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ro COP Board of Governors of the Federal Reserve System
FR Hi OMB Number 70297 Approval expires December 31 2015 Page 1 of2
Annual Report of Holding Companies-FR Y-6
Report at the close of business as of the end of fiscal Year
This Report is required by law Section 5(c)(1)(A) of the Bank Holding Company Act (12 USC sect 1844 (c)(1)(A)) Section 8(a) of the International Banking Act (12 USC sect 3106(a)) Sections 11(a)(1) 25 and 25A of the Federal Reserve Act (12 USC sectsect 248(a)(1) 602 and 611a) Section 21113(c) of Regulation K (12 CFR sect 21113(c)) and Section 2255(b) of Regulation Y (12 CFR sect 2255(b)) and section 1 O(c)(2)(H) of the Home Owners Loan Act Return to the appropriate Federal Reserve Bank the original and the number of copies specified
NOTE The Annual Report of Holding Companies must be signed by one director of the top-tier holding company This individual should also be a senior official of the top-tier holding company In the event that the top-tier holding company does not have an individual who is a senior official and is also a director the chairshyman of the board must sign the report
1 H Michael Lawson Name of the Holding Company Director and Official
President and Chief Executive Officer Trtle of the Holding Company Director and Official
attest that the Annual Report of Holding Companies (including the supporting attachments) for this report date has been preshypared in conformance with the instructions issued by the Federal Reserve System and are true and correct to the best of my knowledge and belief
With respect to information regarding individuals contained in this report the Reporter certifies that it has the authority to provide this information to the Federal Reserve The Reporter also certifies that it has the authority on behalf of each individual to consent or object to public release of information regarding that individual The Federal Reserve may assume in the absence of a request for confidential treatment submitted in accordance with the Boards Rules Regarding Availability of Information 12 CFR Part 261 that the Reporter and individual consent to public release of all details in the report concerning that individual
kfr--SignaCOfaf1dotticial
03302015 Date of Signature
For holding companies nQ1 registered with the SEC-Indicate status of Annual Report to Shareholders
181 is included with the FR Y-6 report
D will be sent under separate cover
D is not prepared
For Federal Reserve Bank Use Only
RSSDID C77R CI
This report form is to be filed by all top-tier bank holding compashynies and top-tier savings and loan holding companies organized under US law and by any foreign banking organization that does not meet the requirements of and is not treated as a qualifyshying foreign banking organization under Section 21123 of Regulation K (12 CFR sect 21123) (See page one of the general instructions for more detail of who must file) The Federal Reserve may not conduct or sponsor and an organization (or a person) is not required to respond to an information collection unless it displays a currently valid OMB control number
Date of Report (top-tier holding companys fiscal year-end)
December 31 2014 Month I Day I Year
none Reporters Legal Entity Identifier (LEI) (20-Character LEI Code)
Reporters Name Street and Mailing Address
RNB Corp Legal Trtle of Holding Company
P 0 Box 340 (Mailing Address of the Hold ing Company) Street I PO Box
Brazil IN 47834 -------City State Zip Code
1 East National Avenue Physical Location (if different from malling address)
Person to whom questions about this report should be directed Michael E Yeager Controller
------------Name Trtle
812-448-2611-159 Area Code I Phone Number I Extension
812-448-8281 Area Code I FAX Number
michaelyeagerriddellonlinecom E-mail Address
NIA Address (URL) for the Holding Co mpanys web page
Does the reporter request confidential treatment for any portion of this
submission
D Yes Please identify the report items to which this request applies
C8J No
O In accordance with the instructions on pages GEN-2 and 3 a Jetter justifying the request is being provided
O The information for which confidential treatment is sought is being submitted separately labeled Confidential
Public reporting burden for this information collection is estimated lo vary from 13 to 101 hours per response with an average of 525 hours per response including time to gather and maintain data in the required form and to review instructions and complete the infonnation collection Send comments regarding this burden estimate or any other aspect of this collection of information including suggestions for reducing this burden to Secretary Board of Governors of the Federal Reserve System 20th and C Streets NW washington DC 20551 and to the Office of Management and Budget Paperwork Reduction Project (7100-0297) Washington DC 20503
102014
RIDDELL NATIONAL BANK
Todays Banking Yesterdays Values
RNB CORP ANNUAL REPORT
2014
CPAs amp Advisors 201 N Illinois Street Suite 700 II PO Sox 44998 II Indianapolis IN 46244-0198
3173834000 II fax 317 3834200 II bkdcom
To the Shareholders and Board of Directors
RNB CORP Brazil Indiana
Independent Auditors Report
We have audited the accompanying consolidated financial statements ofRNB CORP and its subsidiary which comprise the consolidated balance sheets as of December 3 1 2014 and 2013 and the related consolidated statements of income comprehensive income shareholders equity and cash flows for the years then ended and the related notes to the financial statements
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America this includes the design implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement whether due to fraud or error
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits We conducted our audits in accordance with auditing standards generally accepted in the United States of America Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements The procedures selected depend on the auditors judgment including the assessment of the risks of material misstatement of the consolidated financial statements whether due to fraud or error In making those risk assessments the auditor considers internal control relevant to the entitys preparation and fair presentation of the consolidated financial statements i n order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control Accordingly we express no such opinion An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management as well as evaluating the overall presentation of the consolidated financial statements
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion
PraxitY MEMBEll
Gl08Al ALtlAlfCt Of IHbfPEHDEHT FIRMS
Opinion
In our opinion the consolidated financial statements referred to abov present fairly in all material respects the financial position ofRNB CORP and its subsidiary as of December 31 2014 and 2013 and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America
Indianapolis Indiana February 27 2015
1 -middot
2
RNB CORP Consolidated Balance Sheets Decem ber 31 201 4 a n d 2013
Assets
Cash and due from banks
Interest-bearing demand deposits
Cash and cash equivalents Investment securities available for sale
Loans held for sale
Loans net of allowance for loan losses of $ 1 757 785 and $1846358 Premises and equipment Federal Reserve and Federal Home Loan Bank membership stock Interest receivable
Other assets
Total assets
Liab ilities
Deposits
N oninterest-bearing
Interest-bearing
Total deposits
Other borrowings Dividends payable Interest payable
Other liabilities Total liabilities
Sharehol d e rs Equity Common stock no par or stated value
Authorized - 500000 shares
Issued and outstanding - 443509 and 440925 shares
Retained earnings
Accumulated other comprehensive loss
Total shareholders equity
Total liabilities and shareholders equity
See Notes to Consolidated Financial Statements
$
$
$
$
2014 2013
4258363 $ 4452428 1 674904 38882 5933267 449 1 310
25867482 27928824 1384691 1 39467
1461 858 12 142120514 2832422 2923074
740100 720200 1 136173 1 1 0 1 443 4735045 44 1 8520
1 88814992 $ 1 83843352
26748695 $ 22834692 1 35027358 131 8 1 6244 1 61 776053 154650936
10228547 1 3239545 554363 551277 1 81061 357864
1 816453 1 27431 9 1 74556477 170073941
945792 865688 14828098 14100530 (1 515375) ( 1 196807) 14258515 1 376941 1
1 88814992 $ 183843352
3
RNB CORP Consolidated Statements of Income
Years Ended December 31 201 4 and 2013
2014
Interest and Dividend Income
Loans receivable $ 7137918
Investment securities
Taxable including dividend income 365404
Tax-exempt 237314
Other interest and dividends 42379
Total interest and dividend income 7783015
Interest Expense
Deposits 1238845
Borrowings 62884
Total interest expense 1301729
Net Interest Income 6481286
Provision for loan losses 480000
Net Interest Income After Provision for Loan Losses 6001286
Other Income
Fiduciary activities 29359
Service charges on deposit accounts 460721
Gain on loans sold 630444
Investment gains (losses) 246906
ATu1 fees 258118
Other operating income 144344
Total other income 1769892
Other Expenses
Salaries and employee benefits 3015717
Net occupancy expenses 408877
Equipment expenses 435637
Director and committee fees 148221
Legal and professional 291894
ATM processing 189723
Advertising and promotion 287110
Federal Deposit Insurance Corporation insurance expense 164694
Other operating expenses 801459
Total other expenses 5743332
Income Before Income Tax 2027846
Income tax expense 688606
Netlncome $ 1339240
Per Share
Net income $ 303
lgteighted-Average Shares Outstanding 441381
See Notes to Consolidated Financial Statements
2013
$ 6892384
290159 288343
51457 7522343
1860113 63923
1924036
5598307 480000
5118307
45549 537402 767662
(8194) 242978 348935
1934332
3203981 401090 507517 146784 274344
199462 268283 169574 623925
5794960
1257679 284078
$ 973601
$ 222
439368
4
RNB CORP Consol idated Statem ents of Comprehensive I n come
Years Ended December 3 1 201 4 a n d 2013
2014
Net Income $ 1 339240
Other Comprehensiye Loss
Change in netl1Ilealized gain (loss) on securities available for sale net of taxes of$184032 and $(219007) for 2014 and2013 respectively middot 280578
Less reclassificati611 adjusfinent for realized gains (losses) ineluded in net income netoftaxes of $97799 and $(3246) for 2014 and 2013 respectively 149107
Change in net accumulated other comprehensive income (loss) for postretirementplan net of taxes of$(295059) and $77215 for 2014 and 2013 respectively (450039)
(3J8568)
Comprehensive Incqme $ 1020672
--
See Notes to Consolidated Financial Statements
2013
$ 973601
(47241 9)
(4948)
1 1 7771 (349700)
$ 623901
5
RNB CORP Consolidated Statements of Shareholders Equity
Years Ended December31 201 4 and 2013
middotAccumulated Common Stock Other
Shares Retained Comprehensive Outstanding Amount Earning Loss
Balances January 1 2013 436189 s 723608 $ 13735406 $ (847107)
Net income 973601
Other comprehensive Joss (349700)
Issuance of stock 4736 142080
Cash dividends ($138 per share) (608477) -
Balances Decenibr 31middot2013 440925 865688 14i00530 (1196807)
Net income 1339240
Other comprehensive loss (318568)
Issuance of stockmiddot 2584 80104
Cash dividends($138 per share) (6ll672)
Balances December 31 2014 443509 $ 945792 $ 14828093 $ (J515375)
See Notes to Consolidated Financial Statements
Total
s 13611907
973601
(349700)
142080
(608477)
13769411
1339240
(318568)
80104
(611672)
$ 14258515
6
RNB CORP Consol idated Statements of Cash Flows
Years Ended December 3 1 201 4 and 2013
2014
Operating Activities Net income $ 1339240 Items not requiring (providing) cash
Provision for loan losses 480000 Depreciation and amortization 278769 Deferred income tax (45899) Securities amortization net 305437 Net realized (gain) loss on available-for-sale securities (246906) Net realized (gain) loss on OREO 33040 Increase in cash surrender value (44619)
Net change in Loans held for sale (1245224) Interest receivable (34730) Interest payable (176803)
Other adjustments 214557 Net cash provided by operating activities 856862
Investing Activilies Purchases of securities available for sale (7547942) Proceeds from maturities and paydowns of securities
available for sale 5996926 Proceeds from the sale of available-for-sale securities 3725621 Redemption of membership stock Net change in loans (52778 17) Purchase of membership stock (19900) Proceeds from the sale of OREO 310687 Purchases of premises and equipment (1881 17)
Net cash used in investing activities (3000542)
Financing Activities Net change in
Noninterest-bearing NOW money market and savings deposits 7818147 Certificates of deposit (693030) Other borrowings (3010998)
Repayments ofborrowings Issuance of stock net 80104 Cash dividends (608586)
Net cash provided by financing activities 3585637
Net Change in Cash and Cash Equivalents 1441957
Cash and Cash Equivalents Beginning of Year 449 1310
Cash and Cash Equivalents End of Year $ 5933267
Additional Cash Flows Information Interest paid $ 1451160 Income tax paid 469000
See Notes to Consolidated Financial Statements
2013
$ 973601
480000 310169
(4468) 379065
8194 (28224) (50150)
235784 29102
1727 249760
2584560
( 1 1 282162)
7873335 368631 1
36100 (1 0057092)
664171 (74649)
(9153986)
18 1 052 1634777 3518925 (300000)
142080 (602850)
4573984
(1995442)
6486752
$ 4491310
$ 1922309 92000
7
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RIDDELL NATIONAL BANK
Todays Banking Yesterdays Values
RNB CORP ANNUAL REPORT
2014
CPAs amp Advisors 201 N Illinois Street Suite 700 II PO Sox 44998 II Indianapolis IN 46244-0198
3173834000 II fax 317 3834200 II bkdcom
To the Shareholders and Board of Directors
RNB CORP Brazil Indiana
Independent Auditors Report
We have audited the accompanying consolidated financial statements ofRNB CORP and its subsidiary which comprise the consolidated balance sheets as of December 3 1 2014 and 2013 and the related consolidated statements of income comprehensive income shareholders equity and cash flows for the years then ended and the related notes to the financial statements
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America this includes the design implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement whether due to fraud or error
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits We conducted our audits in accordance with auditing standards generally accepted in the United States of America Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements The procedures selected depend on the auditors judgment including the assessment of the risks of material misstatement of the consolidated financial statements whether due to fraud or error In making those risk assessments the auditor considers internal control relevant to the entitys preparation and fair presentation of the consolidated financial statements i n order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control Accordingly we express no such opinion An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management as well as evaluating the overall presentation of the consolidated financial statements
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion
PraxitY MEMBEll
Gl08Al ALtlAlfCt Of IHbfPEHDEHT FIRMS
Opinion
In our opinion the consolidated financial statements referred to abov present fairly in all material respects the financial position ofRNB CORP and its subsidiary as of December 31 2014 and 2013 and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America
Indianapolis Indiana February 27 2015
1 -middot
2
RNB CORP Consolidated Balance Sheets Decem ber 31 201 4 a n d 2013
Assets
Cash and due from banks
Interest-bearing demand deposits
Cash and cash equivalents Investment securities available for sale
Loans held for sale
Loans net of allowance for loan losses of $ 1 757 785 and $1846358 Premises and equipment Federal Reserve and Federal Home Loan Bank membership stock Interest receivable
Other assets
Total assets
Liab ilities
Deposits
N oninterest-bearing
Interest-bearing
Total deposits
Other borrowings Dividends payable Interest payable
Other liabilities Total liabilities
Sharehol d e rs Equity Common stock no par or stated value
Authorized - 500000 shares
Issued and outstanding - 443509 and 440925 shares
Retained earnings
Accumulated other comprehensive loss
Total shareholders equity
Total liabilities and shareholders equity
See Notes to Consolidated Financial Statements
$
$
$
$
2014 2013
4258363 $ 4452428 1 674904 38882 5933267 449 1 310
25867482 27928824 1384691 1 39467
1461 858 12 142120514 2832422 2923074
740100 720200 1 136173 1 1 0 1 443 4735045 44 1 8520
1 88814992 $ 1 83843352
26748695 $ 22834692 1 35027358 131 8 1 6244 1 61 776053 154650936
10228547 1 3239545 554363 551277 1 81061 357864
1 816453 1 27431 9 1 74556477 170073941
945792 865688 14828098 14100530 (1 515375) ( 1 196807) 14258515 1 376941 1
1 88814992 $ 183843352
3
RNB CORP Consolidated Statements of Income
Years Ended December 31 201 4 and 2013
2014
Interest and Dividend Income
Loans receivable $ 7137918
Investment securities
Taxable including dividend income 365404
Tax-exempt 237314
Other interest and dividends 42379
Total interest and dividend income 7783015
Interest Expense
Deposits 1238845
Borrowings 62884
Total interest expense 1301729
Net Interest Income 6481286
Provision for loan losses 480000
Net Interest Income After Provision for Loan Losses 6001286
Other Income
Fiduciary activities 29359
Service charges on deposit accounts 460721
Gain on loans sold 630444
Investment gains (losses) 246906
ATu1 fees 258118
Other operating income 144344
Total other income 1769892
Other Expenses
Salaries and employee benefits 3015717
Net occupancy expenses 408877
Equipment expenses 435637
Director and committee fees 148221
Legal and professional 291894
ATM processing 189723
Advertising and promotion 287110
Federal Deposit Insurance Corporation insurance expense 164694
Other operating expenses 801459
Total other expenses 5743332
Income Before Income Tax 2027846
Income tax expense 688606
Netlncome $ 1339240
Per Share
Net income $ 303
lgteighted-Average Shares Outstanding 441381
See Notes to Consolidated Financial Statements
2013
$ 6892384
290159 288343
51457 7522343
1860113 63923
1924036
5598307 480000
5118307
45549 537402 767662
(8194) 242978 348935
1934332
3203981 401090 507517 146784 274344
199462 268283 169574 623925
5794960
1257679 284078
$ 973601
$ 222
439368
4
RNB CORP Consol idated Statem ents of Comprehensive I n come
Years Ended December 3 1 201 4 a n d 2013
2014
Net Income $ 1 339240
Other Comprehensiye Loss
Change in netl1Ilealized gain (loss) on securities available for sale net of taxes of$184032 and $(219007) for 2014 and2013 respectively middot 280578
Less reclassificati611 adjusfinent for realized gains (losses) ineluded in net income netoftaxes of $97799 and $(3246) for 2014 and 2013 respectively 149107
Change in net accumulated other comprehensive income (loss) for postretirementplan net of taxes of$(295059) and $77215 for 2014 and 2013 respectively (450039)
(3J8568)
Comprehensive Incqme $ 1020672
--
See Notes to Consolidated Financial Statements
2013
$ 973601
(47241 9)
(4948)
1 1 7771 (349700)
$ 623901
5
RNB CORP Consolidated Statements of Shareholders Equity
Years Ended December31 201 4 and 2013
middotAccumulated Common Stock Other
Shares Retained Comprehensive Outstanding Amount Earning Loss
Balances January 1 2013 436189 s 723608 $ 13735406 $ (847107)
Net income 973601
Other comprehensive Joss (349700)
Issuance of stock 4736 142080
Cash dividends ($138 per share) (608477) -
Balances Decenibr 31middot2013 440925 865688 14i00530 (1196807)
Net income 1339240
Other comprehensive loss (318568)
Issuance of stockmiddot 2584 80104
Cash dividends($138 per share) (6ll672)
Balances December 31 2014 443509 $ 945792 $ 14828093 $ (J515375)
See Notes to Consolidated Financial Statements
Total
s 13611907
973601
(349700)
142080
(608477)
13769411
1339240
(318568)
80104
(611672)
$ 14258515
6
RNB CORP Consol idated Statements of Cash Flows
Years Ended December 3 1 201 4 and 2013
2014
Operating Activities Net income $ 1339240 Items not requiring (providing) cash
Provision for loan losses 480000 Depreciation and amortization 278769 Deferred income tax (45899) Securities amortization net 305437 Net realized (gain) loss on available-for-sale securities (246906) Net realized (gain) loss on OREO 33040 Increase in cash surrender value (44619)
Net change in Loans held for sale (1245224) Interest receivable (34730) Interest payable (176803)
Other adjustments 214557 Net cash provided by operating activities 856862
Investing Activilies Purchases of securities available for sale (7547942) Proceeds from maturities and paydowns of securities
available for sale 5996926 Proceeds from the sale of available-for-sale securities 3725621 Redemption of membership stock Net change in loans (52778 17) Purchase of membership stock (19900) Proceeds from the sale of OREO 310687 Purchases of premises and equipment (1881 17)
Net cash used in investing activities (3000542)
Financing Activities Net change in
Noninterest-bearing NOW money market and savings deposits 7818147 Certificates of deposit (693030) Other borrowings (3010998)
Repayments ofborrowings Issuance of stock net 80104 Cash dividends (608586)
Net cash provided by financing activities 3585637
Net Change in Cash and Cash Equivalents 1441957
Cash and Cash Equivalents Beginning of Year 449 1310
Cash and Cash Equivalents End of Year $ 5933267
Additional Cash Flows Information Interest paid $ 1451160 Income tax paid 469000
See Notes to Consolidated Financial Statements
2013
$ 973601
480000 310169
(4468) 379065
8194 (28224) (50150)
235784 29102
1727 249760
2584560
( 1 1 282162)
7873335 368631 1
36100 (1 0057092)
664171 (74649)
(9153986)
18 1 052 1634777 3518925 (300000)
142080 (602850)
4573984
(1995442)
6486752
$ 4491310
$ 1922309 92000
7
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
CPAs amp Advisors 201 N Illinois Street Suite 700 II PO Sox 44998 II Indianapolis IN 46244-0198
3173834000 II fax 317 3834200 II bkdcom
To the Shareholders and Board of Directors
RNB CORP Brazil Indiana
Independent Auditors Report
We have audited the accompanying consolidated financial statements ofRNB CORP and its subsidiary which comprise the consolidated balance sheets as of December 3 1 2014 and 2013 and the related consolidated statements of income comprehensive income shareholders equity and cash flows for the years then ended and the related notes to the financial statements
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America this includes the design implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement whether due to fraud or error
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits We conducted our audits in accordance with auditing standards generally accepted in the United States of America Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements The procedures selected depend on the auditors judgment including the assessment of the risks of material misstatement of the consolidated financial statements whether due to fraud or error In making those risk assessments the auditor considers internal control relevant to the entitys preparation and fair presentation of the consolidated financial statements i n order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control Accordingly we express no such opinion An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management as well as evaluating the overall presentation of the consolidated financial statements
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion
PraxitY MEMBEll
Gl08Al ALtlAlfCt Of IHbfPEHDEHT FIRMS
Opinion
In our opinion the consolidated financial statements referred to abov present fairly in all material respects the financial position ofRNB CORP and its subsidiary as of December 31 2014 and 2013 and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America
Indianapolis Indiana February 27 2015
1 -middot
2
RNB CORP Consolidated Balance Sheets Decem ber 31 201 4 a n d 2013
Assets
Cash and due from banks
Interest-bearing demand deposits
Cash and cash equivalents Investment securities available for sale
Loans held for sale
Loans net of allowance for loan losses of $ 1 757 785 and $1846358 Premises and equipment Federal Reserve and Federal Home Loan Bank membership stock Interest receivable
Other assets
Total assets
Liab ilities
Deposits
N oninterest-bearing
Interest-bearing
Total deposits
Other borrowings Dividends payable Interest payable
Other liabilities Total liabilities
Sharehol d e rs Equity Common stock no par or stated value
Authorized - 500000 shares
Issued and outstanding - 443509 and 440925 shares
Retained earnings
Accumulated other comprehensive loss
Total shareholders equity
Total liabilities and shareholders equity
See Notes to Consolidated Financial Statements
$
$
$
$
2014 2013
4258363 $ 4452428 1 674904 38882 5933267 449 1 310
25867482 27928824 1384691 1 39467
1461 858 12 142120514 2832422 2923074
740100 720200 1 136173 1 1 0 1 443 4735045 44 1 8520
1 88814992 $ 1 83843352
26748695 $ 22834692 1 35027358 131 8 1 6244 1 61 776053 154650936
10228547 1 3239545 554363 551277 1 81061 357864
1 816453 1 27431 9 1 74556477 170073941
945792 865688 14828098 14100530 (1 515375) ( 1 196807) 14258515 1 376941 1
1 88814992 $ 183843352
3
RNB CORP Consolidated Statements of Income
Years Ended December 31 201 4 and 2013
2014
Interest and Dividend Income
Loans receivable $ 7137918
Investment securities
Taxable including dividend income 365404
Tax-exempt 237314
Other interest and dividends 42379
Total interest and dividend income 7783015
Interest Expense
Deposits 1238845
Borrowings 62884
Total interest expense 1301729
Net Interest Income 6481286
Provision for loan losses 480000
Net Interest Income After Provision for Loan Losses 6001286
Other Income
Fiduciary activities 29359
Service charges on deposit accounts 460721
Gain on loans sold 630444
Investment gains (losses) 246906
ATu1 fees 258118
Other operating income 144344
Total other income 1769892
Other Expenses
Salaries and employee benefits 3015717
Net occupancy expenses 408877
Equipment expenses 435637
Director and committee fees 148221
Legal and professional 291894
ATM processing 189723
Advertising and promotion 287110
Federal Deposit Insurance Corporation insurance expense 164694
Other operating expenses 801459
Total other expenses 5743332
Income Before Income Tax 2027846
Income tax expense 688606
Netlncome $ 1339240
Per Share
Net income $ 303
lgteighted-Average Shares Outstanding 441381
See Notes to Consolidated Financial Statements
2013
$ 6892384
290159 288343
51457 7522343
1860113 63923
1924036
5598307 480000
5118307
45549 537402 767662
(8194) 242978 348935
1934332
3203981 401090 507517 146784 274344
199462 268283 169574 623925
5794960
1257679 284078
$ 973601
$ 222
439368
4
RNB CORP Consol idated Statem ents of Comprehensive I n come
Years Ended December 3 1 201 4 a n d 2013
2014
Net Income $ 1 339240
Other Comprehensiye Loss
Change in netl1Ilealized gain (loss) on securities available for sale net of taxes of$184032 and $(219007) for 2014 and2013 respectively middot 280578
Less reclassificati611 adjusfinent for realized gains (losses) ineluded in net income netoftaxes of $97799 and $(3246) for 2014 and 2013 respectively 149107
Change in net accumulated other comprehensive income (loss) for postretirementplan net of taxes of$(295059) and $77215 for 2014 and 2013 respectively (450039)
(3J8568)
Comprehensive Incqme $ 1020672
--
See Notes to Consolidated Financial Statements
2013
$ 973601
(47241 9)
(4948)
1 1 7771 (349700)
$ 623901
5
RNB CORP Consolidated Statements of Shareholders Equity
Years Ended December31 201 4 and 2013
middotAccumulated Common Stock Other
Shares Retained Comprehensive Outstanding Amount Earning Loss
Balances January 1 2013 436189 s 723608 $ 13735406 $ (847107)
Net income 973601
Other comprehensive Joss (349700)
Issuance of stock 4736 142080
Cash dividends ($138 per share) (608477) -
Balances Decenibr 31middot2013 440925 865688 14i00530 (1196807)
Net income 1339240
Other comprehensive loss (318568)
Issuance of stockmiddot 2584 80104
Cash dividends($138 per share) (6ll672)
Balances December 31 2014 443509 $ 945792 $ 14828093 $ (J515375)
See Notes to Consolidated Financial Statements
Total
s 13611907
973601
(349700)
142080
(608477)
13769411
1339240
(318568)
80104
(611672)
$ 14258515
6
RNB CORP Consol idated Statements of Cash Flows
Years Ended December 3 1 201 4 and 2013
2014
Operating Activities Net income $ 1339240 Items not requiring (providing) cash
Provision for loan losses 480000 Depreciation and amortization 278769 Deferred income tax (45899) Securities amortization net 305437 Net realized (gain) loss on available-for-sale securities (246906) Net realized (gain) loss on OREO 33040 Increase in cash surrender value (44619)
Net change in Loans held for sale (1245224) Interest receivable (34730) Interest payable (176803)
Other adjustments 214557 Net cash provided by operating activities 856862
Investing Activilies Purchases of securities available for sale (7547942) Proceeds from maturities and paydowns of securities
available for sale 5996926 Proceeds from the sale of available-for-sale securities 3725621 Redemption of membership stock Net change in loans (52778 17) Purchase of membership stock (19900) Proceeds from the sale of OREO 310687 Purchases of premises and equipment (1881 17)
Net cash used in investing activities (3000542)
Financing Activities Net change in
Noninterest-bearing NOW money market and savings deposits 7818147 Certificates of deposit (693030) Other borrowings (3010998)
Repayments ofborrowings Issuance of stock net 80104 Cash dividends (608586)
Net cash provided by financing activities 3585637
Net Change in Cash and Cash Equivalents 1441957
Cash and Cash Equivalents Beginning of Year 449 1310
Cash and Cash Equivalents End of Year $ 5933267
Additional Cash Flows Information Interest paid $ 1451160 Income tax paid 469000
See Notes to Consolidated Financial Statements
2013
$ 973601
480000 310169
(4468) 379065
8194 (28224) (50150)
235784 29102
1727 249760
2584560
( 1 1 282162)
7873335 368631 1
36100 (1 0057092)
664171 (74649)
(9153986)
18 1 052 1634777 3518925 (300000)
142080 (602850)
4573984
(1995442)
6486752
$ 4491310
$ 1922309 92000
7
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
Opinion
In our opinion the consolidated financial statements referred to abov present fairly in all material respects the financial position ofRNB CORP and its subsidiary as of December 31 2014 and 2013 and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America
Indianapolis Indiana February 27 2015
1 -middot
2
RNB CORP Consolidated Balance Sheets Decem ber 31 201 4 a n d 2013
Assets
Cash and due from banks
Interest-bearing demand deposits
Cash and cash equivalents Investment securities available for sale
Loans held for sale
Loans net of allowance for loan losses of $ 1 757 785 and $1846358 Premises and equipment Federal Reserve and Federal Home Loan Bank membership stock Interest receivable
Other assets
Total assets
Liab ilities
Deposits
N oninterest-bearing
Interest-bearing
Total deposits
Other borrowings Dividends payable Interest payable
Other liabilities Total liabilities
Sharehol d e rs Equity Common stock no par or stated value
Authorized - 500000 shares
Issued and outstanding - 443509 and 440925 shares
Retained earnings
Accumulated other comprehensive loss
Total shareholders equity
Total liabilities and shareholders equity
See Notes to Consolidated Financial Statements
$
$
$
$
2014 2013
4258363 $ 4452428 1 674904 38882 5933267 449 1 310
25867482 27928824 1384691 1 39467
1461 858 12 142120514 2832422 2923074
740100 720200 1 136173 1 1 0 1 443 4735045 44 1 8520
1 88814992 $ 1 83843352
26748695 $ 22834692 1 35027358 131 8 1 6244 1 61 776053 154650936
10228547 1 3239545 554363 551277 1 81061 357864
1 816453 1 27431 9 1 74556477 170073941
945792 865688 14828098 14100530 (1 515375) ( 1 196807) 14258515 1 376941 1
1 88814992 $ 183843352
3
RNB CORP Consolidated Statements of Income
Years Ended December 31 201 4 and 2013
2014
Interest and Dividend Income
Loans receivable $ 7137918
Investment securities
Taxable including dividend income 365404
Tax-exempt 237314
Other interest and dividends 42379
Total interest and dividend income 7783015
Interest Expense
Deposits 1238845
Borrowings 62884
Total interest expense 1301729
Net Interest Income 6481286
Provision for loan losses 480000
Net Interest Income After Provision for Loan Losses 6001286
Other Income
Fiduciary activities 29359
Service charges on deposit accounts 460721
Gain on loans sold 630444
Investment gains (losses) 246906
ATu1 fees 258118
Other operating income 144344
Total other income 1769892
Other Expenses
Salaries and employee benefits 3015717
Net occupancy expenses 408877
Equipment expenses 435637
Director and committee fees 148221
Legal and professional 291894
ATM processing 189723
Advertising and promotion 287110
Federal Deposit Insurance Corporation insurance expense 164694
Other operating expenses 801459
Total other expenses 5743332
Income Before Income Tax 2027846
Income tax expense 688606
Netlncome $ 1339240
Per Share
Net income $ 303
lgteighted-Average Shares Outstanding 441381
See Notes to Consolidated Financial Statements
2013
$ 6892384
290159 288343
51457 7522343
1860113 63923
1924036
5598307 480000
5118307
45549 537402 767662
(8194) 242978 348935
1934332
3203981 401090 507517 146784 274344
199462 268283 169574 623925
5794960
1257679 284078
$ 973601
$ 222
439368
4
RNB CORP Consol idated Statem ents of Comprehensive I n come
Years Ended December 3 1 201 4 a n d 2013
2014
Net Income $ 1 339240
Other Comprehensiye Loss
Change in netl1Ilealized gain (loss) on securities available for sale net of taxes of$184032 and $(219007) for 2014 and2013 respectively middot 280578
Less reclassificati611 adjusfinent for realized gains (losses) ineluded in net income netoftaxes of $97799 and $(3246) for 2014 and 2013 respectively 149107
Change in net accumulated other comprehensive income (loss) for postretirementplan net of taxes of$(295059) and $77215 for 2014 and 2013 respectively (450039)
(3J8568)
Comprehensive Incqme $ 1020672
--
See Notes to Consolidated Financial Statements
2013
$ 973601
(47241 9)
(4948)
1 1 7771 (349700)
$ 623901
5
RNB CORP Consolidated Statements of Shareholders Equity
Years Ended December31 201 4 and 2013
middotAccumulated Common Stock Other
Shares Retained Comprehensive Outstanding Amount Earning Loss
Balances January 1 2013 436189 s 723608 $ 13735406 $ (847107)
Net income 973601
Other comprehensive Joss (349700)
Issuance of stock 4736 142080
Cash dividends ($138 per share) (608477) -
Balances Decenibr 31middot2013 440925 865688 14i00530 (1196807)
Net income 1339240
Other comprehensive loss (318568)
Issuance of stockmiddot 2584 80104
Cash dividends($138 per share) (6ll672)
Balances December 31 2014 443509 $ 945792 $ 14828093 $ (J515375)
See Notes to Consolidated Financial Statements
Total
s 13611907
973601
(349700)
142080
(608477)
13769411
1339240
(318568)
80104
(611672)
$ 14258515
6
RNB CORP Consol idated Statements of Cash Flows
Years Ended December 3 1 201 4 and 2013
2014
Operating Activities Net income $ 1339240 Items not requiring (providing) cash
Provision for loan losses 480000 Depreciation and amortization 278769 Deferred income tax (45899) Securities amortization net 305437 Net realized (gain) loss on available-for-sale securities (246906) Net realized (gain) loss on OREO 33040 Increase in cash surrender value (44619)
Net change in Loans held for sale (1245224) Interest receivable (34730) Interest payable (176803)
Other adjustments 214557 Net cash provided by operating activities 856862
Investing Activilies Purchases of securities available for sale (7547942) Proceeds from maturities and paydowns of securities
available for sale 5996926 Proceeds from the sale of available-for-sale securities 3725621 Redemption of membership stock Net change in loans (52778 17) Purchase of membership stock (19900) Proceeds from the sale of OREO 310687 Purchases of premises and equipment (1881 17)
Net cash used in investing activities (3000542)
Financing Activities Net change in
Noninterest-bearing NOW money market and savings deposits 7818147 Certificates of deposit (693030) Other borrowings (3010998)
Repayments ofborrowings Issuance of stock net 80104 Cash dividends (608586)
Net cash provided by financing activities 3585637
Net Change in Cash and Cash Equivalents 1441957
Cash and Cash Equivalents Beginning of Year 449 1310
Cash and Cash Equivalents End of Year $ 5933267
Additional Cash Flows Information Interest paid $ 1451160 Income tax paid 469000
See Notes to Consolidated Financial Statements
2013
$ 973601
480000 310169
(4468) 379065
8194 (28224) (50150)
235784 29102
1727 249760
2584560
( 1 1 282162)
7873335 368631 1
36100 (1 0057092)
664171 (74649)
(9153986)
18 1 052 1634777 3518925 (300000)
142080 (602850)
4573984
(1995442)
6486752
$ 4491310
$ 1922309 92000
7
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Consolidated Balance Sheets Decem ber 31 201 4 a n d 2013
Assets
Cash and due from banks
Interest-bearing demand deposits
Cash and cash equivalents Investment securities available for sale
Loans held for sale
Loans net of allowance for loan losses of $ 1 757 785 and $1846358 Premises and equipment Federal Reserve and Federal Home Loan Bank membership stock Interest receivable
Other assets
Total assets
Liab ilities
Deposits
N oninterest-bearing
Interest-bearing
Total deposits
Other borrowings Dividends payable Interest payable
Other liabilities Total liabilities
Sharehol d e rs Equity Common stock no par or stated value
Authorized - 500000 shares
Issued and outstanding - 443509 and 440925 shares
Retained earnings
Accumulated other comprehensive loss
Total shareholders equity
Total liabilities and shareholders equity
See Notes to Consolidated Financial Statements
$
$
$
$
2014 2013
4258363 $ 4452428 1 674904 38882 5933267 449 1 310
25867482 27928824 1384691 1 39467
1461 858 12 142120514 2832422 2923074
740100 720200 1 136173 1 1 0 1 443 4735045 44 1 8520
1 88814992 $ 1 83843352
26748695 $ 22834692 1 35027358 131 8 1 6244 1 61 776053 154650936
10228547 1 3239545 554363 551277 1 81061 357864
1 816453 1 27431 9 1 74556477 170073941
945792 865688 14828098 14100530 (1 515375) ( 1 196807) 14258515 1 376941 1
1 88814992 $ 183843352
3
RNB CORP Consolidated Statements of Income
Years Ended December 31 201 4 and 2013
2014
Interest and Dividend Income
Loans receivable $ 7137918
Investment securities
Taxable including dividend income 365404
Tax-exempt 237314
Other interest and dividends 42379
Total interest and dividend income 7783015
Interest Expense
Deposits 1238845
Borrowings 62884
Total interest expense 1301729
Net Interest Income 6481286
Provision for loan losses 480000
Net Interest Income After Provision for Loan Losses 6001286
Other Income
Fiduciary activities 29359
Service charges on deposit accounts 460721
Gain on loans sold 630444
Investment gains (losses) 246906
ATu1 fees 258118
Other operating income 144344
Total other income 1769892
Other Expenses
Salaries and employee benefits 3015717
Net occupancy expenses 408877
Equipment expenses 435637
Director and committee fees 148221
Legal and professional 291894
ATM processing 189723
Advertising and promotion 287110
Federal Deposit Insurance Corporation insurance expense 164694
Other operating expenses 801459
Total other expenses 5743332
Income Before Income Tax 2027846
Income tax expense 688606
Netlncome $ 1339240
Per Share
Net income $ 303
lgteighted-Average Shares Outstanding 441381
See Notes to Consolidated Financial Statements
2013
$ 6892384
290159 288343
51457 7522343
1860113 63923
1924036
5598307 480000
5118307
45549 537402 767662
(8194) 242978 348935
1934332
3203981 401090 507517 146784 274344
199462 268283 169574 623925
5794960
1257679 284078
$ 973601
$ 222
439368
4
RNB CORP Consol idated Statem ents of Comprehensive I n come
Years Ended December 3 1 201 4 a n d 2013
2014
Net Income $ 1 339240
Other Comprehensiye Loss
Change in netl1Ilealized gain (loss) on securities available for sale net of taxes of$184032 and $(219007) for 2014 and2013 respectively middot 280578
Less reclassificati611 adjusfinent for realized gains (losses) ineluded in net income netoftaxes of $97799 and $(3246) for 2014 and 2013 respectively 149107
Change in net accumulated other comprehensive income (loss) for postretirementplan net of taxes of$(295059) and $77215 for 2014 and 2013 respectively (450039)
(3J8568)
Comprehensive Incqme $ 1020672
--
See Notes to Consolidated Financial Statements
2013
$ 973601
(47241 9)
(4948)
1 1 7771 (349700)
$ 623901
5
RNB CORP Consolidated Statements of Shareholders Equity
Years Ended December31 201 4 and 2013
middotAccumulated Common Stock Other
Shares Retained Comprehensive Outstanding Amount Earning Loss
Balances January 1 2013 436189 s 723608 $ 13735406 $ (847107)
Net income 973601
Other comprehensive Joss (349700)
Issuance of stock 4736 142080
Cash dividends ($138 per share) (608477) -
Balances Decenibr 31middot2013 440925 865688 14i00530 (1196807)
Net income 1339240
Other comprehensive loss (318568)
Issuance of stockmiddot 2584 80104
Cash dividends($138 per share) (6ll672)
Balances December 31 2014 443509 $ 945792 $ 14828093 $ (J515375)
See Notes to Consolidated Financial Statements
Total
s 13611907
973601
(349700)
142080
(608477)
13769411
1339240
(318568)
80104
(611672)
$ 14258515
6
RNB CORP Consol idated Statements of Cash Flows
Years Ended December 3 1 201 4 and 2013
2014
Operating Activities Net income $ 1339240 Items not requiring (providing) cash
Provision for loan losses 480000 Depreciation and amortization 278769 Deferred income tax (45899) Securities amortization net 305437 Net realized (gain) loss on available-for-sale securities (246906) Net realized (gain) loss on OREO 33040 Increase in cash surrender value (44619)
Net change in Loans held for sale (1245224) Interest receivable (34730) Interest payable (176803)
Other adjustments 214557 Net cash provided by operating activities 856862
Investing Activilies Purchases of securities available for sale (7547942) Proceeds from maturities and paydowns of securities
available for sale 5996926 Proceeds from the sale of available-for-sale securities 3725621 Redemption of membership stock Net change in loans (52778 17) Purchase of membership stock (19900) Proceeds from the sale of OREO 310687 Purchases of premises and equipment (1881 17)
Net cash used in investing activities (3000542)
Financing Activities Net change in
Noninterest-bearing NOW money market and savings deposits 7818147 Certificates of deposit (693030) Other borrowings (3010998)
Repayments ofborrowings Issuance of stock net 80104 Cash dividends (608586)
Net cash provided by financing activities 3585637
Net Change in Cash and Cash Equivalents 1441957
Cash and Cash Equivalents Beginning of Year 449 1310
Cash and Cash Equivalents End of Year $ 5933267
Additional Cash Flows Information Interest paid $ 1451160 Income tax paid 469000
See Notes to Consolidated Financial Statements
2013
$ 973601
480000 310169
(4468) 379065
8194 (28224) (50150)
235784 29102
1727 249760
2584560
( 1 1 282162)
7873335 368631 1
36100 (1 0057092)
664171 (74649)
(9153986)
18 1 052 1634777 3518925 (300000)
142080 (602850)
4573984
(1995442)
6486752
$ 4491310
$ 1922309 92000
7
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Consolidated Statements of Income
Years Ended December 31 201 4 and 2013
2014
Interest and Dividend Income
Loans receivable $ 7137918
Investment securities
Taxable including dividend income 365404
Tax-exempt 237314
Other interest and dividends 42379
Total interest and dividend income 7783015
Interest Expense
Deposits 1238845
Borrowings 62884
Total interest expense 1301729
Net Interest Income 6481286
Provision for loan losses 480000
Net Interest Income After Provision for Loan Losses 6001286
Other Income
Fiduciary activities 29359
Service charges on deposit accounts 460721
Gain on loans sold 630444
Investment gains (losses) 246906
ATu1 fees 258118
Other operating income 144344
Total other income 1769892
Other Expenses
Salaries and employee benefits 3015717
Net occupancy expenses 408877
Equipment expenses 435637
Director and committee fees 148221
Legal and professional 291894
ATM processing 189723
Advertising and promotion 287110
Federal Deposit Insurance Corporation insurance expense 164694
Other operating expenses 801459
Total other expenses 5743332
Income Before Income Tax 2027846
Income tax expense 688606
Netlncome $ 1339240
Per Share
Net income $ 303
lgteighted-Average Shares Outstanding 441381
See Notes to Consolidated Financial Statements
2013
$ 6892384
290159 288343
51457 7522343
1860113 63923
1924036
5598307 480000
5118307
45549 537402 767662
(8194) 242978 348935
1934332
3203981 401090 507517 146784 274344
199462 268283 169574 623925
5794960
1257679 284078
$ 973601
$ 222
439368
4
RNB CORP Consol idated Statem ents of Comprehensive I n come
Years Ended December 3 1 201 4 a n d 2013
2014
Net Income $ 1 339240
Other Comprehensiye Loss
Change in netl1Ilealized gain (loss) on securities available for sale net of taxes of$184032 and $(219007) for 2014 and2013 respectively middot 280578
Less reclassificati611 adjusfinent for realized gains (losses) ineluded in net income netoftaxes of $97799 and $(3246) for 2014 and 2013 respectively 149107
Change in net accumulated other comprehensive income (loss) for postretirementplan net of taxes of$(295059) and $77215 for 2014 and 2013 respectively (450039)
(3J8568)
Comprehensive Incqme $ 1020672
--
See Notes to Consolidated Financial Statements
2013
$ 973601
(47241 9)
(4948)
1 1 7771 (349700)
$ 623901
5
RNB CORP Consolidated Statements of Shareholders Equity
Years Ended December31 201 4 and 2013
middotAccumulated Common Stock Other
Shares Retained Comprehensive Outstanding Amount Earning Loss
Balances January 1 2013 436189 s 723608 $ 13735406 $ (847107)
Net income 973601
Other comprehensive Joss (349700)
Issuance of stock 4736 142080
Cash dividends ($138 per share) (608477) -
Balances Decenibr 31middot2013 440925 865688 14i00530 (1196807)
Net income 1339240
Other comprehensive loss (318568)
Issuance of stockmiddot 2584 80104
Cash dividends($138 per share) (6ll672)
Balances December 31 2014 443509 $ 945792 $ 14828093 $ (J515375)
See Notes to Consolidated Financial Statements
Total
s 13611907
973601
(349700)
142080
(608477)
13769411
1339240
(318568)
80104
(611672)
$ 14258515
6
RNB CORP Consol idated Statements of Cash Flows
Years Ended December 3 1 201 4 and 2013
2014
Operating Activities Net income $ 1339240 Items not requiring (providing) cash
Provision for loan losses 480000 Depreciation and amortization 278769 Deferred income tax (45899) Securities amortization net 305437 Net realized (gain) loss on available-for-sale securities (246906) Net realized (gain) loss on OREO 33040 Increase in cash surrender value (44619)
Net change in Loans held for sale (1245224) Interest receivable (34730) Interest payable (176803)
Other adjustments 214557 Net cash provided by operating activities 856862
Investing Activilies Purchases of securities available for sale (7547942) Proceeds from maturities and paydowns of securities
available for sale 5996926 Proceeds from the sale of available-for-sale securities 3725621 Redemption of membership stock Net change in loans (52778 17) Purchase of membership stock (19900) Proceeds from the sale of OREO 310687 Purchases of premises and equipment (1881 17)
Net cash used in investing activities (3000542)
Financing Activities Net change in
Noninterest-bearing NOW money market and savings deposits 7818147 Certificates of deposit (693030) Other borrowings (3010998)
Repayments ofborrowings Issuance of stock net 80104 Cash dividends (608586)
Net cash provided by financing activities 3585637
Net Change in Cash and Cash Equivalents 1441957
Cash and Cash Equivalents Beginning of Year 449 1310
Cash and Cash Equivalents End of Year $ 5933267
Additional Cash Flows Information Interest paid $ 1451160 Income tax paid 469000
See Notes to Consolidated Financial Statements
2013
$ 973601
480000 310169
(4468) 379065
8194 (28224) (50150)
235784 29102
1727 249760
2584560
( 1 1 282162)
7873335 368631 1
36100 (1 0057092)
664171 (74649)
(9153986)
18 1 052 1634777 3518925 (300000)
142080 (602850)
4573984
(1995442)
6486752
$ 4491310
$ 1922309 92000
7
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Consol idated Statem ents of Comprehensive I n come
Years Ended December 3 1 201 4 a n d 2013
2014
Net Income $ 1 339240
Other Comprehensiye Loss
Change in netl1Ilealized gain (loss) on securities available for sale net of taxes of$184032 and $(219007) for 2014 and2013 respectively middot 280578
Less reclassificati611 adjusfinent for realized gains (losses) ineluded in net income netoftaxes of $97799 and $(3246) for 2014 and 2013 respectively 149107
Change in net accumulated other comprehensive income (loss) for postretirementplan net of taxes of$(295059) and $77215 for 2014 and 2013 respectively (450039)
(3J8568)
Comprehensive Incqme $ 1020672
--
See Notes to Consolidated Financial Statements
2013
$ 973601
(47241 9)
(4948)
1 1 7771 (349700)
$ 623901
5
RNB CORP Consolidated Statements of Shareholders Equity
Years Ended December31 201 4 and 2013
middotAccumulated Common Stock Other
Shares Retained Comprehensive Outstanding Amount Earning Loss
Balances January 1 2013 436189 s 723608 $ 13735406 $ (847107)
Net income 973601
Other comprehensive Joss (349700)
Issuance of stock 4736 142080
Cash dividends ($138 per share) (608477) -
Balances Decenibr 31middot2013 440925 865688 14i00530 (1196807)
Net income 1339240
Other comprehensive loss (318568)
Issuance of stockmiddot 2584 80104
Cash dividends($138 per share) (6ll672)
Balances December 31 2014 443509 $ 945792 $ 14828093 $ (J515375)
See Notes to Consolidated Financial Statements
Total
s 13611907
973601
(349700)
142080
(608477)
13769411
1339240
(318568)
80104
(611672)
$ 14258515
6
RNB CORP Consol idated Statements of Cash Flows
Years Ended December 3 1 201 4 and 2013
2014
Operating Activities Net income $ 1339240 Items not requiring (providing) cash
Provision for loan losses 480000 Depreciation and amortization 278769 Deferred income tax (45899) Securities amortization net 305437 Net realized (gain) loss on available-for-sale securities (246906) Net realized (gain) loss on OREO 33040 Increase in cash surrender value (44619)
Net change in Loans held for sale (1245224) Interest receivable (34730) Interest payable (176803)
Other adjustments 214557 Net cash provided by operating activities 856862
Investing Activilies Purchases of securities available for sale (7547942) Proceeds from maturities and paydowns of securities
available for sale 5996926 Proceeds from the sale of available-for-sale securities 3725621 Redemption of membership stock Net change in loans (52778 17) Purchase of membership stock (19900) Proceeds from the sale of OREO 310687 Purchases of premises and equipment (1881 17)
Net cash used in investing activities (3000542)
Financing Activities Net change in
Noninterest-bearing NOW money market and savings deposits 7818147 Certificates of deposit (693030) Other borrowings (3010998)
Repayments ofborrowings Issuance of stock net 80104 Cash dividends (608586)
Net cash provided by financing activities 3585637
Net Change in Cash and Cash Equivalents 1441957
Cash and Cash Equivalents Beginning of Year 449 1310
Cash and Cash Equivalents End of Year $ 5933267
Additional Cash Flows Information Interest paid $ 1451160 Income tax paid 469000
See Notes to Consolidated Financial Statements
2013
$ 973601
480000 310169
(4468) 379065
8194 (28224) (50150)
235784 29102
1727 249760
2584560
( 1 1 282162)
7873335 368631 1
36100 (1 0057092)
664171 (74649)
(9153986)
18 1 052 1634777 3518925 (300000)
142080 (602850)
4573984
(1995442)
6486752
$ 4491310
$ 1922309 92000
7
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Consolidated Statements of Shareholders Equity
Years Ended December31 201 4 and 2013
middotAccumulated Common Stock Other
Shares Retained Comprehensive Outstanding Amount Earning Loss
Balances January 1 2013 436189 s 723608 $ 13735406 $ (847107)
Net income 973601
Other comprehensive Joss (349700)
Issuance of stock 4736 142080
Cash dividends ($138 per share) (608477) -
Balances Decenibr 31middot2013 440925 865688 14i00530 (1196807)
Net income 1339240
Other comprehensive loss (318568)
Issuance of stockmiddot 2584 80104
Cash dividends($138 per share) (6ll672)
Balances December 31 2014 443509 $ 945792 $ 14828093 $ (J515375)
See Notes to Consolidated Financial Statements
Total
s 13611907
973601
(349700)
142080
(608477)
13769411
1339240
(318568)
80104
(611672)
$ 14258515
6
RNB CORP Consol idated Statements of Cash Flows
Years Ended December 3 1 201 4 and 2013
2014
Operating Activities Net income $ 1339240 Items not requiring (providing) cash
Provision for loan losses 480000 Depreciation and amortization 278769 Deferred income tax (45899) Securities amortization net 305437 Net realized (gain) loss on available-for-sale securities (246906) Net realized (gain) loss on OREO 33040 Increase in cash surrender value (44619)
Net change in Loans held for sale (1245224) Interest receivable (34730) Interest payable (176803)
Other adjustments 214557 Net cash provided by operating activities 856862
Investing Activilies Purchases of securities available for sale (7547942) Proceeds from maturities and paydowns of securities
available for sale 5996926 Proceeds from the sale of available-for-sale securities 3725621 Redemption of membership stock Net change in loans (52778 17) Purchase of membership stock (19900) Proceeds from the sale of OREO 310687 Purchases of premises and equipment (1881 17)
Net cash used in investing activities (3000542)
Financing Activities Net change in
Noninterest-bearing NOW money market and savings deposits 7818147 Certificates of deposit (693030) Other borrowings (3010998)
Repayments ofborrowings Issuance of stock net 80104 Cash dividends (608586)
Net cash provided by financing activities 3585637
Net Change in Cash and Cash Equivalents 1441957
Cash and Cash Equivalents Beginning of Year 449 1310
Cash and Cash Equivalents End of Year $ 5933267
Additional Cash Flows Information Interest paid $ 1451160 Income tax paid 469000
See Notes to Consolidated Financial Statements
2013
$ 973601
480000 310169
(4468) 379065
8194 (28224) (50150)
235784 29102
1727 249760
2584560
( 1 1 282162)
7873335 368631 1
36100 (1 0057092)
664171 (74649)
(9153986)
18 1 052 1634777 3518925 (300000)
142080 (602850)
4573984
(1995442)
6486752
$ 4491310
$ 1922309 92000
7
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Consol idated Statements of Cash Flows
Years Ended December 3 1 201 4 and 2013
2014
Operating Activities Net income $ 1339240 Items not requiring (providing) cash
Provision for loan losses 480000 Depreciation and amortization 278769 Deferred income tax (45899) Securities amortization net 305437 Net realized (gain) loss on available-for-sale securities (246906) Net realized (gain) loss on OREO 33040 Increase in cash surrender value (44619)
Net change in Loans held for sale (1245224) Interest receivable (34730) Interest payable (176803)
Other adjustments 214557 Net cash provided by operating activities 856862
Investing Activilies Purchases of securities available for sale (7547942) Proceeds from maturities and paydowns of securities
available for sale 5996926 Proceeds from the sale of available-for-sale securities 3725621 Redemption of membership stock Net change in loans (52778 17) Purchase of membership stock (19900) Proceeds from the sale of OREO 310687 Purchases of premises and equipment (1881 17)
Net cash used in investing activities (3000542)
Financing Activities Net change in
Noninterest-bearing NOW money market and savings deposits 7818147 Certificates of deposit (693030) Other borrowings (3010998)
Repayments ofborrowings Issuance of stock net 80104 Cash dividends (608586)
Net cash provided by financing activities 3585637
Net Change in Cash and Cash Equivalents 1441957
Cash and Cash Equivalents Beginning of Year 449 1310
Cash and Cash Equivalents End of Year $ 5933267
Additional Cash Flows Information Interest paid $ 1451160 Income tax paid 469000
See Notes to Consolidated Financial Statements
2013
$ 973601
480000 310169
(4468) 379065
8194 (28224) (50150)
235784 29102
1727 249760
2584560
( 1 1 282162)
7873335 368631 1
36100 (1 0057092)
664171 (74649)
(9153986)
18 1 052 1634777 3518925 (300000)
142080 (602850)
4573984
(1995442)
6486752
$ 4491310
$ 1922309 92000
7
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
N ote 1
RNB CORP N otes to Consolidated F inancial Statements
December 3 1 2014 and 2013 (Table Dollar Amounts in Thousands)
N ature of O perations and S u mmary of Significant Accounting Po licies
The accounting and reporting policies ofRNB CORP (Company) and its wholly owned subsidiary The Riddell National Bank (Bank) and the Banks wholly owned subsidiary RNB Investments Inc which holds services manages and invests a portion of the Banks investment portfolio conform to accounting principles generally accepted in the United States of America and reporting practices followed by the banking industry The more significant of the policies are described below
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Actual results could differ from those estimates
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses valuation of real estate acquired in connection with foreclosures or in satisfaction ofloans loan servicing rights and fair values of financial instruments
The Company is a bank-holding company whose principal activity is the ownership of the Bank The Bank operates under a national bank charter and provides full banking services including trust services As a national bank the Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC)
The Bank generates commercial mortgage and consumer loans and receives deposits from customers located primarily in Clay and Vigo counties and other surrounding Indiana coulities The Banks loans are generally secured by specific items of collateral including real property consumer assets and business assets
Consolidation - The consolidated financial statements include the accounts of the Company the Bank and RNB Investments Inc after elimination of all material intercompany transactions
Cash and Cash Equivalents - The Company considers all liquid investments with original maturities of three months or less to be cash equivalents As of December 3 1 2014 and 2013 cash and cash equivalents are defined to include cash on hand deposits in other institutions and federal funds sold
At December 3 1 2014 the Companys cash accounts exceeded federally insured limits by approximately $1990000 Additionally the Company had approximately $566000 on deposit with the Federal Reserve Bank and the Federal Home Loan Bank of Indianapolis as of December 3 1 2014 which is not federally insured
8
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolidated Financial Statem ents
December 3 1 201 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Investment Securities - Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity Securities held to maturity are carried at amortized cost Debt securities not classified as held to maturity are classified as available for sale Securities available for sale are carried at fair value with unrealized gains and losses reported separately in accumulated other comprehensive income net of tax
Amortization of premiums and accretion of discounts are recorded as interest income from securities Realized gains and losses are recorded as net security gains (losses) Gains and losses on sales of securities are determined on the specific-identification method
For debt securities with fair value below amortized cost when the Company does not intend to sell a debt security and it is more likely than not the Company will not have to sell the security before recovery of its cost basis it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive loss
Loans held for sale are carried at the lower of cost or fair value determined using an aggregate basis Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold net of discounts collected or paid and considering a normal servicing rate
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income charge-offs the allowance for loan losses any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans For all loan classes carried at amortized cost interest income is accrued based on the unpaid principal balance
The accrual of interest for all loan classes is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection Past-due status is based on contractual terms of the loan In all cases all loan classes are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful
All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured
9
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Notes to Conso l idated F inancial Statements
Decem ber 31 20 1 4 and 201 3 (Table Dollar Amounts in Thousands)
middotwhen cash payments are received on impaired loans in each loan class the Company records the payment as a principal reduction and interest income unless collection of the remaining recorded principal amount is doubtful at which time payments are used to reduce the principal balance of the loan Interest income on troubled debt restructured loans is recognized on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months
Allowance for loan losses - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income Loan losses are charged against the allowance when management believes the loan balance is uncollectible Subsequent recoveries if any are credited to the allowance
The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience the nature and volume of the loan portfolio adverse situations that may affect the borrowers ability to repay estimated value of any underlying collateral and prevailing economic conditions This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available
The allowance consists of allocated and general components The allocated component relates to loans that are classified as impaired For those loans that are classified as impaired an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan The general component covers nonclassified loans and is based on actual historical charge-off experience by loan segment experienced by the Company over the prior three years Management believes the three year historical loss experience methodology is appropriate in the current economic environment Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data
A loan is considered impaired when based on current information and events it is probable that the Company vvill be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement Factors considered by management in determining impairment include payment status collateral value and the probability of collecting scheduled principal and interest payments when due Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired Management determines the significance of payment delays and payment shortfalls on a case-by-case basis taking into consideration all known factors affecting the loan and borrower Impainnent is measured on a loan-by-loan basis for nonhomogeneous type loans primarily by the loans obtainable market price or the fair value of the underlying collateral Otherwise the present value of the expected future cash flows discounted at the loans effective interest rate is utilized
10
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Cons o l idated Fin a n cial Statements
Decem ber 31 20 1 4 a n d 20 1 3 (Table Dol lar Amounts in Thousands)
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segments historical loss experience adjusted for changes in trends conditions and other relevant factors that affect repayment of the loans Accordingly the Company does not separately identify individual consumer and residential loans for impairment measurements unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower
Premises and equipment are carried at cost net of accumulated depreciation Depreciation is computed using the straight-line method for premises and the declining-balance method for equipment based on the estimated useful lives of the assets Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized Gains and losses on dispositions are included in cmrent operations
lVIortgage-servicing assets are recognized separately when rights are acquired through sale of fmancial assets Under the servicing assets and liabilities accounting gnidance (ASC 860-50) servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer The Company subsequently measures each class of servicing asset using the amortization method Under the amortization method servicing rights are amortized in proportion to and over the period of estimated net servicing income The amortized assets are assessed for impairment or increased obligation based on fair value at each reporting date
The servicing assets are evaluated and measured for impairment Impairment if any would be recognized through a valuation allowance to the extent that fair value is less than the carrying amount of the servicing assets No impairment has been incurred at December 31 2014
Servicing fee income is recorded for fees earned for servicing loans The fees are based on a contractual percentage of the outstanding principal per loan and are recorded as income when earned The amortization of mortgage-servicing rights is netted against loan servicing fee income
Federal Reserve and Federal Home Loan Bank membership stock are required investments for institutions that are members of the Federal Reserve (FRB) and Federal Home Loan Bank (FHLB) system The required investments in the common stock are based on a predetermined formula
Income tax in the consolidated statements of income includes deferred income tax provisions or benefits for all significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes The Company files consolidated tax returns with its subsidiary The Companys tax years still subject to examination by taxing authorities are years subsequent to 20 1 1
Earnings per share have been computed based upon the weighted-average common shares outstanding during each year
Comprehensive income consists of net income and other comprehensive loss net of applicable income taxes Other comprehensive loss includes unrealized gains (losses) on investment securities and changes in the funded status of the defined-benefit plan
11
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
N ote 2
RNB CORP N otes to Cons o l idated Financial Statem e nts
December 31 20 1 4 and 201 3 (Table Dol lar Amounts in Thousands)
Restriction on Cash and D u e F rom Banks
The Bank is required to maintain reserve funds in cash andor on deposit v1rith the Federal Reserve Bank The reserve required at December 31 2014 was $1194000
N ote 3 I nvestment Secu rities
The amortized cost and approximate fair values together with gross umealized gains and losses of securities are as follows
2014 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 7748 $ 1 6 $ 157 $ 7607 State and municipal 6451 55 75 6431 Mortgage-hacked securities
government-sponsored entities (GSEs) 1 1 754 77 70 11761
Marketable equity securities 14 54 68
Total investment securities $ 25967 $ 202 $ 302 $ 25867
2013 Gross Gross
Amortized Unrealized Unrealized Fair Cost Gains Losses Value
Available for sale Federal agencies $ 10483 $ 1 2 $ 178 $ 10317 State and municipal 8853 56 358 8551 Mortgage-backed securities
GSEs 8836 56 165 8727 Marketable equity securities 27 307 334
Total investment securities $ 28199 $ 431 $ 701 $ 27929
12
I
I I I I I
l t I
r
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolidated F i n ancial Statements
Dece m b e r 3 1 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at an amount less than their historical cost Total fair value of these investments at December 31 2014 and 2013 was $17630000 and $15891000 which is approximately 681and 569 of the Companys investment portfolio These declines in debt securities primarily resulted from changes in market interest rates
Based on evaluation of available evidence including recent changes in market interest rates credit rating information and information obtained from regulatory filings management believes the declines in fair value for these securities are temporary
Should the impairment of any of these securities become other-than-temporary the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the othershythan-temporary impairment is identified
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2014
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair Unrealized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4797 $ 114 $ 1817 $ 43 $ 6614 $ 157 State and municipal 3410 75 3410 75 Mortgage-backed securities
GS Es 3568 21 4038 49 7606 70
Total temporarily impaired securities $ 11775 $ 210 $ 5855 $ 92 $ 17630 $ 302
The following table shows the Companys investments gross unrealized losses and fair value aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at December 31 2013
Less Than 12 Months 12 Months or More Total
Description of Fair U n realized Fair Unrealized Fair U n realized Securities Value Losses Value Losses Value Losses
Federal agencies $ 4234 $ 151 $ 973 $ 27 $ 5207 $ 178 State and municipal 3392 170 1866 188 5258 358 Mortgage-backed securities
GS Es 3760 106 1666 59 5426 165
Total temporarily impaired securities $ JJ386 $ 427 $ 4505 $ 274 $ 15891 $ 701
13
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
Federal Agencies
RNB CORP N otes to Consolidated F i n ancial Statements
D ecember 31 2014 and 201 3 (Table Dollar Amounts in Thousands)
The unrealized losses on the Companys investments in direct obligations of US gove=ent agencies were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company 1vill be required to sell the investments before recovery of their amortized cost bases which may be mahffily the Company does not consider those investments to be othershythan-temporarily impaired at December 31 2014
State and Municipal
The unrealized losses on the Companys investments in securities of state and municipal divisions were caused by interest rate increases The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be maturity the Company does not consider those invetments to be other-thanshytemporarily impaired at December 31 2014
Mortgage-Backed Securities - GSEs
The unrealized losses on the Companys investment in residential mortgage-backed securities were caused by interest rate changes The Company expects to recover the amortized cost basis over the term of the securities Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases which may be mah1rity the Company does not consider those investments to be other-than-temporarily impaired at December 31 2014
14
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Notes to Consol idated Financial Statements
Decem ber 31 201 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
The am01iized cost and fairmiddotvalue of securities available for sale at December 31 2014 by contractual maturity are shown below Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties
Maturity Distribution at December 31
Available for sale Due in one year or less Due after one through five years Due after five through ten years After ten years
Marketable equity securities Mortgage-backed securities GSEs
Totals
$
$
Amortized
Cost
1223 3854 6718 2404
14199 14
1 1 754
25967
$
$
Fair
Value
1 223 38 19 6632 2364
14038 68
1 1 761
25867
Securities with a carrying value and market value of approximately $17062000 and $13793000 were pledged at December 31 2014 and 2013 to secure certain deposits and for other purposes as permitted or required by law
Proceeds from the sale of securities during 2014 and 2013 totaled approximately $3726000 and $3686000 respectively Gains of approximately $247000 and losses of approximately $8000 were realized on those sales during 2014 and 2013 respectively
N ote 4 Loans and Al lowance and Loan Losses
2014 2013
Corrnnercial and industrial $ 27634 $ 27595 Corrnnercial and farm real estate 34230 29460 Residential real estate 74662 74486 Consumer 1 141 8 12426
Total loans 1 47944 143967
Allowance for loan losses (1 758) (1 846)
Total loans net $ 146186 $ 142121
15
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Notes to Consolidated F inancial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The risk characteristics of each loan portfolio segment are as follows
Co=ercial and Industrial
Co=ercial and industrial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower The cash flows of borrowers however may not be as expected and the collateral securing these loans may fluctuate in value Most co=ercial loans are secured by the assets being fmanced or other business assets such as accounts receivable or inventory and may include a personal guarantee Short-term loans may be made on an unsecured basis In the case ofloans secured by accounts receivable the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers
Co=ercial and Farm Real Estate including Construction
Co=ercial and farm real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate Co=ercial and farm real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan Commercial and farm real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy The characteristics of properties securing the Companys commercial and farm real estate portfolio are diverse but with geographic location almost entirely in the Companys market area Management monitors and evaluates co=ercial real estate loans based on collateral geography and risk grade criteria In general the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk
Construction loans are underwritten utilizing feasibility studies independent appraisal reviews and fmancial analysis of the developers and property owners Construction loans are generally based on estimates of costs and value associated with the complete project These estimates may be inaccurate Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders sales of developed property or an interim loan commitment from the Company until permanent financing is obtained These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes governmental regulation of real property general economic conditions and the availability oflong-term fmancing
16
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolidated Financial Statements
D ecem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
Residential and Consumer
Residential and consumer loans consist ofiwo segments - residential real estate loans and consumer loans For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied the Company generally establishes a maximum loan-to-value ratio Home equity loans are typically secured by a subordinate interest in 1-4 family residences for which the Company holds a first lien Consumer personal loans are secured by consumer personal assets such as automobiles or recreational vehicles Some consumer personal loans are unsecured such as small installment loans and certain lines of credit Repayment of these loans is primarily dependent on the personal income of the b01Towers which can be impacted by economic conditions in their market areas such as unemployment levels Repayment can also be impacted by changes in property values on residential properties Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers
The following tables present by portfolio segment the activity in the allowance for loan losses for the years ended December 31 2014 and 2013
2014 Commercial
a n d Industrial
Commercial and Farm
Real Estate Residential Real Estate eonsumer Total
Beginning Balance $ 286 $ 263 $ 977 $ 320 $ 1846 Provision (8) 59 406 23 480 Loans charged off (459) (159) (618) Recoveries 50 50
Ending Balance $ 278 $ 322 $ 924 $ 234 $ 1758
2013 Commercial Commercial
a n d and Farm Residential Industrial Real Estate Real Estate Consumer Total
Beginning Balance $ 218 $ 257 $ 1068 $ 216 $ 1759
Provision 80 6 77 317 480
Loans charged off (12) (203) (310) (525)
Recoveries 35 97 132
Ending Balance $ 286 $ 263 $ 977 $ 320 $ 1846
17
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consol idated F i n an cial Stateme nts
December 31 2014 and 20 1 3 (Table Dollar Amounts i n Thousands)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on the portfolio segment and impairment method as of December 31
2014 and2013
2014 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ $ 37 $ JO $ $ Collectively evaluated
for impairment 278 285 914 234
Total allowance for loan losses $ 278 $ 322 $ 924 $ 234 $
Loan Balances
Individually evaluated
for impairment $ $ 846 $ 1730 $ $ Collectively evaluated
for impairment 27634 33384 72932 I 1418
Total loan balances $ 27634 $ 34230 $ 74662 $ I 1418 $
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate Consumer
Allowance Balances
Individually evaluated
for impairment $ 7 $ 36 $ 126 $ $ Collectively evaluated
for impairment 279 227 851 320
Total allowance for loan losses $ 286 $ 263 $ 977 $ 320 $
Loan Balances
Individually evaluated
for impairment $ 344 $ 682 $ 1876 $ $ Collectively evaluated
for impairment 27251 28778 72610 12426
Total loan balances $ 27595 $ 29460 $ 74486 $ 12426 $
Total
47
1711
1758
2576
145368
147944
Total
169
1677
1846
2902
141065
143967
18
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Notes to Consolidated Financial Statements
D ecemb e r 3 1 20 1 4 a n d 20 1 3 (Table Dol lar Amounts i n Thousands)
Internal Risk Categodes
Loan grades are numbered 1 through 5 Grades 1 through 2 are considered satisfactory grades The grade of 3 or WatchSpecial Mention represents loans of lower quality and is considered criticized The grades of 4 or Substandard and 5 or Doubtful refer to assets that are classified The use and application of these grades by the Bank will be uniform and shall conform to the banks policy
Pass (1-2) Loans are of acceptable quality and repayment ability providing a nominal credit risk
VatchSpecial Mention (3) Loans have potential weaknesses that deserve managements close attention If left uncorrected these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institutions credit position at some future date Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification Ordinarily special mention credits have characteristics which corrective management action would remedy
Substandard ( 4) Loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged if any Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected
Doubtful (5) Loans classified as doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of current known facts conditions and values highly questionable and improbable
The following tables present the credit risk profile of the Companys loan portfolio based on rating category and payment activity as of December 31 2014 and 2013
2014
Commercial Commercial and and Farm Residential
Industrial Real Estate Real Estate Consumer Total
Grade
Pass (1-2) $ 25805 $ 31866 $ 72308 $ 11386 $ 141365 WatchSpecial mention (3) 1474 1161 31 2666 Substandard ( 4) 317 1203 2323 32 3875 Doubtful ( 5) 38 38
Total $ 27634 $ 34230 $ 74662 $ 11418 $ 147944
19
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
Grade
Pass (1-2)
RNB CORP Notes to Consol idated F inancial Statements
December 31 2014 and 20 1 3 (Table Dol lar Amounts in Thousands)
2013 Commercial Commercial
and and Farm Residential Industrial Real Estate Real Estate
$ 25450 $ 27159 $ 71 712
WatchSpecial mention (3) 1736 1135 35
Substandard ( 4) 409 1 1 66 2739
Doubtful (5)
Total $ 27595 $ 29460 $ 74486
Consumer Total
$ 12335 $ 136656
44 2950
47 4361
$ 12426 $ 143967
The following tables present the Companys loan portfolio aging analysis as of December 3 1 2014 and 20 13
201 4 Loans
90 Days gt 90 Days 30-59 Days 6089 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 236 $ 8 $ 5 1 $ 295 $ 27339 $ 27634 $ 38 Commercial and farm real estate 5 1 3 526 1 039 33191 34230 Residential real estate 2448 494 1588 4530 70132 74662 1869 Consumer 133 34 3 170 1 1248 1 1 418 3
Total loans $ 3330 $ 536 $ 2168 $ 6034 $ 141910 s 147944 $ 1910
201 3 Loans
90 Days gt 90 Days 30-59 Days 60-89 Days and Total Total and Past Due Past Due Greater Past Due Current Loans Accruing
Commercial and industrial $ 80 s 92 $ 2 1 5 $ 387 s 27208 $ 27595 $ Commercial and farm real estate 548 192 286 1026 28434 29460
Residential real estate 2837 520 2071 5428 69058 74486 1728 Consumer 108 53 26 1 87 12239 12426 26
Total loans s 3573 s 857 $ 2598 $ 7028 $ 136939 $ 143967 $ 1754
20
)
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to C onsol i d ated F i n a n cial Statements
D ecember 3 1 2014 and 20 1 3 (Table Dollar Amounts in Thousands)
The following table presents the Companys nonaccrual loans at December 3 1 2014 and 20 1 3
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Total nonaccrual loans
$
$
2014
145 830
1 294 9
2278
$
$
2013
1 70 886
1797 6
2859
The following tables present impaired loans for the years ended December 3 1 2014 and 20 1 3
Impaired loans vithout a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with no related specific reserve
Impaired loans with a specific
valuation allovance
Commercial and industrial
Commercial and farm real estate
Residential real estate
Consumer
Total impaired loans with
an allowance recorded
Total impaired loans
Recorded
$
$
Balance
379 1193
1572
467 537
1004
2576
Unpaid Principal
$
$
Balance
379 1 193
1572
467 537
1 004
2576
2014
Specific Allowance
$
$
37 10
47
47
Average Investment i n
$
Impaired Loans
218 372
1 264
1854
380 501
881
2735
I nterest Income
Recognized
$
$
14 15
1 1 6
145
21 21
42
187
21
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consol id ated Financial Statements
December 31 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
201 3 Average
Unpaid I nvestment in
Recorded Principal Specific Impaired Balance Balance Allowance Loans
Impaired loans without a specific
valuation allowance
Commercial and industrial $ 179 $ 179 $ $ 1 99 Commercial and farm real estate 61 94 78 Residential real estate 1367 1367 1 955 Consumer
Total impaired loans with
no related specific reserve 1607 1640 2232
Jmpaired loans with a specific
valuation allovance
Commercial and industrial 165 165 7 92 Commercial and farm real estate 621 621 36 506 Residential -real estate 509 509 126 521 Consumer
Total impaired loans with
an allowance recorded 1 295 1295 169 1 1 1 9
Total impaired loans $ 2902 $ 2935 $ 1 69 $ 3351
The following tables present information regarding troubled debt restructurings by class restructured for the years ended December 31 2014 and 2013
2014 Pre-
Interest
Income Recognized
$ 14
58
72
4 24 22
50
$ 122
Post-Modification Modification
Commercial and industrial Commercial and farm real estate Residential real estate Consumer
Number of Loans
1
$
$
Recorded Balance
83
83
Recorded Balance
$ 83
$ 83
22
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consol id ated F i nancial Statements
December 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
2013
Pre-Modification
Number of Recorded Loans Balance
Commercial and industrial 1 $ 104 Commercial and farm real estate 300 Residential real estate Consumer
2 $ 404
Post-M odification
Recorded Balance
$ 104 300
$ 404
The troubled debt restructurings noted above generally consisted of interest rate and maturity date concessions and increased the allowance by $6000 in 2013 The troubled debt restructuring in 2014 did not impact the allowance for loan losses
The Company has not had any troubled debt restructuring subsequently default during 2014 or 2013 Default occurs when a loan or lease is 90 days or more past due or transferred to nonaccrual and is vrithin 12 months of restructuring
middot
N ote 5 P rem ises and E q u ipment
2014
Land $ 785
Buildings 3449
Equipment 2601 Total cost 6835
Accumulated depreciation (4003)
Net $ 2832
N ote 6 Deposits
2014
Demand deposits $ 58870
Savings deposits 27508
Certificates and other time deposits of $ 100000 or more 33962
Other certificates and time deposits 41 436
Total deposits $ 161776
2013
$ 785 3345 2901 7031
(4108)
$ 2923
2013
$ 52861 25699 25030 51061
$ 154651
23
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Notes to Consolidated Financial Statements
December 31 201 4 and 2013 (Table Dollar Amounts in Thousands)
Certificates and other time deposits maturing in years ending after December 3 1 2014
2015 $ 33593 2016 25560 2017 5005 201 8 4079 2019 6744 Thereafter 417
$ 75398
Certificates of deposit in excess of $250000 totaled $ 15309000 at December 3 1 2014
Note 7 Other Borrowings
2014 2013
Securities sold under repurchase agreements Note payable 45 unsecured due March 25 2015 FHLB overdraft line of credit
$ 9033 1 196
$ 9128 1196 2915
$ 10229 $ 13239
Securities sold under agreements to repurchase consist of obligations of the Company to other parties The obligations are secured by investment securities and such collateral is held by a safekeeping agent The maximum amount of outstanding agreements at any month-end during 2014 and 2013 totaled approximately $ 1 6795000 and $17886000 and the monthly average of such agreements totaled approximately $10807000 and $ 1 1 524000 respectively The agreements at December 3 1 20 14 matured on January 1 2015
The Bank has an overdraft line of credit with the FHLB in the amount of $8000000 The Company had $0 and approximately $2915000 in borrowings on this line of credit at December 31 2014 and 2013 respectively
Note 8 F H LB Advances
The Company had no advances outstanding from the HILB at December 3 1 2014 and 2013 At December 3 1 2014 the Company also has pledged approximately $57047000 of mortgage loans to collateralize any future advances
24
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
N ote 9
RNB CORP N otes to Consolidated F i nancial Statements
December 31 201 4 a n d 2013 (Table Dol lar Amounts in Thousands)
Loan Servicing
Loans serviced for others are not included in the accompanying consolidated balance sheets The loans are serviced for the Federal National Mortgage Association and the Federal Home Loan Bank of Indianapolis The unpaid principal balances ofloans serviced for others totaled approximately $94537000 and $93506000 at December 3 1 2014 and 2013 respectively
The Company capitalizes mortgage-servicing rights on these loans The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 2014 and 2013 approximates carrying value
Mortgage-servicing rights B alances beginning of year Servicing rights capitalized Amortization of servicing rights
Balances end of year
N ote 1 0 I n come Tax
Income tax expense (benefit) Currently payable
Federal State
Deferred Federal State
Total income tax expense
Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34 Tax-exempt interest Effect of state income taxes Other
Actual tax expense
$
$
$
$
$
$
2014
2014
837 109 (96)
850
625 1 1 0
(63) 17
689
699 (132)
83 39
689
$
$
$
$
$
$
2013
764 1 99
( 126)
837
2013
241 47
( 19) 1 5
284
428 (149)
41 (36)
284
25
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Notes to Consolidated Financial Statements
December 3 1 2014 and 2013 (Table Dol lar Amounts in Thousands)
A cumulative net deferred tax asset (liability) is included in other assets (liabilities) The components of the asset (liability) are as follows
2014 2013
Assets
Allowance for loan losses Securities available for sale Pension and employee benefits Other
Total assets
Liabilities
State income tax FHLB stock Depreciation Prepaid expenses Loan fees Mortgage-servicing rights
Total liabilities
N ote 1 1 Accu m u l ated Comprehensive Loss
$
$
The components of accumulated other comprehensive loss are as follows
Net unrealized losses on available-for-sale securities net of tax of$(35) and $(129)
Items not yet recognized in net periodic pension benefit cost net of tax of$(925) and $(656)
$
$
406 $ 448 34 75
360 47 201 52
1001 622
(46) (23) (22) (22) (70) (94) (34) (58)
(193) (163) (351) (348) (716) (708)
285 $ (86)
2014 2013
(65) $ (197)
(1450) (1000)
(1515) $ (1197) ========
26
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consol i dated F i nancial Statem ents
D ecem b e r 3 1 201 4 and 2013 (Table Dol lar Amounts in Thousands)
Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended December 31 2014 and 2013 were as follows
Unrealized gains on available-for-sale securities
Amortization of defined-benefit pension items
$
From AOC 2014 2013
(247) $ 8 Net realized (gains) losses on securities
____ 9_8_ -----(3) Tax effect
$ (149) $ 5 Net reclassified amount =====
Net loss $ 1373 $ 1 19 Components are included in the computation
(544)
$ 829 $
Total reclassification out of AOC $ 680 $
N ote 1 2 Commitments and Contingent Liabi l ities
of net periodic pension cost and presented
in Note 15 (47) Tax effect
72 Net reclassified amount
77
In the normal course of business there are outstanding commitments and contingent liabilities such as commitments to extend credit and standby letters of credit which are not included in the accompanying consolidated financial statements The B anks exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments The Bank uses the same credit policies in making such commihnents as it does for instruments that are included in the consolidated balance sheets
Financial instruments whose contract amount represents credit risk as of December 31 were as follows
201 4 2013
Commitments to extend credit Standby letters of credit
$ 30898 $ 25776 30
27
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolidated Financial Statements
D ecember 31 201 4 and 2013 (Table Dol lar Amounts in Thousands)
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 amounts do not necessaiily represent future cash requirements The Bank evaluates each customers creditworthiness on a case-by-case basis The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation Collateral held vaiies but may include accounts receivable inventory property and equipment and income-producing commercial properties
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party
The Company and Bank are also subject to claims and lawsuits which aiise piimaiily in the ordinary course of business It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position of the Company
N ote 13 Restriction on Bank D ividends
Without piior approval of the Comptroller of the Currency the Bank is restiicted by national b anking laws as to the maximum amount of dividends it can pay in any calendar year to the Banks retained net profits (as defined) for that year and the two preceding years As a practical matter the Bank restricts dividends to a lesser amount because of the need to maintain an adequate capital structure
N ote 1 4 Regu latory Capital
The Bank is subject to vaiious regulatory capital requirements administered by the federal banking agencies Failure to meet minimum capital requirements can initiate actions by the regulatory agencies that if undertaken could have a mateiial effect on the Companys consolidated financial statements Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets liabilities and certain off-balance-sheet items as calculated under regulato1y accounting practices
The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components iisk weightings and other factors
At December 3 1 2014 management of the Bank believes that it meets all capital adequacy requirements to which it is subject The most recent notification from the regulatory agency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action There have been no conditions or events since that notification that management believes have changed this categoiization
28
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolidated Financial Statements
Decem ber 3 1 20 1 4 a n d 20 1 3 (Table Dollar Amounts in Thousands)
The Banks actual and required capital amounts and ratios are as follows
Required for
Actual Adequate Capital1
Amount Ratio Amount Ratio
As of December 3 1 2014
Total capital1 (to risk-weighted assets) $ 1 8404 129 $ 1 1 380 80 Tier 1 capital1 (to risk-weighted assets) 1 6612 1 1 7 5690 40
Tier 1 capital1 (to average assets) 16612 86 7701 40
As of December 31 2013
Total capital1 (to risk-weighted assets) $ 1 7759 128 $ 1 1 122 80 Tier 1 capital1 (to risk-weighted assets) 15883 1 1 4 5561 40 Tier 1 capital 1 (to average assets) 15883 85 7448 40
1 As defined by regulatory agencies
N ote 1 5 Employee Benefits
To Be Well
Capitalized1
Amount Ratio
$ 14225 100 8535 60
9626 50
$ 13 903 100 8342 60 93 10 50
The Company has a noncontributory defined-benefit pension plan covering all employees who meet the eligibility requirements The Companys funding policy is to make the minimum annual contribution that is required by applicable regulations plus such amounts as the Company may determine to be appropriate from time to time The Company expects to contribute $200000 to the plan in 201 5
middot
The Company uses a December 3 1 measurement date for the plan assumptions are
Significant balances costs and
Benefit obligation Fair value of plan assets
Funded status
Accrued benefit cost recognized in the consolidated balance sheets
$
$
$
Pension Benefits 201 4 201 3
(4066) $ (3329) 3 194 3217
(872) $ (1 12)
(872) $ (1 12)
29
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolidated F i n ancial Statements
Decem ber 3 1 2 0 1 4 and 20 1 3 (Table Dol lar Amounts in Thousands)
Amounts recognized in accumulated other comprehepsive loss net of tax not yet recognized as components of net periodic benefit cost consist of
Net loss $
Pension Benefits 201 4 201 3
1450 $ 1 000
The accumulated benefit obligation for the defined-benefit pension plan was approximately $3364000 and $2778000 at December 3 1 2014 and 2013 respectively
Other significant balances and costs are
Benefit cost Employer contributions B enefits paid
$
Pension Benefits 201 4 2013
241 200 251
$ 393 600 406
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Amounts arising during the period Net gain
Amounts reclassified as a component of net periodic benefit cost of the period Net loss
Weighted-average assumptions used to determine benefit costs
Discount rate Expected return on plan assets Rate of compensation increase
$
$
Pension Benefits 201 4 201 3
(1 10) $ (267)
829 72
719 $ (195)
Pension Benefits 201 4 201 3
450 400 250
375 400 250
30
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Notes to Consolidated F i nancial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
Weighted-average assumptions used to determine benefit obligations
Pension Benefits 2014 201 3
Discount rate Rate of compensation increase
350 250
450 250
The estimated net loss for the defmed-benefit pension plan expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $ 1 64000 The Company has estimated the long-term rate ofreturn on plan assets based primarily on historical returns on plan assets adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based upon publicly available information
The following benefit payments which reflect expected future service as appropriate are expected to be paid as ofDecember 3 1 2014
Pension B e n efits
2015 $ 188 2016 1 138 2017 153 2018 44 2019 52 2020-2024 834
Plan assets are held by a bank-administered trust fund which invests the plan assets in accordance with the provisions of the plan agreement The plan agreement permits investments in common stocks corporate bonds and debentures US Government securities certain insurance contracts real estate and other specified investments
Plan assets are re-balanced periodically At December 3 1 201 4 and 2013 plan assets by category are as follows
Debt securities Equity securities Other
Pension B e nefits 2014 2013
25 5
70
25 5
70
100 100
31
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolidated F inancial Statements
D ecember 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
Pension Plan Assets
Following is a description of the valuation methodologies llsed for pension plan assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of pension plan assets pursuant to the valuation hierarchy
Where quoted market prices are available in an active market plan assets are classified within Level 1 of the valuation hierarchy Level 1 plan assets include money market funds corporate obligations and common stocks If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of plan assets with similar characteristics or discounted cash flows Level 2 plan assets include certificates of deposit In certain cases where Level 1 or Level 2 inputs are not available plan assets are classified within Level 3 of the hierarchy The plan does not have any Level 3 assets
The fair values of the Companys pension plan assets at December 3 1 2014 and 2013 by asset class are as follows
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 154 $ 154 $ $ Corporate obligations 806 806 Money market funds 1304 1304 Certificates of deposit 930 930
$ 3194 $ 2264 $ 930 $
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical O bservable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Common stocks $ 1 54 $ 154 $ $ Corporate obligations 804 804 Money market funds 939 939 Certificates of deposit 1320 1320
$ 3217 $ 1897 $ 1320 $
32
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consol idated Financial Statements
December 3 1 201 4 and 2 0 1 3 (Table Dol lar Amounts in Thousands)
The Bank has a retirement savings 401 (k) plan in which substantially all employees may participate The Bank matches employees contributions at the rate of 65 percent for 2014 and 2013 for the first 6 percent of base salary contributed by participants The Banks expense for the plan was approximately $60000 for 2014 and for 2013
N ote 1 6 Related Party Transactions
The Bank has entered into transactions with certain directors executive officers significant stockholders and their affiliates or associates (related parties) Such transactions were made in the ordinary course of business on substantially the same terms and conditions including interest rates and collateral as those prevailing at the same time for comparable transactions with other customers and did not in the opinion of management involve more than normal credit risk or present other unfavorable features
Deposits from related parties held by the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 770000 and $ 1 784000 respectively Loans to related parties held at the Bank at December 3 1 2014 and 2013 totaled approximately $ 1 307000 and $326000 respectively
N ote 1 7 Fai r Val ues of Fi nancial Instru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measnrement date Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs There is a hierarchy of three levels of inputs that may be used to measnre fair value
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities
33
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Notes to Cons o l i dated Financial Statements
D ecember 3 1 20 1 4 and 20 1 3 (Table Dollar Amounts in Thousands)
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy
Available-for-Sale Securities
Vhere quoted market prices are available in an active market securities are classified within Level 1 of the valuation hierarchy Level 1 securities consist of marketable equity securities If quoted market prices are not available then fair values are estimated by using pricing models quoted prices of securities with similar characteristics or discounted cash flovvs The fair value measurements consider observable data that may include broker quotes market spreads cash flows tbe US Treasury yield curve live trading levels trade execution data market consensus prepayment speeds and credit infonnation Level 2 securities include federal agencies mortgageshybacked securities and state and municipal securities The Company does not have any Level 3 securities
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recmTing basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value Measurements Using
Quoted Prices in Active Significant
Markets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 7607 $ $ 7607 $ State and municipal 643 1 643 1 Mortgage-backed securities GSEs 1 1 761 1 1761 Marketable equity securities 68 68
$ 25867 $ 68 $ 25799 $
34
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consol idated Financial Statem ents
December 3 1 2 0 1 4 a n d 2 0 1 3 (Table Dol lar Amounts i n Thousands)
2013 Fair Value Measurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs In puts Value (Level 1 ) (Level 2) (Level 3)
Federal agencies $ 1 03 1 7 $ $ 103 1 7 $ State and municipal 85 5 1 8551 Mortgage-backed securities GSEs 8727 8727 Marketable equity securities 334 334
$ 27929 $ 334 $ 27595 $
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nomecurring basis and recognized in the accompanying consolidated balance sheets as well as the general classification of such assets pursuant to the valuation hierarchy For assets classified withln Level 3 of the fair value hierarchy the process used to develop the reported fair value is described below
Collateral-Dependent Impaired Loans Net of Allowance
The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral less estimated cost to sell Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy
The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Controllers office Appraisals are reviewed for accuracy and consistency by the Controllers office Appraisers are selected from the list of approved appraisers maintained by management The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral These discounts and estimates are developed by the Controllers office by comparison to historical results
35
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolidated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts in Thousands)
The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 3 1 2014 and 2013
201 4 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Significant Identical Observable Unobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 957 $ $ $ 957
2013 Fair Value M easurements Using
Quoted Prices in Active Significant
M arkets for Other Sig nificant Identical Observable U nobservable
Fair Assets Inputs Inputs Value (Level 1 ) (Level 2) (Level 3)
Impaired loans $ 1053 $ $ $ 1 053
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements
Fair Value at
December 3 1 Valuation Unobservable Weig hted-2014 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired Joans $ 957 properties discount 1 0
36
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolid ated Financial Statements
December 3 1 20 1 4 and 201 3 (Table Dollar Amou nts in Thousands)
Fair Value at
December 3 1 Valuation Unobservable Weighted-
2013 Technique Inputs Average
Collateral-dependent Market comparable Marketability
impaired loans $ 1053 properties discount 10
The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying value
Loans and Loans Held for Sale - For both short-term loans and variable-rate loans that reprice frequently and with no significant change in credit risk fair values are based on carrying values
The fair values for other loans are estimated using current market quotes or discounted cash flow analyses using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality
FRB and FHLB Membership Stock - Fair value is based on the price at which it may be resold and approximates carrying value
Mortgage-Servicing Rights - The fair value of mortgage-servicing rights approximates carrying value
Interest ReceivablePayable - The fair values of interest receivablepayable approximate carrying values
Deposits - The fair values of noninterest-bearing interest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on such time deposits
Other Borrowings - Other borrowings consist primarily of securities sold under repurchase agreements The fair value of these borrowings approximates carrying value
FHLB Advances - Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt
37
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP Notes to Consol idated Financial Statements
December 3 1 2 0 1 4 and 2 0 1 3 (Table Dollar Amounts i n Thousands)
The estimated fair values of the Companys financial instruments are as follows
201 4 Carrying Fair Carrying Amount Value Amo u n t
Assets
Cash and cash equivalents $ 5933 $ 5933 $ 4491 Investment securities available for sale 25867 25867 27929 Loans including loans held for sale net 147571 146771 142260 Stock in FRB and Fl-ILB 740 740 720 Mortgage-servicing rights 850 850 837 Interest receivable 1 136 1 136 1 101
Liabilities
Deposits 1 61776 162233 154651 Other borrowings 1 0229 10229 13240 Interest payable 181 181 358
Note 1 8 Condensed Financial I nformation (Parent Company On ly)
201 3
Fair Value
$ 4491 27929
139969 720 837
1 101
155678 1 3240
358
Presented below is condensed financial information as to financial position results of operations and cash flows of the Company
Condensed Balance Sheets
Assets
Cash on deposit with subsidiary Investment in co=on stock of subsidiary - The
Riddell National Bank Other assets
Total assets
Liabilities
Dividends payable B orrovings Other liabilities
Total liabilities
Shareholders Equity
Total liabilities and shareholders equity
$
$
$
$
201 4
226
15097 691
16014
554 1196
5 1755
14259
16014
$
$
$
$
201 3
196
14688 637
15521
551 1196
5 1752
13769
15521
38
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RNB CORP N otes to Consolidated F inancial Statem ents
Dece m ber 3 1 2 0 1 4 and 201 3 (Table Dollar Amounts in Thousands)
Condensed Statements of Income and Comprehensive Income
2014
Income
Dividends from subsidiary $ 660 Dividends from reinsurance company 5
Total income 665
Expenses 57
Income b efore income tax and equity in income of subsidiary 608 Income tax benefit 4
Income before equity in undistributed income of subsidiary 612 Equity in undistributed income of subsidiary 727
Net Income $ 1339
Comprehensive Income $ 1021
Condensed Statements of Cash Flows
2014
Operating Activities
Net income $ 1339 Equity in undistributed income
of subsidiary (727) Other adjustments (26)
Net cash provided by operating activities 586
Investing Activity - paydown ofborrowings (27)
Financing Activities
Cash dividends (609) Stock issuance 80
Net cash used in financing activities (529)
Net Change in Cash 30
Cash at Beginning of Year 196
Cash atEnd of Year $ 226
N ote 1 9 Su bsequent Events
2 0 1 3
$ 608 8
6 1 6
61
555 24
579 395
$ 974
$ 624
201 3
$ 974
(395) 120 699
(149)
(603) 142
(461)
89
107
$ 196
Subsequent events have been evaluated through the date of the Independent Auditors Report which is the date the consolidated financial statements were available to be issued
39
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
DIRECTORS OF RNB CORP AND RIDDELL NATIONAL BANK
John C Coughanowr Chainnan o f the Board RNB CORP and Riddell National Bank Coughanowr Insurance
John E Eder Vice-Chairman of the Board RNB CORP and Riddell National Bank Retired Log Cabin Coal Company
H Michael Lawson President and Chief Executive Officer RNB CORP and Riddell National Bank
Dr Gary W Nesty OD World in Focus Eyecare
Margaret L Simonson Secretary RNB CORP and Riddell National Bank Retired Riddell National Bank
John P Tilley Retired Vincennes University
David 0 Thomas General Counsel Saint-ivfmy-of-the-Woods College
OFFICERS OF RIDDELL NATIONAL BANK
H Michael Lawson President and Chief Executive Officer
W Steven Kidwell Executive Vice-President and Chief Operating Officer
Michael E Yeager Controller
Mark C Nolin Vice-President and Senior Mortgage Officer
Gregory L Eckart Chief Information Officer
John L Burk Vice-President
Cathy J Thompson Vice-President
Anita L James Trust Officer
Anna E Gibson Compliance Officer
Bradley Bush Assistant Vice-President
Elizabeth E Dailey Assistant Vice-President
Cindy S Harris Assistant Vice-President
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
RIDDELL NATIONAL BANK
Today s B anking Yesterday s Values
1 East National Ave
Brazil llf 4 7834
www riddellon l ine com
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
FORM FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 3 1 2 0 1 4
Report Item 1 Annual Report to Shareholders
The bank holding company prepares an annual report for its securities holders and is not registered with
the SEC As specified by the appropriate Reserve Bank 2 copies are enclosed
Report Item 2a Organization Chart
RNB Corp Brazil I N
I ncorporated in Indiana
1 00
The Riddell National Bank Brazil I N
1 00
R N B Investments Inc Las Vegas NV
Incorporated in Nevada
NR = Ownership percentage not reportable on the FR Y-1 0 Percentage of ownership is less than 25 and the companies are not controlled by any other means
Report Item 2b Domestic Branchlisting
Domestic branch listing p rovided to the Federal Reserve Bank via email on 03272015
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
Resutts A list of branches for your depository institution RI DOELL NATIONAL BANK THE (JO_RSSO 31 9047) This depository Institution is held by RNB CORP (1 141478) of BRAZIL IN The data are as or 12312014 Data reflects information that was received and processed through 01072015
Reeonclll1tion and Verification Steps 1 In the Data Action column of each branch rCffl enter one or more of the actions specified below 2 If required enter ttie date in the Effectln Date column
OK If the branch information is correct enter OK in the Data Action column
Changa If the branch information is Incorrect or incomplete revise the data enter Change in he Data Action column and the date when this information first became valid In the Effective Date column Close If a branch listed was sold or closed enter Close in lhe Data Action column and the sale or closure date in the Effective Date column Delete If a branch listed was never owned by this depository institution enter Delete In the Data Action column Add If a reportable branch is mlsslng insert a row lt1dd the branch data and enter Add in the Data Action column and the opening or acquisition date In lhe Effective Date column
If printing this list you may n to adjust your page setup in MS Excel Try using landscape orientation page scaring andor legal sized paper
Submission Prpeedure When you are finished send a saved copy to your FRB contact See lhe detailed instructions on this site for more lnformatlon If you ere amp-mailing this to your FRB contact put your Institution name city and state in the subject line of the e-mail
Nohr
To satisfy the FR Y-10 reporting requirements you mList also submit FR V-10 Domestic Branch Schedules for each branch with a Data Action or Change Close Delete or Add
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y-10 Online application - httpsly10onlinefederalreservegov
bull FDIC UNINUM Office Number and lD_RSSO columns are for reference only Verlflcation of these values Is not required
Dta Action Effective Dte Branch Service T OK Full Service Head Office OK Full Service OK Full Service OK Full Service
Branch ID RSSD Po ular Name 319047 RIDDELL NATIONAL BANK THE
2088271 EAST BRANCH 2090292 CENTER POINT BRANCH
3966077 SYCAMORE TERRACE BRANCH
STATES STATES STATES
ED STATES
FDIC UNINUM Office Number Head Office 2834 0 RIDDELL NATIONAL BANK THE
203031 2 RIDDELL NATIONAL BANK THE 2836 1 RIDDELL NATIONAL BANK THE
476525 5 RIDDELL NATIONAL BANK THE
Head Office ID
3 319047 319047
Comments
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
Form FR Y-6
RNB Corp
Brazil IN
Fiscal Year Ending December 31 201 4
Report Item 3 Securities Holders
Current Securities Holders with ownership control or holdings of 5
or more with power to vote as of fiscal year ending 1 2-31 -201 4
Securities Holders not listed i n 3(1 )(a) through (3)(1 )(c) that had
ownership control or holdings of 5 or more with power to vote
during the fiscal year ending 1 2-31 -201 4
(1 )(a)
Name amp Address (City State
Country)
John E Eder Brazil I N USA
Frank E and Linda S Farmer Brazil IN USA
Alyce H Nance Trust James F Nance amp Richard B Nance Co-Trustees
Acworth GA USA
Joseph C Riddell Brazil I N USA
Samuel L and Janet Trout Brazil IN USA
(1 )(b)
Country of
Citizenship or
Incorporation
USA
USA
USA
USA
USA
(1 )(c) N umber and
Percentage of Each
Class of Voting
Securities
29644 - 668 Common Stock
38528 - 869 Common Stock
39448 ( 1 ) - 889 Common Stock
34584 - 780 Common Stock
34888 - 787 Common Stock
(2)(a)
Name amp Address (City State
Cou ntry)
N O N E
(2)(b) (2)( c) N umber and
Country of Percentage of Each
Citizenship or Class of Voting
Incorporation Securities
NA NA
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
John C Coughanowr Brazil IN USA
John E Eder Brazil IN USA
H Michael Lawson Brazil IN USA
Dr Gary W Nesty OD Brazil IN USA
Margaret L Simonson Brazil IN USA
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Insurance amp Real Estate Agent
Retired
NA
Optometrist
Retired
Director amp Chairman
Director amp Vice Chairman
Director amp President amp CEO
Director
Director amp Secretary
Form FR Y-6
RNB Corp Brazil IN
Fiscal Year Ending December 31 2 0 1 4
(3)(b)
Title amp Position with Subsidiaries (include names of subsidiaries)
Director amp Chairman (Riddell National Bank)
Director amp Vice Chairman (Riddell National Bank)
Director amp President amp CEO (Riddell National Bank) Director (RNB Investments Inc)
Director (Riddell National Bank)
Director amp Secretary (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
Owner Coughanowr Insur Agency amp Coughanowr Realty
None
None
President of World in Focus Eyeware
None
page 1 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
262 None
668 None
026 None
009 None
1 80 None
-
(4)(c) List names of other companies (includes partnerships) if 25 or more of voting securities are held (List names of companies and percentage of voting securities held)
None
None
None
SolarBat Enterprises Inc (100)
None
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1
Re ort Item 4 Insiders
(1 )
Names amp Address (City State Country)
David 0 Thomas Brazil IN USA
John P Tilley Brazil IN USA
---
(2) (3)(a)
Principal Occupation if Title amp Position other than with Bank with Bank Holding Holding Company Company
Attorney Director
Retired Director
Form FR Y-6
RNB Corp Brazil IN I
Fiscal Year Ending Decembe r 31 201 4
(3)(b)
Title amp Position with Subsidiaries (include names of s ubsidiaries)
Director (Riddell National Bank)
Director (Riddell National Bank)
(3)(c)
Title amp Position with Other Businesses (include names of other businesses)
General Counsel Saint Mary-of-the-Woods College
None
page 2 of2
(4)(a) (4)(b)
Percentage of Percentage of Voting Voting Securities in Securities in Subsidiaries Bank Holding (include names of Company subsidiaries)
005 None
496 None
middot
(4)(c) List names of other companies (incJude partnerships) lf 25 or more of voting ecurities are held (List names of companies and percentage of voting securities held)
None
None
middot1