Virginia
(State or other jurisdiction of
incorporation or organization)
|
54-1796693
(I.R.S. Employer
Identification No.)
|
P.O. Box 1128
Abingdon, Virginia
(Address of principal executive offices)
|
24212-1128
(Zip Code)
|
PART I. FINANCIAL INFORMATION
|
PAGE
|
|
Item 1. Financial Statements
|
||
Consolidated Balance Sheets
at March 31, 2017 (Unaudited) and December 31, 2016
|
||
3
|
||
Consolidated Statements of Income (Unaudited)
for the Three Months Ended March 31, 2017 and 2016
|
4
|
|
Consolidated Statements of Comprehensive Income (Unaudited)
for the Three Months Ended March 31, 2017 and 2016
|
5
|
|
Consolidated Statements of Cash Flows (Unaudited)
for the Three Months Ended March 31, 2017 and 2016
|
6
|
|
Consolidated Statements of Changes in
Stockholders' Equity (Unaudited) for the Three Months
Ended March 31, 2017 and 2016
|
7
|
|
Notes to Consolidated Financial Statements (Unaudited)
|
8-32
|
|
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
|
33-35
|
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
36
|
|
Item 4. Controls and Procedures
|
36
|
|
PART II. OTHER INFORMATION
|
||
Item 1. Legal Proceedings
|
36
|
|
Item 1A. Risk Factors
|
36
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
36
|
|
Item 3. Defaults Upon Senior Securities
|
36
|
|
Item 4. Mine Safety Disclosures
|
36
|
|
Item 5. Other Information
|
36
|
|
Item 6. Exhibits
|
36
|
|
SIGNATURES AND CERTIFICATIONS
|
37
|
(Unaudited)
March 31, 2017
|
(Note 1)
December 31, 2016
|
||||
ASSETS
|
|||||
Cash and due from banks
|
$ 22,122
|
$ 27,391
|
|||
Federal funds sold
|
34,066
|
22,994
|
|||
Total Cash and Cash Equivalents
|
56,188
|
50,385
|
|||
Investment securities available for sale (amortized cost $98,149 at March 31, 2017, $96,930 at December 31, 2016)
|
96,384
|
95,073
|
|||
Other investments, at cost
|
6,385
|
6,637
|
|||
Loans Held for Sale
|
3,063
|
1,255
|
|||
Loans, net of allowance for loan losses of $4,728 at March 31, 2017, $4,829 at December 31, 2016
|
404,383
|
404,838
|
|||
Premises and equipment, net
|
17,843
|
17,814
|
|||
Real Estate held for Sale
|
1,662
|
1,680
|
|||
Deferred tax assets
|
12,519
|
12,989
|
|||
Interest receivable
|
1,845
|
2,047
|
|||
Bank owned life Insurance
|
14,409
|
14,314
|
|||
Other real estate owned
|
2,741
|
2,768
|
|||
Other assets
|
2,114
|
2,878
|
|||
Total Assets
|
$ 619,536
|
$ 612,678
|
|||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||
LIABILITIES
|
|||||
Deposits:
|
|||||
Non-interest bearing
|
$ 140,616
|
$ 134,488
|
|||
Interest bearing
|
354,851
|
355,381
|
|||
Total Deposits
|
495,467
|
489,869
|
|||
Interest, taxes and other liabilities
|
1,477
|
1,353
|
|||
Other short-term borrowings
|
27,552
|
27,552
|
|||
Long-term debt
|
40,133
|
40,146
|
|||
Total Other Liabilities
|
69,162
|
69,051
|
|||
Total Liabilities
|
564,629
|
558,920
|
|||
STOCKHOLDERS' EQUITY
|
|||||
Common stock (8,199 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively)
|
5,124
|
5.124
|
|||
Preferred Stock (2,092 shares issued and outstanding)
|
4,184
|
4,184
|
|||
Additional paid-in capital
|
18,946
|
18.891
|
|||
Retained earnings
|
27,817
|
26,785
|
|||
Accumulated other comprehensive income
|
(1,164)
|
(1.226)
|
|||
Total Stockholders' Equity
|
54,907
|
53,758
|
|||
Total Liabilities and Stockholders' Equity
|
$ 619,536
|
$ 612,678
|
Three Months Ended March 31, 2017
|
Three Months Ended March 31, 2016
|
|||
INTEREST INCOME
|
||||
Loans receivable and fees on loans
|
$ 5,049
|
$ 5,478
|
||
Securities available for sale:
|
||||
Taxable
|
435
|
297
|
||
Exempt from taxable income
|
86
|
78
|
||
Other investment income
|
61
|
57
|
||
Federal funds sold
|
50
|
26
|
||
Total Interest Income
|
5,681
|
5,936
|
||
INTEREST EXPENSE
|
||||
Deposits
|
446
|
453
|
||
Other borrowed funds
|
585
|
592
|
||
Total Interest Expense
|
1,031
|
1,045
|
||
Net Interest Income
|
4,650
|
4,891
|
||
Provision for Loan Losses
|
17
|
224
|
||
Net Interest Income after Provision for Loan Losses
|
4,633
|
4,667
|
||
NON-INTEREST INCOME
|
||||
Mortgage Banking Income
|
226
|
-
|
||
Securities gains, net
|
-
|
35
|
||
Service charges on deposit accounts
|
397
|
398
|
||
Other service charges, commissions and fees
|
498
|
441
|
||
Other operating income
|
166
|
284
|
||
Total Non-Interest Income
|
1,287
|
1,158
|
||
NON-INTEREST EXPENSE
|
||||
Salaries and employee benefits
|
2,493
|
2,919
|
||
Occupancy expense of bank premises
|
323
|
313
|
||
Furniture and equipment expense
|
346
|
351
|
||
Other operating expense
|
1,267
|
1,302
|
||
Foreclosed Assets – Write-down and Operating Expenses
|
20
|
219
|
||
Total Non-Interest Expense
|
4,449
|
5,104
|
||
Income Before Income Taxes
|
1,471
|
721
|
||
Income Tax Expense (Note 3)
|
439
|
191
|
||
Net Income
|
$ 1,032
|
$ 530
|
||
Basic Earnings Per Common Share (Note 6)
|
$ 0.13
|
$ 0.07
|
||
Earnings Per Common Share – Assuming Dilution
|
$ 0.10
|
$ 0.05
|
||
Dividends Per Share
|
$ -
|
$ -
|
Three Months Ended March 31, 2017
|
Three Months Ended March 31, 2016
|
|||
Net Income
|
$ 1,032
|
$ 530
|
||
Other Comprehensive Income
|
||||
Unrealized gains on securities during the period
|
94
|
880
|
||
Less: reclassification adjustment for (gains) included in net income
|
-
|
(35)
|
||
Other Comprehensive Income, before tax
|
94
|
845
|
||
Income tax expense related to other
comprehensive income
|
32
|
287
|
||
Other Comprehensive Income
|
62
|
558
|
||
Comprehensive Income
|
$ 1,094
|
$ 1,088
|
||
Three Months Ended
|
Three Months Ended
|
|||||||
March 31, 2017
|
March 31, 2016
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
1,032
|
$
|
530
|
||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
Provision for loan losses
|
17
|
224
|
||||||
Depreciation and amortization
|
241
|
243
|
||||||
Net realized gains on available for sale securities
|
-
|
(35)
|
|
|||||
Net amortization on securities
|
163
|
221
|
||||||
Restricted Stock Expense
|
55
|
-
|
||||||
Origination of Loans held for sale
|
(7,386)
|
|
-
|
|||||
Proceeds from loans held for sale
|
5,578
|
-
|
||||||
(Increase) decrease in interest receivable
|
202
|
(50)
|
|
|||||
Valuation adjustment of other real estate owned
|
-
|
166
|
||||||
Decrease in other assets
|
1,266
|
1,010
|
||||||
Increase in interest, taxes and other liabilities
|
124
|
479
|
||||||
Net cash provided by operating activities
|
1,292
|
2,788
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Securities available for sale:
|
||||||||
Proceeds from sale of securities
|
-
|
11,549
|
||||||
Proceeds from maturities of securities
|
3,910
|
3,457
|
||||||
Purchase of debt and equity securities
|
(5,293)
|
|
(18,082)
|
|
||||
(Purchases) redemptions of other investments
|
252
|
(19)
|
|
|||||
Net decrease in loans
|
212
|
3,725
|
||||||
Proceeds from sales of other real estate owned
|
255
|
328
|
||||||
Proceeds from cash surrender value of life insurance
|
-
|
93
|
||||||
Premises and equipment expenditures
|
(410)
|
|
(114)
|
|
||||
Net cash provided by (used in) investing activities
|
(1,074)
|
|
937
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net decrease in time deposits
|
(1,966)
|
|
(3,890)
|
|
||||
Net increase in demand, savings and other deposits
|
7,564
|
2,075
|
||||||
Decrease in short-term borrowings
|
-
|
(1)
|
|
|||||
Decrease in long-term debt
|
(13)
|
|
(12)
|
|
||||
Issuance of common stock
|
-
|
1,110
|
||||||
Net cash provided by (used in) financing activities
|
5,585
|
(718)
|
|
|||||
Net increase in cash and cash equivalents
|
5,803
|
3,007
|
||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
50,385
|
46,891
|
||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
56,188
|
$
|
49,898
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
1,047
|
$
|
1,059
|
||||
Income taxes
|
$
|
-
|
$
|
-
|
||||
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
|
||||||||
Transfer of loans to other real estate owned
|
$
|
228
|
$
|
153
|
||||
Loans originated from sales of other real estate owned
|
$
|
-
|
$
|
10
|
Common Stock Shares
|
Par Value
|
Preferred Stock
Shares
|
Preferred Stock
Par Value
|
Additional Paid
In Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Stockholders'
Equity
|
|||||||||||||||||||||||||
Balance
December 31, 2015
.
|
7,851
|
$
|
4,907
|
2,092
|
$
|
4,184
|
$
|
17,944
|
$
|
26,773
|
$
|
(248
|
)
|
$
|
53,560
|
|||||||||||||||||
Net Income
|
530
|
530
|
||||||||||||||||||||||||||||||
Issuance of
Common Stock
|
262
|
163
|
947
|
1,110
|
||||||||||||||||||||||||||||
Other
Comprehensive
Income
|
558
|
558
|
||||||||||||||||||||||||||||||
Balance
March 31, 2016
.
|
8,113
|
$
|
5,070
|
2,092
|
$
|
4,184
|
$
|
18,891
|
$
|
27,303
|
$
|
310
|
$
|
55,758
|
||||||||||||||||||
Balance
December 31, 2016
|
8,199
|
$
|
5,124
|
2,092
|
$
|
4,184
|
$
|
18,891
|
$
|
26,785
|
$
|
(1,226
|
)
|
$
|
53,758
|
|||||||||||||||||
Net Income
|
1,032
|
1,032
|
||||||||||||||||||||||||||||||
Other
Comprehensive
Income
|
62
|
62
|
||||||||||||||||||||||||||||||
Compensation Expense on Restricted Stock
|
55
|
55
|
||||||||||||||||||||||||||||||
Balance
March 31, 2017
|
8,199
|
$
|
5,124
|
2,092
|
$
|
4,184
|
$
|
18,946
|
$
|
27,817
|
$
|
(1,164
|
)
|
$
|
54,907
|
|||||||||||||||||
March 31, 2017
|
December 31, 2016
|
|||
Real Estate Secured:
|
||||
Residential 1-4 family
|
$ 183,080
|
$ 186,695
|
||
Multifamily
|
22,723
|
22,630
|
||
Construction and Land Loans
|
16,521
|
15,978
|
||
Commercial, Owner Occupied
|
69,298
|
72,383
|
||
Commercial, Non-owner occupied
|
29,404
|
28,818
|
||
Second mortgages
|
6,195
|
6,934
|
||
Equity lines of credit
|
19,882
|
13,395
|
||
Farmland
|
12,283
|
12,194
|
||
359,386
|
359,027
|
|||
Secured (other) and unsecured
|
||||
Personal
|
16,777
|
17,745
|
||
Commercial
|
30,238
|
29,977
|
||
Agricultural
|
3,169
|
3,490
|
||
50,184
|
51,212
|
|||
Overdrafts
|
260
|
142
|
||
409,830
|
410,381
|
|||
Less:
|
||||
Allowance for loan losses
|
4,728
|
4,829
|
||
Net deferred fees
|
719
|
714
|
||
5,447
|
5,543
|
|||
Loans, net
|
$ 404,383
|
$ 404,838
|
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater Than 90 Days
|
Total Past Due
|
Current
|
Total Financing Receivables
|
Recorded Investment > 90 Days and Accruing
|
||||||||
Real Estate Secured
|
||||||||||||||
Residential 1-4 family
|
$ 388
|
$ 39
|
$ 819
|
$ 1,246
|
$ 181,834
|
$ 183,080
|
$ -
|
|||||||
Equity lines of credit
|
-
|
-
|
10
|
10
|
19,872
|
19,882
|
-
|
|||||||
Multifamily
|
-
|
-
|
-
|
-
|
22,723
|
22,723
|
-
|
|||||||
Farmland
|
411
|
-
|
193
|
604
|
11,679
|
12,283
|
-
|
|||||||
Construction, Land Development, Other Land Loans
|
143
|
-
|
-
|
143
|
16,378
|
16,521
|
-
|
|||||||
Commercial Real Estate- Owner Occupied
|
-
|
-
|
1,643
|
1,643
|
67,655
|
69,298
|
-
|
|||||||
Commercial Real Estate- Non Owner Occupied
|
-
|
-
|
346
|
346
|
29,058
|
29,404
|
-
|
|||||||
Second Mortgages
|
-
|
-
|
18
|
18
|
6,177
|
6,195
|
-
|
|||||||
Non Real Estate Secured
|
||||||||||||||
Personal
|
115
|
30
|
26
|
171
|
16,866
|
17,037
|
-
|
|||||||
Commercial
|
40
|
38
|
397
|
475
|
29,763
|
30,238
|
-
|
|||||||
Agricultural
|
-
|
-
|
-
|
-
|
3,169
|
3,169
|
-
|
|||||||
Total
|
$ 1,097
|
$ 107
|
$ 3,452
|
$ 4,656
|
$ 405,174
|
$ 409,830
|
$ -
|
|||||||
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater Than 90 Days
|
Total Past Due
|
Current
|
Total Financing Receivables
|
Recorded Investment > 90 Days and Accruing
|
||||||||
Real Estate Secured
|
||||||||||||||
Residential 1-4 family
|
$ 841
|
$ 242
|
$ 1,000
|
$ 2,083
|
$ 184,612
|
$ 186,695
|
$ -
|
|||||||
Equity lines of credit
|
-
|
30
|
10
|
40
|
13,355
|
13,395
|
-
|
|||||||
Multifamily
|
-
|
-
|
-
|
-
|
22,630
|
22,630
|
-
|
|||||||
Farmland
|
-
|
47
|
564
|
611
|
11,583
|
12,194
|
-
|
|||||||
Construction, Land Development, Other Land Loans
|
39
|
-
|
-
|
39
|
15,939
|
15,978
|
-
|
|||||||
Commercial Real Estate- Owner Occupied
|
14
|
-
|
3,868
|
3,882
|
68,501
|
72,383
|
2,210
|
|||||||
Commercial Real Estate- Non Owner Occupied
|
-
|
-
|
-
|
-
|
28,818
|
28,818
|
-
|
|||||||
Second Mortgages
|
160
|
1
|
18
|
179
|
6,755
|
6,934
|
-
|
|||||||
Non Real Estate Secured
|
||||||||||||||
Personal
|
118
|
23
|
12
|
153
|
17,734
|
17,887
|
-
|
|||||||
Commercial
|
142
|
54
|
462
|
658
|
29,319
|
29,977
|
-
|
|||||||
Agricultural
|
-
|
7
|
-
|
7
|
3,483
|
3,490
|
-
|
|||||||
Total
|
$ 1,314
|
$ 404
|
$ 5,934
|
$ 7,652
|
$ 402,729
|
$ 410,381
|
$ 2,210
|
|||||||
March 31, 2017
|
December 31, 2016
|
|||
Real Estate Secured
|
||||
Residential 1-4 Family
|
$ 819
|
$ 1,275
|
||
Multifamily
|
-
|
-
|
||
Construction and Land Loans
|
-
|
-
|
||
Commercial-Owner Occupied
|
1,643
|
1,658
|
||
Commercial- Non Owner Occupied
|
346
|
-
|
||
Second Mortgages
|
18
|
18
|
||
Equity Lines of Credit
|
10
|
10
|
||
Farmland
|
193
|
564
|
||
Secured (other) and Unsecured
|
||||
Personal
|
26
|
12
|
||
Commercial
|
397
|
462
|
||
Agricultural
|
-
|
-
|
||
Total
|
$ 3,452
|
$ 3,999
|
Number
|
03/31/17 Balance
|
||
Residential real estate in the process of foreclosure
|
4
|
$ 678
|
|
Foreclosed residential real estate
|
6
|
$ 334
|
Grade (1)
|
Residential 1-4 Family
|
Multifamily
|
Farmland
|
Construction, Land Loans
|
Commercial Real Estate- Owner Occupied
|
Commercial Real Estate Non-Owner Occupied
|
||||||
Quality
|
32,409
|
-
|
18
|
1,714
|
3,823
|
363
|
||||||
Satisfactory
|
102,826
|
18,147
|
7,955
|
5,129
|
36,625
|
16,799
|
||||||
Acceptable
|
40,789
|
1,716
|
3,441
|
7,744
|
21,838
|
8,236
|
||||||
Special Mention
|
3,191
|
1,880
|
-
|
-
|
4,401
|
126
|
||||||
Substandard
|
3,865
|
980
|
869
|
1,934
|
2,611
|
3,880
|
||||||
Doubtful
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||
Total
|
$ 183,080
|
$ 22,723
|
$ 12,283
|
$ 16,521
|
$ 69,298
|
$ 29,404
|
Grade (1)
|
Residential 1-4 Family
|
Multifamily
|
Farmland
|
Construction, Land Loans
|
Commercial Real Estate- Owner Occupied
|
Commercial Real Estate Non-Owner Occupied
|
||||||
Quality
|
$ 32,054
|
$ -
|
$ 19
|
$ 1,941
|
$ 3,686
|
$ 387
|
||||||
Satisfactory
|
106,154
|
18,335
|
7,823
|
5,969
|
36,806
|
15,198
|
||||||
Acceptable
|
41,369
|
1,410
|
3,474
|
5,961
|
22,767
|
5,119
|
||||||
Special Mention
|
3,399
|
1,896
|
-
|
-
|
4,435
|
4,221
|
||||||
Substandard
|
3,719
|
989
|
878
|
2,107
|
4,689
|
3,893
|
||||||
Doubtful
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||
Total
|
$ 186,695
|
$ 22,630
|
$ 12,194
|
$ 15,978
|
$ 72,383
|
$ 28,818
|
·
|
Conformity in all respects with Bank policy, guidelines, underwriting standards, and Federal and State regulations (no exceptions of any kind).
|
·
|
Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources.
|
·
|
Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.
|
·
|
General conformity to the Bank's policy requirements, product guidelines and underwriting standards. Any exceptions that are identified during the underwriting and approval process have been adequately mitigated by other factors.
|
·
|
Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources.
|
·
|
Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.
|
·
|
Additional exceptions to the Bank's policy requirements, product guidelines or underwriting standards that present a higher degree of risk to the Bank. Although the combination and/or severity of identified exceptions is greater, all exceptions have been properly mitigated by other factors.
|
·
|
Unproved, insufficient or marginal primary sources of repayment that appear sufficient to service the debt at this time. Repayment weaknesses may be due to minor operational issues, financial trends, or reliance on projected (not historic) performance.
|
·
|
Marginal or unproven secondary sources to liquidate the debt, including combinations of liquidation of collateral and liquidation value to the net worth of the borrower or guarantor.
|
·
|
Loans with underwriting guideline tolerances and/or exceptions with no identifiable mitigating factors.
|
·
|
Extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank's position at some future date. Potential weaknesses are the result of deviations from prudent lending practices.
|
·
|
Loans where adverse economic conditions that develop subsequent to the loan origination do not jeopardize liquidation of the debt, but do substantially increase the level of risk may also warrant this rating.
|
·
|
High debt to worth ratios and or declining or negative earnings trends
|
·
|
Declining or inadequate liquidity
|
·
|
Improper loan structure or questionable repayment sources
|
·
|
Lack of well-defined secondary repayment source, and
|
·
|
Unfavorable competitive comparisons.
|
·
|
Injection of capital
|
·
|
Alternative financing
|
·
|
Liquidation of assets or the pledging of additional collateral.
|
Consumer - Non Real Estate
|
Equity Line of Credit /Second Mortgages
|
Commercial - Non Real Estate
|
Agricultural - Non Real Estate
|
|||||
Performing
|
$ 17,011
|
$ 26,049
|
$ 29,841
|
$ 3,169
|
||||
Nonperforming (>90 days past due)
|
26
|
28
|
397
|
-
|
||||
Total
|
$ 17,037
|
$ 26,077
|
$ 30,238
|
$ 3,169
|
||||
Consumer - Non Real Estate
|
Equity Line of Credit /Second Mortgages
|
Commercial - Non Real Estate
|
Agricultural - Non Real Estate
|
|||||
Performing
|
$ 17,875
|
$ 20,301
|
$ 29,515
|
$ 3,490
|
||||
Nonperforming (>90 days past due)
|
12
|
28
|
462
|
-
|
||||
Total
|
$ 17,887
|
$ 20,329
|
$ 29,977
|
$ 3,490
|
||||
March 31, 2017
|
Recorded Investment
|
Unpaid Principal Balance
|
Related Allowance
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||
With No Related Allowance
|
||||||||||
Real Estate Secured
|
||||||||||
Residential 1-4 family
|
$ 5,699
|
$ 5,699
|
$ -
|
$ 5,273
|
$ 70
|
|||||
Equity lines of credit
|
-
|
-
|
-
|
12
|
-
|
|||||
Multifamily
|
980
|
980
|
-
|
984
|
13
|
|||||
Farmland
|
582
|
582
|
-
|
633
|
13
|
|||||
Construction, Land Development, Other Land Loans
|
1,536
|
1,536
|
-
|
1,638
|
23
|
|||||
Commercial Real Estate- Owner Occupied
|
826
|
826
|
-
|
3,314
|
5
|
|||||
Commercial Real Estate- Non Owner Occupied
|
346
|
346
|
-
|
1,114
|
-
|
|||||
Second Mortgages
|
64
|
64
|
-
|
125
|
1
|
|||||
Non Real Estate Secured
|
||||||||||
Personal /Consumer
|
-
|
-
|
-
|
7
|
-
|
|||||
Commercial
|
-
|
-
|
-
|
21
|
-
|
|||||
Agricultural
|
-
|
-
|
-
|
-
|
-
|
|||||
Total
|
$ 10,033
|
$ 10,033
|
$ -
|
$ 13,121
|
$ 125
|
March 31, 2017
|
Recorded Investment
|
Unpaid Principal Balance
|
Related Allowance
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||
With an Allowance Recorded
|
||||||||||
Real Estate Secured
|
||||||||||
Residential 1-4 family
|
$ 697
|
$ 697
|
$ 47
|
$ 578
|
$ 7
|
|||||
Equity lines of credit
|
-
|
-
|
-
|
-
|
-
|
|||||
Multifamily
|
-
|
-
|
-
|
-
|
-
|
|||||
Farmland
|
191
|
191
|
20
|
191
|
2
|
|||||
Construction, Land Development, Other Land Loans
|
366
|
366
|
20
|
366
|
6
|
|||||
Commercial Real Estate- Owner Occupied
|
3,437
|
4,437
|
960
|
2,288
|
49
|
|||||
Commercial Real Estate- Non Owner Occupied
|
3,879
|
3,879
|
768
|
2,944
|
46
|
|||||
Second Mortgages
|
-
|
-
|
-
|
9
|
-
|
|||||
Non Real Estate Secured
|
||||||||||
Personal /Consumer
|
-
|
-
|
-
|
25
|
-
|
|||||
Commercial
|
466
|
466
|
280
|
550
|
1
|
|||||
Agricultural
|
-
|
-
|
-
|
-
|
-
|
|||||
Total
|
$ 9,036
|
$ 10,036
|
$ 2,095
|
$ 6,951
|
$ 111
|
December 31, 2016
|
Recorded Investment
|
Unpaid Principal Balance
|
Related Allowance
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||
With no Related Allowance
|
||||||||||
Real Estate Secured
|
||||||||||
Residential 1-4 family
|
$ 4,848
|
$ 4,848
|
$ -
|
$ 5,963
|
$ 200
|
|||||
Equity lines of credit
|
25
|
25
|
-
|
38
|
1
|
|||||
Multifamily
|
989
|
989
|
-
|
1,005
|
1
|
|||||
Farmland
|
685
|
685
|
-
|
750
|
24
|
|||||
Construction, Land Development, Other Land Loans
|
1,741
|
1,741
|
-
|
1,643
|
114
|
|||||
Commercial Real Estate- Owner Occupied
|
5,802
|
5,802
|
-
|
5,685
|
390
|
|||||
Commercial Real Estate- Non Owner Occupied
|
1,883
|
1,883
|
-
|
941
|
39
|
|||||
Second Mortgages
|
186
|
186
|
-
|
292
|
8
|
|||||
Non Real Estate Secured
|
||||||||||
Personal
|
14
|
14
|
-
|
41
|
1
|
|||||
Commercial
|
43
|
43
|
-
|
179
|
3
|
|||||
Agricultural
|
-
|
-
|
-
|
-
|
-
|
|||||
Total
|
$ 16,216
|
$ 16,216
|
$ -
|
$ 16,537
|
$ 781
|
December 31, 2016
|
Recorded Investment
|
Unpaid Principal Balance
|
Related Allowance
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||
With an Allowance Recorded
|
||||||||||
Real Estate Secured
|
||||||||||
Residential 1-4 family
|
$ 460
|
$ 460
|
$ 36
|
$ 1,153
|
$ 14
|
|||||
Equity lines of credit
|
-
|
-
|
-
|
-
|
-
|
|||||
Multifamily
|
-
|
-
|
-
|
-
|
-
|
|||||
Farmland
|
192
|
192
|
16
|
96
|
11
|
|||||
Construction, Land Development, Other Land Loans
|
366
|
366
|
20
|
406
|
22
|
|||||
Commercial Real Estate- Owner Occupied
|
1,139
|
2,139
|
558
|
1,629
|
||||||
Commercial Real Estate- Non Owner Occupied
|
2,009
|
2,009
|
314
|
1,947
|
41
|
|||||
Second Mortgages
|
18
|
18
|
9
|
18
|
-
|
|||||
Non Real Estate Secured
|
||||||||||
Personal
|
51
|
51
|
29
|
82
|
3
|
|||||
Commercial
|
634
|
634
|
365
|
652
|
16
|
|||||
Agricultural
|
-
|
-
|
-
|
-
|
-
|
|||||
Total
|
$ 4,869
|
$ 5,869
|
$ 1,347
|
$ 5,983
|
$ 107
|
Three months ended March 31, 2017
|
Residential
1-4 Family
|
Multifamily
|
Construction and Land Loans
|
Commercial Owner Occupied
|
Commercial Non-Owner Occupied
|
Second Mortgages
|
Equity Line of Credit
|
Farmland
|
Personal and Overdrafts
|
Commercial and Agricultural
|
Unallocated
|
Total
|
Allowance for Credit Losses:
|
||||||||||||
Beginning Balance December 31, 2016
|
$ 371
|
$ -
|
$ 21
|
$ 1,339
|
$ 445
|
$ 15
|
$ 27
|
$ 16
|
$ 802
|
$ 535
|
$ 1,258
|
$ 4,829
|
Provision for Credit Losses
|
(16)
|
-
|
(1)
|
350
|
403
|
(11)
|
4
|
37
|
204
|
(99)
|
(854)
|
17
|
Charge-offs
|
14
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
79
|
59
|
-
|
152
|
Recoveries
|
(3)
|
-
|
(1)
|
-
|
(1)
|
-
|
-
|
(1)
|
(25)
|
(3)
|
-
|
(34)
|
Net Charge-offs
|
11
|
-
|
(1)
|
-
|
(1)
|
-
|
-
|
(1)
|
54
|
56
|
-
|
118
|
Ending Balance
March 31, 2017
|
344
|
-
|
21
|
1,689
|
849
|
4
|
31
|
54
|
952
|
380
|
404
|
4,728
|
Ending Balance: Individually evaluated for impairment
|
47
|
-
|
20
|
960
|
768
|
-
|
-
|
20
|
-
|
280
|
-
|
2,095
|
Ending Balance: Collectively evaluated for impairment
|
297
|
-
|
1
|
729
|
81
|
4
|
31
|
34
|
952
|
100
|
404
|
2,633
|
Loans:
|
||||||||||||
Ending Balance: Individually Evaluated for Impairment
|
6,396
|
980
|
1,902
|
4,263
|
4,225
|
64
|
-
|
773
|
260
|
466
|
-
|
19,329
|
Ending Balance: Collectively Evaluated for Impairment
|
176,684
|
21,743
|
14,619
|
65,035
|
25,179
|
6,131
|
19,882
|
11,510
|
16,777
|
32,941
|
-
|
390,501
|
Ending Balance: March 31, 2017
|
$183,080
|
$22,723
|
$16,521
|
$69,298
|
$29,404
|
$6,195
|
$19,882
|
$12,283
|
$17,037
|
$33,407
|
-
|
$409,830
|
Three months ended March 31, 2016
|
Residential
1-4 Family
|
Multifamily
|
Construction and Land Loans
|
Commercial Owner Occupied
|
Commercial Non-Owner Occupied
|
Second Mortgages
|
Equity Line of Credit
|
Farmland
|
Personal and Overdrafts
|
Commercial and Agricultural
|
Unallocated
|
Total
|
Allowance for Credit Losses:
|
||||||||||||
Beginning Balance December 31, 2015
|
$ 654
|
$ -
|
$ 37
|
$ 1,012
|
$ 748
|
$ 43
|
$ 20
|
$ 7
|
$ 704
|
$ 886
|
$ 1,543
|
$ 5,654
|
Provision for Credit Losses
|
(33)
|
-
|
(18)
|
97
|
(130)
|
40
|
(3)
|
(1)
|
(94)
|
60
|
306
|
224
|
Charge-offs
|
27
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
139
|
23
|
-
|
189
|
Recoveries
|
(1)
|
-
|
(2)
|
-
|
-
|
-
|
(1)
|
-
|
(131)
|
(1)
|
-
|
(136)
|
Net Charge-offs
|
26
|
-
|
(2)
|
-
|
-
|
-
|
(1)
|
-
|
8
|
22
|
-
|
53
|
Ending Balance
March 31, 2016
|
595
|
-
|
21
|
1,109
|
618
|
83
|
18
|
6
|
602
|
924
|
1,849
|
5,825
|
Ending Balance: Individually evaluated for impairment
|
228
|
-
|
21
|
925
|
283
|
59
|
-
|
-
|
42
|
599
|
-
|
2,157
|
Ending Balance: Collectively Evaluated for Impairment
|
367
|
-
|
-
|
184
|
335
|
24
|
18
|
6
|
560
|
325
|
1,849
|
3,668
|
Loans:
|
||||||||||||
Ending Balance: Individually Evaluated for Impairment
|
8,069
|
1,009
|
1,995
|
7,729
|
1,878
|
427
|
50
|
812
|
147
|
966
|
-
|
23,082
|
Ending Balance: Collectively Evaluated for Impairment
|
189,709
|
21,875
|
15,798
|
64,343
|
31,449
|
7,759
|
6,230
|
11,566
|
20,330
|
36,792
|
-
|
405,851
|
Ending Balance: March 31, 2016
|
$197,778
|
$22,884
|
$17,793
|
$72,072
|
$33,327
|
$8,186
|
$6,280
|
$12,378
|
$20,477
|
$37,758
|
-
|
$428,933
|
•
|
A loan is 60 days or more delinquent on scheduled principal or interest;
|
•
|
A loan is presently in an unapproved over advanced position;
|
•
|
A loan is newly modified; or,
|
•
|
A loan is expected to be modified.
|
Troubled Debt Restructurings –Three months ended March 31, 2017
Interest only
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Real Estate Secured
|
|||
Residential 1-4 family
|
|||
Equity lines of credit
|
|||
Multifamily
|
|||
Farmland
|
|||
Construction, Land Development,
Other Land Loans
|
|||
Commercial Real Estate- Owner Occupied
|
|||
Commercial Real Estate- Non Owner Occupied
|
|||
Second Mortgages
|
|||
Non Real Estate Secured
|
|||
Personal / Consumer
|
|||
Commercial
|
|||
Agricultural
|
|||
Total
|
-
|
-
|
-
|
Troubled Debt Restructurings
Below Market Rate
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Real Estate Secured
|
|||
Residential 1-4 family
|
|||
Equity lines of credit
|
|||
Multifamily
|
|||
Farmland
|
|||
Construction, Land Development,
Other Land Loans
|
|||
Commercial Real Estate- Owner Occupied
|
|||
Commercial Real Estate- Non Owner Occupied
|
|||
Second Mortgages
|
|||
Non Real Estate Secured
|
|||
Personal / Consumer
|
|||
Commercial
|
|||
Agricultural
|
|||
Total
|
-
|
-
|
-
|
Troubled Debt Restructurings
Loan term extension
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Real Estate Secured
|
|||
Residential 1-4 family
|
|||
Equity lines of credit
|
|||
Multifamily
|
|||
Farmland
|
|||
Construction, Land Development,
Other Land Loans
|
|||
Commercial Real Estate- Owner Occupied
|
|||
Commercial Real Estate- Non Owner Occupied
|
|||
Second Mortgages
|
|||
Non Real Estate Secured
|
|||
Personal / Consumer
|
|||
Business Commercial
|
|||
Agricultural
|
|||
Total
|
-
|
-
|
-
|
Troubled Debt Restructurings
All
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Total Restructurings
|
-
|
-
|
-
|
Troubled Debt Restructurings
That Subsequently Defaulted
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Real Estate Secured
|
|||
Residential 1-4 family
|
|||
Equity lines of credit
|
|||
Multifamily
|
|||
Farmland
|
|||
Construction, Land Development, Other Land Loans
|
|||
Commercial Real Estate- Owner Occupied
|
|||
Commercial Real Estate- Non Owner Occupied
|
|||
Second Mortgages
|
|||
Non Real Estate Secured
|
|||
Personal / Consumer
|
|||
Commercial
|
|||
Agricultural
|
|||
Total
|
-
|
-
|
-
|
Troubled Debt Restructurings –Three months ended March 31, 2016
Interest only
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Real Estate Secured
|
|||
Residential 1-4 family
|
|||
Equity lines of credit
|
|||
Multifamily
|
|||
Farmland
|
1
|
57
|
57
|
Construction, Land Development,
Other Land Loans
|
|||
Commercial Real Estate- Owner Occupied
|
1
|
92
|
92
|
Commercial Real Estate- Non Owner Occupied
|
|||
Second Mortgages
|
|||
Non Real Estate Secured
|
|||
Personal / Consumer
|
|||
Commercial
|
|||
Agricultural
|
|||
Total
|
2
|
149
|
149
|
Troubled Debt Restructurings
Below Market Rate
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Real Estate Secured
|
|||
Residential 1-4 family
|
1
|
848
|
848
|
Equity lines of credit
|
|||
Multifamily
|
|||
Farmland
|
|||
Construction, Land Development,
Other Land Loans
|
|||
Commercial Real Estate- Owner Occupied
|
|||
Commercial Real Estate- Non Owner Occupied
|
|||
Second Mortgages
|
|||
Non Real Estate Secured
|
|||
Personal / Consumer
|
|||
Commercial
|
|||
Agricultural
|
|||
Total
|
1
|
848
|
848
|
Troubled Debt Restructurings
Loan term extension
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Real Estate Secured
|
|||
Residential 1-4 family
|
|||
Equity lines of credit
|
|||
Multifamily
|
|||
Farmland
|
|||
Construction, Land Development,
Other Land Loans
|
|||
Commercial Real Estate- Owner Occupied
|
|||
Commercial Real Estate- Non Owner Occupied
|
|||
Second Mortgages
|
|||
Non Real Estate Secured
|
|||
Personal / Consumer
|
|||
Business Commercial
|
|||
Agricultural
|
|||
Total
|
|||
Troubled Debt Restructurings
All
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Total Restructurings
|
3
|
997
|
997
|
Troubled Debt Restructurings
That Subsequently Defaulted
|
Number of Contracts
|
Pre- Modification Outstanding Recorded Investment
|
Post - Modification Recorded Investment
|
Real Estate Secured
|
|||
Residential 1-4 family
|
|||
Equity lines of credit
|
|||
Multifamily
|
|||
Farmland
|
|||
Construction, Land Development, Other Land Loans
|
|||
Commercial Real Estate- Owner Occupied
|
|||
Commercial Real Estate- Non Owner Occupied
|
|||
Second Mortgages
|
|||
Non Real Estate Secured
|
|||
Personal / Consumer
|
|||
Commercial
|
|||
Agricultural
|
|||
Total
|
-
|
-
|
-
|
(1)
|
Present value of expected future cash flows discounted at the loan's effective interest rate;
|
(2)
|
Loan's observable market price; or
|
(3)
|
Fair value of the collateral.
|
a.
|
National GDP Growth Rate
|
b.
|
Local Unemployment Rates
|
c.
|
The Prime Rate
|
d.
|
Past-Due Loans
|
e.
|
Non-Accrual Loans
|
f.
|
CRE Concentrations
|
g.
|
Loan Volume Level
|
h.
|
Level and Trend of Classified Loans
|
Three-months ended March 31
|
2017
|
2016
|
||||||
Loans held for sale at end of period
|
$
|
3,063
|
$
|
-
|
||||
Proceeds from sales of mortgage loans originated for sale
|
5,578
|
|||||||
Gain on sales of mortgage loans originated for sale
|
$
|
226
|
-
|
2017
|
2016
|
|||||||
Tax expense at statutory rate
|
$
|
500
|
$
|
245
|
||||
Reduction in taxes from:
|
||||||||
Tax-exempt interest
|
(29)
|
|
(26)
|
|
||||
Other, net
|
(32)
|
|
(28)
|
|
||||
Income tax expense
|
$
|
439
|
$
|
191
|
March 31, 2017
|
||||
Entity
|
Tier 1
|
Total Risk Based
|
Leverage
|
CET 1
|
Highlands Union Bank
|
12.15%
|
13.37%
|
7.80%
|
12.15%
|
December 31, 2016
|
||||
Entity
|
Tier 1
|
Total Risk Based
|
Leverage
|
CET 1
|
Highlands Union Bank
|
11.78%
|
13.02%
|
7.59%
|
11.78%
|
For the three months ended March 31
|
2017
|
2016
|
||||||
Income available to common stockholders
|
$
|
1,032
|
$
|
530
|
||||
Weighted average shares outstanding
|
8,113
|
8,089
|
||||||
Shares outstanding including assumed conversion
|
10,292
|
10,205
|
||||||
Basic earnings per common share
|
$
|
0.13
|
$
|
0.07
|
||||
Fully diluted earnings per share (including convertible preferred shares outstanding and restricted stock)
|
$
|
0.10
|
$
|
0.05
|
|
Level 1
|
|
Valuation is based upon quoted prices for identical instruments traded in active markets.
|
|
|||
|
Level 2
|
|
Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
|
|
|||
|
Level 3
|
|
Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
|
March 31, 2017
|
||||
Level 1
|
Level 2
|
Level 3
|
Total Fair Value
|
|
Available for Sale Securities
|
||||
State and Political Subdivisions
|
$ -
|
$ 12,903
|
$ -
|
$ 12,903
|
Mortgage Backed Securities
|
-
|
75,431
|
-
|
75,431
|
SBA Pools
|
-
|
8,050
|
-
|
8,050
|
Total AFS Securities
|
$ -
|
$ 96,384
|
$ -
|
$ 96,384
|
December 31, 2016
|
||||
Level 1
|
Level 2
|
Level 3
|
Total Fair Value
|
|
Available for Sale Securities
|
||||
State and Political Subdivisions
|
$ -
|
$ 12,451
|
$ -
|
$ 12,451
|
Mortgage Backed Securities
|
-
|
74,288
|
-
|
74,288
|
SBA Pools
|
-
|
8,334
|
-
|
8,334
|
Total AFS Securities
|
$ -
|
$ 95,073
|
$ -
|
$ 95,073
|
March 31, 2017
|
Level 1
|
Level 2
|
Level 3
|
Total Fair Value
|
||||||||||||
Impaired Loans
|
$
|
-
|
$
|
-
|
$
|
9,036
|
$
|
9,036
|
||||||||
Loans held for Sale
|
3,063
|
-
|
$
|
3 ,063
|
||||||||||||
Repossessions/OREO, net
|
$
|
-
|
$
|
-
|
$
|
2,741
|
$
|
2,741
|
||||||||
Real Estate Held for sale
|
$
|
-
|
$
|
-
|
$
|
1,662
|
$
|
1,662
|
December 31, 2016
|
Level 1
|
Level 2
|
Level 3
|
Total Fair Value
|
||||||||||||
Impaired Loans
|
$
|
-
|
$
|
-
|
$
|
4,869
|
$
|
4,869
|
||||||||
Loans held for sale
|
1,255
|
-
|
1,255
|
|||||||||||||
Repossessions/OREO, net
|
$
|
-
|
$
|
-
|
$
|
2,768
|
$
|
2,768
|
||||||||
Real Estate Held for sale
|
$
|
-
|
$
|
-
|
$
|
1,680
|
$
|
1,680
|
|
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
|
||||||||
|
|
March
|
|
|
|
Valuation
|
|
Unobservable
|
|
Range
|
|
||
|
12/31/16
|
|
3/31/17
|
|
Techniques
|
|
Input (2)
|
|
(Weighted Average)
|
|
|||
OREO, net
|
|
$
|
2,768
|
|
$
|
2,741
|
|
Appraisal of collateral (1)
|
|
Appraisal adjustments
|
|
0% to 45% (13%)
|
|
|
|
|
|
|
|
|
|
Liquidation expenses
|
|
0% to 10% (9%)
|
|
||
Real Estate held for sale
|
$ 1,680
|
$ 1,662 |
Appraisal of collateral (1)
|
Appraisal adjustments
|
|
0% to 50% (40%)
|
|||||||
Liquidation expenses
|
|
0% to 10% (8%)
|
|||||||||||
Impaired loans
|
|
$
|
4,869
|
|
$
|
9,036
|
|
Fair value of collateral –real estate (1), (3)
|
|
Appraisal adjustments
|
|
0% to 10% (9%)
|
|
|
|
|
|
|
|
Fair value of collateral –equipment, inventory, other (1), (3)
|
|
Appraisal adjustments
|
|
25% to 50% (33%)
|
|
||
Liquidation expenses
|
|
0% to 10% (9%)
|
March 31, 2017
|
December 31, 2016
|
|||||
Carrying Amount
|
Fair Value
|
Carrying Amount
|
Fair Value
|
|||
Cash and cash equivalents
|
$ 56,188
|
$ 56,188
|
$ 50,385
|
$ 50,385
|
||
Securities available for
sale
|
96,384
|
96,384
|
95,073
|
95,073
|
||
Other investments
|
6,385
|
6,385
|
6,637
|
6,637
|
||
Loans, net
|
404,383
|
404,043
|
404,838
|
406,851
|
||
Deposits
|
(495,467)
|
(427,552)
|
(489,869)
|
(422,730)
|
||
Other short-term
borrowings
|
(27,552)
|
(27,781)
|
(27,552)
|
(27,958)
|
||
Long-term debt
|
(40,133)
|
(41,555)
|
(40,146)
|
(41,825)
|
March 31, 2017
|
|||||||
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Value
|
||||
State and political subdivisions
|
$ 13,455
|
$ 31
|
$ 583
|
$ 12,903
|
|||
Mortgage backed securities
|
76,478
|
86
|
1,133
|
75,431
|
|||
SBA Pools
|
8,216
|
4
|
170
|
8,050
|
|||
$ 98,149
|
$ 121
|
$ 1,886
|
$ 96,384
|
December 31, 2016
|
|||||||
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Value
|
||||
State and political subdivisions
|
$ 13,013
|
$ 41
|
$ 603
|
$ 12,451
|
|||
Mortgage backed securities
|
75,384
|
93
|
1,189
|
74,288
|
|||
SBA Pools
|
8,533
|
6
|
205
|
8,334
|
|||
$ 96,930
|
$ 140
|
$ 1,997
|
$ 95,073
|
March 31, 2017
|
||||||
Less Than 12 months
|
12 Months or More
|
Total
|
||||
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
|
State and political subdivisions
|
$ 9,907
|
$ 583
|
$ -
|
$ -
|
$ 9,907
|
$ 583
|
Mortgage-backed securities
|
66,109
|
1,077
|
1,286
|
56
|
67,395
|
1,133
|
SBA Pools
|
7,106
|
154
|
554
|
16
|
7,660
|
170
|
Total
|
$ 83,122
|
$ 1,814
|
$ 1,840
|
$ 72
|
$84,962
|
$ 1,886
|
December 31, 2016
|
||||||
Less Than 12 months
|
12 Months or More
|
Total
|
||||
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
|
State and political subdivisions
|
$ 9,191
|
$ 603
|
$ -
|
$ -
|
$ 9,191
|
$ 603
|
Mortgage-backed securities
|
66,878
|
1,189
|
-
|
-
|
66,878
|
1,189
|
SBA Pools
|
7,587
|
205
|
-
|
-
|
7,587
|
205
|
Total
|
$ 83,656
|
$ 1,997
|
$ -
|
$ -
|
$83,656
|
$ 1,997
|
Amortized Cost
|
Approximate
Market Value
|
||
Due in one year or less
|
$ 555
|
$ 558
|
|
Due after one year through five years
|
1,431
|
1,446
|
|
Due after five years through ten years
|
3
|
3
|
|
Due after ten years
|
19,682
|
18,946
|
|
21,671
|
20,953
|
||
Mortgage-backed securities
|
76,478
|
75,431
|
|
$ 98,149
|
$ 96,384
|
·
|
strengthen board oversight of the management and operations of the Bank;
|
·
|
strengthen credit risk management and administration;
|
·
|
provide for the effective grading of the Bank's loan portfolio;
|
·
|
summarize the findings of its review of the adequacy of the staffing of its loan review function;
|
·
|
improve the Bank's position with respect to loans, relationships, or other assets in excess of $500,000 that currently are, or in the future become past due more than 90 days, on the Bank's problem loan list, or adversely classified in any report of examination of the Bank;
|
·
|
review and revise the Bank's methodology for determining the allowance for loan and lease losses ("ALLL") and maintain an adequate ALLL;
|
·
|
maintain sufficient capital at the Company and the Bank;
|
·
|
establish a revised written contingency funding plan;
|
·
|
establish a revised written strategic and capital plan;
|
·
|
establish a revised investment policy;
|
·
|
improve the Bank's earnings and overall condition;
|
·
|
revise the Bank's information technology program;
|
·
|
establish a disaster recovery and business continuity program; and,
|
·
|
establish a committee to monitor compliance with all aspects of the written agreement.
|
·
|
strengthen board oversight of the management and operations of the Bank;
|
·
|
strengthen credit risk management and administration;
|
·
|
provide for the effective grading of the Bank's loan portfolio;
|
·
|
summarize the findings of its review of the adequacy of the staffing of its loan review function;
|
·
|
improve the Bank's position with respect to loans, relationships, or other assets in excess of $500,000 that currently are or in the future become past due more than 90 days, on the Bank's problem loan list, or adversely classified in any report of examination of the Bank;
|
·
|
review and revise the Bank's methodology for determining the allowance for loan and lease losses ("ALLL") and maintain an adequate ALLL;
|
·
|
maintain sufficient capital at the Company and the Bank;
|
·
|
establish a revised written contingency funding plan;
|
·
|
establish a revised written strategic and capital plan;
|
·
|
establish a revised investment policy;
|
·
|
improve the Bank's earnings and overall condition;
|
·
|
revise the Bank's information technology program;
|
·
|
establish a disaster recovery and business continuity program; and,
|
·
|
establish a committee to monitor compliance with all aspects of the written agreement.
|
OREO Property at 3/31/17
|
||||||||
OREO Description
|
Number
|
Balance at 3/31/17
|
||||||
(in thousands)
|
||||||||
Land Development - Vacant Land
|
9
|
$
|
576
|
|||||
1-4 Family
|
6
|
334
|
||||||
Commercial Real Estate
|
7
|
1,831
|
||||||
Total
|
22
|
$
|
2,741
|
|||||
OREO Property at 12/31/2016
|
||||||||
OREO Description
|
Number
|
Balance at 12/31/16
|
||||||
(in thousands)
|
||||||||
Land Development - Vacant Land
|
9
|
$
|
597
|
|||||
1-4 Family
|
6
|
340
|
||||||
Commercial Real Estate
|
7
|
1,831
|
||||||
Total
|
22
|
$
|
2,768
|
|||||
March 31, 2017
|
December 31, 2016
|
||||||
Geographic Area
|
Number
|
Value (in thousands)
|
Number
|
Value (in thousands)
|
|||
Sevierville and Knoxville TN Area
|
3
|
$ 133
|
4
|
$153
|
|||
Southwest VA and Tri-city TN Area
|
16
|
2,519
|
16
|
2,525
|
|||
Boone and Banner Elk NC Area
|
3
|
89
|
2
|
90
|
|||
Total
|
22
|
$2,741
|
22
|
$2,768
|
·
|
adverse economic conditions in the market area and the impact on credit quality and risks inherent in the loan portfolio such as repayment risk and fluctuating collateral values;
|
·
|
our inability to manage, dispose of and properly value non-performing assets and other real estate owned;
|
·
|
further deterioration in the housing market and collateral values;
|
·
|
our inability to assess the creditworthiness of our loan portfolio and maintain a sufficient allowance for loan losses;
|
·
|
our inability to maintain adequate sources of funding and liquidity, including secondary sources such as Federal Home Loan Bank advances;
|
·
|
our ability to attract and maintain capital levels adequate to support our asset levels and risk profile;
|
·
|
our inability to comply with the written agreement, dated October 13, 2010, with the Federal Reserve Bank of Richmond;
|
·
|
our successful management of interest rate risk and changes in interest rates and interest rate policies;
|
·
|
reliance on our management team, including our ability to attract and retain key personnel;
|
·
|
our ability to successfully manage our strategic plan;
|
·
|
difficult market conditions in our industry;
|
·
|
problems with technology utilized by us;
|
·
|
our ability to successfully manage third-party vendors upon whom we are dependent;
|
·
|
competition with other banks and financial institutions, and companies outside of the banking industry, including those companies that have substantially greater access to capital and other resources;
|
·
|
potential impact on us of recently enacted legislation and future regulation;
|
·
|
changes in accounting policies or standards;
|
·
|
demand, development and acceptance of new products and services; and,
|
·
|
changing trends in customer profiles and behavior.
|
Exhibits Index
|
||
31.1
|
Rule 13a-14(a) Certification of President and Chief Executive Officer
|
|
312
|
Rule 13a-14(a) Certification of Chief Financial Officer
|
|
32.1
|
Certification Statement of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
|
|
32.2
|
Certification Statement of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
|
|
101
|
The following materials from the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 2017, formatted in Extensible Business Reporting Language (XBRL), include: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows; (v) Consolidated Statements of Changes in Stockholders' Equity and (vi) related notes (furnished herewith).
|
|
HIGHLANDS BANKSHARES, INC
|
|||
(Registrant)
|
|||
Date: May 10, 2017
|
By:
|
/s/ Timothy K. Schools
|
|
Timothy K. Schools
|
|||
President and
|
|||
Chief Executive Officer
|
|||
Date: May 10, 2017
|
/s/ James R. Edmondson
|
||
James R. Edmondson
|
|||
Chief Financial Officer
|
Exhibits Index
|
||
31.1
|
Rule 13a-14(a) Certification of President and Chief Executive Officer
|
|
312
|
Rule 13a-14(a) Certification of Chief Financial Officer
|
|
32.1
|
Certification Statement of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
|
|
32.2
|
Certification Statement of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
|
|
101
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The following materials from the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 2017, formatted in Extensible Business Reporting Language (XBRL), include: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows; (v) Consolidated Statements of Changes in Stockholders' Equity and (vi) related notes (furnished herewith).
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