Prospectus Supplement No. 7 | Filed Pursuant to Rule 424(b)(3) | |
(To Post-Effective Amendment No. 2 to | Registration No. 333-186128 | |
Registration Statement on Form S-1 Dated June 19, 2013) |
Community Financial Shares, Inc.
Up to 19,684,700 Shares of Common Stock
This prospectus supplement relates to the offer and sale from time to time of up to 19,684,700 shares of common stock of Community Financial Shares, Inc., a Maryland corporation (the “Company”), by the selling stockholders named in the prospectus (the “Prospectus”) included in Registration Statement No. 333-186128. You should read this prospectus supplement in conjunction with the Prospectus, and this prospectus supplement is qualified in its entirety by reference to the Prospectus, except to the extent that the information contained in this prospectus supplement supersedes or supplements the information contained in the Prospectus.
The information contained herein supplements the information in the Prospectus by including our unaudited financial statements for the three and nine months ended September 30, 2013, as well as the other information included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (the “Form 10-Q”). The text of the Form 10-Q is attached hereto.
Investing in our common stock involves risks, including the possible loss of principal. See “Risk Factors” beginning on page 8 of the Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is November 15, 2013.
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | |
| SECURITIES EXCHANGE ACT OF 1934 | |
| | |
| For the quarterly period ended September 30, 2013 | |
| | |
| OR | |
| | |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | |
| SECURITIES EXCHANGE ACT OF 1934 | |
Maryland | | 36-4387843 |
(State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | Identification No.) |
| | |
357 Roosevelt Road Glen Ellyn, Illinois | | 60137 |
(Address of principal executive offices) | | (Zip Code) |
Yes x | No ¨ |
Yes x | No ¨ |
Large Accelerated Filer ¨ | Accelerated Filer ¨ |
| |
Non-Accelerated Filer ¨ | Smaller Reporting Company x |
(Do not check if a smaller reporting company) | |
Yes ¨ | No x |
Class | | Outstanding at November 6, 2013 |
Common Stock, $0.01 par value per share | | 10,781,988 shares |
| PART I FINANCIAL INFORMATION | |
| | |
Item 1. | Financial Statements | 3 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 41 |
Item 4 | Controls and Procedures | 42 |
| | |
| PART II OTHER INFORMATION | |
| | |
Item 1. | Legal Proceedings | 43 |
Item 1A. | Risk Factors | 43 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 45 |
Item 3. | Defaults Upon Senior Securities | 45 |
Item 4. | Mine Safety Disclosures | 45 |
Item 5. | Other Information | 45 |
Item 6. | Exhibits | 46 |
| Signatures | 47 |
2 | ||
| | September 30, | | December 31, | | ||
| | 2013 | | 2012 | | ||
| | (Unaudited) | | | | | |
ASSETS | | | | | | | |
Cash and due from banks | | $ | 4,095 | | $ | 4,875 | |
Interest-bearing deposits | | | 30,064 | | | 66,146 | |
Cash and cash equivalents | | | 34,159 | | | 71,021 | |
| | | | | | | |
Interest-bearing time deposits | | | 1,443 | | | 1,941 | |
Securities available for sale | | | 87,446 | | | 47,588 | |
Loans held for sale | | | 480 | | | 7,230 | |
Loans, less allowance for loan losses of $2,544 and $3,032 at September 30, 2013 and December 31, 2012, respectively | | | 196,458 | | | 194,391 | |
Foreclosed assets, net | | | 6,423 | | | 9,012 | |
Federal Home Loan Bank stock | | | 926 | | | 926 | |
Premises and equipment, net | | | 14,963 | | | 14,724 | |
Cash value of life insurance | | | 6,589 | | | 6,421 | |
Interest receivable and other assets | | | 2,541 | | | 1,922 | |
| | | | | | | |
Total assets | | $ | 351,428 | | $ | 355,176 | |
| | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | |
Deposits | | $ | 319,119 | | $ | 317,204 | |
Federal Home Loan Bank advances | | | 4,500 | | | 9,000 | |
Subordinated debentures | | | 3,609 | | | 3,609 | |
Interest payable and other liabilities | | | 2,520 | | | 3,011 | |
Total liabilities | | | 329,748 | | | 332,824 | |
| | | | | | | |
Commitments and contingent liabilities | | | | | | | |
| | | | | | | |
Shareholders' equity | | | | | | | |
Common stock - $0.01 and no par value, 75,000,000 shares authorized; 10,781,988 and 5,560,567 shares issued and outstanding | | | - | | | - | |
Preferred stock - $1.00 par value, $100 liquidation preference 1,000,000 shares authorized; 191,246 and 196,847 shares issued and outstanding | | | 191 | | | 197 | |
Paid-in capital | | | 30,385 | | | 26,270 | |
Accumulated deficit | | | (7,585) | | | (4,346) | |
Accumulated other comprehensive income (loss) | | | (1,311) | | | 231 | |
Total shareholders' equity | | | 21,680 | | | 22,352 | |
| | | | | | | |
Total liabilities and shareholders' equity | | $ | 351,428 | | $ | 355,176 | |
3 | ||
| | Three Months | | Nine Months | | ||||||||
| | Ended September 30, | | Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
Interest and dividend income | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 2,697 | | $ | 2,719 | | $ | 7,972 | | $ | 8,289 | |
Securities: | | | | | | | | | | | | | |
Taxable | | | 276 | | | 241 | | | 790 | | | 710 | |
Exempt from federal income tax | | | 77 | | | 82 | | | 191 | | | 283 | |
Other interest income | | | 25 | | | 38 | | | 104 | | | 117 | |
Total interest and dividend income | | | 3,075 | | | 3,080 | | | 9,057 | | | 9,399 | |
Interest expense | | | | | | | | | | | | | |
Deposits | | | 351 | | | 426 | | | 1,120 | | | 1,343 | |
Federal Home Loan Bank advances and other borrowed funds | | | 28 | | | 89 | | | 92 | | | 286 | |
Subordinated debentures | | | 18 | | | 19 | | | 52 | | | 58 | |
Total interest expense | | | 397 | | | 534 | | | 1,264 | | | 1,687 | |
Net interest income | | | 2,678 | | | 2,546 | | | 7,793 | | | 7,712 | |
Provision for loan losses | | | 120 | | | 180 | | | 1,420 | | | 1,137 | |
Net interest income after provision for loan losses | | | 2,558 | | | 2,366 | | | 6,373 | | | 6,575 | |
Non-interest income | | | | | | | | | | | | | |
Service charges on deposit accounts | | | 89 | | | 98 | | | 260 | | | 289 | |
Gain on sale of loans | | | 222 | | | 229 | | | 993 | | | 609 | |
Gain on sale of securities | | | - | | | - | | | 55 | | | 141 | |
Gain/(Loss) on sale of foreclosed assets | | | 7 | | | (25) | | | (331) | | | (20) | |
Other non-interest income | | | 231 | | | 256 | | | 713 | | | 800 | |
Total non-interest income | | | 549 | | | 558 | | | 1,690 | | | 1,819 | |
Non-interest expense | | | | | | | | | | | | | |
Salaries and employee benefits | | | 1,468 | | | 1,548 | | | 4,584 | | | 4,361 | |
Net occupancy and equipment expense | | | 299 | | | 313 | | | 954 | | | 962 | |
Data processing expense | | | 341 | | | 317 | | | 1,009 | | | 930 | |
Advertising and promotions | | | 47 | | | 81 | | | 137 | | | 218 | |
Professional fees | | | 343 | | | 254 | | | 1,058 | | | 778 | |
FDIC insurance premiums | | | 205 | | | 319 | | | 617 | | | 912 | |
Write-down on other real estate owned | | | 386 | | | - | | | 1,251 | | | 424 | |
Other real estate owned expenses | | | 187 | | | 141 | | | 507 | | | 412 | |
Other operating expenses | | | 282 | | | 335 | | | 1,039 | | | 1,033 | |
Total non-interest expense | | | 3,558 | | | 3,308 | | | 11,156 | | | 10,030 | |
Loss before income taxes | | | (451) | | | (384) | | | (3,093) | | | (1,636) | |
Income taxes/(benefit) | | | - | | | (30) | | | 146 | | | (56) | |
Net loss | | | (451) | | | (354) | | | (3,239) | | | (1,580) | |
Preferred stock dividend and accretion | | | - | | | (114) | | | - | | | (339) | |
Net loss available to common shareholders | | $ | (451) | | $ | (468) | | $ | (3,239) | | $ | (1,919) | |
Loss per share | | | | | | | | | | | | | |
Basic | | $ | (0.07) | | $ | (0.38) | | $ | (0.53) | | $ | (1.54) | |
Diluted | | $ | (0.07) | | $ | (0.38) | | $ | (0.53) | | $ | (1.54) | |
| | | | | | | | | | | | | |
Average shares outstanding basic | | | 6,590,610 | | | 1,245,267 | | | 6,098,213 | | | 1,245,267 | |
Average shares outstanding diluted | | | 6,590,610 | | | 1,245,267 | | | 6,098,213 | | | 1,245,267 | |
Dividends per share | | $ | 0.00 | | $ | 0.00 | | $ | 0.00 | | $ | 0.00 | |
4 | ||
| | Three Months | | Nine Months | | ||||||||
| | Ended September 30, | | Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
Net loss | | $ | (451) | | $ | (354) | | $ | (3,239) | | $ | (1,580) | |
Other comprehensive loss: | | | | | | | | | | | | | |
Unrealized holding gains/(losses) arising during the period: | | | | | | | | | | | | | |
Unrealized net gains/(losses) | | | (357) | | | 77 | | | (2,461) | | | 287 | |
Related income tax benefit/(expense) | | | 138 | | | (30) | | | 954 | | | (107) | |
Net unrealized gains/(losses) | | | (219) | | | 47 | | | (1,507) | | | 180 | |
Less: reclassification adjustment for net gains realized during the period | | | | | | | | | | | | | |
Realized net gains | | | - | | | - | | | 55 | | | 141 | |
Related income tax expense | | | - | | | - | | | (20) | | | (51) | |
Net realized gains | | | - | | | - | | | 35 | | | 90 | |
Other comprehensive income/(loss) | | | (219) | | | 47 | | | (1,542) | | | 90 | |
Comprehensive loss | | $ | (670) | | $ | (307) | | $ | (4,781) | | $ | (1,490) | |
5 | ||
| | Number | | | | | | | | Accumulated | | | | ||||||
| | of | | | | | | | | Other | | Total | | ||||||
| | Common | | Preferred | | Paid-In | | Accumulated | | Comprehensive | | Shareholders' | | ||||||
| | Shares | | Stock | | Capital | | Deficit | | Income (loss) | | Equity | | ||||||
| | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2013 | | | 5,560,567 | | $ | 197 | | $ | 26,270 | | $ | (4,346) | | $ | 231 | | $ | 22,352 | |
Net loss | | | - | | | - | | | - | | | (3,239) | | | - | | | (3,239) | |
Other comprehensive loss | | | - | | | - | | | - | | | - | | | (1,542) | | | (1,542) | |
Net proceeds of rights offering | | | 3,670,221 | | | - | | | 4,090 | | | - | | | - | | | 4,090 | |
Preferred stock conversion to common | | | 1,551,200 | | | (16) | | | 16 | | | - | | | - | | | - | |
Preferred stock issued | | | - | | | 10 | | | - | | | - | | | - | | | 10 | |
Amortization of stock option expense | | | - | | | - | | | 9 | | | - | | | - | | | 9 | |
Balance at September 30, 2013 | | | 10,781,988 | | $ | 191 | | $ | 30,385 | | $ | (7,585) | | $ | (1,311) | | $ | 21,680 | |
| | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2012 | | | 1,245,267 | | $ | 7 | | $ | 12,033 | | $ | (5,407) | | $ | 617 | | $ | 7,250 | |
Net loss | | | - | | | - | | | - | | | (1,580) | | | - | | | (1 580) | |
Other comprehensive income | | | - | | | - | | | - | | | - | | | 90 | | | 90 | |
Preferred stock dividends (5%) | | | - | | | - | | | - | | | (285) | | | - | | | (285) | |
Discount on preferred stock | | | - | | | - | | | 54 | | | (54) | | | - | | | - | |
Amortization of stock option expense | | | - | | | - | | | 10 | | | - | | | - | | | 10 | |
Balance at September 30, 2012 | | | 1,245,267 | | $ | 7 | | $ | 12,097 | | $ | (7,326) | | $ | 707 | | $ | 5,485 | |
6 | ||
| | Nine Months | | ||||
| | Ended September 30, | | ||||
| | 2013 | | 2012 | | ||
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | |
Net loss | | $ | (3,239) | | $ | (1,580) | |
Adjustments to reconcile net loss to net cash from (used in) operating activities | | | | | | | |
Amortization on securities, net | | | 505 | | | 174 | |
Depreciation | | | 460 | | | 490 | |
Provision for loan losses | | | 1,420 | | | 1,137 | |
Gain on sale of securities | | | (55) | | | (141) | |
Write-down on other real estate owned | | | 1,251 | | | 424 | |
Loss on sale of foreclosed assets | | | 331 | | | 20 | |
Gain on sale of loans | | | (993) | | | (609) | |
Originations of loans for sale | | | (39,696) | | | (28,693) | |
Proceeds from sales of loans | | | 47,438 | | | 29,302 | |
Compensation cost of stock options | | | 9 | | | 10 | |
Change in cash value of life insurance | | | (169) | | | (180) | |
Change in interest receivable and other assets | | | (323) | | | (2,500) | |
Change in interest payable and other liabilities | | | (491) | | | 343 | |
Net cash from (used in) operating activities | | | 6,448 | | | (1,803) | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | |
Net change in interest-bearing time deposits | | | 498 | | | 1,494 | |
Purchases of securities available for sale | | | (62,550) | | | (29,752) | |
Proceeds from maturities and calls of securities available for sale | | | 11,664 | | | 18,547 | |
Proceeds from sales of securities available for sale | | | 8,063 | | | 4,392 | |
Proceeds from Federal Home Loan Bank stock redemption | | | - | | | 3,503 | |
Proceeds from sale of other real estate owned | | | 3,990 | | | 1,053 | |
Net change in loans | | | (5,791) | | | (1,334) | |
Property and equipment expenditures, net | | | (699) | | | (240) | |
Net cash used in investing activities | | | (44,825) | | | (2,337) | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | |
Change in: | | | | | | | |
Non-interest bearing and interest-bearing demand deposits and savings | | | 4,004 | | | 3,996 | |
Certificates and other time deposits | | | (2,089) | | | 2,333 | |
Proceeds of capital raises | | | 4,100 | | | - | |
Repayments of borrowings | | | (4,500) | | | - | |
Net cash from financing activities | | | 1,515 | | | 6,329 | |
| | | | | | | |
Change in cash and cash equivalents | | | (36,862) | | | 2,189 | |
Cash and cash equivalents at beginning of period | | | 71,021 | | | 44,258 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | | $ | 34,159 | | $ | 46,447 | |
| | | | | | | |
Supplemental disclosures | | | | | | | |
Interest paid | | $ | 1,251 | | $ | 1,601 | |
Income taxes paid | | | - | | | - | |
Transfers from loans to foreclosed assets | | | 1,594 | | | 2,237 | |
7 | ||
| | Three Months | | Nine Months | | ||
| | Ended | | Ended | | ||
| | September 30, | | September 30, | | ||
| | 2013 | | 2013 | | ||
Net loss available for distribution | | $ | (451) | | $ | (3,239) | |
Dividends and undistributed loss allocated to participating securities | | | - | | | - | |
Loss attributable to common shareholders | | $ | (451) | | $ | (3,239) | |
| | | | | | | |
Average common shares outstanding for basic earnings per share | | | 6,590,610 | | | 6,098,213 | |
Effect of dilutive convertible preferred stock | | | - | | | - | |
Effect of dilutive stock options | | | - | | | - | |
Average common and common-equivalent shares for dilutive earnings per share | | | 6,590,610 | | | 6,098,213 | |
| | | | | | | |
Basic | | $ | (0.07) | | $ | (0.53) | |
Diluted | | $ | (0.07) | | $ | (0.53) | |
8 | ||
| | Three Months | | Nine Months | | ||
| | September 30, | | September 30, | | ||
| | 2012 | | 2012 | | ||
Basic | | | | | | | |
Net loss | | $ | (354) | | $ | (1,580) | |
Less: Accretion of discount on preferred stock | | | (18) | | | (54) | |
Dividends on preferred stock | | | (96) | | | (285) | |
Net loss available to common shareholders | | $ | (468) | | $ | (1,919) | |
| | | | | | | |
Weighted-average common shares outstanding | | | 1,245,267 | | | 1,245,267 | |
| | | | | | | |
Basic loss per share | | $ | (0.38) | | $ | (1.54) | |
| | | | | | | |
Diluted | | | | | | | |
Net loss | | $ | (354) | | $ | (1,580) | |
Less: Accretion of discount on preferred stock | | | (18) | | | (54) | |
Dividends on preferred stock | | | (96) | | | (285) | |
Net loss available to common shareholders | | $ | (468) | | $ | (1,919) | |
Weighted-average common shares outstanding for basic loss per share | | | 1,245,267 | | | 1,245,267 | |
Add dilutive effects of assumed exercise of stock options | | | - | | | - | |
Average shares and dilutive potential common shares | | | 1,245,267 | | | 1,245,267 | |
| | | | | | | |
Diluted loss per share | | $ | (0.38) | | $ | (1.54) | |
| | September 30, 2013 | | | December 31, 2012 | | | ||||||||
| | Amount | | Ratio | | | Amount | | Ratio | | | ||||
Total capital (to risk-weighted assets) | | $ | 25,462 | | | 11.4 | % | | $ | 28,321 | | | 12.6 | % | |
Tier I capital (to risk-weighted assets) | | | 22,918 | | | 10.3 | % | | | 25,514 | | | 11.4 | % | |
Tier I capital (to average assets) | | | 22,918 | | | 6.8 | % | | | 25,514 | | | 7.7 | % | |
9 | ||
| | September 30, 2013 | | |||||||
| | | | Gross | | Gross | | |||
| | Fair | | Unrealized | | Unrealized | | |||
| | Value | | Gains | | Losses | | |||
U. S. government agencies | | $ | 11,389 | | $ | - | | $ | (1,084) | |
State and political subdivisions | | | 15,304 | | | 76 | | | (367) | |
Mortgage-backed securities Government sponsored entities | | | 54,919 | | | 182 | | | (874) | |
Preferred stock | | | 24 | | | 20 | | | - | |
SBA guaranteed | | | 5,810 | | | 2 | | | (95) | |
| | $ | 87,446 | | $ | 280 | | $ | (2,420) | |
| | December 31, 2012 | | |||||||
| | | | Gross | | Gross | | |||
| | Fair | | Unrealized | | Unrealized | | |||
| | Value | | Gains | | Losses | | |||
U. S. government agencies | | $ | 21,430 | | $ | 29 | | $ | (67) | |
State and political subdivisions | | | 2,909 | | | 72 | | | - | |
Mortgage-backed securities GSE residential | | | 22,975 | | | 338 | | | (20) | |
Preferred stock | | | 37 | | | 22 | | | - | |
SBA guaranteed | | | 237 | | | 3 | | | (1) | |
| | $ | 47,588 | | $ | 464 | | $ | (88) | |
10 | ||
| | September 30, 2013 | | ||||||||||||||||
| | Less than 12 Months | | 12 Months or More | | Total | | ||||||||||||
Description of | | | | Unrealized | | | | Unrealized | | | | Unrealized | | ||||||
Securities | | Fair Value | | Losses | | Fair Value | | Losses | | Fair Value | | Losses | | ||||||
U. S. government agencies | | $ | 11,389 | | $ | (1,084) | | $ | - | | $ | - | | $ | 11,389 | | $ | (1,084) | |
State and political subdivisions | | | 10,502 | | | (367) | | | - | | | - | | | 10,502 | | | (367) | |
Mortgage-backed securities GSE | | | 42,180 | | | (874) | | | - | | | - | | | 42,180 | | | (874) | |
SBA guaranteed | | | ,653 | | | (95) | | | - | | | - | | | 5,653 | | | (95) | |
| | | | | | | | | | | | | | | | | | | |
Total temporarily impaired securities | | $ | 69,724 | | $ | (2,420) | | $ | - | | $ | - | | $ | 69,724 | | $ | (2,420) | |
| | December 31, 2012 | | ||||||||||||||||
| | Less than 12 Months | | 12 Months or More | | Total | | ||||||||||||
Description of | | | | Unrealized | | | | Unrealized | | | | Unrealized | | ||||||
Securities | | Fair Value | | Losses | | Fair Value | | Losses | | Fair Value | | Losses | | ||||||
U.S. Government agencies | | $ | 11,406 | | $ | (67) | | $ | - | | $ | - | | $ | 11,406 | | $ | (67) | |
Mortgage-backed securities GSE residential | | | 3,637 | | | (20) | | | 14 | | | - | | | 3,651 | | | (20) | |
SBA guaranteed | | | - | | | - | | | 25 | | | (1) | | | 25 | | | (1) | |
| | | | | | | | | | | | | | | | | | | |
Total temporarily impaired securities | | $ | 15,043 | | $ | (87) | | $ | 39 | | $ | (1) | | $ | 15,082 | | $ | (88) | |
| | Amortized | | Fair | | ||
| | Cost | | Value | | ||
Due in one year or less | | $ | 330 | | $ | 331 | |
Due after one year through five years | | | 1,447 | | | 1,441 | |
Due after five years through ten years | | | 8,889 | | | 8,686 | |
Due after ten years | | | 17,402 | | | 16,235 | |
| | | | | | | |
Mortgage-backed securities | | | 55,611 | | | 54,919 | |
SBA guaranteed | | | 5,903 | | | 5,810 | |
Preferred stock | | | 4 | | | 24 | |
| | $ | 89,586 | | $ | 87,446 | |
11 | ||
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
Sales proceeds | | $ | - | | $ | - | | $ | 8,063 | | $ | 4,392 | |
Gross gains on sales | | | - | | | - | | | 55 | | | 141 | |
12 | ||
| | September 30, | | December 31, | | ||
| | 2013 | | 2012 | | ||
Real estate | | | | | | | |
Commercial | | $ | 100,122 | | $ | 96,588 | |
Construction | | | 2,050 | | | 3,615 | |
Residential | | | 25,945 | | | 20,875 | |
Home equity | | | 46,663 | | | 50,444 | |
Total real estate loans | | | 174,780 | | | 171,522 | |
Commercial | | | 22,722 | | | 24,388 | |
Consumer | | | 1,294 | | | 1,313 | |
Total loans | | | 198,796 | | | 197,223 | |
Deferred loan costs, net | | | 206 | | | 200 | |
Allowance for loan losses | | | (2,544) | | | (3,032) | |
Loans, net | | $ | 196,458 | | $ | 194,391 | |
13 | ||
14 | ||
Balances, January 1, 2013 | | $ | 2,432 | |
New loans including renewals | | | 66 | |
Payments including renewals | | | (954) | |
Balances, September 30, 2013 | | $ | 1,544 | |
| | Three Months Ended September 30, 2013 | | |||||||||||||||||||
| | | | Commercial | | | | | | | | | | | | |||||||
| | Commercial | | Real Estate | | Construction | | Consumer | | Residential | | HELOC | | Total | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | $ | 454 | | $ | 1,453 | | $ | 63 | | $ | 19 | | $ | 168 | | $ | 277 | | $ | 2,434 | |
| | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses | | | 110 | | | (38) | | | (28) | | | 6 | | | 24 | | | 46 | | | 120 | |
Charge-offs | | | (80) | | | - | | | - | | | - | | | - | | | (12) | | | (92) | |
Recoveries | | | - | | | 74 | | | - | | | - | | | 7 | | | 1 | | | 82 | |
Balance at end of period | | $ | 484 | | $ | 1,489 | | $ | 35 | | $ | 25 | | $ | 199 | | $ | 312 | | $ | 2,544 | |
15 | ||
| | Nine Months Ended September 30, 2013 | | |||||||||||||||||||
| | | | Commercial | | | | | | | | | | | | |||||||
| | Commercial | | Real Estate | | Construction | | Consumer | | Residential | | HELOC | | Total | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | $ | 621 | | $ | 1,386 | | $ | 53 | | $ | 21 | | $ | 305 | | $ | 646 | | $ | 3,032 | |
| | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses | | | 129 | | | 374 | | | (18) | | | 17 | | | 714 | | | 204 | | | 1,420 | |
Charge-offs | | | (266) | | | (357) | | | - | | | (14) | | | (835) | | | (542) | | | (2,014) | |
Recoveries | | | - | | | 86 | | | - | | | 1 | | | 15 | | | 4 | | | 106 | |
Balance at end of period | | $ | 484 | | $ | 1,489 | | $ | 35 | | $ | 25 | | $ | 199 | | $ | 312 | | $ | 2,544 | |
| | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated for impairment | | $ | - | | $ | 249 | | $ | - | | $ | - | | $ | - | | $ | 46 | | $ | 295 | |
Ending balance: collectively evaluated for impairment | | $ | 484 | | $ | 1,240 | | $ | 35 | | $ | 25 | | $ | 199 | | $ | 266 | | $ | 2,249 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Loans: | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 22,722 | | $ | 100,122 | | $ | 2,050 | | $ | 1,294 | | $ | 25,945 | | $ | 46,663 | | $ | 198,796 | |
Ending balance: individually evaluated for impairment | | $ | 1,614 | | $ | 1,359 | | $ | - | | $ | - | | $ | - | | $ | 505 | | $ | 3,478 | |
Ending balance: collectively evaluated for impairment | | $ | 21,108 | | $ | 98,764 | | $ | 2,050 | | $ | 1,294 | | $ | 25,945 | | $ | 46,157 | | $ | 195,318 | |
| | Three Months Ended September 30, 2012 | | |||||||||||||||||||
| | | | Commercial | | | | | | | | | | | | |||||||
| | Commercial | | Real Estate | | Construction | | Consumer | | Residential | | HELOC | | Total | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | $ | 652 | | $ | 3,051 | | $ | 28 | | $ | 18 | | $ | 274 | | $ | 1,144 | | $ | 5,168 | |
Provision for loan losses | | | 11 | | | 217 | | | 9 | | | - | | | 165 | | | (222) | | | 180 | |
Charge-offs | | | - | | | (20) | | | - | | | - | | | - | | | (34) | | | (54) | |
Recoveries | | | - | | | 6 | | | - | | | - | | | 10 | | | - | | | 16 | |
Balance at end of period | | $ | 663 | | $ | 3,254 | | $ | 37 | | $ | 18 | | $ | 449 | | $ | 888 | | $ | 5,309 | |
| | Nine Months Ended September 30, 2012 | | |||||||||||||||||||
| | | | Commercial | | | | | | | | | | | | |||||||
| | Commercial | | Real Estate | | Construction | | Consumer | | Residential | | HELOC | | Total | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | $ | 695 | | $ | 4,171 | | $ | 1,768 | | $ | 18 | | $ | 804 | | $ | 1,398 | | $ | 8,854 | |
Provision for loan losses | | | 254 | | | 950 | | | 9 | | | 5 | | | 71 | | | (152) | | | 1,137 | |
Charge-offs | | | (295) | | | (1,877) | | | (1,740) | | | (5) | | | (456) | | | (358) | | | (4,731) | |
Recoveries | | | 9 | | | 10 | | | - | | | - | | | 30 | | | - | | | 49 | |
Balance at end of period | | $ | 663 | | $ | 3,254 | | $ | 37 | | $ | 18 | | $ | 449 | | $ | 888 | | $ | 5,309 | |
| | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated for impairment | | $ | - | | $ | 2,034 | | $ | - | | $ | - | | $ | 240 | | $ | 571 | | $ | 2,845 | |
Ending balance: collectively evaluated for impairment | | $ | 663 | | $ | 1,220 | | $ | 37 | | $ | 18 | | $ | 209 | | $ | 317 | | $ | 2,464 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Loans: | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 26,205 | | $ | 96,116 | | $ | 2,486 | | $ | 1,299 | | $ | 19,460 | | $ | 53,749 | | $ | 199,315 | |
Ending balance: individually evaluated for impairment | | $ | - | | $ | 6,771 | | $ | - | | $ | - | | $ | 1,686 | | $ | 2,651 | | $ | 11,108 | |
Ending balance: collectively evaluated for impairment | | $ | 26,205 | | $ | 89,345 | | $ | 2,486 | | $ | 1,299 | | $ | 17,774 | | $ | 51,098 | | $ | 188,207 | |
16 | ||
| | December 31, 2012 | | |||||||||||||||||||
| | | | Commercial | | | | | | | | | | | | |||||||
| | Commercial | | Real Estate | | Construction | | Consumer | | Residential | | HELOC | | Total | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | $ | 695 | | $ | 4,171 | | $ | 1,768 | | $ | 18 | | $ | 804 | | $ | 1,398 | | $ | 8,854 | |
Provision for loan losses | | | 203 | | | 810 | | | 25 | | | 15 | | | 535 | | | (121) | | | 1,467 | |
Charge-offs | | | (295) | | | (3,611) | | | (1,740) | | | (12) | | | (1,067) | | | (638) | | | (7,363) | |
Recoveries | | | 18 | | | 16 | | | - | | | - | | | 33 | | | 7 | | | 74 | |
Balance at end of period | | $ | 621 | | $ | 1,386 | | $ | 53 | | $ | 21 | | $ | 305 | | $ | 646 | | $ | 3,032 | |
| | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated for impairment | | $ | - | | $ | 154 | | $ | - | | $ | - | | $ | 147 | | $ | 368 | | $ | 669 | |
Ending balance: collectively evaluated for impairment | | $ | 621 | | $ | 1,232 | | $ | 53 | | $ | 21 | | $ | 158 | | $ | 278 | | $ | 2,363 | |
Total Loans: | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 24,388 | | $ | 96,588 | | $ | 3,615 | | $ | 1,313 | | $ | 20,875 | | $ | 50,444 | | $ | 197,223 | |
Ending balance: individually evaluated for impairment | | $ | - | | $ | 4,034 | | $ | - | | $ | - | | $ | 2,970 | | $ | 1,717 | | $ | 8,721 | |
Ending balance: collectively evaluated for impairment | | $ | 24,388 | | $ | 92,554 | | $ | 3,615 | | $ | 1,313 | | $ | 17,905 | | $ | 48,727 | | $ | 188,502 | |
| | September 30, | | December 31, | | ||
| | 2013 | | 2012 | | ||
Real estate loans: | | | | | | | |
Commercial | | $ | 1,359 | | $ | 3,143 | |
Residential | | | - | | | 2,565 | |
Home equity | | | 505 | | | 1,717 | |
Commercial | | | 30 | | | - | |
Total | | $ | 1,894 | | $ | 7,425 | |
| | | | Unpaid | | | | |||
| | Recorded | | Principal | | Specific | | |||
| | Balance | | Balance | | Allowance | | |||
With no related allowance recorded: | | | | | | | | | | |
Commercial | | $ | 1,614 | | $ | 1,695 | | $ | - | |
Commercial real estate | | | 440 | | | 440 | | | - | |
HELOC | | | 165 | | | 165 | | | - | |
Subtotal | | | 2,219 | | | 2,300 | | | - | |
With an allowance recorded: | | | | | | | | | | |
Commercial real estate | | | 919 | | | 1,262 | | | 249 | |
HELOC | | | 340 | | | 340 | | | 46 | |
Subtotal | | | 1,259 | | | 1,602 | | | 295 | |
Total Impaired Loans | | $ | 3,478 | | $ | 3,902 | | $ | 295 | |
17 | ||
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||||||||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||||||||||||||
| | Average | | | | Average | | | | Average | | | | Average | | | | ||||||||
| | Investment in | | Interest | | Investment in | | Interest | | Investment in | | Interest | | Investment in | | Interest | | ||||||||
| | Impaired | | Income | | Impaired | | Income | | Impaired | | Income | | Impaired | | Income | | ||||||||
| | Loans | | Recognized | | Loans | | Recognized | | Loans | | Recognized | | Loans | | Recognized | | ||||||||
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,700 | | $ | 25 | | $ | - | | $ | - | | $ | 729 | | $ | 25 | | $ | - | | $ | - | |
Commercial real estate | | | 445 | | | - | | | 1,889 | | | 21 | | | 457 | | | - | | | 1,466 | | | 58 | |
Residential | | | 401 | | | 5 | | | 786 | | | 4 | | | 531 | | | 14 | | | 1,836 | | | 9 | |
HELOC | | | 165 | | | - | | | 166 | | | - | | | 166 | | | - | | | 165 | | | - | |
Subtotal | | | 2,711 | | | 30 | | | 2,841 | | | 25 | | | 1,883 | | | 39 | | | 3,467 | | | 67 | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | 918 | | | - | | | 4,854 | | | - | | | 933 | | | - | | | 3,940 | | | 53 | |
Residential | | | - | | | - | | | 902 | | | 4 | | | - | | | - | | | 435 | | | 8 | |
HELOC | | | 340 | | | - | | | 2,491 | | | 7 | | | 342 | | | - | | | 2,505 | | | 7 | |
Subtotal | | | 1,258 | | | - | | | 8,247 | | | 11 | | | 1,275 | | | - | | | 6,880 | | | 68 | |
Total Impaired Loans | | $ | 3,969 | | $ | 30 | | $ | 11,088 | | $ | 36 | | $ | 3,158 | | $ | 39 | | $ | 10,347 | | $ | 135 | |
| | | | | | | | | | | Average | | | | | |
| | | | | Unpaid | | | | | Investment in | | | | | ||
| | Recorded | | Principal | | | | | Impaired | | Interest Income | | ||||
| | Balance | | Balance | | Specific Allowance | | Loans | | Recognized | | |||||
With no related allowance recorded: | | | | | | | | | | | | | | | | |
Commercial real estate | | $ | 890 | | $ | 890 | | $ | - | | $ | 678 | | $ | 24 | |
Residential | | | 1,008 | | | 1,008 | | | - | | | 951 | | | 28 | |
HELOC | | | 181 | | | 181 | | | - | | | 165 | | | - | |
Subtotal | | | 2,079 | | | 2,079 | | | - | | | 1,794 | | | 52 | |
With an allowance recorded: | | | | | | | | | | | | | | | | |
Commercial real estate | | | 3,144 | | | 4,878 | | | 154 | | | 4,620 | | | 64 | |
Residential | | | 1,962 | | | 2,180 | | | 147 | | | 1,512 | | | 43 | |
HELOC | | | 1,536 | | | 1,536 | | | 368 | | | 2,024 | | | 15 | |
Subtotal | | | 6,642 | | | 8,594 | | | 669 | | | 8,155 | | | 122 | |
Total Impaired Loans | | $ | 8,721 | | $ | 10,673 | | $ | 669 | | $ | 9,949 | | $ | 174 | |
18 | ||
| | September 30, 2013 | | ||||||||||||||||
| | | | | Special | | | | | | | | | | | | | | |
| | Pass | | Mention | | Substandard | | Doubtful | | Loss | | Total | | ||||||
| | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 20,818 | | $ | 221 | | $ | 1,683 | | $ | | | $ | | | $ | 22,722 | |
Real estate loans: | | | | | | | | | | | | | | | | | | | |
Construction | | | 2,050 | | | - | | | - | | | | | | | | | 2,050 | |
Commercial real estate | | | 95,507 | | | 3,256 | | | 1,359 | | | | | | | | | 100,122 | |
Residential | | | 24,468 | | | 1,477 | | | - | | | | | | | | | 25,945 | |
Home equity | | | 46,128 | | | 30 | | | 505 | | | | | | | | | 46,663 | |
Consumer | | | 1,294 | | | | | | | | | | | | | | | 1,294 | |
Total | | $ | 190,265 | | $ | 4,984 | | $ | 3,547 | | $ | | | $ | | | $ | 198,796 | |
| | December 31, 2012 | | ||||||||||||||||
| | | | | Special | | | | | | | | | | | | | | |
| | Pass | | Mention | | Substandard | | Doubtful | | Loss | | Total | | ||||||
| | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 23,882 | | $ | 247 | | $ | 259 | | $ | | | $ | | | $ | 24,388 | |
Real estate loans: | | | | | | | | | | | | | | | | | | | |
Construction | | | 3,615 | | | - | | | - | | | | | | | | | 3,615 | |
Commercial real estate | | | 90,102 | | | 3,342 | | | 3,144 | | | | | | | | | 96,588 | |
Residential mortgage | | | 16,833 | | | 1,477 | | | 2,565 | | | | | | | | | 20,875 | |
Home equity | | | 48,469 | | | 258 | | | 1,717 | | | | | | | | | 50,444 | |
Consumer | | | 1,313 | | | | | | | | | | | | | | | 1,313 | |
Total | | $ | 184,214 | | $ | 5,324 | | $ | 7,685 | | $ | | | $ | | | $ | 197,223 | |
| | September 30, 2013 | | |||||||||||||||||||
| | | | | | | | Greater | | | | | | | | | | | Loans > | | ||
| | 30-59 Days | | 60-89 Days | | Than | | Total | | | | | | | | 90 Days and | | |||||
| | Past Due | | Past Due | | 90 Days | | Past Due | | Current | | Total Loans | | Accruing | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 258 | | $ | | | $ | 70 | | $ | 328 | | $ | 22,394 | | $ | 22,722 | | $ | 40 | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | 2,050 | | | 2,050 | | | | |
Commercial real estate | | | 452 | | | | | | 1,359 | | | 1,811 | | | 98,311 | | | 100,122 | | | | |
Residential | | | 161 | | | | | | 13 | | | 174 | | | 25,771 | | | 25,945 | | | 13 | |
Home equity | | | 100 | | | 136 | | | 564 | | | 800 | | | 45,863 | | | 46,663 | | | 59 | |
Consumer | | | 2 | | | - | | | | | | 2 | | | 1,292 | | | 1,294 | | | | |
Total | | $ | 973 | | $ | 136 | | $ | 2,006 | | $ | 3,115 | | $ | 195,681 | | $ | 198,796 | | $ | 112 | |
19 | ||
| | December 31, 2012 | | |||||||||||||||||||
| | | | | | | | Greater | | | | | | | | | | | Loans > | | ||
| | 30-59 Days | | 60-89 Days | | Than | | Total | | | | | | | | 90 Days and | | |||||
| | Past Due | | Past Due | | 90 Days | | Past Due | | Current | | Total Loans | | Accruing | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 140 | | $ | | | $ | | | $ | 140 | | $ | 24,248 | | $ | 24,388 | | $ | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | 3,615 | | | 3,615 | | | | |
Commercial real estate | | | 373 | | | | | | 3,144 | | | 3,517 | | | 93,071 | | | 96,588 | | | | |
Residential mortgage | | | 461 | | | 58 | | | 2,583 | | | 3,102 | | | 17,773 | | | 20,875 | | | 18 | |
Home equity | | | 186 | | | 76 | | | 2,040 | | | 2,302 | | | 48,142 | | | 50,444 | | | 324 | |
Consumer | | | | | | | | | | | | | | | 1,313 | | | 1,313 | | | | |
Total | | $ | 1,160 | | $ | 134 | | $ | 7,767 | | $ | 9,061 | | $ | 188,162 | | $ | 197,223 | | $ | 342 | |
20 | ||
| | Three months ended September 30, 2012 | | Nine months ended September 30, 2012 | | ||||||||||||
| | Count | | Balance Prior to TDR | | Balance after TDR | | Count | | Balance Prior to TDR | | Balance after TDR | | ||||
Real estate loans: | | | | | | | | | | | | | | | | | |
Commercial real estate | | - | | $ | - | | $ | - | | 2 | | $ | 997 | | $ | 997 | |
Residential | | - | | | - | | | - | | 2 | | | 636 | | | 636 | |
Total | | - | | $ | - | | $ | - | | 4 | | $ | 1,633 | | $ | 1,633 | |
| | Three months ended September 30, 2013 | | Nine months ended September 30, 2013 | | ||||||||
| | | | | Default | | | | Default | | |||
| | Count | | Balance | | Count | | Balance | | ||||
Real estate loans: | | | | | | | | | | | | | |
Commercial | | | 1 | | | 444 | | | 1 | | | 444 | |
Residential | | | 1 | | | 339 | | | 1 | | | 339 | |
Total | | | 2 | | $ | 783 | | | 2 | | $ | 783 | |
| Level 1 | Quoted prices in active markets for identical assets or liabilities. |
| Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
21 | ||
| | | | | At September 30, 2013 | | |||||||
| | Fair | | Fair Value Measurements Using | | ||||||||
| | Value | | Level 1 | | Level 2 | | Level 3 | | ||||
Available-for-sale securities: | | | | | | | | | | | | | |
U.S. government agencies | | $ | 11,389 | | $ | - | | $ | 11,389 | | $ | - | |
State and political subdivisions | | | 15,304 | | | - | | | 15,304 | | | - | |
| | | | | | | | | | | | | |
Mortgage-backed securities GSE | | | 54,919 | | | - | | | 54,919 | | | - | |
Preferred stock | | | 24 | | | 24 | | | - | | | - | |
SBA guaranteed | | | 5,810 | | | - | | | 5,810 | | | - | |
Total available-for-sale securities | | $ | 87,446 | | $ | 24 | | $ | 87,422 | | $ | - | |
| | | | | At December 31, 2012 | | |||||||
| | Fair | | Fair Value Measurements Using | | ||||||||
| | Value | | Level 1 | | Level 2 | | Level 3 | | ||||
Available-for-sale securities: | | | | | | | | | | | | | |
U.S. government agencies | | $ | 21,430 | | $ | - | | $ | 21,430 | | $ | - | |
State and political subdivisions | | | 2,909 | | | - | | | 2,909 | | | - | |
| | | | | | | | | | | | | |
Mortgage-backed securities GSE residential | | | 22,975 | | | - | | | 22,975 | | | - | |
Preferred stock | | | 37 | | | 37 | | | - | | | - | |
SBA guaranteed | | | 237 | | | - | | | 237 | | | - | |
Total available-for-sale securities | | $ | 47,588 | | $ | 37 | | $ | 47,551 | | $ | - | |
| | | | | At September 30, 2013 | | |||||||
| | Fair | | Fair Value Measurements Using | | ||||||||
| | Value | | Level 1 | | Level 2 | | Level 3 | | ||||
| | | | | | | | | | | | | |
Impaired loans | | $ | 3,584 | | | - | | | - | | $ | 3,584 | |
Other real estate owned | | | 6,423 | | | - | | | - | | | 6,423 | |
| | | | | At December 31, 2012 | | |||||||
| | Fair | | Fair Value Measurements Using | | ||||||||
| | Value | | Level 1 | | Level 2 | | Level 3 | | ||||
| | | | | | | | | | | | | |
Impaired loans | | $ | 5,972 | | | - | | | - | | $ | 5,972 | |
Other real estate owned | | | 8,858 | | | - | | | - | | | 8,858 | |
22 | ||
| As of September 30, 2013 | | |||||||
| Fair | | Valuation | | Unobservable | | | | |
| Value | | Technique | | Inputs | | Range | | |
Impaired loans | $ | 3,584 | | Market comparable properties | | Marketability discount | | 5% - 30% | |
| | | | | | | | | |
Other real estate owned | $ | 6,423 | | Fair value appraisals | | | | | |
| | As of December 31, 2012 | | |||||||
| | Fair | | Valuation | | Unobservable | | | | |
| | Value | | Technique | | Inputs | | Range | | |
Impaired loans | | $ | 5,972 | | Market comparable properties | | Marketability discount | | 5% - 30.7% | |
| | | | | | | | | | |
Other real estate owned | | $ | 8,858 | | Fair value appraisals | | | | | |
23 | ||
| | | | | At September 30, 2013 | | |||||||
| | Carrying | | Fair Value Measurements Using | | ||||||||
| | Amount | | Level 1 | | Level 2 | | Level 3 | | ||||
Financial assets | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 34,159 | | $ | 34,159 | | $ | - | | $ | - | |
Interest-bearing time deposits | | | 1,443 | | | 1,443 | | | - | | | - | |
Securities available for sale | | | 87,446 | | | 24 | | | 87,422 | | | - | |
Loans held for sale | | | 480 | | | - | | | 480 | | | - | |
Loans receivable, net | | | 196,458 | | | - | | | - | | | 196,230 | |
Federal Home Loan Bank stock | | | 926 | | | - | | | 926 | | | - | |
Interest receivable | | | 1,004 | | | - | | | 1,004 | | | - | |
| | | | | | | | | | | | | |
Financial liabilities | | | | | | | | | | | | | |
Deposits | | | 319,119 | | | - | | | 323,066 | | | - | |
Federal Home Loan Bank advances | | | 4,500 | | | - | | | 4,588 | | | - | |
Subordinated debentures | | | 3,609 | | | - | | | - | | | 1,250 | |
Interest payable | | | 145 | | | - | | | 145 | | | - | |
| | | | | At December 31, 2012 | | |||||||
| | Carrying | | Fair Value Measurements Using | | ||||||||
| | Amount | | Level 1 | | Level 2 | | Level 3 | | ||||
Financial assets | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 71,021 | | $ | 71,021 | | $ | - | | | - | |
Interest-bearing time deposits | | | 1,941 | | | 1,941 | | | - | | | - | |
Securities available for sale | | | 47,588 | | | 37 | | | 47,551 | | | - | |
Loans held for sale | | | 7,230 | | | - | | | 7,230 | | | - | |
Loans receivable, net | | | 194,391 | | | - | | | - | | | 196,156 | |
Federal Home Loan Bank stock | | | 926 | | | - | | | 926 | | | - | |
Interest receivable | | | 926 | | | - | | | 926 | | | - | |
| | | | | | | | | | | | | |
Financial liabilities | | | | | | | | | | | | | |
Deposits | | | 317,204 | | | - | | | 318,558 | | | - | |
Federal Home Loan Bank advances | | | 9,000 | | | - | | | 9,189 | | | - | |
Subordinated debentures | | | 3,609 | | | - | | | - | | | 1,230 | |
Interest payable | | | 145 | | | - | | | 145 | | | - | |
24 | ||
25 | ||
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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| | Three Months Ended September 30, | | | ||||||||||
| | 2013 | | 2012 | | $ Change | | % Change | | | ||||
| | (Dollars in thousands) | | | ||||||||||
Interest and dividend income: | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 2,697 | | $ | 2,719 | | $ | (22) | | | (0.81) | % | |
Securities: | | | | | | | | | | | | | | |
Taxable | | | 276 | | | 241 | | | 35 | | | 14.52 | | |
Exempt from federal tax | | | 77 | | | 82 | | | (5) | | | (2.07) | | |
Other interest income | | | 25 | | | 38 | | | (13) | | | (34.21) | | |
Total interest and dividend income | | | 3,075 | | | 3,080 | | | (5) | | | (0.16) | | |
| | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | |
Deposits | | | 351 | | | 426 | | | (75) | | | (17.61) | | |
Federal Home Loan Bank advances and other borrowings | | | 28 | | | 89 | | | (61) | | | (68.54) | | |
Subordinated debentures | | | 18 | | | 19 | | | (1) | | | (5.26) | | |
Total interest expense | | | 397 | | | 534 | | | (137) | | | (25.66) | | |
Net interest income | | $ | 2,678 | | $ | 2,546 | | $ | 132 | | | 5.19 | | |
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| | Three Months Ended September 30, | | | |||||||||||||||||
| | 2013 | | | 2012 | | | ||||||||||||||
| | | | | | Average | | | | | | | Average | | | ||||||
| | Average | | | | Yield/ | | | Average | | | | Yield/ | | | ||||||
| | Balance | | Interest | | Cost | | | Balance | | Interest | | Cost | | | ||||||
| | (Dollars in thousands) | | | |||||||||||||||||
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | |
Taxable securities | | $ | 74,910 | | $ | 276 | | | 1.46 | % | | $ | 42,838 | | $ | 241 | | | 2.23 | % | |
Tax-exempt securities | | | 12,365 | | | 77 | | | 2.46 | | | | 7,637 | | | 82 | | | 4.28 | | |
Loan receivables (1) | | | 197,392 | | | 2,697 | | | 5.42 | | | | 199,083 | | | 2,719 | | | 5.42 | | |
Interest-bearing deposits | | | 31,347 | | | 24 | | | 0.31 | | | | 47,180 | | | 36 | | | 0.30 | | |
FHLB stock | | | 926 | | | 1 | | | 0.30 | | | | 2,247 | | | 2 | | | 0.37 | | |
Total interest-earning assets | | | 316,940 | | | 3,075 | | | 3.88 | | | | 298,985 | | | 3,080 | | | 4.09 | | |
| | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | | 72,301 | | | 33 | | | 0.18 | | | | 72,656 | | | 55 | | | 0.30 | | |
Regular savings | | | 72,018 | | | 46 | | | 0.26 | | | | 61,671 | | | 52 | | | 0.33 | | |
Money market accounts | | | 44,739 | | | 35 | | | 0.31 | | | | 44,569 | | | 54 | | | 0.48 | | |
Certificates of deposit | | | 92,861 | | | 237 | | | 1.01 | | | | 94,826 | | | 265 | | | 1.11 | | |
FHLB advances and other | | | 5,271 | | | 28 | | | 2.09 | | | | 14,300 | | | 89 | | | 2.46 | | |
Subordinated debentures | | | 3,609 | | | 18 | | | 1.92 | | | | 3,609 | | | 19 | | | 2.11 | | |
Total interest-bearing liabilities | | $ | 290,799 | | | 397 | | | 0.54 | | | $ | 291,631 | | | 534 | | | 0.73 | | |
| | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | $ | 2,678 | | | | | | | | | $ | 2,546 | | | | | |
Net interest spread | | | | | | | | | 3.31 | % | | | | | | | | | 3.36 | % | |
Net interest income to average interest-earning assets | | | | | | | | | 3.35 | % | | | | | | | | | 3.38 | % | |
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| | Three Months Ended September 30, | | | |||||||||
| | 2013 | | 2012 | | $ Change | | % Change | | | |||
| | (Dollars in thousands) | | | |||||||||
Non-interest income: | | | | | | | | | | | | | |
Service charges on deposit accounts | | $ | 89 | | $ | 98 | | $ | (9) | | (9.18) | % | |
Gain on sale of loans | | | 222 | | | 229 | | | (7) | | (3.06) | | |
Gain/(loss) on sale of foreclosed assets | | | 7 | | | (25) | | | 32 | | 128.00 | | |
Other non-interest income | | | 231 | | | 256 | | | (25) | | (9.77) | | |
Total non-interest income | | $ | 549 | | $ | 558 | | $ | (9) | | (1.61) | | |
| | Three Months Ended September 30, | | | |||||||||
| | 2013 | | 2012 | | $ Change | | % Change | | | |||
| | (Dollars in thousands) | | | |||||||||
Non-interest expenses: | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 1,468 | | $ | 1,548 | | $ | (80) | | (5.17) | % | |
Net occupancy and equipment expense | | | 299 | | | 313 | | | (14) | | (4.47) | | |
Data processing expense | | | 341 | | | 317 | | | 24 | | 7.57 | | |
Advertising and promotions | | | 47 | | | 81 | | | (34) | | (41.98) | | |
Professional fees | | | 343 | | | 254 | | | 89 | | 35.04 | | |
FDIC insurance premiums | | | 205 | | | 319 | | | (114) | | (35.74) | | |
Write-down on other real estate owned | | | 386 | | | - | | | 386 | | - | | |
Other real estate owned expenses | | | 187 | | | 141 | | | 46 | | 32.62 | | |
Other operating expenses | | | 282 | | | 335 | | | (53) | | (15.82) | | |
Total non-interest expenses | | $ | 3,558 | | $ | 3,308 | | $ | 250 | | 7.56 | | |
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| | Nine Months Ended September 30, | | | |||||||||
| | 2013 | | 2012 | | $ Change | | % Change | | | |||
| | (Dollars in thousands) | | | |||||||||
Interest and dividend income: | | | | | | | | | | | | | |
Interest and fees on loans Securities: | | $ | 7,972 | | $ | 8,289 | | $ | (317) | | (3.82) | % | |
Taxable | | | 790 | | | 710 | | | 80 | | 11.27 | | |
Exempt from federal tax | | | 191 | | | 283 | | | (92) | | (32.51) | | |
Other interest income | | | 104 | | | 117 | | | (13) | | (11.11) | | |
Total interest and dividend income | | | 9,057 | | | 9,399 | | | (342) | | (3.64) | | |
| | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | |
Deposits | | | 1,120 | | | 1,343 | | | (223) | | (16.61) | | |
Federal Home Loan Bank advances and | | | | | | | | | | | | | |
other borrowings | | | 92 | | | 286 | | | (194) | | (67.83) | | |
Subordinated debentures | | | 52 | | | 58 | | | (6) | | (10.35) | | |
Total interest expense | | | 1,264 | | | 1,687 | | | (423) | | (25.07) | | |
Net interest income | | $ | 7,793 | | $ | 7,712 | | $ | 81 | | 1.05 | | |
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| | Nine Months Ended September 30, | | | |||||||||||||||
| | 2013 | | | 2012 | | | ||||||||||||
| | | | | | Average | | | | | | | | Average | | ||||
| | Average | | | | Yield/ | | | Average | | | | | Yield/ | | ||||
| | Balance | | Interest | | Cost | | | Balance | | | Interest | | Cost | | ||||
| | (Dollars in thousands) | | | |||||||||||||||
Interest-earning assets: | | | | | | | | | | | | | | | | | | | |
Taxable securities | | $ | 66,585 | | $ | 790 | | 1.59 | % | | $ | 39,268 | | $ | 710 | | 2.41 | % | |
Tax-exempt securities | | | 8,414 | | | 191 | | 2.88 | | | | 8,442 | | | 283 | | 4.47 | | |
Loan receivables (1) | | | 198,699 | | | 7,972 | | 5.36 | | | | 201,119 | | | 8,289 | | 5.49 | | |
Interest-bearing deposits | | | 43,930 | | | 102 | | 0.31 | | | | 47,646 | | | 111 | | 0.31 | | |
FHLB stock | | | 926 | | | 2 | | 0.35 | | | | 3,117 | | | 6 | | 0.26 | | |
Total interest-earning assets | | | 318,554 | | | 9,057 | | 3.80 | | | | 299,592 | | | 9,399 | | 4.18 | | |
| | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | |
NOW accounts | | | 74,128 | | | 118 | | 0.21 | | | | 74,638 | | | 187 | | 0.33 | | |
Regular savings | | | 69,350 | | | 151 | | 0.29 | | | | 59,702 | | | 163 | | 0.36 | | |
Money market accounts | | | 44,729 | | | 124 | | 0.37 | | | | 43,901 | | | 195 | | 0.59 | | |
Certificates of deposit | | | 94,051 | | | 727 | | 1.03 | | | | 94,102 | | | 798 | | 1.13 | | |
FHLB advances and other | | | 5,921 | | | 92 | | 2.08 | | | | 14,300 | | | 286 | | 2.67 | | |
Subordinated debentures | | | 3,609 | | | 52 | | 1.93 | | | | 3,609 | | | 58 | | 2.14 | | |
Total interest-bearing liabilities | | $ | 291,788 | | | 1,264 | | 0.58 | | | $ | 290,252 | | | 1,687 | | 0.77 | | |
| | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | $ | 7,793 | | | | | | | | $ | 7,712 | | | | |
Net interest spread | | | | | | | | 3.22 | % | | | | | | | | 3.41 | % | |
Net interest income to average interest-earning assets | | | | | | | | 3.27 | % | | | | | | | | 3.43 | % | |
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| | Nine Months Ended September 30, | | | |||||||||
| | 2013 | | 2012 | | $ Change | | % Change | | | |||
| | (Dollars in thousands) | | | |||||||||
Non-interest income: | | | | | | | | | | | | | |
Service charges on deposit accounts | | $ | 260 | | $ | 289 | | $ | (29) | | (10.04) | % | |
Gain on sale of loans | | | 993 | | | 609 | | | 384 | | 63.05 | | |
Gain on sale of securities | | | 55 | | | 141 | | | (86) | | (60.99) | | |
Loss on sale of foreclosed assets | | | (331) | | | (20) | | | (311) | | (1,555.00) | | |
Other non-interest income | | | 713 | | | 800 | | | (87) | | (10.88) | | |
Total non-interest income | | $ | 1,690 | | $ | 1,819 | | $ | (129) | | (7.09) | | |
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| | Nine Months Ended September 30, | | | ||||||||||
| | 2013 | | 2012 | | $ Change | | % Change | | | ||||
| | (Dollars in thousands) | | | ||||||||||
Non-interest expenses: | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 4,584 | | $ | 4,361 | | $ | 223 | | | 5.11 | % | |
Net occupancy and equipment expense | | | 954 | | | 962 | | | (8) | | | (0.83) | | |
Data processing expense | | | 1,009 | | | 930 | | | 79 | | | 8.50 | | |
Advertising and promotions | | | 137 | | | 218 | | | (81) | | | (37.16) | | |
Professional fees | | | 1,058 | | | 778 | | | 280 | | | 35.99 | | |
FDIC insurance premiums | | | 617 | | | 912 | | | (295) | | | (32.35) | | |
Write-down on other real estate owned | | | 1,251 | | | 424 | | | 827 | | | 195.05 | | |
Other real estate owned expenses | | | 507 | | | 412 | | | 95 | | | 23.06 | | |
Other operating expenses | | | 1,039 | | | 1,033 | | | 6 | | | 0.58 | | |
Total non-interest expenses | | $ | 11,156 | | $ | 10,030 | | $ | 1,126 | | | 11.23 | | |
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| | Payments Due By Year | | |||||||||||||||||||
(Dollars in Thousands) | | 2013 | | 2014 | | 2015 | | 2016 | | 2017 | | 2018 and after | | Total | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Federal Home Loan Bank advances | | $ | - | | $ | 2,500 | | $ | 2,000 | | $ | - | | $ | - | | $ | - | | $ | 4,500 | |
Subordinated debentures | | | - | | | - | | | - | | | - | | | | | | 3,609 | | | 3,609 | |
Data Processing (1), (2) | | | 165 | | | 660 | | | 660 | | | 660 | | | 660 | | | 1,980 | | | 4,785 | |
Total | | $ | 165 | | $ | 3,160 | | $ | 2,660 | | $ | 660 | | $ | 660 | | $ | 5,589 | | $ | 12,894 | |
| (1) | Estimated contract amount based on transaction volume. Actual expense was $737,000 and $751,000 in 2012 and 2011, respectively. |
| (2) | The current contract expires September 30, 2013. A new contract was signed and is effective until October 14, 2020. |
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ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
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ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
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ITEM 6. | EXHIBITS |
| 4.1 | Form of Common Stock Certificate of Community Financial Shares, Inc. (1) |
| 4.2 | Form of Stock Certificate for Series C Convertible Noncumulative Perpetual Preferred Stock of Community Financial Shares, Inc. (1) |
| 4.3 | Form of Stock Certificate for Series D Convertible Noncumulative Perpetual Preferred Stock of Community Financial Shares, Inc. (1) |
| 4.4 | Form of Stock Certificate for Series E Convertible Noncumulative Perpetual Preferred Stock of Community Financial Shares, Inc. (1) |
| 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) |
| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) |
| 32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.0* | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows; and (vi) the Notes to the Consolidated Financial Statements. |
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| COMMUNITY FINANCIAL SHARES, INC. |
| (Registrant) |
| |
| /s/ Donald H. Wilson |
| Donald H. Wilson |
| Dated: November 14, 2013 |
| President and Chief Executive Officer |
| (Principal Executive Officer) |
| |
| /s/ Eric J. Wedeen |
| Eric J. Wedeen |
| Dated: November 14, 2013 |
| Chief Financial Officer |
| (Principal Financial Officer) |
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