
Financial Performance - Net income for the year ended December 31, 2019, decreased by $579 thousand to $9.6 million, or $1.92 per diluted share, compared to $10.1 million, or $2.04 per diluted share, for 2018[148] - Noninterest income decreased by $605 thousand, or 7%, primarily due to lower service charges on deposit accounts and income from bank-owned life insurance[149] - Net interest income increased by $384 thousand, or 1%, driven by higher average earning asset balances, despite a decrease in net interest margin by 5 basis points to 3.88%[150] - The efficiency ratio for 2019 was 65.28%, compared to 63.05% in 2018, indicating a decline in operational efficiency[153] - The return on average assets was 1.23% and return on average equity was 13.19% for 2019, down from 1.34% and 16.36% in 2018, respectively[148] - The interest rate spread was 3.60% for 2019, compared to 3.74% in 2018, indicating a decrease in profitability from interest-earning assets[1] - Noninterest income totaled $8,552 million in 2019, up from $9,157 million in 2018, reflecting a decrease of 6.6%[255] Loan and Asset Quality - The provision for loan losses was recorded at $450 thousand for 2019, down from $600 thousand in 2018, reflecting improved asset quality[151] - The allowance for loan losses is evaluated quarterly, considering factors such as trends in delinquencies, charge-offs, and current economic conditions[162] - The provision for loan losses was $450 million in 2019, down from $600 million in 2018, indicating a reduction of 25%[255] - The allowance for loan losses totaled $4.9 million at December 31, 2019, representing 0.86% of total loans[212] - Non-performing assets totaled $1.5 million at December 31, 2019, representing 0.18% of total assets[209] - The company experienced a decrease in net charge-offs, totaling $525 thousand in 2019, down from $917 thousand in 2018[1][2] - The ratio of net charge-offs to average loans outstanding was 0.09% in 2019, down from 0.17% in 2018[217] Asset and Liability Management - Total assets increased to $776.933 million at December 31, 2019, up from $754.457 million in 2018, representing a growth of 3.1%[1] - Total loans increased to $564.042 million in 2019, up from $530.165 million in 2018, marking a growth of 6.4%[1] - Total liabilities increased by $36.5 million to $722.8 million at December 31, 2019, compared to $686.3 million at December 31, 2018[201] - Total shareholders' equity increased by $10.5 million to $77.2 million at December 31, 2019, compared to $66.7 million at December 31, 2018[202] - As of December 31, 2019, total deposits increased to $706.4 million, up by $35.9 million from $670.6 million at the end of 2018[230] Interest Income and Expenses - Tax-equivalent net interest income for 2019 was $28,217 thousand, compared to $27,833 thousand in 2018[155] - The company achieved a net interest margin of 3.88% for 2019, slightly down from 3.93% in 2018, suggesting a tightening in the margin between interest income and interest expense[1] - The cost of funds was 0.70% for 2019, up from 0.51% in 2018, indicating an increase in the expense of funding sources[1] - Noninterest expenses rose by $557 thousand, or 2%, primarily due to higher salaries and employee benefits, marketing expenses, and legal fees[149] Capital Adequacy - The Bank's regulatory capital ratios met all adequacy requirements, including a common equity Tier 1 capital ratio of 7.0% as of December 31, 2019[246] - Common equity Tier 1 capital increased to $80,505 million in 2019 from $69,688 million in 2018, representing a growth of 11.6%[248] - Total risk-based capital rose to $85,439 million in 2019, up from $74,697 million in 2018, reflecting a 14.4% increase[248] - The Common equity Tier 1 capital ratio improved to 13.99% in 2019, compared to 12.71% in 2018, indicating a 10% increase[248] - The Tier 1 leverage ratio increased to 10.13% in 2019 from 9.26% in 2018, marking a 9.4% improvement[248] Risk Management - The Bank's loan policy includes approval limits for individual loan officers based on their position and experience, with oversight from the Board Loan Committee[166] - The Bank's commercial real estate loan underwriting criteria require examination of debt service coverage ratios and the borrower's creditworthiness[173] - The Company conducts independent reviews of loans within the portfolio annually to analyze loan risk ratings and validate specific reserves on impaired loans[168] - Construction and land development loans entail significant risks, including potential cost overruns and failure to complete construction[170] - The Bank's consumer lending includes unsecured loans and lines of credit, which may entail greater risk than residential mortgage loans[175]