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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Earnings Per Share, Policy [Policy Text Block]

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding (basic shares). Included in basic shares are certain shares that have been accrued as of the balance sheet date as deferred compensation for members of Bancshares’ Board of Directors. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding, adjusted for the effect of potentially dilutive stock awards outstanding during the period (dilutive shares). The dilutive shares consist of nonqualified stock option grants issued to employees and members of Bancshares’ Board of Directors pursuant to Bancshares’ 2013 Incentive Plan (as amended, the “2013 Incentive Plan”) previously approved by Bancshares’ shareholders. The following table reflects weighted average shares used to calculate basic and diluted net income per share for the periods presented.

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2019				2018				2019				2018
Basic shares			6,423,642				6,195,801				6,420,653				6,192,117
Dilutive shares			427,282				378,701				427,282				378,701
Diluted shares			6,850,924				6,574,502				6,847,935				6,570,818

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2019				2018				2019				2018
		(Dollars in Thousands, Except Per Share Data)
Net income		$	1,005			$	359			$	2,239			$	773
Basic net income per share		$	0.16			$	0.06			$	0.35			$	0.13
Diluted net income per share		$	0.15			$	0.06			$	0.33			$	0.12

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income

Comprehensive income consists of net income, as well as unrealized holding gains and losses that arise during the period associated with the Company’s available-for-sale securities portfolio and the effective portion of cash flow hedge derivatives. In the calculation of comprehensive income, reclassification adjustments are made for gains or losses realized in the statement of operations associated with the sale of available-for-sale securities, settlement of derivative contracts or changes in the fair value of cash flow derivatives.

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Policies Recently Adopted

Accounting Standards Update (“ASU”)

2017-12

, “Targeted Improvements to Accounting for Hedging Activities.”

This ASU simplifies and expands the eligible hedging strategies for financial and nonfinancial risks by more closely aligning hedge accounting with a company’s risk management activities, and also simplifies the application of

Accounting Standards Codification (“ASC”) Topic

815,

Derivatives and Hedging

, through targeted improvements in key practice areas. This includes expanding the list of items eligible to be hedged and amending the methods used to measure the effectiveness of hedging relationships. In addition, the ASU prescribes how hedging results should be presented and requires incremental disclosures. These changes are intended to allow preparers more flexibility and to enhance the transparency of how hedging results are presented and disclosed. Further, the ASU provides partial relief on the timing of certain aspects of hedge documentation and eliminates the requirement to recognize hedge ineffectiveness separately in earnings in the current period. ASU 2017-12 became effective for the Company on January 1, 2019. The adoption of ASU 2017-12 did not have a material impact on the Company’s consolidated financial statements.

ASU

2016

-

02,

“Leases (Topic

842

).”

Issued in February 2016, ASU 2016-02 was issued by the Financial Accounting Standards Board (“FASB”) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU 2016-02 requires organizations that lease assets (lessees) to recognize on the balance sheet the assets and liabilities for the rights and obligations created by the lease for all operating leases under current U.S. GAAP with a term of more than 12 months. ASU 2016-02 became effective for the Company on January 1, 2019. Refer to Note 13, Leases, for additional information regarding the adoption of ASU 2016-02. As a result of implementation of the standard, the Company recorded a right-of-use asset and lease liability. As of June 30, 2019, both the right-of-use asset and lease liability totaled approximately

$3.8

million.

Pending Accounting Pronouncements

ASU

2018

-

15

, “Intangibles-Goodwill and Other – Internal-Use Software (Subtopic

350

-

40

): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force).”

Issued in

August 2018,

ASU

2018

-

15

aims to reduce complexity in the accounting for costs of implementing a cloud computing service arrangement. ASU

2018

-

15

aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments of ASU

2018

-

15

require an entity to follow the guidance in FASB ASC Subtopic

350

-

40,

“Intangibles-Goodwill and Other

–

Internal-Use Software,” in order to determine which implementation costs to capitalize as assets related to the service contract and which costs to expense. The amendments of ASU

2018

-

15

also require an entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement (i.e., the noncancellable period of the arrangement plus periods covered by (

1

) an option to extend the arrangement if the entity is reasonably certain to exercise that option, (

2

) an option to terminate the arrangement if the entity is reasonably certain

not

to exercise the option and (

3

) an option to extend (or

not

to terminate) the arrangement in which exercise of the option is in the control of the vendor). ASU

2018

-

15

also requires an entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement, and to classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. ASU

2018

-

15

is effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019.

The Company does

not

currently have any material amount of implementation costs related to hosting arrangements that are service contracts, and the Company does

not

expect the adoption of ASU

2018

-

15

to have a material impact on the Company’s consolidated financial statements.

ASU

2018

-

13

, “Fair Value Measurement (Topic

820

): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.”

Issued in

August 2018,

the amendments in this ASU remove disclosure requirements in ASC Topic

820

related to (

1

) the amount of, and reasons for, transfers between Level

1

and Level

2

of the fair value hierarchy, (

2

) the policy for timing of transfers between levels and (

3

) the valuation processes for Level

3

fair value measurements. The ASU also modifies disclosure requirements such that (

1

) for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date that restrictions from redemption might lapse, only if the investee has communicated the timing to the entity or announced the timing publicly, and (

2

) it is clear that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Additionally, this ASU adds disclosure requirements for public entities about (

1

) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level

3

fair value measurements held at the end of the reporting period, and (

2

) the range and weighted average of significant unobservable inputs used to develop Level

3

fair value measurements. The amendments of ASU

2018

-

13

are effective for fiscal years, and interim periods within those years, beginning after

December 15, 2019.

Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements

.

ASU

2017

-

04,

“Intangibles-Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment.”  

Issued in

January 2017,

ASU

2017

-

04

simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step

2

from the goodwill impairment test. Step

2

measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill under Step

2,

an entity, prior to the amendments in ASU

2017

-

04,

had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities, including unrecognized assets and liabilities, in accordance with the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. However, under the amendments in ASU

2017

-

04,

an entity should (

1

) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (

2

) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU

2017

-

04

removes the requirements for any reporting unit with a

zero

or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step

2

of the goodwill impairment test. ASU

2017

-

04

is effective prospectively for annual, or any interim, goodwill impairment tests in fiscal years beginning after

December 15, 2019.

Management is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements

.

ASU

2016

-

13,

"Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments

.” Issued in

June 2016,

ASU

2016

-

13

removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables and held-to-maturity debt securities. Under current U.S. GAAP, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance removes all current recognition thresholds and requires companies to recognize an allowance for lifetime expected credit losses. Credit losses will be immediately recognized through net income; the amount recognized will be based on the current estimate of contractual cash flows

not

expected to be collected over the financial asset’s contractual term. ASU

2016

-

13

also amends the credit loss measurement guidance for available-for-sale debt securities. The standard will add new disclosures related to factors that influenced management’s estimate, including current expected credit losses, the changes in those factors and reasons for the changes, as well as the method applied to revert to historical credit loss experience. As originally issued, ASU

2016

-

13

is effective for financial statements issued for fiscal years and for interim periods within those fiscal years beginning after

December 15, 2019,

with institutions required to apply the changes through a cumulative-effect adjustment to their retained earnings balance as of the beginning of the

first

reporting period in which the guidance is effective. In

July 2019,

the FASB proposed rules that would delay implementation of ASU

2016

-

13

by

three

years for certain small public lenders, which would include the Company. The proposal is currently undergoing a

30

-day comment period. Management has been in the process of developing a revised model to calculate the allowance for loan and lease losses upon implementation of ASU

2016

-

13

in order to determine the impact on the Company’s consolidated financial statements and, at this time, expects to recognize a

one

-time cumulative effect adjustment to the allowance for loan and lease losses as of the beginning of the

first

reporting period in which the new standard is effective, although the magnitude of any such

one

-time adjustment is

not

yet known. In light of the recent FASB proposal, management will continue to monitor developments with respect to the implementation date of ASU

2016

-

13.

Revenue from Contract with Customer [Policy Text Block]

Revenue

On

January 1, 2018,

the Company implemented ASU

2014

-

09,

Revenue from Contracts with Customers

, codified at ASC Topic

606.

The Company adopted ASC Topic

606

using the modified retrospective transition method. As of the implementation date, the Company had

no

uncompleted customer contracts and, as a result,

no

cumulative transition adjustment was made to the Company’s accumulated deficit during the year ended

December 31, 2018.

Results for reporting periods beginning on or after

January 1, 2018

are presented under ASC Topic

606,

while prior period amounts continue to be reported under legacy U.S. GAAP.

The majority of the Company’s revenue is generated through interest earned on financial instruments, including loans and investment securities, which falls outside the scope of ASC Topic

606.

The Company also generates revenue from insurance- and lease-related contracts that fall outside the scope of ASC Topic

606.

All of the Company’s revenue that is subject to ASC Topic

606

is included in non-interest income; however,

not

all non-interest income is subject to ASC Topic

606.

Revenue earned by the Company that is subject to ASC Topic

606

primarily consists of service and other charges on deposit accounts, mortgage fees from secondary market transactions at the Bank, ATM fee income and other non-interest income. Revenue generated from these sources for both of the

six

-month periods ended

June 30, 2019

and

2018

was

$1.6

million, and for both of the

three

-month periods ended

June 30, 2019

and

2018

was

$0.8

million. All sources of the Company’s revenue subject to ASC Topic

606

are transaction-based, and revenue is recognized at the time at which the transaction is executed, which is the same time at which the Company’s performance obligation is satisfied. The Company had

no

contract liabilities or unsatisfied performance obligations with customers as of

June 30, 2019.

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