The Pros & Cons of an FHA Loan

FHA loans are loans issued by private lenders – including by JD Bank – but backed by the Federal Housing Administration (FHA). Because they are insured by the FHA, these loans are typically the easiest to qualify for new homeowners and people who can’t afford to make big down-payments on conventional loans.

FHA loans are the easiest to qualify for, and certainly worth considering. They may not be the right solution for all borrowers when considering FHA loans compared to other types of home loans that are available from JD Bank. It all depends on your situation, but let’s examine the pros and cons of FHA loans for home buyers in Louisiana.

PROS

Lower Credit Scores Are Acceptable – Borrowers with low credit scores – or no credit history – are more likely to get approved for an FHA loan than other types of loans. When applying for a conventional loan, a lower credit score is a difficult obstacle to overcome. Those with credit problems, including bankruptcy, still could qualify for an FHA loan, but your minimum down payment will rise. Because the U.S. government backs the loan, you don’t need near-perfect credit.

Lower Debt-to-Income Ratio (DTI) – Often with conventional loans, your debit-to-income ratio is a key factor in determining whether you are approved. Lenders want the amount you spend on monthly loan payments to be relatively low compared to your total monthly income. FHA loans allow for a higher DTI than conventional loans. 

Lower Down Payments – Where you may be required to put down 5 percent or more for a conventional home loan, FHA loans allow you to put down as little as 3.5 percent, or $3,500 per $100,000 that you borrow. An FHA loan will also allow other sources, such as a family member, employer or philanthropy, to contribute to your down payment.

FHA loans are also a useful solution for more than traditional, single-family residences. Borrowers can use FHA home loans to purchase a multi-unit property with up to four units, as long as they live in one of the units for a year. This loan can also be used for a condominium or even a manufactured home as long as it has a permanent foundation.

These benefits make FHA loans a great option for many borrowers. For some, FHA loans aren’t the ideal choice, as they would be better served with other home loan options.

CONS 

Mortgage Insurance Premiums (MIP) – While a conventional mortgage only requires private mortgage insurance, FHA loans demand mortgage insurance premiums. These can include an upfront MIP payment of 1.75 percent of your loan amount at closing, and then an annual premium FOR THE LIFE OF THE MORTGAGE, which is typically 30 years.

Limits on How Much You Can Borrow – These limits vary depending on where you are located in the country, but they are still lower than the limits for conventional loans. The FHA publishes a chart each year showing the maximum amount for FHA loans by region. If you are in a market where the real estate is in demand and high priced, FHA loans may not work for you.

Minimum Housing Standards – These may prevent you from buying the house you want, because not all houses qualify for FHA loans. These minimum property standards are meant to protect buyers from purchasing properties that are in disrepair, but they can make it difficult for those who aim to purchase an older home that needs work. An FHA loan inspection will be tough for a buyer wanting to make significant renovations and repairs on a fixer-upper.

An FHA loan has several appealing factors, and it can be the right choice for first-time homebuyers, those without sterling credit and others of all income levels. While FHA loans aren’t the perfect fit for everyone, there are several other loan options to consider, so talk to a local JD Bank home lending expert to clarify what loan will fit your unique needs best.

JD Bancshares, Inc. Reports Financial Results for the Year Ended December 31, 2019

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PRESS RELEASE
February 20, 2020
JD Bancshares, Inc. 

FOR IMMEDIATE RELEASE
For more information contact:
Bruce Elder (CEO) (337-246-5399) 
Paul Brummett (EVP) (337-824-1422)
Website: www.jdbank.com

JD Bancshares, Inc. Reports Financial Results for the Year Ended December 31, 2019

 

Jennings, Louisiana – JD Bancshares, Inc. (OTC PINK: JDVB) (the “Company”), the parent holding company of JD Bank (the “Bank”), reports its unaudited financial results for the year ended December 31, 2019.  

Net income for the twelve month period ended December 31, 2019 was $8,947,846 or $5.74 per common share compared with $9,391,054 or $6.04 per common share for the twelve-month period ended December 31, 2018.  Financial results for the year ended December 31, 2018 included a non-recurring payment received from our insurance company in the amount of $1,520,073, net of tax, to settle prior year litigation.  Gains on the sale of securities, net of taxes, were $306,834 and $4,255 for 2019 and 2018, respectively.  Excluding the effects of these non-operating items, net income and earnings per common share for the twelve-month periods ended December 31, 2019 and 2018 would have been $8,641,012 or $5.54 and $7,866,726 or $5.06, respectively.  The increase in adjusted operating net income was primarily due to an increase in net interest income, partially offset by an increase in non-interest expenses and higher credit provisioning expense. 

Bruce Elder, President and CEO, commented, “I am pleased to report the Company’s results for 2019. The past year has been one of change for the Company due to a shift in leadership.  The management team stayed focused during the transition and produced increased adjusted operating results for the year.  As 2020 comes into view, we will be focused on gaining efficiencies as the new CEO looks at the Bank and Company from a new perspective.  As a team, we will blend certain processes that have served this Company well in the past with fresh concepts designed to move the Company forward for the future.” 

Asset Quality

Total nonperforming assets, including loans on non-accrual status, restructured loans on non-accrual status and other real estate owned (OREO) increased to $8.7 million at December 31, 2019, from $5.8 million at December 31, 2018.  Loans on non-accrual status increased to $7.7 million at December 31, 2019, from $5.1 million December 31, 2018. Other real estate owned increased to $956,000 at December 31, 2019 from $632,000 at the prior year-end, reflecting foreclosure activity net of sales and write-downs of certain real estate properties.  Management performs a quarterly evaluation of OREO properties and believes their adjusted carrying values are representative of their fair market values, although there is also no assurance that the ultimate sales will be equal or greater than the carrying values.

The Bank recorded $696,000 in provisions for credit losses in the 2019 compared to $189,000 in the prior year.  The allowance for loan losses (ALLL) was $6.6 million at December 31, 2019 or 1.06% of total loans compared to $6.4 million at December 31, 2018 or 1.02% of total loans.  Net charge offs were $471,000 for 2019 period compared to $496,000 in 2018.  We believe the current level of our ALLL is adequate; however, there is no assurance that regulators, increased risks in the loan portfolio, or changes in economic conditions will not require additional adjustments to the ALLL.

Net Interest Income

Net interest income increased to $35.3 million for the year ended December 31, 2019 from $33.0 million for the comparative period ended December 31, 2018. The change in levels of net interest income is influenced by the volume of interest-earning assets and interest-bearing liabilities and the management of rates earned and paid during each respective reporting period. The net interest margin improved to 4.40% in 2019 compared to 4.14% in 2018.  The increase in margin is due to both an increase in the volume of average earning assets over the current twelve-month period as well as an increase in the yield on earning assets.

Non-Interest Income

Total non-interest income was $9.8 million for the year ended December 31, 2019 compared to $11.3 million for the prior year period.  Service charges and other deposit account related income increased by approximately $120,000 year over year primarily comprised of an increase in debit card interchange and ATM surcharge revenue of $133,000, an increase in NSF fee income of $18,000, and a decline in deposit service charges of $37,000. 

Revenue from mortgage loan sales and related fees increased by $42,000 in 2019 to $565,000. Although the volume of mortgages sold in the secondary market declined by approximately $2.6 million, the margin on those sales increased by 20 basis points.  Fees and commissions from securities brokerage activities totaled $601,000 in 2019, reflecting a $162,000 increase over 2018.  Revenue from our trust division increased to $505,000 from $478,000 for the prior year.

Gains on sale of investment securities for the year ended 2019 were $388,000 compared to $5,000 for the year ended 2018.  Other non-interest income declined by $2.2 million when compared to the prior year primarily due to the receipt of insurance proceeds in the second quarter of 2018 of approximately $2.1 million to settle litigation from 2016.

Non-Interest Expense

Total non-interest expense increased to $33.7 million for the year ended December 31, 2019 from $32.7 million for the prior year period ended December 31, 2018.  Compensation and benefits, the largest component of these expenses, increased marginally by $61,000 to $18.1 million for 2019.   The largest increase in non-interest expense between 2019 and 2018 was in the area of data processing.  Prior to late 2018, the Bank did all account processing on an in-house platform.  The decision was made to outsource account processing to a data center environment.  While more expensive to process in an outsourced environment, the benefits derived from data security and system uptime outweighed the additional costs.  Occupancy expenses also increased in 2019 primarily in the areas of depreciation, repairs, and maintenance.  Other noninterest expenses declined by $280,000 due to decreases in expenses related to OREO and FDIC insurance.  These decreases were partially offset by higher expenses in the areas of professional consulting and communications.

Income tax expense declined by $241,000 to $1.7 million for the 2019 compared with $2.0 million for the prior year.  The decline was due to lower pre-tax income and a reduction in the effective tax rate from 17.26% for 2018 to 16.11% for 2019.  The reduction reflects the higher volume of tax-exempt municipal securities on the balance sheet for 2019. 

Balance Sheet

Total assets increased by $20.3 million or 2.35% to $885.0 million at December 31, 2019 from $864.7 million at December 31, 2018. The increase in total assets was primarily in the categories of securities available for sale, interest bearing deposits at banks, and other stock equity investments which rose by $25.4 million, $2.4 million and $1.3 million, respectively.  Net loans held for investment declined by $4.9 million to $614.1 million, securities held to maturity declined by $4.3 million and bank premises and equipment decreased by $1.0 million.   

Total deposits increased by $13.3 million or 1.75% to $772.1 million at December 31, 2019 from $758.8 million at December 31, 2018. Money market, interest bearing checking, non-interest bearing checking, and savings account balances all increased during the year by $9.0 million, $4.8 million, $1.4 million and $100,000, respectively.  Non-interest bearing checking accounts represent 34.75% of total deposit balances at year-end 2019.  Time deposit and individual retirement accounts declined by $2.0 million during the year.

Stockholders’ equity increased by $7.9 million to $88.9 million at December 31, 2019 from $81.0 million at December 31, 2018, reflecting year-to-date net income, changes in accumulated other comprehensive income and dividends paid to common shareholders.  The tangible equity to assets ratio increased to 9.46% at December 31, 2019 from 9.09% at December 31, 2018.  There were 1,560,000 and 1,555,156 common shares outstanding at December 31, 2019 and 2018, respectively.  Tangible book value per common share increased to $53.70 at year-end 2019 compared to $50.39 for the prior year-end.

Key Performance Ratios

GAAP return on average assets (ROA) and return on average equity (ROE) declined in 2019.  ROA is 1.03% for the current year compared to 1.10% for 2018 and ROE is 10.38% for 2019 compared to 12.09% for the prior year-end.   On an adjusted operating basis, eliminating the gains on sales of securities for both years and the insurance settlement in 2018, ROA improved in 2019 to 0.99% compared to 0.92% in 2018 and ROE declined slightly to 10.03% from 10.13%.  The GAAP efficiency ratio is 74.77% for the current year compared to 73.94% for the prior year. On an adjusted operating basis, the efficiency ratio is 75.42% for 2019 compared to 77.30% for 2018.  

JD Bancshares, Inc. may be accessed on its website at www.jdbank.com.  The Company’s common stock symbol as traded on the OTC Pink Sheets is “JDVB”.  The Company anticipates registering with the OTC-QX exchange during the first quarter of 2020.

JD Bank has been serving the citizens of southwest Louisiana since 1947 and offers a variety of financial products and services, including a trust and investment services.  Securities brokerage services are made available through an affiliation with an independent broker/dealer. The Bank operates through its main office headquartered in Jennings, Louisiana, and has 21 full service branch offices located along the Interstate 10 corridor from Lake Charles to Lafayette.

Statements contained in this release, which are not historical facts, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors which include the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates, the effects of competition, and including without limitation to other factors that could cause actual results to differ materially as discussed in documents filed by the Company with the Securities and Exchange Commission from time to time.

CLICK HERE TO READ THE FULL RELEASE WITH FINANCIALS

 

(OTC PINK: JDVB)

​

Money Moves To Make Before April 15th

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As the April 15th tax deadline nears, there are a few savvy actions you should be aware of before filing your return that can impact your bottom line either now or in the future. These tips can give you a head start.

Check Your Tax Withholdings – It’s nice to get that tax refund every year, and there are those who wait for it, like an annual financial boost. However, a bigger paycheck might provide your budget a little more comfort, or the extra funds could go toward savings. Conversely, you may find you have to pay taxes this year. The IRS has a useful tool, the Tax Withholding Estimator [Link: https://www.irs.gov/individuals/tax-withholding-estimator] to adjust your W-4.

If you haven’t checked the withholding amount on your paystub in ages, it is worth doing. If you think about it, paying too much in taxes with each paycheck during the year, and then getting the overpayment back months later after filing your return as a tax refund, is like giving the government a loan without interest.

Increase Your Retirement Plan Contributions – The money you put in these accounts, such as a 401(k), reduces your taxable income for the year, which reduces your tax bill. And this money isn’t taxed until you withdraw it. If you have an IRA through JD Bank, the contribution limits for 2019 and 2020 are $6,000 plus $1,000 in catch-up contributions. If you have a 401(k) at work and it is matched by your employer, try to contribute the amount that will be matched by employer contributions.

Those funds are tax-deferred and grow tax-free. This is a good time to review if you are investing enough toward retirement, and whether you can increase the percentage moving forward. You should try to increase your contribution amounts annually to keep pace with inflation rates.  

Make Charitable Contributions – Supporting your favorite causes and charities is not only good for the soul, it has benefits as a tax deduction. There are several ways to give, either as cash, or stock held for over one year.

Get Your Credit Report – Data breaches and system hacks unfortunately are constantly in the headlines. As you review all of your finances, it’s smart to also get a copy of your credit report to make sure nothing has been falsely reported. Federal law allows you to get a free copy of your credit report from the three credit reporting companies – Equifax, Experian and TransUnion – each year. Your credit card company should be able to provide this to you.

Build A Plan of Attack for Your Debt – If you have outstanding credit card debt, vehicle loans, mortgage and student loans, review these debts. Explore if there is any flexibility in your budget on these repayment timelines as you take a wide view of your personal finances. Look closely at your spending habits as you collect your receipts for taxes and consider if consolidating your debt with either a personal loan or home equity loan is wise. Often a simple, yet smart money move will be changing to a high interest checking account such as ZydeCash for greater returns on your balances, as well as making one extra payment on your mortgage annually.

Review Your Beneficiary Designations – This move is not just for the wealthy. Make sure who you have named as the beneficiary for any retirement accounts, life insurance policies and other estate planning documents are up to date. And if you don’t have an estate plan, it’s time to look into it. JD Bank has an experienced team that specializes in estate planning, trusts and retirement plans.

As the time to file your taxes looms, one always realizes how much impact on your bottom line that taxes can have. When your taxable income exceeds certain limits, your tax rate goes up with what tax bracket you fall into. It clarifies the benefit of contributing higher amounts to a 401(k), a Health Savings Account, or a traditional IRA throughout the year. Not only for retirement – and planning for the future is important – these deductible contributions can also save you money in the near term by placing you in a lower tax bracket.   

 

-JDB-

Cybersecurity

The beginning of the year is a great time to make sure that your INFORMATION is protected! 

 

With each year that passes, we invite more connected devices into our lives. The “Internet of Things” also known as IOT, used to just include your laptop, smart phone, and maybe a DVR, but these days, everything is a smart device, from your toothbrush, to washing machine and even that digital pressure cooker we all love so much. Each one of these devices is connected to the internet and presents an entry point for a breach in your security.

Here are some tips to keep your home network secure.
 
  1. Change the password for your home router and Wi-Fi –
     Both your router and Wi-Fi come with a standard default password. All too often cybercriminals take over these devices using the factory default standard password.
  2. Set up administrative (powerful) and non-administrative (everyday) user accounts in Windows – Don’t use an administrative account unless you need to install software. If you do, a hacker can hijack your machine and install malicious software.
  3. Use complex and different passwords for each online account – This will minimize the chances that anyone will hack into any of your accounts. And by having different passwords, a breach on one account won’t lead hackers to your others.
  4. Be sure your system is automatically applying patches – Not applying patches increases the likelihood that a weakness can be exploited.
  5. Use antivirus software – This will help you to keep your system protected from intrusion.
  6. Avoid suspicious websites and links –
    Be careful about clicking on any hyperlinks and opening attachments. Emails and websites can be made to look like they belong to your bank or other legitimate organizations.
  7. Don’t give out personal information – Many identity thieves will attempt to pose as a bank or credit card company employee over the phone. Even if you believe the call is authentic, it’s safer to hang up and call back using the phone number listed on bank statements or the back of your credit card.
  8. Monitor your accounts and your credit report 
    – Checking for suspicious transactions on all of your accounts is an effective protection. You can also pull your credit report from each of the three major credit reporting agencies at least once a year to look for fraudulent accounts opened in your name.
  9. Set up fraud alerts – You can set up fraud alerts as part of your online account with JD Bank. The alerts will let you know about activity involving your accounts.

Now that your home network and devices are secure, how do you protect your identity?
 
  1. Start with your Social Security number – It’s an important part of your identity, and you want to protect it in every way you can. For instance, remember never to carry your Social Security card with you in your wallet or purse. It’s too easy to lose. And if you lose your wallet, whoever finds it might have access not only to your Social Security number, but also to your driver’s license, which includes your full name, home address and date of birth. That information would give a thief what he might need to steal your identity.
  2. Protect important documents that could be stolen from your home – Ensure your mailbox is secure. Shred documents containing personal information before you discard them. Some identity thieves steal from mailboxes and the trash to gather your personal information.
  3. Restrict access to your living space – This may sound obvious, but consider repair people, house cleaners, caregivers and others you may not think twice about. Even a relative or friend with financial troubles might resort to identity theft. You don’t want to make yourself an easy target.

  4. Consider a password manager –  It will help you not only generate a unique password for each of your online accounts, but also to keep track of them on all of your devices. There are many different password managers to choose from. Check out online reviews to figure out which one may work best for you in terms of functionality and cost.

 
 
Cybercrime is a full-time job for most hackers, so your security in the digital world needs to be constantly monitored. By adhering to the tips mentioned above, you make yourself a harder target, and most cybercriminals will move on to exploit an easier target. JD Bank thanks you for your continued support and business.

The Many Benefits of a Health Savings Account with JD Bank

Health Savings Accounts continue to grow in popularity for employers, and many don’t realize it’s also an account that people can open on their own at JD Bank for their healthcare needs. With the right type of health insurance, an accompanying HSA can help individuals save on healthcare expenses as well as build a nest egg for retirement, not unlike a 401(k).

An HSA offers triple-tax advantages: the contributions are tax-free, the earnings are tax-free, and withdrawals for eligible expenses are tax-free. An HSA account with JD Bank grows annually and remains with you as the account holder, regardless of career changes. While an HSA can help limit your medical costs, reduce taxable income and even help plan for retirement, to be eligible for an HSA it must be teamed with a qualifying, High-Deductible Health Plan (HDHP).

Click here to apply for a JD Bank HSA Account

 

Every dollar you put into your HSA from a payroll deduction are dollars you don’t have to pay taxes on. Post-tax contributions are deductible on your tax returns. The interest or investment income in your HSA is tax free as well. Even if you change to a non-HSA health plan one day, the funds that have accumulated can still be applied to qualifying medical expenses.  

An HSA offers tremendous flexibility, in that it is your account, and how you manage it for your healthcare needs. The funds are always immediately available to you for qualified medical expenses. There is no limit to how large your HSA can grow over time, how much you use on eligible expenses, or how much you choose not to use until it’s needed. These funds do not expire.  

A Health Savings Account allows individuals – or employees of a company – to contribute money to their account pre-tax. This helps build funds to cover any eligible healthcare expenses from that account until reaching their deductible. However, to be eligible for an HSA, the most important caveat is you must be enrolled in a High-Deductible Health Plan (HDHP). According to the IRS, an HDHP in 2020 must have a health insurance minimum deductible of $1,400 per year for self-coverage and $2,800 for a family plan.

Click here to apply for a JD Bank HSA Account

The limits that can be contributed to an HSA in pre-tax money for medical expenses in 2020 are $3,550 and $7,100, respectively. Similar to 401(k) and IRA contributions, if you are age 55 or older, you can contribute an extra $1,000 to your HSA. Employees or individuals can make their HSA contributions at any time during the year, but to maximize their contributions, breaking it down into monthly contributions through a pre-tax payroll deduction can make the process easier to manage. Since HSAs are tied to HDHPs, the annual out-of-pocket expenses for an HDHP this year cannot exceed $6,900 for self-only coverage, or $13,800 for family coverage.  

Your employer can make contributions to your HSA, as can family members, or any other person. This applies whether you are employed, self-employed or unemployed. Again, the flexibility of an HSA is one of its greatest features, as is that the funds always roll over into the next year – and earn interest. The maximum amount you can put in includes any employer contributions – to encourage participation some employers will also contribute – so be sure to understand whether your company is making deposits on your behalf.

However, that the Health Savings Account from JD Bank provides triple-tax advantages may be its most notable benefit, as the contributions, withdrawals for eligible expenses and earnings are all tax-free. 

Click here to apply for a JD Bank HSA Account

For local employers looking to partner with JD Bank for a consumer-driven health plan, an HSA is a sound option for your workforce that puts participants in greater control of their healthcare.

It’s important to understand the HSA qualified expenses. Generally, HSA funds can be used to pay for doctor and dentist visits, prescription medications, and treatments. Typically, this includes eyeglasses, nursing care, lab fees and medical devices, but not health club fees or cosmetic surgery.

Since the money you contribute to an HSA will never expire, there are those who save their Health Savings Account funds primarily for medical needs during retirement, even if you are covered by Medicaid at that time. Once you reach age 65, most people can no longer contribute to an HSA, so there is a limited window to take advantage of this savings plan.

If you are age 65 or older, you may withdraw money from an HSA for any purpose other than qualified expenses and only have to pay income tax on that amount.  However, if you are under age 65 and withdraw money from your HSA for any purpose other than qualified expenses, you will have to pay income tax on that amount as well as a 20% penalty. 

-JDB