Company Quick10K Filing
Wilson Bank Holding
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 11 $-0
10-K 2020-03-12 Annual: 2019-12-31
10-Q 2019-11-08 Quarter: 2019-09-30
10-Q 2019-08-09 Quarter: 2019-06-30
10-Q 2019-05-09 Quarter: 2019-03-31
10-K 2019-03-08 Annual: 2018-12-31
10-Q 2018-11-08 Quarter: 2018-09-30
10-Q 2018-08-08 Quarter: 2018-06-30
10-Q 2018-05-09 Quarter: 2018-03-31
10-K 2018-03-09 Annual: 2017-12-31
10-Q 2017-11-09 Quarter: 2017-09-30
10-Q 2017-08-09 Quarter: 2017-06-30
10-Q 2017-05-09 Quarter: 2017-03-31
10-K 2017-03-10 Annual: 2016-12-31
10-Q 2016-11-08 Quarter: 2016-09-30
10-Q 2016-08-09 Quarter: 2016-06-30
10-Q 2016-05-10 Quarter: 2016-03-31
10-K 2016-03-14 Annual: 2015-12-31
10-Q 2015-11-09 Quarter: 2015-09-30
10-Q 2015-08-07 Quarter: 2015-06-30
10-Q 2015-05-08 Quarter: 2015-03-31
10-K 2015-03-13 Annual: 2014-12-31
10-Q 2014-11-07 Quarter: 2014-09-30
10-Q 2014-08-08 Quarter: 2014-06-30
10-Q 2014-05-08 Quarter: 2014-03-31
10-K 2014-03-14 Annual: 2013-12-31
10-Q 2013-11-08 Quarter: 2013-09-30
10-Q 2013-08-09 Quarter: 2013-06-30
10-Q 2013-05-09 Quarter: 2013-03-31
10-K 2013-03-13 Annual: 2012-12-31
10-Q 2012-11-07 Quarter: 2012-09-30
10-Q 2012-08-07 Quarter: 2012-06-30
10-Q 2012-05-09 Quarter: 2012-03-31
10-K 2012-03-15 Annual: 2011-12-31
10-Q 2011-11-08 Quarter: 2011-09-30
10-Q 2011-08-08 Quarter: 2011-06-30
10-Q 2011-05-10 Quarter: 2011-03-31
10-K 2011-03-16 Annual: 2010-12-31
10-Q 2010-11-09 Quarter: 2010-09-30
10-Q 2010-08-09 Quarter: 2010-06-30
10-Q 2010-05-10 Quarter: 2010-03-31
10-K 2010-03-16 Annual: 2009-12-31
8-K 2020-01-13 Earnings, Regulation FD, Exhibits
8-K 2019-12-31
8-K 2019-10-03 Earnings, Officers, Regulation FD, Exhibits
8-K 2019-07-08 Earnings, Regulation FD, Exhibits
8-K 2019-04-25 Shareholder Vote
8-K 2019-04-10 Earnings, Regulation FD, Exhibits
8-K 2019-03-06 Officers
8-K 2019-01-11 Earnings, Regulation FD, Exhibits
8-K 2018-10-10 Earnings, Regulation FD, Exhibits
8-K 2018-07-09 Earnings, Regulation FD, Exhibits
8-K 2018-04-26 Shareholder Vote
8-K 2018-04-10 Earnings, Regulation FD, Exhibits
8-K 2018-01-12 Earnings, Regulation FD, Exhibits
8-K 2018-01-05 Officers
WBHC 2019-12-31
Part I
Item 1A. Risk Factors.
Part II
Part III
Item 10.        Directors, Executive Officers and Corporate Governance
EX-4.2 ex_175534.htm
EX-10.68 ex_167763.htm
EX-10.69 ex_167764.htm
EX-13.1 ex_164618.htm
EX-21.1 ex_165894.htm
EX-23.1 ex_165895.htm
EX-31.1 ex_165896.htm
EX-31.2 ex_165897.htm
EX-32.1 ex_165898.htm
EX-32.2 ex_165899.htm

Wilson Bank Holding Earnings 2019-12-31

WBHC 10K Annual 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
AEI20 15 1 0 0 1 2 -3 -2.0 9%
AIXN 6 2 2 2 0 0 -0 88% -2.4 2%
ICOG 35 19 2 0 -22 -19 5 0% -0.2 -62%
LBRD 12,083 1,497 22 0 2,116 2,593 479 0% 0.2 18%
WBHC 2,759 2,431 0 0 38 68 -215 -3.1 1%
NHEL 5 2 1 1 -0 -0 -1 67% 2.6 -7%
PROC 76 44 14 2 1 3 -10 12% -3.9 1%
SHEPH 60 53 0 0 1 5 -2 -0.5 1%
WWIN 0 0 0 0 -0 -0 -0 100% 0.2 -495%
GAHR 3,091 1,967 1,201 191 -9 140 745 16% 5.3 -0%

wbhc20191231_10k.htm
false 0000885275 0000885275 2019-12-31 2019-12-31 0000885275 2020-03-12 0000885275 2019-06-30
--12-31 FY 2019
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________________________
FORM 10-K
__________________________________________________________
(Mark One)
 
   
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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 0-20402
 __________________________________________________________
WILSON BANK HOLDING COMPANY
(Exact name of registrant as specified in its charter)
__________________________________________________________
 
   
Tennessee
62-1497076
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
623 West Main Street
 
Lebanon, Tennessee
37087
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code:
(615) 444-2265
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $2.00 par value per share
 (Title of class)
 
__________________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒
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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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.   Yes  ☐    No  ☐
The aggregate market value of the voting stock held by non-affiliates of the registrant on June 30, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $532,621,138.50. For purposes of this calculation, “affiliates” are considered to be the directors and executive officers of the registrant. The market value calculation was determined using $52.25 per share.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes     No  ☒
Shares of common stock, $2.00 par value per share, outstanding on March 12, 2020 were 10,888,745.
 
 

 
 
DOCUMENTS INCORPORATED BY REFERENCE
 
 
     
Part of Form 10-K
  
Documents from which portions are incorporated by reference
Part II
  
Portions of the Registrant’s Annual Report to Shareholders for the fiscal year ended December 31, 2019 are incorporated by reference into Items 1, 5, 6, 7, 7A and 8.
 
 
Part III
  
Portions of the Registrant’s Proxy Statement to be filed relating to the Registrant’s Annual Meeting of Shareholders to be held on April 28, 2020 are incorporated by reference into Items 10, 11, 12, 13 and 14.
 
 

 
 
PART I
Item 1. Business.
 
General
 
Wilson Bank Holding Company (the “Company”) was incorporated on March 17, 1992 under the laws of the State of Tennessee. The purpose of the Company was to acquire all of the issued and outstanding capital stock of Wilson Bank and Trust (the “Bank”) and act as a one-bank holding company. On November 17, 1992, the Company acquired 100% of the capital stock of the Bank pursuant to the terms of an agreement and plan of share exchange.
 
All of the Company’s banking business is conducted through the Bank, a state chartered bank organized under the laws of the State of Tennessee. The Bank, on December 31, 2019, had eleven full service banking offices located in Wilson County, Tennessee, one full service banking facility in Trousdale County, Tennessee, three full service banking offices in Davidson County, Tennessee, five full service banking offices located in Rutherford County, Tennessee, two full service banking offices in DeKalb County, Tennessee, two full service banking offices in Smith County, Tennessee, two full service banking office in Sumner County, Tennessee, one full service banking office in Putnam County, Tennessee and one full service banking office in Williamson County, Tennessee.
 
Management believes that Wilson County, Trousdale County, Davidson County, Rutherford County, DeKalb County, Smith County, Sumner County, Putnam County and Williamson County offer an environment for continued banking growth in the Company’s target market, which consists of local consumers, professionals and small-to-medium-sized businesses. The Bank offers a wide range of banking services, including checking, savings, and money market deposit accounts, certificates of deposit and loans for consumer, commercial and real estate purposes. The Bank also offers custodial, trust and discount brokerage services to its customers. The Bank does not have a concentration of deposits obtained from a single person or entity or a small group of persons or entities, the loss of which would have a material adverse effect on the business of the Bank.
 
The Bank was organized in 1987 to provide Wilson County with a locally-owned, locally-managed commercial bank. Since its opening, the Bank has experienced a steady growth in deposits and loans as a result of providing personal, service-oriented banking services to its targeted market. For the year ended December 31, 2019, the Company reported net earnings of approximately $36.04 million and at December 31, 2019 it had total assets of approximately $2.79 billion.
 
 
Financial and Statistical Information
 
The Company’s audited consolidated financial statements, selected financial data and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report to Shareholders for the year ended December 31, 2019 filed as Exhibit 13.1 to this Form 10-K (the “2019 Annual Report”), are incorporated herein by reference.
 
Regulation and Supervision
 
The banking industry is generally subject to extensive regulatory oversight. Both the Company and the Bank are subject to extensive state and federal banking laws and regulations that impose restrictions on and provide for general regulatory oversight of the Company’s and the Bank’s operations. These laws and regulations are generally intended to protect depositors and borrowers, and may not necessarily protect shareholders. Many of these laws and regulations have undergone significant change in recent years.
 
In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law. The Dodd-Frank Act and the regulations promulgated thereunder implements far-reaching reforms of major elements of the financial landscape, particularly for larger financial institutions. Many of its most far-reaching provisions do not directly apply to community-based institutions like the Company or the Bank. For instance, provisions that regulate derivative transactions and limit derivatives trading activity of federally-insured institutions, enhance supervision of “systemically significant” institutions, impose new regulatory authority over hedge funds, limit proprietary trading by banks, and phase-out the eligibility of trust preferred securities for Tier 1 capital for institutions with greater than $15.0 billion in total assets are among the provisions that do not directly impact the Company or the Bank either because of exemptions for institutions below a certain asset size or because of the nature their operations. Those provisions that have been adopted or are expected to be adopted that have impacted and, in some cases, will continue to impact the Company and the Bank include the following:
 
3

 
 
 
Changing the assessment base for federal deposit insurance from the amount of insured deposits to consolidated assets less tangible capital, eliminating the ceiling and increasing the size of the floor of the Deposit Insurance Fund, and offsetting the impact of the increase in the minimum floor on institutions with less than $10 billion in assets.
 
 
Making permanent the $250,000 limit for federal deposit insurance and increasing the cash limit of Securities Investor Protection Corporation protection to $250,000.
 
 
Repealing the federal prohibition on payment of interest on demand deposits, thereby permitting depositing institutions to pay interest on business transaction and other accounts.
 
 
Centralizing responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau (the "CFPB") , responsible for implementing federal consumer protection laws, although banks below $10 billion in assets will continue to be examined and supervised for compliance with these laws by their primary federal banking regulator.
 
 
Imposing new requirements for mortgage lending, including new minimum underwriting standards, prohibitions on certain yield-spread compensation to mortgage originators, special consumer protections for mortgage loans that do not meet certain provision qualifications, prohibitions and limitations on certain mortgage terms and various new mandated disclosures to mortgage borrowers.
 
 
Applying the same leverage and risk-based capital requirements that apply to insured depository institutions to their holding companies.
 
 
Permitting national and state banks to establish de novo interstate branches at any location where a bank based in that state could establish a branch, and requiring that bank holding companies and banks be well-capitalized and well managed in order to acquire banks located outside their home state.
 
 
Imposing new limits on affiliated transactions and causing derivative transactions to be subject to lending limits.
 
 
Implementing certain corporate governance revisions that apply to all public companies.
 
Failure to comply with the requirements of the Dodd-Frank Act would negatively impact the Company’s results of operations and financial condition and could limit its growth or expansion activities. While the Company cannot predict what effect any presently contemplated or future changes in the laws or regulations or their interpretations would have on it or the Bank, such changes could be materially adverse to the Company’s investors.
 
The Company is a bank holding company within the meaning of the Bank Holding Company Act of 1956 (the “BHC Act”) and is registered with the Board of Governors of the Federal Reserve System (the “FRB”). The Company is required to file annual reports and other information regarding its business operations and those of its bank subsidiary with, and is subject to examination by, the FRB. The Bank is chartered under the laws of the State of Tennessee and is subject to the supervision of, and is regularly examined by, the Tennessee Department of Financial Institutions (the “TDFI”). The Bank is also regularly examined by the Federal Deposit Insurance Corporation (“FDIC”), the government entity that insures the Bank’s deposits subject to applicable limitations.
 
Under the BHC Act, a bank holding company may not directly or indirectly acquire ownership or control of more than five percent of the voting shares or substantially all of the assets of any company, including a bank, without the prior approval of the FRB unless the bank holding company already owns a majority of such company. In addition, bank holding companies are generally prohibited under the BHC Act from engaging directly or indirectly in activities other than those of banking or managing or controlling banks, or furnishing services to their subsidiaries, subject to certain exceptions and the modernization of the financial services industry in connection with the passing of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”). The GLB Act amended the BHC Act and expanded the activities in which bank holding companies and affiliates of banks are permitted to engage. Under the BHC Act, as amended by the GLB Act, the FRB is authorized to approve the ownership by a bank holding company of shares of any company whose activities have been determined by the FRB to be so closely related to banking or to managing or controlling banks as to be a proper incident thereto.
 
4

 
 
Subject to various exceptions, the BHC Act and the Federal Change in Bank Control Act, together with related regulations, require FRB approval prior to any person or company acquiring "control" of a bank holding company. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of the bank holding company. Control is rebuttably presumed to exist if a person or company acquires 10% or more, but less than 25%, of any class of voting securities and either:
 
 
The bank holding company has registered securities under Section 12 of the Securities Exchange Act of 1934; or
 
 
No other person owns a greater percentage of that class of voting securities immediately after the transaction.
 
The Company’s common stock is registered under Section 12 of the Securities Exchange Act of 1934. The regulations provide a procedure for challenge of the rebuttable control presumption.
 
Under the GLB Act, a “financial holding company” may engage in activities the FRB determines to be financial in nature or incidental to such financial activity or complementary to a financial activity and not a substantial risk to the safety and soundness of such depository institutions or the financial system generally. Generally, such companies may engage in a wide range of securities activities and insurance underwriting and agency activities. The Company has not made application to the FRB to become a “financial holding company.”
 
Under the BHC Act, a bank holding company, which has not qualified or elected to become a financial holding company, is generally prohibited from engaging in or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in nonbanking activities unless, prior to the enactment of the GLB Act, the FRB found those activities to be so closely related to banking as to be a proper incident to the business of banking. Activities that the FRB has found to be so closely related to banking as to be a proper incident to the business of banking include:
 
 
Factoring accounts receivable;
 
 
Acquiring or servicing loans;
 
 
Leasing personal property;
 
 
Conducting discount securities brokerage activities;
 
 
Performing selected data processing services;
 
 
Acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and
 
 
Underwriting certain insurance risks of the holding company and its subsidiaries.
 
Despite prior approval, the FRB may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company’s continued ownership, activity or control constitutes a serious risk to the financial safety, soundness, or stability of any of its bank subsidiaries.
 
Under the Tennessee Bank Structure Act, a bank holding company which controls 30% or more of the total deposits (excluding certain deposits) in all federally insured financial institutions in Tennessee is prohibited from acquiring any bank in Tennessee. With prior regulatory approval, Tennessee law permits banks based in the state to either establish new or acquire existing branch offices throughout Tennessee. As a result of the Dodd-Frank Act, the Bank and other state-chartered or national banks generally may establish new branches in another state to the same extent as banks chartered in the other state may establish new branches in that state.
 
5

 
 
The Company and the Bank are subject to certain restrictions imposed by the Federal Reserve Act and the Federal Deposit Insurance Act, respectively, on any extensions of credit to the bank holding company or its subsidiary bank, on investments in the stock or other securities of the bank holding company or its subsidiary bank, and on taking such stock or other securities as collateral for loans of any borrower. The Bank takes Company common stock as collateral for borrowings subject to the aforementioned restrictions.
 
Both the Company and the Bank are subject to the provisions of Section 23A of the Federal Reserve Act. Section 23A places limits on the amount of:
 
 
A bank’s loans or extensions of credit, including purchases of assets subject to an agreement to repurchase, to or for the benefit of affiliates;
+
 
A bank’s investment in affiliates;
 
 
Assets a bank may purchase from affiliates, except for real and personal property exempted by the FRB;
 
 
The amount of loans or extensions of credit to third parties collateralized by the securities or obligations of affiliates;
 
 
Transactions involving the borrowing or lending of securities and any derivative transaction that results in credit exposure to an affiliate; and
 
 
A bank’s guarantee, acceptance or letter of credit issued on behalf of an affiliate.
 
The total amount of the above transactions is limited in amount, as to any one affiliate, to 10% of a bank’s capital and surplus and, as to all affiliates combined, to 20% of a bank’s capital and surplus. In addition to the limitation on the amount of these transactions, each of the above transactions must also meet specified collateral requirements. The Bank must also comply with other provisions designed to avoid the taking of low-quality assets.
 
The Company and the Bank are also subject to the provisions of Section 23B of the Federal Reserve Act which, among other things, prohibits an institution from engaging in the above transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.
 
The Bank is also subject to restrictions on extensions of credit to its executive officers, directors, principal stockholders and their related interests. These extensions of credit (1) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties, and (2) must not involve more than the normal risk of repayment or present other unfavorable features.
 
The FRB has the power to prohibit dividends by bank holding companies if their actions constitute unsafe or unsound practices. The FRB has issued a policy statement expressing its view that a bank holding company should pay cash dividends only to the extent that the company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the company’s capital needs, asset quality, and overall financial condition. As noted below, FRB regulations limit dividends, stock repurchases and discretionary bonuses to executive officers if a bank holding company’s capital is below the level of regulatory minimums plus the applicable capital conservation buffer.
 
The Company is a legal entity separate and distinct from the Bank. Over time, the principal source of the Company’s cash flow, including cash flow to pay dividends to the Company’s common stock shareholders, will be dividends that the Bank pays to the Company as its sole shareholder. Under Tennessee law, the Company is not permitted to pay dividends if, after giving effect to such payment, the Company would not be able to pay its debts as they become due in the normal course of business or the Company’s total assets would be less than the sum of its total liabilities plus any amounts needed to satisfy any preferential rights if the Company were dissolving. In addition, in deciding whether or not to declare a dividend of any particular size, the Company’s board of directors must consider the Company’s current and prospective capital, liquidity, and other needs.
 
Statutory and regulatory limitations also apply to the Bank’s payment of dividends to the Company. Under Tennessee law, the Bank in any one calendar year can only pay dividends to the Company in an amount equal to or less than the total amount of its net income for that calendar year combined with retained net income for the preceding two years. Payment of dividends in excess of this amount requires the consent of the Commissioner of the TDFI.
 
The payment of dividends by the Bank and the Company may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), a depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.
 
6

 
 
Under the Dodd-Frank Act, and previously under FRB policy, the Company is required to act as a source of financial strength for the Bank and to commit resources to support the Bank. This support can be required at times when it would not be in the best interest of the Company’s shareholders or creditors to provide it. Further, if the Bank’s capital levels were to fall below certain minimum regulatory guidelines, the Bank would need to develop a capital plan to increase its capital levels and the Company would be required to guarantee the Bank’s compliance with the capital plan in order for such plan to be accepted by the federal regulatory agency. In the event of bankruptcy, any commitment by the Company to a federal regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee and entitled to a priority of payment.
 
Both the Company and the Bank are required to comply with the capital adequacy standards established by the FRB, in the Company’s case, and the FDIC, in the case of the Bank. The FRB has established a risk-based and a leverage measure of capital adequacy for bank holding companies, like the Company. The Bank is also subject to risk-based and leverage capital requirements adopted by the FDIC, which are substantially similar to those adopted by the FRB for bank holding companies. In addition, the FDIC and TDFI may require state banks that are not members of the FRB, like the Bank, to maintain capital at levels higher than those required by general regulatory requirements. Tennessee state banks are required to have the capital structure that the TDFI deems adequate, and the Commissioner of the TDFI as well as federal regulators may require a state bank (or its holding company in the case of federal regulators) to increase its capital levels to the point deemed adequate by the Commissioner or such other federal regulator before granting approval of a branch application, merger application or charter amendment.
 
The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance-sheet exposure, and to minimize disincentives for holding liquid assets. Assets and off-balance-sheet items, such as letters of credit and unfunded loan commitments, are assigned to broad risk categories, each with appropriate risk weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items.
 
In July 2013, the FRB and the FDIC approved final rules that substantially amend the regulatory capital rules applicable to the Bank and the Company, effective January 1, 2015. The final rules implemented the regulatory capital reforms of the Basel Committee on Banking Supervision reflected in "Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems" (Basel III) and changes required by the Dodd-Frank Act.
 
Under these rules, the leverage and risk-based capital ratios of bank holding companies may not be lower than the leverage and risk-based capital ratios for insured depository institutions. The final capital rules implementing Basel III, among other things, included new minimum risk-based capital and leverage ratios for banks and their holding companies. Moreover, these rules refined the definition of what constitutes “capital” for purposes of calculating those ratios, including the definitions of Tier 1 capital and Tier 2 capital. Total capital consists of two components, Tier 1 capital and Tier 2 capital. Tier 1 capital generally consists of common stock (plus related surplus) and retained earnings, limited amounts of minority interest in the form of additional Tier 1 capital instruments, and non-cumulative preferred stock and related surplus, subject to certain eligibility standards, less goodwill and other specified intangible assets and other regulatory deductions. Cumulative preferred stock and trust preferred securities issued after May 19, 2010 no longer qualify as Tier 1 capital, but such securities issued prior to May 19, 2010, including in the case of bank holding companies with less than $15.0 billion in total assets as of December 31, 2009, trust preferred securities issued prior to that date, continue to count as Tier 1 capital subject to certain limitations. Tier 2 capital generally consists of perpetual preferred stock and related surplus not meeting the Tier 1 capital definition, qualifying subordinated debt, qualifying mandatorily convertible debt securities, and a limited amount of loan loss reserves.
 
The minimum capital level requirements applicable to bank holding companies and banks subject to the rules are: (i) a Tier 1 common equity (“CET1”) capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6%; (iii) a total capital ratio of 8%; and (iv) a Tier 1 leverage ratio of 4% for all institutions. The rules also established a "capital conservation buffer" of 2.5% (consisting of CET1 capital) above the regulatory minimum capital ratios, and have resulted in the following minimum ratios: (i) a CET1 capital ratio of 7%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. The phase-in of the capital conservation buffer requirement was fully implemented in January 2019. An institution will be subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if capital levels fall below minimum levels plus the buffer amounts. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.
 
Under the Basel III capital rules, CET1 capital consists of common stock and paid in capital and retained earnings. CET1 capital is reduced by goodwill, certain intangible assets, net of associated deferred tax liabilities, deferred tax assets that arise from tax credit and net operating loss carryforwards, net of any valuation allowance, and certain other items specified in the Basel III capital rules. The Basel III capital rules also provide for a number of deductions from and adjustments to CET1 capital. These include, for example, the requirement that mortgage servicing rights, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks and significant investments in non-consolidated financial entities be deducted from CET1 capital to the extent that any one such category exceeds 10% of CET1 capital or all such categories in the aggregate exceed 15% of CET1 capital.
 
The final rules implementing Basel III allow banks and their holding companies with less than $250 billion in assets a one-time opportunity to opt-out of a requirement to include unrealized gains and losses in accumulated other comprehensive income in their capital calculation. The Company and the Bank each opted out of this requirement.
 
7

 
 
Additionally, the FDICIA establishes a system of prompt corrective action ("PCA") to resolve the problems of undercapitalized financial institutions. Under this system, the federal banking regulators have established five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) into one of which all institutions are categorized. Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized. The federal banking agencies have specified by regulation the relevant capital level for each category (excluding the Basel III capital conservation buffer amounts), as set forth in the following table:
 
   
CET1 capital ratio
   
Total risk-based capital ratio
   
Tier 1 risk-based capital ratio
   
Tier 1 leverage ratio
 
Well capitalized
  6.5%     10%     8%     5%  
Adequately capitalized
  4.5%     8%     6%     4%  
Undercapitalized
 
< 4.5%
   
< 8%
   
< 6%
   
< 4%
 
Significantly undercapitalized
 
< 3%
   
< 6%
   
< 4%
   
< 3%
 
Critically undercapitalized
 
Tangible Equity/Total Assets ≤ 2%
 
 
Failure to meet statutorily mandated capital guidelines or more restrictive ratios separately established for a depository institution or its holding company by its regulators could subject a bank or bank holding company to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting or renewing brokered deposits, limitations on the rates of interest that the institution may pay on its deposits, limitations on the ability to hire senior executive officers or add directors without prior approval and other restrictions on its business. As described above, significant additional restrictions can be imposed on FDIC-insured depository institutions that fail to meet applicable capital requirements.
 
A state regulated bank which is not a member of the Federal Reserve, like the Bank, is required to be “well-capitalized" under PCA in order to take advantage of expedited procedures on certain applications, such as branches and mergers, and to accept and renew brokered deposits without further regulatory approval.
 
The Basel III capital rules prescribe a standardized approach for risk weightings that expand the risk-weighting categories from the four Basel I-derived categories (0%, 20%, 50% and 100%) to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures, and resulting in higher risk weights for a variety of asset categories. Specific changes to the rules impacting the Company’s and the Bank’s determination of risk-weighted assets include, among other things:
 
 
applying a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans;
 
assigning a 150% risk weight to the unsecured portion of non-residential mortgage loans that are 90 days past due or otherwise on nonaccrual status;
 
providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable (previously set at 0%);
 
providing for a risk weight, generally not less than 20% with certain exceptions, for securities lending transactions based on the risk weight category of the underlying collateral securing the transaction; and
 
eliminating the 50% cap on the risk weight for OTC derivatives.
 
In December 2017, the Basel Committee on Banking Supervision published the last version of the Basel III accord, generally referred to as “Basel IV.” The Basel Committee stated that a key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets (“RWA”), which will be accomplished by enhancing the robustness and risk sensitivity of the standardized approaches for credit risk and operational risk, which will facilitate the comparability of banks’ capital ratios; constraining the use of internally modeled approaches; and complementing the risk-weighted capital ratio with a finalized leverage ratio and a revised and robust capital floor. Leadership of the federal banking agencies who are tasked with implementing Basel IV has indicated that it is considering how to appropriately apply these revisions in the United States. Although it is uncertain at this time, the Company anticipates some, if not all, of the Basel IV accord may be incorporated into the capital requirements framework applicable to the Company and the Bank.
 
Banking organizations must have appropriate capital planning processes, with proper oversight from the board of directors. Accordingly, pursuant to a separate, general supervisory letter from the FRB, bank holding companies are expected to conduct and document comprehensive capital adequacy analyses prior to the declaration of any dividends (on common stock, preferred stock, trust preferred securities or other Tier 1 capital instruments), capital redemptions or capital repurchases. Moreover, the federal banking agencies have adopted a joint agency policy statement, noting that the adequacy and effectiveness of a bank’s interest rate risk management process and the level of its interest rate exposures are critical factors in the evaluation of the bank’s capital adequacy. A bank with material weaknesses in its interest rate risk management process or high levels of interest rate exposure relative to its capital will be directed by the relevant federal banking agencies to take corrective actions.
 
8

 
 
The FDIC has adopted a risk-based assessment system for insured depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities. Under the Dodd-Frank Act, the FDIC adopted regulations that base deposit insurance assessments on total assets less capital rather than deposit liabilities and include off-balance sheet liabilities of institutions and their affiliates in risk-based assessments.
 
The Dodd-Frank Act increased the basic limit on federal deposit insurance coverage to $250,000 per depositor at each insured depository institution. The Dodd-Frank Act also repealed the prohibition on paying interest on demand transaction accounts, but did not extend unlimited insurance protection for these accounts.
 
The FDIC may terminate its insurance of deposits if it finds that a depository institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
 
The Financial Reform, Recovery and Enforcement Act of 1989 provides that a holding company’s controlled insured depository institutions are liable for any loss incurred by the FDIC in connection with the default of, or any FDIC-assisted transaction involving, an affiliated insured bank or savings association.
 
The maximum permissible rates of interest on most commercial and consumer loans made by the Bank are governed by Tennessee’s general usury law and the Tennessee Industrial Loan and Thrift Companies Act (“Industrial Loan Act”). Certain other usury laws affect limited classes of loans, but the Company believes that the laws referenced above are the most significant. Tennessee’s general usury law authorizes a floating rate of 4% per annum over the average prime or base commercial loan rate, as published by the FRB from time to time, subject to an absolute 24% per annum limit. The Industrial Loan Act, which is generally applicable to most of the loans made by the Bank in Tennessee, authorizes an interest rate of up to 24% per annum and also allows certain loan charges, generally on a more liberal basis than does the general usury law.
 
The Bank's loan operations are also subject to federal laws, rules and regulatoins applicable to credit transactions, such as the:
 
 
Federal Truth-In-Lending Act, governing disclosures of credit terms and costs to consumer borrowers giving consumers the right to cancel certain credit transactions, and defining requirements for servicing consumer loans secured by a dwelling;
 
Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
 
Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies;
 
Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by collection agencies;
 
Service Members' Civil Relief Act, governing the repayment terms of, and property rights underlying, secured obligations of persons in active military service;
 
Rules and regulations of the various federal agencies charged with the responsibility of implementing the federal laws;
 
Electronic Funds Transfer Act, which regulates fees and other terms of electronic funds transactions;
 
Fair and Accurate Credit Transactions Act of 2003, which permanently extended the national credit reporting standards of the Fair Credit Reporting Act, and permits consumers, including the Bank’s customers, to opt out of information sharing among affiliated companies for marketing purposes and requires financial institutions, including banks, to notify a customer if the institution provides negative information about the customer to a national credit reporting agency or if the credit that is granted to the customer is on less favorable terms than those generally available; and
 
the Real Estate Settlement and Procedures Act of 1974, which affords consumers greater protection pertaining to federally related mortgage loans by requiring, among other things, improved and streamlined good faith estimate forms including clear summary information and improved disclosure of yield spread premiums.
 
The Bank’s deposit operations are subject to the:
 
 
Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;
 
Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities (including with respect to the permissibility of overdraft charges) arising from the use of automated teller machines and other electronic banking services;
 
the Truth in Savings Act, which requires depository institutions to disclose the terms of deposit accounts to consumers;
 
the Expedited Funds Availability Act, which requires financial institutions to make deposited funds available according to specified time schedules and to disclose funds availability policies to consumers; and
 
the Check Clearing for the 21st Century Act (“Check 21”), which is designed to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation. Check 21 created a new negotiable instrument called a substitute check and permits, but does not require, banks to truncate original checks, process check information electronically, and deliver substitute checks to banks that wish to continue receiving paper checks.
 
The Office of Foreign Assets Control (“OFAC”), which is an office in the U.S. Department of the Treasury, is responsible for helping to ensure that U.S. entities do not engage in transactions with “enemies” of the United States, as defined by various Executive Orders and Acts of Congress. OFAC publishes lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts; owned or controlled by, or acting on behalf of target countries, and narcotics traffickers. If a bank finds a name on any transaction, account or wire transfer that is on an OFAC list, it must freeze or block the transactions on the account. The Bank has appointed a compliance officer to oversee the inspection of its accounts and the filing of any notifications. The Bank actively checks high-risk OFAC areas such as new accounts, wire transfers and customer files. These checks are performed using software that is updated each time a modification is made to the lists provided by OFAC and other agencies of Specially Designated Nationals and Blocked Persons.
 
9

 
 
Pursuant to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act  of 2001 (the “Patriot Act”), as amended, financial institutions are subject to prohibitions against specified financial transactions and account relationships as well as enhanced due diligence and "know your customer" standards in their dealings with foreign financial institutions and foreign customers. 
 
A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing. The Bank Secrecy Act (the "BSA") and its implementing regulations and parallel requirements of the federal banking regulators require the Bank to maintain a risk-based anti-money laundering (“AML”) program reasonably designed to prevent and detect money laundering and terrorist financing and to comply with the recordkeeping and reporting requirements of the BSA, including the requirement to report suspicious activity. The Patriot Act substantially broadened the scope of AML laws and regulations by imposing significant new compliance and due diligence obligations on financial institutions, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the United States. Financial institutions, including banks, are required under final rules implementing Section 326 of the Patriot Act to establish procedures for collecting standard information from customers opening new accounts and verifying the identity of these new account holders within a reasonable period of time. Financial institutions are also prohibited from entering into specified financial transactions and account relationships and must take certain steps to assist government agencies in detecting and preventing money laundering and to report certain types of suspicious transactions. In May 2016, Treasury’s Financial Crimes Enforcement Network issued rules under the BSA requiring financial institutions to identify the beneficial owners who own or control certain legal entity customers at the time an account is opened and to update their AML compliance programs to include risk-based procedures for conducting ongoing customer due diligence. The Bank currently has policies and procedures in place designed to comply with the Patriot Act, the BSA and the other regulations targeting terrorism and money laundering. 
 
The Community Reinvestment Act of 1977 (the “Community Reinvestment Act”) requires that, in connection with examinations of financial institutions within their respective jurisdictions, the FRB and the FDIC shall evaluate the record of each financial institution in meeting the credit needs of its local communities, including low- and moderate-income neighborhoods consistent with safe and sound operations of the institutions. These facts are also considered in evaluating mergers, acquisitions, and applications to open a branch or facility. Failure to adequately meet these criteria could impose additional requirements and limitations on the Bank. Additionally, banks are required to publicly disclose the terms of various Community Reinvestment Act-related agreements. The Bank received a “satisfactory” Community Reinvestment Act rating from its primary federal regulator on its most recent regulatory examination.
 
The Bank is also subject to fair lending requirements and reporting obligations involving its home mortgage lending operations. Fair lending laws prohibit discrimination in the provision of banking services, and bank regulators have increasingly focused on the enforcement of these laws. Fair lending laws include the Equal Credit Opportunity Act of 1974 and the Fair Housing Act of 1968, which prohibit discrimination in credit and residential real estate transactions on the basis of prohibited factors including, among others, race, color, national origin, gender and religion. The Bank may be liable, either through administrative enforcement or private civil actions, for policies that result in a disparate treatment of or have a disparate impact on a protected class of applicants or borrowers. If a pattern or practice of lending discrimination is alleged by a regulator, then that agency may refer the matter to the U.S. Department of Justice (“DOJ”) for investigation. Pursuant to a Memorandum of Understanding, the DOJ and  (“ the CFPB”) have agreed to share information, coordinate investigations and generally commit to strengthen their coordination efforts. The Bank is required to have a fair lending program that is of sufficient scope to monitor the inherent fair lending risk of the institution and that appropriately remediates issues which are identified.
 
State and federal banking regulators have issued various policy statements and, in some cases, regulations, emphasizing the importance of technology risk management and supervision. Such policy statements and regulations indicate that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution. A financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyber-attack involving destructive malware. A financial institution is expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack.
 
Federal statutes and regulations, including the GLB Act and the Right to Financial Privacy Act of 1978, limit the Company’s and the Bank’s ability to disclose non-public information about consumers, customers and employees to nonaffiliated third parties. Specifically, the GLB Act requires disclosure of the Company’s privacy policies and practices relating to sharing non-public information and enables retail customers to opt out of the institution’s ability to share information with unaffiliated third parties under certain circumstances. The GLB Act also requires the Company and the Bank to implement a comprehensive information security program that includes administrative, technical and physical safeguards to ensure the security and confidentiality of customer records and information and, if applicable state law is more protective of customer privacy than the GLB Act, financial institutions, including the Bank, will be required to comply with such state law. An increasing number of state laws and regulations have been enacted in recent years to implement privacy and cybersecurity standards and regulations, including data breach notification and data privacy requirements. This trend of state-level activity is expected to continue to expand, requiring continual monitoring of developments in the states in which our customers are located and ongoing investments in our information systems and compliance capabilities.
 
Other laws and regulations impact the Company’s and the Bank’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes. These regulations affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors. In connection with the regulations governing the privacy of consumer financial information, the federal banking agencies, including the FDIC, have adopted guidelines for establishing information security standards and programs to protect such information. In addition, the Bank has established a privacy policy that it believes promotes compliance with the federal requirements.
 
Examination and enforcement by the state and federal banking agencies, and other such enforcement authorities, for non-compliance with consumer protection laws and their implementing regulations have increased and become more intense. The advent of the CFPB further heightens oversight and review of compliance with consumer protection laws and regulations. Due to these heightened regulatory concerns, including increased enforcement of the Community Reinvestment Act by the federal banking agencies, and new powers and authority of the CFPB, the Bank may incur additional compliance costs or be required to expend additional funds for investments in its local community.
 
10

 
 
The Company’s securities are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, the Company is subject to the information, proxy solicitation, insider trading, corporate governance, and other requirements and restrictions of the Exchange Act. As a public company, the Company is also subject to the accounting oversight and corporate governance requirements of the Sarbanes-Oxley Act of 2002, including, among other things, required executive certification of financial presentations, increased requirements for board audit committees and their members, and enhanced requirements relating to disclosure controls and procedures and internal control over financial reporting.
 
In 2018, the U.S. Congress passed, and the President signed into law, the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (the “Growth Act”). The Growth Act, among other things, required the federal banking agencies to issue regulations allowing community bank organizations with total assets of less than $10.0 billion and limited amounts of certain assets and off-balance sheet exposures to access a simpler capital regime focused on a bank’s Tier 1 leverage capital levels rather than risk-based capital levels that are the focus of the capital rules issued under the Dodd-Frank Act implementing Basel III.
 
In October 2019, the federal banking agencies approved final rules that, as of January 1, 2020, exempt from the risk-based and leverage capital requirements of the capital rules issued under the Dodd-Frank Act any qualifying community bank and its holding company that have leverage ratios (calculated as Tier 1 capital over average total consolidated assets) of greater than 9 percent and hold 25% or less of total assets in off-balance sheet exposures and 5% or less of total assets in trading assets and liabilities. As such, a qualifying community banking organization and its holding company that have chosen the proposed framework are no longer required to calculate the generally applicable risk-based and leverage capital requirements. Such a bank is also considered to have met the capital ratio requirements to be well capitalized for the agencies' PCA rules provided it has a community bank leverage ratio greater than 9 percent.
 
The Growth Act also raised the eligibility for the small bank holding company policy statement to $3 billion of assets from $1 billion.
 
The Company is currently evaluating whether or not it will take advantage of these new capital rules under the Growth Act.
 
New regulations and statutes are regularly proposed that contain wide-ranging provisions for altering the structures, regulations and competitive relationships of the nation’s financial institutions. Throughout 2017, 2018 and 2019, the U.S. Congress has debated, proposed and in some cases, passed changes to the financial institution regulatory landscape, including the Growth Act and other proposed amendments to the Dodd-Frank Act, including raising the asset threshold levels at which financial institutions and their holding companies become subject to enhanced regulatory oversight and compliance requirements. Federal banking regulators have also proposed changes to certain of the rules they adopted pursuant to the Dodd-Frank Act. The Company cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which the Company’s business may be affected by any new regulation or statute or change in applicable rules or regulations. Even if modifications are enacted to existing or proposed regulations, including raising certain assets thresholds above those currently in place, the Company may continue to face enhanced scrutiny from its regulators who may expect it to continue to comply with the current, more stringent requirements as part of their safety and soundness and compliance examinations and general oversight of the Company’s operations.
 
Competition
 
The banking business is highly competitive. The Company’s primary market areas consist of Wilson, Trousdale, Davidson, Rutherford, DeKalb, Smith, Sumner, Putnam and Williamson Counties in Tennessee. The Company competes with numerous commercial banks and savings institutions with offices in these market areas. In addition to these competitors, the Company competes for loans with insurance companies, regulated small loan companies, credit unions, and certain government agencies. The Company also competes with numerous companies and financial institutions engaged in similar lines of business, such as mortgage banking companies, brokerage companies and lending companies. Also, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our non-bank competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than the Bank can. Continued consolidation in the financial services industry, due in part to the regulatory changes made under the Growth Act, including the increased asset threshold for required stress testing, has contributed to increases in the number of large competitors we face in our markets. Some of the Company’s competitors have significantly greater financial resources and offer a greater number of branch locations. To offset this advantage of its larger competitors, the Company believes it can attract customers by providing loan and management decisions at the local level. The Company does not experience significant seasonal trends in its operations.
 
Monetary Policies
 
The results of operations of the Bank and the Company are affected by the policies of the regulatory authorities, particularly the FRB. An important function of the FRB is to regulate the national supply of bank credit in order to combat recession and curb inflation. Among the instruments used to attain these objectives are open market operations in U.S. government securities, changes in the discount rate on bank borrowings and changes in reserve requirements relating to member bank deposits. These instruments are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may also affect interest rates charged on loans and paid for deposits. Policies of the regulatory agencies have had a significant effect on the operating results of commercial banks in the past and are expected to do so in the future. The effect of such policies upon the future business and results of operations of the Company and the Bank cannot be predicted with accuracy.
 
Employment
 
As of March 12, 2020, the Company and its subsidiary collectively employed 530 full-time equivalent employees.
 
11

 
 
Available Information
 
The Company’s Internet website is http://www.wilsonbank.com. Please note that the Company’s website address is provided as an inactive textual reference only. The Company makes available free of charge on its website the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after it files or furnishes such materials to the Securities and Exchange Commission (the “SEC”). The information provided on the Company’s website is not part of this report, and is therefore not incorporated by reference herein unless such information is otherwise specifically referenced elsewhere in this report.
 
Statistical Information Required by Guide 3
 
The statistical information required to be displayed under Item 1 pursuant to Guide 3, “Statistical Disclosure by Bank Holding Companies,” of the Exchange Act Industry Guides is incorporated herein by reference to the Consolidated Financial Statements and the notes thereto and the Management’s Discussion and Analysis sections in the Company’s 2019 Annual Report. Certain information not contained in the Company’s 2019 Annual Report, but required by Guide 3, is contained in the tables immediately following:
 
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12

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
 
 
 I.
Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential 
 
The schedule which follows indicates the average balances for each major balance sheet item, an analysis of net interest income and net interest expense and the change in interest income and interest expense attributable to changes in volume and changes in rates.
 
The difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities is net interest income, which is the Company's gross margin. Analysis of net interest income is more meaningful when income from tax-exempt earning assets is adjusted to a tax equivalent basis. Accordingly, the following schedule includes a tax equivalent adjustment of tax-exempt earning assets, assuming a weighted average Federal income tax rate of 34% for 2017 and 21% for 2019 and 2018.
 
In this schedule, "change due to volume" is the change in volume multiplied by the interest rate for the prior year. "Change due to rate" is the change in interest rate multiplied by the volume for the prior year. Changes in interest income and expense not due solely to volume or rate changes have been allocated to the “change due to volume” and “change due to rate” in proportion to the relationship of the absolute dollar amounts of the change in each category.
 
Non-accrual loans have been included in the loan category. Loan fees of $7,751,000, $7,400,000 and $6,773,000 for 2019, 2018 and 2017, respectively, are included in loan income and represent an adjustment of the yield on these loans.
 
   
Dollars In Thousands
 
   
2019
   
2018
   
2019/2018 Change
 
   
Average
           
Income/
   
Average
           
Income/
   
Due to
   
Due to
         
   
Balance
   
Rates/Yields
   
Expense
   
Balance
   
Rates/Yields
   
Expense
   
Volume
   
Rate
   
Total
 
Loans, net of unearned interest (2) (3)
  $ 2,030,861       5.31 %     105,783     $ 1,898,772       5.11 %     94,917     $ 6,873       3,993       10,866  
Investment securities—taxable
    347,873       2.46       8,559       281,154       2.19       6,158       1,580       821       2,401  
Investment securities—tax exempt
    38,859       1.99       773       40,675       2.51       1,020       (44 )     (203 )     (247 )
Taxable equivalent adjustment (1)
          0.53       205             0.66       271       (12 )     (54 )     (66 )
Total tax-exempt investment securities
    38,859       2.52       978       40,675       3.17       1,291       (56 )     (257 )     (313 )
Total investment securities
    386,732       2.47       9,537       321,829       2.31       7,449       1,524       564       2,088  
Loans held for sale
    9,613       3.38       325       5,343       3.44       184       144       (3 )     141  
Federal funds sold
    14,645       1.88       275       4,801       1.73       83       184       8       192  
Interest bearing deposits
    121,399       1.78       2,164       55,911       1.75       979       1,167       18       1,185  
Restricted equity securities
    4,241       4.67       198       3,012       6.11       184       64       (50 )     14  
Total earning assets
    2,567,491       4.69       118,282       2,289,668       4.62       103,796       9,956       4,530       14,486  
Cash and due from banks
    10,480                       17,820                                          
Allowance for loan losses
    (28,073 )                     (25,365 )                                        
Bank premises and equipment
    58,545                       57,712                                          
Other assets
    72,487                       70,071                                          
Total assets
  $ 2,680,930                     $ 2,409,906                                          
 
13

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
   
Dollars In Thousands
 
   
2019
   
2018
   
2019/2018 Change
 
   
Average
           
Income/
   
Average
           
Income/
   
Due to
   
Due to
         
   
Balance
   
Rates/Yields
   
Expense
   
Balance
   
Rates/Yields
   
Expense
   
Volume
   
Rate
   
Total
 
Deposits:
                                                                       
Negotiable order of withdrawal accounts
  $ 526,026       0.44 %     2,311     $ 503,312       0.36 %     1,823     $ 85       403       488  
Money market demand accounts
    749,366       0.80       6,030       668,007       0.52       3,487       467       2,076       2,543  
Time deposits
    642,513       2.01       12,896       556,054       1.43       7,944       1374       3,578       4,952  
Other savings deposits
    136,912       0.60       825       139,664       0.53       744       (15 )     96       81  
Total interest-bearing deposits
    2,054,817       1.07       22,062       1,867,037       0.75       13,998     $ 1,911       6,153       8,064  
Federal Home Loan Bank advances     21,712       2.68       581                         581             581  
Securities sold under repurchase agreements
                      1,090       1.47       16       (16 )           (16 )
Federal funds purchased
    597       0.67       4       588       0.68       4                    
Total interest-bearing liabilities
    2,077,126       1.09       22,647       1,868,715       0.75       14,018       2,476       6,153       8,629  
Demand deposits
    270,136                       250,328                                          
Other liabilities
    14,994                       12,342                                          
Stockholders’ equity
    318,674                       278,521                                          
Total liabilities and stockholders’ equity
  $ 2,680,930                     $ 2,409,906                                          
Net interest income
                    95,635                       89,778                          
Net yield on earning assets (4)
            3.81 %                     4.01 %                                
Net interest spread (5)
            3.60 %                     3.87 %                                
 
 
(1)
The tax equivalent adjustment for 2019 and 2018 have been computed using a 21% Federal tax rate.
 
(2)
Yields on loans and total earning assets include the impact of State income tax credits related incentive loans at below market rates and tax exempt loans to municipalities.
  (3) Loan fees of $7.8 million and $7.4 million are included in interest income in 2019 and 2018.
  (4) Annualized net interest income on a tax equivalent basis divided by average interest-earning assets.
  (5) Average interest rate on interest-earning assets less average interest rate on interest-bearing liabilities.  
 
14

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
   
Dollars In Thousands
 
   
2018
   
2017
   
2018/2017 Change
 
   
Average
           
Income/
   
Average
           
Income/
   
Due to
   
Due to
         
   
Balance
   
Rates/Yields
   
Expense
   
Balance
   
Rates/Yields
   
Expense
   
Volume
   
Rate
   
Total
 
Loans, net of unearned interest (2) (3)
  $ 1,898,772       5.11 %     94,917     $ 1,727,499       4.84 %     83,120     $ 7,623       4,174       11,797  
Investment securities—taxable
    281,154       2.19       6,158       277,511       1.94       5,397       72       689       761  
Investment securities—tax exempt
    40,675       2.51       1,020       61,868       1.95       1,208       (478 )     290       (188 )
Taxable equivalent adjustment (1)
          0.66       271             1.01       622       (187 )     (164 )     (351 )
Total tax-exempt investment securities
    40,675       3.17       1,291       61,868       2.96       1,830       (665 )     126       (539 )
Total investment securities
    321,829       2.31       7,449       339,379       2.13       7,227       (593 )     815       222  
Loans held for sale
    5,343       3.44       184       8,657       3.74       324       (116 )     (24 )     (140 )
Federal funds sold
    4,801       1.73       83       10,475       0.93       97       (70 )     56       (14 )
Interest bearing deposits
    55,911       1.75       979       77,606       0.93       723       (245 )     501       256  
Restricted equity securities
    3,012       6.11       184       3,012       5.01       151             33       33  
Total earning assets
    2,289,668       4.62       103,796       2,166,628       4.25       91,642       6,599       5,555       12,154  
Cash and due from banks
    17,820                       10,581                                          
Allowance for loan losses
    (25,365 )                     (23,174 )                                        
Bank premises and equipment
    57,712                       48,888                                          
Other assets
    70,071                       68,125                                          
Total assets
  $ 2,409,906                     $ 2,271,048                                          
 
15

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
   
Dollars In Thousands
 
   
2018
   
2017
   
2018/2017 Change
 
   
Average
           
Income/
   
Average
           
Income/
   
Due to
   
Due to
         
   
Balance
   
Rates/Yields
   
Expense
   
Balance
   
Rates/Yields
   
Expense
   
Volume
   
Rate
   
Total
 
Deposits:
                                                                       
Negotiable order of withdrawal accounts
  $ 503,312       0.36 %     1,823     $ 478,691       0.27       1,308     $ 70       445       515  
Money market demand accounts
    668,007       0.52       3,487       635,072       0.26       1,681       91       1,715       1,806  
Time deposits
    556,054       1.43       7,944       519,732       1.03       5,353       396       2,195       2,591  
Other savings deposits
    139,664       0.53       744       132,557       0.40       530       29       185       214  
Total interest-bearing deposits
    1,867,037       0.75       13,998       1,766,052       0.50       8,872       586       4,540       5,126  
Securities sold under repurchase agreements
    1,090       1.47       16       1,382       0.65       9       (2 )     9       7  
Federal funds purchased
    588       0.68       4       1,176       0.68       8       (4 )           (4 )
Total interest-bearing liabilities
    1,868,715       0.75       14,018       1,768,610       0.50       8,889       580       4,549       5,129  
Demand deposits
    250,328                       231,409                                          
Other liabilities
    12,342                       11,352                                          
Stockholders’ equity
    278,521                       259,677                                          
Total liabilities and stockholders’ equity
  $ 2,409,906                     $ 2,271,048                                          
Net interest income
                    89,778                       82,753                          
Net yield on earning assets (4)
            4.01 %                     3.84 %                                
Net interest spread (5)
            3.87 %                     3.75 %                                
 
 
(1)
The tax equivalent adjustment for 2018 has been computed using a 21% Federal tax rate; whereas, 2017 has been computed using a 34% Federal tax rate.
 
(2)
Yields on loans and total earning assets include the impact of State income tax credits related incentive loans at below market rates and tax exempt loans to municipalities.
  (3) Loan fees of $7.4 million and $6.8 million are included in interest income in 2018 and 2017.
  (4) Annualized net interest income on a tax equivalent basis divided by average interest-earning assets.
  (5) Average interest rate on interest-earning assets less average interest rate on interest-bearing liabilities.
 
 
16

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
II.
Investment Portfolio:
 
A.    Investment securities at December 31, 2019 consist of the following:
 
   
Securities Available-For-Sale
 
   
(In Thousands)
 
           
Gross
   
Gross
   
Estimated
 
   
Amortized
   
Unrealized
   
Unrealized
   
Market
 
   
Cost
   
Gains
   
Losses
   
Value
 
U.S. Government-sponsored enterprises (GSEs)
  $ 59,735       48       204       59,579  
Mortgage-backed securities
    265,648       2,300       635       267,313  
Asset-backed securities
    27,531       1       303       27,229  
Obligations of states and political subdivisions
    67,293       559       828       67,024  
    $ 420,207       2,908       1,970       421,145  
 
17

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
II.
Investment Portfolio, Continued:
 
A.    Investment securities at December 31, 2018 consist of the following, continued:
 
   
Securities Available-For-Sale
 
   
(In Thousands)
 
           
Gross
   
Gross
   
Estimated
 
   
Amortized
   
Unrealized
   
Unrealized
   
Market
 
   
Cost
   
Gains
   
Losses
   
Value
 
U.S. Government-sponsored enterprises (GSEs)
  $ 71,446             2,979       68,467  
Mortgage-backed securities
    152,375       9       4,874       147,510  
Asset-backed securities
    22,534       10       844       21,700  
Obligations of states and political subdivisions
    49,328       22       1,775       47,575  
    $ 295,683       41       10,472       285,252  
 
18

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
II.
Investment Portfolio, Continued:
    
A.    Investment securities at December 31, 2017 consist of the following, continued:
 
   
Securities Held-To-Maturity
 
   
(In Thousands)
 
           
Gross
   
Gross
   
Estimated
 
   
Amortized
   
Unrealized
   
Unrealized
   
Market
 
   
Cost
   
Gains
   
Losses
   
Value
 
Mortgage-backed securities
  $ 9,886       31       156       9,761  
Obligations of states and political subdivisions
    22,594       66       310       22,350  
    $ 32,480       97       466       32,111  
 
 
   
Securities Available-For-Sale
 
   
(In Thousands)
 
           
Gross
   
Gross
   
Estimated
 
   
Amortized
   
Unrealized
   
Unrealized
   
Market
 
   
Cost
   
Gains
   
Losses
   
Value
 
U.S. Government-sponsored enterprises (GSEs)
  $ 74,690       4       1,714       72,980  
Mortgage-backed securities
    200,175       302       2,551       197,926  
Asset-backed securities
    26,387             789       25,598  
Obligations of states and political subdivisions
    37,197       7       992       36,212  
    $ 338,449       313       6,046       332,716  
 
19

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
II.
Investment Portfolio, Continued:    
     
 
B.
The following schedule details the contractual maturities and weighted average yields of investment securities of the Company. Actual maturities may differ from contractual maturities of mortgage and asset-backed securities because the mortgages or other assets underlying such securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories noted below as of December 31, 2019:
 
Available-For-Sale Securities
  Amortized Cost     Estimated Market Value     Weighted Average Yields  
   
(In Thousands, Except Yields)
 
Mortgage and asset-backed securities
  $ 293,179       294,542       2.33 %
U.S. Government-sponsored enterprises (GSEs):
                       
Less than one year
                 
One to three years
    8,950       8,944       1.77  
Three to five years
    8,746       8,737       1.96  
Five to ten years
    35,505       35,402       2.41  
More than ten years
    6,534       6,496       2.65  
Total U.S. Government-sponsored enterprises (GSEs)
    59,735       59,579       2.27  
Obligations of states and political subdivisions*:
                       
Less than one year
    472       471       1.54  
One to three years
                 
Three to five years
    636       638       2.25  
Five to ten years
    21,121       21,220       2.39  
More than ten years
    45,064       44,695       3.24  
Total obligations of states and political subdivisions
    67,293       67,024       2.95  
Total available-for-sale securities
  $ 420,207       421,145       2.42 %
 
*
Weighted average yield is stated on a tax-equivalent basis, assuming a weighted average Federal income tax rate of 21%.
 
20

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
III.
Loan Portfolio:
 
A.    Loan Types
 
The following schedule details the loans of the Company at December 31, 2019, 2018, 2017, 2016 and 2015:
 
   
In Thousands
 
   
2019
   
2018
   
2017
   
2016
   
2015
 
Commercial, financial and agricultural
  $ 108,883     $ 89,554       59,266       50,437       41,036  
Real estate—construction
    425,185       518,245       392,039       297,315       275,319  
Real estate—mortgage
    1,504,140       1,393,641       1,263,696       1,303,918       1,110,989  
Installment
    54,834       48,759       43,540       44,755       43,770  
Total loans
    2,093,042       2,050,199       1,758,541       1,696,425       1,471,114  
Deferred loan fees
    (7,141 )     (7,020 )     (7,379 )     (6,606 )     (5,035 )
Total loans, net of deferred fees
    2,085,901       2,043,179       1,751,162       1,689,819       1,466,079  
Less allowance for loan losses
    (28,726 )     (27,174 )     (23,909 )     (22,731 )     (22,900 )
Net loans
  $ 2,057,175     $ 2,016,005       1,727,253       1,667,088       1,443,179  
 
21

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
III.
Loan Portfolio, Continued:
 
B.    Maturities and Sensitivities of Loans to Changes in Interest Rates
 
The following table classifies the Company's fixed and variable rate loans at December 31, 2019 according to contractual maturities of: (1) one year or less, (2) after one year through five years, and (3) after five years. The table also classifies the Company's variable rate loans pursuant to the contractual repricing dates of the underlying loans (dollars in thousands):
 
   
Amounts at December 31, 2019
         
   
 
   
 
           
At December 31,
 
   
Fixed Rates
   
Variable Rates
   
Totals
   
2019
 
Based on contractual maturity:
                               
Due within one year
  $ 205,817       70,290       276,107       13.2 %
Due in one year to five years
    166,766       139,425       306,191       14.6  
Due after five years
    79,468       1,431,276       1,510,744       72.2  
Totals
  $ 452,051       1,640,991       2,093,042       100.0 %
Based on contractual repricing dates:
                               
Daily floating rate
  $       26,546       26,546       1.3 %
Due within one year
    205,817       494,487       700,304       33.4  
Due in one year to five years
    166,766       956,947       1,123,713       53.7  
Due after five years
    79,468       163,011       242,479       11.6  
Totals
  $ 452,051       1,640,991       2,093,042       100.0 %
 
The following table represents the contractual maturities of the loan portfolio as of December 31, 2019 (dollars in thousands):
 
   
Due Within One
   
Due in One to Five
   
Due After Five
         
   
Year
   
Years
   
Years
   
Total
 
Commercial, financial and agricultural
  $ 16,790       45,425       46,668       108,883  
Real estate—construction
    157,530       95,982       171,673       425,185  
Real estate—mortgage
    84,418       136,514       1,283,208       1,504,140  
Installment
    17,369       28,271       9,194       54,834  
    $ 276,107       306,192       1,510,743       2,093,042  
 
22

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
III.
Loan Portfolio, Continued:
 
C.    Risk Elements
 
The following schedule details selected information as to non-performing loans of the Company at December 31, 2019, 2018, 2017, 2016 and 2015:
 
   
In Thousands, Except Percentages
 
   
2019
   
2018
   
2017
   
2016
   
2015
 
Non-accrual loans:
                                       
Commercial, financial and agricultural
  $                          
Real estate—construction
                             
Real estate—mortgage
    2,610       2,050       2,039       3,565       4,909  
Installment
                1              
Total non-accrual
  $ 2,610       2,050       2,040       3,565       4,909  
Loans 90 days past due still accruing:
                                       
Commercial, financial and agricultural
  $       24             14       41  
Real estate—construction
    594       32       113       22        
Real estate—mortgage
    1,867       1,058       716       1,642       1,883  
Installment
    46       95       148       129       54  
Total loans 90 days past due still accruing   $ 2,507       1,209       977       1,807       1,978  
Troubled debt restructurings, excluding those included in non-accrual above
  $ 2,886       2,492       4,084       4,596       4,104  
Total non-performing loans
  $ 8,003       5,751       7,101       9,968       10,991  
Total loans, net of deferred fees
  $ 2,085,901       2,043,179       1,751,162       1,689,819       1,466,079  
Percentage of total non-performing loans to total loans outstanding, net of deferred fees
    0.38 %     0.28       0.41       0.59       0.75  
Other real estate owned
  $ 697       1,357       1,635       4,527       5,410  
 
23

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
III.
Loan Portfolio, Continued:
 
C.Risk Elements, Continued:
 
The accrual of interest income is discontinued when it is determined that collection of interest is less than probable or the collection of any amount of principal is doubtful. The decision to place a loan on a non-accrual status is based on an evaluation of the borrower’s financial condition, collateral liquidation value, economic and business conditions and other factors that affect the borrower’s ability to pay. At the time a loan is placed on a non-accrual status, the accrued but unpaid interest is also evaluated as to collectability. If collectability is doubtful, the unpaid interest is charged off. Thereafter, interest on non-accrual loans is recognized only as received. Non-accrual loans totaled $2,610,000 at December 31, 2019, $2,050,000 at December 31, 2018, $2,040,000 at December 31, 2017, $3,565,000 at December 31, 2016 and $4,909,000 at December 31, 2015. The additional interest income on non-accrual loans that would have been recorded for the year ended December 31, 2019 if the loans had been current totaled $85,000 compared to $210,000 in 2018, $117,000 in 2017, $202,000 in 2016 and $291,000 in 2015. The amount of interest and fee income recognized on total loans during 2019 totaled $105,783,000 as compared to $94,917,000 in 2018, $83,120,000 in 2017, $77,024,000 in 2016 and $71,543,000 in 2015.
 
At December 31, 2019, loans, which include the above non-accrual loans, totaling $10,651,000 were included in the Company’s internal classified loan list. Of these loans $10,432,000 are real estate secured and $219,000 are secured by various other types of collateral. The value collateralizing these loans is estimated by management to be approximately $18,814,000 ($18,631,000 related to real property securing real estate loans and $183,000 related to the various other types of loans). Such loans are listed as classified when information obtained about possible credit problems of the borrowers has prompted management to question the ability of the borrower to comply with the repayment terms of the loan agreement. The loan classifications do not represent or result from trends or uncertainties which management expects will materially impact future operating results, liquidity or capital resources.
 
At December 31, 2019, real estate construction and mortgage loans made up 20.3% and 71.9%, respectively, of the Company’s loan portfolio.
 
At December 31, 2019 and 2018, other real estate owned totaled $697,000 and $1,357,000 , respectively.
 
There were no material amounts of other interest-bearing assets (interest-bearing deposits with other banks, municipal bonds, etc.) at December 31, 2019 which would be required to be disclosed as past due, non-accrual, restructured or potential problem loans, if such interest-bearing assets were loans.
 
24

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
IV.
Summary of Loan Loss Experience:
 
The following schedule details selected information related to the allowance for loan loss account of the Company at December 31, 2019, 2018, 2017, 2016 and 2015 and for the years then ended:
 
   
In Thousands, Except Percentages
 
   
2019
   
2018
   
2017
   
2016
   
2015
 
Allowance for loan losses at beginning of period
  $ 27,174       23,909       22,731       22,900       22,572  
Charge-offs:
                                       
Commercial, financial and agricultural
    (15 )           (16 )     (11 )      
Real estate – construction
          (19 )           (66 )     (26 )
Real estate – mortgage
    (188 )     (492 )     (132 )     (209 )     (414 )
Installment
    (1,160 )     (1,152 )     (1,074 )     (674 )     (664 )
      (1,363 )     (1,663 )     (1,222 )     (960 )     (1,104 )
Recoveries:
                                       
Commercial, financial and agricultural
    15       3       6       15       7  
Real estate – construction
    423       88       121       34       39  
Real estate – mortgage
    74       116       174       131       767  
Installment
    363       423       418       232       231  
      875       630       719       412       1,044  
Net loan charge-offs
    (488 )     (1,033 )     (503 )     (548 )     (60 )
Provision for loan losses charged to expense
    2,040       4,298       1,681       379       388  
Allowance for loan losses at end of period
  $ 28,726       27,174       23,909       22,731       22,900  
Total loans, net of deferred fees, at end of year
  $ 2,085,901       2,043,179       1,751,162       1,689,819       1,466,079  
Average total loans outstanding, net of deferred fees, during year
  $ 2,030,861       1,898,772       1,727,499       1,571,528       1,418,561  
Net charge-offs as a percentage of average total loans outstanding, net of deferred fees, during year
    0.02 %     0.05       0.03       0.04       0.01  
Ending allowance for loan losses as a percentage of total loans outstanding net of deferred fees, at end of year
    1.38 %     1.33       1.37       1.35       1.56  
 
25

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
 IV.    Summary of Loan Loss Experience, Continued:
 
The allowance for loan losses is an amount that management believes will be adequate to absorb possible losses on existing loans that may become uncollectible. The provision for loan losses charged to operating expense is based on past loan loss experience and other factors which, in management’s judgment, deserve current recognition in estimating possible loan losses. Such other factors considered by management include growth and composition of the loan portfolio, review of specific problem loans, the relationship of the allowance for loan losses to outstanding loans, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral and current economic conditions that may affect the borrower’s ability to pay.
 
Management conducts a continuous review of all loans that are delinquent, previously charged down or which are determined to be potentially uncollectible. Loan classifications are reviewed periodically by a person independent of the lending function. The Board of Directors of the Company periodically reviews the adequacy of the allowance for loan losses.
 
The following detail provides a breakdown of the allocation of the allowance for loan losses:
 
   
December 31, 2019
   
December 31, 2018
 
           
Percent of
           
Percent of
 
           
Loans In
           
Loans In
 
   
In
   
Each Category
   
In
   
Each Category
 
   
Thousands
   
To Total Loans
   
Thousands
   
To Total Loans
 
Commercial, financial and agricultural
  $ 1,058       5.2 %   $ 682       4.3 %
Real estate—construction
    5,997       20.3       7,084       25.3  
Real estate—mortgage
    20,574       71.9       18,601       68.0  
Installment
    1,097       2.6       807       2.4  
    $ 28,726       100 %   $ 27,174       100 %
 
   
December 31, 2017
   
December 31, 2016
 
           
Percent of
           
Percent of
 
           
Loans In
           
Loans In
 
   
In
   
Each Category
   
In
   
Each Category
 
   
Thousands
   
To Total Loans
   
Thousands
   
To Total Loans
 
Commercial, financial and agricultural
  $ 411       3.4 %   $ 386       3.0 %
Real estate—construction
    6,094       22.3       5,387       17.5  
Real estate—mortgage
    16,738       71.9       16,396       76.9  
Installment
    666       2.4       562       2.6  
    $ 23,909       100 %   $ 22,731       100 %
 
   
December 31, 2015
 
           
Percent of
 
           
Loans In
 
   
In
   
Each Category
 
   
Thousands
   
To Total Loans
 
Commercial, financial and agricultural
  $ 339       2.8 %
Real estate—construction
    5,136       18.7  
Real estate—mortgage
    16,983       75.5  
Installment
    442       3.0  
    $ 22,900       100 %
 
26

 
 
WILSON BANK HOLDING COMPANY
Form 10-K
December 31, 2019
 
V.
Deposits:
 
The average amounts and average interest rates for deposits for 2019, 2018 and 2017 are detailed in the following schedule:
 
   
2019
   
2018
   
2017
 
   
Average
           
Average
           
Average
         
   
Balance
           
Balance
           
Balance
         
   
In
   
Average
   
In
   
Average
   
In
   
Average
 
   
Thousands
   
Rate
   
Thousands
   
Rate
   
Thousands
   
Rate
 
Non-interest bearing deposits
  $ 270,136       %   $ 250,328       %   $ 231,409       %
Negotiable order of withdrawal accounts
    526,026       0.44       503,312       0.36       478,691       0.27  
Money market demand accounts
    749,366       0.80       668,007       0.52       635,072       0.26  
Time deposits
    642,513       2.01       556,054       1.43       519,732       1.03  
Other savings
    136,912       0.60       139,664       0.53       132,557       0.40  
    $ 2,324,953