Michigan | 38-3423227 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
1030 W. Norton Avenue, Muskegon, MI | 49441 | |||
(Address of principal executive offices) | (Zip Code) | |||
Parts I and II
|
Portions of the 2011 annual report to shareholders.
|
Consolidated Results of Operations:
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Interest Income
|
10,833,160 | 11,984,054 | 13,284,651 | |||||||||
Interest Expense
|
3,336,766 | 5,032,743 | 6,498,815 | |||||||||
Net Interest Income
|
7,496,394 | 6,951,311 | 6,785,836 | |||||||||
Provision for loan losses
|
2,483,640 | 6,024,775 | 2,607,643 | |||||||||
Non interest income
|
1,921,431 | 1,568,780 | 1,971,444 | |||||||||
Non interest expense
|
9,505,263 | 11,388,661 | 10,993,190 | |||||||||
Loss before income tax expense
|
(2,571,078 | ) | (8,893,345 | ) | (4,843,553 | ) | ||||||
Income tax (benefit) expense
|
(103,669 | ) | (10,618 | ) | 118,826 | |||||||
Net loss
|
(2,467,409 | ) | (8,882,727 | ) | (4,962,379 | ) |
Consolidated Balance Sheet Data:
|
||||||||||||
Total assets
|
$ | 208,651,301 | $ | 237,945,497 | $ | 231,430,059 | ||||||
Cash and cash equivalents
|
8,919,568 | 23,639,873 | 2,824,088 | |||||||||
Securities
|
34,572,103 | 36,503,903 | 27,491,447 | |||||||||
Loans held for sale
|
5,534,983 | 1,263,263 | 1,070,692 | |||||||||
Gross loans
|
149,658,931 | 165,243,881 | 183,247,827 | |||||||||
Allowance for loan losses
|
5,299,454 | 4,791,907 | 3,782,132 | |||||||||
Other assets
|
15,265,170 | 16,086,484 | 20,578,138 | |||||||||
Deposits
|
191,545,236 | 219,263,177 | 198,576,609 | |||||||||
Federal funds purchased and repurchase agreements
|
7,814,745 | 7,460,795 | 7,000,327 | |||||||||
Federal Home Loan Bank advances
|
0 | 0 | 6,000,000 | |||||||||
Notes payable
|
5,000,000 | 5,000,000 | 5,000,000 | |||||||||
Subordinated debentures
|
4,500,000 | 4,500,000 | 4,500,000 | |||||||||
Other
|
1,211,702 | 875,738 | 613,132 | |||||||||
Shareholders’ equity
|
(1,420,382 | ) | 845,787 | 9,739,991 |
Consolidated Financial Ratios:
|
||||||||||||
Return on average assets
|
(1.07 | ) % | (3.57 | ) % | (1.97 | ) % | ||||||
Return on average shareholders’ equity
|
(6992.01 | ) | (109.72 | ) | (36.35 | ) | ||||||
Average equity to average assets
|
0.02 | 3.25 | 5.42 | |||||||||
Dividend payout ratio
|
N/A | N/A | N/A | |||||||||
Non performing loans to total loans and leases
|
4.50 | 4.99 | 4.69 | |||||||||
Tier 1 leverage capital ratio
|
3.79 | 4.25 | 7.79 | |||||||||
Tier 1 leverage risk-based capital ratio
|
5.12 | 5.79 | 9.15 | |||||||||
Total risk-based capital ratio
|
6.40 | 7.06 | 10.41 | |||||||||
Per Share Data:
|
||||||||||||
Net Loss:
|
||||||||||||
Basic
|
$ | (1.68 | ) | $ | (6.05 | ) | $ | (3.38 | ) | |||
Diluted
|
(1.68 | ) | (6.05 | ) | (3.38 | ) | ||||||
Book value at end of period
|
(0.97 | ) | 0.58 | 6.63 | ||||||||
Dividends declared
|
N/A | N/A | N/A | |||||||||
Weighted average shares outstanding
|
1,468,800 | 1,468,800 | 1,468,800 | |||||||||
Diluted average shares outstanding
|
1,468,800 | 1,468,800 | 1,468,800 |
Years Ended December 31:
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||||||||||||
Average
|
Interest
|
Average
|
Average
|
Interest
|
Average
|
Average
|
Interest
|
Average
|
||||||||||||||||||||||||||||
Balance
|
Yield/Rate
|
Balance
|
Yield/Rate
|
Balance
|
Yield/Rate
|
|||||||||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||||||
Federal funds sold and interest-bearing deposits with banks
|
$ | 19,459,188 | $ | 47,240 | 0.24 | % | $ | 20,301,004 | $ | 49,882 | 0.25 | % | $ | 8,883,563 | $ | 34,022 | 0.38 | % | ||||||||||||||||||
Securities1,2
|
35,734,951 | 849,725 | 2.38 | 31,926,359 | 927,582 | 2.91 | 28,101,164 | 1,095,665 | 3.90 | |||||||||||||||||||||||||||
161,885,478 | 9,985,906 | 6.17 | 177,551,516 | 11,075,774 | 6.24 | 193,354,546 | 12,297,691 | 6.36 | ||||||||||||||||||||||||||||
217,079,617 | 10,882,871 | 5.01 | 229,778,879 | 12,053,238 | 5.25 | 230,339,273 | 13,427,378 | 5.83 | ||||||||||||||||||||||||||||
Other assets
|
13,175,286 | 19,185,648 | 21,829,189 | |||||||||||||||||||||||||||||||||
$ | 230,254,903 | $ | 248,964,527 | $ | 252,168,462 | |||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity
|
||||||||||||||||||||||||||||||||||||
Interest-bearing deposits
|
$ | 173,966,362 | $ | 2,845,254 | 1.64 | % | $ | 194,013,849 | $ | 4,304,290 | 2.22 | % | $ | 193,243,953 | $ | 5,749,296 | 2.98 | % | ||||||||||||||||||
Federal funds purchased and repurchase agreements
|
9,626,384 | 73,269 | 0.76 | 8,913,430 | 75,837 | 0.85 | 7,640,761 | 59,065 | 0.77 | |||||||||||||||||||||||||||
Subordinated debentures, notes Payable and FHLB Advances
|
9,500,000 | 418,243 | 4.40 | 12,142,466 | 652,616 | 5.37 | 15,228,219 | 690,454 | 4.53 | |||||||||||||||||||||||||||
193,092,746 | 3,336,766 | 1.73 | 215,069,745 | 5,032,743 | 2.34 | 216,112,933 | 6,498,815 | 3.01 | ||||||||||||||||||||||||||||
Noninterest-bearing deposits
|
36,100,143 | 25,027,916 | 21,694,511 | |||||||||||||||||||||||||||||||||
Other liabilities
|
1,026,725 | 770,814 | 703,732 | |||||||||||||||||||||||||||||||||
Shareholders’ Equity
|
35,289 | 8,096,052 | 13,657,286 | |||||||||||||||||||||||||||||||||
$ | 230,254,903 | $ | 248,964,527 | $ | 252,168,462 | |||||||||||||||||||||||||||||||
Net interest income (tax equivalent basis)
|
7,546,105 | 7,020,495 | 6,928,563 | |||||||||||||||||||||||||||||||||
Net interest spread on earning assets (tax equivalent basis)
|
3.28 | % | 2.91 | % | 2.82 | % | ||||||||||||||||||||||||||||||
Net interest margin on earning assets (tax equivalent basis)
|
3.48 | % | 3.06 | % | 3.01 | % | ||||||||||||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities
|
112.42 | % | 106.84 | % | 106.58 | % | ||||||||||||||||||||||||||||||
Tax equivalent adjustment
|
49,711 | 69,184 | 142,727 | |||||||||||||||||||||||||||||||||
Net Interest Income
|
$ | 7,496,394 | $ | 6,951,311 | $ | 6,785,836 |
Year ended December 31, 2011 over 2010
|
Year ended December 31, 2010 over 2009
|
|||||||||||||||||||||||
Total
|
Volume
|
Rate
|
Total
|
Volume
|
Rate
|
|||||||||||||||||||
Increase (decrease) in interest income
|
||||||||||||||||||||||||
Federal funds sold and interest-
bearing deposits with banks
|
(2,642 | ) | (2,049 | ) | (593 | ) | 15,860 | 31,472 | (15,612 | ) | ||||||||||||||
Securities1,2
|
(77,857 | ) | 102,689 | (180,546 | ) | (168,083 | ) | 135,911 | (303,994 | ) | ||||||||||||||
Loans3
|
(1,089,868 | ) | (967,582 | ) | (122,286 | ) | (1,221,917 | ) | (989,474 | ) | (232,443 | ) | ||||||||||||
Net change in interest income
|
(1,170,367 | ) | (866,942 | ) | (303,425 | ) | (1,374,140 | ) | (822,091 | ) | (552,049 | ) | ||||||||||||
Increase (decrease) in interest expense
|
||||||||||||||||||||||||
Interest-bearing deposits
|
(1,459,036 | ) | (299,251 | ) | (1,159,785 | ) | (1,445,006 | ) | (98,756 | ) | (1,346,250 | ) | ||||||||||||
Federal funds purchased and
repurchase agreements
|
(2,568 | ) | 5,790 | (8,358 | ) | 16,772 | 10,455 | 6,317 | ||||||||||||||||
Subordinated debentures, notes
payable and FHLB advances
|
(234,373 | ) | (127,995 | ) | (106,378 | ) | (37,838 | ) | (153,455 | ) | 115,617 | |||||||||||||
Net change in interest expense
|
(1,695,977 | ) | (421,456 | ) | (1,274,521 | ) | (1,466,072 | ) | (241,756 | ) | (1,224,316 | ) | ||||||||||||
Net change in net interest income
|
525,610 | (445,486 | ) | 971,096 | 91,932 | (580,335 | ) | 672,267 |
Balance at
|
Balance at
|
Balance at
|
||||||||||
December 31, 2011
|
December 31, 2010
|
December 31, 2009
|
||||||||||
US Treasury
|
$ | 4,067,656 | $ | 1,011,094 | $ | 0 | ||||||
U.S. Government and federal agency
|
15,572,588 | 16,908,716 | 14,495,407 | |||||||||
Municipals
|
2,891,420 | 3,238,294 | 7,018,707 | |||||||||
Mortgage-backed and collateralized mortgage obligations– residential
|
12,040,439 | 15,345,799 | 5,977,333 | |||||||||
$ | 34,572,103 | $ | 36,503,903 | $ | 27,491,447 |
2011
|
One Yr or Less
|
1 - 5 Years
|
Over 5 Years
|
Total
|
||||||||||||
US Treasury
|
$ | 2,013,515 | $ | 2,054,141 | $ | 0 | $ | 4,067,656 | ||||||||
U.S. Government and federal agency
|
2,048,589 | 13,523,999 | 0 | 15,572,588 | ||||||||||||
Municipals
|
503,455 | 533,595 | 1,854,370 | 2,891,420 | ||||||||||||
Mortgage-backed and collateralized mortgage obligations– residential
|
0 | 253,089 | 11,787,350 | 12,040,439 | ||||||||||||
$ | 4,565,559 | $ | 16,364,824 | $ | 13,641,720 | $ | 34,572,103 | |||||||||
Weighted Average Yield
|
1.46 | % | 1.69 | % | 2.91 | % | 2.13 | % |
Issuer
|
Book Value
|
Market Value
|
FNMA
|
2,974,649
|
3,175,175
|
FHLMC
|
1,903,165
|
1,974,056
|
FHLB
|
5,102,541
|
5,191,162
|
FFCB
|
5,583,519
|
5,658,397
|
GNMA
|
7,379,334
|
7,457,992
|
FAMCA | 3,581,628 | 3,596,303 |
US Treasury Note | 4,041,881 | 4,067,656 |
December 31, 2011
|
December 31, 2010
|
December 31, 2009
|
December 31, 2008
|
December 31, 2007
|
||||||||||||||||||||||||||||||||||||
Balance
|
%
|
Balance
|
%
|
Balance
|
%
|
Balance
|
%
|
Balance
|
%
|
|||||||||||||||||||||||||||||||
Commercial
|
$ | 53,168,129 | 35.5 | $ | 58,829,236 | 35.7 | $ | 69,862,430 | 38.1 | $ | 76,623,763 | 37.4 | $ | 86,543,187 | 37.6 | |||||||||||||||||||||||||
Real estate – Commercial
|
63,272,641 | 42.3 | 67,317,571 | 40.7 | 70,504,399 | 38.5 | 81,257,794 | 39.6 | 92,048,614 | 40.0 | ||||||||||||||||||||||||||||||
Real estate – Residential
|
16,942,989 | 11.3 | 18,213,954 | 11.0 | 18,625,574 | 10.2 | 16,275,219 | 7.9 | 15,842,205 | 6.9 | ||||||||||||||||||||||||||||||
Real estate – Construction
|
0 | 0.0 | 1,320,750 | 0.8 | 1,518,378 | 0.8 | 3,850,176 | 1.9 | 6,264,591 | 2.7 | ||||||||||||||||||||||||||||||
Consumer
|
16,275,172 | 10.9 | 19,562,370 | 11.8 | 22,737,046 | 12.4 | 27,146,251 | 13.2 | 29,520,823 | 12.8 | ||||||||||||||||||||||||||||||
149,658,931 | 100.0 | 165,243,881 | 100.0 | 183,247,827 | 100.0 | 205,153,203 | 100.0 | 230,219,420 | 100.0 | |||||||||||||||||||||||||||||||
Less allowance for loan
losses
|
5,299,454 | 4,791,907 | 3,782,132 | 4,350,903 | 3,602,948 | |||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
$ | 144,359,477 | $ | 160,451,974 | $ | 179,465,695 | $ | 200,802,300 | $ | 226,616,472 |
December 31,
|
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||||||
Loans on nonaccrual status
|
$ | 3,245,000 | $ | 7,573,000 | $ | 7,649,000 | $ | 5,780,000 | $ | 4,532,000 | ||||||||||
Loans 90 days or more past due and accruing interest
|
26,000 | 2,000 | 982,000 | 80,000 | 1,485,000 | |||||||||||||||
Troubled debt restructuring
|
9,037,000 | 1 | 5,371,000 | 2 | 2,658,000 | 3 | 0 | 0 | ||||||||||||
$ | 12,308,000 | $ | 12,946,000 | $ | 11,289,000 | $ | 5,860,000 | $ | 6,017,000 |
2011
|
||||
Average of impaired loans during the year
|
$ | 14,478,463 | ||
Interest income recognized during impairment
|
299,173 | |||
Cash-basis interest income recognized
|
248,814 |
12/31/2011
|
12/31/2010
|
12/31/2009
|
12/31/2008
|
12/31/2007
|
||||||||||||||||
Beginning Balance
|
$ | 4,791,907 | $ | 3,782,132 | $ | 4,350,903 | $ | 3,602,948 | $ | 2,549,016 | ||||||||||
Charge-offs
|
||||||||||||||||||||
Commercial
|
(541,494 | ) | (1,126,177 | ) | (2,392,214 | ) | (530,211 | ) | (647,238 | ) | ||||||||||
Real Estate - Commercial
|
(1,294,273 | ) | (3,028,701 | ) | (449,975 | ) | (277,663 | ) | (85,039 | ) | ||||||||||
Real Estate - Residential
|
(77,060 | ) | (166,213 | ) | 0 | (52,453 | ) | 0 | ||||||||||||
Real Estate - Construction
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Consumer
|
(248,953 | ) | (769,047 | ) | (386,378 | ) | (400,524 | ) | (188,707 | ) | ||||||||||
(2,161,780 | ) | (5,090,138 | ) | (3,228,567 | ) | (1,260,851 | ) | (920,984 | ) | |||||||||||
Recoveries
|
||||||||||||||||||||
Commercial
|
91,000 | 31,868 | 29,378 | 30,293 | 8,862 | |||||||||||||||
Real Estate - Commercial
|
49,486 | 317 | 150 | 0 | 0 | |||||||||||||||
Real Estate - Residential
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Real Estate - Construction
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Consumer
|
45,201 | 42,953 | 22,625 | 34,537 | 34,091 | |||||||||||||||
185,687 | 75,138 | 52,153 | 64,830 | 42,953 | ||||||||||||||||
Net Charge-offs
|
(1,976,093 | ) | (5,015,000 | ) | (3,176,414 | ) | (1,196,021 | ) | (878,031 | ) | ||||||||||
Provision charged against operating expense
|
2,483,640 | 6,024,775 | 2,607,643 | 1,943,976 | 1,931,963 | |||||||||||||||
Ending Balance
|
$ | 5,299,454 | $ | 4,791,907 | $ | 3,782,132 | $ | 4,350,903 | $ | 3,602,948 |
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||||||||||||||||||||||
Amount
|
% of
Loans in |
Amount
|
% of
Loans in |
Amount
|
% of
Loans in |
Amount
|
% of
Loans in |
Amount
|
% of
Loans in |
|||||||||||||||||||||||||||||||
Balance at End of Period
|
||||||||||||||||||||||||||||||||||||||||
Applicable To:
|
||||||||||||||||||||||||||||||||||||||||
Commercial
|
$ | 2,197,755 | 35.5 | % | $ | 1,218,865 | 35.7 | % | $ | 1,529,470 | 38.1 | % | $ | 2,640,269 | 37.4 | % | $ | 1,687,805 | 37.6 | % | ||||||||||||||||||||
Real estate – Commercial
|
2,498,310 | 42.3 | 2,896,177 | 40.7 | 1,828,022 | 38.5 | 1,237,913 | 39.6 | 1,331,132 | 40.0 | ||||||||||||||||||||||||||||||
Real estate – Residential
|
193,388 | 11.3 | 123,391 | 11.0 | 91,532 | 10.2 | 104,033 | 7.9 | 129,906 | 6.9 | ||||||||||||||||||||||||||||||
Real estate – Construction
|
0 | 0.0 | 6,872 | 0.8 | 17,461 | 0.8 | 49,667 | 1.9 | 89,672 | 2.7 | ||||||||||||||||||||||||||||||
Consumer
|
410,001 | 10.9 | 546,602 | 11.8 | 315,647 | 12.4 | 319,021 | 13.2 | 364,433 | 12.8 | ||||||||||||||||||||||||||||||
Unallocated
|
0 | 0.0 | 0 | 0.0 | 0 | 0.0 | 0 | 0.0 | 0 | 0.0 | ||||||||||||||||||||||||||||||
Total
|
$ | 5,299,454 | 100.0 | % | $ | 4,791,907 | 100.0 | % | $ | 3,782,132 | 100.0 | % | $ | 4,350,903 | 100.0 | % | $ | 3,602,948 | 100.0 | % |
Average
Balance |
Average
Rate |
Average
Balance |
Average
Rate |
Average
Balance |
Average
Rate |
|||||||||||||||||||
Non Interest Bearing Demand
|
$ | 36,100,143 | N/A | $ | 25,027,916 | N/A | $ | 21,694,511 | N/A | |||||||||||||||
Interest Bearing Demand
|
39,751,169 | 0.42 | % | 52,187,867 | 0.39 | % | 47,097,872 | 1.49 | % | |||||||||||||||
Savings
|
9,895,229 | 0.32 | 8,819,475 | 0.31 | 9,964,155 | 1.51 | ||||||||||||||||||
Time Deposits
|
124,319,964 | 2.13 | 133,006,507 | 3.06 | 136,181,926 | 4.63 | ||||||||||||||||||
Total
|
$ | 210,066,505 | 1.64 | % | $ | 219,041,765 | 2.22 | % | $ | 214,938,464 | 3.83 | % |
Within Three
Months |
Over Three
Through Six |
Over Six
Through |
Over
Twelve |
Total
|
||||||||||||||||
Time Deposits > $100,000
|
$ | 5,238,252 | $ | 6,209,801 | $ | 3,392,981 | $ | 1,832,185 | $ | 16,673,219 |
Repurchase
Agreements |
Borrowings
from FRB |
Borrowings
from FHLB |
||||||||||
Outstanding at December 31, 2011
|
$ | 7,814,745 | $ | 0 | $ | 0 | ||||||
Average interest rate at year end
|
0.71 | % | 0.00 | % | 0.00 | % | ||||||
Average balance during year
|
9,626,125 | 0 | 260 | |||||||||
Average interest rate during year
|
0.76 | % | 0.00 | % | 0.45 | % | ||||||
Maximum month end balance during year
|
11,986,254 | 0 | 0 | |||||||||
Outstanding at December 31, 2010
|
$ | 7,460,795 | $ | 0 | $ | 0 | ||||||
Average interest rate at year end
|
0.72 | % | 0.00 | % | 0.00 | % | ||||||
Average balance during year
|
8,598,005 | 315,425 | 0 | |||||||||
Average interest rate during year
|
0.86 | % | 0.50 | % | 0.00 | % | ||||||
Maximum month end balance during year
|
10,132,049 | 0 | 0 | |||||||||
Outstanding at December 31, 2009
|
$ | 7,000,327 | $ | 0 | $ | 0 | ||||||
Average interest rate at year end
|
0.66 | % | 0.00 | % | 0.00 | % | ||||||
Average balance during year
|
7,489,802 | 150,959 | 0 | |||||||||
Average interest rate during year
|
0.78 | % | 0.50 | % | 0.00 | % | ||||||
Maximum month end balance during year
|
10,393,960 | 2,120,000 | 0 |
/s/ Heather D. Brolick | |
Heather D. Brolick
President and Chief Executive Officer
|
|
/s/ Tracey A. Welsh | |
Tracey A. Welsh
Senior Vice President, Chief Financial Officer and
Treasurer
|
Name, Age, and Position with
the Company and the Bank
|
Has Served As
Director Since
|
Year When Term
As a Director Expires
|
Class I Directors
|
||
Gary F. Bogner, 69, Director,
Non-officer Chairman of the Boards of
the Company and the Bank
|
1998
|
2014
|
Robert L. Chandonnet, 67, Director, Non-officer Vice Chairman
of the Boards of the Company and the Bank
|
1998
|
2014
|
Class II Directors
|
||
Steven P. Moreland, 55, Director
|
2006
|
2012
|
Julie K. Greene, 53, Director
|
2011
|
2012
|
Class III Directors
|
||
Heather D. Brolick, 52, Director,
President and Chief Executive Officer
of the Company and the Bank
|
2006
|
2013
|
Bruce J. Essex, 62, Director
|
1998
|
2013
|
Executive Officers (Who Are Not Also Directors)
|
||
Tracey A. Welsh, 46, Senior Vice President,
Chief Financial Officer and Treasurer
of the Company and the Bank
|
||
John M. Clark, 50, Senior Vice President and Secretary of
the Company, Senior Vice President, Commercial
Loan Department Head and Secretary of the Bank
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock Awards
($)
|
Option Awards
($)
|
Non Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation Earnings
($)
|
All Other Compensation
($) (1)
|
Total
($)
|
|||||||||||||||||||||||||||
Heather D. Brolick
|
2011
|
195,300 |
0
|
0 | 0 | 0 | 0 | 942 | 196,242 | |||||||||||||||||||||||||||
President and, Chief Executive
Officer of the Company and
the Bank
|
2010
|
195,300
|
0
|
0
|
0
|
0
|
0
|
944
|
196,244
|
|||||||||||||||||||||||||||
John M. Clark
|
2011 | 115,000 | 0 | 0 | 0 | 0 | 0 | 499 | 115,499 | |||||||||||||||||||||||||||
Vice President and Secretary of
the Company, Senior Vice
President and, Commercial
Loan Department Head of
the Bank
|
2010
|
106,554
|
304
|
106,858
|
||||||||||||||||||||||||||||||||
Tracey A. Welsh
|
2011 | 129,300 | 0 | 0 | 0 | 0 | 0 | 377 | 129,677 | |||||||||||||||||||||||||||
Senior Vice President, Chief
Financial Officer and Treasurer
of the Company, Senior Vice
President and Chief Financial
Officer of the Bank
|
2010
|
129,300
|
0
|
0
|
0
|
0
|
0
|
252
|
129,552
|
(1)
|
Consists of the matching contribution made by the Bank to the named executive officer’s 401(k) plan account, group term life insurance premiums paid by the Bank on behalf of the named executive officers and nominal product sales referral incentive.
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(1)
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
|
Market
Value of
Shares
or Units
of Stock
That Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
|
||||||||||||||||||||||||
Heather D. Brolick
|
10,000 | 0 | 0 | 10.00 |
7/30/12
|
0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Tracey A. Welsh
|
7,500 | 0 | 0 | 10.00 |
9/24/12
|
0 | 0 | 0 | 0 | ||||||||||||||||||||||||
John M. Clark
|
0 | 0 | 0 | 0 | N/A | 0 | 0 | 0 | 0 |
(1)
|
The options for 10,000 shares granted to Ms. Brolick vested in four installments over a three year period at the rate of 2,500 shares per year, commencing on the July 31, 2002 grant date. The option for 7,500 shares granted to Ms. Welsh vested in four installments over a three year period at the rate of 1,875 shares per year, commencing on the July 31, 2002 grant date.
|
Name (1)
|
Fees
Earned
or Paid
in Cash
($)
|
Stock
Awards
($)
|
Option
Awards (2)
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||
Gary F. Bogner
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Robert L. Chandonnet
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Bruce J. Essex
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Steven P. Moreland
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Julie K. Greene
|
0 | 0 | 0 | 0 | 0 | 0 | 0 |
(1)
|
Our President and Chief Executive Officer, Ms. Brolick, who is also a director, has been omitted from this table because she received no special compensation for serving on our Board of Directors. Her compensation is included in the Summary Compensation Table.
|
(2)
|
No option awards were made to our directors during 2011. As of December 31, 2011, our current directors held the following option awards to acquire our common stock: Messrs. Bogner, Chandonnet, and Essex two option awards each, covering for each an aggregate of 4,000 shares; Mr. Moreland and Ms. Greene did not hold any option awards as of December 31, 2011.
|
Name and Address of Beneficial Owner
|
Amount
Beneficially
Owned
|
Percent of Class
Beneficially
Owned
|
||||||
Gordon H. Girod Trust and its trustees,
Norma J. Girod, Stephen J. Girod
and Gerald J. Girod
3677 Lakeshore Drive North
Holland, Michigan 49424 (1)
|
100,000 | 6.8 | % | |||||
Bruce J. Essex
1985 E. Laketon Avenue
Muskegon, Michigan 49442 (2)
|
81,362 | 5.5 | % | |||||
Steven R. Bolhuis, Sr.
1241 Keating Avenue
Muskegon, Michigan 49443 (3)
|
75,000 | 5.1 | % |
(1)
|
This information is based on a Schedule 13G filed by the Gordon H. Girod Trust and its trustees, Norma J. Girod, Stephen J. Girod and Gerald J. Girod, and subsequently confirmed by one of the trustees. The Schedule 13G discloses that the trust has sole voting and dispositive power for these 100,000 shares, and that each of the trustees has shared voting and dispositive power for these 100,000 shares. The Schedule 13G discloses the address set forth in the table for the trust and Mr. Gerald Girod, for Mrs. Norma Girod, 2207 Lanco Drive N.W., Grand Rapids, Michigan 49504, and for Mr. Stephen Girod, 673 Lakeside Drive, Macatawa, Michigan 49434.
|
(2)
|
This information is based on a Schedule 13G filed by Bruce J. Essex, who is a member of our Board of Directors, on February 16, 2010, and subsequently confirmed with Mr. Essex. The Schedule 13G discloses that Mr. Essex has sole voting and dispositive power for 23,595 of these shares, and shared voting and dispositive power for 57,767 of these shares.
|
(3)
|
This information is based upon information provided by Mr. Bolhuis. Mr. Bolhuis has advised that he has sole voting and dispositive power for these shares.
|
Name of Beneficial Owner
|
Amount Beneficially
Owned (1)
|
Percent of Class
Beneficially Owned (6)
|
||||||
Gary F. Bogner•
|
64,130 | 4.4 | % | |||||
Heather D. Brolick•
|
21,910 | (2) | 1.5 | % | ||||
Robert L. Chandonnet•
|
67,630 | 4.6 | % | |||||
Bruce J. Essex•
|
81,362 | (3) | 5.5 | % | ||||
Julie K. Greene•
|
0 | * | ||||||
Steven P. Moreland•
|
0 | * | ||||||
John M. Clark
|
0 | * | ||||||
Tracey A. Welsh
|
13,421 | (4) | * | |||||
All directors and executive officers as a group
|
248,453 | (5) | 16.6 | % | ||||
(8 persons)
|
•
|
Member of our Board of Directors.
|
*
|
Less than one percent.
|
(1)
|
The number of shares beneficially owned includes any shares over which the person has sole or shared voting power or investment power and also any shares that the person can acquire within 60 days of February 13, 2012 through the exercise of any stock options or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) over the shares set forth in the table. For each person, the number of shares included in the table because the person has options to acquire the shares is set forth below.
|
Name
|
Shares
|
Name
|
Shares
|
Name
|
Shares
|
|||||||||
Mr. Bogner
|
4,000 |
Mr. Clark
|
0 |
Mr. Moreland
|
0 | |||||||||
Ms. Brolick
|
10,000 |
Mr. Essex
|
4,000 |
Ms. Welsh
|
7,500 | |||||||||
Mr. Chandonnet
|
4,000 |
Ms. Greene
|
0 |
(2)
|
Includes 9,410 shares that Ms. Brolick owns under the Bank’s 401(k) plan.
|
(3)
|
Includes 6,250 shares owned by Port City Die Cast, a corporation solely owned by Mr. Essex, and 767 shares owned by Mr. Essex’s spouse.
|
(4)
|
Includes 5,811 shares that Ms. Welsh owns under the Bank’s 401(k) plan.
|
(5)
|
Includes 29,500 shares that such persons have the right to acquire within 60 days of February 13, 2012 pursuant to our 1998 Employee Stock Option Plan or Director Stock Option Plans, and 15,221 shares that such persons own under the Bank’s 401(k) plan.
|
(6)
|
The percentages shown are based on the 1,468,800 shares of our common stock outstanding as of February 13, 2012, plus the number of shares that the named person or group has the right to acquire within 60 days of February 13, 2012. For purposes of computing the percentage of outstanding shares of common stock held by each person or group, any shares that the person or group has the right to acquire within 60 days after February 13, 2012 are deemed to be outstanding with respect to such person or group but are not deemed to be outstanding for the purpose of computing the percentage of ownership of any other person or group.
|
Plan Category
|
Number of securities
to be issued upon |
Weighted average
exercise price of |
Number of securities
remaining
available for future issuance
under equity compensation |
|||||||||
(a)
|
(b)
|
(c)
|
||||||||||
Equity compensation
plans approved by
security holders (1)
|
42,800 | $ | 10.69 | 115,000(2) | ||||||||
Equity compensation
plans not approved by
security holders
|
- | - | - | |||||||||
Total
|
42,800 | $ | 10.69 | 115,000(2) |
(1)
|
The plans referred to are the Company's Employee Stock Option Plans of 1998 and 2005 and the Director Stock Option Plans of 2003 and 2005.
|
(2)
|
Includes 60,000 shares of restricted stock available for issuance pursuant to the Company’s Executive Incentive Plan.
|
2011
|
2010
|
|||||||
Audit Fees (1)
|
$ | 75,500 | $ | 73,000 | ||||
Audit-Related Fees (2)
|
400 | 9,060 | ||||||
Tax Fees (3)
|
400 | 2,900 | ||||||
All Other Fees (4)
|
195 | 785 |
(1)
|
Includes the aggregate fees billed for professional services rendered by Crowe Horwath LLP for 2011 and 2010 for the audit of the Company’s annual financial statements and review of financial statements included in the quarterly reports on Form 10-Q.
|
(2)
|
Includes additional fees billed for consultation regarding other real estate owned for 2011 and review of impaired loans, allowance for loan losses, other real estate owned and regulatory matters for 2010.
|
(3)
|
Principally tax compliance services for 2011 and 2010.
|
(4)
|
Compensation survey for 2011 and principally deferred tax asset valuation review services for 2010.
|
EXHIBIT NO.
|
EXHIBIT DESCRIPTION
|
3.1
|
Articles of Incorporation are incorporated by reference to exhibit 3.1 of the Company’s June 30, 2004 Form 10-QSB (SEC file no. 333-63769).
|
3.2
|
Bylaws of the Company are incorporated by reference to exhibit 3(ii) of the Company’s 8-K filed July 5, 2006 (SEC file no. 000-51166).
|
4.1
|
Second Amendment to Loan Agreement between the Company and Fifth Third Bank dated December 18, 2009, and Promissory Note dated December 18, 2009 payable to Fifth Third Bank are included as exhibit 10.19 to this report.
|
10.1
|
1998 Employee Stock Option Plan is incorporated by reference to exhibit 10.1 of the Company’s Registration Statement on Form SB-2 (SEC file no. 333-63769), which became effective on December 17, 1998. *
|
10.2
|
First Amendment to 1998 Employee Stock Option Plan is incorporated by reference to exhibit 10.3 of the Company’s Registration Statement on Form SB-2 (SEC file no. 333-63769), which became effective on December 17, 1998. *
|
10.3
|
Director Stock Option Plan is incorporated by reference to exhibit 10.53 of the Company’s December 31, 2003 Form 10-KSB (SEC file no. 333-63769). *
|
10.4
|
Agreement between Fiserv Solutions, Inc. and Community Shores Bank is incorporated by reference to exhibit 10.4 of the Company’s Registration Statement on Form SB-2 (SEC file no. 333-63769) which became effective on December 17, 1998.
|
10.5
|
Junior Subordinated Indenture between Community Shores Bank Corporation and Deutsche Bank Trust Company Americas, as Trustee dated as of December 17, 2004 is incorporated by reference to exhibit 10.20 of the Company’s December 31, 2004 Form 10-KSB (SEC file no. 000-51166).
|
10.6
|
Amended and Restated Trust Agreement among Community Shores Bank Corporation, as Depositor, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, as Delaware Trustee, and The Administrative Trustees Named Herein as Administrative Trustees dated as of December 17, 2004 is incorporated by reference to exhibit 10.21 of the Company’s December 31, 2004 Form 10-KSB (SEC file no. 000-51166).
|
10.7
|
Guarantee Agreement between Community Shores Bank Corporation, as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee dated as of December 17, 2004 is incorporated by reference to exhibit 10.22 of the Company’s December 31, 2004 Form 10-KSB (SEC file no. 000-51166).
|
10.8
|
Placement Agreement among Community Shores Bank Corporation, Community Shores Capital Trust I and Suntrust Capital Markets, Inc. dated as of December 17, 2004 is incorporated by reference to exhibit 10.23 of the Company’s December 31, 2004 Form 10-KSB (SEC file no. 000-51166).
|
10.9
|
2005 Employee Stock Option Plan is incorporated by reference to Appendix A of the Company’s proxy statement for its May 12, 2005 annual meeting of shareholders (SEC file no. 000-51166).*
|
10.10
|
2005 Director Stock Option Plan is incorporated by reference to Appendix B of the Company’s proxy statement for its May 12, 2005 annual meeting of shareholders (SEC file no. 000-51166).*
|
10.11
|
Form of stock option agreement for options granted under the 2005 Employee Stock Option Plan is incorporated by reference to exhibit 10.3 of the Company’s Form 8-K filed May 17, 2005 (SEC file no. 000-51166).*
|
10.12
|
Form of stock option agreement for options granted to directors under the 2005 Director Stock Option Plan is incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed December 13, 2005 (SEC file no. 000-51166).*
|
10.13
|
Extension to the agreement between Fiserv Solutions, Inc. and Community Shores Bank is incorporated by reference to exhibit 10.2 of the Company’s Form 8-K filed July 7, 2006 (SEC file no. 000-51166).
|
10.14
|
Community Shores Bank Corporation Executive Incentive Plan is incorporated by reference to Appendix A of the Company’s proxy statement for its May 10, 2007 annual meeting of shareholders that was filed April 5, 2007 (SEC file no. 000-51166)*.
|
10.15
|
Summary of Director Compensation Arrangement. *
|
10.16
|
Loan Agreement between Community Shores Bank Corporation and Fifth Third Bank dated September 7, 2007 is incorporated by reference to exhibit 10.1 of the Company’s September 30, 2007 Form 10-QSB (SEC file no. 000-51166).
|
10.17
|
Amendment to Loan Agreement, Revolving Credit Note and Pledge Agreement between Community Shores Bank Corporation and Fifth Third Bank dated September 16, 2008 are incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed September 23, 2008 (SEC file number 000-51166).
|
10.18
|
Extension notice from Fifth Third Bank dated September 22, 2009 relating to line of credit is incorporated by reference to exhibit 10.1 of the Company's September 30, 2009 Form 10-Q (SEC file no. 000-51166).
|
10.19
|
Second Amendment to Loan Agreement between the Company and Fifth Third Bank dated December 18, 2009, and Promissory Note dated December 18, 2009 payable to Fifth Third Bank are incorporated by reference to exhibit 4.1 of the Company's Form 8-K filed December 22, 2009 (SEC file no. 000-51166).
|
10.20
|
Consent Order issued and effective September 2, 2010 is incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed September 9, 2010 (SEC file number 000-51166).
|
10.21
|
Stipulation to the Issuance of a Consent Order is incorporated by reference to exhibit 10.2 of the Company’s Form 8-K filed September 9, 2010 (SEC file number 000-51166).
|
10.22
|
Written Agreement dated December 16, 2010, effective December 16, 2010, by and between Community Shores Bank Corporation and the Federal Reserve Bank of Chicago is incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed December 21, 2010 (SEC file no. 000-51166).
|
10.23
|
Purchase Agreement entered into effective May 18, 2011, between Community Shores Bank, as Seller, and Velmeir Acquisition Services, LLC as Buyer, relating to vacant land in the County of Muskegon, is incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed May 24, 2011 (SEC file no. 000-51166).
|
13
|
2011 Annual Report to Shareholders of the Company. Except for the portions of the 2011 Annual Report that are expressly incorporated by reference in this Annual Report on Form 10-K, the 2011 Annual Report of the Company shall not be deemed filed as a part of this Annual Report on Form 10-K.
|
14
|
Code of Ethics is incorporated by reference to exhibit 14 of the Company's Form 8-K filed January 22, 2010 (SEC file no. 000-51166).
|
21
|
Subsidiaries of the registrant.
|
23
|
Consent of Independent Registered Public Accounting Firm.
|
31.1
|
Rule 13a-14(a) Certification of the principal executive officer.
|
31.2
|
Rule 13a-14(a) Certification of the principal financial officer.
|
32.1
|
Section 1350 Certification of the Chief Executive Officer.
|
32.2
|
Section 1350 Certification of the Chief Financial Officer.
|
101
|
The following financial information from the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Changes in Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements*
|
COMMUNITY SHORES BANK CORPORATION
|
|
/s/ Heather D. Brolick | |
Heather D. Brolick
President and Chief Executive Officer
|
/s/ Gary F. Bogner | /s/ Julie K. Greene | |
Gary F. Bogner, Chairman of the Board
(non-officer)
|
Julie K. Greene, Director
|
|
/s/ Heather D. Brolick | /s/ Steven P. Moreland | |
Heather D. Brolick, President, Chief Executive
Officer and Director (principal executive officer)
|
Steven P. Moreland, Director
|
|
/s/ Robert L. Chandonnet | /s/ Tracey A. Welsh | |
Robert L. Chandonnet, Vice Chairman of the Board
(non-officer)
|
Tracey A. Welsh, Senior Vice President, Chief
Financial Officer and Treasurer (principal financial
and accounting officer)
|
|
/s/ Bruce J. Essex | ||
Bruce J. Essex , Director
|
EXHIBIT NO.
|
EXHIBIT DESCRIPTION
|
3.1
|
Articles of Incorporation are incorporated by reference to exhibit 3.1 of the Company’s June 30, 2004 Form 10-QSB (SEC file no. 333-63769).
|
3.2
|
Bylaws of the Company are incorporated by reference to exhibit 3(ii) of the Company’s 8-K filed July 5, 2006 (SEC file no. 000-5166).
|
4.1
|
Second Amendment to Loan Agreement between the Company and Fifth Third Bank dated December 18, 2009, and Promissory Note dated December 18, 2009 payable to Fifth Third Bank are included as exhibit 10.19 to this report.
|
10.1
|
1998 Employee Stock Option Plan is incorporated by reference to exhibit 10.1 of the Company’s Registration Statement on Form SB-2 (SEC file no. 333-63769), which became effective on December 17, 1998. *
|
10.2
|
First Amendment to 1998 Employee Stock Option Plan is incorporated by reference to exhibit 10.3 of the Company’s Registration Statement on Form SB-2 (SEC file no. 333-63769), which became effective on December 17, 1998. *
|
10.3
|
Director Stock Option Plan is incorporated by reference to exhibit 10.53 of the Company’s December 31, 2003 Form 10-KSB (SEC file no. 333-63769). *
|
10.4
|
Agreement between Fiserv Solutions, Inc. and Community Shores Bank is incorporated by reference to exhibit 10.4 of the Company’s Registration Statement on Form SB-2 (SEC file no. 333-63769) which became effective on December 17, 1998.
|
10.5
|
Junior Subordinated Indenture between Community Shores Bank Corporation and Deutsche Bank Trust Company Americas, as Trustee dated as of December 17, 2004 is incorporated by reference to exhibit 10.20 of the Company’s December 31, 2004 Form 10-KSB (SEC file no. 000-51166).
|
10.6
|
Amended and Restated Trust Agreement among Community Shores Bank Corporation, as Depositor, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, as Delaware Trustee, and The Administrative Trustees Named Herein as Administrative Trustees dated as of December 17, 2004 is incorporated by reference to exhibit 10.21 of the Company’s December 31, 2004 Form 10-KSB (SEC file no. 000-51166).
|
10.7
|
Guarantee Agreement between Community Shores Bank Corporation, as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee dated as of December 17, 2004 is incorporated by reference to exhibit 10.22 of the Company’s December 31, 2004 Form 10-KSB (SEC file no. 000-51166).
|
10.8
|
Placement Agreement among Community Shores Bank Corporation, Community Shores Capital Trust I and Suntrust Capital Markets, Inc. dated as of December 17, 2004 is incorporated by reference to exhibit 10.23 of the Company’s December 31, 2004 Form 10-KSB (SEC file no. 000-51166).
|
10.9
|
2005 Employee Stock Option Plan is incorporated by reference to Appendix A of the Company’s proxy statement for its May 12, 2005 annual meeting of shareholders (SEC file no. 000-51166).*
|
10.10
|
2005 Director Stock Option Plan is incorporated by reference to Appendix B of the Company’s proxy statement for its May 12, 2005 annual meeting of shareholders (SEC file no. 000-51166).*
|
10.11
|
Form of stock option agreement for options granted under the 2005 Employee Stock Option Plan is incorporated by reference to exhibit 10.3 of the Company’s Form 8-K filed May 17, 2005 (SEC file no. 000-51166).*
|
10.12
|
Form of stock option agreement for options granted to directors under the 2005 Director Stock Option Plan is incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed December 13, 2005 (SEC file no. 000-51166).*
|
10.13
|
Extension to the agreement between Fiserv Solutions, Inc. and Community Shores Bank is incorporated by reference to exhibit 10.2 of the Company’s Form 8-K filed July 7, 2006 (SEC file no. 000-51166).
|
10.14
|
Community Shores Bank Corporation Executive Incentive Plan is incorporated by reference to Appendix A of the Company’s proxy statement for its May 10, 2007 annual meeting of shareholders that was filed April 5, 2007 (SEC file no. 000-51166)*.
|
10.15
|
Summary of Director Compensation Arrangement. *
|
10.16
|
Loan Agreement between Community Shores Bank Corporation and Fifth Third Bank dated September 7, 2007 is incorporated by reference to exhibit 10.1 of the Company’s September 30, 2007 Form 10-QSB (SEC file no. 000-51166).
|
10.17
|
Amendment to Loan Agreement, Revolving Credit Note and Pledge Agreement between Community Shores Bank Corporation and Fifth Third Bank dated September 16, 2008 are incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed September 23, 2008 (SEC file number 000-51166).
|
10.18
|
Extension notice from Fifth Third Bank dated September 22, 2009 relating to line of credit is incorporated by reference to exhibit 10.1 of the Company's September 30, 2009 Form 10-Q (SEC file no. 000-51166).
|
10.19
|
Second Amendment to Loan Agreement between the Company and Fifth Third Bank dated December 18, 2009, and Promissory Note dated December 18, 2009 payable to Fifth Third Bank are incorporated by reference to exhibit 4.1 of the Company's Form 8-K filed December 22, 2009 (SEC file no. 000-51166).
|
10.20
|
Consent Order issued and effective September 2, 2010 is incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed September 9, 2010 (SEC file number 000-51166).
|
10.21
|
Stipulation to the Issuance of a Consent Order is incorporated by reference to exhibit 10.2 of the Company’s Form 8-K filed September 9, 2010 (SEC file number 000-51166).
|
10.22
|
Written Agreement dated December 16, 2010, effective December 16, 2010, by and between Community Shores Bank Corporation and the Federal Reserve Bank of Chicago is incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed December 21, 2010 (SEC file no. 000-51166).
|
10.23
|
Purchase Agreement entered into effective May 18, 2011, between Community Shores Bank, as Seller, and Velmeir Acquisition Services, LLC as Buyer, relating to vacant land in the County of Muskegon, is incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed May 24, 2011 (SEC file no. 000-51166).
|
13
|
2011 Annual Report to Shareholders of the Company. Except for the portions of the 2011 Annual Report that are expressly incorporated by reference in this Annual Report on Form 10-K, the 2011 Annual Report of the Company shall not be deemed filed as a part of this Annual Report on Form 10-K.
|
14
|
Code of Ethics is incorporated by reference to exhibit 14 of the Company's Form 8-K filed January 22, 2010 (SEC file no. 000-51166).
|
21
|
Subsidiaries of the registrant.
|
23
|
Consent of Independent Registered Public Accounting Firm.
|
31.1
|
Rule 13a-14(a) Certification of the principal executive officer.
|
31.2
|
Rule 13a-14(a) Certification of the principal financial officer.
|
32.1
|
Section 1350 Certification of the Chief Executive Officer.
|
32.2
|
Section 1350 Certification of the Chief Financial Officer.
|
101
|
The following financial information from the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Changes in Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements*
|
Selected Financial Information
|
||||||||||||
At or For the Year-Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||
(dollars in thousands, except per share data)
|
||||||||||||
Results of Operations:
|
||||||||||||
Net interest income
|
$ | 7,496 | $ | 6,951 | $ | 6,786 | ||||||
Provision for loan losses
|
2,484 | 6,025 | 2,608 | |||||||||
Non-interest income
|
1,922 | 1,569 | 1,972 | |||||||||
Non-interest expense
|
9,505 | 11,389 | 10,993 | |||||||||
Loss before income tax
|
(2,571 | ) | (8,894 | ) | (4,843 | ) | ||||||
Income tax expense (benefit)
|
(104 | ) | (11 | ) | 119 | |||||||
Net loss
|
(2,467 | ) | (8,883 | ) | (4,962 | ) | ||||||
Financial Condition:
|
||||||||||||
Total assets
|
208,651 | 237,945 | 231,430 | |||||||||
Loans held for sale
|
5,535 | 1,263 | 1,071 | |||||||||
Loans
|
149,659 | 165,244 | 183,248 | |||||||||
Allowance for loan losses
|
5,299 | 4,792 | 3,782 | |||||||||
Securities
|
34,572 | 36,504 | 27,491 | |||||||||
Deposits
|
191,545 | 219,263 | 198,577 | |||||||||
Federal funds purchased and repurchase agreements
|
7,815 | 7,461 | 7,000 | |||||||||
Notes payable and other borrowings
|
9,500 | 9,500 | 15,500 | |||||||||
Shareholders' equity
|
(1,420 | ) | 846 | 9,740 | ||||||||
Performance Ratios:
|
||||||||||||
Return on average assets
|
(1.07 | ) % | (3.57 | ) % | (1.97 | ) % | ||||||
Return on average shareholders' equity
|
(6,992.01 | ) | (109.72 | ) | (36.34 | ) | ||||||
Net interest margin (tax equivalent)
|
3.48 | 3.06 | 3.01 | |||||||||
Efficiency ratio
|
100.93 | 133.67 | 125.53 | |||||||||
Per Share Data:
|
||||||||||||
Earnings per share - basic
|
$ | (1.68 | ) | $ | (6.05 | ) | $ | (3.38 | ) | |||
Earnings per share - diluted
|
(1.68 | ) | (6.05 | ) | (3.38 | ) | ||||||
Book value per share
|
(0.97 | ) | 0.58 | 6.63 | ||||||||
Capital Ratios of Bank:
|
||||||||||||
Tier 1 risk-based capital
|
5.12 | % | 5.79 | % | 9.15 | % | ||||||
Total risk-based capital
|
6.40 | 7.06 | 10.41 |
2011
|
2010
|
|||||||||||||||
Applicable to:
|
Amount
|
Percent of
Loans in
Each
Category to
Total Loans
|
Amount
|
Percent of
Loans in
Each
Category to
Total Loans
|
||||||||||||
Commercial
|
$ | 2,197,755 | 35.5 | % | $ | 1,218,865 | 35.3 | % | ||||||||
Commercial Real Estate
|
2,498,310 | 42.3 | 2,896,176 | 41.0 | ||||||||||||
Consumer
|
410,001 | 10.9 | 546,603 | 11.9 | ||||||||||||
Residential
|
193,388 | 11.3 | 130,263 | 11.8 | ||||||||||||
$ | 5,299,454 | 100.0 | % | $ | 4,791,907 | 100.0 | % |
2011
|
2010
|
|||||||
Return on average assets
|
(1.07 | ) % | (3.57 | ) % | ||||
Return on average shareholders’ equity
|
(6,992.01 | ) | (109.72 | ) | ||||
Average equity to average assets
|
0.02 | 3.25 |
Within
Three
Months
|
Three to
Twelve
Months
|
One to
Five
Years
|
After
Five
Years
|
Total | ||||||||||||||||
Commercial
|
$ | 4,581,116 | $ | 24,300,602 | $ | 21,526,279 | $ | 2,760,132 | $ | 53,168,129 | ||||||||||
Commercial Real Estate:
|
||||||||||||||||||||
General
|
7,002,769 | 7,519,763 | 40,299,553 | 2,025,515 | 56,847,600 | |||||||||||||||
Construction
|
2,507,095 | 1,657,469 | 2,215,447 | 45,030 | 6,425,041 | |||||||||||||||
Consumer:
|
||||||||||||||||||||
Lines of credit
|
494,454 | 1,816,937 | 5,190,299 | 5,874,999 | 13,376,689 | |||||||||||||||
Other
|
157,113 | 314,941 | 1,183,088 | 715,483 | 2,370,625 | |||||||||||||||
Credit card
|
59,557 | 184,716 | 283,585 | 0 | 527,858 | |||||||||||||||
Residential
|
0 | 0 | 8,274 | 16,934,715 | 16,942,989 | |||||||||||||||
$ | 14,802,104 | $ | 35,794,428 | $ | 70,706,525 | $ | 28,355,874 | $ | 149,658,931 | |||||||||||
Loans at fixed rates
|
$ | 12,701,373 | $ | 16,454,685 | $ | 59,857,784 | $ | 17,777,257 | $ | 106,791,099 | ||||||||||
Loans at variable rates
|
2,100,731 | 19,339,743 | 10,848,741 | 10,578,617 | 42,867,832 | |||||||||||||||
$ | 14,802,104 | $ | 35,794,428 | $ | 70,706,525 | $ | 28,355,874 | $ | 149,658,931 |
Years Ended December 31:
|
||||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Average
Yield/Rate
|
Average
Balance
|
Interest
|
Average
Yield/Rate
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Federal funds sold and interest-bearing deposits with banks
|
$ | 19,459,188 | $ | 47,240 | 0.24 | % | $ | 20,301,004 | $ | 49,882 | 0.25 | % | ||||||||||||
Securities 1,2
|
35,734,951 | 849,725 | 2.38 | 31,926,359 | 927,582 | 2.91 | ||||||||||||||||||
Loans 3
|
161,885,478 | 9,985,906 | 6.17 | 177,551,516 | 11,075,774 | 6.24 | ||||||||||||||||||
217,079,617 | 10,882,871 | 5.01 | 229,778,879 | 12,053,238 | 5.25 | |||||||||||||||||||
Other assets
|
13,175,286 | 19,185,648 | ||||||||||||||||||||||
$ | 230,254,903 | $ | 248,964,527 | |||||||||||||||||||||
Liabilities and Shareholders’ Equity
|
||||||||||||||||||||||||
Interest-bearing deposits
|
$ | 173,966,362 | $ | 2,845,254 | 1.64 | $ | 194,013,849 | $ | 4,304,290 | 2.22 | ||||||||||||||
FRB Borrowings and repurchase agreements
|
9,626,384 | 73,269 | 0.76 | 8,913,430 | 75,837 | 0.85 | ||||||||||||||||||
Subordinated debentures, notes payable and FHLB advances
|
9,500,000 | 418,243 | 4.40 | 12,142,466 | 652,616 | 5.37 | ||||||||||||||||||
193,092,746 | 3,336,766 | 1.73 | 215,069,745 | 5,032,743 | 2.34 | |||||||||||||||||||
Noninterest-bearing deposits
|
36,100,143 | 25,027,916 | ||||||||||||||||||||||
Other liabilities
|
1,026,725 | 770,814 | ||||||||||||||||||||||
Shareholders’ Equity
|
35,289 | 8,096,052 | ||||||||||||||||||||||
$ | 230,254,903 | $ | 248,964,527 | |||||||||||||||||||||
Net interest income (tax equivalent basis)
|
7,546,105 | 7,020,495 | ||||||||||||||||||||||
Net interest spread on earning assets (tax equivalent basis)
|
3.28 | % | 2.91 | % | ||||||||||||||||||||
Net interest margin on earning assets (tax equivalent basis)
|
3.48 | 3.06 | ||||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities
|
112.42 | 106.84 | ||||||||||||||||||||||
Tax equivalent adjustment
|
49,711 | 69,184 | ||||||||||||||||||||||
Net interest income
|
$ | 7,496,394 | $ | 6,951,311 |
Year-ended December 31,
2011 over 2010
|
||||||||||||
Total
|
Volume
|
Rate
|
||||||||||
Increase (decrease) in interest income
|
||||||||||||
Federal funds sold and interest-bearing deposits with banks
|
$ | (2,642 | ) | $ | (2,049 | ) | $ | (593 | ) | |||
Securities 1
|
(77,857 | ) | 102,689 | (180,546 | ) | |||||||
Loans
|
(1,089,868 | ) | (967,582 | ) | (122,286 | ) | ||||||
Net change in interest income
|
(1,170,367 | ) | (866,942 | ) | (303,425 | ) | ||||||
Increase (decrease) in interest expense
|
||||||||||||
Interest-bearing deposits
|
(1,459,036 | ) | (299,251 | ) | (1,159,785 | ) | ||||||
Federal funds purchased, repurchase agreements and FRB discount window
|
(2,568 | ) | 5,790 | (8,358 | ) | |||||||
Subordinated debentures, notes payable and FHLB advances
|
(234,373 | ) | (127,995 | ) | (106,378 | ) | ||||||
Net change in interest expense
|
(1,695,977 | ) | (421,456 | ) | (1,274,521 | ) | ||||||
Net change in net interest income
|
$ | 525,610 | $ | (445,486 | ) | $ | 971,096 |
Interest Rate Sensitivity Period
|
||||||||||||||||||||
Within
Three
Months
|
Three to
Twelve
Months
|
One to
Five
Years
|
After
Five
Years
|
Total
|
||||||||||||||||
Earning assets
|
||||||||||||||||||||
Interest-bearing deposits in other financial institutions
|
$ | 6,493,426 | $ | 0 | $ | 0 | $ | 0 | $ | 6,493,426 | ||||||||||
Securities (includes FHLB stock)
|
2,891,812 | 8,204,452 | 19,776,932 | 4,149,707 | 35,022,903 | |||||||||||||||
Loans
|
65,657,988 | 14,933,005 | 53,045,656 | 21,557,265 | 155,193,914 | |||||||||||||||
75,043,226 | 23,137,457 | 72,822,588 | 25,706,972 | 196,710,243 | ||||||||||||||||
Interest-bearing liabilities
|
||||||||||||||||||||
Savings and checking
|
46,379,051 | 0 | 0 | 0 | 46,379,051 | |||||||||||||||
Time deposits <$100,000
|
10,584,807 | 33,287,574 | 51,339,387 | 0 | 95,211,768 | |||||||||||||||
Time deposits >$100,000
|
5,238,302 | 9,602,757 | 1,832,160 | 0 | 16,673,219 | |||||||||||||||
Repurchase agreements and Federal funds purchased
|
7,814,745 | 0 | 0 | 0 | 7,814,745 | |||||||||||||||
Notes payable and other borrowings
|
9,500,000 | 0 | 0 | 0 | 9,500,000 | |||||||||||||||
79,516,905 | 42,890,331 | 53,171,547 | 0 | 175,578,783 | ||||||||||||||||
Net asset (liability) repricing gap
|
$ | (4,473,679 | ) | $ | (19,752,874 | ) | $ | 19,651,041 | $ | 25,706,972 | $ | 21,131,460 | ||||||||
Cumulative net asset (liability) repricing gap
|
$ | (4,473,679 | ) | $ | (24,226,553 | ) | $ | (4,575,512 | ) | $ | 21,131,460 |
![]() |
|
Crowe Horwath LLP
|
2011
|
2010
|
|||||||
ASSETS
|
||||||||
Cash and due from financial institutions
|
$ | 2,426,142 | $ | 2,074,301 | ||||
Interest-bearing deposits in other financial institutions
|
6,493,426 | 21,565,572 | ||||||
Cash and cash equivalents
|
8,919,568 | 23,639,873 | ||||||
Securities available for sale (at fair value)
|
34,572,103 | 36,503,903 | ||||||
Loans held for sale
|
5,534,983 | 1,263,263 | ||||||
Loans
|
149,658,931 | 165,243,881 | ||||||
Less: Allowance for loan losses
|
5,299,454 | 4,791,907 | ||||||
Net loans
|
144,359,477 | 160,451,974 | ||||||
Federal Home Loan Bank stock
|
450,800 | 479,800 | ||||||
Premises and equipment, net
|
10,404,865 | 10,874,176 | ||||||
Accrued interest receivable
|
746,143 | 781,334 | ||||||
Foreclosed assets
|
3,276,838 | 3,382,594 | ||||||
Other assets
|
386,524 | 568,580 | ||||||
Total assets
|
$ | 208,651,301 | $ | 237,945,497 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Deposits
|
||||||||
Non-interest-bearing
|
$ | 33,281,198 | $ | 33,326,683 | ||||
Interest-bearing
|
158,264,038 | 185,936,494 | ||||||
Total deposits
|
191,545,236 | 219,263,177 | ||||||
Federal funds purchased and repurchase agreements
|
7,814,745 | 7,460,795 | ||||||
Notes payable
|
5,000,000 | 5,000,000 | ||||||
Subordinated debentures
|
4,500,000 | 4,500,000 | ||||||
Accrued expenses and other liabilities
|
1,211,702 | 875,738 | ||||||
Total liabilities
|
210,071,683 | 237,099,710 | ||||||
Shareholders’ equity
|
||||||||
Preferred Stock, no par value: 1,000,000 shares authorized and none issued
|
0 | 0 | ||||||
Common Stock, no par value: 9,000,000 shares authorized; 1,468,800 issued and outstanding
|
13,296,691 | 13,296,691 | ||||||
Retained deficit
|
(15,084,431 | ) | (12,617,022 | ) | ||||
Accumulated other comprehensive income
|
367,358 | 166,118 | ||||||
Total shareholders’ equity
|
(1,420,382 | ) | 845,787 | |||||
Total liabilities and shareholders’ equity
|
$ | 208,651,301 | $ | 237,945,497 |
2011
|
2010
|
|||||||
Interest and dividend income
|
||||||||
Loans, including fees
|
$ | 9,985,906 | $ | 11,075,774 | ||||
Securities, taxable
|
698,749 | 724,834 | ||||||
Securities, tax exempt
|
89,063 | 124,868 | ||||||
Federal funds sold, FHLB dividends and other income
|
59,442 | 58,578 | ||||||
Total interest and dividend income
|
10,833,160 | 11,984,054 | ||||||
Interest expense
|
||||||||
Deposits
|
2,845,254 | 4,304,290 | ||||||
Repurchase agreements, federal funds purchased, and other debt
|
73,269 | 75,837 | ||||||
Federal Home Loan Bank advances and notes payable
|
418,243 | 652,616 | ||||||
Total interest expense
|
3,336,766 | 5,032,743 | ||||||
Net Interest Income
|
7,496,394 | 6,951,311 | ||||||
Provision for loan losses
|
2,483,640 | 6,024,775 | ||||||
Net Interest Income After Provision for Loan Losses
|
5,012,754 | 926,536 | ||||||
Non-interest income
|
||||||||
Service charges on deposit accounts
|
741,990 | 787,980 | ||||||
Mortgage loan referral fees
|
50,877 | 0 | ||||||
Gain on sale of loans
|
295,961 | 316,525 | ||||||
Gain on sale of securities
|
3,288 | 79,814 | ||||||
Gain (loss) on the sale of foreclosed assets
|
192,176 | (193,559 | ) | |||||
Other
|
637,139 | 578,020 | ||||||
Total non-interest income
|
1,921,431 | 1,568,780 | ||||||
Non-interest expense
|
||||||||
Salaries and employee benefits
|
4,074,170 | 4,146,318 | ||||||
Occupancy
|
668,502 | 643,159 | ||||||
Furniture and equipment
|
530,948 | 578,156 | ||||||
Advertising
|
49,636 | 58,411 | ||||||
Data processing
|
505,981 | 532,103 | ||||||
Professional services
|
358,685 | 513,458 | ||||||
Foreclosed asset impairment
|
1,047,644 | 2,575,129 | ||||||
FDIC Insurance
|
926,464 | 738,940 | ||||||
Other
|
1,343,233 | 1,602,987 | ||||||
Total non-interest expense
|
9,505,263 | 11,388,661 | ||||||
Loss Before Federal Income Taxes
|
(2,571,078 | ) | (8,893,345 | ) | ||||
Federal income tax expense (benefit)
|
(103,669 | ) | (10,618 | ) | ||||
Net Loss
|
$ | (2,467,409 | ) | $ | (8,882,727 | ) | ||
Weighted average shares outstanding
|
1,468,800 | 1,468,800 | ||||||
Diluted average shares outstanding
|
1,468,800 | 1,468,800 | ||||||
Basic loss per share
|
$ | (1.68 | ) | $ | (6.05 | ) | ||
Diluted loss per share
|
$ | (1.68 | ) | $ | (6.05 | ) |
Shares
|
Common
Stock
|
Retained
Deficit
|
Accumulated
Other
Comprehensive
Income
|
Total
Shareholders’
Equity
|
||||||||||||||||
Balance at January 1, 2010
|
1,468,800 | $ | 13,296,691 | $ | (3,734,295 | ) | $ | 177,595 | $ | 9,739,991 | ||||||||||
Comprehensive income (loss):
|
||||||||||||||||||||
Net loss
|
(8,882,727 | ) | (8,882,727 | ) | ||||||||||||||||
Unrealized loss on securities available for sale, net
|
(11,477 | ) | (11,477 | ) | ||||||||||||||||
Total comprehensive income (loss)
|
(8,894,204 | ) | ||||||||||||||||||
Balance at December 31, 2010
|
1,468,800 | 13,296,691 | (12,617,022 | ) | 166,118 | 845,787 | ||||||||||||||
Comprehensive income (loss):
|
||||||||||||||||||||
Net loss
|
(2,467,409 | ) | (2,467,409 | ) | ||||||||||||||||
Unrealized gain on securities available for sale, net
|
201,240 | 201,240 | ||||||||||||||||||
Total comprehensive income (loss)
|
(2,266,169 | ) | ||||||||||||||||||
Balance at December 31, 2011
|
1,468,800 | $ | 13,296,691 | $ | (15,084,431 | ) | $ | 367,358 | $ | (1,420,382 | ) |
2011
|
2010
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$ | (2,467,409 | ) | $ | (8,882,727 | ) | ||
Adjustments to reconcile net loss to net cash from operating activities:
|
||||||||
Provision for loan losses
|
2,483,640 | 6,024,775 | ||||||
Depreciation
|
522,212 | 579,553 | ||||||
Net amortization of securities
|
258,365 | 199,959 | ||||||
Net realized gain on sale of securities
|
(3,288 | ) | (79,814 | ) | ||||
Net realized gain on sale of loans
|
(295,961 | ) | (316,525 | ) | ||||
Net realized (gain) loss on sale of foreclosed assets
|
(192,176 | ) | 193,559 | |||||
Foreclosed asset impairment
|
1,047,644 | 2,575,129 | ||||||
Originations of loans for sale
|
(18,157,446 | ) | (19,707,901 | ) | ||||
Proceeds from loan sales
|
14,181,687 | 19,831,855 | ||||||
Deferred federal income tax benefit
|
(103,669 | ) | 0 | |||||
Net change in:
|
||||||||
Accrued interest receivable and other assets
|
217,247 | 1,090,040 | ||||||
Accrued interest payable and other liabilities
|
335,964 | 262,606 | ||||||
Net cash (used in) from operating activities
|
(2,173,190 | ) | 1,770,509 | |||||
Cash flows from investing activities
|
||||||||
Activity in available for sale securities:
|
||||||||
Sales
|
820,285 | 3,751,027 | ||||||
Maturities, prepayments and calls
|
13,800,337 | 11,445,595 | ||||||
Purchases
|
(12,638,990 | ) | (24,340,702 | ) | ||||
Loan originations and payments, net
|
12,491,304 | 10,798,221 | ||||||
Redemption (purchase) of Federal Home Loan Bank stock
|
29,000 | (75,700 | ) | |||||
Additions to premises and equipment, net
|
(52,901 | ) | (160,560 | ) | ||||
Proceeds from the sale of foreclosed assets
|
367,841 | 2,480,359 | ||||||
Net cash from investing activities
|
14,816,876 | 3,898,240 | ||||||
Cash flows from financing activities
|
||||||||
Net change in deposits
|
(27,717,941 | ) | 20,686,568 | |||||
Net change in federal funds purchased and repurchase agreements
|
353,950 | 460,468 | ||||||
Repayment of FHLB advances
|
0 | (6,000,000 | ) | |||||
Net cash (used in) from financing activities
|
(27,363,991 | ) | 15,147,036 | |||||
Net change in cash and cash equivalents
|
(14,720,305 | ) | 20,815,785 | |||||
Beginning cash and cash equivalents
|
23,639,873 | 2,824,088 | ||||||
Ending cash and cash equivalents
|
$ | 8,919,568 | $ | 23,639,873 | ||||
Supplemental cash flow information:
|
||||||||
Cash paid during the period for interest
|
$ | 2,960,854 | $ | 4,834,163 | ||||
Transfers from loans to foreclosed assets
|
1,544,993 | 3,073,725 | ||||||
Transfers from securities held to maturity to available for sale
|
0 | 5,839,614 | ||||||
Foreclosed asset sales financed by the Bank
|
427,440 | 883,000 |
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
2011
|
||||||||||||||||
US Treasury
|
$ | 4,041,881 | $ | 25,775 | $ | 0 | $ | 4,067,656 | ||||||||
US Government and federal agency
|
15,341,362 | 239,037 | (7,811 | ) | 15,572,588 | |||||||||||
Municipals
|
2,767,463 | 123,957 | 0 | 2,891,420 | ||||||||||||
Mortgage-backed and collateralized mortgage obligations– residential
|
11,733,141 | 317,565 | (10,267 | ) | 12,040,439 | |||||||||||
$ | 33,883,847 | $ | 706,334 | $ | (18,078 | ) | $ | 34,572,103 | ||||||||
2010
|
||||||||||||||||
US Treasury
|
$ | 1,004,240 | $ | 6,854 | $ | 0 | $ | 1,011,094 | ||||||||
US Government and federal agency
|
16,696,952 | 222,261 | (10,497 | ) | 16,908,716 | |||||||||||
Municipals
|
3,179,898 | 62,864 | (4,468 | ) | 3,238,294 | |||||||||||
Mortgage-backed and collateralized mortgage obligations– residential
|
15,239,466 | 236,840 | (130,507 | ) | 15,345,799 | |||||||||||
$ | 36,120,556 | $ | 528,819 | $ | (145,472 | ) | $ | 36,503,903 |
2011
|
Amortized
Cost
|
Fair
Value
|
||||||
Due in one year or less
|
$ | 4,529,357 | $ | 4,565,559 | ||||
Due from one to five years
|
15,866,876 | 16,111,735 | ||||||
Due from five to ten years
|
1,754,473 | 1,854,370 | ||||||
Due in more than ten years
|
0 | 0 | ||||||
Mortgage-backed and collateralized mortgage obligations – residential
|
11,733,141 | 12,040,439 | ||||||
$ | 33,883,847 | $ | 34,572,103 |
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
2011
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
US Government and federal agency
|
$ | 2,060,693 | $ | (7,811 | ) | $ | 0 | $ | 0 | $ | 2,060,693 | $ | (7,811 | ) | ||||||||||
Mortgage-backed and collateralized mortgage obligations - residential
|
817,615 | (4,240 | ) | 1,215,921 | (6,027 | ) | 2,033,536 | (10,267 | ) | |||||||||||||||
$ | 2,878,308 | $ | (12,051 | ) | $ | 1,215,921 | $ | (6,027 | ) | $ | 4,094,229 | $ | (18,078 | ) |
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
2010
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
US Government and federal agency
|
$ | 2,489,266 | $ | (10,497 | ) | $ | 0 | $ | 0 | $ | 2,489,266 | $ | (10,497 | ) | ||||||||||
Municipals
|
350,532 | (4,468 | ) | 0 | 0 | 350,532 | (4,468 | ) | ||||||||||||||||
Mortgage-backed and collateralized mortgage obligations - residential
|
7,887,368 | (130,507 | ) | 0 | 0 | 7,887,368 | (130,507 | ) | ||||||||||||||||
$ | 10,727,166 | $ | (145,472 | ) | $ | 0 | $ | 0 | $ | 10,727,166 | $ | (145,472 | ) |
2011
|
2010
|
|||||||
Commercial
|
$ | 53,200,412 | $ | 58,416,643 | ||||
Commercial Real Estate:
|
||||||||
General
|
56,847,600 | 58,996,411 | ||||||
Construction
|
6,425,041 | 8,782,762 | ||||||
Consumer:
|
||||||||
Lines of credit
|
13,376,689 | 15,954,866 | ||||||
Other
|
2,370,625 | 3,087,409 | ||||||
Credit card
|
527,858 | 520,095 | ||||||
Residential
|
16,942,989 | 19,534,704 | ||||||
149,691,214 | 165,292,890 | |||||||
Less: Allowance for loan losses
|
(5,299,454 | ) | (4,791,907 | ) | ||||
Net deferred loan fees
|
(32,283 | ) | (49,009 | ) | ||||
Loans, net
|
$ | 144,359,477 | $ | 160,451,974 |
Year Ending December 31, 2011
|
Commercial
|
Commercial
Real Estate
|
Consumer
|
Residential
|
Total
|
|||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Beginning balance
|
$ | 1,218,865 | $ | 2,896,176 | $ | 546,603 | $ | 130,263 | $ | 4,791,907 | ||||||||||
Charge-offs
|
(541,494 | ) | (1,294,273 | ) | (248,953 | ) | (77,060 | ) | (2,161,780 | ) | ||||||||||
Recoveries
|
91,000 | 49,486 | 45,201 | 0 | 185,687 | |||||||||||||||
Provision for loan losses
|
1,429,384 | 846,921 | 67,150 | 140,185 | 2,483,640 | |||||||||||||||
Ending balance
|
$ | 2,197,755 | $ | 2,498,310 | $ | 410,001 | $ | 193,388 | $ | 5,299,454 |
2010
|
||||
Beginning balance
|
$ | 3,782,132 | ||
Charge-offs
|
(5,090,138 | ) | ||
Recoveries
|
75,138 | |||
Provision for loan losses
|
6,024,775 | |||
Ending balance
|
$ | 4,791,907 |
2011
|
Commercial
|
Commercial
Real Estate
|
Consumer
|
Residential
|
Total
|
|||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||
Individually evaluated for impairment
|
$ | 1,354,124 | $ | 1,424,273 | $ | 109,309 | $ | 103,393 | $ | 2,991,099 | ||||||||||
Collectively evaluated for impairment
|
843,631 | 1,074,037 | 300,692 | 89,995 | 2,308,355 | |||||||||||||||
Total ending allowance balance
|
$ | 2,197,755 | $ | 2,498,310 | $ | 410,001 | $ | 193,388 | $ | 5,299,454 | ||||||||||
Loans:
|
||||||||||||||||||||
Individually evaluated for impairment
|
$ | 7,098,022 | $ | 7,895,704 | $ | 274,700 | $ | 595,598 | $ | 15,864,024 | ||||||||||
Collectively evaluated for impairment
|
46,310,131 | 55,826,466 | 16,025,489 | 16,429,725 | 134,591,811 | |||||||||||||||
Total ending loans balance
|
$ | 53,408,153 | $ | 63,722,170 | $ | 16,300,189 | $ | 17,025,323 | $ | 150,455,835 |
2010
|
Commercial
|
Commercial
Real Estate
|
Consumer
|
Residential
|
Total
|
|||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||
Individually evaluated for impairment
|
$ | 195,684 | $ | 1,789,936 | $ | 85,233 | $ | 49,145 | $ | 2,119,998 | ||||||||||
Collectively evaluated for impairment
|
1,023,181 | 1,106,240 | 461,370 | 81,118 | 2,671,909 | |||||||||||||||
Total ending allowance balance
|
$ | 1,218,865 | $ | 2,896,176 | $ | 546,603 | $ | 130,263 | $ | 4,791,907 | ||||||||||
Loans:
|
||||||||||||||||||||
Individually evaluated for impairment
|
$ | 4,276,850 | $ | 8,405,141 | $ | 307,307 | $ | 1,339,741 | $ | 14,329,039 | ||||||||||
Collectively evaluated for impairment
|
54,326,131 | 59,724,688 | 19,096,341 | 18,508,671 | 151,655,831 | |||||||||||||||
Total ending loans balance
|
$ | 58,602,981 | $ | 68,129,829 | $ | 19,403,648 | $ | 19,848,412 | $ | 165,984,870 |
2011
|
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Cash Basis
Interest
Recognized
|
||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||||||
Commercial
|
$ | 2,591,467 | $ | 2,589,356 | $ | 0 | $ | 3,511,753 | $ | 55,237 | $ | 55,237 | ||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
General
|
4,388,271 | 4,377,406 | 0 | 3,265,902 | 123,083 | 107,620 | ||||||||||||||||||
Construction
|
227,842 | 227,842 | 0 | 511,659 | 0 | 0 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Lines of credit
|
91,397 | 91,327 | 0 | 72,432 | 616 | 616 | ||||||||||||||||||
Other
|
0 | 0 | 0 | 6,012 | 0 | 0 | ||||||||||||||||||
Credit card
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Residential
|
186,207 | 186,723 | 0 | 314,265 | 0 | 0 | ||||||||||||||||||
Subtotal
|
$ | 7,485,184 | $ | 7,472,654 | $ | 0 | $ | 7,682,023 | $ | 178,936 | $ | 163,473 | ||||||||||||
With an allowance recorded:
|
||||||||||||||||||||||||
Commercial
|
$ | 4,506,555 | $ | 4,476,078 | $ | 1,354,124 | $ | 1,223,325 | $ | 48,745 | $ | 29,623 | ||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
General
|
1,003,929 | 997,686 | 136,723 | 2,601,890 | 33,073 | 30,049 | ||||||||||||||||||
Construction
|
2,275,662 | 2,275,337 | 1,287,550 | 2,069,800 | 2,373 | 2,202 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Lines of credit
|
63,854 | 63,675 | 16,128 | 145,132 | 11,143 | 3,682 | ||||||||||||||||||
Other
|
119,449 | 119,275 | 93,181 | 74,854 | 1,955 | 1,650 | ||||||||||||||||||
Credit card
|
0 | 0 | 0 | 1,006 | 0 | 0 | ||||||||||||||||||
Residential
|
409,391 | 408,244 | 103,393 | 699,853 | 22,948 | 18,135 | ||||||||||||||||||
Subtotal
|
$ | 8,378,840 | $ | 8,340,295 | $ | 2,991,099 | $ | 6,815,860 | $ | 120,237 | $ | 85,341 | ||||||||||||
Total
|
$ | 15,864,024 | $ | 15,812,949 | $ | 2,991,099 | $ | 14,497,883 | $ | 299,173 | $ | 248,814 |
2010
|
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
|||||||||
With no related allowance recorded:
|
||||||||||||
Commercial
|
$ | 3,692,148 | $ | 3,689,868 | $ | 0 | ||||||
Commercial Real Estate:
|
||||||||||||
General
|
2,684,164 | 2,681,391 | 0 | |||||||||
Construction
|
664,866 | 664,866 | 0 | |||||||||
Consumer:
|
||||||||||||
Lines of credit
|
108,274 | 108,274 | 0 | |||||||||
Other
|
18,900 | 18,900 | 0 | |||||||||
Credit card
|
0 | 0 | 0 | |||||||||
Residential
|
848,983 | 849,457 | 0 | |||||||||
Subtotal
|
$ | 8,017,335 | $ | 8,012,756 | $ | 0 | ||||||
With an allowance recorded:
|
||||||||||||
Commercial
|
$ | 584,702 | $ | 582,331 | $ | 195,684 | ||||||
Commercial Real Estate:
|
||||||||||||
General
|
3,088,254 | 3,078,481 | 575,175 | |||||||||
Construction
|
1,967,857 | 1,967,857 | 1,214,761 | |||||||||
Consumer:
|
||||||||||||
Lines of credit
|
131,515 | 131,149 | 42,799 | |||||||||
Other
|
45,829 | 45,696 | 39,645 | |||||||||
Credit card
|
2,789 | 2,789 | 2,789 | |||||||||
Residential
|
490,758 | 490,385 | 49,145 | |||||||||
Subtotal
|
$ | 6,311,704 | $ | 6,298,688 | $ | 2,119,998 | ||||||
Total
|
$ | 14,329,039 | $ | 14,311,444 | $ | 2,119,998 |
2010
|
||||
Average of impaired loans during the year
|
$ | 14,323,860 | ||
Interest income recognized during impairment
|
238,647 | |||
Cash-basis interest income recognized
|
214,270 |
Accruing Loans
|
30-59 Days Past
Due
|
60-89 Days Past
Due
|
Greater Than 90
Days Past
Due
|
Total Accruing
Past Due
Loans
|
Current
Accruing Loans
|
Total Recorded
Investment of
Accruing Loans
|
||||||||||||||||||
Commercial
|
$ | 774,224 | $ | 48,273 | $ | 0 | $ | 822,497 | $ | 51,248,854 | $ | 52,071,351 | ||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
General
|
0 | 243,075 | 0 | 243,075 | 54,452,985 | 54,696,060 | ||||||||||||||||||
Construction
|
0 | 0 | 0 | 0 | 4,063,776 | 4,063,776 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Lines of credit
|
11,052 | 102,760 | 21,002 | 134,814 | 13,194,317 | 13,329,131 | ||||||||||||||||||
Other
|
8,817 | 0 | 0 | 8,817 | 2,306,281 | 2,315,098 | ||||||||||||||||||
Credit card
|
0 | 0 | 5,899 | 5,899 | 521,959 | 527,858 | ||||||||||||||||||
Residential
|
80,952 | 0 | 0 | 80,952 | 16,772,293 | 16,853,245 | ||||||||||||||||||
Total
|
$ | 875,045 | $ | 394,108 | $ | 26,901 | $ | 1,296,054 | $ | 142,560,465 | $ | 143,856,519 |
Non Accrual Loans
|
30-59 Days Past
Due
|
60-89 Days Past
Due
|
Greater Than 90
Days Past
Due
|
Total
Non Accrual
Past Due Loans
|
Current
Non Accrual
Loans
|
Total Non Accrual
Recorded
Investment
|
||||||||||||||||||
Commercial
|
$ | 0 | $ | 2,478 | $ | 1,172,890 | $ | 1,175,368 | $ | 161,434 | $ | 1,336,802 | ||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
General
|
0 | 0 | 869,398 | 869,398 | 1,673,895 | 2,543,293 | ||||||||||||||||||
Construction
|
0 | 0 | 406,090 | 406,090 | 2,012,951 | 2,419,041 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Lines of credit
|
4,826 | 66,587 | 48,230 | 119,643 | 0 | 119,643 | ||||||||||||||||||
Other
|
0 | 0 | 8,459 | 8,459 | 0 | 8,459 | ||||||||||||||||||
Credit card
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Residential
|
0 | 0 | 0 | 0 | 172,078 | 172,078 | ||||||||||||||||||
Total
|
$ | 4,826 | $ | 69,065 | $ | 2,505,067 | $ | 2,578,958 | $ | 4,020,358 | $ | 6,599,316 |
Accruing Loans
|
30-59 Days Past
Due
|
60-89 Days Past
Due
|
Greater Than 90
Days Past
Due
|
Total Accruing
Past Due
Loans
|
Current
Accruing Loans
|
Total Recorded
Investment of
Accruing Loans
|
||||||||||||||||||
Commercial
|
$ | 627,034 | $ | 0 | $ | 0 | $ | 627,034 | $ | 56,661,353 | $ | 57,288,387 | ||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
General
|
157,637 | 217,803 | 0 | 375,440 | 55,866,348 | 56,241,788 | ||||||||||||||||||
Construction
|
0 | 0 | 0 | 0 | 6,184,355 | 6,184,355 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Lines of credit
|
79,191 | 35,460 | 0 | 114,651 | 15,620,301 | 15,734,952 | ||||||||||||||||||
Other
|
12,054 | 0 | 1,776 | 13,830 | 2,921,580 | 2,935,410 | ||||||||||||||||||
Credit card
|
0 | 0 | 0 | 0 | 520,095 | 520,095 | ||||||||||||||||||
Residential
|
94,404 | 0 | 0 | 94,404 | 19,005,843 | 19,100,247 | ||||||||||||||||||
Total
|
$ | 970,320 | $ | 253,263 | $ | 1,776 | $ | 1,225,359 | $ | 156,779,875 | $ | 158,005,234 |
Non Accrual Loans
|
30-59 Days Past
Due
|
60-89 Days Past
Due
|
Greater Than 90
Days Past
Due
|
Total
Non Accrual
Past Due Loans
|
Current
Non Accrual
Loans
|
Total Non Accrual
Recorded
Investment
|
||||||||||||||||||
Commercial
|
$ | 0 | $ | 0 | $ | 1,310,602 | $ | 1,310,602 | $ | 3,992 | $ | 1,314,594 | ||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
General
|
107,164 | 654,703 | 1,527,536 | 2,289,403 | 790,456 | 3,079,859 | ||||||||||||||||||
Construction
|
0 | 0 | 2,623,827 | 2,623,827 | 0 | 2,623,827 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Lines of credit
|
0 | 0 | 166,973 | 166,973 | 46,218 | 213,191 | ||||||||||||||||||
Other
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Credit card
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Residential
|
0 | 0 | 713,396 | 713,396 | 34,769 | 748,165 | ||||||||||||||||||
Total
|
$ | 107,164 | $ | 654,703 | $ | 6,342,334 | $ | 7,104,201 | $ | 875,435 | $ | 7,979,636 |
2011
|
Number of Loans
|
Pre-Modification
Outstanding Recorded
Investment
|
Post-Modification
Outstanding Recorded
Investment
|
|||||||||
Troubled Debt Restructurings:
|
||||||||||||
Commercial
|
8 | $ | 391,400 | $ | 391,440 | |||||||
Commercial Real Estate:
|
||||||||||||
General
|
8 | 1,836,316 | 1,781,418 | |||||||||
Construction
|
2 | 2,186,620 | 2,186,620 | |||||||||
Consumer:
|
||||||||||||
Lines of credit
|
2 | 53,696 | 53,696 | |||||||||
Residential
|
2 | 311,909 | 311,909 | |||||||||
Total
|
22 | $ | 4,779,941 | $ | 4,725,083 |
2011
|
Number of Loans
|
Recorded Investment
at time of default
|
||||||
Troubled Debt Restructurings
|
||||||||
That Subsequently Defaulted:
|
||||||||
Commercial
|
3 | $ | 224,933 | |||||
Commercial Real Estate:
|
||||||||
General
|
1 | 319,915 | ||||||
Total
|
4 | $ | 544,848 |
1.
|
Exceptional. Loans with an exceptional credit rating.
|
2.
|
Quality. Loans with excellent sources of repayment that conform, in all respects, to Bank policy and regulatory requirements. These are loans for which little repayment risk has been identified.
|
3.
|
Above Average. Loans with above average sources of repayment and minimal identified credit or collateral exceptions and minimal repayment risk.
|
4.
|
Average. Loans with average sources of repayment that materially conform to Bank policy and regulatory requirements. Repayment risk is considered average.
|
5.
|
Acceptable. Loans with acceptable sources of repayment and risk.
|
5W.
|
Loans considered to be below average quality. The loans are often fundamentally sound but require more frequent management review because of an adverse financial event. Risk of non payment is elevated.
|
6.
|
Special Mention. Loans that have potential weaknesses and deserve close attention. If uncorrected, further deterioration is likely. Risk of non payment is above average.
|
7.
|
Substandard. Loans that are inadequately protected by the borrower’s capacity to pay or the collateral pledged. Risk of non payment is high.
|
8.
|
Doubtful. Loans in this grade have identified weaknesses that make full repayment highly questionable and improbable.
|
Commercial
|
Commercial Real Estate
General
|
Commercial Real Estate
Construction
|
||||||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||
1
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
2
|
253,956 | 583,364 | 0 | 0 | 0 | 0 | ||||||||||||||||||
3
|
4,947,905 | 1,722,896 | 3,141,880 | 3,443,220 | 0 | 30,927 | ||||||||||||||||||
4
|
13,552,704 | 21,109,601 | 19,274,469 | 17,362,231 | 271,335 | 2,727,615 | ||||||||||||||||||
5
|
21,119,918 | 19,659,157 | 21,250,749 | 24,656,543 | 2,347,947 | 1,702,025 | ||||||||||||||||||
5W
|
3,910,143 | 1,687,613 | 5,452,332 | 4,399,618 | 1,360,030 | 1,484,710 | ||||||||||||||||||
6
|
5,005,950 | 9,349,408 | 4,394,702 | 4,777,202 | 0 | 190,333 | ||||||||||||||||||
7
|
3,567,564 | 3,292,002 | 2,293,571 | 2,328,376 | 39,330 | 39,849 | ||||||||||||||||||
8
|
1,050,013 | 1,198,940 | 1,431,650 | 2,354,457 | 2,464,175 | 2,632,723 | ||||||||||||||||||
Total
|
$ | 53,408,153 | $ | 58,602,981 | $ | 57,239,353 | $ | 59,321,647 | $ | 6,482,817 | $ | 8,808,182 |
Residential
|
||||||||
2011
|
2010
|
|||||||
Performing
|
$ | 16,429,725 | $ | 18,508,671 | ||||
Impaired
|
595,598 | 1,339,741 | ||||||
Total
|
$ | 17,025,323 | $ | 19,848,412 |
Consumer – Lines of credit
|
Consumer – Other
|
Consumer – Credit card
|
||||||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||
Performing
|
$ | 13,293,523 | $ | 15,708,354 | $ | 2,204,108 | $ | 2,870,681 | $ | 527,858 | $ | 517,306 | ||||||||||||
Impaired
|
155,251 | 239,789 | 119,449 | 64,729 | 0 | 2,789 | ||||||||||||||||||
Total
|
$ | 13,448,774 | $ | 15,948,143 | $ | 2,323,557 | $ | 2,935,410 | $ | 527,858 | $ | 520,095 |
2011
|
2010
|
|||||||
Beginning of year
|
$ | 3,382,594 | $ | 6,440,916 | ||||
Additions
|
1,544,993 | 3,073,725 | ||||||
Reductions from sales
|
(603,105 | ) | (3,556,918 | ) | ||||
Direct write-downs
|
(1,047,644 | ) | (2,575,129 | ) | ||||
End of year
|
$ | 3,276,838 | $ | 3,382,594 | ||||
|
||||||||
Expenses related to foreclosed assets include:
|
||||||||
2011 | 2010 | |||||||
Operating expenses, net of rental income
|
$ | 138,199 | $ | 445,682 |
2011
|
2010
|
|||||||
Land & land improvements
|
$ | 5,466,281 | $ | 5,464,946 | ||||
Buildings & building improvements
|
6,132,163 | 6,132,163 | ||||||
Furniture, fixtures and equipment
|
3,679,037 | 3,652,390 | ||||||
15,277,481 | 15,249,499 | |||||||
Less: accumulated depreciation
|
4,872,616 | 4,375,323 | ||||||
$ | 10,404,865 | $ | 10,874,176 |
2011
|
2010
|
|||||||
Non-interest-bearing DDA
|
$ | 33,281,198 | $ | 33,326,683 | ||||
Interest-bearing DDA
|
19,432,618 | 23,944,608 | ||||||
Money market
|
18,468,540 | 18,493,059 | ||||||
Savings
|
8,477,893 | 7,388,395 | ||||||
Certificate of deposit
|
111,884,987 | 136,110,432 | ||||||
$ | 191,545,236 | $ | 219,263,177 |
2012
|
$ | 58,713,415 | ||
2013
|
32,585,784 | |||
2014
|
17,028,479 | |||
2015
|
1,576,799 | |||
2016
|
1,980,510 | |||
$ | 111,884,987 |
Repurchase
Agreements
|
Discount
Window
|
|||||||
Outstanding at December 31, 2011
|
$ | 7,814,745 | $ | 0 | ||||
Average interest rate at year end
|
0.71 | % | 0.00 | % | ||||
Average balance during year
|
9,626,125 | 0 | ||||||
Average interest rate during year
|
0.76 | % | 0.00 | % | ||||
Maximum month end balance during year
|
11,986,254 | 0 |
Repurchase
Agreements
|
Discount
Window
|
|||||||
Outstanding at December 31, 2010
|
$ | 7,460,795 | $ | 0 | ||||
Average interest rate at year end
|
0.72 | % | 0.00 | % | ||||
Average balance during year
|
8,598,005 | 315,425 | ||||||
Average interest rate during year
|
0.86 | % | 0.50 | % | ||||
Maximum month end balance during year
|
10,132,049 | 0 |
2011
|
2010
|
|||||||
Current payable (receivable)
|
$ | 0 | $ | (10,618 | ) | |||
Deferred liability (benefit)
|
(103,669 | ) | 0 | |||||
Valuation allowance establishment
|
0 | 0 | ||||||
$ | (103,669 | ) | $ | (10,618 | ) |
2011
|
2010
|
|||||||
Deferred tax asset
|
||||||||
Allowance for loan losses
|
$ | 1,401,490 | $ | 1,195,446 | ||||
Non-accrual loans
|
359,526 | 276,715 | ||||||
Deferred loan costs, net
|
10,976 | 9,975 | ||||||
Accrued expenses
|
0 | 7,115 | ||||||
Foreclosed assets
|
1,401,133 | 1,276,595 | ||||||
Other
|
24,233 | 25,432 | ||||||
Net operating loss carryforward
|
3,086,212 | 2,587,922 | ||||||
6,283,570 | 5,379,200 | |||||||
Deferred tax liabilities
|
||||||||
Depreciation
|
$ | (240,472 | ) | $ | (240,455 | ) | ||
Accretion on securities
|
(273 | ) | (191 | ) | ||||
Unrealized gain on securities available for sale
|
(217,229 | ) | (217,229 | ) | ||||
Prepaid expenses
|
(37,166 | ) | (32,942 | ) | ||||
Other
|
(11,646 | ) | (12,394 | ) | ||||
(506,786 | ) | (503,211 | ) | |||||
$ | 5,776,784 | $ | 4,875,989 | |||||
Valuation allowance
|
(5,776,784 | ) | (4,875,989 | ) | ||||
Net deferred tax asset
|
$ | 0 | $ | 0 |
2011
|
2010
|
|||||||
Tax at statutory rate
|
$ | (874,167 | ) | $ | (3,023,737 | ) | ||
Tax-exempt interest income
|
(30,281 | ) | (42,438 | ) | ||||
Other
|
(100,016 | ) | 12,396 | |||||
Valuation allowance
|
900,795 | 3,043,161 | ||||||
Federal income tax expense (benefit)
|
$ | (103,669 | ) | $ | (10,618 | ) |
Beginning balance
|
$ | 3,390,161 | ||
New loans and line advances
|
1,136,625 | |||
Repayments
|
(869,204 | ) | ||
Ending balance
|
$ | 3,657,582 |
Number of
Shares
Subject to
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value*
|
||||||||||
Outstanding at beginning of year
|
47,300 | $ | 11.01 | ||||||||||
Granted
|
0 | 0 | |||||||||||
Exercised
|
0 | 0 | |||||||||||
Forfeited or expired
|
(4,500 | ) | (14.04 | ) | |||||||||
Outstanding at end of year
|
42,800 | $ | 10.69 | 1.3 | $ |
0
|
|||||||
Exercisable at end of year
|
42,800 | $ | 10.69 | 1.3 | $ |
0
|
Actual
|
Minimum Required
For Capital
Adequacy Purposes
|
Minimum Required
Under
Consent Order
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
2011
|
||||||||||||||||||||||||
Total Capital (Tier 1 and Tier 2) to risk-weighted assets of the Bank
|
$ | 10,350,300 | 6.40 | % | $ | 12,944,731 | 8.00 | % | $ | 17,799,005 | 11.00 | % | ||||||||||||
Tier 1 (Core) Capitalto risk-weighted assets of the Bank
|
8,287,231 | 5.12 | 6,472,366 | 4.00 | N/A | N/A | ||||||||||||||||||
Tier 1 (Core) Capital to average assets of the Bank
|
8,287,231 | 3.79 | 8,756,307 | 4.00 | 18,607,152 | 8.50 |
Actual
|
Minimum Required
For Capital
Adequacy Purposes
|
Minimum Required
Under
Consent Order
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
2010
|
||||||||||||||||||||||||
Total Capital (Tier 1 and Tier 2) to risk-weighted assets of the Bank
|
$ | 12,501,302 | 7.06 | % | $ | 14,173,103 | 8.00 | % | $ | 19,488,017 | 11.00 | % | ||||||||||||
Tier 1 (Core) Capital to risk-weighted assets of the Bank
|
10,254,935 | 5.79 | 7,086,552 | 4.00 | N/A | N/A | ||||||||||||||||||
Tier 1 (Core) Capital to average assets of the Bank
|
10,254,935 | 4.25 | 9,646,274 | 4.00 | 20,498,333 | 8.50 |
2011
|
2010
|
|||||||||||||||
Fixed
Rate
|
Variable
Rate
|
Fixed
Rate
|
Variable
Rate
|
|||||||||||||
Unused lines of credit
|
$ | 0 | $ | 21,349,655 | $ | 1,427,195 | $ | 23,425,296 | ||||||||
Unused standby letters of credit
|
0 | 1,262,000 | 0 | 1,266,735 | ||||||||||||
Commitments to make loans
|
0 | 0 | 95,470 | 0 |
2011
|
2010
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 33,933 | $ | 125,459 | ||||
Investment in subsidiaries
|
8,686,686 | 10,471,075 | ||||||
Other assets
|
21,953 | 23,139 | ||||||
Total assets
|
$ | 8,742,572 | $ | 10,619,673 | ||||
LIABILITIES AND EQUITY
|
||||||||
Accrued expenses and other liabilities
|
$ | 662,954 | $ | 273,886 | ||||
Notes payable
|
5,000,000 | 5,000,000 | ||||||
Subordinated debentures
|
4,500,000 | 4,500,000 | ||||||
Shareholders’ equity
|
(1,420,382 | ) | 845,787 | |||||
Total liabilities and shareholders’ equity
|
$ | 8,742,572 | $ | 10,619,673 |
2011
|
2010
|
|||||||
Other income
|
$ | 354 | $ | 4,023 | ||||
Interest expense
|
(418,243 | ) | (416,455 | ) | ||||
Other expense
|
(90,452 | ) | (249,421 | ) | ||||
Loss before income tax benefit and undistributed subsidiary income
|
(508,341 | ) | (661,853 | ) | ||||
Equity in undistributed subsidiary income (loss)
|
(1,959,068 | ) | (8,231,492 | ) | ||||
Federal income tax benefit
|
0 | (10,618 | ) | |||||
Net loss
|
$ | (2,467,409 | ) | $ | (8,882,727 | ) |
2011
|
2010
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$ | (2,467,409 | ) | $ | (8,882,727 | ) | ||
Equity in undistributed subsidiary income (loss)
|
1,959,068 | 8,231,492 | ||||||
Net change in:
|
||||||||
Other assets
|
1,186 | (14,298 | ) | |||||
Other liabilities
|
389,068 | (243,718 | ) | |||||
Net cash used in operating activities
|
(118,087 | ) | (909,251 | ) | ||||
Cash flows from investing activities
|
||||||||
Capital investment into subsidiaries
|
26,561 | (2,606 | ) | |||||
Net cash from (used in) investing activities
|
26,561 | (2,606 | ) | |||||
Cash flows from financing activities
|
||||||||
Draws on notes payable and line of credit
|
0 | 0 | ||||||
Paydown on notes payable
|
0 | 0 | ||||||
Net cash from financing activities
|
0 | 0 | ||||||
Net change in cash and cash equivalents
|
(91,526 | ) | (911,857 | ) | ||||
Beginning cash and cash equivalents
|
125,459 | 1,037,316 | ||||||
Ending cash and cash equivalents
|
$ | 33,933 | $ | 125,459 |
2011
|
2010
|
|||||||
Unrealized holding gains on held to maturity securities transferred to available for sale
|
$ | 0 | $ | 28,192 | ||||
Unrealized holding gains on available for sale securities
|
308,197 | 40,145 | ||||||
Less reclassification adjustments for gains later recognized in income
|
(3,288 | ) | (79,814 | ) | ||||
Net unrealized gain (loss)
|
304,909 | (11,477 | ) | |||||
Tax effect
|
103,669 | 0 | ||||||
Other comprehensive income (loss)
|
$ | 201,240 | $ | (11,477 | ) |
Fair Value Measurements Using
|
||||||||||||||||
December 31, 2011
|
Total
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
Available for sale securities:
|
||||||||||||||||
US Treasury
|
$ | 4,067,656 | $ | 4,067,656 | $ | 0 | $ | 0 | ||||||||
US Government and federal agency
|
15,572,588 | 0 | 15,572,588 | 0 | ||||||||||||
Municipals
|
2,891,420 | 0 | 2,891,420 | 0 | ||||||||||||
Mortgage-backed and collateralized mortgage obligations– residential
|
12,040,439 | 0 | 12,040,439 | 0 | ||||||||||||
Total
|
$ | 34,572,103 | $ | 4,067,656 | $ | 30,504,447 | $ | 0 | ||||||||
Servicing assets
|
$ | 76,276 | $ | 0 | $ | 76,276 | $ | 0 | ||||||||
December 31, 2010
|
||||||||||||||||
Available for sale securities:
|
||||||||||||||||
US Treasury
|
$ | 1,011,094 | $ | 1,011,094 | $ | 0 | $ | 0 | ||||||||
US Government and federal agency
|
16,908,716 | 1,000,000 | 15,908,716 | 0 | ||||||||||||
Municipals
|
3,238,294 | 0 | 3,238,294 | 0 | ||||||||||||
Mortgage-backed and collateralized mortgage obligations– residential
|
15,345,799 | 0 | 15,345,799 | 0 | ||||||||||||
Total
|
$ | 36,503,903 | $ | 2,011,094 | $ | 34,492,809 | $ | 0 | ||||||||
Servicing assets
|
$ | 38,858 | $ | 0 | $ | 38,858 | $ | 0 |
Total
|
Significant
Unobservable Inputs
(Level 3)
|
|||||||
December 31, 2011
|
||||||||
Impaired loans:
|
||||||||
Commercial
|
$ | 2,390,984 | $ | 2,390,984 | ||||
Commercial Real Estate:
|
||||||||
General
|
867,206 | 867,206 | ||||||
Construction
|
988,112 | 988,112 | ||||||
Consumer:
|
||||||||
Lines of credit
|
47,726 | 47,726 | ||||||
Other
|
26,268 | 26,268 | ||||||
Residential
|
305,998 | 305,998 | ||||||
Total
|
$ | 4,626,294 | $ | 4,626,294 | ||||
Foreclosed assets:
|
||||||||
Commercial Real Estate:
|
||||||||
General
|
$ | 1,601,041 | $ | 1,601,041 | ||||
Construction
|
1,379,158 | 1,379,158 | ||||||
Residential
|
281,472 | 281,472 | ||||||
Total
|
$ | 3,261,671 | $ | 3,261,671 |
Total
|
Significant
Unobservable Inputs
(Level 3)
|
|||||||
December 31, 2010
|
||||||||
Impaired loans:
|
||||||||
Commercial
|
$ | 360,718 | $ | 360,718 | ||||
Commercial Real Estate:
|
||||||||
General
|
2,513,079 | 2,513,079 | ||||||
Construction
|
753,096 | 753,096 | ||||||
Consumer:
|
||||||||
Lines of credit
|
88,716 | 88,716 | ||||||
Other
|
6,184 | 6,184 | ||||||
Residential
|
441,613 | 441,613 | ||||||
Total
|
$ | 4,163,406 | $ | 4,163,406 | ||||
Foreclosed assets:
|
||||||||
Commercial Real Estate:
|
||||||||
General
|
$ | 1,061,170 | $ | 1,061,170 | ||||
Construction
|
2,005,831 | 2,005,831 | ||||||
Residential
|
163,786 | 163,786 | ||||||
Total
|
$ | 3,230,787 | $ | 3,230,787 |
2011
|
2010
|
|||||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Financial assets
|
||||||||||||||||
Cash and cash equivalents
|
$ | 8,920 | $ | 8,920 | $ | 23,640 | $ | 23,640 | ||||||||
Loans held for sale
|
5,535 | 5,940 | 1,263 | 1,273 | ||||||||||||
Loans, net (including impaired)
|
144,359 | 139,176 | 160,452 | 154,484 | ||||||||||||
FHLB stock
|
451 | N/A | 480 | N/A | ||||||||||||
Accrued interest receivable
|
746 | 746 | 781 | 781 | ||||||||||||
Financial liabilities
|
||||||||||||||||
Deposits
|
191,545 | 193,775 | 219,263 | 220,711 | ||||||||||||
Federal funds purchased and repurchase agreements
|
7,815 | 7,815 | 7,461 | 7,461 | ||||||||||||
Subordinated debentures
|
4,500 | 2,945 | 4,500 | 3,172 | ||||||||||||
Notes payable
|
5,000 | 2,500 | 5,000 | 2,500 | ||||||||||||
Accrued interest payable
|
738 | 738 | 362 | 362 |
·
|
The work force has been reduced by 27% with 20 positions eliminated. Most staff salaries have been frozen for four years and the 401(k) matching contributions were suspended in 2009. Benefits expenses have been reapportioned with the employees bearing more of the cost. As a result, salary and benefit expenses decreased 18% or over $900,000 which more than offset the $743,000 increase in FDIC premiums since 2007.
|
·
|
Renegotiated vendor contracts as well as the reduction and elimination of a variety of overhead expenses allowed the Bank to absorb over 90% of the nearly $350,000 increase in administration expenses on impaired loans since 2007.
|
·
|
The Bank’s balance sheet management successfully reduced net risk-weighted assets by over $88 million since year-end 2007. A majority of the decrease was in loans.
|
High
|
Low
|
|||||||
Calendar Year 2011
|
||||||||
First Quarter
|
$ | 1.01 | $ | 0.57 | ||||
Second Quarter
|
0.75 | 0.32 | ||||||
Third Quarter
|
0.60 | 0.33 | ||||||
Fourth Quarter
|
0.45 | 0.05 | ||||||
Calendar Year 2010
|
||||||||
First Quarter
|
$ | 1.75 | $ | 0.60 | ||||
Second Quarter
|
2.24 | 1.02 | ||||||
Third Quarter
|
1.55 | 0.77 | ||||||
Fourth Quarter
|
1.79 | 0.36 |
Rodman & Renshaw, LLC
1251 Avenue of the Americas
20th Floor
New York, NY 10020
|
Stock Registrar and Transfer Agent
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016-3572
1-800-368-5948, via e-mail at
info@rtco.com or online at their
website, www.rtco.com
|
Legal Counsel
Dickinson Wright PLLC
2600 West Big Beaver Road, Suite 300
Troy, Michigan 48084
and
200 Ottawa Avenue, N.W., Suite 1000
Grand Rapids, Michigan 49503
www.dickinsonwright.com
|
Independent Auditors
Crowe Horwath LLP
55 Campau Avenue N.W., Suite 300
Grand Rapids, Michigan 49503
|
DIRECTORS AND OFFICERS
|
|
Community Shores Bank Corporation Board of Directors
|
|
Gary F. Bogner
|
Real Estate Developer
|
(Chairman, non-officer)
|
|
Heather D. Brolick
|
President and Chief Executive Officer
|
Robert L. Chandonnet
|
Owner and President, The Nugent Sand Company, Inc.
|
(Vice Chairman, non-officer)
|
|
Bruce J. Essex
|
Chairman, Port City Die Cast
|
Julie K. Greene
|
Chief Executive Officer, Muskegon Surgery Center
|
Steven P. Moreland
|
President and Chief Executive Officer, Automatic Spring Products Corporation
|
Executive Officers
|
|
Heather D. Brolick
|
President and Chief Executive Officer
|
John M. Clark
|
Senior Vice President and Secretary
|
Tracey A. Welsh
|
Senior Vice President, Chief Financial Officer and Treasurer
|
DIRECTORS AND OFFICERS
|
|
Community Shores Bank Board of Directors
|
|
Gary F. Bogner
|
Real Estate Developer
|
(Chairman, non-officer)
|
|
Heather D. Brolick
|
President and Chief Executive Officer
|
Robert L. Chandonnet
|
Owner and President, The Nugent Sand Company, Inc.
|
(Vice Chairman, non-officer)
|
|
Bruce J. Essex
|
Chairman, Port City Die Cast
|
Julie K. Greene
|
Chief Executive Officer, Muskegon Surgery Center
|
Steven P. Moreland
|
President and Chief Executive Officer, Automatic Spring Products Corporation
|
Management Team
|
|
Heather D. Brolick
|
President and Chief Executive Officer
|
John M. Clark
|
Senior Vice President/Commercial Loan Department Head and Secretary
|
Amy L. Schultz
|
Senior Vice President and Technology/Operations Manager
|
Cerise A. Semrinec
|
Vice President and Credit Administrator
|
Lori E. Versalle
|
Senior Vice President and Branch Administrator
|
Tracey A. Welsh
|
Senior Vice President, Chief Financial Officer and Treasurer
|
DIRECTORS AND OFFICERS
|
|
Faith A. Biros
|
Deposit Processing Manager
|
Monica J. Bixeman
|
Retail Banking Officer
|
Sherri S. Campbell
|
Vice President / Deposit Operations Manager
|
Kelly M. Christian
|
Assistant Vice President / Controller
|
Jennifer L. Egeler
|
Assistant Controller
|
Sharon L. Gary
|
Human Resources Manager
|
Jon M. Huizenga
|
Assistant Vice President / Commercial Lending Officer
|
Robert J. Jacobs
|
Senior Vice President / Business Development Officer
|
Susan M. Kane
|
Vice President / Mortgage Loan Operations Manager
|
Alan W. Kowalski
|
Assistant Vice President / Loan Adjustment - Collections Manager
|
Kimberli A. LaVallee
|
Assistant Vice President / Grand Haven Branch Manager
|
Ronald Maciejewski
|
Vice President / Commercial Lending Officer
|
Renee L. Nyblade
|
Vice President / Mortgage Loan Officer
|
Benjamin D. Robbins
|
Vice President / Commercial Lending Officer
|
Jamie J. Sheffer
|
North Muskegon Branch Manager
|
Clinton A. Todd
|
Vice President / Retail Lending
|
Laurie J. White
|
Vice President / Retail Deposit Sales Manager
|
![]() |
|
Crowe Horwath LLP
|
1.
|
I have reviewed this report on Form 10-K of Community Shores Bank Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: March 28, 2012 | /s/Heather D. Brolick |
Heather D. Brolick
President and Chief Executive Officer
|
|
1.
|
I have reviewed this report on Form 10-K of Community Shores Bank Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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|
a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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|
b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date: March 28, 2012 |
/s/Tracey A. Welsh
|
Tracey A. Welsh
Senior Vice President, Chief Financial Officer and Treasurer |
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(i)
|
the Form 10-K fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
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(ii)
|
to my knowledge, the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Issuer as of and for the period covered by the report.
|
/s/Heather D. Brolick | |
Heather D. Brolick | |
President and Chief Executive Officer |
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(i)
|
the Form 10-K fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
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|
(ii)
|
to my knowledge, the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Issuer as of and for the period covered by the report.
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Note 19 - Fair Value Measurements
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Fair Value, Measurement Inputs, Disclosure [Table Text Block] |
NOTE
19 - FAIR VALUE MEASUREMENTS
Fair
value is the exchange price that would be received for an
asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or
liability in an orderly transaction between market
participants on the measurement date. A fair value hierarchy
requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring
fair value. There are three levels of inputs that may be used
to measure fair value:
Level
1: Quoted prices (unadjusted) for identical assets or
liabilities in active markets that the entity has the ability
to access as of the measurement date.
Level 2: Significant other 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.
Level
3: Significant unobservable inputs that reflect a reporting
entity’s own assumptions about the assumptions that
market participants would use in pricing an asset or
liability.
The
Company used the following methods and significant
assumptions to estimate fair value:
Securities: The
fair values of securities are obtained from a third party who
utilizes quoted prices on nationally recognized securities
exchanges (Level 1 inputs) or matrix pricing (Level 2
inputs), which is a mathematical technique used widely in the
industry to value debt securities without relying exclusively
on quoted
prices for the specific securities but rather by relying on
the securities’ relationship to other benchmark quoted
securities.
Servicing
Rights: The fair value of SBA servicing rights is
obtained from a third party using assumptions provided by the
Company. The individual servicing rights are valued
individually taking into consideration the original term to
maturity, the current age of the loan and the remaining term
to maturity. The valuation methodology utilized for the
servicing rights begins with projecting future cash flows for
each servicing asset, based on its unique characteristics and
market-based assumptions for prepayment speeds. The present
value of the future cash flows are then calculated utilizing
a market-based discount rate assumption. These inputs are
generally observable in the marketplace resulting in a Level
2 classification.
Impaired
Loans: The fair value of impaired loans with
specific allocations of the allowance for loan losses is
generally based on recent real estate appraisals, broker
market opinions or internal evaluations. These appraisals may
utilize a single valuation approach or a combination of
approaches including comparable sales and the income
approach. Adjustments are routinely made in the appraisal
process by the appraisers to adjust for differences between
the comparable sales and income data available. Such
adjustments are typically significant and result in a Level 3
classification of the inputs for determining fair
value.
Foreclosed
Assets: Nonrecurring adjustments to certain
commercial and residential real estate properties classified
as foreclosed assets are measured at fair value, less costs
to sell. Fair values are generally based on recent real
estate appraisals, broker market opinions or internal
evaluations. These appraisals may utilize a single valuation
approach or a combination of approaches including comparable
sales and the income approach. Adjustments are routinely made
in the appraisal process by the appraisers to adjust for
differences between the comparable sales and income data
available. Adjustments of the carrying amount utilizing this
process result in a Level 3 classification.
Assets
measured at fair value on a recurring basis are summarized
below for the years ending December 31, 2011 and 2010:
During
the first quarter of 2011, there was a transfer of two
federal agency securities with a fair value of $991,568 at
March 31, 2011 from Level 1 to Level 2. There were
no transfers between Level 1 and Level 2 during the last
three quarters of 2011 or during all of 2010.
Assets
measured at fair value on a non-recurring basis are
summarized below for the years ending December 31, 2011 and
2010:
The
following two paragraphs describe the impairment charges
recognized during the period:
The
valuation of impaired loans depends on the anticipated source
of repayment. Most of the Bank’s impaired
loans are collateral dependent; only two impairments are
measured using the cash flow method. Collateral
dependent impaired loans are measured using the fair value of
the collateral. At December 31, 2011, such impaired loans had
a recorded investment of $7,528,841, with a valuation
allowance of $2,902,547 compared to impaired loans with a
recorded investment of $6,226,817 and a valuation allowance
of $2,063,411 at December 31, 2010. The fair value of the
collateral on the collateral dependent loans were determined
using independent appraisals, broker market opinions or
internal evaluations which were adjusted for anticipated
disposition costs. The impairment charges, recorded to the
provision for loan losses, on collateral dependent loans were
$871,000 for the year ending December 31, 2011 and $1,565,000
for the year ending December 31, 2010.
At
December 31, 2011 and December 31, 2010, foreclosed assets
carried a fair value of $3,261,671 and $3,230,787
respectively. During the year ending December 31, 2011,
thirty properties included in this total were written down by
$1,047,644. There were also nine properties totaling
$1,544,993 (at fair value) added to other real estate owned
during the year ending December 31, 2011. The fair value of
other real estate
owned was determined primarily using independent appraisals,
broker market opinions or internal evaluations which were
adjusted for anticipated disposition costs.
Carrying
amount and estimated fair values of financial instruments not
previously presented were as follows at year-end:
The
methods and assumptions used to estimate fair value are
described as follows:
Carrying
amount is the estimated fair value for cash and cash
equivalents, short-term borrowings, accrued interest
receivable and payable, demand deposits, short-term debt, and
variable rate loans or deposits that reprice frequently and
fully. For fixed rate loans or deposits and for
variable rate loans or deposits with infrequent repricing or
repricing limits, fair value is based on discounted cash
flows using current market rates applied to the estimated
life and credit risk including consideration for widening
credit spreads. Fair values for impaired loans are
estimated using discounted cash flow analysis or underlying
collateral values. Fair value of loans held for
sale is based on market quotes. Fair value of debt
is based on current rates for similar
financing. It was not practical to determine the
fair value of Federal Home Loan Bank stock due to
restrictions placed on its transferability. Estimated fair
value for other financial instruments and off-balance sheet
loan commitments are considered to approximate carrying
value.
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Note 3 - Loans
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Dec. 31, 2011
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Allowance for Credit Losses on Financing Receivables [Table Text Block] |
NOTE
3 - LOANS
Outstanding
loan balances by portfolio segment and class at year-end were
as follows:
The
following table presents the activity in the allowance for
loan losses for the year ending December 31, 2011 by
portfolio segment:
Activity
in the allowance for loan losses for 2010 was as
follows:
The
following table presents the balance in the allowance for
loan losses and the recorded investment in loans by portfolio
segment based on impairment method as of year-end:
The
following table presents loans individually evaluated for
impairment by class of loans as of year-end. For purposes of
this disclosure, the Company reports unpaid principal balance
net of partial charge-offs.
Non-performing
loans and impaired loans are defined
differently. Some loans may be included in both
categories, whereas other loans may only be included in one
category. However, non-accrual loans and loans
past due 90 days still on accrual are all individually
classified impaired loans.
The
following tables present the aging of the recorded investment
in past due and non accrual loans as of year-end 2011 by
class of loans:
The
following tables present the aging of the recorded investment
in past due and non accrual loans as of year-end 2010 by
class of loans:
Troubled
Debt Restructurings:
The
Company has allocated $1,499,705 of specific reserves on
$9,036,794 of loans to customers whose loan terms have been
modified in troubled debt restructurings as of December 31,
2011 and $447,947 on $5,370,581 as of December 31, 2010. At
December 31, 2011, the Company had an additional $222,700 in
performing loans outstanding to one of those customers. As of
December 31, 2010, there was $1,146,342 committed to two
customers. These customers are paying as agreed on
those loans.
During
the twelve month period ended December 31, 2011, the terms of
certain loans were modified as troubled debt restructurings.
The modification of the terms of such loans included one or a
combination of the following: a stated rate of interest lower
than the current market rate for new debt with similar risk;
interest only payments on an amortizing note; a reduced
payment amount which does not fully cover the interest; or a
permanent reduction of the recorded investment in the
loan.
Modifications
involving a stated interest rate of the loan below the
current market rate were for periods ranging from 6 months to
1 year. Modifications involving a reduced payment amount were
for periods ranging from 5 months to 3 years. One
modification involved an interest only payment on an
amortizing note for 15 months and another modification
involved an interest rate/amortization concession for 3
months. Lastly, one modification involved a
permanent reduction of the recorded investment in the
loan.
The
following table presents loans by class modified as troubled
debt restructurings that occurred during the twelve month
period ended December 31, 2011:
In
the twelve month period ended December 31, 2011, troubled
debt restructurings incurred charge-offs of $383,000. As of
December 31, 2011, an additional $1,308,000 of specific
reserves were established on these troubled debt
restructurings.
Generally,
a modified loan is considered to be in payment default when
the borrower is not performing according to the renegotiated
terms and stops communicating and working with the
Bank.
For
the twelve month period ended December 31, 2011, there were
four trouble debt restructurings that experienced a payment
default within twelve months of the modification. Below is a
table which presents those loans by class:
In
the twelve month period ended December 31, 2011, troubled
debt restructurings that subsequently defaulted resulted in
charge-offs of $326,000. As of December 31, 2011,
there are no specific reserves on the remaining balance of
these troubled debt restructurings.
In
order to determine whether a borrower is experiencing
financial difficulty, an evaluation is performed of the
probability that the borrower will be in payment default on
any of its debt in the foreseeable future without the
modification. This evaluation is performed utilizing the
company’s internal underwriting policy.
Credit
Quality Indicators:
The
Bank utilizes a numeric grading system for commercial and
commercial real estate loans to indicate the strength of the
credit. At origination, grades are assigned to each
commercial and commercial real estate loan by assessing
information about the specific borrower’s situation
including cash flow analysis and the estimated collateral
values. The loan grade is reassessed at each renewal or
amendment but any credit may receive a review based on lender
identification of changes in the situation or behavior of the
borrower. All commercial and commercial real estate loans
exceeding $500,000 are formally reviewed at least annually.
Once a loan is graded a 5W or greater number, and is over
$100,000, the loan grade will be reanalyzed once a quarter to
assess the borrowers compliance with the Bank’s
documented action plan. In addition to these methods for
assigning loan grades, changes may occur through the external
loan review or regulatory exam process. The loan grades are
as follows:
As
of December 31, 2011 and 2010, and based on the most recent
analysis performed in the fourth quarter of each year, the
risk category of loans by class of loans is as
follows:
The
Company considers the performance of the loan portfolio and
its impact on the allowance for loan losses. For
residential and consumer loan classes, the Company evaluates
credit quality based on the aging status of the loan, which
was previously presented and by payment
activity. The following tables present the
recorded investment in residential and consumer loans based
on payment activity as of December 31, 2011 and 2010:
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