SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| ☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017
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 0-24751
SALISBURY BANCORP, INC.
(Exact name of registrant as specified in its charter)
| Connecticut | 06-1514263 | |
| (State or other jurisdiction | (I.R.S. Employer | |
| of incorporation or organization) | Identification No.) | |
| 5 Bissell Street, Lakeville, CT | 06039 | |
| (Address of principal executive offices) | (Zip code) |
(860) 435-9801
(Registrant's telephone number, including area code)
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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” , and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☑ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
The number of shares of Common Stock outstanding as of November 14, 2017 is 2,785,916.
TABLE OF CONTENTS
| Page | ||||||
| PART I. FINANCIAL INFORMATION | ||||||
| Item 1. | Financial Statements as of SEPTEMBER 30, 2017 (unaudited) and DECEMBER 31, 2016: | |||||
| CONSOLIDATED BALANCE SHEETS (unaudited) | 3 | |||||
| CONSOLIDATED STATEMENTS OF INCOME (unaudited) | 4 | |||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | 5 | |||||
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) | 5 | |||||
CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited) | 6 | |||||
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | 8 | |||||
| Item 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 32 | ||||
| Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 49 | ||||
| Item 4. | CONTROLS AND PROCEDURES | 50 | ||||
| PART II. OTHER INFORMATION 50 | ||||||
| Item 1. | LEGAL PROCEEDINGS | 51 | ||||
| Item 1A. | RISK FACTORS | 51 | ||||
| Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 51 | ||||
| Item 3. | DEFAULTS UPON SENIOR SECURITIES | 51 | ||||
| Item 4. | MINE SAFETY DISCLOSURES | 51 | ||||
| Item 5. | OTHER INFORMATION | 51 | ||||
| Item 6. | EXHIBITS | 51 | ||||
| SIGNATURES | 52 | |||||
| 2 |
PART I - FINANCIAL INFORMATION
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS (unaudited)
| (in thousands, except share data) | September 30, 2017 | December 31, 2016 | ||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 6,833 | $ | 5,434 | ||||
| Interest bearing demand deposits with other banks | 42,570 | 30,051 | ||||||
| Total cash and cash equivalents | 49,403 | 35,485 | ||||||
| Securities | ||||||||
| Available-for-sale at fair value | 85,508 | 79,623 | ||||||
| Federal Home Loan Bank of Boston stock at cost | 3,038 | 3,211 | ||||||
| Loans held-for-sale | 561 | — | ||||||
| Loans receivable, net (allowance for loan losses: $6,494 and $6,127) | 784,136 | 763,184 | ||||||
| Other real estate owned | 3,944 | 3,773 | ||||||
| Bank premises and equipment, net | 16,329 | 14,398 | ||||||
| Goodwill | 13,815 | 12,552 | ||||||
| Intangible assets (net of accumulated amortization: $3,906 and $3,511) | 1,974 | 1,737 | ||||||
| Accrued interest receivable | 2,520 | 2,424 | ||||||
| Cash surrender value of life insurance policies | 14,297 | 14,038 | ||||||
| Deferred taxes | 1,326 | 1,367 | ||||||
| Other assets | 2,618 | 3,574 | ||||||
| Total Assets | $ | 979,469 | $ | 935,366 | ||||
| LIABILITIES and SHAREHOLDERS' EQUITY | ||||||||
| Deposits | ||||||||
| Demand (non-interest bearing) | $ | 225,496 | $ | 218,420 | ||||
| Demand (interest bearing) | 139,521 | 127,854 | ||||||
| Money market | 196,745 | 182,476 | ||||||
| Savings and other | 152,570 | 135,435 | ||||||
| Certificates of deposit | 117,657 | 117,585 | ||||||
| Total deposits | 831,989 | 781,770 | ||||||
| Repurchase agreements | 4,529 | 5,535 | ||||||
| Federal Home Loan Bank of Boston advances | 27,364 | 37,188 | ||||||
| Subordinated debt | 9,805 | 9,788 | ||||||
| Note payable | 321 | 344 | ||||||
| Capital lease liability | 1,859 | 418 | ||||||
| Accrued interest and other liabilities | 6,076 | 6,316 | ||||||
| Total Liabilities | 881,943 | 841,359 | ||||||
| Shareholders' Equity | ||||||||
| Common stock - $.10 per share par value | ||||||||
| Authorized: 5,000,000; | ||||||||
| Issued: 2,785,916 and 2,758,086 | 279 | 276 | ||||||
| Paid-in capital | 42,983 | 42,085 | ||||||
| Retained earnings | 54,368 | 51,521 | ||||||
| Unearned compensation - restricted stock awards | (660 | ) | (352 | ) | ||||
| Accumulated other comprehensive income | 556 | 477 | ||||||
| Total Shareholders' Equity | 97,526 | 94,007 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 979,469 | $ | 935,366 | ||||
| 3 |
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| Periods ended September 30, (in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Interest and dividend income | ||||||||||||||||
| Interest and fees on loans | $ | 8,196 | $ | 8,067 | $ | 24,544 | $ | 23,935 | ||||||||
| Interest on debt securities | ||||||||||||||||
| Taxable | 443 | 310 | 1,115 | 889 | ||||||||||||
| Tax exempt | 68 | 202 | 345 | 725 | ||||||||||||
| Other interest and dividends | 175 | 91 | 351 | 226 | ||||||||||||
| Total interest and dividend income | 8,882 | 8,670 | 26,355 | 25,775 | ||||||||||||
| Interest expense | ||||||||||||||||
| Deposits | 682 | 565 | 1,776 | 1,603 | ||||||||||||
| Repurchase agreements | 2 | 2 | 4 | 4 | ||||||||||||
| Capital lease | 29 | 17 | 66 | 53 | ||||||||||||
| Note payable | 6 | 6 | 13 | 15 | ||||||||||||
| Subordinated debt | 156 | 156 | 468 | 468 | ||||||||||||
| Federal Home Loan Bank of Boston advances | 241 | 237 | 769 | 714 | ||||||||||||
| Total interest expense | 1,116 | 983 | 3,096 | 2,857 | ||||||||||||
| Net interest and dividend income | 7,766 | 7,687 | 23,259 | 22,918 | ||||||||||||
| Provision for loan losses | 237 | 344 | 953 | 1,332 | ||||||||||||
| Net interest and dividend income after provision for loan losses | 7,529 | 7,343 | 22,306 | 21,586 | ||||||||||||
| Non-interest income | ||||||||||||||||
| Trust and wealth advisory | 874 | 849 | 2,620 | 2,517 | ||||||||||||
| Service charges and fees | 935 | 822 | 2,799 | 2,277 | ||||||||||||
| Gains on sales of mortgage loans, net | 25 | 55 | 104 | 151 | ||||||||||||
| Mortgage servicing, net | 104 | 40 | 180 | 119 | ||||||||||||
| Gains (losses) on sales and calls of available-for-sale securities, net | — | 9 | (14 | ) | 157 | |||||||||||
| Other | 142 | 113 | 365 | 343 | ||||||||||||
| Total non-interest income | 2,080 | 1,888 | 6,054 | 5,564 | ||||||||||||
| Non-interest expense | ||||||||||||||||
| Salaries | 2,829 | 2,757 | 8,266 | 8,018 | ||||||||||||
| Employee benefits | 1,004 | 924 | 2,923 | 2,922 | ||||||||||||
| Premises and equipment | 995 | 809 | 2,797 | 2,546 | ||||||||||||
| Data processing | 545 | 473 | 1,521 | 1,369 | ||||||||||||
| Professional fees | 481 | 459 | 1,962 | 1,403 | ||||||||||||
| Collections, OREO, and loan related | 419 | 109 | 875 | 420 | ||||||||||||
| FDIC insurance | 106 | 164 | 354 | 474 | ||||||||||||
| Marketing and community support | 220 | 144 | 623 | 524 | ||||||||||||
| Amortization of intangibles | 142 | 148 | 395 | 455 | ||||||||||||
| Other | 479 | 513 | 1,561 | 1,846 | ||||||||||||
| Total non-interest expense | 7,220 | 6,500 | 21,277 | 19,977 | ||||||||||||
| Income before income taxes | 2,389 | 2,731 | 7,083 | 7,173 | ||||||||||||
| Income tax provision | 695 | 812 | 1,903 | 2,008 | ||||||||||||
| Net income | $ | 1,694 | $ | 1,919 | $ | 5,180 | $ | 5,165 | ||||||||
| Net income available to common stock | $ | 1,678 | $ | 1,904 | $ | 5,139 | $ | 5,124 | ||||||||
| Basic earnings per common share | $ | 0.61 | $ | 0.70 | $ | 1.87 | $ | 1.88 | ||||||||
| Weighted average common shares outstanding, to calculate basic earnings per share | 2,759 | 2,737 | 2,755 | 2,732 | ||||||||||||
| Diluted earnings per common share | $ | 0.60 | $ | 0.69 | $ | 1.85 | $ | 1.87 | ||||||||
| Weighted average common shares outstanding, to calculate diluted earnings per share | 2,779 | 2,751 | 2,774 | 2,747 | ||||||||||||
| Common dividends per share | $ | 0.28 | $ | 0.28 | $ | 0.84 | $ | 0.84 | ||||||||
| 4 |
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| Periods ended September 30, (in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net income | $ | 1,694 | $ | 1,919 | $ | 5,180 | $ | 5,165 | ||||||||
| Other comprehensive (loss) income | ||||||||||||||||
| Net unrealized (losses) gains on securities available-for-sale | (16 | ) | (332 | ) | 106 | (211 | ) | |||||||||
| Reclassification of net realized (gains) losses and write-downs in net income (1) | — | (10 | ) | 14 | (157 | ) | ||||||||||
| Unrealized (losses) gains on securities available-for-sale | (16 | ) | (342 | ) | 120 | (368 | ) | |||||||||
| Income tax benefit (expense) | 5 | 116 | (41 | ) | 126 | |||||||||||
| Other comprehensive (loss) income | (11 | ) | (226 | ) | 79 | (242 | ) | |||||||||
| Comprehensive income | $ | 1,683 | $ | 1,693 | $ | 5,259 | $ | 4,923 | ||||||||
(1) Reclassification adjustments include realized security gains and losses. The gains and losses have been reclassified out of other comprehensive income (loss) and have affected certain lines in the consolidated statements of income as follows: The pre-tax amount is reflected as gains on sales and calls of available-for-sale securities, net, the tax effect is included in the income tax provision and the after tax amount is included in net income. The net tax effect for the three months ending September 30, 2017 and 2016 are $0 thousand and ($3) thousand, respectively. The net tax effect for the nine months ending September 30, 2017 and 2016 are $5 thousand and ($53) thousand, respectively.
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) Nine months ended September 30, 2017 and 2016
| (dollars in thousands) | Common Stock | Paid-in capital | Retained earnings | Unearned compensation restricted stock awards | Accumulated other comp- rehensive income | Total shareholders' equity | ||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||
| Balances at December 31, 2015 | 2,733,576 | $ | 273 | $ | 41,364 | $ | 47,922 | $ | (110 | ) | $ | 1,125 | $ | 90,574 | ||||||||||||||
| Net income for period | — | — | — | 5,165 | — | — | 5,165 | |||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | (242 | ) | (242 | ) | |||||||||||||||||||
| Common stock dividends declared | — | — | — | (2,314 | ) | — | — | (2,314 | ) | |||||||||||||||||||
| Stock options exercised | 4,050 | — | 87 | — | — | — | 87 | |||||||||||||||||||||
| Issuance of restricted common stock | 15,800 | 2 | 464 | — | (466 | ) | — | — | ||||||||||||||||||||
| Forfeiture of restricted common stock | (100 | ) | — | (3 | ) | — | 3 | — | — | |||||||||||||||||||
| Issuance of vested common stock for directors | 4,760 | 1 | 141 | — | — | — | 142 | |||||||||||||||||||||
| Stock based compensation-restricted stock awards | — | — | — | — | 142 | — | 142 | |||||||||||||||||||||
| Balances at September 30, 2016 | 2,758,086 | $ | 276 | $ | 42,053 | $ | 50,773 | $ | (431 | ) | $ | 883 | $ | 93,554 | ||||||||||||||
| Balances at December 31, 2016 | 2,758,086 | $ | 276 | $ | 42,085 | $ | 51,521 | $ | (352 | ) | $ | 477 | $ | 94,007 | ||||||||||||||
| Net income for period | — | — | — | 5,180 | — | — | 5,180 | |||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | 79 | 79 | |||||||||||||||||||||
| Common stock dividends declared | — | — | — | (2,333 | ) | — | — | (2,333 | ) | |||||||||||||||||||
| Stock options exercised | 12,150 | 1 | 311 | — | — | — | 312 | |||||||||||||||||||||
| Issuance of restricted common stock | 11,800 | 2 | 426 | — | (428 | ) | — | — | ||||||||||||||||||||
| Forfeiture of restricted common stock | (200 | ) | — | (3 | ) | — | 3 | — | — | |||||||||||||||||||
| Issuance of vested common stock for directors | 2,056 | — | 81 | — | — | — | 81 | |||||||||||||||||||||
| Issuance of director’s restricted stock awards | 2,024 | — | 83 | — | (83 | ) | — | — | ||||||||||||||||||||
| Stock based compensation-restricted stock awards | — | — | — | — | 200 | — | 200 | |||||||||||||||||||||
| Balances at September 30, 2017 | 2,785,916 | $ | 279 | $ | 42,983 | $ | 54,368 | $ | (660 | ) | $ | 556 | $ | 97,526 | ||||||||||||||
| 5 |
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| Nine months ended September 30, (in thousands) | 2017 | 2016 | ||||||
| Operating Activities | ||||||||
| Net income | $ | 5,180 | $ | 5,165 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| (Accretion), amortization and depreciation | ||||||||
| Securities | 116 | 204 | ||||||
| Bank premises and equipment | 979 | 889 | ||||||
| Core deposit intangible | 395 | 455 | ||||||
| Modification fees on Federal Home Loan Bank of Boston advances | 176 | 173 | ||||||
| Subordinated debt issuance costs | 17 | 18 | ||||||
| Mortgage servicing rights | 149 | 182 | ||||||
| Fair value adjustment on loans | (969 | ) | (1,429 | ) | ||||
| Fair value adjustment on deposits | (64 | ) | (97 | ) | ||||
| (Gains) and losses, including write-downs | ||||||||
| Loss and (gain) on sales and calls of securities available-for-sale, net | 14 | (157 | ) | |||||
| Gain on sales of loans, excluding capitalized servicing rights | (79 | ) | (152 | ) | ||||
| Write-downs of other real estate owned | 395 | — | ||||||
| Loss on sale/disposals of premises and equipment | 1 | 13 | ||||||
| Provision for loan losses | 953 | 1,332 | ||||||
| Proceeds from loans sold | 4,495 | 6,814 | ||||||
| Loans originated for sale | (4,977 | ) | (6,736 | ) | ||||
| Increase in deferred loan origination fees and costs, net | (38 | ) | (91 | ) | ||||
| Mortgage servicing rights originated | (53 | ) | (71 | ) | ||||
| (Decrease) increase in mortgage servicing rights impairment reserve | (24 | ) | 13 | |||||
| (Increase) decrease in interest receivable | (84 | ) | 47 | |||||
| (Increase) decrease in prepaid expenses | (59 | ) | 18 | |||||
| Increase in cash surrender value of life insurance policies | (259 | ) | (267 | ) | ||||
| Decrease in income tax receivable | 43 | 433 | ||||||
| Decrease in other assets | 920 | 218 | ||||||
| (Decrease) increase in accrued expenses | (384 | ) | 1,079 | |||||
| Increase (decrease) in interest payable | 157 | (125 | ) | |||||
| (Decrease) increase in other liabilities | (16 | ) | 1,310 | |||||
| Stock based compensation-restricted stock awards | 200 | 142 | ||||||
| Net cash provided by operating activities | 7,184 | 9,380 | ||||||
| Investing Activities | ||||||||
| Redemption of Federal Home Loan Bank of Boston stock, net of purchases | 173 | 239 | ||||||
| Purchases of securities available-for-sale | (36,654 | ) | (45,317 | ) | ||||
| Proceeds from sales of securities available-for-sale | — | 3,860 | ||||||
| Proceeds from calls of securities available-for-sale | 11,141 | 11,811 | ||||||
| Proceeds from maturities of securities available-for-sale | 19,618 | 29,125 | ||||||
| Loan originations and principal collections, net | (14,776 | ) | (57,351 | ) | ||||
| Recoveries of loans previously charged off | 232 | 111 | ||||||
| Proceeds from sales of other real estate owned | 177 | — | ||||||
| Capital expenditures | (1,306 | ) | (1,168 | ) | ||||
| Cash and cash equivalents acquired from acquisition | 22,387 | — | ||||||
| Net cash provided (utilized) by investing activities | 992 | (58,690 | ) | |||||
| Financing Activities | ||||||||
| Increase in deposit transaction accounts, net | 18,714 | 35,320 | ||||||
| Increase (decrease) in time deposits, net | 136 | (3,026 | ) | |||||
| Decrease in securities sold under agreements to repurchase, net | (1,006 | ) | (333 | ) | ||||
| Principal payments on Federal Home Loan Bank of Boston advances | (10,000 | ) | (18 | ) | ||||
| Principal payments on note payable | (23 | ) | (25 | ) | ||||
| Decrease in capital lease obligation | (139 | ) | (3 | ) | ||||
| Stock options exercised | 312 | 87 | ||||||
| Issuance of shares for directors’ fees | 81 | 142 | ||||||
| Common stock dividends paid | (2,333 | ) | (2,314 | ) | ||||
| Net cash provided by financing activities | 5,742 | 29,830 | ||||||
| Net increase (decrease) in cash and cash equivalents | 13,918 | (19,480 | ) | |||||
| Cash and cash equivalents, beginning of period | 35,485 | 62,118 | ||||||
| Cash and cash equivalents, end of period | $ | 49,403 | $ | 42,638 |
| 6 |
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| Cash paid during period | ||||||||
| Interest | $ | 2,810 | $ | 2,714 | ||||
| Income taxes | 1,958 | 842 | ||||||
| Non-cash transfers | ||||||||
| From loans to other real estate owned | 743 | 2,823 | ||||||
| Empire State Bank branch acquisition 2017 | ||||||||
| Cash and cash equivalents acquired | 22,387 | — | ||||||
| Net loans acquired | 7,097 | — | ||||||
| Fixed assets acquired (including capital leases) | 1,605 | — | ||||||
| Accrued interest receivable acquired | 12 | — | ||||||
| Other assets acquired | 20 | — | ||||||
| Core deposit intangible | 632 | — | ||||||
| Goodwill | 1,263 | — | ||||||
| Deposits assumed | 31,433 | — | ||||||
| Capital lease assumed | 1,580 | — | ||||||
| Other liabilities assumed | 3 | — |
| 7 |
Salisbury Bancorp, Inc. and Subsidiary
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The interim (unaudited) consolidated financial statements of Salisbury Bancorp, Inc. ("Salisbury") include those of Salisbury and its wholly owned subsidiary, Salisbury Bank and Trust Company (the "Bank"). In the opinion of management, the interim unaudited consolidated financial statements include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the consolidated financial position of Salisbury and the consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for the interim periods presented.
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). In preparing the financial statements, management is required to make extensive use of estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet, and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, expected cash flows from loans acquired in a business combination, other-than-temporary impairment of securities and impairment of goodwill and intangibles.
Certain financial information, which is normally included in financial statements prepared in accordance with generally accepted accounting principles, but which is not required for interim reporting purposes, has been condensed or omitted. Operating results for the interim period ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in Salisbury's 2016 Annual Report on Form 10-K for the year ended December 31, 2016.
The allowance for loan losses is a significant accounting policy and is presented in the Notes to Consolidated Financial Statements and in Management’s Discussion and Analysis, which provides information on how significant assets are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions and estimates underlying those amounts, management has identified the determination of the allowance for loan losses to be the accounting area that requires the most subjective judgments, and as such could be most subject to revision as new information becomes available.
Impact of New Accounting Pronouncements Issued
In May 2014, August 2015, May 2016, and December 2016, respectively, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, 2015-14, 2016-12, and 2016-20, “Revenue from Contracts with Customers (Topic 606).” The objective of ASU 2014-09 is to clarify principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The guidance in ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For public entities, the amendments in ASU 2015-14 defer the effective date of ASU 2014-09 to interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before the original effective date (i.e. interim and annual reporting periods beginning after December 15, 2016). The amendments in ASU 2016-12 do not change the core principle of the guidance in Topic 606, but rather affect only certain narrow aspects aimed to reduce the potential for diversity in practice at initial application and the cost and complexity of applying Topic 606 both at transition and on an ongoing basis. The amendments in ASU 2016-20 include technical corrections and improvements to Topic 606 and other Topics amended by ASU 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. Salisbury is currently reviewing ASU 2014-09, 2015-14, 2016-12, and 2016-20 to determine if they will have an impact on its consolidated financial statements.
| 8 |
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments –overall (subtopic 825-10): "Recognition and Measurement of Financial Assets and Financial Liabilities." This ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments by making targeted improvements to GAAP as follows: (1) require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer; (2) simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value; (3) eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (4) eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (5) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (6) require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (7) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (8) clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. ASU No. 2016-01 is effective for interim and annual reporting periods beginning after December 15, 2017. Early application is permitted as of the beginning of the fiscal year of adoption only for provisions (3) and (6) above. Early adoption of the other provisions mentioned above is not permitted. Salisbury does not expect ASU No. 2016-01 to have a material impact on the Company's Consolidated Financial Statements.
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)”. Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases): 1) a lease liability, which is the present value of a lessee's obligation to make lease payments, and 2) a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Lessor accounting under the new guidance remains largely unchanged as it is substantially equivalent to existing guidance for sales-type leases, direct financing leases, and operating leases. Leveraged leases have been eliminated, although lessors can continue to account for existing leveraged leases using the current accounting guidance. Other limited changes were made to align lessor accounting with the lessee accounting model and the new revenue recognition standard. All entities will classify leases to determine how to recognize lease-related revenue and expense. Quantitative and qualitative disclosures will be required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The intention is to require enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018; early adoption is permitted. All entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. They have the option to use certain relief; full retrospective application is prohibited. Salisbury is currently evaluating this ASU to determine the impact on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, “Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. Some of the key provisions of this new ASU include: (1) companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, and APIC pools will be eliminated. The guidance also eliminates the requirement that excess tax benefits be realized before companies can recognize them. In addition, the guidance requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity; (2) increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. The new guidance will also require an employer to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on its statement of cash flows (current guidance did not specify how these cash flows should be classified); and (3) permit companies to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. Salisbury has opted to recognize forfeitures as they occur as the impact is not expected to be material. ASU 2016-09 was effective for interim and annual reporting periods beginning after December 15, 2016. Salisbury adopted ASU 2016-09 as of January 1, 2017. Adoption contributed a $105 thousand benefit to the tax provision in the second quarter 2017 and did not have a material effect on the financial results for the nine month period ended September 30, 2017.
| 9 |
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which adds a new Topic 326 to the Codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all recognition thresholds and will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument’s contractual life. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale debt securities and beneficial interests in securitized financial assets. The guidance in ASU 2016-13 is effective for “public business entities,” as defined, that are SEC filers for fiscal years and for interim periods with those fiscal years beginning after December 15, 2019. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Salisbury is currently evaluating the provisions of ASU 2016-13 to determine the potential impact the new standard will have on Salisbury’s Consolidated Financial Statements.
In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments." This ASU is intended to reduce diversity in practice in how eight particular transactions are classified in the statement of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted, provided that all of the amendments are adopted in the same period. Entities will be required to apply the guidance retrospectively. If it is impracticable to apply the guidance retrospectively for an issue, the amendments related to that issue would be applied prospectively. As this guidance only affects the classification within the statement of cash flows, ASU 2016-15 is not expected to have a material impact on Salisbury’s Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business." The amendments in this ASU are intended to add guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this ASU provide a screen to determine when a set of input, processes, and outputs is not a business and provides a framework to assist entities in evaluating whether both an input and a substantive process are present. ASU 2017-01 is effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance, or for transactions in which a subsidiary is deconsolidated or a group of assets is derecognized that occur before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. Entities should apply the guidance prospectively on or after the effective date. Salisbury is currently evaluating the provisions of ASU 2017-01 to determine the potential impact the new standard will have on Salisbury’s Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU is intended to allow companies to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for public business entities that are SEC filers for fiscal years beginning after December 15, 2019 and interim periods within those years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Entities should apply the guidance prospectively. Salisbury is currently evaluating the provisions of ASU 2017-04 to determine the potential impact the new standard will have on Salisbury’s Consolidated Financial Statements.
In March 2017, the FASB issued ASU 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This ASU will amend the amortization period for certain purchased callable debt securities held at a premium. The Board is shortening the amortization period for the premium to the earliest call date. Under current generally accepted accounting principles, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. ASU 2017-08 is effective for public business entities for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. Entities should apply the guidance on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Salisbury is currently evaluating the provisions of ASU 2017-08 and does not expect that the adoption of the new standard will have a material impact on Salisbury’s Consolidated Financial Statements.
| 10 |
In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting.” This ASU will provide clarity in the accounting guidance regarding a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. Entities should apply the guidance prospectively to an award modified on or after the adoption date. Salisbury is currently evaluating the provisions of ASU 2017-09 and does not expect that the adoption of the new standard will have a material impact on Salisbury’s Consolidated Financial Statements.
NOTE 2 - SECURITIES
The composition of securities is as follows:
| (in thousands) | Amortized
cost basis (1) | Gross
un- realized gains | Gross
un- realized losses | Fair Value | ||||||||||||
| September 30, 2017 | ||||||||||||||||
| Available-for-sale | ||||||||||||||||
| Municipal bonds | $ | 4,611 | $ | 30 | $ | — | $ | 4,641 | ||||||||
| Mortgage-backed securities: | ||||||||||||||||
| U.S. Government agencies and U.S. Government-sponsored enterprises | 49,655 | 274 | 172 | 49,757 | ||||||||||||
| Collateralized mortgage obligations: | ||||||||||||||||
| U.S. Government agencies | 10,815 | 39 | 13 | 10,841 | ||||||||||||
| Non-agency | 2,464 | 420 | 16 | 2,868 | ||||||||||||
| SBA bonds | 12,767 | 59 | 10 | 12,816 | ||||||||||||
| CRA mutual funds | 847 | — | 7 | 840 | ||||||||||||
| Corporate bonds | 3,500 | 57 | — | 3,557 | ||||||||||||
| Preferred stock | 7 | 181 | — | 188 | ||||||||||||
| Total securities available-for-sale | $ | 84,666 | $ | 1,060 | $ | 218 | $ | 85,508 | ||||||||
| Non-marketable securities | ||||||||||||||||
| Federal Home Loan Bank of Boston stock | $ | 3,038 | $ | — | $ | — | $ | 3,038 | ||||||||
| (in thousands) |
|
Amortized cost basis (1) | Gross un- realized gains |
|
Gross un- realized losses | Fair Value | ||||||||||
| December 31, 2016 | ||||||||||||||||
| Available-for-sale | ||||||||||||||||
| Municipal bonds | $ | 15,800 | $ | 197 | $ | 1 | $ | 15,996 | ||||||||
| Mortgage-backed securities: | ||||||||||||||||
| U.S. Government agencies and U.S. Government- sponsored enterprises | 53,407 | 229 | 335 | 53,301 | ||||||||||||
| Collateralized mortgage obligations: | ||||||||||||||||
| U.S. Government agencies | 1,470 | 4 | — | 1,474 | ||||||||||||
| Non-agency | 3,327 | 414 | 6 | 3,735 | ||||||||||||
| SBA bonds | 2,056 | 9 | 1 | 2,064 | ||||||||||||
| CRA mutual funds | 834 | — | 16 | 818 | ||||||||||||
| Corporate bonds | 2,000 | 16 | 3 | 2,013 | ||||||||||||
| Preferred stock | 7 | 215 | — | 222 | ||||||||||||
| Total securities available-for-sale | $ | 78,901 | $ | 1,084 | $ | 362 | $ | 79,623 | ||||||||
| Non-marketable securities | ||||||||||||||||
| Federal Home Loan Bank of Boston stock | $ | 3,211 | $ | — | $ | — | $ | 3,211 | ||||||||
| (1) | Net of other-than-temporary impairment write-downs recognized in earnings. |
Salisbury did not sell any available-for-sale securities during the nine month period ended September 30, 2017. Salisbury sold $3.9 million in securities available-for-sale during the nine month period ended September 30, 2016 realizing a pre-tax gain of $148 thousand and related tax expense of $50 thousand.
| 11 |
The following table summarizes, for all securities in an unrealized loss position, including debt securities for which a portion of other-than-temporary impairment (OTTI) has been recognized in other comprehensive income (loss), the aggregate fair value and gross unrealized loss of securities that have been in a continuous unrealized loss position as of the dates presented:
| September 30, 2017 (in thousands) | Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
| Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||
| Available-for-sale | ||||||||||||||||||||||||
| Mortgage-backed securities | $ | 10,483 | $ | 56 | $ | 18,553 | $ | 116 | $ | 29,036 | $ | 172 | ||||||||||||
| Collateralized mortgage obligations: | ||||||||||||||||||||||||
| U.S. Government agencies | 4,810 | 13 | — | — | 4,810 | 13 | ||||||||||||||||||
| Non-agency | — | — | 118 | 3 | 118 | 3 | ||||||||||||||||||
| SBA bonds | 3,414 | 10 | — | — | 3,414 | 10 | ||||||||||||||||||
| Corporate bonds | 500 | — | — | — | 500 | — | ||||||||||||||||||
| CRA mutual funds | 840 | 7 | — | — | 840 | 7 | ||||||||||||||||||
| Total temporarily impaired securities | 20,047 | 86 | 18,671 | 119 | 38,718 | 205 | ||||||||||||||||||
| Other-than-temporarily impaired securities | ||||||||||||||||||||||||
| Collateralized mortgage obligations: | ||||||||||||||||||||||||
| Non-agency | 107 | 13 | — | — | 107 | 13 | ||||||||||||||||||
| Total temporarily impaired and other-than-temporarily impaired securities | $ | 20,154 | $ | 99 | $ | 18,671 | $ | 119 | $ | 38,825 | $ | 218 | ||||||||||||
| December 31, 2016 (in thousands) | Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
| Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||
| Available-for-sale | ||||||||||||||||||||||||
| Municipal bonds | $ | 517 | $ | 1 | $ | — | $ | — | $ | 517 | $ | 1 | ||||||||||||
| Mortgage-backed securities | 34,758 | 329 | 249 | 6 | 35,007 | 335 | ||||||||||||||||||
| Collateralized mortgage obligations: | ||||||||||||||||||||||||
| Non-agency | 60 | — | 339 | 5 | 399 | 5 | ||||||||||||||||||
| SBA bonds | 475 | 1 | — | — | 475 | 1 | ||||||||||||||||||
| CRA mutual funds | 818 | 16 | — | — | 818 | 16 | ||||||||||||||||||
| Corporate bonds | 498 | 3 | — | — | 498 | 3 | ||||||||||||||||||
| Total temporarily impaired securities | 37,126 | 350 | 588 | 11 | 37,714 | 361 | ||||||||||||||||||
| Other-than-temporarily impaired securities | ||||||||||||||||||||||||
| Collateralized mortgage obligations: | ||||||||||||||||||||||||
| Non-agency | 174 | 1 | — | — | 174 | 1 | ||||||||||||||||||
| Total temporarily impaired and other-than-temporarily impaired securities | $ | 37,300 | $ | 351 | $ | 588 | $ | 11 | $ | 37,888 | $ | 362 | ||||||||||||
The amortized cost, fair value and tax equivalent yield of securities, by maturity, are as follows:
| September 30, 2017 (in thousands) | Maturity | Amortized cost | Fair value | Yield(1) | ||||||||||
| Municipal bonds | Within 1 year | $ | 305 | $ | 306 | 6.26 | % | |||||||
| After 1 year but within 5 years | 491 | 495 | 5.10 | |||||||||||
| After 10 years but within 15 years | 1,839 | 1,852 | 7.01 | |||||||||||
| After 15 years | 1,976 | 1,988 | 6.94 | |||||||||||
| Total | 4,611 | 4,641 | 6.73 | |||||||||||
| Mortgage-backed securities | U.S. Government agency and U.S. Government-sponsored enterprises | 49,655 | 49,757 | 2.31 | ||||||||||
| Collateralized mortgage obligations | U.S. Government agency and U.S. Government-sponsored enterprises | 10,815 | 10,841 | 2.73 | ||||||||||
| Non-agency | 2,464 | 2,868 | 3.99 | |||||||||||
| SBA bonds | 12,767 | 12,816 | 3.02 | |||||||||||
| CRA mutual funds | 847 | 840 | 2.30 | |||||||||||
| Corporate bonds | After 5 years but within 10 years | 3,500 | 3,557 | 5.57 | ||||||||||
| Preferred stock | 7 | 188 | 5.49 | |||||||||||
| Securities available-for-sale | $ | 84,666 | $ | 85,508 | 2.89 | % | ||||||||
(1) Yield is based on amortized cost.
| 12 |
Salisbury evaluates securities for OTTI where the fair value of a security is less than its amortized cost basis at the balance sheet date. As part of this process, Salisbury considers whether it has the intent to sell each debt security and whether it is more likely than not that it will be required to sell the security before its anticipated recovery. If either of these conditions is met, Salisbury recognizes an OTTI charge to earnings equal to the entire difference between the security’s amortized cost basis and its fair value at the balance sheet date. For securities that meet neither of these conditions, an analysis is performed to determine if any of these securities are at risk for OTTI.
The following summarizes, by security type, the basis for evaluating if the applicable securities were OTTI at September 30, 2017.
U.S. Government agency mortgage-backed securities and collateralized mortgage obligations: The contractual cash flows are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Changes in fair values are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities. Furthermore, Salisbury evaluates these securities for strategic fit and may reduce its position in these securities, although it is not more likely than not that Salisbury will be required to sell these securities before recovery of their cost basis, which may be maturity, and does not intend to sell these securities. Therefore, management does not consider the twenty-four securities with unrealized losses at September 30, 2017 to be OTTI.
SBA bonds: The contractual cash flows are guaranteed by the U.S. government. Changes in fair values are a function of changes in investment spreads and interest rate movements and not changes in credit quality since time of purchase. Management expects to recover the entire amortized cost basis of these securities. Furthermore, Salisbury evaluates these securities for strategic fit and may reduce its position in these securities, although it is not more likely than not that Salisbury will be required to sell these securities before recovery of their cost basis, which may be maturity, and does not intend to sell these securities. Therefore, management evaluated the impairment status of these debt securities, and concluded that the gross unrealized losses on six positions were temporary in nature and does not consider these investments to be other-than temporarily impaired at September 30, 2017.
Corporate bonds: Salisbury regularly monitors and analyzes its corporate bond portfolio for credit quality. Management believes the unrealized loss position is attributable to interest rate and spread movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities. Furthermore, Salisbury evaluates these securities for strategic fit and may reduce its position in these securities, although it is not more likely than not that Salisbury will be required to sell these securities before recovery of their cost basis, which may be maturity, and does not intend to sell these securities. Therefore, management evaluated the impairment status of this debt security, and concluded that the gross unrealized loss was temporary in nature and does not consider this investment- to be other-than temporarily impaired at September 30, 2017.
Non-agency CMOs: Salisbury performed a detailed cash flow analysis of its non-agency CMOs at September 30, 2017, to assess whether any of the securities were OTTI. Salisbury uses cash flow forecasts for each security based on a variety of market driven assumptions and securitization terms, including prepayment speed, default or delinquency rate, and default severity for losses including interest, legal fees, property repairs, expenses and realtor fees, that, together with the loan amount are subtracted from collateral sales proceeds to determine severity. In 2009, Salisbury determined that five non-agency CMO securities reflected OTTI and recognized losses for deterioration in credit quality of $1,128,000. Salisbury judged the four remaining securities not to have additional OTTI and all other CMO securities not to be OTTI as of September 30, 2017. It is possible that future loss assumptions could change necessitating Salisbury to recognize future OTTI for further deterioration in credit quality. Salisbury evaluates these securities for strategic fit and depending upon such factor could reduce its position in these securities, although it has no present intention to do so, and it is not more likely than not that Salisbury will be required to sell these securities before recovery of their cost basis.
CRA mutual funds consist of an investment in a fixed income mutual fund ($840 thousand in total fair value and $7 thousand in total unrealized losses as of September 30, 2017). The severity of the impairment (fair value is approximately 0.83% less than cost) and the duration of the impairment correlates with interest rates in 2017. Salisbury evaluated the near-term prospects of this fund in relation to the severity and duration of the impairment. Based on that evaluation, Salisbury does not consider this investment to be OTTI at September 30, 2017.
The following table presents activity related to credit losses recognized into earnings on the non-agency CMOs held by Salisbury for which a portion of an OTTI charge was recognized in accumulated other comprehensive income:
| Nine months ended September 30 (in thousands) | 2017 | 2016 | ||||||
| Balance, beginning of period | $ | 1,128 | $ | 1,128 | ||||
| Credit component on debt securities in which OTTI was not previously recognized | — | — | ||||||
| Balance, end of period | $ | 1,128 | $ | 1,128 |
| 13 |
The Federal Home Loan Bank of Boston (FHLBB) is a cooperative that provides services, including funding in the form of advances, to its member banking institutions. As a requirement of membership, the Bank must own a minimum amount of FHLBB stock, calculated periodically based primarily on its level of borrowings from the FHLBB. No market exists for shares of the FHLBB and therefore, they are carried at par value. FHLBB stock may be redeemed at par value five years following termination of FHLBB membership, subject to limitations which may be imposed by the FHLBB or its regulator, the Federal Housing Finance Board, to maintain capital adequacy of the FHLBB. While the Bank currently has no intentions to terminate its FHLBB membership, the ability to redeem its investment in FHLBB stock would be subject to the conditions imposed by the FHLBB. Based on the capital adequacy and the liquidity position of the FHLBB, management believes there is no impairment related to the carrying amount of the Bank’s FHLBB stock as of September 30, 2017. Deterioration of the FHLBB’s capital levels may require the Bank to deem its restricted investment in FHLBB stock to be OTTI. If evidence of impairment exists in the future, the FHLBB stock would reflect fair value using either observable or unobservable inputs. The Bank will continue to monitor its investment in FHLBB stock.
NOTE 3 – LOANS
The composition of loans receivable and loans held-for-sale is as follows:
| September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
| (In thousands) | Business Activities Loans | Acquired Loans | Total | Business Activities Loans | Acquired Loans | Total | ||||||||||||||||||
| Residential 1-4 family | $ | 304,711 | $ | 5,626 | $ | 310,337 | $ | 295,030 | $ | 6,098 | $ | 301,128 | ||||||||||||
| Residential 5+ multifamily | 11,904 | 5,251 | 17,155 | 7,976 | 5,649 | 13,625 | ||||||||||||||||||
| Construction of residential 1-4 family | 11,582 | — | 11,582 | 10,951 | — | 10,951 | ||||||||||||||||||
| Home equity lines of credit | 35,529 | — | 35,529 | 35,487 | — | 35,487 | ||||||||||||||||||
| Residential real estate | 363,726 | 10,877 | 374,603 | 349,444 | 11,747 | 361,191 | ||||||||||||||||||
| Commercial | 180,055 | 67,306 | 247,361 | 155,628 | 79,854 | 235,482 | ||||||||||||||||||
| Construction of commercial | 8,444 | 809 | 9,253 | 3,481 | 1,917 | 5,398 | ||||||||||||||||||
| Commercial real estate | 188,499 | 68,115 | 256,614 | 159,109 | 81,771 | 240,880 | ||||||||||||||||||
| Farm land | 4,692 | — | 4,692 | 3,914 | — | 3,914 | ||||||||||||||||||
| Vacant land | 7,464 | — | 7,464 | 6,600 | — | 6,600 | ||||||||||||||||||
| Real estate secured | 564,381 | 78,992 | 643,373 | 519,067 | 93,518 | 612,585 | ||||||||||||||||||
| Commercial and industrial | 114,447 | 14,126 | 128,573 | 121,144 | 20,329 | 141,473 | ||||||||||||||||||
| Municipal | 12,499 | — | 12,499 | 8,626 | — | 8,626 | ||||||||||||||||||
| Consumer | 4,851 | 49 | 4,900 | 5,312 | 68 | 5,380 | ||||||||||||||||||
| Loans receivable, gross | 696,178 | 93,167 | 789,345 | 654,149 | 113,915 | 768,064 | ||||||||||||||||||
| Deferred loan origination fees and costs, net | 1,285 | — | 1,285 | 1,247 | — | 1,247 | ||||||||||||||||||
| Allowance for loan losses | (6,280 | ) | (214 | ) | (6,494 | ) | (5,816 | ) | (311 | ) | (6,127 | ) | ||||||||||||
| Loans receivable, net | $ | 691,183 | $ | 92,953 | $ | 784,136 | $ | 649,580 | $ | 113,604 | $ | 763,184 | ||||||||||||
| Loans held-for-sale | ||||||||||||||||||||||||
| Residential 1-4 family | $ | 561 | $ | — | $ | 561 | $ | — | $ | — | $ | — | ||||||||||||
Concentrations of Credit Risk
Salisbury's loans consist primarily of residential and commercial real estate loans located principally in northwestern Connecticut, New York and Massachusetts towns, which constitute Salisbury's service area. Salisbury offers a broad range of loan and credit facilities to borrowers in its service area, including residential mortgage loans, commercial real estate loans, construction loans, working capital loans, equipment loans, and a variety of consumer loans, including home equity lines of credit, and installment and collateral loans. All residential and commercial mortgage loans are collateralized by first or second mortgages on real estate. The ability of single family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the market area and real estate values. The ability of commercial borrowers to honor their repayment commitments is dependent on the general economy as well as the health of the real estate economic sector in Salisbury’s market area.
| 14 |
Loan Credit Quality
The composition of loans receivable by risk rating grade is as follows:
Business Activities Loans
| (in thousands) | Pass | Special mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||
| September 30, 2017 | ||||||||||||||||||||||||
| Residential 1-4 family | $ | 294,812 | $ | 6,657 | $ | 3,242 | $ | — | $ | — | $ | 304,711 | ||||||||||||
| Residential 5+ multifamily | 9,917 | 1,834 | 153 | — | — | 11,904 | ||||||||||||||||||
| Construction of residential 1-4 family | 11,582 | — | — | — | — | 11,582 | ||||||||||||||||||
| Home equity lines of credit | 34,463 | 738 | 328 | — | — | 35,529 | ||||||||||||||||||
| Residential real estate | 350,774 | 9,229 | 3,723 | — | — | 363,726 | ||||||||||||||||||
| Commercial | 170,227 | 3,611 | 6,217 | — | — | 180,055 | ||||||||||||||||||
| Construction of commercial | 8,334 | — | 110 | — | — | 8,444 | ||||||||||||||||||
| Commercial real estate | 178,561 | 3,611 | 6,327 | — | — | 188,499 | ||||||||||||||||||
| Farm land | 3,712 | — | 980 | — | — | 4,692 | ||||||||||||||||||
| Vacant land | 7,349 | 79 | 36 | — | — | 7,464 | ||||||||||||||||||
| Real estate secured | 540,396 | 12,919 | 11,066 | — | — | 564,381 | ||||||||||||||||||
| Commercial and industrial | 112,799 | 1,225 | 423 | — | — | 114,447 | ||||||||||||||||||
| Municipal | 12,499 | — | — | — | — | 12,499 | ||||||||||||||||||
| Consumer | 4,812 | 39 | — | — | — | 4,851 | ||||||||||||||||||
| Loans receivable, gross | $ | 670,506 | $ | 14,183 | $ | 11,489 | $ | — | $ | — | $ | 696,178 | ||||||||||||
Acquired Loans
| (in thousands) | Pass | Special mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||
| September 30, 2017 | ||||||||||||||||||||||||
| Residential 1-4 family | $ | 5,475 | $ | 103 | $ | 48 | $ | — | $ | — | $ | 5,626 | ||||||||||||
| Residential 5+ multifamily | 5,251 | — | — | — | — | 5,251 | ||||||||||||||||||
| Construction of residential 1-4 family | — | — | — | — | — | — | ||||||||||||||||||
| Home equity lines of credit | — | — | — | — | — | — | ||||||||||||||||||
| Residential real estate | 10,726 | 103 | 48 | — | — | 10,877 | ||||||||||||||||||
| Commercial | 59,511 | 2,118 | 5,677 | — | — | 67,306 | ||||||||||||||||||
| Construction of commercial | 551 | — | 258 | — | — | 809 | ||||||||||||||||||
| Commercial real estate | 60,062 | 2,118 | 5,935 | — | — | 68,115 | ||||||||||||||||||
| Farm land | — | — | — | — | — | — | ||||||||||||||||||
| Vacant land | — | — | — | — | — | — | ||||||||||||||||||
| Real estate secured | 70,788 | 2,221 | 5,983 | — | — | 78,992 | ||||||||||||||||||
| Commercial and industrial | 13,199 | 844 | 83 | — | — | 14,126 | ||||||||||||||||||
| Municipal | — | — | — | — | — | — | ||||||||||||||||||
| Consumer | 47 | 2 | — | — | — | 49 | ||||||||||||||||||
| Loans receivable, gross | $ | 84,034 | $ | 3,067 | $ | 6,066 | $ | — | $ | — | $ | 93,167 | ||||||||||||
| 15 |
Business Activities Loans
| (in thousands) | Pass | Special mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||
| December 31, 2016 | ||||||||||||||||||||||||
| Residential 1-4 family | $ | 285,939 | $ | 6,170 | $ | 2,832 | $ | 89 | $ | — | $ | 295,030 | ||||||||||||
| Residential 5+ multifamily | 5,907 | 1,906 | 163 | — | — | 7,976 | ||||||||||||||||||
| Construction of residential 1-4 family | 10,951 | — | — | — | — | 10,951 | ||||||||||||||||||
| Home equity lines credit | 34,299 | 512 | 676 | — | — | 35,487 | ||||||||||||||||||
| Residential real estate | 337,096 | 8,588 | 3,671 | 89 | — | 349,444 | ||||||||||||||||||
| Commercial | 145,849 | 3,759 | 6,020 | — | — | 155,628 | ||||||||||||||||||
| Construction of commercial | 3,366 | — | 115 | — | — | 3,481 | ||||||||||||||||||
| Commercial real estate | 149,215 | 3,759 | 6,135 | — | — | 159,109 | ||||||||||||||||||
| Farm land | 2,912 | — | 1,002 | — | — | 3,914 | ||||||||||||||||||
| Vacant land | 6,513 | 87 | — | — | — | 6,600 | ||||||||||||||||||
| Real estate secured | 495,736 | 12,434 | 10,808 | 89 | — | 519,067 | ||||||||||||||||||
| Commercial and industrial | 118,804 | 1,734 | 606 | — | — | 121,144 | ||||||||||||||||||
| Municipal | 8,626 | — | — | — | — | 8,626 | ||||||||||||||||||
| Consumer | 5,288 | 24 | — | — | — | 5,312 | ||||||||||||||||||
| Loans receivable, gross | $ | 628,454 | $ | 14,192 | $ | 11,414 | $ | 89 | $ | — | $ | 654,149 | ||||||||||||
Acquired Loans
| (in thousands) | Pass | Special mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||
| December 31, 2016 | ||||||||||||||||||||||||
| Residential 1-4 family | $ | 5,989 | $ | 109 | $ | — | $ | — | $ | — | $ | 6,098 | ||||||||||||
| Residential 5+ multifamily | 5,649 | — | — | — | — | 5,649 | ||||||||||||||||||
| Construction of residential 1-4 family | — | — | — | — | — | — | ||||||||||||||||||
| Home equity lines of credit | — | — | — | — | — | — | ||||||||||||||||||
| Residential real estate | 11,638 | 109 | — | — | — | 11,747 | ||||||||||||||||||
| Commercial | 70,007 | 4,059 | 5,788 | — | — | 79,854 | ||||||||||||||||||
| Construction of commercial | 1,659 | — | 258 | — | — | 1,917 | ||||||||||||||||||
| Commercial real estate | 71,666 | 4,059 | 6,046 | — | — | 81,771 | ||||||||||||||||||
| Farm land | — | — | — | — | — | — | ||||||||||||||||||
| Vacant land | — | — | — | — | — | — | ||||||||||||||||||
| Real estate secured | 83,304 | 4,168 | 6,046 | — | — | 93,518 | ||||||||||||||||||
| Commercial and industrial | 19,110 | 1,160 | 59 | — | — | 20,329 | ||||||||||||||||||
| Municipal | — | — | — | — | — | — | ||||||||||||||||||
| Consumer | 65 | 3 | — | — | — | 68 | ||||||||||||||||||
| Loans receivable, gross | $ | 102,479 | $ | 5,331 | $ | 6,105 | $ | — | $ | — | $ | 113,915 | ||||||||||||
| 16 |
The composition of loans receivable by delinquency status is as follows:
Business Activities Loans
| Past due | ||||||||||||||||||||||||||||||||
| 180 | 30 | Accruing | ||||||||||||||||||||||||||||||
| (in thousands) | Current | 30-59 | 60-89 | 90-179 | days | days | 90 days | Non- | ||||||||||||||||||||||||
| days | days | days | and | and | and | accrual | ||||||||||||||||||||||||||
| over | over | over | ||||||||||||||||||||||||||||||
| September 30, 2017 | ||||||||||||||||||||||||||||||||
| Residential 1-4 family | $ | 301,613 | $ | 1,108 | $ | 228 | $ | 430 | $ | 1,332 | $ | 3,098 | $ | 102 | $ | 2,169 | ||||||||||||||||
| Residential 5+ multifamily | 11,904 | — | — | — | — | — | — | 153 | ||||||||||||||||||||||||
| Construction of residential 1-4 family | 11,582 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Home equity lines of credit | 34,753 | 293 | 394 | 89 | — | 776 | — | 209 | ||||||||||||||||||||||||
| Residential real estate | 359,852 | 1,401 | 622 | 519 | 1,332 | 3,874 | 102 | 2,531 | ||||||||||||||||||||||||
| Commercial | 177,985 | 276 | — | — | 1,793 | 2,069 | — | 1,793 | ||||||||||||||||||||||||
| Construction of commercial | 8,444 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Commercial real estate | 186,429 | 276 | — | — | 1,793 | 2,069 | — | 1,793 | ||||||||||||||||||||||||
| Farm land | 3,711 | 258 | — | — | 723 | 981 | — | 980 | ||||||||||||||||||||||||
| Vacant land | 7,428 | — | — | 36 | — | 36 | 36 | — | ||||||||||||||||||||||||
| Real estate secured | 557,420 | 1,935 | 622 | 555 | 3,848 | 6,960 | 138 | 5,304 | ||||||||||||||||||||||||
| Commercial and industrial | 114,037 | 194 | 5 | 75 | 137 | 411 | 75 | 137 | ||||||||||||||||||||||||
| Municipal | 12,499 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Consumer | 4,774 | 75 | 2 | — | — | 77 | — | — | ||||||||||||||||||||||||
| Loans receivable, gross | $ | 688,730 | $ | 2,204 | $ | 629 | $ | 630 | $ | 3,985 | $ | 7,448 | $ | 213 | $ | 5,441 | ||||||||||||||||
Acquired Loans
| Past due | ||||||||||||||||||||||||||||||||
| 180 | 30 | Accruing | ||||||||||||||||||||||||||||||
| (in thousands) | Current | 30-59 | 60-89 | 90-179 | days | days | 90 days | Non- | ||||||||||||||||||||||||
| days | days | days | and | and | and | accrual | ||||||||||||||||||||||||||
| over | over | over | ||||||||||||||||||||||||||||||
| September 30, 2017 | ||||||||||||||||||||||||||||||||
| Residential 1-4 family | $ | 5,626 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
| Residential 5+ multifamily | 5,251 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Construction of residential 1-4 family | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Home equity lines of credit | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Residential real estate | 10,877 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Commercial | 64,204 | 698 | 4 | 545 | 1,856 | 3,103 | 545 | 1,856 | ||||||||||||||||||||||||
| Construction of commercial | 551 | — | — | — | 258 | 258 | — | 258 | ||||||||||||||||||||||||
| Commercial real estate | 64,755 | 698 | 4 | 545 | 2,114 | 3,361 | 545 | 2,114 | ||||||||||||||||||||||||
| Farm land | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Vacant land | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Real estate secured | 75,632 | 698 | 4 | 545 | 2,114 | 3,361 | 545 | 2,114 | ||||||||||||||||||||||||
| Commercial and industrial | 13,754 | 61 | 310 | — | — | 371 | — | — | ||||||||||||||||||||||||
| Municipal | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Consumer | 49 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Loans receivable, gross | $ | 89,435 | $ | 759 | $ | 314 | $ | 545 | $ | 2,114 | $ | 3,732 | $ | 545 | $ | 2,114 | ||||||||||||||||
| 17 |
Business Activities Loans
| Past due | ||||||||||||||||||||||||||||||||
| 180 | 30 | Accruing | ||||||||||||||||||||||||||||||
| (in thousands) | Current | 30-59 | 60-89 | 90-179 | days | days | 90 days | Non- | ||||||||||||||||||||||||
| days | days | days | and | and | and | accrual | ||||||||||||||||||||||||||
| over | over | over | ||||||||||||||||||||||||||||||
| December 31, 2016 | ||||||||||||||||||||||||||||||||
| Residential 1-4 family | $ | 291,941 | $ | 1,161 | $ | 213 | $ | 327 | $ | 1,388 | $ | 3,089 | $ | 236 | $ | 1,920 | ||||||||||||||||
| Residential 5+ multifamily | 7,976 | — | — | — | — | — | — | 163 | ||||||||||||||||||||||||
| Construction of residential 1-4 family | 10,951 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Home equity lines of credit | 35,190 | 155 | 88 | — | 54 | 297 | — | 519 | ||||||||||||||||||||||||
| Residential real estate | 346,058 | 1,316 | 301 | 327 | 1,442 | 3,386 | 236 | 2,602 | ||||||||||||||||||||||||
| Commercial | 152,905 | 451 | 250 | 1,793 | 229 | 2,723 | — | 2,022 | ||||||||||||||||||||||||
| Construction of commercial | 3,481 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Commercial real estate | 156,386 | 451 | 250 | 1,793 | 229 | 2,723 | — | 2,022 | ||||||||||||||||||||||||
| Farm land | 2,402 | 789 | — | — | 723 | 1,512 | — | 1,002 | ||||||||||||||||||||||||
| Vacant land | 6,575 | 25 | — | — | — | 25 | — | — | ||||||||||||||||||||||||
| Real estate secured | 511,421 | 2,581 | 551 | 2,120 | 2,394 | 7,646 | 236 | 5,626 | ||||||||||||||||||||||||
| Commercial and industrial | 120,719 | 140 | 239 | 46 | — | 425 | 20 | 27 | ||||||||||||||||||||||||
| Municipal | 8,626 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Consumer | 5,268 | 26 | 15 | 3 | — | 44 | — | 4 | ||||||||||||||||||||||||
| Loans receivable, gross | $ | 646,034 | $ | 2,747 | $ | 805 | $ | 2,169 | $ | 2,394 | $ | 8,115 | $ | 256 | $ | 5,657 | ||||||||||||||||
Acquired Loans
| Past due | ||||||||||||||||||||||||||||||||
| 180 | 30 | Accruing | ||||||||||||||||||||||||||||||
| (in thousands) | Current | 30-59 | 60-89 | 90-179 | days | days | 90 days | Non- | ||||||||||||||||||||||||
| days | days | days | and | and | and | accrual | ||||||||||||||||||||||||||
| over | over | over | ||||||||||||||||||||||||||||||
| December 31, 2016 | ||||||||||||||||||||||||||||||||
| Residential 1-4 family | $ | 5,954 | $ | 144 | $ | — | $ | — | $ | — | $ | 144 | $ | — | $ | — | ||||||||||||||||
| Residential 5+ multifamily | 5,649 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Construction of residential 1-4 family | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Home equity lines of credit | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Residential real estate | 11,603 | 144 | — | — | — | 144 | — | — | ||||||||||||||||||||||||
| Commercial | 76,471 | 762 | — | 346 | 2,275 | 3,383 | — | 2,621 | ||||||||||||||||||||||||
| Construction of commercial | 1,659 | — | — | — | 258 | 258 | — | 258 | ||||||||||||||||||||||||
| Commercial real estate | 78,130 | 762 | — | 346 | 2,533 | 3,641 | — | 2,879 | ||||||||||||||||||||||||
| Farm land | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Vacant land | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Real estate secured | 89,733 | 906 | — | 346 | 2,533 | 3,785 | — | 2,879 | ||||||||||||||||||||||||
| Commercial and industrial | 19,904 | 425 | — | — | — | 425 | — | — | ||||||||||||||||||||||||
| Municipal | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Consumer | 68 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Loans receivable, gross | $ | 109,705 | $ | 1,331 | $ | — | $ | 346 | $ | 2,533 | $ | 4,210 | $ | — | $ | 2,879 | ||||||||||||||||
Interest on non-accrual loans that would have been recorded as additional interest income for the nine months ended September 30, 2017 and 2016 had the loans been current in accordance with their original terms totaled $691 thousand and $666 thousand, respectively.
| 18 |
Troubled Debt Restructurings
Troubled debt restructurings occurring during the periods are as follows:
Business Activities Loans
| Nine months ended | ||||||||||||||||||||||||
| September 30, 2017 | September 30, 2016 | |||||||||||||||||||||||
| (in thousands) | Quantity | Pre- modification balance | Post- modification balance | Quantity | Pre- modification balance | Post- modification balance | ||||||||||||||||||
| Residential real estate | — | $ | — | $ | — | 4 | $ | 683 | $ | 683 | ||||||||||||||
| Commercial real estate | 1 | 600 | 600 | 2 | 2,123 | 2,123 | ||||||||||||||||||
| Troubled debt restructurings | 1 | $ | 600 | $ | 600 | 6 | $ | 2,806 | $ | 2,806 | ||||||||||||||
| Rate reduction and term extension | — | $ | — | $ | — | 1 | $ | 174 | $ | 174 | ||||||||||||||
| Debt consolidation | — | — | — | 2 | 2,123 | 2,123 | ||||||||||||||||||
| Term extension | 1 | 600 | 600 | 3 | 509 | 509 | ||||||||||||||||||
| Troubled debt restructurings | 1 | $ | 600 | $ | 600 | 6 | $ | 2,806 | $ | 2,806 | ||||||||||||||
Acquired Loans
No acquired loans have been modified as a troubled debt restructure during the nine months ended September 30, 2017 and September 30, 2016.
Allowance for Loan Losses
Changes in the allowance for loan losses are as follows:
| Business Activities Loans | Acquired Loans | |||||||||||||||||||||||||||||||||||||||
| (in thousands) | Three months ended September 30, 2017 | Three months ended September 30, 2017 | ||||||||||||||||||||||||||||||||||||||
| Beginning balance | Provision | Charge- offs | Reco- veries | Ending balance | Beginning balance | Provision | Charge- offs | Reco- veries | Ending balance | |||||||||||||||||||||||||||||||
| Residential | $ | 2,353 | $ | 34 | $ | (93 | ) | $ | 4 | $ | 2,298 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
| Commercial | 2,099 | 50 | — | 69 | 2,218 | 285 | 53 | (190 | ) | 48 | 196 | |||||||||||||||||||||||||||||
| Land | 154 | 51 | (27 | ) | — | 178 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Real estate | 4,606 | 135 | (120 | ) | 73 | 4,694 | 285 | 53 | (190 | ) | 48 | 196 | ||||||||||||||||||||||||||||
| Commercial and industrial | 979 | (59 | ) | — | 1 | 921 | 22 | 31 | (41 | ) | 6 | 18 | ||||||||||||||||||||||||||||
| Municipal | 18 | 2 | — | — | 20 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Consumer | 69 | 12 | (17 | ) | 4 | 68 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Unallocated | 514 | 63 | — | — | 577 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Totals | $ | 6,186 | $ | 153 | $ | (137 | ) | $ | 78 | $ | 6,280 | $ | 307 | $ | 84 | |||||||||||||||||||||||||