The Access National Corporation Profit Sharing Plan (As restated
January 1, 2010) (the Plan) is subject to the Employee Retirement Income Security Act of 1974 (ERISA). Therefore, in lieu of the
requirements of Items 1-3 of Form 11-K, the following financial statements and schedule of the Plan as of December 31, 2015
and 2014, and for the year ended December 31, 2015, which have been prepared in accordance with the financial reporting requirements
of ERISA, are provided:
Report of Independent Registered Public Accounting Firm
To the Plan Administrator
Access National Corporation Profit Sharing Plan
Reston, Virginia
We have audited the accompanying statements
of net assets available for benefits of the Access National Corporation Profit Sharing Plan (the “Plan”) as of December
31, 2015 and 2014, and the related statement of changes in net assets available for benefits for the year ended December 31, 2015.
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is
not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31,
2015 and 2014, and the changes in net assets available for benefits for the year ended December 31, 2015, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying supplemental schedules
of Assets (held at end of year) and Delinquent Contributions as of December 31, 2015 have been subjected to audit procedures performed
in conjunction with the audit of the Plan’s financial statements. The supplemental schedules are the responsibility of the
Plan’s management. Our audit procedures included determining whether the supplemental schedules reconciles to the financial
statements or the underlying accounting and other records, as applicable and performing procedures to test the completeness and
accuracy of the information presented in the supplemental schedules. In forming our opinion on the supplemental schedules, we evaluated
whether the supplemental schedules, including its form and content, are presented in conformity with the Department of Labor’s
Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the
supplemental schedules are fairly stated, in all material respects, in relation to the financial statements as a whole.
McLean, Virginia
June 28, 2016
NOTES TO FINANCIAL STATEMENTS
December 31, 2015
NOTE 1 — DESCRIPTION OF PLAN
The following description of the Access National Corporation
Profit Sharing Plan (As Restated January 1, 2010) (the Plan) provides only general information. Participants should refer to the
Plan agreement for a more complete description of the Plan’s provisions.
General
: The Plan is a Profit Sharing Plan pursuant to
the provisions of Section 401(k) of the Internal Revenue Code (IRC or Code) and covers eligible employees of Access National Corporation
(the Company) and its subsidiaries. The Plan was originally established in 2000 and was last amended January 2, 2013 to reflect
provisions of Internal Revenue Service Revenue Ruling 2011-1 (as modified by Revenue Service Notice 2012-6 and applicable superseding
guidance) and provisions of Internal Revenue Service Revenue Ruling 2012-3 (and applicable superseding guidance) and certain other
applicable laws. The Plan provides for retirement, death, and disability benefits. The Plan is subject to the applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
Contributions
: Employees of the Company and its subsidiaries
are eligible to participate in the Plan if they have completed six months of service, as defined by the Plan, and have attained
age 21. Participation in the Plan is voluntary. Eligible employees may elect to make contributions up to a maximum dollar amount
prescribed by law. Any participant who has attained age 50 by the end of the Plan year may make catch-up contributions in accordance
with Code Section 414(v). Participants direct the investment of their contributions into various investment options offered
by the Plan. The Company may contribute, at its discretion, a percentage of the participant’s salary deferral contribution,
to be determined each year (the employer matching contribution). Employer matching contributions of $335,589 and $279,700 were
made subsequent to December 31, 2015 and 2014, respectively, and are reflected under receivables in the Statements of Net Assets
Available for Benefits as of December 31, 2015 and 2014, respectively.
In accordance with IRC limits, the Plan is required to return
excess contributions received during the Plan year. The Plan failed the Average Deferral Percentage (ADP) test in compliance with
IRC Section 415 for the year ended December 31, 2015; therefore, participant contribution refunds were necessary for the Plan’s
2015 fiscal year in the amount of $37,063.
Participant Accounts
: Each participant’s account
is credited with the participant’s contribution, employer matching contributions, if any, and an allocation of Plan earnings.
Allocations are based on participant account balances as defined in the Plan. The benefit to which a participant is entitled is
the benefit that can be provided from the participant’s vested account.
Vesting
: Participants are immediately vested in their
voluntary and rollover contributions plus actual earnings thereon. Participants become 100% vested in the employer matching contribution
and earnings thereon after completion of three years of credited service.
Number of Years of
|
|
|
|
Credited Service
|
|
Vested Interest
|
|
Less than 3 years
|
|
|
0
|
%
|
3 years
|
|
|
100
|
%
|
Payment of Benefits
: Upon termination of service, death,
disability or retirement, a participant may elect to receive an amount equal to the value of the participant’s vested interest
in his or her account. Benefit payments are distributed in a lump sum payment.
NOTE 1 — DESCRIPTION OF PLAN
(Continued)
Investment Options
: All assets in the Plan are invested
as directed by individual participants. Participants are given the option to direct account balances and all contributions into
mutual funds, money market funds and personal brokerage accounts. The Company’s common stock is not a direct investment option
and can only be acquired through the personal brokerage account.
Notes Receivable from Participants
: Participants may
borrow from their Plan accounts, in accordance with the Plan’s terms and applicable law, up to the lesser of $50,000 or 50%
of the participant’s vested interest in the Plan for terms not to exceed five years, unless the loan is for the purchase
of a principal residence. Loans to participants are evidenced by promissory notes and are secured by the balance in the participant’s
account. Loan principal and interest payments are made in accordance with the note’s amortization schedule. Participants
repay loan principal and interest through payroll deductions.
In-service Withdrawals
: A Plan participant may request
an in-service withdrawal if he or she has attained age 59-1/2.
Forfeitures
: Forfeitures represent the non-vested portion
of the participant’s account plus earnings thereon that are not fully distributable to participants who terminate employment
before they are 100% vested. Forfeitures may be used to reduce future employer matching contribution expense to the Plan, to pay
administrative expenses of the Plan or to fund a qualified non-elective contribution. As of December 31, 2015, forfeitures
of $22,479 were available for these purposes. Forfeitures were not used to pay administrative expenses of the Plan for the Plan
year ended December 31, 2015.
Expenses
: Certain administrative expenses are paid by
the Plan as provided by the Plan document. All other administrative expenses are paid by the Company.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
: The Plan’s financial statements
are prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (GAAP).
Investments
: The investments held by the Plan are shown
at fair value. Purchases and sales are recorded on a trade date basis. The Plan’s investments in mutual funds are valued
based on quoted market prices as of the end of the Plan year. The self-directed brokerage accounts consist of common stock and
mutual funds, stated at fair value, based on quoted market prices.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Notes Receivable from Participants
: Notes receivable
from participants are carried at unpaid principal plus accrued interest. Interest income is recorded on the accrual basis.
Payment of Benefits
: Benefits are recorded when paid.
Risk and Uncertainties
: The Plan provides for various
investment options including any combination of certain mutual funds, and through participants’ self-directed brokerage accounts,
investments with readily determinable market values including common stock of the Company. The underlying investment securities
are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in the near term and that such changes could materially
affect the amounts reported in the Statements of Net Assets Available for Benefits and participants’ individual account balances.
Use of Estimates
: The preparation of financial statements
in conformity with GAAP requires the Plan administrator to make estimates and assumptions that affect certain reported amounts
and disclosures, and actual results may differ from these estimates.
Recent Accounting Pronouncements
: In May 2015, the
Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2015-07,
Disclosures for Investments in Certain
Entities That Calculate Net Asset Value per Share (or Its Equivalent)
(“ASU 2015-07”). ASU 2015-07 seeks to eliminate
diversity in practice surrounding how investments measured at net asset value under the practical expedient with future redemption
dates have been categorized in the fair value hierarchy. It is effective for annual reporting periods beginning after December
15, 2015. Management is currently evaluating the implications of ASU 2015-07.
In July 2015, the FASB issued ASU No. 2015-12,
Plan
Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic962), Health and Welfare
Benefit Plans (Topic 965) – (I) Fully Benefit-Responsive Investment Contracts, (II) Plan Investment Disclosures, and
(III)Measurement Date Practical Expedient (a consensus of the FASB Emerging Issues Task Force)
. The purpose of this ASU
is to simplify plan accounting by eliminating the requirements to measure fair value of fully benefit-responsive investment contracts
as well as eliminating certain disclosure requirements for investments that represent 5 percent or more of net assets available
for benefits. It is effective for annual reporting periods beginning after December 15, 2015. Management believes the implementation
of ASU 2015-12 will not have a material effect on its financial statements.
In January 2016, FASB issued ASU 2016-01,
Financial Instruments
– Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
. ASU 2016-01 addresses
certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments in this ASU
are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December
15, 2019. With certain exceptions, early adoption is not permitted. Management is currently evaluating the impact that ASU 2016-01
will have on its financial statements.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Fair Value Measurements
: The Plan measures certain financial
assets and liabilities at fair value in accordance with ASC 820 which defines fair value as 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 measurement date. ASC
820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3). The three levels within the fair value hierarchy are described as follows:
|
Level 1
|
Unadjusted quoted prices in active markets that are accessible
at the measurement date for identical, unrestricted assets or liabilities;
|
|
Level 2
|
Quoted prices for identical or similar assets in markets
that are not considered to be active or financial instruments for which all significant inputs are observable, either directly
or indirectly;
|
|
Level 3
|
Prices or valuations that require inputs that are both
significant to the fair value measurement and are unobservable.
|
A financial instrument’s level within the fair value hierarchy
is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of
the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments
pursuant to the valuation hierarchy:
Common stock
- Valued at the closing price reported on
the active market on which the individual security is traded.
Mutual funds
- Valued at the net asset value of shares
held by the Plan at year end.
The following tables summarize investments measured at fair
value on a recurring basis:
|
|
Investment Assets at Fair Value as of December 31, 2015
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Mutual Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth funds
|
|
$
|
6,627,121
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,627,121
|
|
International growth funds
|
|
|
1,319,192
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,319,192
|
|
Index funds
|
|
|
3,691,708
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,691,708
|
|
Target-date retirement funds
|
|
|
1,020,545
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,020,545
|
|
Fixed income funds
|
|
|
1,160,425
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,160,425
|
|
Money market funds
|
|
|
391,202
|
|
|
|
-
|
|
|
|
-
|
|
|
|
391,202
|
|
Total Mutual Funds
|
|
|
14,210,193
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,210,193
|
|
Self-Directed Brokerage Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Access National Corp. common stock
|
|
|
2,085,960
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,085,960
|
|
Other common stock
|
|
|
338,311
|
|
|
|
-
|
|
|
|
-
|
|
|
|
338,311
|
|
Mutual funds
|
|
|
697,422
|
|
|
|
-
|
|
|
|
-
|
|
|
|
697,422
|
|
Total Self-Directed Brokerage Accounts
|
|
|
3,121,693
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,121,693
|
|
Total investment assets at fair value
|
|
$
|
17,331,886
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
17,331,886
|
|
|
|
Investment Assets at Fair Value as of December 31, 2014
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Mutual Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth funds
|
|
$
|
6,420,965
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,420,965
|
|
International growth funds
|
|
|
1,382,885
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,382,885
|
|
Index funds
|
|
|
3,277,431
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,277,431
|
|
Target-date retirement funds
|
|
|
731,836
|
|
|
|
-
|
|
|
|
-
|
|
|
|
731,836
|
|
Fixed income funds
|
|
|
1,171,673
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,171,673
|
|
Money market funds
|
|
|
511,658
|
|
|
|
-
|
|
|
|
-
|
|
|
|
511,658
|
|
Total Mutual Funds
|
|
|
13,496,448
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,496,448
|
|
Self-Directed Brokerage Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Access National Corp. common stock
|
|
|
1,807,697
|
|
|
|
|
|
|
|
|
|
|
|
1,807,697
|
|
Other common stock
|
|
|
343,752
|
|
|
|
|
|
|
|
|
|
|
|
343,752
|
|
Mutual funds
|
|
|
82,290
|
|
|
|
|
|
|
|
|
|
|
|
82,290
|
|
Money market funds
|
|
|
103,627
|
|
|
|
|
|
|
|
|
|
|
|
103,627
|
|
Total Self-Directed Brokerage Accounts
|
|
|
2,337,366
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,337,366
|
|
Total investment assets at fair value
|
|
$
|
15,833,814
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
15,833,814
|
|
NOTE 3 — RIGHTS UPON PLAN TERMINATION
Although it has not expressed any intent to do so, the Company
has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants would become 100% vested in their accounts.
NOTE 4 — RECONCILIATION OF FINANCIAL STATEMENTS
TO FORM 5500
The following is a reconciliation of participant loans as
presented on the Plan’s financial statements and the Plan’s Form 5500 for the periods indicated below.
|
|
Year Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Total benefits paid to participants (financial statements)
|
|
$
|
1,063,655
|
|
|
$
|
870,912
|
|
Less loans deemed distributions for the year ended December 31, 2015 and 2014
|
|
|
-
|
|
|
|
(25,080
|
)
|
Distributions to plan participants (Form 5500)
|
|
$
|
1,063,655
|
|
|
$
|
845,832
|
|
NOTE 5 — SCHEDULE OF REPORTABLE INVESTMENTS
The following table presents investments that represented
5% or more of the Plan’s net assets at December 31, 2015 and 2014:
|
|
2015
|
|
|
2014
|
|
American Funds Cap World Growth & Income R5
|
|
$
|
1,319,192
|
|
|
$
|
1,382,885
|
|
American Funds Income Fund of America R5
|
|
|
2,769,368
|
|
|
|
2,632,871
|
|
T Rowe Price Blue Chip Growth
|
|
|
1,235,951
|
|
|
|
1,064,128
|
|
Vanguard 500 Index Fund-Admiral Class
|
|
|
1,932,016
|
|
|
|
1,934,574
|
|
Vanguard Retirement Funds
|
|
|
1,020,545
|
|
|
|
**
|
|
Access National Stock*
|
|
|
2,085,960
|
|
|
|
1,807,697
|
|
* Included in self-directed brokerage account.
** Investment did not represent 5% or more of the Plan’s
net assets during this year.
The following table summarizes appreciation or depreciation
in fair value of the Plan’s investments, including net realized and unrealized gains and losses for the year ended December
31, 2015:
|
|
December 31, 2015
|
|
|
|
|
|
Mutual Funds
|
|
$
|
(342,036
|
)
|
Self-directed brokerage accounts
|
|
|
395,211
|
|
|
|
|
|
|
Total
|
|
$
|
53,175
|
|
NOTE 6 — PARTIES-IN-INTEREST
Parties-in-interest are defined under Department of Labor
Regulations as any fiduciary of the Plan, any party rendering services to the Plan, the employer, and certain others. Certain professional
fees for the administration of the Plan were paid by the Company. Fees paid by the Plan to Columbia Benefits Consultants, Inc.,
the Plan record keeper, and Mid-Atlantic Trust Company, the Custodian, totaled $109,389 for 2015.
NOTE 7 — TAX STATUS
The Plan is a non-standardized prototype and has received
an opinion letter from the Internal Revenue Service dated March 31, 2014, stating that the Plan is qualified under Section 401(a)
of the Code and, therefore, the related Trust is exempt from taxation. In accordance with Revenue Procedure 2002-6 and Announcement
2001-77, the Plan Sponsor has determined that it is eligible to and has chosen to rely on the current IRS prototype plan opinion
letter. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator
believes that the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that
the Plan is qualified and the related Trust is tax-exempt.
Accounting principles generally accepted in the United States
of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the
Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue
Service. The Plan administrator has analyzed the tax positions taken by the Plan and has concluded that as of December 31, 2015,
there are no uncertain positions taken or expected to be taken that require recognition of a liability (or asset) or disclosure
in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits
for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior
to 2012.
NOTE 8 — PLAN AMENDMENTS
Effective January 1, 2016 the Plan has an automatic
salary deferral rate of 3% for plan participants and includes an opt-out provision for those individuals choosing not
to participate.
In 2014, there was one delinquent contribution which
was remitted along with lost earnings to the Plan in 2015.