Document And Entity Information
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Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2014
Mar. 24, 2015
Jun. 30, 2014
Document And Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2014    
Document Fiscal Year Focus 2014    
Document Fiscal Period Focus FY    
Entity Registrant Name NEW PEOPLES BANKSHARES INC    
Entity Central Index Key 0001163389    
Current Fiscal Year End Date --12-31    
Entity Filer Category Smaller Reporting Company    
Entity Common Stock, Shares Outstanding   22,878,654  
Entity Well-known Seasoned Issuer No    
Entity Public Float     $ 9,241,597
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    

Consolidated Balance Sheets
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
ASSETS    
Cash and due from banks $ 14,622 $ 18,770
Interest-bearing deposits with banks 20,933 35,908
Federal funds sold 5 2
Total Cash and Cash Equivalents 35,560 54,680
Investment Securities available-for-sale 100,069 79,126
Loans receivable 457,549 493,023
Allowance for loan losses (9,922) (13,080)
Net Loans 447,627 479,943
Bank premises and equipment, net 28,766 29,976
Equity securities (restricted) 2,369 2,704
Other real estate owned 15,049 15,853
Accrued interest receivable 1,975 2,286
Life insurance investments 12,268 12,118
Goodwill and other intangibles   8
Deferred taxes net 4,988 5,446
Other assets 2,413 2,571
Total Assets 651,084 684,711
Deposits:    
Noninterest bearing 143,950 137,745
Interest-bearing 29,567 30,138
Savings deposits 111,701 104,123
Time deposits 299,974 346,991
Total Deposits 585,192 618,997
FHLB advances 4,158 5,358
Accrued interest payable 266 2,287
Accrued expenses and other liabilities 2,121 1,613
Trust preferred securities 16,496 16,496
Total Liabilities 608,233 644,751
STOCKHOLDERS' EQUITY    
Common stock - $2.00 par value; 50,000,000 shares authorized; 21,878,654 and 21,872,293 shares issued and outstanding at December 31, 2014 and 2013, respectively 45,757 43,745
Common stock warrants 1,176 2,050
Additional paid-in-capital 13,672 13,050
Retained deficit (17,685) (17,925)
Accumulated other comprehensive income (69) (960)
Total Stockholders' Equity 42,851 39,960
Total Liabilities and Stockholders' Equity $ 651,084 $ 684,711

Consolidated Balance Sheets (Parenthetical)
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Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2014
Dec. 31, 2013
Consolidated Balance Sheets [Abstract]    
Common stock, par value $ 2.00 $ 2.00
Common stock, shares authorized 50,000,000 50,000,000
Common stock, shares issued 22,878,654 21,872,293
Common stock, shares outstanding 22,878,654 21,872,293

Consolidated Statements Of Operations
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Consolidated Statements Of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
INTEREST AND DIVIDEND INCOME    
Loans including fees $ 24,875 $ 28,824
Federal funds sold 3 2
Interest-earning deposits with banks 155 188
Investments 1,482 934
Dividends on equity securities (restricted) 129 128
Total Interest and Dividend Income 26,644 30,076
INTEREST EXPENSE    
Demand 37 82
Savings 180 205
Time deposits below $100,000 1,829 2,196
Time deposits above $100,000 1,270 1,547
FHLB Advances 195 242
Trust Preferred Securities 545 471
Total Interest Expense 4,056 4,743
NET INTEREST INCOME 22,588 25,333
PROVISION FOR LOAN LOSSES   550
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 22,588 24,783
NONINTEREST INCOME    
Service charges 2,191 2,258
Fees, commission and other income 3,572 2,763
Insurance and investment fees 391 322
Net realized gains on sale of investment securities 2 99
Life insurance investment income 85 89
Total Noninterest Income 6,241 5,531
NONINTEREST EXPENSES    
Salaries and employee benefits 12,725 13,430
Occupancy and equipment expense 3,886 4,001
Advertising and public relations 463 411
Data processing and telecommunications 2,244 1,956
FDIC insurance premiums 1,427 1,514
Other real estate owned and repossessed assets, net 2,286 2,290
Other operating expenses 5,563 5,299
Total Noninterest Expenses 28,594 28,901
INCOME BEFORE INCOME TAXES 235 1,413
INCOME TAX BENEFIT (5) (71)
NET INCOME $ 240 $ 1,484
Income Per Share    
Basic and Fully Diluted $ 0.01 $ 0.07
Average Weighted Shares of Common Stock    
Basic and Fully Diluted 22,099,926 21,870,758

Consolidated Statements Of Comprehensive Income (Loss)
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Consolidated Statements Of Comprehensive Income (Loss) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Statement of Other Comprehensive Income (Loss) [Abstract]    
NET INCOME $ 240 $ 1,484
Investment securities activity    
Unrealized gains (losses) arising during the year 1,351 (1,971)
Tax related to unrealized gains (losses) (459) 670
Reclassification of realized gains during the year (2) (99)
Tax related to realized gains 1 33
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) 891 (1,367)
TOTAL COMPREHENSIVE INCOME $ 1,131 $ 117

Consolidated Statements Of Changes In Stockholders' Equity
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Consolidated Statements Of Changes In Stockholders' Equity (USD $)
In Thousands, except Share data
Common Stock [Member]
Common Stock Warrants [Member]
Additional Paid In Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Total
Balance at Dec. 31, 2012 $ 43,731 $ 2,056 $ 13,081 $ (19,409) $ 407 $ 39,866
Balance, Shares at Dec. 31, 2012 21,866,000          
Net income       1,484   1,484
Exercise of Common Stock Warrants 14 (6) 6     14
Exercise of Common Stock Warrants, Shares 6,000          
Stock offering costs     (37)     (37)
Other comprehensive income (loss), net of tax         (1,367) (1,367)
Balance at Dec. 31, 2013 43,745 2,050 13,050 (17,925) (960) 39,960
Balance, Shares at Dec. 31, 2013 21,872,000         21,872,293
Net income       240   240
Exercise of Common Stock Warrants (2,012) 874 (622)     (1,760)
Exercise of Common Stock Warrants, Shares 1,006,000          
Other comprehensive income (loss), net of tax         891 891
Balance at Dec. 31, 2014 $ 45,757 $ 1,176 $ 13,672 $ (17,685) $ (69) $ 42,851
Balance, Shares at Dec. 31, 2014 22,878,000         22,878,654

Consolidated Statements Of Cash Flows
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Consolidated Statements Of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income $ 240 $ 1,484
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation 2,216 2,338
Provision of loan losses   550
Income (less expenses) on life insurance (150) (154)
Gain on sale of securities available-for-sale (2) (99)
(Gain) Loss on sale of premises and equipment (386) 23
Loss on sale of foreclosed real estate 173 570
Adjustment of carrying value of foreclosed real estate 1,099 562
Accretion of bond premiums/discounts 1,038 922
Deferred tax expense (benefit)   (57)
Amortization of core deposit intangible 8 45
Net change in:    
Interest receivable 311 88
Other assets 158 228
Accrued interest payable (2,021) 407
Accrued expenses and other liabilities 508 248
Net Cash Provided by Operating Activities 3,192 7,155
CASH FLOWS FROM INVESTING ACTIVITIES    
Net decrease in loans 24,611 16,847
Proceeds from sale of loans 4,655  
Purchase of securities available-for-sale (54,859) (48,280)
Proceeds from sale and maturities of securities available-for-sale 34,229 15,876
Sale of Federal Home Loan Bank stock 350 309
Purchase of Federal Reserve Bank stock (15) (210)
Payments for the purchase of premises and equipment (1,753) (1,552)
Proceeds from sales of premises and equipment 1,133 405
Proceeds from sales of other real estate owned 2,582 5,097
Net Cash Provided by (Used in) Investing Activities 10,933 (11,508)
CASH FLOWS FROM FINANCING ACTIVITIES    
Stock offering costs   (37)
Exercise of common stock warrants 1,760 14
Repayments to Federal Home Loan Bank (1,200) (1,200)
Net change in:    
Demand deposits 5,634 786
Savings deposits 7,578 (9,157)
Time deposits (47,017) (25,482)
Net Cash Used in Financing Activities (33,245) (35,076)
Net increase (decrease) in cash and cash equivalents (19,120) (39,429)
Cash and Cash Equivalents, Beginning of Period 54,680 94,109
Cash and Cash Equivalents, End of Period 35,560 54,680
Supplemental Disclosure of Cash Paid During the Year For:    
Interest 6,077 4,336
Taxes      
Supplemental Disclosure of Non Cash Transactions:    
Other real estate acquired in settlement of foreclosed loans 4,306 9,001
Loans made to finance sale of foreclosed real estate $ 1,256 $ 787

Nature Of Operations
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Nature Of Operations
12 Months Ended
Dec. 31, 2014
Nature Of Operations [Abstract]  
Nature Of Operations

NOTE 1NATURE OF OPERATIONS:

 

Nature of Operations –  New Peoples Bankshares, Inc. (“The Company”) is a bank holding company whose principal activity is the ownership and management of a community bank.  New Peoples Bank, Inc. (“The Bank”) was organized and incorporated under the laws of the Commonwealth of Virginia on December 9, 1997.  The Bank commenced operations on October 28, 1998, after receiving regulatory approval.  As a state chartered member bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions, the Federal Deposit Insurance Corporation and the Federal Reserve Bank.  The Bank provides general banking services to individuals, small and medium size businesses and the professional community of southwestern Virginia, southern West Virginia, and eastern Tennessee.  On June 9, 2003, the Company formed two wholly owned subsidiaries, NPB Financial Services, Inc. and NPB Web Services, Inc.  On July 7, 2004 the Company established NPB Capital Trust I for the purpose of issuing trust preferred securities.  On September 27, 2006, the Company established NPB Capital Trust 2 for the purpose of issuing additional trust preferred securities.  NPB Financial Services, Inc. was a subsidiary of the Company until January 1, 2009 when it became a subsidiary of the Bank. The name of NPB Financial Services, Inc. was changed in June 2012 to NPB Insurance Services, Inc. which operates solely as an insurance agency.


Summary Of Significant Accounting Policies
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Summary Of Significant Accounting Policies
12 Months Ended
Dec. 31, 2014
Summary Of Significant Accounting Policies [Abstract]  
Summary Of Significant Accounting Policies

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 

Consolidation Policy - The consolidated financial statements include the Company, the Bank, NPB Insurance Services, Inc., and NPB Web Services, Inc. (Hereinafter, collectively referred to as “The Company.”)  All significant intercompany balances and transactions have been eliminated.  In accordance with ASC 942, NPB Capital Trust I and 2 are not included in the consolidated financial statements.

 

Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions.

 

Cash and Cash Equivalents – Cash and cash equivalents as used in the cash flow statements include cash and due from banks, interest-bearing deposits with banks, and federal funds sold.

 

Investment Securities – Management determines the appropriate classification of securities at the time of purchase.  If management has the intent and the Company has the ability at the time of purchase to hold securities until maturity, they are classified as held to maturity and carried at amortized historical cost.  Securities not intended to be held to maturity are classified as available for sale and carried at fair value.  Securities available for sale are intended to be used as part of the Company’s asset and liability management strategy and may be sold in response to changes in interest rates, prepayment risk or other similar factors.

 

The amortization of premiums and accretion of discounts are recognized in interest income using the effective interest method over the period to maturity.  Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the securities sold, using the specific identification method.  Realized gains (losses) on securities available-for-sale are included in noninterest income and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income.  Unrealized gains and losses on investment securities available for sale are based on the difference between book value and fair value of each security.  These gains and losses are credited or charged to other comprehensive income, net of tax, whereas realized gains and losses flow through the statement of operations.

 

Loans – Loans are carried on the balance sheet at unpaid principal balance, net of any unearned interest and the allowance for loan losses.  Interest income on loans is computed using the effective interest method, except where serious doubt exists as to the collectibility of the loan, in which case accrual of the income is discontinued.

 

It is the Company’s policy to stop accruing interest on a loan, and classify that loan as non-accrual under the following circumstances:  (a) whenever we are advised by the borrower that scheduled payment or interest payments cannot be met, (b) when our best judgment indicates that payment in full of principal and interest can no longer be expected, or (c) when any such loan or obligation becomes delinquent for 90 days unless it is both well secured and in the process of collection.  All interest accrued but not collected for loans that are place on nonaccrual or charged off is reversed against interest income.  The interest on these loans is accounted for on the cash basis or cost-recovery method, until qualifying for return to accrual.  Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and prospects for future contractual payments are reasonably assured.

 

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

 

Significant Group Concentrations of Credit Risk –  The Company identifies a concentration as any obligation, direct or indirect, of the same or affiliated interests which represent 25% or more of the Company’s capital structure, or $10.7 million as of December 31, 2014.  Most of the Company’s activities are with customers located within the southwest Virginia, southern West Virginia, and northeastern Tennessee region.  Certain concentrations may pose credit risk.  The Company does not have any significant concentrations to any one industry or customer.

 

Allowance for Loan Losses – The allowance for loan losses is maintained at a level that, in management’s judgment, is adequate to absorb credit losses inherent in the loan portfolio.  The loan portfolio is analyzed periodically and loans are assigned a risk rating.  Allowances for impaired loans are generally determined based on collateral values or the present value of expected cash flows.  A general allowance is made for all other loans not considered impaired as deemed appropriate by management.  In determining the adequacy of the allowance, management considers the following factors: the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, the estimated value of any underlying collateral, prevailing environmental factors and economic conditions, and other inherent risks.  While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in collateral values and changes in estimates of cash flows on impaired loans.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

 

The allowance is increased by a provision for loan losses, which is charged to expense and reduced by charge-offs, net of recoveries.  Loans are charged against the allowance for loan losses when management believes that collectability of all or part of the principal is unlikely.  Past due status is determined based on contractual terms.

 

In regards to its consumer loans and consumer real estate loan portfolio, the Company uses the guidance found in the Uniform Retail Credit Classification and Account Management Policy and as a result affects our estimate of the allowance for loan losses.  Under this approach when a consumer loan or consumer real estate loan is originated, it must possess qualities of a credit risk grade of Pass for approval and will remain with the initial risk rating through maturity unless there is a deterioration in the credit quality of the loan.  Subsequently, if the loan becomes contractually 90 days past due or the borrower files for bankruptcy protection, it is downgraded to Substandard and placed in nonaccrual status.  If the loan is unsecured, upon being deemed Substandard, the entire loan amount is charged off. 

 

At 90 days past due, or earlier if the customer has filed bankruptcy, for non 1-4 family residential secured loans, the collateral value less estimated liquidation costs is compared to the loan balance to calculate any potential deficiency.  If there is sufficient collateral, no charge-off is necessary.  If there is a deficiency, then prior to the loan becoming contractually 120 days past due, the deficiency is charged-off against the allowance for loan loss.  In the case of 1-4 family residential or a home equity loans, upon the loan becoming 120 days past due, a current value is obtained and after application of an estimated liquidation discount, a comparison is made to the loan balance to calculate any deficiency.  Subsequently, any noted deficiency is then charged-off against the allowance for loan loss when the loan becomes contractually 180 days past due.  If the customer has filed bankruptcy, then within 60 days of the bankruptcy notice, any calculated deficiency is charged-off against the allowance for loan loss.  Collection efforts continue by means of repossessions or foreclosures, and upon bank ownership, liquidation ensues.

 

Other Real Estate Owned – Other real estate owned represents properties acquired through foreclosure or deed taken in lieu of foreclosure.  At the time of acquisition, these properties are recorded at fair value less estimated costs to sell.  Expenses incurred in connection with operating these properties and subsequent write-downs, if any, are charged to expense.  Subsequent to foreclosure, management periodically considers the adequacy of the reserve for losses on the property.  Gains and losses on the sales of these properties are credited or charged to income in the year of the sale.

 

Bank Premises and Equipment – Land, buildings and equipment are recorded at cost less accumulated depreciation.  Depreciation is computed using the straight-line method over the following estimated useful lives:

 

Type

 

Estimated useful life

Buildings

 

39 years

Paving and landscaping

 

15 years

Computer equipment and software

 

3 to 5 years

Vehicles

 

5 years

Furniture and other equipment

 

5 to 7 years

Stock Options - The Company records compensation related to stock options pursuant to ASC 718 which requires the estimated fair market value of the expense to be reflected over the period the award is earned which is presumed to be the vesting period.  For additional discussion concerning stock options see Note 15, “Stock Option Plan.

Common Stock Warrants - The company issued common stock warrants as a result of its conversion of Director notes and the completion of its common stock offering in 2012.  For additional discussion concerning these transactions including the terms and value of the warrants, see Note 22, “Capital.”

Income Taxes – Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method.  Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.  If all or a portion of the net deferred tax asset is determined to be unlikely to be realized, a valuation allowance is established to reduce the net deferred tax asset to the amount that is more likely than not to be realized.

 

In the event the Company has unrecognized tax expense in future accounting periods, the Company will recognize interest in interest expense and penalties in operating expenses.  There were no interest or penalties related to an unrecognized tax position for the years ended December 31, 2014 and 2013.  Because of the impact of deferred tax accounting, other than interest and penalties, the reversal of the Company’s treatment by taxing authorities would not affect the annual effective tax rate but would defer or accelerate the payment of cash to the taxing authority.  The Company’s tax filings for years ended 2010 through 2014 are currently open to audit under statutes of limitations by the Internal Revenue Service (“IRS”) and state taxing authorities

 

Financial Instruments – Off-balance-sheet instruments -  In the ordinary course of business, the Company has entered into commitments to extend credit.  Such financial instruments are recorded in the financial statements when they are funded.

 

Earnings Per Share – Basic earnings per share computations are based on the weighted average number of shares outstanding during each year.  Dilutive earnings per share reflects the additional common shares that would have been outstanding if dilutive potential common shares had been issued.  Potential common shares that may be issued relate to outstanding options and common stock warrants and are determined by the Treasury Method.  For the years ending December 31, 2014 and 2013, potential common shares of 1,555,964 and 2,648,871, respectively, were anti-dilutive and were not included in the calculation.  Basic and diluted net income per common share calculations follows:

 

(Amounts in Thousands, Except

 

For the years ended

Share and Per Share Data)

 

December 31,

 

 

2014

 

2013

Net income

$

240 

$

1,484 

Weighted average shares outstanding

 

22,099,926 

 

21,870,758 

Weighted average dilutive shares outstanding

 

22,099,926 

 

21,870,758 

Basic and diluted income per share

$

0.01 

$

0.07 

 

Comprehensive Income (Loss) – Generally accepted accounting principles require that recognized revenue, expenses, gains and losses be included in net income.  Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.  The change in unrealized gains and losses on available-for-sale securities is our only component of other comprehensive income.

 

Advertising Cost – Advertising costs are expensed in the period incurred.

 

Business Combinations - For purchase acquisitions accounted for as a business combination, the Company is required to record the assets acquired, including identified intangible assets and liabilities assumed at their fair value, which in many instances involves estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques.  The determination of the useful lives of intangible assets is subjective, as is the appropriate amortization method for such intangible assets.  In addition, purchase acquisitions may result in goodwill, which is subject to ongoing periodic impairment testing based on the fair value of net assets acquired compared to the carrying value of goodwill.  Changes in acquisition multiples, the overall interest rate environment, or the continuing operations of the assets acquired could have a significant impact on the periodic impairment testing.  For additional discussion concerning our valuation of intangible assets, see Note 13, “Intangible Assets.”

 

Reclassification – Certain reclassifications have been made to the prior years’ financial statements to place them on a comparable basis with the current year.  Net income and stockholders’ equity previously reported were not affected by these reclassifications. 

 

Subsequent Events – The Company has evaluated subsequent events for potential recognition and/or disclosure through the date these consolidated financial statements were issued.


Formal Written Agreement
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Formal Written Agreement
12 Months Ended
Dec. 31, 2014
Formal Written Agreement [Abstract]  
Formal Written Agreement

NOTE 3FORMAL WRITTEN AGREEMENT:

Effective July 29, 2010, the Company and the Bank entered into a written agreement with the Federal Reserve Bank of Richmond (“Reserve Bank”) and the Virginia State Corporation Commission Bureau of Financial Institutions (the “Bureau”) called (the “Written Agreement”).  At December 31, 2014, we believe we have not yet achieved full compliance with the Written Agreement but we have made progress in our compliance efforts under the Written Agreement and all of the written plans required to date, as discussed in the following paragraphs, have been submitted on a timely basis. 

 

Under the terms of the Written Agreement, the Bank has agreed to develop and submit for approval within specified  time periods written plans to: (a) strengthen board oversight of management and the Bank’s operation; (b) if appropriate after review, to strengthen the Bank’s management and board governance; (c) strengthen credit risk management policies; (d) enhance lending and credit administration; (e) enhance the Bank’s management of commercial real estate concentrations; (f) conduct ongoing review and grading of the Bank’s loan portfolio; (g) improve the Bank’s position with respect to loans, relationships, or other assets in excess of $1 million which are now or in the future become past due more than 90 days, which are on the Bank’s problem loan list, or which are adversely classified in any report of examination of the Bank; (h) review and revise, as appropriate, current policy and maintain sound processes for maintaining an adequate allowance for loan and lease losses; (i) enhance management of the Bank’s liquidity position and funds management practices; (j) revise its contingency funding plan; (k)  revise its strategic plan; and (l)  enhance the Bank’s anti-money laundering and related activities.

 

In addition, the Bank has agreed that it will: (a) not extend, renew, or restructure any credit that has been criticized by the Reserve Bank or the Bureau absent prior board of directors approval in accordance with the restrictions in the Written Agreement; (b) eliminate all assets or portions of assets classified as “loss” and thereafter charge off all assets classified as “loss” in a federal or state report of examination, unless otherwise approved by the Reserve Bank.

Under the terms of the Written Agreement, both the Company and the Bank have agreed to submit capital plans to maintain sufficient capital at the Company, on a consolidated basis, and the Bank, on a stand-alone basis, and to refrain from declaring or paying dividends without prior regulatory approval. The Company has agreed that it will not take any other form of payment representing a reduction in the Bank’s capital or make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without prior regulatory approval. The Company may not incur, increase or guarantee any debt without prior regulatory approval and has agreed not to purchase or redeem any shares of its stock without prior regulatory approval.

Under the terms of the Written Agreement, the Company and the Bank have appointed a committee to monitor compliance with the Written Agreement. The directors of the Company and the Bank have recognized and unanimously agree with the common goal of financial soundness represented by the Written Agreement and have confirmed the intent of the directors and executive management to diligently seek to comply with all requirements of the Written Agreement.


Deposits In And Federal Funds Sold To Banks
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Deposits In And Federal Funds Sold To Banks
12 Months Ended
Dec. 31, 2014
Deposits In And Federal Funds Sold To Banks [Abstract]  
Deposits In And Federal Funds Sold To Banks Disclosure

NOTE 4DEPOSITS IN AND FEDERAL FUNDS SOLD TO BANKS:

 

The Bank had federal funds sold and cash on deposit with other commercial banks amounting to $20.9 million and $35.9 million at December 31, 2014 and 2013, respectively.  Deposit amounts at other commercial banks may, at times, exceed federally insured limits.    

 

The Bank is required to maintain average reserve balances, computed by applying prescribed percentages to its various types of deposits, either at the Bank or on deposit with the Federal Reserve Bank.  At December 31, 2014 and 2013, all required reserves were met by the Bank’s vault cash. 


Investment Securities
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Investment Securities
12 Months Ended
Dec. 31, 2014
Investment Securities [Abstract]  
Investment Securities

NOTE 5INVESTMENT SECURITIES:

 

The amortized cost and estimated fair value of securities (all available-for-sale) are as follows:

 

 

 

 

 

Gross

 

Gross

 

Approximate

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

(Dollars are in thousands)

Cost

 

Gains

 

Losses

 

Value

December 31, 2014

U.S. Government Agencies

$

43,985 

$

332 

$

247 

$

44,070 

Taxable municipals

 

293 

 

-

 

 

288 

Mortgage backed securities

 

55,896 

 

144 

 

329 

 

55,711 

Total Securities AFS

$

100,174 

$

476 

$

581 

$

100,069 

 

December 31, 2013

U.S. Government Agencies

$

39,296 

$

246 

$

941 

$

38,601 

Mortgage backed securities

 

41,284 

 

60 

 

819 

 

40,525 

Total Securities AFS

$

80,580 

$

306 

$

1,760 

$

79,126 

 

The following table details unrealized losses and related fair values in the available-for-sale portfolio.  This information is aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2014 and December 31, 2013.

 

 

 

Less than 12 Months

 

12 Months or More

 

Total

 

 

(Dollars are in thousands)

 

Fair Value

 

Unrealized

Losses

 

Fair

Value

 

Unrealized

Losses

 

Fair

Value

 

Unrealized

Losses

 

December 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Agencies

$

7,408 

$

38 

$

12,965 

$

209 

$

20,373 

$

247 

 

Taxable municipals

 

288 

 

 

-

 

-

 

288 

 

 

Mtg. backed securities

 

21,083 

 

179 

 

11,622 

 

150 

 

32,705 

 

329 

 

Total Securities AFS

$

28,779 

$

222 

$

24,587 

$

359 

$

53,366 

$

581 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Agencies

$

26,090 

$

936 

$

570 

$

$

26,660 

$

941 

 

Mtg. backed securities

 

27,461 

 

693 

 

5,046 

 

126 

 

32,507 

 

819 

 

Total Securities AFS

$

53,551 

$

1,629 

$

5,616 

$

131 

$

59,167 

$

1,760 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2014, the available-for-sale portfolio included eighty four investments for which the fair market value was less than amortized cost.  At December 31, 2013, the available-for-sale portfolio included eighty investments for which the fair market value was less than amortized cost.  Management evaluates securities for other than temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial conditions and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  No securities were deemed to have an other than temporary impairment.

 

 

 

 

 

 

 

The amortized cost and fair value of investment securities at December 31, 2014, by contractual maturity, are shown in the following schedule.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

Weighted

(Dollars are in thousands)

Amortized

 

Fair

 

Average

Securities Available for Sale

Cost

 

Value

 

Yield

Due in one year or less

$

190 

$

191 

 

1.60% 

Due after one year through five years

2,760 
2,776 
1.43% 

Due after five years through ten years

 

12,758 

 

12,788 

 

1.51% 

Due after ten years

 

84,466 

 

84,314 

 

1.90% 

Total

$

100,174 

$

100,069 

 

1.83% 

 

Investment securities with a carrying value of $17.5 million and $17.0 million at December 31, 2014 and 2013, were pledged to secure public deposits, overnight payment processing and for other purposes required by law.

 

The Bank, as a member of the Federal Reserve Bank and the Federal Home Loan Bank, is required to hold stock in each. These equity securities are restricted from trading and are recorded at a cost of $2.4 million and $2.7 million as of December 31, 2014 and 2013, respectively.


Loans
v0.0.0.0
Loans
12 Months Ended
Dec. 31, 2014
Loans [Abstract]  
Loans

NOTE 6LOANS:

 

Loans receivable outstanding at December 31, are summarized as follows:

 

 

 

 

 

 

 

 

 

(Dollars are in thousands)

2014

 

2013

Real estate secured:

 

 

 

 

Commercial

$

108,062 

$

126,174 

Construction and land development

 

15,439 

 

22,421 

Residential 1-4 family

 

243,538 

 

249,187 

Multifamily

 

14,409 

 

11,482 

Farmland

 

25,252 

 

28,892 

Total real estate loans

 

406,700 

 

438,156 

Commercial

 

21,807 

 

24,955 

Agriculture

 

3,117 

 

3,718 

Consumer installment loans

 

25,828 

 

26,055 

All other loans

97 
139 

Total loans

$

457,549 

$

493,023 

 

Loans receivable on nonaccrual status at December 31, are summarized as follows:

 

(Dollars are in thousands)

2014

 

2013

Real estate secured:

 

 

 

 

Commercial

$

6,222 

$

16,098 

Construction and land development

 

332 

 

775 

Residential 1-4 family

 

8,589 

 

4,852 

Multifamily

 

118 

 

171 

Farmland

 

5,982 

 

5,315 

Total real estate loans

 

21,243 

 

27,211 

Commercial

 

554 

 

947 

Agriculture

 

18 

 

45 

Consumer installment loans

46 
104 

All other loans

-

-

Total loans receivable on nonaccrual status

$

21,861 

$

28,307 

 

Total interest income not recognized on nonaccrual loans for 2014 and 2013 was $386 thousand and $969 thousand, respectively.  In 2014, three nonperforming loans totaling $5.5 million were sold to further reduce the high level of nonaccrual loans.  Charge offs of $1.0 million were realized and fully absorbed by the allowance for loan losses with no additional provisions needed.  We will continue to evaluate certain loans to determine if additional loans may be sold at minimal impact to earnings and to capital levels in the near future as we aggressively work to reduce the level of nonperforming loans.  There were no nonperforming loans sold during 2013.

The following table presents information concerning the Company’s investment in loans considered impaired as of December 31, 2014 and December 31, 2013:

 

 

As of December 31, 2014

(Dollars are in thousands)

 

 

Average

Recorded

Investment

 

 

Interest

Income

Recognized

 

 

 

Recorded

Investment

 

 

Unpaid Principal Balance

 

 

 

Related

Allowance

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

Real estate secured:

 

 

 

 

 

 

 

 

 

 

Commercial

$

9,628 

$

128 

$

3,986 

$

5,166 

$

-

Construction and land development

 

248 

 

 

15 

 

15 

 

-

Residential 1-4 family

 

2,959 

 

177 

 

3,245 

 

3,471 

 

-

Multifamily

 

370 

 

26 

 

438 

 

479 

 

-

Farmland

 

5,383 

 

114 

 

5,767 

 

6,801 

 

-

Commercial

 

421 

 

-

 

548 

 

674 

 

-

Agriculture

 

62 

 

 

52 

 

52 

 

-

Consumer installment loans

 

12 

 

 

15 

 

15 

 

-

All other loans

 

-

 

-

 

-

 

-

 

-

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

Real estate secured:

 

 

 

 

 

 

 

 

 

 

Commercial

 

6,338 

 

132 

 

4,517 

 

4,905 

 

1,482 

Construction and land development

 

505 

 

14 

 

303 

 

355 

 

88 

Residential 1-4 family

 

4,248 

 

126 

 

2,573 

 

2,852 

 

347 

Multifamily

 

268 

 

 

113 

 

113 

 

15 

Farmland

 

2,573 

 

59 

 

1,104 

 

1,116 

 

343 

Commercial

 

407 

 

 

74 

 

74 

 

26 

Agriculture

 

39 

 

 

30 

 

30 

 

30 

Consumer installment loans

 

10 

 

-

 

-

 

-

 

-

All other loans

 

-

 

-

 

-

 

-

 

-

Total

$

33,471 

$

795 

$

22,780 

$

26,118 

$

2,331 

 

 

 

 

As of December 31, 2013

(Dollars are in thousands)

 

 

Average

Recorded

Investment

 

 

Interest

Income

Recognized

 

 

 

Recorded

Investment

 

 

Unpaid Principal Balance

 

 

 

Related

Allowance

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

Real estate secured:

 

 

 

 

 

 

 

 

 

 

Commercial

$

16,270 

$

300 

$

9,807 

$

10,276 

$

-

Construction and land development

 

2,246 

 

26 

 

336 

 

345 

 

-

Residential 1-4 family

 

4,276 

 

126 

 

2,557 

 

2,727 

 

-

Multifamily

 

652 

 

16 

 

326 

 

326 

 

-

Farmland

 

4,260 

 

166 

 

2,533 

 

2,670 

 

-

Commercial

 

717 

 

 

315 

 

423 

 

-

Agriculture

 

71 

 

 

60 

 

60 

 

-

Consumer installment loans

 

51 

 

 

12 

 

12 

 

-

All other loans

 

-

 

-

 

-

 

-

 

-

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

Real estate secured:

 

 

 

 

 

 

 

 

 

 

Commercial

 

12,080 

 

441 

 

12,092 

 

13,924 

 

1,942 

Construction and land development

 

492 

 

 

554 

 

640 

 

138 

Residential 1-4 family

 

3,980 

 

260 

 

5,458 

 

5,824 

 

1,180 

Multifamily

 

561 

 

17 

 

268 

 

268 

 

39 

Farmland

 

4,116 

 

114 

 

6,109 

 

6,797 

 

653 

Commercial

 

1,012 

 

 

672 

 

740 

 

208 

Agriculture

 

138 

 

 

55 

 

71 

 

43 

Consumer installment loans

 

22 

 

 

22 

 

22 

 

All other loans

 

-

 

-

 

-

 

-

 

-

Total

$

50,944 

$

1,499 

$

41,176 

$

45,125 

$

4,206 

 

 

 

 

An age analysis of past due loans receivable was as follows:

 

 

 

 

 

As of December 31, 2014

(Dollars are in thousands)

 

 

 

Loans

30-59

Days

Past

Due

 

 

 

Loans

60-89

Days

Past

Due

 

 

Loans

90 or

More

Days

Past

Due

 

 

 

 

Total

Past

Due

Loans

 

 

 

 

 

 

Current

Loans

 

 

 

 

 

 

Total

Loans

 

Accruing

Loans

90 or

More

Days

Past

Due

Real estate secured:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

2,683 

$

74 

$

2,411 

$

5,168 

$

102,894 

$

108,062 

$

-

Construction and  land

  development

 

94 

 

335 

 

12 

 

441 

 

14,998 

 

15,439 

 

-

Residential 1-4 family

 

7,885 

 

1,728 

 

2,346 

 

11,959 

 

231,579 

 

243,538 

 

-

Multifamily

 

320 

 

-

 

-

 

320 

 

14,089 

 

14,409 

 

-

Farmland

 

661 

 

453 

 

-

 

1,114 

 

24,138 

 

25,252 

 

-

Total real estate loans

 

11,643 

 

2,590 

 

4,769 

 

19,002 

 

387,698 

 

406,700 

 

-

Commercial

 

64 

 

15 

 

162 

 

241 

 

21,566 

 

21,807 

 

-

Agriculture

 

-

 

 

-

 

 

3,113 

 

3,117 

 

-

Consumer installment

  Loans

 

153 

 

19 

 

21 

 

193 

 

25,635 

 

25,828 

 

-

All other loans

 

22 

 

 

-

 

28 

 

69 

 

97 

 

-

Total loans

$

11,882 

$

2,634 

$

4,952 

$

19,468 

$

438,081 

$

457,549 

$

-

 

 

 

 

 

 

 

As of December 31, 2013

(Dollars are in thousands)

 

 

 

Loans

30-59

Days

Past

Due

 

 

 

Loans

60-89

Days

Past

Due

 

 

Loans

90 or

More

Days

Past

Due

 

 

 

 

Total

Past

Due

Loans

 

 

 

 

 

 

Current

Loans

 

 

 

 

 

 

Total

Loans

 

Accruing

Loans

90 or

More

Days

Past

Due

Real estate secured:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

7,192 

$

1,713 

$

4,174 

$

13,079 

$

113,095 

$

126,174 

$

-

Construction and  land

  development

 

505 

 

183 

 

347 

 

1,035 

 

21,386 

 

22,421 

 

-

Residential 1-4 family

 

6,391 

 

1,067 

 

1,271 

 

8,729 

 

240,458 

 

249,187 

 

-

Multifamily

 

-

 

436 

 

-

 

436 

 

11,046 

 

11,482 

 

-

Farmland

 

1,869 

 

137 

 

3,986 

 

5,992 

 

22,900 

 

28,892 

 

-

Total real estate loans

 

15,957 

 

3,536 

 

9,778 

 

29,271 

 

408,885 

 

438,156 

 

-

Commercial

 

135 

 

14 

 

902 

 

1,051 

 

23,904 

 

24,955 

 

-

Agriculture

 

26 

 

20 

 

13 

 

59 

 

3,659 

 

3,718 

 

-

Consumer installment

  Loans

 

241 

 

48 

 

 

297 

 

25,758 

 

26,055 

 

-

All other loans

 

11 

 

 

 

19 

 

120 

 

139 

 

Total loans

$

16,370 

$

3,625 

$

10,702 

$

30,697 

$

462,326 

$

493,023 

$

 

 

The Company categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans and leases individually by classifying the loans receivable as to credit risk.  The Company uses the following definitions for risk ratings:

 

Pass - Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service their debt and other factors.

 

Special Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit quality or financial strength.  Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.  Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Company’s credit position at some future date.

 

Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

Doubtful - Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

 

Based on the most recent analysis performed, the risk category of loans receivable was as follows:

 

As of December 31, 2014

(Dollars are in thousands)

 

 

 

Pass

 

 

Special

Mention

 

 

 

Substandard

 

 

 

 

 

Doubtful

 

 

 

Total

Real estate secured:

 

 

 

 

 

 

 

 

 

 

Commercial

$

92,515 

$

7,925 

$

7,622 

$

-

$

108,062 

Construction and land development

 

12,974 

 

2,041 

 

424 

 

-

 

15,439 

Residential 1-4 family

 

230,184 

 

1,965 

 

11,389 

 

-

 

243,538 

Multifamily

 

13,953 

 

146 

 

310 

 

-

 

14,409 

Farmland

 

18,159 

 

270 

 

6,823 

 

-

 

25,252 

Total real estate loans

 

367,785 

 

12,347 

 

26,568 

 

-

 

406,700 

Commercial

 

18,495 

 

2,548 

 

764 

 

-

 

21,807 

Agriculture

 

3,069 

 

-

 

48 

 

-

 

3,117 

Consumer installment loans

 

25,719 

 

-

 

109 

 

-

 

25,828 

All other loans

 

97 

 

-

 

-

 

-

 

97 

Total

$

415,165 

$

14,895 

$

27,489 

$

-

$

457,549 

 

 

 

As of December 31, 2013

(Dollars are in thousands)

 

 

 

Pass

 

 

Special

Mention

 

 

 

Substandard

 

 

 

 

 

Doubtful

 

 

 

Total

Real estate secured:

 

 

 

 

 

 

 

 

 

 

Commercial

$

100,403 

$

4,586 

$

21,185 

$

-

$

126,174 

Construction and land development

 

19,138 

 

2,107 

 

1,176 

 

-

 

22,421 

Residential 1-4 family

 

234,857 

 

1,916 

 

12,213 

 

201 

 

249,187 

Multifamily

 

10,777 

 

266 

 

439 

 

-

 

11,482 

Farmland

 

19,935 

 

411 

 

8,546 

 

-

 

28,892 

Total real estate loans

 

385,110 

 

9,286 

 

43,559 

 

201 

 

438,156 

Commercial

 

23,258 

 

634 

 

1,034 

 

29 

 

24,955 

Agriculture

 

3,583 

 

11 

 

124 

 

-

 

3,718 

Consumer installment loans

 

25,879 

 

-

 

176 

 

-

 

26,055 

All other loans

 

139 

 

-

 

-

 

-

 

139 

Total

$

437,969 

$

9,931 

$

44,893 

$

230 

$

493,023 

 

 

 

 


Allowance For Loan Losses
v0.0.0.0
Allowance For Loan Losses
12 Months Ended
Dec. 31, 2014
Allowance For Loan Losses [Abstract]  
Allowance For Loan Losses

 

NOTE 7ALLOWANCE FOR LOAN LOSSES:

 

The following table details activity in the allowance for loan losses by portfolio segment for the period ended December 31, 2014.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.