Attached files
file | filename |
---|---|
8-K/A - 8-K/A - BANNER CORP | d76355d8ka.htm |
EX-99.1 - EX-99.1 - BANNER CORP | d76355dex991.htm |
EX-23.1 - EX-23.1 - BANNER CORP | d76355dex231.htm |
EX-99.3 - EX-99.3 - BANNER CORP | d76355dex993.htm |
EXHIBIT 99.2
Index to Unaudited Interim Consolidated Financial Statements of SKBHC Holdings LLC and Subsidiaries
PAGE | ||||
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
||||
Consolidated statements of financial condition as of September 30, 2015 and December 31, 2014 |
2 | |||
Consolidated statements of income for the three and nine months ended September 30, 2015 and 2014 |
3 | |||
Consolidated statements of comprehensive income for the three and nine months ended September 30, 2015 and 2014 |
4 | |||
Consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014 |
5-6 | |||
Notes to interim consolidated financial statements |
7-41 |
SKBHC HOLDINGS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(in thousands)
As of September 30, 2015 |
As of December 31, 2014 |
|||||||
ASSETS | ||||||||
Cash and due from banks |
$ | 74,545 | $ | 62,889 | ||||
Interest bearing deposits with other banks |
23,103 | 31,625 | ||||||
|
|
|
|
|||||
Cash and cash equivalents |
97,648 | 94,514 | ||||||
Securities: |
||||||||
Securities, available-for-sale at fair value |
882,375 | 944,959 | ||||||
Securities, held-to-maturity at amortized cost |
146,600 | 107,890 | ||||||
Loans held for sale |
86,692 | 61,776 | ||||||
Loans, net of allowance for loan losses and deferred fees |
2,888,626 | 2,596,549 | ||||||
Accrued interest receivable |
13,007 | 11,888 | ||||||
Restricted equity securities |
15,178 | 14,723 | ||||||
Premises and equipment, net |
70,223 | 72,801 | ||||||
Foreclosed real estate and other foreclosed assets |
8,362 | 15,263 | ||||||
Bank-owned life insurance |
83,512 | 70,662 | ||||||
Goodwill |
77,958 | 57,219 | ||||||
Intangible assets |
20,970 | 23,294 | ||||||
Deferred tax asset, net |
117,697 | 129,069 | ||||||
Other assets |
17,937 | 11,369 | ||||||
|
|
|
|
|||||
Total assets |
$ | 4,526,785 | $ | 4,211,976 | ||||
|
|
|
|
|||||
LIABILITIES AND MEMBERS EQUITY | ||||||||
LIABILITIES |
||||||||
Non-interest bearing demand deposits |
$ | 966,647 | $ | 818,512 | ||||
Interest bearing deposits: |
||||||||
NOW, savings accounts, and money market accounts |
1,951,794 | 1,796,887 | ||||||
Time, $250,000 and over |
63,022 | 55,464 | ||||||
Other time |
638,791 | 623,742 | ||||||
|
|
|
|
|||||
Total deposits |
3,620,254 | 3,294,605 | ||||||
Accrued interest payable |
670 | 724 | ||||||
Junior subordinated debentures |
7,058 | | ||||||
Federal Home Loan Bank advances and other borrowings |
240,141 | 283,752 | ||||||
Deferred compensation and retirement plans |
21,114 | 21,690 | ||||||
Management unit liability |
13,833 | 12,601 | ||||||
Other liabilities |
32,429 | 34,022 | ||||||
|
|
|
|
|||||
Total liabilities |
3,935,499 | 3,647,394 | ||||||
Commitments and contingencies (Note 9) |
||||||||
MEMBERS EQUITY |
||||||||
Members capital |
476,350 | 476,350 | ||||||
Accumulated earnings |
109,057 | 87,299 | ||||||
Accumulated other comprehensive income, net of tax |
5,879 | 933 | ||||||
|
|
|
|
|||||
Total members equity |
591,286 | 564,582 | ||||||
|
|
|
|
|||||
Total liabilities and members equity |
$ | 4,526,785 | $ | 4,211,976 | ||||
|
|
|
|
See accompanying notes. |
2 |
SKBHC HOLDINGS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands)
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
INTEREST INCOME |
||||||||||||||||
Interest and fees on loans |
$ | 35,394 | $ | 31,028 | $ | 107,833 | $ | 96,110 | ||||||||
Interest and dividends on securities |
5,304 | 5,928 | 16,885 | 18,725 | ||||||||||||
Other interest income |
71 | 39 | 287 | 193 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest income |
40,769 | 36,995 | 125,005 | 115,028 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
INTEREST EXPENSE |
||||||||||||||||
Interest on deposits |
2,035 | 1,547 | 6,224 | 4,430 | ||||||||||||
Interest on borrowings |
437 | 323 | 1,349 | 546 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest expense |
2,472 | 1,870 | 7,573 | 4,976 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
NET INTEREST INCOME |
38,297 | 35,125 | 117,432 | 110,052 | ||||||||||||
PROVISION (BENEFIT) FOR LOAN LOSSES |
| (77 | ) | (1,189 | ) | 997 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net interest income after provision (benefit) for loan losses |
38,297 | 35,202 | 118,621 | 109,055 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
NON-INTEREST INCOME |
||||||||||||||||
Fees and service charges on deposits |
4,119 | 4,190 | 12,217 | 11,312 | ||||||||||||
Fees on mortgage loan sales, net |
1,541 | 954 | 4,181 | 2,851 | ||||||||||||
Other income |
3,307 | 5,386 | 10,768 | 19,726 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total non-interest income |
8,967 | 10,530 | 27,166 | 33,889 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
NON-INTEREST EXPENSE |
||||||||||||||||
Salaries and employee benefits |
19,584 | 20,248 | 61,106 | 60,725 | ||||||||||||
Occupancy expense, net |
3,591 | 3,585 | 10,908 | 9,683 | ||||||||||||
Equipment expense |
3,497 | 3,404 | 10,498 | 10,498 | ||||||||||||
Foreclosed real estate and other foreclosed assets expense, net |
1,385 | 1,421 | 3,290 | 4,638 | ||||||||||||
Amortization of intangible assets |
735 | 902 | 2,205 | 2,598 | ||||||||||||
Other expense |
6,213 | 6,617 | 22,327 | 25,212 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total non-interest expense |
35,005 | 36,177 | 110,334 | 113,354 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
INCOME BEFORE INCOME TAX EXPENSE |
12,259 | 9,555 | 35,453 | 29,590 | ||||||||||||
INCOME TAX EXPENSE |
4,282 | 3,916 | 13,695 | 12,604 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
NET INCOME |
$ | 7,977 | $ | 5,639 | $ | 21,758 | $ | 16,986 | ||||||||
|
|
|
|
|
|
|
|
See accompanying notes. |
3 |
SKBHC HOLDINGS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in thousands)
For the Nine Months Ended September 30, | ||||||||
2015 | 2014 | |||||||
Net income |
$ | 21,758 | $ | 16,986 | ||||
Other comprehensive income: |
||||||||
Unrealized gains on available-for-sale securities arising during the nine months ended September 30 |
8,390 | 15,173 | ||||||
Reclassification adjustment for net gains on available-for-sale securities realized in net income |
(427 | ) | (455 | ) | ||||
Income tax expense |
(3,017 | ) | (5,577 | ) | ||||
|
|
|
|
|||||
Total other comprehensive income, net of tax |
4,946 | 9,141 | ||||||
|
|
|
|
|||||
Comprehensive income |
$ | 26,704 | $ | 26,127 | ||||
|
|
|
|
|||||
For the Three Months Ended September 30, | ||||||||
2015 | 2014 | |||||||
Net income |
$ | 7,977 | $ | 5,639 | ||||
Other comprehensive income (loss): |
||||||||
Unrealized gains (losses) on available-for-sale securities arising during the quarter |
5,462 | (1,719 | ) | |||||
Reclassification adjustment for net gains on available-for-sale securities realized in net income |
(267 | ) | (10 | ) | ||||
Income tax (expense) benefit |
(2,004 | ) | 656 | |||||
|
|
|
|
|||||
Total other comprehensive income (loss), net of tax |
3,191 | (1,073 | ) | |||||
|
|
|
|
|||||
Comprehensive income |
$ | 11,168 | $ | 4,566 | ||||
|
|
|
|
See accompanying notes. |
4 |
SKBHC HOLDINGS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
For the Nine Months Ended September 30, |
||||||||
2015 | 2014 | |||||||
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES |
||||||||
Net income |
$ | 21,758 | $ | 16,986 | ||||
Adjustments to reconcile net income to net cash provided by operating activities |
||||||||
Provisions for loan losses, unfunded commitments, repurchase reserve, write downs on foreclosed real estate and other foreclosed assets, and fixed asset impairments |
1,372 | 4,244 | ||||||
Depreciation and amortization |
19,619 | 19,045 | ||||||
Impairment recorded on intangible assets |
| 3,131 | ||||||
Deferred income taxes |
17,078 | 18,135 | ||||||
Compensation in the form of management units |
1,232 | 1,054 | ||||||
Gain on sale of other premises and equipment, investments and foreclosed real estate, and other foreclosed assets |
(1,283 | ) | (3,056 | ) | ||||
Stock dividends received |
(84 | ) | (81 | ) | ||||
Originations of loans held for sale |
(425,421 | ) | (240,969 | ) | ||||
Proceeds from loans sold |
408,444 | 306,715 | ||||||
Gain on sale of loans |
(9,223 | ) | (13,992 | ) | ||||
Fair value adjustments on derivatives |
4,790 | 859 | ||||||
Changes in assets and liabilities |
||||||||
Accrued interest receivable |
756 | (1,489 | ) | |||||
Bank owned life insurance |
(1,585 | ) | (1,563 | ) | ||||
Other assets |
(3,618 | ) | (3,106 | ) | ||||
Accrued interest payable |
(1,015 | ) | 13 | |||||
Other liabilities |
(10,060 | ) | (9,735 | ) | ||||
|
|
|
|
|||||
Net cash provided by operating activities |
22,760 | 96,191 | ||||||
|
|
|
|
|||||
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES |
||||||||
Securities available-for-sale |
||||||||
Maturities, calls, sales, and principal payments |
248,085 | 176,758 | ||||||
Purchases |
(72,173 | ) | (124,719 | ) | ||||
Securities held-to-maturity |
||||||||
Maturities, calls, sales, and principal payments |
2,856 | 2,681 | ||||||
Purchases |
| (22,865 | ) | |||||
Restricted equity securities activity, net |
1,936 | 1,331 | ||||||
Purchases of home equity lines of credit |
| (80,941 | ) | |||||
Purchases of residential mortgage loans |
| (98,091 | ) | |||||
Net increase in loans |
(34,172 | ) | (153,931 | ) | ||||
Purchases of premises and equipment |
(2,947 | ) | (3,916 | ) | ||||
Proceeds from sale of premises and equipment |
344 | 2,511 | ||||||
Proceeds from foreclosed real estate and other foreclosed assets |
9,603 | 13,426 | ||||||
Cash consideration paid in merger and branch transactions, net of cash acquired |
(40,005 | ) | (21,347 | ) | ||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities |
113,527 | (309,103 | ) | |||||
|
|
|
|
|||||
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES |
||||||||
Net increase in deposits |
(73,542 | ) | (10,394 | ) | ||||
Proceeds of Federal Home Loan Bank advances and other borrowing activity |
1,193,600 | 1,046,300 |
See accompanying notes. |
5 |
Repayments of Federal Home Loan Bank advances and other borrowing activity |
(1,253,211 | ) | (867,922 | ) | ||||
|
|
|
|
|||||
Net cash (used in) provided by financing activities |
(133,153 | ) | 167,984 | |||||
|
|
|
|
|||||
NET CHANGE IN CASH AND CASH EQUIVALENTS |
3,134 | (44,928 | ) | |||||
CASH AND CASH EQUIVALENTS, beginning of year |
94,514 | 130,158 | ||||||
|
|
|
|
|||||
CASH AND CASH EQUIVALENTS, end of year |
$ | 97,648 | $ | 85,230 | ||||
|
|
|
|
|||||
SUPPLEMENTAL DISCLOSURES |
||||||||
Cash paid during the period for |
||||||||
Interest |
$ | 8,588 | $ | 4,963 | ||||
Income taxes |
840 | 2 | ||||||
Non-cash investing and financing activities |
||||||||
Change in fair value of available-for-sale securities, net of tax |
(4,946 | ) | (9,141 | ) | ||||
Foreclosed real estate acquired in settlement of loans |
1,811 | 7,616 | ||||||
Loans issued for sale of foreclosed assets |
| 71 | ||||||
Fair value of assets acquired in acquisitions |
487,280 | | ||||||
Fair value of liabilities assumed in acquisitions |
427,973 | | ||||||
Transfer to property held for sale |
255 | 482 |
See accompanying notes. |
6 |
Note 1 Nature of Business
SKBHC Holdings LLC (Holdings or the Company) is a Delaware limited liability company which was organized in 2009 and is headquartered in Seattle, Washington. Holdings was organized with the intention of operating as a top tier bank holding company that acquires financial institutions, including distressed or failed institutions, and becoming a leading regional community banking franchise in the Western United States. Holdings wholly-owned subsidiary is Starbuck Bancshares which has two of its own wholly-owned subsidiaries (First National Bank of Starbuck and AmericanWest Bank) from which all significant operating activities are conducted.
The following table provides the Companys acquisitions by date, location, and number of branches:
Acquired Institution |
Acquisition Date |
Location |
# of Branches | |||
Starbuck Bancshares (Bancshares) First National Bank of Starbuck (FNBS) | November 10, 2010 | Starbuck, Minnesota | 1 | |||
AmericanWest Bank (AWB) | December 20, 2010 | Spokane, Washington | 58 | |||
Bank of the Northwest (BONW) | July 28, 2011 | Seattle, Washington | 4 | |||
Sunrise Bank (Sunrise) | July 28, 2011 | San Diego, California | 4 | |||
Viking Financial Services Corporation Viking Bank (Viking) | November 30, 2011 | Seattle, Washington | 7 | |||
Security Business Bancorp Security Business Bank of San Diego (SBB) |
July 2, 2012 | San Diego, California | 4 | |||
ICB Financial Inland Community Bank (ICB) |
November 1, 2012 | Los Angeles, California | 5 | |||
PremierWest Bancorp PremierWest Bank (PWB) |
April 9, 2013 | Medford, Oregon | 32 | |||
Greater Sacramento Bancorp Bank of Sacramento (BOS) |
February 2, 2015 | Sacramento, California | 4 |
BONW, Sunrise, Viking, SBB, ICB, PWB, and BOS branches were merged with and into AWB on the date of acquisition. The operating activities resulting from each acquisition are incorporated in the consolidated financial statements of AWB, and therefore Holdings, since the date of each acquisition.
On October 4, 2013, Bancshares acquired 8 branches in Southern California from Pacific Trust Bancorp (PTB). These branches were merged with and into AWB on the date of acquisition, and the operating activities resulting from those branch acquisitions are incorporated in the consolidated financial statements of AWB, and therefore Holdings, since the date of acquisition.
On April 4, 2014, FNBS was merged into AWB. On July 25, 2014, the former FNBS branch was sold.
7 |
Note 1 Nature of Business (continued)
Unless otherwise indicated, reference to the Company shall include the consolidated information of Holdings and its wholly-owned subsidiaries Bancshares, FNBS, and AWB, and the unconsolidated information will be referred to as Holdings, Bancshares, FNBS, or AWB, respectively. Any reference to the Bank or Banks includes AWB for the period ended September 30, 2015 and AWB and FNBS for the year ended December 31, 2014.
The Banks provide community banking products and services, focusing on small and middle market businesses and their employees along with individual consumers in the local markets they serve. The Bank does business in the states of California, Idaho, Oregon, Utah and Washington. The Bank previously did business in the state of Minnesota, until the former FNBS branch was sold on July 25, 2014.
Note 2 Basis of financial statement presentation
The accompanying unaudited consolidated financial statements have been prepared in a condensed format and therefore do not include all information and footnotes required by generally accepted accounting principles (GAAP) in the United States of America for complete financial statements, which are included in the Companys annual financial statements and which should be read in conjunction with the interim unaudited condensed financial statements. The information furnished in these interim unaudited and condensed financial statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results of such period. All dollar amounts contained in the unaudited consolidated financial statements and disclosures are stated in thousands.
Note 3 Business Combinations
Bank of Sacramento On February 2, 2015, the Company acquired all of the outstanding shares of Greater Sacramento Bancorp, and its wholly-owned banking subsidiary Bank of Sacramento (collectively BOS), in an business combination accounted for under the acquisition method of accounting. The acquisition was consistent with the Companys strategic plan to grow through acquisitions. Acquisition expense related to the transaction for the first nine months of 2015 were $887 thousand and are included in earnings. The operating results of BOS have been included in the Companys consolidated financial statements since the date of acquisition. The aggregate purchase price included $59.3 million of cash paid to selling shareholders; simultaneous with the acquisition.
8 |
Note 3 Business Combinations (continued)
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed for BOS at the date of acquisition:
Assets Acquired |
||||
Cash and Cash Equivalents |
$ | 19,302 | ||
Securities |
159,242 | |||
Loans |
257,285 | |||
Goodwill |
20,739 | |||
Other intangibles |
17 | |||
Premises and equipment |
72 | |||
Foreclosed assets |
1,248 | |||
Deferred tax asset, net |
5,706 | |||
Other assets |
23,669 | |||
|
|
|||
Total assets |
$ | 487,280 | ||
|
|
|||
Liabilities assumed |
||||
Deposits |
$ | 399,191 | ||
Junior subordinated debentures |
7,017 | |||
FHLB borrowings and other liabilities |
21,765 | |||
|
|
|||
Total liabilities |
$ | 427,973 | ||
|
|
|||
Net assets acquired/consideration paid |
$ | 59,307 | ||
|
|
As a result of the acquisition, the Company recognized $20.7 million in goodwill which will not be amortized but will be evaluated for potential impairment on an annual basis or earlier if a triggering event merits evaluation.
All other acquisition accounting adjustments, with the exception of those for impaired loans, foreclosed assets, and income taxes, will be amortized or accreted to operations over the expected life of the related asset or liability. Adjustments for impaired loans and foreclosed assets will be realized in accordance with the Companys accounting policy when the underlying assets are resolved or liquidated. Changes in acquired tax uncertainties after the measurement period are recognized in net income.
9 |
Note 4 Securities
Debt and equity securities have been classified according to managements intent to hold them as either available-for-sale or held-to-maturity. The amortized cost of securities, their gross unrealized gains and losses, and their fair values at September 30, 2015 and December 31, 2014 are shown in the following table:
September 30, 2015 | Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||
Securities available-for-sale: |
||||||||||||||||
Obligations of federal government agencies |
$ | 18,525 | $ | 229 | $ | (30 | ) | $ | 18,724 | |||||||
Obligations of states, municipalities, and political subdivisions |
86,953 | 1,843 | (200 | ) | 88,596 | |||||||||||
Residential mortgage-backed securities |
685,619 | 9,022 | (1,007 | ) | 693,634 | |||||||||||
Commercial mortgage-backed securities |
50,067 | 500 | | 50,567 | ||||||||||||
Corporate securities |
13,665 | 74 | | 13,739 | ||||||||||||
Other securities |
17,211 | 50 | (146 | ) | 17,115 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 872,040 | $ | 11,718 | $ | (1,383 | ) | $ | 882,375 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Securities held-to-maturity: |
||||||||||||||||
Obligations of states, municipalities, and political subdivisions |
$ | 76,906 | $ | 1,739 | $ | (260 | ) | $ | 78,385 | |||||||
Residential mortgage-backed securities |
67,023 | 1,449 | | 68,472 | ||||||||||||
Other securities |
2,671 | | | 2,671 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 146,600 | $ | 3,188 | $ | (260 | ) | $ | 149,528 | |||||||
|
|
|
|
|
|
|
|
|||||||||
December 31, 2014 | Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
||||||||||||
Securities available-for-sale: |
||||||||||||||||
Obligations of federal government agencies |
$ | 19,425 | $ | 94 | $ | (2 | ) | $ | 19,517 | |||||||
Obligations of states, municipalities, and political subdivisions |
91,927 | 1,740 | (987 | ) | 92,680 | |||||||||||
Residential mortgage-backed securities |
751,123 | 5,313 | (3,339 | ) | 753,097 | |||||||||||
Commercial mortgage-backed securities |
53,718 | 5 | (293 | ) | 53,430 | |||||||||||
Corporate securities |
7,031 | 82 | | 7,113 | ||||||||||||
Other securities |
19,310 | 42 | (230 | ) | 19,122 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 942,534 | $ | 7,276 | $ | (4,851 | ) | $ | 944,959 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Securities held-to-maturity: |
||||||||||||||||
Obligations of states, municipalities, and political subdivisions |
$ | 35,817 | $ | 1,134 | $ | | $ | 36,951 | ||||||||
Residential mortgage-backed securities |
70,016 | 556 | | 70,572 | ||||||||||||
Other securities |
2,057 | | | 2,057 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 107,890 | $ | 1,690 | $ | | $ | 109,580 | ||||||||
|
|
|
|
|
|
|
|
10 |
Note 4 Securities (continued)
The following tables include information on securities with unrealized losses at September 30, 2015 and December 31, 2014:
September 30, 2015
Less than 12 months | 12 Months or Longer | Total | ||||||||||||||||||||||
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
|||||||||||||||||||
Securities available-for-sale: |
||||||||||||||||||||||||
Obligations of federal government agencies |
$ | | $ | | $ | 5,955 | $ | (30 | ) | $ | 5,955 | $ | (30 | ) | ||||||||||
Obligations of states, municipalities and political subdivisions |
3,621 | (9 | ) | 16,917 | (191 | ) | 20,538 | (200 | ) | |||||||||||||||
Residential mortgage-backed securities |
87,764 | (396 | ) | 48,791 | (611 | ) | 136,555 | (1,007 | ) | |||||||||||||||
Other securities |
| | 14,649 | (146 | ) | 14,649 | (146 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 91,385 | $ | (405 | ) | $ | 86,312 | $ | (978 | ) | $ | 177,697 | $ | (1,383 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Securities held to maturity: |
||||||||||||||||||||||||
Obligations of states, municipalities and political subdivisions |
$ | 25,365 | $ | (260 | ) | $ | | $ | | $ | 25,365 | $ | (260 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 25,365 | $ | (260 | ) | $ | | $ | | $ | 25,365 | $ | (260 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014
Less than 12 months | 12 Months or Longer | Total | ||||||||||||||||||||||
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
|||||||||||||||||||
Securities available-for-sale: |
||||||||||||||||||||||||
Obligations of federal government agencies |
$ | | $ | | $ | 6,369 | $ | (2 | ) | $ | 6,369 | $ | (2 | ) | ||||||||||
Obligations of states, municipalities and political subdivisions |
7,061 | (45 | ) | 55,437 | (942 | ) | 62,498 | (987 | ) | |||||||||||||||
Residential mortgage-backed securities |
227,717 | (1,681 | ) | 96,479 | (1,658 | ) | 324,196 | (3,339 | ) | |||||||||||||||
Commercial mortgage-backed securities |
26,314 | (63 | ) | 12,078 | (230 | ) | 38,392 | (293 | ) | |||||||||||||||
Other securities |
| | 19,033 | (230 | ) | 19,033 | (230 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 261,092 | $ | (1,789 | ) | $ | 189,396 | $ | (3,062 | ) | $ | 450,488 | $ | (4,851 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Certain securities have fair values less than amortized cost and therefore contain unrealized losses. At September 30, 2015 and December 31, 2014, the Company evaluated the securities which had an unrealized loss for Other Than Temporary Impairment (OTTI) and determined all declines in value to be temporary. There were 71 and 109 investment securities with unrealized losses at September 30, 2015 and December 31, 2014, respectively. The Company anticipates full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment.
During the nine month period ended September 30, 2015, proceeds from sales of securities available-for-sale totaled $35.9 million resulting in realized gains of $454 thousand and realized losses of $27 thousand. During the three month period ended September 30, 2015, proceeds from sales of securities available-for-sale totaled $7.4 million resulting in realized gains of $267 thousand and no realized losses. During the nine month period ended September 30, 2014, proceeds from sales of securities available-for-sale totaled $68.0 million resulting in realized gains of $575 thousand and realized losses of $120 thousand. During the three month period ended September 30, 2014, proceeds from sales of securities available-for-sale totaled $31.9 million resulting in realized gains of $110 thousand and realized losses of $100 thousand.
11 |
Note 4 Securities (continued)
Securities with an amortized cost of $472.9 million and $525.0 million at September 30, 2015 and December 31, 2014, respectively, were pledged for purposes required or permitted by law. The market value of these securities was $480.6 million and $528.1 million at September 30, 2015 and December 31, 2014, respectively.
The contractual scheduled maturity of securities at September 30, 2015 was as follows:
Amortized Cost |
Fair Value |
|||||||
Securities available-for-sale: |
||||||||
Due in one year or less |
$ | 5,196 | $ | 5,231 | ||||
Due from one to five years |
76,688 | 77,604 | ||||||
Due from five to ten years |
206,155 | 208,562 | ||||||
Due after ten years |
578,557 | 585,527 | ||||||
Other non-maturity securities |
5,444 | 5,451 | ||||||
|
|
|
|
|||||
Total |
$ | 872,040 | $ | 882,375 | ||||
|
|
|
|
|||||
Securities held-to-maturity: |
||||||||
Due in one year or less |
$ | 131 | $ | 131 | ||||
Due from one to five years |
1,909 | 1,923 | ||||||
Due from five to ten years |
46,560 | 48,302 | ||||||
Due after ten years |
98,000 | 99,172 | ||||||
|
|
|
|
|||||
Total |
$ | 146,600 | $ | 149,528 | ||||
|
|
|
|
Expected maturities will differ from contractual maturities as the issuers of certain debt securities have the right to call or prepay their obligations without penalties. Mortgage-backed securities have been classified above based on contractual maturities.
12 |
Note 5 Loans
Loan categories as of September 30, 2015 and December 31, 2014 were as follows:
September 30, 2015 | December 31, 2014 | |||||||
Commercial real estate |
$ | 1,665,088 | $ | 1,473,072 | ||||
Residential real estate |
616,605 | 586,033 | ||||||
Construction, land development, and other land |
64,690 | 51,408 | ||||||
Agricultural |
144,690 | 139,781 | ||||||
Commercial and industrial |
376,374 | 326,789 | ||||||
Installment and other |
37,541 | 35,833 | ||||||
|
|
|
|
|||||
Total loans |
2,904,988 | 2,612,916 | ||||||
Allowance for loan losses |
(16,602 | ) | (16,576 | ) | ||||
Deferred loan fees, net of deferred costs |
240 | 209 | ||||||
|
|
|
|
|||||
Net loans |
$ | 2,888,626 | $ | 2,596,549 | ||||
|
|
|
|
Installment and other loans included $358 thousand and $362 thousand in overdraft deposits which were reclassified as loans as of September 30, 2015 and December 31, 2014, respectively. At September 30, 2015, there were $1.6 billion in loans pledged as security for borrowings including excess collateral.
13 |
Note 5 Loans (continued)
Total loans consist of originated loans, B notes, acquired impaired loans, and acquired non-impaired loans. B notes represent advances on acquired impaired loans after acquisition date. The following table summarizes the carrying balances for each respective loan category as of September 30, 2015 and December 31, 2014:
September 30, 2015 | Originated | B Notes | Acquired Impaired |
Acquired Non-impaired |
Total | |||||||||||||||
Commercial real estate |
$ | 925,560 | $ | 13,148 | $ | 231,680 | $ | 494,700 | $ | 1,665,088 | ||||||||||
Residential real estate |
510,634 | 10,265 | 38,170 | 57,536 | 616,605 | |||||||||||||||
Construction, land development, and other land |
38,986 | 44 | 9,400 | 16,260 | 64,690 | |||||||||||||||
Agricultural |
122,640 | 7,892 | 8,107 | 6,051 | 144,690 | |||||||||||||||
Commercial and industrial |
269,266 | 6,145 | 6,419 | 94,544 | 376,374 | |||||||||||||||
Installment and other |
27,490 | 1,065 | 939 | 8,047 | 37,541 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans |
$ | 1,894,576 | $ | 38,559 | $ | 294,715 | $ | 677,138 | $ | 2,904,988 | ||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2014 | Originated | B Notes | Acquired Impaired |
Acquired Non-impaired |
Total | |||||||||||||||
Commercial real estate |
$ | 789,746 | $ | 11,751 | $ | 264,611 | $ | 406,964 | $ | 1,473,072 | ||||||||||
Residential real estate |
466,626 | 9,713 | 45,168 | 64,526 | 586,033 | |||||||||||||||
Construction, land development, and other land |
17,585 | 1 | 16,319 | 17,503 | 51,408 | |||||||||||||||
Agricultural |
111,112 | 10,613 | 9,925 | 8,131 | 139,781 | |||||||||||||||
Commercial and industrial |
239,869 | 9,405 | 7,101 | 70,414 | 326,789 | |||||||||||||||
Installment and other |
27,495 | 1,101 | 1,010 | 6,227 | 35,833 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans |
$ | 1,652,433 | $ | 42,584 | $ | 344,134 | $ | 573,765 | $ | 2,612,916 | ||||||||||
|
|
|
|
|
|
|
|
|
|
14 |
Note 5 Loans (continued)
Acquired impaired loans The Company acquired certain impaired loans as part of the AWB, BONW, Sunrise, Viking, SBB, ICB, PWB and BOS transactions. The carrying amount of those loans includes an allowance for loan losses for acquired impaired loans of $1.1 million and $1.7 million at September 30, 2015 and December 31, 2014, respectively. The balances of these loans, net of the allowance for loan losses, at September 30, 2015 and December 31, 2014 are summarized as follows:
September 30, 2015 | Unpaid Principal Balance |
Carrying Value | ||||||
Commercial real estate |
$ | 257,481 | $ | 230,880 | ||||
Residential real estate |
50,806 | 38,066 | ||||||
Construction, land development, and other land |
11,792 | 9,278 | ||||||
Agricultural |
8,979 | 8,107 | ||||||
Commercial and industrial |
10,011 | 6,354 | ||||||
Installment and other |
1,482 | 939 | ||||||
|
|
|
|
|||||
Total Loans |
$ | 340,551 | $ | 293,624 | ||||
|
|
|
|
December 31, 2014 | Unpaid Principal Balance |
Carrying Value | ||||||
Commercial real estate |
$ | 269,222 | $ | 246,382 | ||||
Residential real estate |
60,058 | 44,930 | ||||||
Construction, land development, and other land |
20,915 | 16,169 | ||||||
Agricultural |
10,926 | 9,925 | ||||||
Commercial and industrial |
10,594 | 6,917 | ||||||
Installment and other |
1,682 | 1,010 | ||||||
|
|
|
|
|||||
Total Loans |
$ | 394,787 | $ | 342,393 | ||||
|
|
|
|
15 |
Note 5 Loans (continued)
Impaired loan unpaid principal balances and carrying values, net of the allowance for loan losses, by acquired financial institution at September 30, 2015 and December 31, 2014 are summarized as follows:
September 30, 2015 | Unpaid Principal Balance |
Carrying Value | ||||||
AWB |
$ | 221,835 | $ | 202,858 | ||||
BONW |
430 | 112 | ||||||
Sunrise |
1,140 | 853 | ||||||
Viking |
7,361 | 5,000 | ||||||
SBB |
7,679 | 6,041 | ||||||
ICB |
3,597 | 2,107 | ||||||
PWB |
76,269 | 58,785 | ||||||
BOS |
22,240 | 17,868 | ||||||
|
|
|
|
|||||
Total loans |
$ | 340,551 | $ | 293,624 | ||||
|
|
|
|
December 31, 2014 | Unpaid Principal Balance |
Carrying Value | ||||||
AWB |
$ | 269,222 | $ | 246,382 | ||||
BONW |
605 | 186 | ||||||
Sunrise |
2,776 | 2,017 | ||||||
Viking |
8,763 | 5,951 | ||||||
SBB |
8,050 | 6,310 | ||||||
ICB |
4,565 | 2,700 | ||||||
PWB |
100,806 | 78,847 | ||||||
|
|
|
|
|||||
Total loans |
$ | 394,787 | $ | 342,393 | ||||
|
|
|
|
16 |
Note 5 Loans (continued)
The following tables summarize the changes in accretable yield for acquired impaired loans for the nine month periods ended September 30, 2015 and 2014 and the year ended December 31, 2014:
AWB | BONW | Sunrise | Viking | SBB | ICB | PWB | BOS | Total | ||||||||||||||||||||||||||||
Balance, December 31, 2014 |
$ | 75,639 | $ | 399 | $ | 715 | $ | 4,235 | $ | 4,320 | $ | 2,760 | $ | 32,464 | $ | | $ | 120,532 | ||||||||||||||||||
Additions resulting from acquisitions |
| | | | | | | 4,987 | 4,987 | |||||||||||||||||||||||||||
Accretion to interest income |
(13,017 | ) | (121 | ) | (54 | ) | (762 | ) | (351 | ) | (312 | ) | (7,796 | ) | (1,019 | ) | (23,432 | ) | ||||||||||||||||||
Change related to prepayments |
(3,507 | ) | | | (32 | ) | 2 | | (1,289 | ) | 43 | (4,783 | ) | |||||||||||||||||||||||
Reclassification from nonaccretable difference |
| | | | | | | | | |||||||||||||||||||||||||||
Impact of change in assumptions |
| (8 | ) | | (190 | ) | | | | | (198 | ) | ||||||||||||||||||||||||
Disposals |
(1,494 | ) | | (406 | ) | (79 | ) | | (453 | ) | (486 | ) | (664 | ) | (3,582 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance, September 30, 2015 |
$ | 57,621 | $ | 270 | $ | 255 | $ | 3,172 | $ | 3,971 | $ | 1,995 | $ | 22,893 | $ | 3,347 | $ | 93,524 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AWB | BONW | Sunrise | Viking | SBB | ICB | PWB | BOS | Total | ||||||||||||||||||||||||||||
Balance, December 31, 2013 |
$ | 99,845 | $ | 1,222 | $ | 1,239 | $ | 7,185 | $ | 6,325 | $ | 4,309 | $ | 27,927 | $ | | $ | 148,052 | ||||||||||||||||||
Additions resulting from acquisitions |
| | | | | | | | | |||||||||||||||||||||||||||
Accretion to interest income |
(15,772 | ) | (311 | ) | (803 | ) | (1,309 | ) | (564 | ) | (577 | ) | (12,324 | ) | | (31,660 | ) | |||||||||||||||||||
Change related to prepayments |
(6,926 | ) | 3 | (531 | ) | 28 | 59 | 4 | 3,583 | | (3,780 | ) | ||||||||||||||||||||||||
Reclassification from nonaccretable difference |
2,471 | 355 | (881 | ) | 1,646 | 571 | 802 | 23,672 | | 28,636 | ||||||||||||||||||||||||||
Impact of change in assumptions |
5,377 | (808 | ) | 1,630 | (1,759 | ) | (1,434 | ) | (283 | ) | (4,150 | ) | | (1,427 | ) | |||||||||||||||||||||
Disposals |
(821 | ) | (44 | ) | 85 | (271 | ) | (200 | ) | (1,395 | ) | (2,877 | ) | | (5,523 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance, September 30, 2014 |
$ | 84,174 | $ | 417 | $ | 739 | $ | 5,520 | $ | 4,757 | $ | 2,860 | $ | 35,830 | $ | | $ | 134,297 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion to interest income includes $5.3 million and $9.4 million recognized in interest income related to prepayment removals for the nine month periods ended September 30, 2015 and 2014, respectively.
The following tables summarize the changes in accretable yield for acquired impaired loans for the three month periods ended September 30, 2015 and 2014:
AWB | BONW | Sunrise | Viking | SBB | ICB | PWB | BOS | Total | ||||||||||||||||||||||||||||
Balance at June 30, 2015 |
$ | 63,121 | $ | 299 | $ | 268 | $ | 3,467 | $ | 4,082 | $ | 2,107 | $ | 24,694 | $ | 3,686 | $ | 101,724 | ||||||||||||||||||
Additions resulting from acquisitions |
| | | | | | | | | |||||||||||||||||||||||||||
Accretion to interest income |
(4,033 | ) | (29 | ) | (13 | ) | (235 | ) | (111 | ) | (112 | ) | (1,719 | ) | (382 | ) | (6,634 | ) | ||||||||||||||||||
Change related to prepayments |
(1,430 | ) | | | (9 | ) | | | (83 | ) | 43 | (1,479 | ) | |||||||||||||||||||||||
Reclassification from nonaccretable difference |
| | | | | | | | | |||||||||||||||||||||||||||
Impact of change in assumptions |
| | | (53 | ) | | | | | (53 | ) | |||||||||||||||||||||||||
Disposals |
(37 | ) | | | 2 | | | 1 | | (34 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance, September 30, 2015 |
$ | 57,621 | $ | 270 | $ | 255 | $ | 3,172 | $ | 3,971 | $ | 1,995 | $ | 22,893 | $ | 3,347 | $ | 93,524 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17 |
Note 5 Loans (continued)
AWB | BONW | Sunrise | Viking | SBB | ICB | PWB | BOS | Total | ||||||||||||||||||||||||||||
Balance at June 30, 2014 |
$ | 87,483 | $ | 832 | $ | 745 | $ | 6,102 | $ | 5,755 | $ | 3,679 | $ | 21,758 | $ | | $ | 126,354 | ||||||||||||||||||
Additions resulting from acquisitions |
| | | | | | | | | |||||||||||||||||||||||||||
Accretion to interest income |
(4,967 | ) | (46 | ) | (29 | ) | (457 | ) | (152 | ) | (146 | ) | (1,985 | ) | | (7,782 | ) | |||||||||||||||||||
Change related to prepayments |
(1,940 | ) | | | 35 | | | (197 | ) | | (2,102 | ) | ||||||||||||||||||||||||
Reclassification from nonaccretable difference |
348 | 139 | 71 | 778 | 348 | 95 | 14,838 | | 16,617 | |||||||||||||||||||||||||||
Impact of change in assumptions |
3,835 | (464 | ) | (48 | ) | (902 | ) | (1,194 | ) | (1 | ) | 2,742 | | 3,968 | ||||||||||||||||||||||
Disposals |
(585 | ) | (44 | ) | | (36 | ) | | (767 | ) | (1,326 | ) | | (2,758 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance, September 30, 2014 |
$ | 84,174 | $ | 417 | $ | 739 | $ | 5,520 | $ | 4,757 | $ | 2,860 | $ | 35,830 | $ | | $ | 134,297 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion to interest income includes $1.1 million and $846 thousand recognized in interest income related to prepayment removals for the three month periods ended September 30, 2015 and 2014, respectively.
The following table presents a reconciliation of the undiscounted contractual cash flows, non-accretable difference, accretable yield, and fair value of impaired loans acquired during the nine month period ended September 30, 2015 as of the acquisition date:
BOS | ||||
February 2, 2015 |
||||
As of respective acquisition date in 2015 |
||||
Undiscounted contractual cash flows |
$ | 38,354 | ||
Undiscounted cash flows not expected to be collected (non-accretable difference) |
(11,289 | ) | ||
|
|
|||
Undiscounted cash flows expected to be collected |
27,065 | |||
Accretable yield at acquisition |
(4,987 | ) | ||
Estimated fair value of impaired loans acquired at acquisition |
22,078 | |||
Accrued interest acquired reclassified to loans |
123 | |||
|
|
|||
Total impaired loans at acquisition |
$ | 22,201 | ||
|
|
18 |
Note 5 Loans (continued)
Acquired non-impaired loans The Company acquired certain non-impaired loans as part of the FNBS, BONW, Sunrise, Viking, SBB, ICB, PWB, PTB, and BOS transactions. The balances of these loans at September 30, 2015 and December 31, 2014 are as follows:
September 30, 2015 | Unpaid Principal Balance |
Carrying Value |
||||||
Commercial real estate |
$ | 491,530 | $ | 494,700 | ||||
Residential real estate |
60,652 | 57,536 | ||||||
Construction, land development, and other land |
16,218 | 16,260 | ||||||
Agricultural |
6,033 | 6,051 | ||||||
Commercial and industrial |
95,427 | 94,544 | ||||||
Installment and other |
8,392 | 8,047 | ||||||
|
|
|
|
|||||
Total acquired non-impaired loans |
$ | 678,252 | $ | 677,138 | ||||
|
|
|
|
|||||
December 31, 2014 | Unpaid Principal Balance |
Carrying Value |
||||||
Commercial real estate |
$ | 403,144 | $ | 406,964 | ||||
Residential real estate |
68,160 | 64,526 | ||||||
Construction, land development, and other land |
17,344 | 17,503 | ||||||
Agricultural |
8,072 | 8,131 | ||||||
Commercial and industrial |
71,124 | 70,414 | ||||||
Installment and other |
6,677 | 6,227 | ||||||
|
|
|
|
|||||
Total acquired non-impaired loans |
$ | 574,521 | $ | 573,765 | ||||
|
|
|
|
19 |
Note 5 Loans (continued)
The following table presents the fair value of acquired non-impaired loans, gross contractual amounts receivable (including contractual principal and interest), and estimated contractual cash flows not expected to be received (fair value adjustments related to credit) for the BOS acquisition as of the acquisition date. There were no acquisitions consummated during 2014:
As of acquisition dates in the period ended September 30, 2015 |
Fair Value | Gross Contractual Ammounts Receivable |
Estimated Contractual Cash Flows Not Expected to be Collected |
|||||||||
Loans secured by real estate |
$ | 195,280 | $ | 253,716 | $ | 3,657 | ||||||
Commercial and industrial loans |
37,085 | 40,203 | 1,068 | |||||||||
Loans to individuals for household, family, and other personal expenditures |
2,018 | 2,441 | 317 | |||||||||
All other loans |
701 | 727 | 15 | |||||||||
|
|
|
|
|
|
|||||||
Total loans at acquisition |
$ | 235,084 | $ | 297,087 | $ | 5,057 | ||||||
|
|
|
|
|
|
Note 6 Allowance for Loan Losses and Reserve for Unfunded Commitments
Allowance for loan losses The allowance for loan losses evaluation includes B notes, acquired impaired loans with deteriorated credit quality, acquired non-impaired loans, and originated loans. Although all acquired non-impaired loans are included in the following allowance tables, only those loans without a remaining discount or that have incurred credit deterioration subsequent to acquisition date are included in the allowance for loan losses calculation.
The activity related to the allowance for loan losses for the three month and nine month periods ended September 30, 2015 and 2014 is presented below:
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Balance, beginning of period |
$ | 16,012 | $ | 13,982 | $ | 16,576 | $ | 12,514 | ||||||||
(Benefit)/Provision for loan losses |
| (77 | ) | (1,189 | ) | 997 | ||||||||||
Loans charged-off |
(322 | ) | (211 | ) | (1,062 | ) | (2,747 | ) | ||||||||
Recoveries |
912 | 1,465 | 2,277 | 4,395 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | 16,602 | $ | 15,159 | $ | 16,602 | $ | 15,159 | ||||||||
|
|
|
|
|
|
|
|
20 |
Note 6 Allowance for Loan Losses and Reserve for Unfunded Commitments (continued)
The following tables summarize the balance and activity within the allowance for loan losses, the components of the allowance for loan losses in terms of loans individually and collectively evaluated for impairment, and corresponding loan balances by type for the nine month and three month periods ended September 30, 2015 and 2014:
Nine Months Ended September 30, 2015
Commercial Real Estate |
Residential Real Estate |
Construction, Land Development and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Unallocated | Total | |||||||||||||||||||||||||
Allowance for loan losses |
||||||||||||||||||||||||||||||||
Beginning balance |
$ | 6,795 | $ | 3,582 | $ | 639 | $ | 525 | $ | 4,107 | $ | 304 | $ | 624 | $ | 16,576 | ||||||||||||||||
Charge-offs |
(368 | ) | (368 | ) | (42 | ) | | (207 | ) | (77 | ) | | (1,062 | ) | ||||||||||||||||||
Recoveries |
328 | 426 | 308 | 7 | 1,117 | 91 | 2,277 | |||||||||||||||||||||||||
Provisions |
46 | (29 | ) | (11 | ) | (19 | ) | (945 | ) | 163 | (394 | ) | $ | (1,189 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending balance |
$ | 6,801 | $ | 3,611 | $ | 894 | $ | 513 | $ | 4,072 | $ | 481 | 230 | $ | 16,602 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending balance: individually evaluated for impairment |
$ | | $ | 6 | $ | | $ | | $ | 38 | $ | | $ | | $ | 44 | ||||||||||||||||
Ending balance: collectively evaluated for impairment |
6,001 | 3,501 | 772 | 513 | 3,969 | 481 | 230 | 15,467 | ||||||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality |
800 | 104 | 122 | | 65 | | | 1,091 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total allowance for loan losses |
$ | 6,801 | $ | 3,611 | $ | 894 | $ | 513 | $ | 4,072 | $ | 481 | $ | 230 | $ | 16,602 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Real Estate |
Residential Real Estate |
Construction, Land Development and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Total | ||||||||||||||||||||||
Ending balance: individually evaluated for impairment |
$ | 3,062 | $ | 876 | $ | 199 | $ | 313 | $ | 2,407 | $ | 37 | $ | 6,894 | ||||||||||||||
Ending balance: collectively evaluated for impairment |
1,430,346 | 577,559 | 55,091 | 136,270 | 367,548 | 36,565 | 2,603,379 | |||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality |
52,479 | 7,495 | 274 | | 324 | 11 | 60,583 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total loans evaluated for allowance for loan losses |
$ | 1,485,887 | $ | 585,930 | $ | 55,564 | $ | 136,583 | $ | 370,279 | $ | 36,613 | $ | 2,670,856 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2014
Commercial Real Estate |
Residential Real Estate |
Construction, Land Development and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Unallocated | Total | |||||||||||||||||||||||||
Allowance for loan losses |
||||||||||||||||||||||||||||||||
Beginning balance |
$ | 4,415 | $ | 2,247 | $ | 1,176 | $ | 500 | $ | 3,634 | $ | 255 | $ | 287 | $ | 12,514 | ||||||||||||||||
Charge-offs |
(912 | ) | (437 | ) | (656 | ) | | (663 | ) | (79 | ) | | (2,747 | ) | ||||||||||||||||||
Recoveries |
1,363 | 368 | 1,797 | 19 | 695 | 153 | | 4,395 | ||||||||||||||||||||||||
Provisions |
956 | 1,303 | (1,640 | ) | (47 | ) | 419 | (29 | ) | 35 | 997 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending balance |
$ | 5,822 | $ | 3,481 | $ | 677 | $ | 472 | $ | 4,085 | $ | 300 | $ | 322 | $ | 15,159 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending balance: individually evaluated for impairment |
$ | | $ | 7 | $ | | $ | | $ | 216 | $ | | $ | | $ | 223 | ||||||||||||||||
Ending balance: collectively evaluated for impairment |
4,655 | 3,250 | 533 | 472 | 3,627 | 300 | 322 | 13,159 | ||||||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality |
1,167 | 224 | 144 | 242 | 1,777 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total allowance for loan losses |
$ | 5,822 | $ | 3,481 | $ | 677 | $ | 472 | $ | 4,085 | $ | 300 | $ | 322 | $ | 15,159 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21 |
Note 6 Allowance for Loan Losses and Reserve for Unfunded Commitments (continued)
Commercial Real Estate |
Residential Real Estate |
Construction, Land Development and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Total | ||||||||||||||||||||||
Ending balance: individually evaluated for impairment |
$ | 8,439 | $ | 525 | $ | | $ | | $ | 2,665 | $ | 58 | $ | 11,687 | ||||||||||||||
Ending balance: collectively evaluated for impairment |
1,102,340 | 525,290 | 38,713 | 118,445 | 312,518 | 34,438 | 2,131,744 | |||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality |
67,819 | 9,797 | 586 | | 818 | 14 | 79,034 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total loans evaluated for allowance for loan losses |
$ | 1,178,598 | $ | 535,612 | $ | 39,299 | $ | 118,445 | $ | 316,001 | $ | 34,510 | $ | 2,222,465 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize the recorded investment, unpaid principal balance, and related allowance for originated and B note loans considered impaired as of September 30, 2015 and December 31, 2014, respectively:
Nine Months Ended September 30, 2015
Commercial Real Estate |
Residential Real Estate |
Construction, Land Development and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Unallocated | Total | |||||||||||||||||||||||||
Allowance for loan losses |
||||||||||||||||||||||||||||||||
Beginning balance |
$ | 6,795 | $ | 3,582 | $ | 639 | $ | 525 | $ | 4,107 | $ | 304 | $ | 624 | $ | 16,576 | ||||||||||||||||
Charge-offs |
(368 | ) | (368 | ) | (42 | ) | | (207 | ) | (77 | ) | | (1,062 | ) | ||||||||||||||||||
Recoveries |
328 | 426 | 308 | 7 | 1,117 | 91 | | 2,277 | ||||||||||||||||||||||||
Provisions |
46 | (29 | ) | (11 | ) | (19 | ) | (945 | ) | 163 | (230 | ) | (1,189 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending balance |
$ | 6,801 | $ | 3,611 | $ | 894 | $ | 513 | $ | 4,702 | $ | 481 | $ | 230 | $ | 1602 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending balance: individually evaluated for impairment |
$ | | $ | 6 | $ | | $ | | $ | 38 | $ | | $ | | $ | 44 | ||||||||||||||||
Ending balance: collectively evaluated for impairment |
6,001 | 3,501 | 772 | 513 | 3,969 | 481 | 230 | 15,467 | ||||||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality |
800 | 104 | 122 | | 65 | | | 1,091 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total allowance for loan losses |
$ | 6,801 | $ | 3,611 | $ | 894 | $ | 513 | $ | 4,702 | $ | 481 | $ | 230 | $ | 1602 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Real Estate |
Residential Real Estate |
Construction, Land Development and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Total | ||||||||||||||||||||||
Ending balance: individually evaluated for impairment |
$ | 3,062 | $ | 876 | $ | 199 | $ | 313 | $ | 2,407 | $ | 37 | $ | 6,894 | ||||||||||||||
Ending balance: collectively evaluated for impairment |
1,430,346 | 577,559 | 55,091 | 136,270 | 367,548 | 36,565 | 2,603,379 | |||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality |
52,479 | 7,495 | 274 | | 324 | 11 | 60,583 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total loans evaluated for allowance for loan losses |
$ | 1,485,887 | $ | 585,930 | $ | 55,564 | $ | 136,583 | $ | 370,279 | $ | 36,613 | $ | 2,670,856 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 |
Nine Months Ended September 30, 2014
Commercial Real Estate |
Residential Real Estate |
Construction, Land Development and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Unallocated | Total | |||||||||||||||||||||||||
Allowance for loan losses |
||||||||||||||||||||||||||||||||
Beginning balance |
$ | 4,415 | $ | 2,247 | $ | 1,176 | $ | 500 | $ | 3,634 | $ | 255 | $ | 287 | $ | 12,514 | ||||||||||||||||
Charge-offs |
(912 | ) | (437 | ) | (656 | ) | | (663 | ) | (79 | ) | 0 | (2,747 | ) | ||||||||||||||||||
Recoveries |
1,363 | 368 | 1,797 | 19 | 695 | 153 | | 4,395 | ||||||||||||||||||||||||
Provisions |
956 | 1,303 | (1,640 | ) | (47 | ) | 419 | (29 | ) | 35 | 997 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending balance |
$ | 5,822 | $ | 3,481 | $ | 677 | $ | 472 | $ | 4,085 | $ | 300 | $ | 322 | $ | 15,159 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending balance: individually evaluated for impairment |
$ | | $ | 7 | $ | | $ | | $ | 216 | $ | | $ | | $ | 223 | ||||||||||||||||
Ending balance: collectively evaluated for impairment |
4,655 | 3,250 | 533 | 472 | 3,627 | 300 | 322 | 13,159 | ||||||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality |
1,167 | 224 | 144 | | 242 | | | 1,777 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total allowance for loan losses |
$ | 5,822 | $ | 3,481 | $ | 677 | $ | 472 | $ | 4,085 | $ | 300 | $ | 322 | $ | 15,159 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Real Estate |
Residential Real Estate |
Construction, Land Development and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Total | ||||||||||||||||||||||
Ending balance: individually evaluated for impairment |
$ | 8,439 | $ | 525 | $ | | $ | | $ | 2,665 | $ | 58 | $ | 11,687 | ||||||||||||||
Ending balance: collectively evaluated for impairment |
1,102,340 | 525,290 | 38,713 | 118,445 | 312,518 | 34,438 | 2,131,744 | |||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality |
67,819 | 9,797 | 586 | | 818 | 14 | 79,034 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total loans evaluated for allowance for loan losses |
$ | 1,178,598 | $ | 535,612 | $ | 39,299 | $ | 118,445 | $ | 316,001 | $ | 34,510 | $ | 2,222,465 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23 |
September 30, 2015 | Recorded Investment |
Unpaid Principal Balance |
Related Allowance |
|||||||||
With no related allowance recorded: |
||||||||||||
Commercial real estate |
$ | 3,062 | $ | 3,648 | $ | | ||||||
Residential real estate |
858 | 1,519 | | |||||||||
Construction, land development, and other land |
199 | 228 | | |||||||||
Agricultural |
313 | 673 | | |||||||||
Commercial and industrial |
1,700 | 2,648 | | |||||||||
Installment and Other |
37 | 102 | | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 6,169 | $ | 8,818 | $ | | ||||||
|
|
|
|
|
|
|||||||
With a related allowance recorded: |
||||||||||||
Commercial real estate |
$ | | $ | | $ | | ||||||
Residential real estate |
18 | 24 | 6 | |||||||||
Construction, land development, and other land |
| | | |||||||||
Agricultural |
| | | |||||||||
Commercial and industrial |
707 | 731 | 38 | |||||||||
Installment and Other |
| | | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 725 | $ | 755 | $ | 44 | ||||||
|
|
|
|
|
|
|||||||
Total Impaired Loans |
$ | 6,894 | $ | 9,573 | $ | 44 | ||||||
|
|
|
|
|
|
|||||||
December 31, 2014 | Recorded Investment |
Unpaid Principal Balance |
Related Allowance |
|||||||||
With no related allowance recorded: |
||||||||||||
Commercial real estate |
$ | 3,269 | $ | 5,821 | $ | | ||||||
Residential real estate |
597 | 962 | | |||||||||
Construction, land development, and other land |
409 | 409 | | |||||||||
Agricultural |
| | | |||||||||
Commercial and industrial |
569 | 2,528 | | |||||||||
Installment and Other |
42 | 112 | | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 4,886 | $ | 9,832 | $ | | ||||||
|
|
|
|
|
|
|||||||
With a related allowance recorded: |
||||||||||||
Commercial real estate |
$ | | $ | | $ | | ||||||
Residential real estate |
20 | 24 | 7 | |||||||||
Construction, land development, and other land |
| | | |||||||||
Agricultural |
| | | |||||||||
Commercial and industrial |
1,933 | 2,224 | 215 | |||||||||
Installment and Other |
| | | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 1,953 | $ | 2,248 | $ | 222 | ||||||
|
|
|
|
|
|
|||||||
Total Impaired Loans |
$ | 6,839 | $ | 12,080 | $ | 222 | ||||||
|
|
|
|
|
|
24 |
Note 6 Allowance for Loan Losses and Reserve for Unfunded Commitments (continued)
The following tables present the average recorded investment and interest income recognized for originated and B note loans considered impaired as of and for the three and nine month periods ended September 30, 2015 and 2014:
Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2015 | |||||||||||||||
Average Recorded Investment |
Interest Income Recognized |
Average Recorded Investment |
Interest Income Recognized |
|||||||||||||
With no related allowance recorded: |
||||||||||||||||
Commercial real estate |
$ | 2,438 | $ | | $ | 3,140 | $ | | ||||||||
Residential real estate |
874 | | 744 | | ||||||||||||
Construction, land development, and other land |
201 | | 262 | | ||||||||||||
Agricultural |
345 | | 241 | | ||||||||||||
Commercial and industrial |
1,723 | | 1,761 | | ||||||||||||
Installment and other |
37 | | 38 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 5,618 | $ | | $ | 6,186 | $ | | ||||||||
|
|
|
|
|
|
|
|
|||||||||
With related allowance recorded: |
||||||||||||||||
Commercial real estate |
$ | | $ | | $ | | $ | | ||||||||
Residential real estate |
18 | | 19 | | ||||||||||||
Construction, land development, and other land |
| | | | ||||||||||||
Agricultural |
| | | | ||||||||||||
Commercial and industrial |
709 | 10 | 712 | 28 | ||||||||||||
Installment and other |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 727 | $ | 10 | $ | 731 | $ | 28 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total impaired loans |
$ | 6,345 | $ | 10 | $ | 6,917 | $ | 28 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Three Months Ended September 30, 2014 | Nine Months Ended September 30, 2014 | |||||||||||||||
Average Recorded Investment |
Interest Income Recognized |
Average Recorded Investment |
Interest Income Recognized |
|||||||||||||
With no related allowance recorded: |
||||||||||||||||
Commercial real estate |
$ | 7,673 | $ | | $ | 5,361 | $ | | ||||||||
Residential real estate |
530 | | 588 | | ||||||||||||
Construction, land development, and other land |
| | 41 | | ||||||||||||
Agricultural |
1 | | 1 | | ||||||||||||
Commercial and industrial |
2,178 | | 1,788 | | ||||||||||||
Installment and other |
59 | | 92 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 10,441 | $ | | $ | 7,871 | $ | | ||||||||
|
|
|
|
|
|
|
|
|||||||||
With related allowance recorded: |
||||||||||||||||
Commercial real estate |
$ | | $ | | $ | | $ | | ||||||||
Residential real estate |
20 | | 21 | | ||||||||||||
Construction, land development, and other land |
| | | | ||||||||||||
Agricultural |
| | | | ||||||||||||
Commercial and industrial |
731 | 10 | 735 | 29 | ||||||||||||
Installment and other |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 751 | $ | 10 | $ | 756 | $ | 29 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total impaired loans |
$ | 11,192 | $ | 10 | $ | 8,627 | $ | 29 | ||||||||
|
|
|
|
|
|
|
|
25 |
Note 6 Allowance for Loan Losses and Reserve for Unfunded Commitments (continued)
AWBs risk rating methodology assigns risk ratings from 1 to 9, where a higher rating represents higher risk. FNBS uses a similar risk rating methodology. The risk rating categories are described by the following groupings:
Pass Ratings 14 define the risk levels of borrowers and guarantors that offer a minimal to an acceptable level of risk.
Watch A watch asset (rating of 5) has credit exposure that presents higher than average risk and warrants greater than routine attention by Bank personnel due to conditions affecting the borrower, the borrowers industry or the economic environment.
Special mention A special mention asset (rating of 6) has potential weaknesses that deserve managements close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institutions credit position at some future date.
Substandard A substandard asset (rating of 7) is inadequately protected by the current sound worth and paying capacity of the borrower or the collateral pledged, if any. Assets so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.
Doubtful A doubtful asset (rating of 8) has all the weaknesses inherent in one classified substandard with 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.
Loss A loss asset (rating of 9) is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted.
26 |
Note 6 Allowance for Loan Losses and Reserve for Unfunded Commitments (continued)
The following table summarizes the credit quality of the loans considered for inclusion in the allowance for loan losses calculation, excluding acquired impaired loans, as of September 30, 2015 and December 31, 2014:
September 30, 2015 | Commercial Real Estate |
Residential Real Estate |
Construction, Land Development, and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Total | |||||||||||||||||||||
Pass |
$ | 1,312,306 | $ | 572,933 | $ | 35,441 | $ | 121,781 | $ | 307,245 | $ | 28,683 | $ | 2,378,389 | ||||||||||||||
Watch |
85,236 | 4,315 | 18,148 | 12,647 | 38,790 | 7,079 | 166,215 | |||||||||||||||||||||
Special Mention |
22,898 | 119 | 1,502 | 931 | 15,704 | 800 | 41,954 | |||||||||||||||||||||
Substandard |
12,968 | 1,068 | 199 | 1,224 | 8,216 | 40 | 23,715 | |||||||||||||||||||||
Doubtful |
| | | | | | | |||||||||||||||||||||
Loss |
| | | | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 1,433,408 | $ | 578,435 | $ | 55,290 | $ | 136,583 | $ | 369,955 | $ | 36,602 | $ | 2,610,273 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
December 31, 2014 | Commercial Real Estate |
Residential Real Estate |
Construction, Land Development, and Other Land |
Agricultural | Commercial and Industrial |
Installment and Other |
Total | |||||||||||||||||||||
Pass |
$ | 1,052,175 | $ | 529,027 | $ | 22,833 | $ | 112,610 | $ | 252,457 | $ | 34,085 | $ | 2,003,187 | ||||||||||||||
Watch |
117,257 | 7,278 | 10,075 | 13,398 | 45,286 | 696 | 193,990 | |||||||||||||||||||||
Special Mention |
25,615 | 138 | 1,573 | 2,825 | 12,788 | | 42,939 | |||||||||||||||||||||
Substandard |
13,414 | 4,422 | 608 | 1,023 | 9,157 | 42 | 28,666 | |||||||||||||||||||||
Doubtful |
| | | | | | | |||||||||||||||||||||
Loss |
| | | | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 1,208,461 | $ | 540,865 | $ | 35,089 | $ | 129,856 | $ | 319,688 | $ | 34,823 | $ | 2,268,782 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize loan portfolio by type and payment status at the dates indicated (excluding acquired impaired loans):
September 30, 2015 | ||||||||||||||||||||||||||||
Commercial Real Estate |
Residential Real Estate |
Construction/land Development |
Agricultural | Commercial & Industrial |
Installments & Other |
Total | ||||||||||||||||||||||
Performing |
$ | 1,430,346 | $ | 577,559 | $ | 55,091 | $ | 136,270 | $ | 368,255 | $ | 36,565 | $ | 2,604,086 | ||||||||||||||
Nonperforming |
3,062 | 876 | 199 | 313 | 1,700 | 37 | 6,187 | |||||||||||||||||||||
Total loans |
$ | 1,433,408 | $ | 578,435 | $ | 55,290 | $ | 136,583 | $ | 369,955 | $ | 36,602 | $ | 2,610,273 | ||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||||
Commercial Real Estate |
Residential Real Estate |
Construction/land Development |
Agricultural | Commercial & Industrial |
Installments & Other |
Total | ||||||||||||||||||||||
Performing |
$ | 1,205,192 | $ | 540,248 | $ | 34,680 | $ | 129,856 | $ | 317,909 | $ | 34,781 | $ | 2,262,666 | ||||||||||||||
Nonperforming |
3,269 | 617 | 409 | | 1,779 | 42 | 6,116 | |||||||||||||||||||||
Total loans |
$ | 1,208,461 | $ | 540,865 | $ | 35,089 | $ | 129,856 | $ | 319,688 | $ | 34,823 | $ | 2,268,782 |
27 |
Note 6 Allowance for Loan Losses and Reserve for Unfunded Commitments (continued)
The following tables summarize past due loan information by category, excluding acquired impaired loans, as of September 30, 2015 and December 31, 2014:
September 30, 2015 | 30-59 Days Past Due |
60-89 Days Past Due |
Greater than 90 Days and Accruing |
Total Past Due |
Non-accrual | Current | Total | |||||||||||||||||||||
Commercial real estate |
$ | 232 | $ | 241 | $ | | $ | 473 | $ | 3,062 | $ | 1,429,873 | $ | 1,433,408 | ||||||||||||||
Residential real estate |
582 | | | 582 | 876 | 576,977 | 578,435 | |||||||||||||||||||||
Construction, land development, and other land |
1,199 | | | 1,199 | 199 | 53,892 | 55,290 | |||||||||||||||||||||
Agricultural |
| | | | 313 | 136,270 | 136,583 | |||||||||||||||||||||
Commercial and industrial |
3,308 | 25 | 41 | 3,374 | 1,700 | 364,881 | 369,955 | |||||||||||||||||||||
Installment and other |
13 | 7 | | 20 | 37 | 36,545 | 36,602 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 5,334 | $ | 273 | $ | 41 | $ | 5,648 | $ | 6,187 | $ | 2,598,438 | $ | 2,610,273 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
December 31, 2014 | 30-59 Days Past Due |
60-89 Days Past Due |
Greater than 90 Days and Accruing |
Total Past Due |
Non-accrual | Current | Total | |||||||||||||||||||||
Commercial real estate |
$ | 1,822 | $ | 526 | $ | | $ | 2,348 | $ | 3,269 | $ | 1,202,844 | $ | 1,208,461 | ||||||||||||||
Residential real estate |
185 | 925 | 214 | 1,324 | 617 | 538,924 | 540,865 | |||||||||||||||||||||
Construction, land development, and other land |
12 | | | 12 | 409 | 34,668 | 35,089 | |||||||||||||||||||||
Agricultural |
110 | | | 110 | | 129,746 | 129,856 | |||||||||||||||||||||
Commercial and industrial |
355 | 23 | | 378 | 1,779 | 317,531 | 319,688 | |||||||||||||||||||||
Installment and other |
20 | | | 20 | 42 | 34,761 | 34,823 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 2,504 | $ | 1,474 | $ | 214 | $ | 4,192 | $ | 6,116 | $ | 2,258,474 | $ | 2,268,782 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual loans have related government guaranteed balances of $2.4 million and $1.0 million as of September 30, 2015 and December 31, 2014, respectively.
Not considering purchased impaired loans, impaired loans of $725 thousand and $742 thousand were classified as troubled debt restructurings as of September 30, 2015 and December 31, 2014, respectively. The restructurings were granted in response to borrower financial difficulty and generally provide for a modification of loan repayment terms or interest rate. Impaired restructured loans carry a specific allowance, and the allowance on impaired restructured loans is calculated consistently for all loans. The Bank did not restructure any loans during the nine month period ended September 30, 2015, or for the year ended December 2014. There were no available commitments for troubled debt restructurings outstanding as of September 30, 2015 or December 31, 2014.
28 |
Note 6 Allowance for Loan Losses and Reserve for Unfunded Commitments (continued)
The following table presents troubled debt restructurings by accrual versus non-accrual status and by loan class as of September 30, 2015 and December 31, 2014:
September 30, 2015 | ||||||||||||||||||||||||
Number of Contracts |
Accrual Status |
Number of Contracts |
Non- Accrual Status |
Number of Contracts |
Total Modifications |
|||||||||||||||||||
Commercial real estate |
| $ | | | $ | | | $ | | |||||||||||||||
Residential real estate |
| | 1 | 18 | 1 | 18 | ||||||||||||||||||
Construction, land development and other land |
| | | | | | ||||||||||||||||||
Agricultural |
| | | | | | ||||||||||||||||||
Commercial and industrial |
2 | 707 | | | 2 | 707 | ||||||||||||||||||
Installment and other |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
2 | $ | 707 | 1 | $ | 18 | 3 | $ | 725 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
December 31, 2014 | ||||||||||||||||||||||||
Number of Contracts |
Accrual Status |
Number of Contracts |
Non- Accrual Status |
Number of Contracts |
Total Modifications |
|||||||||||||||||||
Commercial real estate |
| $ | | | $ | | | $ | | |||||||||||||||
Residential real estate |
| | 1 | 20 | 1 | 20 | ||||||||||||||||||
Construction, land development and other land |
| | | | | | ||||||||||||||||||
Agricultural |
| | | | | | ||||||||||||||||||
Commercial and industrial |
2 | 722 | | | 2 | 722 | ||||||||||||||||||
Installment and other |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
2 | $ | 722 | 1 | $ | 20 | 3 | $ | 742 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
29 |
Note 6 Allowance for Loan Losses and Reserve for Unfunded Commitments (continued)
Reserve for unfunded commitments The activity related to the reserve for unfunded commitments for the three month and nine month periods ended September 30, 2015 and 2014 is presented below:
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Balance, beginning of period |
$ | 3,212 | $ | 1,657 | $ | 2,145 | $ | 1,090 | ||||||||
Reserve for acquired unfunded commitments |
| | 195 | | ||||||||||||
Provision (benefit) for unfunded commitments |
(109 | ) | 151 | 763 | 718 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | 3,103 | $ | 1,808 | $ | 3,103 | $ | 1,808 | ||||||||
|
|
|
|
|
|
|
|
There were no charge-offs or recoveries related to the reserve for unfunded commitments for the three and nine month periods ended September 30, 2015 and 2014.
Note 7 Goodwill, Intangible Assets, and Intangible Liabilities
The following table summarizes the changes in the Companys goodwill and intangible assets and intangible liabilities for the nine months ended September 30, 2015 and the year ended December 31, 2014:
Goodwill | Core Deposit Intangible |
Trade Name Intangible |
Favorable Leasehold Interest Intangible |
Unfavorable Leasehold Interest Intangible |
||||||||||||||||
Balance, December 31, 2013 |
$ | 59,620 | $ | 22,039 | $ | 2,642 | $ | 2,378 | $ | (2,372 | ) | |||||||||
Measurement period adjustments |
562 | | | | | |||||||||||||||
Amortization or accretion |
| (3,028 | ) | (155 | ) | (312 | ) | 590 | ||||||||||||
Impairment |
(2,963 | ) | (270 | ) | | | | |||||||||||||
Balance, December 31, 2014 |
57,219 | 18,741 | 2,487 | 2,066 | (1,782 | ) | ||||||||||||||
Acquired |
17,253 | 17 | (230 | ) | ||||||||||||||||
Measurement period adjustments |
3,486 | | | | | |||||||||||||||
Amortization or accretion |
| (2,088 | ) | (117 | ) | (136 | ) | 355 | ||||||||||||
Impairment |
| | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, September 30, 2015 |
$ | 77,958 | $ | 16,670 | $ | 2,370 | $ | 1,930 | $ | (1,657 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulated amortization or accretion |
n/a | $ | 14,570 | $ | 746 | $ | 1,126 | $ | (2,750 | ) | ||||||||||
Weighted average remaining amortization or accretion period (years) |
n/a | 12 | 15 | 14 | 7 |
30 |
The following table presents the forecasted amortization expense for intangible assets acquired in all mergers:
Expected Amortization |
||||
Remainder of 2015 |
$ | 735 | ||
2016 |
2,710 | |||
2017 |
2,481 | |||
2018 |
2,252 | |||
2019 |
2,023 | |||
Thereafter |
8,839 |
31 |
Note 8 Fair Value of Financial Instruments
The following table presents information about the Companys assets and liabilities measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 and indicates the fair value hierarchy of the valuation techniques utilized by the Bank to determine such fair value.
Fair Value Measurements Using | ||||||||||||||||
September 30, 2015 | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Recurring assets |
||||||||||||||||
Obligations of federal government agencies |
$ | 18,724 | $ | | $ | 18,724 | $ | | ||||||||
Obligations of states, municipalities, and political subdivisions |
88,596 | | 88,596 | | ||||||||||||
Residential mortgage backed securities |
693,634 | | 693,634 | | ||||||||||||
Commercial mortgage backed securities |
50,567 | | 50,567 | | ||||||||||||
Corporate securities |
13,739 | | 13,739 | | ||||||||||||
Other securities |
17,115 | 5,451 | 11,664 | | ||||||||||||
Rate lock commitments |
33 | | 33 | | ||||||||||||
Forward sales commitments |
18 | | 18 | | ||||||||||||
Interest rate swaps |
5,940 | | 5,940 | | ||||||||||||
Recurring liabilities |
||||||||||||||||
Rate lock commitments |
107 | | 107 | | ||||||||||||
Forward sales commitments |
24 | | 24 | | ||||||||||||
Interest rate swaps |
6,150 | | 6,150 | | ||||||||||||
Fair Value Measurements Using | ||||||||||||||||
December 31, 2014 | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Recurring assets |
||||||||||||||||
Obligations of federal government agencies |
$ | 19,517 | $ | | $ | 19,517 | $ | | ||||||||
Obligations of states, municipalities, and political subdivisions |
92,680 | | 92,680 | | ||||||||||||
Residential mortgage backed securities |
753,097 | | 753,097 | | ||||||||||||
Commercial mortgage backed securities |
53,430 | | 53,430 | | ||||||||||||
Corporate securities |
7,113 | | 7,113 | | ||||||||||||
Other securities |
19,122 | 5,338 | 13,784 | | ||||||||||||
Rate lock commitments |
11 | | 11 | | ||||||||||||
Forward sales commitments |
5 | | 5 | | ||||||||||||
Interest rate swaps |
3,685 | | 3,685 | | ||||||||||||
Recurring liabilities |
||||||||||||||||
Rate lock commitments |
6 | | 6 | | ||||||||||||
Forward sales commitments |
11 | | 11 | | ||||||||||||
Interest rate swaps |
3,640 | | 3,640 | | ||||||||||||
Risk participation agreement |
40 | 40 |
32 |
Note 8 Fair Value of Financial Instruments (continued)
Certain assets are also measured at fair value on a non-recurring basis. Adjustments to fair value based on such non-recurring transactions generally result from the application of lower of cost or fair value accounting or write-downs of individual assets due to impairment. The following table summarizes the Companys assets and liabilities that were measured at fair value on a non-recurring basis at September 30, 2015 and December 31, 2014:
Fair Value Measurements Using | ||||||||||||||||
September 30, 2015 | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Non-recurring |
||||||||||||||||
Foreclosed real estate and other foreclosed assets |
$ | 8,090 | $ | | $ | | $ | 8,090 | ||||||||
Premises and equipment held for sale |
1,930 | | | 1,930 | ||||||||||||
Fair Value Measurements Using | ||||||||||||||||
December 31, 2014 | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Non-recurring |
||||||||||||||||
Foreclosed real estate and other foreclosed assets |
$ | 9,928 | $ | | $ | | $ | 9,928 | ||||||||
Premises and equipment held for sale |
2,925 | | | 2,925 |
33 |
Note 8 Fair Value of Financial Instruments (continued)
The following fair value table includes those financial instruments for which it is practical to estimate fair value. It does not include the value of non-financial assets and liabilities such as premises and equipment and intangible assets such as goodwill, customer relationships, trade name and core deposit intangibles. The table summarizes carrying amounts, estimated fair values, and assumptions used by the Company to estimate fair value as of September 30, 2015 and December 31, 2014:
September 30, 2015 | Assumptions Used in Estimating Fair Value |
Carrying Amount |
Estimated Fair Value |
|||||||
Financial assets |
||||||||||
Cash and due from banks |
Equal to carrying value |
$ | 74,545 | $ | 74,545 | |||||
Overnight interest bearing deposits with other banks |
Equal to carrying value |
23,103 | 23,103 | |||||||
Securities available-for-sale |
Quoted market prices for identical or similar instruments or model-derived valuations |
882,375 | 882,375 | |||||||
Securities held to maturity |
Quoted market prices for identical or similar instruments or model-derived valuations |
146,600 | 149,528 | |||||||
Loans, held for sale |
Quoted market prices for similar loan products |
86,692 | 87,508 | |||||||
Loans |
Fixed-rate loans at discounted expected future cash flows, and variable rate loans equal to carrying value, net of allowance for loan losses and liquidity discount |
2,904,988 | 2,862,346 | |||||||
Restricted equity securities |
Par value |
15,178 | 15,178 | |||||||
Bank-owned life insurance |
Equal to carrying value |
83,512 | 83,512 | |||||||
Derivative assets |
Quoted market prices for similar instruments or model-derived valuations |
5,991 | 5,991 | |||||||
Financial liabilities |
||||||||||
Deposits |
Fixed-rate certificates of deposit at discounted expected future cash flows and all other deposits equal to carrying value |
3,620,254 | 3,490,263 | |||||||
Junior Subordinated Debentures |
Equal to carrying value |
7,058 | 7,058 | |||||||
Federal Home Loan Bank advances and other borrowings |
Discounted expected future cash flows |
240,141 | 240,463 | |||||||
Derivative liabilities |
Quoted market prices for similar instruments or model-derived valuations |
6,281 | 6,281 | |||||||
December 31, 2014 | Assumptions Used in Estimating Fair Value |
Carrying Amount |
Estimated Fair Value |
|||||||
Financial assets |
||||||||||
Cash and due from banks |
Equal to carrying value |
$ | 62,889 | $ | 62,889 | |||||
Overnight interest bearing deposits with other banks |
Equal to carrying value |
31,625 | 31,625 | |||||||
Securities available-for-sale |
Quoted market prices for identical or similar instruments or model-derived valuations |
944,959 | 944,959 | |||||||
Securities held to maturity |
Quoted market prices for identical or similar instruments or model-derived valuations |
107,890 | 109,580 | |||||||
Loans, held for sale |
Quoted market prices for similar loan products |
61,776 | 63,191 | |||||||
Loans |
Fixed-rate loans at discounted expected future cash flows, and variable rate loans equal to carrying value, net of allowance for loan losses and liquidity discount |
2,612,916 | 2,517,031 | |||||||
Restricted equity securities |
Par value |
14,723 | 14,723 | |||||||
Bank-owned life insurance |
Equal to carrying value |
70,662 | 70,662 | |||||||
Derivative assets |
Quoted market prices for similar instruments or model-derived valuations |
3,701 | 3,701 | |||||||
Financial liabilities |
||||||||||
Deposits |
Fixed-rate certificates of deposit at discounted expected future cash flows and all other deposits equal to carrying value |
3,294,605 | 3,131,708 | |||||||
Federal Home Loan Bank advances and other borrowings |
Discounted expected future cash flows |
283,752 | 283,769 | |||||||
Derivative liabilities |
Quoted market prices for similar instruments or model-derived valuations |
3,697 | 3,697 |
34 |
Note 9 Commitments, Contingencies, and Derivatives
At September 30, 2015 and December 31, 2014, the Company had commitments to originate mortgage loans held for sale at pre-determined interest rates and forward sales commitments totaling $24.9 million and $8.2 million, respectively.
At September 30, 2015, the Company had risk participation agreements and interest rate swaps with notional values of $7.7 million and $267.9 million, respectively. At December 31, 2014, the Company had risk participation agreements and interest rate swaps with notional values of $7.8 million and $247.9 million, respectively. The aggregate value of assets posted as collateral for derivatives totaled $7.1 million and $4.7 million at September 30, 2015 and December 31, 2014, respectively.
Interest rate swap agreements are used for interest rate risk management and to accommodate the credit needs of the Banks customers. These transactions involve both credit and market risk, and their value is derived from the underlying interest rates. The notional amounts are amounts on which calculations, payments, and the value of the derivative are based. Notional amounts do not represent direct credit exposures. Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any. Such difference, which represents the fair value of the derivative instruments, is reflected in the Companys consolidated statements of financial condition as other assets and other liabilities. The interest rate swap agreements are not designated as hedges and do not receive hedge accounting treatment; thus, changes in fair values are recorded in current operations.
Changes in the fair value of interest rate derivatives are recorded in other non-interest income. For the nine month periods ended September 30, 2015 and 2014, losses on interest rate derivatives were $214 thousand and $495 thousand, respectively. For the three month periods ended September 30, 2015 and 2014, losses on interest rate derivatives were $318 thousand and $13 thousand, respectively.
Legal contingencies In the ordinary course of business, the Company has various outstanding commitments and contingent liabilities that are not reflected in the accompanying unaudited consolidated financial statements. In addition, the Company is a defendant in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is not expected to have a material effect on the consolidated financial condition or results of operations of the Company.
Commitments to extend credit The Banks are party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of their customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of condition. The contract or notional amounts of those instruments reflect the extent of involvement the Banks have in particular classes of financial instruments.
35 |
Note 9 Commitments, Contingencies and Derivatives (continued)
The Companys exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for instruments recognized on the statement of condition. The Banks do not anticipate any material losses as a result of the commitments and standby letters of credit.
The following table summarizes the contract or notional amount of outstanding loan commitments at September 30, 2015 and December 31, 2014:
September 30, | December 31, | |||||||
2015 | 2014 | |||||||
Commitments to extend credit |
$ | 670,303 | $ | 538,865 | ||||
Standby letters of credit |
13,583 | 10,863 | ||||||
|
|
|
|
|||||
Total |
$ | 683,886 | $ | 549,728 | ||||
|
|
|
|
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Banks evaluate each customers creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Banks upon extension of credit, is based on managements credit evaluation of the counterparty. Collateral required varies but may include accounts receivable, inventory, property, plant, and equipment, and income producing commercial properties.
Standby letters of credit are conditional commitments issued by the Banks to guarantee to a third-party the performance of a customer. Those guarantees are primarily issued to support public and private borrowing arrangements, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The related liability for the Banks obligation under standby letters of credit and guarantees is immaterial.
Note 10 Holdings and Bancshares Only Statements
Certain intercompany transactions are affected by timing differences, and the impact of those differences on the Companys statements of income are reflected in the following tables. The following are the condensed statements of financial condition, income, and cash flows for Holdings:
36 |
SKBHC Holdings LLC
Condensed Statements of Financial Condition
As of September 30, | As of December 31, | |||||||
2015 | 2014 | |||||||
Cash |
$ | 299 | $ | 372 | ||||
Investment in subsidiary |
604,976 | 576,941 | ||||||
|
|
|
|
|||||
Total assets |
$ | 605,275 | $ | 577,313 | ||||
|
|
|
|
|||||
Other liabilities |
$ | 13,989 | $ | 12,731 | ||||
Members equity |
591,286 | 564,582 | ||||||
|
|
|
|
|||||
Total liabilities and members equity |
$ | 605,275 | $ | 577,313 | ||||
|
|
|
|
SKBHC Holdings LLC
Condensed Statements of Income
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
INCOME |
||||||||||||||||
Other income |
$ | | $ | | $ | | $ | | ||||||||
|
|
|
|
|
|
|
|
|||||||||
| | | | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
EXPENSES |
||||||||||||||||
Other operating expenses |
395 | 579 | 1,632 | 1,307 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
395 | 579 | 1,632 | 1,307 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
LOSS BEFORE BENEFIT FOR INCOME TAX AND NET INCOME OF SUBSIDIARY, NET OF DIVIDENDS PAID TO HOLDINGS |
(395 | ) | (579 | ) | (1,632 | ) | (1,307 | ) | ||||||||
INCOME TAXES |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
LOSS BEFORE NET INCOME OF SUBSIDIARY, NET OF DIVIDENDS PAID TO HOLDINGS |
(395 | ) | (579 | ) | (1,632 | ) | (1,307 | ) | ||||||||
Equity in earnings from subsidiaries |
8,372 | 6,218 | 23,390 | 18,293 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
NET INCOME |
$ | 7,977 | $ | 5,639 | $ | 21,758 | $ | 16,986 | ||||||||
|
|
|
|
|
|
|
|
37 |
Note 10 Holdings and Bancshares Only Statements (continued)
SKBHC Holdings LLC
Condensed Statements of Cash Flows
For the Nine Months Ended | ||||||||
September 30, | ||||||||
2015 | 2014 | |||||||
CASH FLOWS USED IN OPERATING ACTIVITIES |
||||||||
Net income |
$ | 21,758 | $ | 16,986 | ||||
Adjustments to reconcile net income to cash used in operating activities: |
||||||||
Net income of subsidiaries, net of dividends paid to Holdings |
(23,390 | ) | (18,293 | ) | ||||
Compensation expense for management units |
1,232 | 1,054 | ||||||
Net change in other assets |
| (3 | ) | |||||
Net change in other liabilities |
27 | (204 | ) | |||||
|
|
|
|
|||||
Net cash used in operating activities |
(373 | ) | (460 | ) | ||||
|
|
|
|
|||||
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES |
||||||||
Capital contributions to subsidiary |
| | ||||||
Dividends received from subsidiary |
300 | | ||||||
|
|
|
|
|||||
Net cash provided by investing activities |
300 | | ||||||
|
|
|
|
|||||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES |
||||||||
Proceeds from members |
| | ||||||
|
|
|
|
|||||
Net cash provided by financing activities |
| | ||||||
|
|
|
|
|||||
Net change in cash |
(73 | ) | (460 | ) | ||||
CASH, beginning of year |
372 | 978 | ||||||
|
|
|
|
|||||
CASH, end of period |
$ | 299 | $ | 518 | ||||
|
|
|
|
38 |
Note 10 Holdings and Bancshares Only Statements (continued)
The following are the condensed statements of financial condition, operations and cash flows for Bancshares:
Starbuck Bancshares, Inc.
Condensed Statements of Financial Condition
As of September 30, | As of December 31, | |||||||
2015 | 2014 | |||||||
Cash |
$ | 5,579 | $ | 4,420 | ||||
Investment in Bank subsidiaries |
598,038 | 568,177 | ||||||
Other assets |
12,090 | 9,195 | ||||||
|
|
|
|
|||||
Total assets |
$ | 615,707 | $ | 581,792 | ||||
|
|
|
|
|||||
Junior subordinated debentures |
$ | 7,058 | $ | | ||||
Other liabilities |
$ | 3,673 | 4,851 | |||||
Shareholder equity |
604,976 | 576,941 | ||||||
|
|
|
|
|||||
Total liabilities and shareholder equity |
$ | 615,707 | $ | 581,792 | ||||
|
|
|
|
Starbuck Bancshares, Inc.
Condensed Statements of Income
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
INCOME |
||||||||||||||||
Management and service fees |
$ | 773 | $ | 374 | $ | 2,318 | $ | 1,139 | ||||||||
Other income |
4 | 121 | 5 | 385 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
777 | 495 | 2,323 | 1,524 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
EXPENSES |
||||||||||||||||
Interest expense on junior suboridinated debentures |
73 | | 191 | | ||||||||||||
Other operating expenses |
(106 | ) | 1,840 | 4,333 | 4,596 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
(33 | ) | 1,840 | 4,524 | 4,596 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
INCOME (LOSS) BEFORE BENEFIT FOR INCOME TAX AND NET INCOME OF SUBSIDIARIES, NET OF DIVIDENDS PAID TO PARENT |
810 | (1,345 | ) | (2,201 | ) | (3,072 | ) | |||||||||
BENEFIT FOR INCOME TAX |
116 | 265 | 677 | 923 | ||||||||||||
INCOME (LOSS) BEFORE NET INCOME OF SUBSIDIARIES, NET OF DIVIDENDS PAID TO PARENT |
926 | (1,080 | ) | (1,524 | ) | (2,149 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income of subsidiaries, net of dividends paid to Parent |
7,446 | 7,298 | 24,914 | 20,465 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
NET INCOME |
$ | 8,372 | $ | 6,218 | $ | 23,390 | $ | 18,316 | ||||||||
|
|
|
|
|
|
|
|
39 |
Note 10 Holdings and Bancshares Only Statements (continued)
Starbuck Bancshares, Inc.
Condensed Statements of Cash Flows
For the Nine Months Ended September 30, |
||||||||
2015 | 2014 | |||||||
CASH FLOWS USED IN OPERATING ACTIVITIES |
||||||||
Net income |
$ | 23,390 | $ | 18,316 | ||||
Adjustments to reconcile net income to cash used in operating activities: |
||||||||
Net income of subsidiaries, net of dividends paid to Parent |
(24,914 | ) | (20,465 | ) | ||||
Net change in other assets |
(2,895 | ) | (298 | ) | ||||
Net change in other liabilities |
(1,180 | ) | (134 | ) | ||||
|
|
|
|
|||||
Net cash used in operating activities |
(5,599 | ) | (2,581 | ) | ||||
|
|
|
|
|||||
CASH FLOWS USED IN INVESTING ACTIVITIES |
||||||||
Capital contributions to subsidiary |
| | ||||||
|
|
|
|
|||||
Net cash used in investing activities |
| | ||||||
|
|
|
|
|||||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES |
||||||||
Acquisition of junior subordinated debt |
7,058 | | ||||||
Dividends paid to Holdings |
(300 | ) | | |||||
|
|
|
|
|||||
Net cash provided by financing activities |
6,758 | | ||||||
|
|
|
|
|||||
Net change in cash |
1,159 | (2,581 | ) | |||||
CASH, beginning of year |
4,420 | 7,089 | ||||||
|
|
|
|
|||||
CASH, end of period |
$ | 5,579 | $ | 4,508 | ||||
|
|
|
|
40 |
Note 11 Other Non-interest Income and Expense
Components of other non-interest income which exceed 1% of the aggregate total net interest income and total non-interest income for the three month and nine month periods ended September 30, 2015 and 2014, respectively, are as follows:
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Loan sales income |
$ | 1,485 | $ | 2,768 | $ | 4,798 | $ | 10,983 | ||||||||
Bank-owned life insurance |
569 | 452 | 1,578 | 1,563 | ||||||||||||
Net gains on sales of foreclosed assets and rental income |
390 | 776 | 1,047 | 3,135 | ||||||||||||
Net gains on sales of securities |
267 | 9 | 427 | 455 | ||||||||||||
Other |
596 | 1,381 | 2,918 | 3,590 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 3,307 | $ | 5,386 | $ | 10,768 | $ | 19,726 | ||||||||
|
|
|
|
|
|
|
|
Components of other non-interest expense which exceed 1% of the aggregate total net interest income and total non-interest income for the three month and nine month periods ended September 30, 2015 and 2014, respectively, are as follows:
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Acquisition-related expenses |
$ | 1,025 | $ | 194 | $ | 1,203 | $ | 246 | ||||||||
FDIC assessment |
625 | 594 | 1,925 | 1,823 | ||||||||||||
Travel |
529 | 552 | 1,587 | 1,833 | ||||||||||||
Bankcard and debit cards |
525 | 442 | 1,511 | 1,553 | ||||||||||||
Postage and supplies |
415 | 491 | 1,237 | 1,748 | ||||||||||||
Insurance |
404 | 442 | 1,324 | 1,279 | ||||||||||||
Telephone |
308 | 285 | 921 | 1,031 | ||||||||||||
Advertising and marketing |
286 | 477 | 797 | 1,234 | ||||||||||||
Other professional fees |
264 | 570 | 906 | 1,907 | ||||||||||||
Mortgage repurchase expense |
14 | 732 | 14 | 734 | ||||||||||||
Other |
1,818 | 1,838 | 10,902 | 11,824 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 6,213 | $ | 6,617 | $ | 22,327 | $ | 25,212 | ||||||||
|
|
|
|
|
|
|
|
Note 12 Subsequent Event
On October 2, 2015, Banner Corporation (Banner), announced that it had completed the acquisition of AmericanWest Bank, effective as of 11:59 p.m. October 1, 2015. Pursuant to the terms of the previously announced Agreement and Plan of Merger, dated as of November 5, 2014, by and among Banner, Elements Merger Sub, LLC, a wholly owned subsidiary of Banner (Merger Sub), SKBHC Holdings LLC and Starbuck Bancshares, Inc. (Starbuck) (as amended, the Merger Agreement), Starbuck merged with and into Merger Sub (the Merger), and immediately following the Merger, Starbucks wholly owned subsidiary bank, AmericanWest Bank merged with and into Banners wholly owned subsidiary bank, Banner Bank (the Bank Merger). The consideration paid by Banner pursuant to the Merger Agreement was 13,230,000 shares of Banners common stock and non-voting common stock and $130.0 million in cash.
41 |