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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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California
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77-0559736
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(State or other jurisdiction
of incorporation)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller reporting company þ
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Item 1. Financial Statements (Unaudited)
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Condensed Consolidated Balance Sheets at June 30, 2011, December 31, 2010 and June 30, 2010
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Condensed Consolidated Statements of Operations for the Three- and Six-Month Periods Ended June 30, 2011 and 2010
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Condensed Consolidated Statements of Changes of Shareholders’ Equity for the Six-Month Periods Ended June 30, 2011 and 2010
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Condensed Consolidated Statements of Cash Flows for the Three- and Six-Month Periods Ended June 30, 2011 and 2010
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Notes to Consolidated Financial Statements
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
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Item 4. Controls and Procedures
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Item 1. Legal Proceedings
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Item 1A. Risk Factors
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3. Defaults Upon Senior Securities
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Item 4. Reserved
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Item 5. Other Information
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Item 6. Exhibits
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1.
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Adoption of certain provisions of Accounting Standards Codification (“ASC”) 815 – “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815”) (formerly EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock”). ASC 815 became effective January 1, 2009. The anti-dilution features in certain outstanding warrants (“Warrants”) of the Company require these Warrants to be accounted for as liabilities and measured at fair value. The restated consolidated financial statements reflect the reclassification of the Warrants from shareholders’ equity to warrant liability and record changes in the fair value of the warrant liability in the consolidated statements of operations.
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2.
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The Company’s Series A Non-Voting Convertible Redeemable Preferred Stock (“Series A Preferred Stock”) and its Series C Non-Voting Convertible Redeemable Preferred Stock (“Series C Preferred Stock”) received improper accounting treatment related to beneficial conversion features in these preferred securities which were triggered by the issuance by the Company of its securities in a private placement in the second quarter of 2010 at a price below the conversion price set forth in the Certificates of Determination for the Series A and C Preferred Stock. This beneficial conversion impacts the Company’s loss per common share.
Further, the Company’s Series A Preferred Stock, Series B Non-Voting Preferred Stock (“Series B Preferred Stock”) and its Series C Preferred Stock received improper accounting treatment since these preferred shares contain redemption provisions that are outside the control of the Company. As a result, these preferred shares have been removed from stockholders’ equity and are now presented as mezzanine at their redemption value.
The tables below outline the changes to the balance sheet, equity and net loss for the period noted (see Note 11, Restatement, of the Notes to the Consolidated Financial Statements for further details):
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June 30, 2011
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||||||||
(in thousands)
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(As previously reported)
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(Restated)
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||||||
Warrant Liability, previously classified as equity
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- | $ | 4,070 | |||||
Total Other Liabilities
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$ | 186,741 | $ | 190,811 | ||||
Redeemable Preferred Stock (Series A, B and C), previously classified as equity
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$ | - | $ | 1,205 |
See Note 11
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||||||||||||
(in thousands)
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Stockholders' Equity
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|||||||||||
June 30, 2011
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December 31, 2010 |
June 30, 2010
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||||||||||
Balance previously reported
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$ | 38,528 | $ | 39,143 | $ | 37,814 | ||||||
Cumulative effect of reclassification of redeemable preferred stock, Series A, B and C
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(1,205 | ) | (1,205 | ) | (1,205 | ) | ||||||
Fair value of warrants issued in 2010
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(8,602 | ) | (8,602 | ) | (8,602 | ) | ||||||
Cumulative net change in fair value of warrant liability
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4,532 | 3,573 | - | |||||||||
Total Adjustments
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$ | (5,275 | ) | $ | (6,234 | ) | $ | (9,807 | ) | |||
Total restated shareholders' equity
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$ | 33,253 | $ | 32,909 | $ | 28,007 |
Loss Per Share
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||||||||||||||||
For the three months ended
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For the six months ended
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|||||||||||||||
June 30, 2011
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June 30, 2011
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|||||||||||||||
(dollars in thousands except share and per share (loss)/earnings)
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(As previously reported)
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(Restated)
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(As previously reported)
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(Restated) See Note 11
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||||||||||||
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||||||||||||||||
Average common shares outstanding during the year (used for basic EPS)
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7,094,274 | 7,094,274 | 7,094,274 | 7,094,274 | ||||||||||||
Dilutive effect of outstanding stock options
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- | - | - | - | ||||||||||||
Average common shares used for diluted EPS
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7,094,274 | 7,094,274 | 7,094,274 | 7,094,274 | ||||||||||||
Net loss, as previously reported
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$ | (974 | ) | $ | (974 | ) | $ | (1,441 | ) | (1,441 | ) | |||||
Change in fair value of warrant liability
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- | 407 | - | 959 | ||||||||||||
Net loss
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$ | (974 | ) | $ | (567 | ) | $ | (1,441 | ) | $ | (482 | ) | ||||
Less loss and dividends allocated to preferred stock:
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- | |||||||||||||||
Convertible preferred (Series A and C)
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(14 | ) | - | (22 | ) | - | ||||||||||
Non-convertible preferred (Series B)
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(3 | ) | - | (4 | ) | - | ||||||||||
Accretion of discount on preferred (Series A and C)
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- | - | - | - | ||||||||||||
Dividends on Non-convertible TARP preferred (Series D)
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64 | 64 | 128 | 128 | ||||||||||||
Net loss allocated to common stock
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$ | (1,021 | ) | $ | (631 | ) | $ | (1,543 | ) | $ | (610 | ) | ||||
Basic loss per common share
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$ | (0.14 | ) | $ | (0.09 | ) | $ | (0.22 | ) | $ | (0.09 | ) |
Loss Per Share
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||||||||||||||||
For the three months ended
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For the six months ended
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June 30, 2010
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June 30, 2010
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|||||||||||||||
(dollars in thousands except share and per share (loss)/earnings)
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(As previously reported)
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(Restated)
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(As previously reported)
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(Restated) See Note 11
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||||||||||||
Average common shares outstanding during the year (used for basic EPS)
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3,301,646 | 3,301,646 | 2,329,027 | 2,329,027 | ||||||||||||
Dilutive effect of outstanding stock options
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- | - | - | - | ||||||||||||
Average common shares used for diluted EPS
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3,301,646 | 3,301,646 | 2,329,027 | 2,329,027 | ||||||||||||
Net loss
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$ | (5,665 | ) | $ | (5,665 | ) | $ | (6,051 | ) | (6,051 | ) | |||||
Change in fair value of warrant liability
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- | - | - | - | ||||||||||||
Net loss
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$ | (5,665 | ) | $ | (5,665 | ) | $ | (6,051 | ) | $ | (6,051 | ) | ||||
Less loss and dividends allocated to preferred stock:
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Convertible preferred (Series A and C)
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(223 | ) | - | (253 | ) | - | ||||||||||
Non-convertible preferred (Series B)
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(46 | ) | - | (53 | ) | - | ||||||||||
Accretion of discount on preferred (Series A and C) resulting from beneficial feature
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- | 882 | - | 882 | ||||||||||||
Dividends on Non-convertible TARP preferred (Series D)
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64 | 64 | 128 | 128 | ||||||||||||
Total income (loss) allocated to preferred stock
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(205 | ) | 946 | (178 | ) | 1,010 | ||||||||||
Net loss allocated to common stock
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$ | (5,460 | ) | $ | (6,611 | ) | $ | (5,873 | ) | $ | (7,061 | ) | ||||
Basic loss per common share
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$ | (1.65 | ) | $ | (2.00 | ) | $ | (2.52 | ) | $ | (3.03 | ) |
June 30, 2011
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December 31, 2010
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June 30, 2010
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||||||||||
(Restated)
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||||||||||||
See Note 11
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Assets
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Cash and due from banks
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$ | 6,755 | $ | 10,817 | $ | 25,632 | ||||||
Interest-bearing deposits in other banks
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302 | 550 | 400 | |||||||||
Investment securities available for sale
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91,956 | 75,435 | 48,598 | |||||||||
Loans held for sale
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10,029 | 15,115 | 16,976 | |||||||||
Loans, net of unearned income
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106,296 | 105,110 | 108,920 | |||||||||
Less allowance for loan and lease losses
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(3,182 | ) | (3,198 | ) | (3,731 | ) | ||||||
Net loans
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103,114 | 101,912 | 105,189 | |||||||||
Federal Home Loan Bank stock and other stock, at cost
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2,489 | 2,682 | 2,814 | |||||||||
Premises and equipment
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3,138 | 3,199 | 3,336 | |||||||||
Other real estate owned
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2,833 | 3,137 | 1,528 | |||||||||
Company owned life insurance
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3,025 | 2,980 | 2,932 | |||||||||
Accrued interest and other assets
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1,628 | 1,974 | 1,377 | |||||||||
Total Assets
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$ | 225,269 | $ | 217,801 | $ | 208,782 | ||||||
Liabilities and Shareholders' Equity
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Deposits:
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Noninterest-bearing demand
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$ | 25,549 | $ | 22,910 | $ | 22,443 | ||||||
Money market, NOW and savings
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69,168 | 70,010 | 51,343 | |||||||||
Time certificates of deposit
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87,563 | 80,320 | 87,340 | |||||||||
Total deposits
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182,280 | 173,240 | 161,126 | |||||||||
Other borrowings
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- | 349 | 4,142 | |||||||||
Junior subordinated debt securities
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3,093 | 3,093 | 3,093 | |||||||||
Accrued interest and other liabilities
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1,368 | 1,976 | 2,607 | |||||||||
Warrant liability
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4,070 | 5,029 | 8,602 | |||||||||
Total liabilities
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190,811 | 183,687 | 179,570 | |||||||||
Redeemable Preferred Stock, Series A, B,C
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1,205 | 1,205 | 1,205 | |||||||||
Shareholders' equity:
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||||||||||||
Preferred stock - 10,000,000 shares authorized:
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||||||||||||
Series A (100,000 shares issued and outstanding)
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- | - | - | |||||||||
Series B (20,500 shares issued and outstanding)
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- | - | - | |||||||||
Series C (50,000 shares issued and outstanding)
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- | - | - | |||||||||
Series D (5,116 shares issued and outstanding)
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5,068 | 5,068 | 5,068 | |||||||||
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Common stock - 50,000,000 shares authorized; issued and outstanding: 7,094,274 at June 30, 2011 and December 31, 2010, and 6,345,602 at June 30, 2010
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37,785 | 37,824 | 34,287 | |||||||||
Additional paid-in capital
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1,278 | 1,209 | 1,143 | |||||||||
Retained deficit
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(11,260 | ) | (10,650 | ) | (13,461 | ) | ||||||
Accumulated other comprehensive income (loss)
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382 | (542 | ) | 970 | ||||||||
Total shareholders' equity
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33,253 | 32,909 | 28,007 | |||||||||
Total Liabilities and Shareholders' Equity
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$ | 225,269 | $ | 217,801 | $ | 208,782 |
For the Three Months Ended
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For the Six Months Ended
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|||||||||||||||
June 30, 2011
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June 30, 2010
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June 30, 2011
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June 30, 2010
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(Restated)
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See Note 11
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Interest Income
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Interest and fees on loans
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$ | 1,697 | $ | 1,930 | $ | 3,486 | $ | 3,988 | ||||||||
Interest on investment securities
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461 | 304 | 880 | 613 | ||||||||||||
Other interest income
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6 | 10 | 16 | 17 | ||||||||||||
Total interest income
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2,164 | 2,244 | 4,382 | 4,618 | ||||||||||||
Interest Expense
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Interest on money market, NOW and savings deposits
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104 | 117 | 219 | 236 | ||||||||||||
Interest on time certificates of deposit
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229 | 293 | 476 | 631 | ||||||||||||
Other interest expense
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25 | 86 | 55 | 185 | ||||||||||||
Total interest expense
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358 | 496 | 750 | 1,052 | ||||||||||||
Net interest income
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1,806 | 1,748 | 3,632 | 3,566 | ||||||||||||
Provision for loan and lease losses
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- | 5,250 | - | 5,450 | ||||||||||||
Net interest income after provision for loan and lease losses
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1,806 | (3,502 | ) | 3,632 | (1,884 | ) | ||||||||||
Non-interest income
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||||||||||||||||
Service charges on deposit accounts
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121 | 92 | 198 | 174 | ||||||||||||
Gain on sale of loans
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35 | 181 | 141 | 181 | ||||||||||||
Loan servicing fees, net of amortization
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35 | 39 | 59 | 73 | ||||||||||||
Gain on sale of available-for-sale securities
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- | - | - | 58 | ||||||||||||
Change in fair value of warrant liability
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407 | - | 959 | - | ||||||||||||
Other real estate income
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18 | - | 38 | - | ||||||||||||
Net gains(losses) and writedowns of fixed assets or other real estate
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70 | (344 | ) | 23 | (450 | ) | ||||||||||
(Losses) gains on disposition of loans held for sale
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(4 | ) | - | 46 | - | |||||||||||
Other income and fees
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42 | 47 | 84 | 86 | ||||||||||||
Total non-interest income
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724 | 15 | 1,548 | 122 | ||||||||||||
Non-interest expense
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Salaries and employee benefits
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1,448 | 921 | 2,763 | 1,844 | ||||||||||||
Occupancy expenses
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331 | 315 | 652 | 615 | ||||||||||||
Furniture and equipment
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112 | 112 | 226 | 236 | ||||||||||||
Data processing
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262 | 176 | 463 | 364 | ||||||||||||
Professional fees
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403 | 184 | 533 | 318 | ||||||||||||
Marketing and business development
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56 | 33 | 93 | 70 | ||||||||||||
Office supplies and expenses
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67 | 61 | 126 | 118 | ||||||||||||
Insurance and regulatory assessments
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81 | 192 | 226 | 396 | ||||||||||||
Loan and lease expenses
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123 | 29 | 160 | 57 | ||||||||||||
Other real estate expenses
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42 | 29 | 98 | 39 | ||||||||||||
Other expenses
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167 | 126 | 317 | 232 | ||||||||||||
Total non-interest expense
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3,092 | 2,178 | 5,657 | 4,289 | ||||||||||||
Loss before income taxes
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(562 | ) | (5,665 | ) | (477 | ) | (6,051 | ) | ||||||||
Income tax expense
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5 | - | 5 | - | ||||||||||||
Net loss
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$ | (567 | ) | $ | (5,665 | ) | $ | (482 | ) | $ | (6,051 | ) | ||||
Net loss applicable to common stock
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$ | (631 | ) | $ | (6,611 | ) | $ | (610 | ) | $ | (7,061 | ) | ||||
Per Common Share Data:
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Net loss - basic
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$ | (0.09 | ) | $ | (2.00 | ) | $ | (0.09 | ) | $ | (3.03 | ) | ||||
Average common shares outstanding - basic
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7,094,274 | 3,301,646 | 7,094,274 | 2,329,027 |
Accumulated
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Additional
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Other
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Preferred
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Common Stock
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Paid-In
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Comprehensive
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Retained
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Comprehensive
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Stock
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Shares
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Amount
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Capital
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Income(Loss)
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Deficit
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Loss
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Total
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Balance at January 1, 2010
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$ | 6,152 | 1,345,602 | $ | 18,042 | $ | 242 | $ | (6,280 | ) | $ | 482 | $ | 18,638 | |||||||||||
Cumulative effect of reclassification of certain redeemable preferred stock
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(1,084 | ) | (121 | ) | $ | (1,205 | ) | ||||||||||||||||||
Effect of beneficial conversion feature of redeemable preferred stock
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882 | (882 | ) | $ | - | ||||||||||||||||||||
Issuance of common stock in private placement, net of issuance costs of $153
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5,000,000 | 24,847 | 24,847 | ||||||||||||||||||||||
Fair value of warrants issued ,accounted for as liability
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(8,602 | ) | $ | (8,602 | ) | ||||||||||||||||||||
Dividends declared and paid on Series D preferred stock
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(127 | ) | (127 | ) | |||||||||||||||||||||
Stock-based compensation
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19 | 19 | |||||||||||||||||||||||
Comprehensive loss:
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Net (loss)
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$ | (6,051 | ) | (6,051 | ) | (6,051 | ) | ||||||||||||||||||
Less beginning of year unrealized gain on securities sold during the period, net of taxes of $-0-
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(22 | ) | (22 | ) | (22 | ) | |||||||||||||||||||
Net unrealized gain on remaining available-for-sale securities, net of taxes of $-0-
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- | - | - | - | 510 | - | 510 | 510 | |||||||||||||||||
Total comprehensive loss
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$ | (5,563 | ) | ||||||||||||||||||||||
Balance at June 30, 2010 (Restated) See Note 11
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$ | 5,068 | 6,345,602 | $ | 34,287 | $ | 1,143 | $ | (13,461 | ) | $ | 970 | $ | 28,007 | |||||||||||
Balance at January 1, 2011
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$ | 5,068 | 7,094,274 | $ | 37,824 | $ | 1,209 | $ | (10,650 | ) | $ | (542 | ) | $ | 32,909 | ||||||||||
Dividends declared and paid on Series D preferred stock
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(128 | ) | (128 | ) | |||||||||||||||||||||
Stock-based compensation
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69 | 69 | |||||||||||||||||||||||
Additional expenses of 2010 shareholder rights offering
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(39 | ) | (39 | ) | |||||||||||||||||||||
Comprehensive loss:
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Net (loss)
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$ | (482 | ) | (482 | ) | (482 | ) | ||||||||||||||||||
Net unrealized gain on available-for-sale securities, net of taxes of $-0-
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- | - | - | - | 924 | - | 924 | 924 | |||||||||||||||||
Total comprehensive income(loss)
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$ | 442 | |||||||||||||||||||||||
Balance at June 30, 2011 (Restated) See Note 11
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$ | 5,068 | 7,094,274 | $ | 37,785 | $ | 1,278 | $ | (11,260 | ) | $ | 382 | $ | 33,253 |
For the Three Months Ended
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For the Six Months Ended
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|||||||||||||||
June 30, 2011
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June 30, 2010
|
June 30, 2011
|
June 30, 2010 | |||||||||||||
(Restated)
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||||||||||||||||
See Note 11
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||||||||||||||||
Operating Activities
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||||||||||||||||
Net loss
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$ | (567 | ) | $ | (5,665 | ) | $ | (482 | ) | $ | (6,051 | ) | ||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
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||||||||||||||||
Depreciation
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127 | 126 | 252 | 259 | ||||||||||||
Accretion of discount on securities and loans, net
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138 | (1 | ) | 257 | (24 | ) | ||||||||||
Provision for credit losses
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- | 5,250 | - | 5,450 | ||||||||||||
Stock-based compensation
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35 | 10 | 69 | 19 | ||||||||||||
Gain on sale of available-for-sale securities
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- | - | - | (58 | ) | |||||||||||
Change in warrant liability
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(407 | ) | - | (959 | ) | - | ||||||||||
Gain on sale of loans
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(35 | ) | (181 | ) | (141 | ) | (181 | ) | ||||||||
Losses (gains) on disposition of loans held for sale
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4 | - | (46 | ) | - | |||||||||||
Net losses (gains) and writedowns of fixed assets or other real estate
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(70 | ) | 344 | (23 | ) | 450 | ||||||||||
Increase in company-owned life insurance
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(23 | ) | (24 | ) | (45 | ) | (47 | ) | ||||||||
Other, net
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463 | (199 | ) | (260 | ) | 304 | ||||||||||
Proceeds from loan sales
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475 | 1,482 | 1,440 | 4,402 | ||||||||||||
Loans originated for sale
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(629 | ) | (1,542 | ) | (1,562 | ) | (3,583 | ) | ||||||||
Net cash (used in) provided by operating activities
|
(489 | ) | (400 | ) | (1,500 | ) | 940 | |||||||||
Investing Activities
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||||||||||||||||
Net decrease in Federal Home Loan Bank and other stock
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117 | 189 | 193 | 189 | ||||||||||||
Net decrease in deposits in other banks
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- | - | 248 | 25 | ||||||||||||
Purchase of available-for-sale securities
|
(14,038 | ) | (19,193 | ) | (22,033 | ) | (23,160 | ) | ||||||||
Proceeds from maturities, calls and paydowns of available-for-sale securities
|
2,439 | 7,124 | 6,142 | 10,660 | ||||||||||||
Proceeds from sales of available-for-sale securities
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- | 5,564 | - | 5,622 | ||||||||||||
Net decrease in loans
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1,610 | (130 | ) | 3,160 | 2,279 | |||||||||||
Purchases of premises and equipment
|
(100 | ) | (127 | ) | (191 | ) | (340 | ) | ||||||||
Additional investments in other real estate owned
|
(79 | ) | - | (111 | ) | - | ||||||||||
Proceeds from sale of other real estate owned
|
1,368 | 5 | 1,507 | 605 | ||||||||||||
Net cash used in investing activities
|
(8,683 | ) | (6,568 | ) | (11,085 | ) | (4,120 | ) | ||||||||
Financing Activities
|
||||||||||||||||
Net increase (decrease) in demand deposits and savings accounts
|
6,665 | (6,387 | ) | 1,797 | (4,974 | ) | ||||||||||
Net increase in time deposits
|
956 | 2,162 | 7,243 | 2,330 | ||||||||||||
Net (decrease) in other borrowings
|
- | (1,858 | ) | (349 | ) | (1,858 | ) | |||||||||
Proceeds from common stock issued, net of issuance costs
|
- | 24,847 | (40 | ) | 24,847 | |||||||||||
Payment of TARP-CPP dividends
|
(64 | ) | (64 | ) | (128 | ) | (128 | ) | ||||||||
Net cash provided by financing activities
|
7,557 | 18,700 | 8,523 | 20,217 | ||||||||||||
Net (decrease) increase in cash and cash equivalents
|
(1,615 | ) | 11,732 | (4,062 | ) | 17,037 | ||||||||||
Cash and cash equivalents at beginning of period
|
8,370 | 13,900 | 10,817 | 8,595 | ||||||||||||
Cash and cash equivalents at end of period
|
$ | 6,755 | $ | 25,632 | $ | 6,755 | $ | 25,632 | ||||||||
Non-cash changes:
|
||||||||||||||||
Change in unrealized gains (losses) on available-for-sale securities
|
$ | 1,109 | 402 | $ | 925 | 488 | ||||||||||
Real estate acquired by foreclosure
|
- | 377 | 1,069 | 377 | ||||||||||||
Loans reclassified to held for sale
|
- | 16,689 | - | 16,689 | ||||||||||||
Supplemental disclosures of cash flow information:
|
||||||||||||||||
Interest paid
|
378 | 590 | 760 | 1,135 | ||||||||||||
Taxes paid
|
2 | - | 2 | - |
Date of grant
|
1/25/2011
|
4/4/2011
|
||||||
Exercise price
|
$ | 5.00 | $ | 5.00 | ||||
Market price of common stock
|
$ | 3.65 | $ | 3.61 | ||||
Expected stock price volatility
|
37.4 | % | 37.3 | % | ||||
Expected option life
|
6 years
|
6 years
|
||||||
Risk-free interest rate
|
2.32 | % | 2.53 | % | ||||
Weighted average fair value of all options granted during the period:
|
||||||||
3 months ended 6/30/11
|
$ | 1.07 | ||||||
6 months ended 6/30/11
|
$ | 1.08 |
July 1 through December 31, 2011
|
$ | 71 | ||
2012
|
142 | |||
2013
|
72 | |||
2014
|
9 | |||
2015
|
8 | |||
2016
|
1 | |||
Total unrecognized compensation cost
|
$ | 303 |
Weighted-
|
Aggregate
|
||||||||||||
Weighted-
|
Average
|
Intrinsic
|
|||||||||||
Average
|
Remaining
|
Value of
|
|||||||||||
Exercise
|
Contractual
|
In-the-Money
|
|||||||||||
Shares
|
Price
|
Term
|
Options
|
||||||||||
Outstanding at beginning of year
|
183,432 | $ | 10.39 | ||||||||||
Options granted
|
40,000 | 5.00 | |||||||||||
Options exercised
|
- | ||||||||||||
Options cancelled
|
(7,000 | ) | 8.25 | ||||||||||
Outstanding at end of period
|
216,432 | $ | 9.46 | 7.6 Years | $ | - | |||||||
Options exercisable at end of period
|
93,094 | $ | 13.08 | 5.9 Years | $ | - | |||||||
Options Vested or Expected to Vest
|
216,432 | $ | 9.46 | 7.6 Years | $ | - |
(in thousands)
|
Gross
|
Gross
|
Estimated
|
|||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Market
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
June 30, 2011:
|
||||||||||||||||
U.S. Government agencies
|
$ | 29,826 | $ | 165 | $ | (59 | ) | $ | 29,932 | |||||||
Mortgage-backed securities
|
58,704 | 358 | (123 | ) | 58,939 | |||||||||||
Municipal securities
|
2,917 | 42 | (5 | ) | 2,954 | |||||||||||
Corporate debt securities
|
- | - | - | - | ||||||||||||
Asset-backed securities
|
127 | 4 | - | 131 | ||||||||||||
$ | 91,574 | $ | 569 | $ | (187 | ) | $ | 91,956 | ||||||||
December 31, 2010:
|
||||||||||||||||
U.S. Government agencies
|
$ | 21,083 | $ | 47 | $ | (270 | ) | $ | 20,860 | |||||||
Mortgage-backed securities
|
49,831 | 215 | (566 | ) | 49,480 | |||||||||||
Municipal securities
|
2,917 | 20 | (15 | ) | 2,922 | |||||||||||
Corporate debt securities
|
1,981 | 20 | - | 2,001 | ||||||||||||
Asset-backed securities
|
165 | 7 | - | 172 | ||||||||||||
$ | 75,977 | $ | 309 | $ | (851 | ) | $ | 75,435 |
(in thousands)
|
Available-for-Sale Securities
|
|||||||
Amortized
|
Fair
|
|||||||
Cost
|
Value
|
|||||||
Within one year
|
$ | - | $ | - | ||||
Due in one year to five years
|
28,907 | 28,994 | ||||||
Due in five years to ten years
|
16,101 | 16,222 | ||||||
Due in greater than ten years
|
46,566 | 46,740 | ||||||
$ | 91,574 | $ | 91,956 |
(in thousands)
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
|||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
June 30, 2011:
|
||||||||||||||||||||||||
U.S. Government agencies
|
$ | 11,938 | $ | 59 | $ | - | $ | - | $ | 11,938 | $ | 59 | ||||||||||||
Mortgage-backed securities
|
28,143 | 123 | - | - | 28,143 | 123 | ||||||||||||||||||
Municipal securities
|
575 | 5 | - | - | 575 | 5 | ||||||||||||||||||
Corporate debt securities
|
- | - | - | - | - | - | ||||||||||||||||||
Asset-backed securities
|
- | - | - | - | - | - | ||||||||||||||||||
$ | 40,656 | $ | 187 | $ | - | $ | - | $ | 40,656 | $ | 187 | |||||||||||||
December 31, 2010:
|
||||||||||||||||||||||||
U.S. Government agencies
|
$ | 15,985 | $ | 270 | $ | - | $ | - | $ | 15,985 | $ | 270 | ||||||||||||
Mortgage-backed securities
|
37,274 | 566 | - | - | 37,274 | 566 | ||||||||||||||||||
Municipal securities
|
1,169 | 15 | - | - | 1,169 | 15 | ||||||||||||||||||
Corporate debt securities
|
- | - | - | - | - | - | ||||||||||||||||||
Asset-backed securities
|
- | - | - | - | - | - | ||||||||||||||||||
$ | 54,428 | $ | 851 | $ | - | $ | - | $ | 54,428 | $ | 851 |
Loan Composition
|
||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
June 30, 2011
|
December 31, 2010
|
June 30, 2010
|
||||||||||||||||||||||
Type of Loan
|
Amount
|
Percentage
|
Amount
|
Percentage
|
Amount
|
Percentage
|
||||||||||||||||||
Construction and land development
|
$ | 9,866 | 8.5 | % | $ | 8,972 | 7.4 | % | $ | 9,659 | 7.7 | % | ||||||||||||
Commercial real estate - owner-occupied
|
31,572 | 27.2 | % | 35,135 | 29.2 | % | 34,977 | 27.8 | % | |||||||||||||||
Commercial real estate - non-owner-occupied
|
32,717 | 28.1 | % | 32,240 | 26.8 | % | 35,374 | 28.1 | % | |||||||||||||||
Residential real estate
|
15,338 | 13.2 | % | 16,641 | 13.9 | % | 17,414 | 13.8 | % | |||||||||||||||
All other real estate loans
|
2,951 | 2.5 | % | 2,989 | 2.5 | % | 3,100 | 2.5 | % | |||||||||||||||
Commercial and industrial loans
|
16,659 | 14.3 | % | 17,701 | 14.7 | % | 18,725 | 14.9 | % | |||||||||||||||
Agricultural loans
|
2,596 | 2.2 | % | 1,022 | 0.9 | % | 390 | 0.3 | % | |||||||||||||||
Municipal loans
|
2,429 | 2.1 | % | 2,987 | 2.5 | % | 3,589 | 2.8 | % | |||||||||||||||
Leases, net of unearned income
|
815 | 0.7 | % | 1,047 | 0.9 | % | 1,097 | 0.9 | % | |||||||||||||||
Consumer loans
|
1,382 | 1.2 | % | 1,491 | 1.2 | % | 1,571 | 1.2 | % | |||||||||||||||
Total loans
|
$ | 116,325 | 100.0 | % | $ | 120,225 | 100.0 | % | $ | 125,896 | 100.0 | % |
Loans Held for Sale
|
||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
June 30, 2011
|
December 31, 2010
|
June 30, 2010
|
||||||||||||||||||||||
Type of Loan
|
Amount
|
% of Total Loans
|
Amount
|
% of Total Loans
|
Amount
|
% of Total Loans
|
||||||||||||||||||
Commercial
|
$ | 252 | 0.2 | % | $ | 32 | 0.0 | % | $ | 376 | 0.3 | % | ||||||||||||
Real estate
|
6,372 | 5.5 | % | 10,545 | 8.8 | % | 11,074 | 8.8 | % | |||||||||||||||
Construction and land development
|
3,405 | 2.9 | % | 4,538 | 3.8 | % | 5,526 | 4.4 | % | |||||||||||||||
Total loans held for sale
|
$ | 10,029 | 8.6 | % | $ | 15,115 | 12.6 | % | $ | 16,976 | 13.5 | % |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30, 2011
|
June 30, 2010
|
June 30, 2011
|
June 30, 2010
|
|||||||||||||
Balance at beginning of period
|
$ | 3,244,630 | $ | 5,080,392 | $ | 3,197,636 | $ | 5,536,929 | ||||||||
Provision for loan and lease losses charged to expense
|
- | 5,250,000 | - | 5,450,000 | ||||||||||||
Loans charged off
|
(91,564 | ) | (6,600,145 | ) | (99,613 | ) | (7,287,500 | ) | ||||||||
Recoveries on loans previously charged off
|
28,926 | 1,221 | 83,969 | 32,039 | ||||||||||||
Balance at end of period
|
$ | 3,181,992 | $ | 3,731,468 | $ | 3,181,992 | $ | 3,731,468 |
Three Months Ended June 30, 2011
|
||||||||||||||||||||
Loan Portfolio Segment
|
Balance at Beginning of Period
|
Provision for Loan Losses Charged (Credited) to Expense
|
Less Loans Charged Off
|
Plus Recoveries on Loans Previously Charged Off
|
Balance at End of Period
|
|||||||||||||||
Construction and land development
|
$ | 624,555 | $ | (501,909 | ) | $ | - | $ | - | $ | 122,646 | |||||||||
Commercial real estate - owner-occupied
|
311,687 | 80,792 | - | - | 392,479 | |||||||||||||||
Commercial real estate - non-owner-occupied
|
474,121 | 238,974 | - | - | 713,095 | |||||||||||||||
Residential real estate
|
431,370 | 167,849 | (83,000 | ) | - | 516,219 | ||||||||||||||
All other real estate loans
|
3,261 | 792 | - | - | 4,053 | |||||||||||||||
Commercial and industrial loans
|
920,275 | 100,214 | (8,564 | ) | 26,076 | 1,038,001 | ||||||||||||||
Consumer and all other loans and lease financing
|
110,255 | 117 | - | 2,850 | 113,222 | |||||||||||||||
Unallocated
|
369,106 | (86,829 | ) | - | - | 282,277 | ||||||||||||||
Totals
|
$ | 3,244,630 | $ | - | $ | (91,564 | ) | $ | 28,926 | $ | 3,181,992 | |||||||||
Six Months Ended June 30, 2011
|
||||||||||||||||||||
Loan Portfolio Segment
|
Balance at Beginning of Year
|
Provision for Loan Losses Charged (Credited) to Expense
|
Less Loans Charged Off
|
Plus Recoveries on Loans Previously Charged Off
|
Balance at End of Period
|
|||||||||||||||
Construction and land development
|
$ | 530,473 | $ | (407,827 | ) | $ | - | $ | - | $ | 122,646 | |||||||||
Commercial real estate - owner-occupied
|
165,181 | 216,823 | - | 10,475 | 392,479 | |||||||||||||||
Commercial real estate - non-owner-occupied
|
696,239 | 16,856 | - | - | 713,095 | |||||||||||||||
Residential real estate
|
501,008 | 84,702 | (83,000 | ) | 13,509 | 516,219 | ||||||||||||||
All other real estate loans
|
3,289 | 764 | - | - | 4,053 | |||||||||||||||
Commercial and industrial loans
|
1,021,240 | (31,730 | ) | (8,564 | ) | 57,055 | 1,038,001 | |||||||||||||
Consumer and all other loans and lease financing
|
123,727 | (5,386 | ) | (8,049 | ) | 2,930 | 113,222 | |||||||||||||
Unallocated
|
156,479 | 125,798 | - | - | 282,277 | |||||||||||||||
Totals
|
$ | 3,197,636 | $ | - | $ | (99,613 | ) | $ | 83,969 | $ | 3,181,992 | |||||||||
Year Ended December 31, 2010
|
||||||||||||||||||||
Loan Portfolio Segment
|
Balance at Beginning of Year
|
Provision for Loan Losses Charged (Credited) to Expense
|
Less Loans Charged Off
|
Plus Recoveries on Loans Previously Charged Off
|
Balance at End of Year
|
|||||||||||||||
Construction and land development
|
$ | 1,529,114 | $ | 1,737,805 | $ | (2,755,179 | ) | $ | 18,733 | $ | 530,473 | |||||||||
Commercial real estate - owner-occupied
|
669,727 | 822,197 | (1,326,743 | ) | - | 165,181 | ||||||||||||||
Commercial real estate - non-owner-occupied
|
1,272,180 | 234,669 | (810,610 | ) | - | 696,239 | ||||||||||||||
Residential real estate
|
162,505 | 1,679,365 | (1,340,862 | ) | - | 501,008 | ||||||||||||||
All other real estate loans
|
248,029 | (9,279 | ) | (235,461 | ) | - | 3,289 | |||||||||||||
Commercial and industrial loans
|
866,580 | 1,710,065 | (1,582,702 | ) | 27,297 | 1,021,240 | ||||||||||||||
Consumer and all other loans and lease financing
|
275,646 | (18,153 | ) | (134,401 | ) | 635 | 123,727 | |||||||||||||
Unallocated
|
513,148 | (356,669 | ) | - | - | 156,479 | ||||||||||||||
Totals
|
$ | 5,536,929 | $ | 5,800,000 | $ | (8,185,958 | ) | $ | 46,665 | $ | 3,197,636 |
Loans by Risk Rating
|
Risk Ratings
|
|||||||||||||||||||
(in thousands)
|
Special
|
Total
|
||||||||||||||||||
Pass
|
Mention
|
Substandard
|
Doubtful
|
Loans
|
||||||||||||||||
As of June 30, 2011:
|
||||||||||||||||||||
Construction and land development
|
$ | 4,970 | $ | 168 | $ | 1,323 | $ | - | $ | 6,461 | ||||||||||
Commercial real estate - owner-occupied
|
26,144 | 3,518 | 1,251 | - | 30,913 | |||||||||||||||
Commercial real estate - non-owner-occupied
|
24,143 | 4,527 | 1,170 | - | 29,840 | |||||||||||||||
Residential real estate
|
14,147 | - | 92 | 19 | 14,258 | |||||||||||||||
All other real estate
|
1,297 | - | - | - | 1,297 | |||||||||||||||
Commercial and industrial
|
14,441 | 454 | 1,301 | - | 16,196 | |||||||||||||||
Consumer and all other loans and lease financing
|
7,280 | - | 51 | - | 7,331 | |||||||||||||||
Total loans, net of unearned income
|
$ | 92,422 | $ | 8,667 | $ | 5,188 | $ | 19 | $ | 106,296 | ||||||||||
As of December 31, 2010:
|
||||||||||||||||||||
Construction and land development
|
$ | 2,932 | $ | 179 | $ | 1,324 | $ | - | $ | 4,435 | ||||||||||
Commercial real estate - owner-occupied
|
29,590 | - | 1,023 | - | 30,613 | |||||||||||||||
Commercial real estate - non-owner-occupied
|
22,477 | 6,077 | 781 | - | 29,335 | |||||||||||||||
Residential real estate
|
15,322 | - | - | - | 15,322 | |||||||||||||||
All other real estate
|
1,315 | - | - | - | 1,315 | |||||||||||||||
Commercial and industrial
|
14,872 | 150 | 877 | 13 | 15,912 | |||||||||||||||
Consumer and all other loans and lease financing
|
8,046 | - | 132 | - | 8,178 | |||||||||||||||
Total loans, net of unearned income
|
$ | 94,554 | $ | 6,406 | $ | 4,137 | $ | 13 | $ | 105,110 | ||||||||||
As of June 30, 2010:
|
||||||||||||||||||||
Construction and land development
|
$ | 2,428 | $ | 1,699 | $ | 6 | $ | - | $ | 4,133 | ||||||||||
Commercial real estate - owner-occupied
|
27,857 | - | 2,208 | - | 30,065 | |||||||||||||||
Commercial real estate - non-owner-occupied
|
24,209 | 2,784 | 4,825 | - | 31,818 | |||||||||||||||
Residential real estate
|
15,853 | 321 | 154 | - | 16,328 | |||||||||||||||
All other real estate
|
1,380 | - | - | - | 1,380 | |||||||||||||||
Commercial and industrial
|
14,234 | 428 | 1,725 | 13 | 16,400 | |||||||||||||||
Consumer and all other loans and lease financing
|
8,501 | 93 | 202 | - | 8,796 | |||||||||||||||
Total loans, net of unearned income
|
$ | 94,462 | $ | 5,325 | $ | 9,120 | $ | 13 | $ | 108,920 |
Loans by Delinquency Status
|
Accruing
|
Past Due
|
||||||||||||||||||||||||||
(in thousands)
|
Recorded Balance of Loans Past Due
|
Troubled
|
90+ Days
|
Non- | ||||||||||||||||||||||||
30-59
Days
|
60-89
Days
|
90+
Days
|
Total
Past Due |
Current
|
Total Loans
|
Debt
Restructurings
|
and
Accruing |
Accrual
Loans |
||||||||||||||||||||
As of June 30, 2011:
|
||||||||||||||||||||||||||||
Construction and land development
|
$ | - | $ | - | $ | 1,323 | $ | 1,323 | $ | 5,138 | $ | 6,461 | $ | - | $ | - | $ | 1,323 | ||||||||||
Commercial real estate - owner-occupied
|
- | - | 682 | 682 | 30,231 | 30,913 | - | - | 709 | |||||||||||||||||||
Commercial real estate - non-owner-occupied
|
393 | - | - | 393 | 29,447 | 29,840 | - | - | 393 | |||||||||||||||||||
Residential real estate
|
- | - | 92 | 92 | 14,166 | 14,258 | - | - | 111 | |||||||||||||||||||
All other real estate
|
- | - | - | - | 1,297 | 1,297 | - | - | - | |||||||||||||||||||
Commercial and industrial
|
153 | 156 | - | 309 | 15,887 | 16,196 | - | - | 739 | |||||||||||||||||||
Consumer and all other loans and lease financing
|
- | - | - | - | 7,331 | 7,331 | 7 | - | - | |||||||||||||||||||
Total loans, net of unearned income
|
$ | 546 | $ | 156 | $ | 2,097 | $ | 2,799 | $ | 103,497 | $ | 106,296 | $ | 7 | $ | - | $ | 3,275 | ||||||||||
As of December 31, 2010:
|
||||||||||||||||||||||||||||
Construction and land development
|
$ | - | $ | - | $ | - | $ | - | $ | 4,435 | $ | 4,435 | $ | - | $ | - | $ | - | ||||||||||
Commercial real estate - owner-occupied
|
- | 681 | - | 681 | 29,932 | 30,613 | - | - | 641 | |||||||||||||||||||
Commercial real estate - non-owner-occupied
|
- | - | - | - | 29,335 | 29,335 | - | - | - | |||||||||||||||||||
Residential real estate
|
- | - | - | - | 15,322 | 15,322 | - | - | - | |||||||||||||||||||
All other real estate
|
- | - | - | - | 1,315 | 1,315 | - | - | - | |||||||||||||||||||
Commercial and industrial
|
237 | 165 | 821 | 1,223 | 14,689 | 15,912 | - | - | 1,352 | |||||||||||||||||||
Consumer and all other loans and lease financing
|
38 | - | - | 38 | 8,140 | 8,178 | - | - | - | |||||||||||||||||||
Total loans, net of unearned income
|
$ | 275 | $ | 846 | $ | 821 | $ | 1,942 | $ | 103,168 | $ | 105,110 | $ | - | $ | - | $ | 1,993 | ||||||||||
As of June 30, 2010:
|
||||||||||||||||||||||||||||
Construction and land development
|
$ | - | $ | 185 | $ | 7 | $ | 192 | $ | 3,941 | $ | 4,133 | $ | - | $ | - | $ | 6 | ||||||||||
Commercial real estate - owner-occupied
|
- | - | 785 | 785 | 29,280 | 30,065 | - | - | 785 | |||||||||||||||||||
Commercial real estate - non-owner-occupied
|
- | - | 233 | 233 | 31,585 | 31,818 | - | - | 671 | |||||||||||||||||||
Residential real estate
|
- | - | - | - | 16,328 | 16,328 | - | - | - | |||||||||||||||||||
All other real estate
|
- | - | - | - | 1,380 | 1,380 | - | - | - | |||||||||||||||||||
Commercial and industrial
|
609 | 150 | 1,098 | 1,857 | 14,543 | 16,400 | 168 | - | 1,527 | |||||||||||||||||||
Consumer and all other loans and lease financing
|
- | - | - | - | 8,796 | 8,796 | 109 | - | - | |||||||||||||||||||
Total loans, net of unearned income
|
$ | 609 | $ | 335 | $ | 2,123 | $ | 3,067 | $ | 105,853 | $ | 108,920 | $ | 277 | $ | - | $ | 2,989 |
Impaired Loans
|
For the Six Months Ended
|
|||||||||||||||||||
(in thousands)
|
As of June 30, 2011
|
June 30, 2011
|
||||||||||||||||||
Unpaid
|
Average
|
Interest Income
|
||||||||||||||||||
Recorded
|
Principal
|
Related
|
Recorded
|
Recognized
|
||||||||||||||||
Investment
|
Balance
|
Allowance
|
Investment
|
While Impaired
|
||||||||||||||||
Impaired Loans With a Related Allowance for Loan and Lease Losses:
|
||||||||||||||||||||
Construction and land development
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Commercial real estate - owner-occupied
|
353 | 424 | 32 | 345 | - | |||||||||||||||
Commercial real estate - non-owner-occupied
|
393 | 393 | 51 | 131 | - | |||||||||||||||
Residential real estate
|
111 | 194 | 19 | 37 | - | |||||||||||||||
All other real estate
|
- | - | - | - | - | |||||||||||||||
Commercial and industrial
|
345 | 805 | 100 | 482 | - | |||||||||||||||
Consumer and all other loans and lease financing
|
7 | 7 | - | 5 | - | |||||||||||||||
Total Impaired Loans With An Allowance Recorded
|
1,209 | 1,823 | 202 | 1,000 | - | |||||||||||||||
Impaired Loans With No Related Allowance for Loan and Lease Losses:
|
||||||||||||||||||||
Construction and land development
|
1,680 | 1,698 | - | 797 | - | |||||||||||||||
Commercial real estate - owner-occupied
|
- | - | - | - | - | |||||||||||||||
Commercial real estate - non-owner-occupied
|
- | - | - | - | - | |||||||||||||||
Residential real estate
|
- | - | - | - | - | |||||||||||||||
All other real estate
|
- | - | - | - | - | |||||||||||||||
Commercial and industrial
|
393 | 445 | - | 419 | - | |||||||||||||||
Consumer and all other loans and lease financing
|
- | - | - | - | - | |||||||||||||||
Total Impaired Loans With No Allowance Recorded
|
2,073 | 2,143 | - | 1,216 | - | |||||||||||||||
Total Loans Individually Evaluated for Impairment:
|
||||||||||||||||||||
Construction and land development
|
1,680 | 1,698 | - | 797 | - | |||||||||||||||
Commercial real estate - owner-occupied
|
353 | 424 | 32 | 345 | - | |||||||||||||||
Commercial real estate - non-owner-occupied
|
393 | 393 | 51 | 131 | - | |||||||||||||||
Residential real estate
|
111 | 194 | 19 | 37 | - | |||||||||||||||
All other real estate
|
- | - | - | - | - | |||||||||||||||
Commercial and industrial
|
738 | 1,250 | 100 | 901 | - | |||||||||||||||
Consumer and all other loans and lease financing
|
7 | 7 | - | 4 | - | |||||||||||||||
Total Loans Individually Evaluated For Impairment
|
$ | 3,282 | $ | 3,966 | $ | 202 | $ | 2,215 | $ | - | ||||||||||
Loans Collectively Evaluated for Impairment:
|
||||||||||||||||||||
Construction and land development
|
$ | 4,781 | $ | 4,781 | $ | 123 | ||||||||||||||
Commercial real estate - owner-occupied
|
30,560 | 30,560 | 361 | |||||||||||||||||
Commercial real estate - non-owner-occupied
|
29,447 | 29,447 | 662 | |||||||||||||||||
Residential real estate
|
14,147 | 14,147 | 497 | |||||||||||||||||
All other real estate
|
1,297 | 1,297 | 4 | |||||||||||||||||
Commercial and industrial
|
15,458 | 15,458 | 938 | |||||||||||||||||
Consumer and all other loans and lease financing
|
7,324 | 7,324 | 113 | |||||||||||||||||
Unallocated
|
- | - | 282 | |||||||||||||||||
Total Loans Collectively Evaluated For Impairment
|
$ | 103,014 | $ | 103,014 | $ | 2,980 | ||||||||||||||
Total Loans:
|
||||||||||||||||||||
Construction and land development
|
$ | 6,461 | $ | 6,479 | $ | 123 | ||||||||||||||
Commercial real estate - owner-occupied
|
30,913 | 30,984 | 393 | |||||||||||||||||
Commercial real estate - non-owner-occupied
|
29,840 | 29,840 | 713 | |||||||||||||||||
Residential real estate
|
14,258 | 14,341 | 516 | |||||||||||||||||
All other real estate
|
1,297 | 1,297 | 4 | |||||||||||||||||
Commercial and industrial
|
16,196 | 16,708 | 1,038 | |||||||||||||||||
Consumer and all other loans and lease financing
|
7,331 | 7,331 | 113 | |||||||||||||||||
Unallocated
|
- | - | 282 | |||||||||||||||||
Total Loans
|
$ | 106,296 | $ | 106,980 | $ | 3,182 |
Impaired Loans
|
For the Year Ended
|
|||||||||||||||||||
(in thousands)
|
As of December 31, 2010
|
December 31, 2010
|
||||||||||||||||||
Unpaid
|
Average
|
Interest Income
|
||||||||||||||||||
Recorded
|
Principal
|
Related
|
Recorded
|
Recognized
|
||||||||||||||||
Investment
|
Balance
|
Allowance
|
Investment
|
While Impaired
|
||||||||||||||||
Impaired Loans With a Related Allowance for Loan and Lease Losses:
|
||||||||||||||||||||
Construction and land development
|
$ | - | $ | - | $ | - | $ | 1,817 | $ | - | ||||||||||
Commercial real estate - owner-occupied
|
- | - | - | 2,053 | - | |||||||||||||||
Commercial real estate - non-owner-occupied
|
- | - | - | 1,393 | - | |||||||||||||||
Residential real estate
|
- | - | - | 94 | - | |||||||||||||||
All other real estate
|
- | - | - | - | - | |||||||||||||||
Commercial and industrial
|
1,010 | 1,424 | 9 | 1,193 | - | |||||||||||||||
Consumer and all other loans and lease financing
|
- | - | - | 226 | - | |||||||||||||||
Total Impaired Loans With An Allowance Recorded
|
1,010 | 1,424 | 9 | 6,776 | - | |||||||||||||||
Impaired Loans With No Related Allowance for Loan and Lease Losses:
|
||||||||||||||||||||
Construction and land development
|
356 | 375 | - | 307 | - | |||||||||||||||
Commercial real estate - owner-occupied
|
326 | 396 | - | 46 | - | |||||||||||||||
Commercial real estate - non-owner-occupied
|
- | - | - | 958 | - | |||||||||||||||
Residential real estate
|
- | - | - | - | - | |||||||||||||||
All other real estate
|
- | - | - | - | - | |||||||||||||||
Commercial and industrial
|
301 | 322 | - | 299 | 27 | |||||||||||||||
Consumer and all other loans and lease financing
|
- | - | - | - | - | |||||||||||||||
Total Impaired Loans With No Allowance Recorded
|
983 | 1,093 | - | 1,610 | 27 | |||||||||||||||
Total Loans Individually Evaluated for Impairment:
|
||||||||||||||||||||
Construction and land development
|
356 | 375 | - | 2,124 | - | |||||||||||||||
Commercial real estate - owner-occupied
|
326 | 396 | - | 2,099 | - | |||||||||||||||
Commercial real estate - non-owner-occupied
|
- | - | - | 2,351 | - | |||||||||||||||
Residential real estate
|
- | - | - | 94 | - | |||||||||||||||
All other real estate
|
- | - | - | - | - | |||||||||||||||
Commercial and industrial
|
1,311 | 1,746 | 9 | 1,492 | 27 | |||||||||||||||
Consumer and all other loans and lease financing
|
- | - | - | 226 | - | |||||||||||||||
Total Loans Individually Evaluated For Impairment
|
$ | 1,993 | $ | 2,517 | $ | 9 | $ | 8,386 | $ | 27 | ||||||||||
Loans Collectively Evaluated for Impairment:
|
||||||||||||||||||||
Construction and land development
|
$ | 4,079 | $ | 4,079 | $ | 531 | ||||||||||||||
Commercial real estate - owner-occupied
|
30,287 | 30,287 | 165 | |||||||||||||||||
Commercial real estate - non-owner-occupied
|
29,335 | 29,335 | 696 | |||||||||||||||||
Residential real estate
|
15,322 | 15,322 | 501 | |||||||||||||||||
All other real estate
|
1,315 | 1,315 | 3 | |||||||||||||||||
Commercial and industrial
|
14,601 | 14,601 | 1,012 | |||||||||||||||||
Consumer and all other loans and lease financing
|
8,178 | 8,178 | 124 | |||||||||||||||||
Unallocated
|
- | - | 157 | |||||||||||||||||
Total Loans Collectively Evaluated For Impairment
|
$ | 103,117 | $ | 103,117 | $ | 3,189 | ||||||||||||||
Total Loans:
|
||||||||||||||||||||
Construction and land development
|
$ | 4,435 | $ | 4,454 | $ | 531 | ||||||||||||||
Commercial real estate - owner-occupied
|
30,613 | 30,683 | 165 | |||||||||||||||||
Commercial real estate - non-owner-occupied
|
29,335 | 29,335 | 696 | |||||||||||||||||
Residential real estate
|
15,322 | 15,322 | 501 | |||||||||||||||||
All other real estate
|
1,315 | 1,315 | 3 | |||||||||||||||||
Commercial and industrial
|
15,912 | 16,347 | 1,021 | |||||||||||||||||
Consumer and all other loans and lease financing
|
8,178 | 8,178 | 124 | |||||||||||||||||
Unallocated
|
- | - | 157 | |||||||||||||||||
Total Loans
|
$ | 105,110 | $ | 105,634 | $ | 3,198 |
For the three months ended
|
For the six months ended
|
|||||||||||||||
June 30, 2011
|
June 30, 2010
|
June 30, 2011
|
June 30, 2010
|
|||||||||||||
(Restated)
|
||||||||||||||||
See Note 11
|
||||||||||||||||
|
||||||||||||||||
Average common shares outstandingduring the period (used for basic EPS)
|
7,094,274 | 3,301,646 | 7,094,274 | 2,329,027 | ||||||||||||
Dilutive effect of outstanding stock options
|
- | - | - | - | ||||||||||||
Average common shares used for diluted EPS
|
7,094,274 | 3,301,646 | 7,094,274 | 2,329,027 | ||||||||||||
Net income (loss)
|
$ | (567 | ) | $ | (5,665 | ) | $ | (482 | ) | $ | (6,051 | ) | ||||
Accretion on discount of preferred (Series A and C) resulting from beneficial conversion feature
|
- | 882 | - | 882 | ||||||||||||
Dividends on Non-convertible TARP preferred (Series D)
|
64 | 64 | 128 | 128 | ||||||||||||
Income (loss) allocated to common stock
|
$ | (631 | ) | $ | (6,611 | ) | $ | (610 | ) | $ | (7,061 | ) | ||||
Basic earnings (loss) per common share
|
$ | (0.09 | ) | $ | (2.00 | ) | $ | (0.09 | ) | $ | (3.03 | ) |
|
·
|
Level 1—Quoted prices in active markets for identical assets or liabilities
|
|
·
|
Level 2—Estimates based on significant other observable inputs that market participants would use in pricing the asset or liability
|
|
·
|
Level 3—Estimates based on significant unobservable inputs that reflect the entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Valuation techniques include management’s judgment, which may be a significant factor.
|
(in thousands)
|
Fair Value Measurements Using
|
|||||||||||||||
June 30, 2011(Restated)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Available for sale securities:
|
||||||||||||||||
U.S. Government agencies
|
$ | - | $ | 29,932 | $ | - | $ | 29,932 | ||||||||
Mortgage-backed securities
|
- | 58,939 | - | 58,939 | ||||||||||||
Municipal securities
|
- | 2,954 | - | 2,954 | ||||||||||||
Corporate debt securities
|
- | - | - | - | ||||||||||||
Asset-backed securities
|
- | 131 | - | 131 | ||||||||||||
Total available-for-sale securities
|
- | 91,956 | - | 91,956 | ||||||||||||
Loans held for sale
|
- | - | 10,029 | 10,029 | ||||||||||||
Warrant liability
|
- | - | (4,070 | ) | (4,070 | ) | ||||||||||
Net assets and liabilities measured at fair value on a recurring basis
|
$ | - | $ | 91,956 | $ | 5,959 | $ | 97,915 | ||||||||
December 31, 2010 (Restated)
|
||||||||||||||||
Available for sale securities:
|
||||||||||||||||
U.S. Government agencies
|
$ | - | $ | 20,860 | $ | - | $ | 20,860 | ||||||||
Mortgage-backed securities
|
- | 49,480 | - | 49,480 | ||||||||||||
Municipal securities
|
- | 2,922 | - | 2,922 | ||||||||||||
Corporate debt securities
|
- | 2,001 | - | 2,001 | ||||||||||||
Asset-backed securities
|
- | 172 | - | 172 | ||||||||||||
Total available-for-sale securities
|
- | 75,435 | - | 75,435 | ||||||||||||
Loans held for sale
|
- | - | 15,115 | 15,115 | ||||||||||||
Warrant liability
|
- | - | (5,029 | ) | (5,029 | ) | ||||||||||
Net assets and liabilities measured at fair value on a recurring basis
|
$ | - | $ | 75,435 | $ | 10,086 | $ | 85,521 |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Warrants issued in:
|
Apr-10
|
Jun-10
|
Apr-10
|
Jun-10
|
||||||||||||
Risk-free interest rate
|
1.29 | % | 1.29 | % | 1.52 | % | 2.10 | % | ||||||||
Expected volatility
|
43.51 | % | 42.78 | % | 41.44 | % | 41.05 | % | ||||||||
Expected life (in years)
|
3.82 | 3.96 | 4.32 | 4.45 | ||||||||||||
Expected dividend yield
|
0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % |
(in thousands)
|
Current
|
|||||||||||||||||||
Period
|
||||||||||||||||||||
Fair Value Measurements Using
|
Gains
|
|||||||||||||||||||
June 30, 2011
|
Level 1
|
Level 2
|
Level 3
|
Total
|
(Losses)
|
|||||||||||||||
Financial assets measured at fair value on a non-recurring basis:
|
||||||||||||||||||||
Impaired loans, net of charge-offs and specific reserves--
|
||||||||||||||||||||
Construction and land development
|
$ | - | $ | - | $ | 1,680 | $ | 1,680 | $ | - | ||||||||||
Commercial real estate - owner-occupied
|
- | - | 321 | 321 | (32 | ) | ||||||||||||||
Commercial real estate - non-owner-occupied
|
- | - | 342 | 342 | (52 | ) | ||||||||||||||
Residential real estate
|
- | - | 92 | 92 | (102 | ) | ||||||||||||||
Commercial and industrial
|
- | - | 638 | 638 | (99 | ) | ||||||||||||||
Consumer and all other loans and lease financing
|
- | - | 7 | 7 | - | |||||||||||||||
Total impaired loans, net of charge-offs and specific reserves
|
$ | - | $ | - | $ | 3,080 | $ | 3,080 | $ | (285 | ) | |||||||||
Non-financial assets measured at fair value on a non-recurring basis:
|
||||||||||||||||||||
Other real estate owned
|
$ | - | $ | - | $ | 2,833 | $ | 2,833 | $ | 23 | ||||||||||
Full Year
|
||||||||||||||||||||
Fair Value Measurements Using
|
Gains
|
|||||||||||||||||||
December 31, 2010
|
Level 1
|
Level 2
|
Level 3
|
Total
|
(Losses)
|
|||||||||||||||
Financial assets measured at fair value on a non-recurring basis:
|
||||||||||||||||||||
Impaired loans, net of charge-offs and specific reserves--
|
||||||||||||||||||||
Commercial and industrial
|
$ | - | $ | - | $ | 1,010 | $ | 1,010 | $ | (648 | ) | |||||||||
Commercial real estate - owner-occupied
|
- | - | 326 | 326 | (97 | ) | ||||||||||||||
Construction and land development
|
- | - | 356 | 356 | (10 | ) | ||||||||||||||
Total impaired loans, net of charge-offs and specific reserves
|
$ | - | $ | - | $ | 1,692 | $ | 1,692 | $ | (755 | ) | |||||||||
Non-financial assets measured at fair value on a non-recurring basis:
|
||||||||||||||||||||
Other real estate owned
|
$ | - | $ | - | $ | 3,137 | $ | 3,137 | $ | (486 | ) |
(in thousands)
|
Level 3 Available-for-Sale Securities,
Loans Held for Sale and Warrant Liability
|
|||||||
(Restated) See Note 11
|
Six Months Ended June 30
|
|||||||
2011
|
2010
|
|||||||
Balance at beginning of year
|
$ | 10,086 | $ | 913 | ||||
Securities transfered into Level 3
|
- | - | ||||||
Net increase (decrease) in SBA loans held for sale
|
244 | (616 | ) | |||||
Loans held for sale transfered into Level 3
|
- | 16,689 | ||||||
Unrealized gains (losses) included in other comprehensive income (loss)
|
- | - | ||||||
Purchases
|
- | - | ||||||
Settlements - principal reductions in loans held for sale
|
(4,186 | ) | - | |||||
Loans held for sale transferred to other real estate owned
|
(1,069 | ) | - | |||||
Securities valuation reserve
|
- | (10 | ) | |||||
Loans held for sale valuation reserve
|
(75 | ) | - | |||||
Warrant liability as issuance
|
- | (8,602 | ) | |||||
Change in warrant liability
|
959 | - | ||||||
Balance at end of period
|
$ | 5,959 | $ | 8,374 |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying Value
|
Fair Value
|
Carrying Value
|
Fair Value
|
|||||||||||||
(Restated)
|
||||||||||||||||
See Note 11
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||
Cash and due from banks
|
$ | 6,755 | $ | 6,755 | $ | 10,817 | $ | 10,817 | ||||||||
Interest-bearing deposits in other banks
|
302 | 302 | 550 | 550 | ||||||||||||
Investment securities
|
91,956 | 91,956 | 75,435 | 75,435 | ||||||||||||
Loans held for sale
|
10,029 | 10,029 | 15,115 | 15,115 | ||||||||||||
Loans, net of allowance for loan and lease losses
|
103,114 | 103,791 | 101,912 | 102,926 | ||||||||||||
Federal Home Loan Bank and other stocks
|
2,489 | 2,489 | 2,682 | 2,682 | ||||||||||||
Company owned life insurance
|
3,025 | 3,025 | 2,980 | 2,980 | ||||||||||||
Accrued interest receivable
|
805 | 805 | 697 | 697 | ||||||||||||
Financial Liabilities:
|
||||||||||||||||
Deposits
|
182,280 | 182,512 | 173,240 | 173,590 | ||||||||||||
Other borrowings
|
- | - | 349 | 349 | ||||||||||||
Junior subordinated debt securities
|
3,093 | 1,328 | 3,093 | 1,333 | ||||||||||||
Accrued interest payable
|
171 | 171 | 180 | 180 | ||||||||||||
Warrant liability
|
4,070 | 4,070 | 5,029 | 5,029 |
Warrant
Issuance
Dates
|
Number of
Warrants at
Issuance
|
Exercise
Price
|
Warrant
Expiration
Date
|
Fair Value
of Warrants
at Issue Date
|
Change in
Fair Value
of Warrants
Since Issuance
|
Fair Value
of Warrants
at June 30, 2011
|
||||||||||||||
April 27, 2010
|
2,000,000 | $ | 5.00 |
April 27, 2015
|
$ | 3,422,000 | $ | (1,797,800 | ) | $ | 1,624,200 | |||||||||
June 15, 2010
|
3,000,000 | $ | 5.00 |
June 15, 2015
|
5,180,100 | (2,734,500 | ) | 2,445,600 | ||||||||||||
Total Fair Value
|
$ | 8,602,100 | $ | (4,532,300 | ) | $ | 4,069,800 |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Warrants issued in:
|
Apr-10
|
Jun-10
|
Apr-10
|
Jun-10
|
||||||||||||
Risk-free interest rate
|
1.29 | % | 1.29 | % | 1.52 | % | 2.10 | % | ||||||||
Expected volatility
|
43.51 | % | 42.78 | % | 41.44 | % | 41.05 | % | ||||||||
Expected life (in years)
|
3.82 | 3.96 | 4.32 | 4.45 | ||||||||||||
Expected dividend yield
|
0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % |
Consolidated Balance Sheet
|
||||||||||||||||||||||||
June 30, 2011
|
December 31, 2010
|
June 30, 2010
|
||||||||||||||||||||||
(in thousands)
|
(As previously reported)
|
(As restated)
|
(As previously reported)
|
(As restated)
|
(As previously reported)
|
(As restated)
|
||||||||||||||||||
Warrant Liability, previously classified as equity
|
$ | - | $ | 4,070 | $ | - | $ | 5,029 | $ | - | $ | 8,602 | ||||||||||||
Total Liabilities
|
$ | 186,741 | $ | 190,811 | $ | 178,657 | $ | 183,686 | $ | 170,968 | $ | 179,570 | ||||||||||||
Redeemable Preferred Stock (Series A, B and C), previously classified as equity
|
$ | - | $ | 1,205 | $ | - | $ | 1,205 | $ | - | $ | 1,205 | ||||||||||||
Shareholders' Equity:
|
||||||||||||||||||||||||
Preferred stock:
|
||||||||||||||||||||||||
Series A
|
$ | 392 | $ | - | $ | 392 | $ | - | $ | 392 | $ | - | ||||||||||||
Series B
|
192 | - | 192 | - | 192 | - | ||||||||||||||||||
Series C
|
500 | - | 500 | - | 500 | - | ||||||||||||||||||
Series D
|
5,068 | 5,068 | 5,068 | 5,068 | 5,068 | 5,068 | ||||||||||||||||||
Common stock
|
46,387 | 37,785 | 46,426 | 37,824 | 42,889 | 34,287 | ||||||||||||||||||
Additional paid-in capital
|
396 | 1,278 | 327 | 1,209 | 261 | 1,143 | ||||||||||||||||||
Retained deficit
|
(14,789 | ) | (11,260 | ) | (13,220 | ) | (10,650 | ) | (12,458 | ) | (13,461 | ) | ||||||||||||
Accumulated Other Comprehensive (Loss) Income
|
382 | 382 | (542 | ) | (542 | ) | 970 | 970 | ||||||||||||||||
Total Shareholders' Equity
|
$ | 38,528 | $ | 33,253 | $ | 39,143 | $ | 32,909 | $ | 37,814 | $ | 28,007 |
Consolidated Statements of Operations
|
||||||||||||||||
For the three Months Ended
|
For the six Months Ended
|
|||||||||||||||
June 30, 2011
|
June 30, 2011
|
|||||||||||||||
(in thousands, except loss per share)
|
(As previously reported)
|
(As restated)
|
(As previously reported)
|
(As restated)
|
||||||||||||
Change in fair value of warrant liability
|
$ | - | $ | 407 | $ | - | $ | 959 | ||||||||
Net Loss
|
$ | (974 | ) | $ | (567 | ) | $ | (1,441 | ) | $ | (482 | ) | ||||
Less loss and dividends allocated to preferred stock:
|
||||||||||||||||
Convertible preferred (Series A and C)
|
(14 | ) | - | (22 | ) | - | ||||||||||
Non-convertible preferred (Series B)
|
(3 | ) | - | (4 | ) | - | ||||||||||
Accretion of discount on preferred (Series A and C) resulting from beneficial conversion feature
|
- | - | - | - | ||||||||||||
Dividends on Non-convertible TARP preferred (Series D)
|
64 | 64 | 128 | 128 | ||||||||||||
Total income (loss) allocated to preferred stock
|
47 | 64 | 102 | 128 | ||||||||||||
Net loss allocated to common stock
|
$ | (1,021 | ) | $ | (631 | ) | $ | (1,543 | ) | $ | (610 | ) | ||||
Basic loss per common share
|
$ | (0.14 | ) | $ | (0.09 | ) | $ | (0.22 | ) | $ | (0.09 | ) |
Consolidated Statements of Operations
|
||||||||||||||||
For the three Months Ended
|
For the six Months Ended
|
|||||||||||||||
June 30, 2010
|
June 30, 2010
|
|||||||||||||||
(in thousands, except loss per share)
|
(As previously reported)
|
(As restated)
|
(As previously reported)
|
(As restated)
|
||||||||||||
Change in fair value of warrant liability
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Net Loss
|
$ | (5,665 | ) | $ | (5,665 | ) | $ | (6,051 | ) | $ | (6,051 | ) | ||||
Less loss and dividends allocated to preferred stock:
|
||||||||||||||||
Convertible preferred (Series A and C)
|
(223 | ) | - | (253 | ) | - | ||||||||||
Non-convertible preferred (Series B)
|
(46 | ) | - | (53 | ) | - | ||||||||||
Accretion of discount on preferred (Series A and C) resulting from beneficial conversion feature
|
- | 882 | - | 882 | ||||||||||||
Dividends on Non-convertible TARP preferred (Series D)
|
64 | 64 | 128 | 128 | ||||||||||||
Total loss allocated to preferred stock
|
(205 | ) | 946 | (178 | ) | 1,010 | ||||||||||
Net loss allocated to common stock
|
$ | (5,460 | ) | $ | (6,611 | ) | $ | (5,873 | ) | $ | (7,061 | ) | ||||
Basic loss per common share
|
$ | (1.65 | ) | $ | (2.00 | ) | $ | (2.52 | ) | $ | (3.03 | ) |
Consolidated Statements of Cash Flows
|
||||||||||||||||
For the three Months Ended
|
For the six Months Ended
|
|||||||||||||||
June 30, 2011
|
June 30, 2011
|
|||||||||||||||
(in thousand)
|
(As previously reported)
|
(As restated)
|
(As previously reported)
|
(As restated)
|
||||||||||||
Net (loss)
|
$ | (974 | ) | $ | (567 | ) | $ | (1,441 | ) | $ | (482 | ) | ||||
Change in fair value of warrant liability
|
- | 407 | - | 959 | ||||||||||||
Net cash provided by operating activities
|
$ | (489 | ) | $ | (489 | ) | $ | (1,500 | ) | $ | (1,500 | ) |
|
1.
|
Adoption of certain provisions of Accounting Standards Codification (“ASC”) 815 – “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815”) (formerly EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock”). ASC 815 became effective January 1, 2009. The anti-dilution features in certain outstanding warrants (“Warrants”) of the Company require these Warrants to be accounted for as liabilities and measured at fair value. The restated consolidated financial statements reflect the reclassification of the Warrants from shareholders’ equity to warrant liability and record changes in the fair value of the warrant liability in the consolidated statements of operations.
|
|
2.
|
The Company’s Series A Non-Voting Convertible Redeemable Preferred Stock (“Series A Preferred Stock”) and its Series C Non-Voting Convertible Redeemable Preferred Stock (“Series B Preferred Stock”) received improper accounting treatment related to beneficial conversion features in these preferred securities which were triggered by the issuance by the Company of its securities in a private placement in the second quarter of 2010 at a price below the conversion price set forth in the Certificates of Determination for the Series A and C Preferred Stock. The Company’s loss per share for 2010 has been corrected.
Further, the Company’s Series A Preferred Stock, Series B Non-Voting Preferred Stock (“Series B Preferred Stock”) and its Series C Preferred Stock received improper accounting treatment since these preferred shares contain redemption provisions that are outside the control of the Company. As a result, these preferred shares have been removed from stockholders’ equity and we now present as mezzanine at their redemption value.
|
|
·
|
The Company incurred a net loss of $(567) thousand for the second quarter of 2011, as compared with a net loss of $(5.665) million for the second quarter of 2010. For the six-month period ended June 30, 2011, the net loss was $(482) thousand, as compared to a net loss of $(6.051) million for the comparable period in 2010.
|
|
·
|
No provision for loan losses was recorded in the second quarter of 2011, a decrease of $5.250 million from the second quarter of 2010. For the first six months of 2011, no provision was recognized, as compared with $5.450 million in the first half of 2010.
|
|
·
|
Net interest income for the three-month period ended June 30, 2011, was $1.806 million, an increase of $58 thousand from the same period in 2010. For the first half of 2011, net interest income was $3.632 million, up $66 thousand from the comparable 2010 period. The increases in net interest income were primarily due to continued decreases in deposit rates as well as a $4.9 million decrease in the average balance of borrowed funds.
|
|
·
|
The net interest margin (net interest income as a percentage of average interest earning assets) decreased by 35 basis points, to 3.41%, for the three-month period ended June 30, 2011, as compared to the same period in 2010. For the six months, net interest margin decreased by 42 basis points, to 3.46%.
|
|
·
|
For the three months ended June 30, 2011, non-interest income increased by $709 thousand from the same period in 2010. The six-month results reflect a $1.4 million improvement in non-interest income. The improvement was due to a reduction in losses on other real estate combined with the change in fair value for warrant liability.
|
|
·
|
Non-interest expense increased by $914 thousand for the second quarter of 2011, as compared to the same quarter in 2010. For the six months, the increase in non-interest expense was $1.368 million. Principal factors relating to the increase were salaries and benefits for newly hired officers and increased professional fees related to the pending bank acquisition.
|
|
·
|
Total assets increased by $7.5 million (3.4%) from December 31, 2010 to June 30, 2011.
|
|
·
|
Non-performing assets decreased from $14.6 million as of December 31, 2010 to $10.3 million on June 30, 2011.
|
Net Interest Analysis
|
||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
For the Three Months Ended
|
||||||||||||||||||||||||
June 30, 2011
|
June 30, 2010
|
|||||||||||||||||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||||||||||||||
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
|||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans, net of unearned income*
|
$ | 117,587 | $ | 1,697 | 5.79 | % * | $ | 130,975 | $ | 1,929 | 5.91 | % * | ||||||||||||
Investment securities*
|
82,931 | 461 | 2.23 | % * | 39,945 | 304 | 3.05 | % * | ||||||||||||||||
Other interest income
|
12,052 | 6 | 0.21 | % | 15,621 | 10 | 0.25 | % | ||||||||||||||||
Total interest-earning assets / interest income
|
212,570 | 2,164 | 4.08 | % | 186,541 | 2,243 | 4.82 | % | ||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Allowance for loan losses
|
(3,250 | ) | (4,361 | ) | ||||||||||||||||||||
Cash and due from banks
|
1,728 | 5,636 | ||||||||||||||||||||||
Premises and equipment
|
3,173 | 3,331 | ||||||||||||||||||||||
Other assets
|
8,353 | 10,114 | ||||||||||||||||||||||
Total assets
|
$ | 222,574 | $ | 201,261 | ||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||
Transaction accounts
|
$ | 11,590 | $ | 18 | 0.62 | % | $ | 19,229 | $ | 37 | 0.78 | % | ||||||||||||
Savings and Money Market deposit accounts
|
54,497 | 86 | 0.63 | % | 35,189 | 79 | 0.90 | % | ||||||||||||||||
Certificates of deposit
|
87,577 | 229 | 1.05 | % | 83,923 | 293 | 1.40 | % | ||||||||||||||||
Total interest-bearing deposits
|
153,664 | 333 | 0.87 | % | 138,341 | 409 | 1.19 | % | ||||||||||||||||
Other short-tems borrowings
|
- | - | - | 119 | 2 | 6.04 | % | |||||||||||||||||
Federal Home Loan Bank advances
|
- | - | - | 4,747 | 59 | 5.02 | % | |||||||||||||||||
Trust preferred securities
|
3,093 | 25 | 3.27 | % | 3,093 | 25 | 3.30 | % | ||||||||||||||||
Total borrowed funds
|
3,093 | 25 | 3.27 | % | 7,959 | 86 | 4.36 | % | ||||||||||||||||
Total interest-bearing liabilities / interest expense
|
156,757 | 358 | 0.92 | % | 146,300 | 495 | 1.36 | % | ||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing deposits
|
25,761 | 24,276 | ||||||||||||||||||||||
Other liabilities
|
5,556 | 6,122 | ||||||||||||||||||||||
Total liabilities
|
188,074 | 176,698 | ||||||||||||||||||||||
Shareholders' equity
|
34,501 | 24,563 | ||||||||||||||||||||||
Total liabilities and shareholders' equity
|
$ | 222,574 | $ | 201,261 | ||||||||||||||||||||
Net interest-rate spread
|
3.16 | % | 3.46 | % | ||||||||||||||||||||
Impact of non-interest-bearing sources and other changes in balance sheet composition
|
0.25 | % | 0.30 | % | ||||||||||||||||||||
Net interest income / margin on earning assets
|
$ | 1,806 | 3.41 | % ** | $ | 1,748 | 3.76 | % ** |
Net Interest Analysis
|
||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
For the Six Months Ended
|
||||||||||||||||||||||||
June 30, 2011
|
June 30, 2010
|
|||||||||||||||||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||||||||||||||
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
|||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans, net of unearned income*
|
$ | 118,594 | $ | 3,486 | 5.93 | % * | $ | 133,478 | $ | 3,988 | 6.02 | % * | ||||||||||||
Investment securities*
|
79,120 | 880 | 2.24 | % * | 39,811 | 613 | 3.10 | % * | ||||||||||||||||
Other interest income
|
13,686 | 16 | 0.24 | % | 11,884 | 17 | 0.28 | % | ||||||||||||||||
Total interest-earning assets / interest income
|
211,400 | 4,382 | 4.18 | % | 185,173 | 4,618 | 5.03 | % | ||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Allowance for loan losses
|
(3,238 | ) | (4,953 | ) | ||||||||||||||||||||
Cash and due from banks
|
1,578 | 4,166 | ||||||||||||||||||||||
Premises and equipment
|
3,191 | 3,356 | ||||||||||||||||||||||
Other assets
|
7,978 | 9,920 | ||||||||||||||||||||||
Total assets
|
$ | 220,909 | $ | 197,662 | ||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||
Interest-bearing demand accounts
|
$ | 11,401 | $ | 38 | 0.67 | % | $ | 19,988 | $ | 78 | 0.79 | % | ||||||||||||
Savings and Money Market deposit accounts
|
53,243 | 181 | 0.68 | % | 35,143 | 157 | 0.90 | % | ||||||||||||||||
Certificates of deposit
|
86,987 | 476 | 1.11 | % | 84,816 | 631 | 1.50 | % | ||||||||||||||||
Total interest-bearing deposits
|
151,631 | 695 | 0.92 | % | 139,947 | 866 | 1.25 | % | ||||||||||||||||
Other short-tems borrowings
|
191 | 5 | 4.75 | % | 60 | 2 | 6.04 | % | ||||||||||||||||
Federal Home Loan Bank advances
|
- | - | - | 5,370 | 134 | 5.01 | % | |||||||||||||||||
Trust preferred securities
|
3,093 | 50 | 3.29 | % | 3,093 | 50 | 3.27 | % | ||||||||||||||||
Total borrowed funds
|
3,284 | 55 | 3.37 | % | 8,523 | 186 | 4.39 | % | ||||||||||||||||
Total interest-bearing liabilities / interest expense
|
154,915 | 750 | 0.98 | % | 148,470 | 1,052 | 1.43 | % | ||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing deposits
|
26,181 | 23,461 | ||||||||||||||||||||||
Other liabilities
|
5,843 | 4,630 | ||||||||||||||||||||||
Total liabilities
|
186,939 | 176,561 | ||||||||||||||||||||||
Shareholders' equity
|
33,970 | 21,101 | ||||||||||||||||||||||
Total liabilities and shareholders' equity
|
$ | 220,909 | $ | 197,662 | ||||||||||||||||||||
Net interest-rate spread
|
3.20 | % | 3.60 | % | ||||||||||||||||||||
Impact of non-interest-bearing sources and other changes in balance sheet composition
|
0.26 | % | 0.28 | % | ||||||||||||||||||||
Net interest income / margin on earning assets
|
$ | 3,632 | 3.46 | % ** | $ | 3,566 | 3.88 | % ** |
Rate / Volume Variance Analysis
|
||||||||||||
(In thousands)
|
Three Months Ended June 30, 2011
|
|||||||||||
Compared to 2010
|
||||||||||||
Increase (Decrease)
|
||||||||||||
in interest income and expense
|
||||||||||||
due to changes in:
|
||||||||||||
Volume
|
Rate
|
Total
|
||||||||||
Interest-earning assets:
|
||||||||||||
Loans, net of unearned income
|
$ | (194 | ) | $ | (38 | ) | $ | (232 | ) | |||
Investment securities
|
257 | (100 | ) | 157 | ||||||||
Other interest income
|
(2 | ) | (2 | ) | (4 | ) | ||||||
Total increase (decrease) in interest income
|
61 | (140 | ) | (79 | ) | |||||||
Interest-bearing liabilities:
|
||||||||||||
Transaction accounts
|
(13 | ) | (6 | ) | (19 | ) | ||||||
Savings deposits
|
36 | (29 | ) | 7 | ||||||||
Certificates of deposit
|
12 | (76 | ) | (64 | ) | |||||||
Total interest-bearing deposits
|
35 | (111 | ) | (76 | ) | |||||||
Other short-term borrowings
|
(2 | ) | - | (2 | ) | |||||||
FHLB advances
|
(59 | ) | - | (59 | ) | |||||||
Trust preferred securities
|
- | - | - | |||||||||
Total borrowed funds
|
(61 | ) | - | (61 | ) | |||||||
Total increase (decrease) in interest expense
|
(26 | ) | (111 | ) | (137 | ) | ||||||
Increase (decrease) in net interest income
|
$ | 87 | $ | (29 | ) | $ | 58 |
Rate / Volume Variance Analysis
|
||||||||||||
(In thousands)
|
Six Months Ended June 30, 2011
|
|||||||||||
Compared to 2010
|
||||||||||||
Increase (Decrease)
|
||||||||||||
in interest income and expense
|
||||||||||||
due to changes in:
|
||||||||||||
Volume
|
Rate
|
Total
|
||||||||||
Interest-earning assets:
|
||||||||||||
Loans, net of unearned income
|
$ | (438 | ) | $ | (64 | ) | $ | (502 | ) | |||
Investment securities
|
474 | (207 | ) | 267 | ||||||||
Other interest income
|
2 | (3 | ) | (1 | ) | |||||||
Total increase (decrease) in interest income
|
38 | (274 | ) | (236 | ) | |||||||
Interest-bearing liabilities:
|
||||||||||||
Transaction accounts
|
(30 | ) | (10 | ) | (40 | ) | ||||||
Savings deposits
|
68 | (44 | ) | 24 | ||||||||
Certificates of deposit
|
16 | (171 | ) | (155 | ) | |||||||
Total interest-bearing deposits
|
54 | (225 | ) | (171 | ) | |||||||
Other short-term borrowings
|
3 | - | 3 | |||||||||
FHLB advances
|
(134 | ) | - | (134 | ) | |||||||
Trust preferred securities
|
- | - | - | |||||||||
Total borrowed funds
|
(131 | ) | - | (131 | ) | |||||||
Total increase (decrease) in interest expense
|
(77 | ) | (225 | ) | (302 | ) | ||||||
Increase (decrease) in net interest income
|
$ | 115 | $ | (49 | ) | $ | 66 |
Non-Interest Income
|
||||||||||||||||||||||||
(In thousands)
|
For the Three Months Ended June 30,
|
For the Six Months Ended June 30,
|
||||||||||||||||||||||
$ Amount
|
Change
|
$ Amount
|
Change
|
|||||||||||||||||||||
2011
|
2010
|
$ | % | 2011 | 2010 | $ | % | |||||||||||||||||
Service charges on deposit accounts
|
$ | 121 | $ | 92 | $ | 29 | 32 | % | $ | 198 | $ | 174 | $ | 24 | 14 | % | ||||||||
Gain on sale of loans
|
35 | 181 | (146 | ) | -81 | % | 141 | 181 | (40 | ) | -22 | % | ||||||||||||
Loan servicing fees, net of amortization
|
35 | 39 | (4 | ) | -10 | % | 59 | 73 | (14 | ) | -19 | % | ||||||||||||
Gain on sale of available-for-sale securities
|
- | - | - |
nm
|
- | 58 | (58 | ) | -100 | % | ||||||||||||||
Change in fair value of warrant liability
|
407 | - | 407 | 100 | % | 959 | - | 959 | 100 | % | ||||||||||||||
Other real estate income
|
18 | - | 18 |
nm
|
38 | - | 38 |
nm
|
||||||||||||||||
Net gains(losses) or writedowns of fixed assets or other real estate
|
70 | (344 | ) | 414 |
nm
|
23 | (450 | ) | 473 |
nm
|
||||||||||||||
Gain on disposition of loans held for sale
|
(4 | ) | - | (4 | ) |
nm
|
46 | - | 46 |
nm
|
||||||||||||||
Other income and fees
|
42 | 47 | (5 | ) | -11 | % | 84 | 86 | (2 | ) | -2 | % | ||||||||||||
Total non-interest income
|
$ | 724 | $ | 15 | $ | 709 | 4727 | % | $ | 1,548 | $ | 122 | $ | 1,426 | 1169 | % | ||||||||
nm - not meaningful
|
Non-Interest Expense
|
||||||||||||||||||||||||||
(In thousands)
|
For the Three Months Ended June 30,
|
For the Six Months Ended June 30,
|
||||||||||||||||||||||||
$ Amount
|
Change
|
$ Amount
|
Change
|
|||||||||||||||||||||||
2011
|
2010
|
$ | % | 2011 | 2010 | $ | % | |||||||||||||||||||
Salaries and employee benefits
|
$ | 1,448 | $ | 921 | $ | 527 | 57 | % | $ | 2,763 | $ | 1,844 | $ | 919 | 50 | % | ||||||||||
Occupancy expenses
|
331 | 315 | 16 | 5 | % | 652 | 615 | 37 | 6 | % | ||||||||||||||||
Furniture and equipment
|
112 | 112 | - | 0 | % | 226 | 236 | (10 | ) | -4 | % | |||||||||||||||
Data processing
|
262 | 176 | 86 | 49 | % | 463 | 364 | 99 | 27 | % | ||||||||||||||||
Professional fees
|
403 | 184 | 219 | 119 | % | 533 | 318 | 215 | 68 | % | ||||||||||||||||
Marketing and business development
|
56 | 33 | 23 | 70 | % | 93 | 70 | 23 | 33 | % | ||||||||||||||||
Office supplies and expenses
|
67 | 61 | 6 | 10 | % | 126 | 118 | 8 | 7 | % | ||||||||||||||||
Insurance and regulatory assessments
|
81 | 192 | (111 | ) | -58 | % | 226 | 396 | (170 | ) | -43 | % | ||||||||||||||
Loan and lease expenses
|
123 | 29 | 94 | 324 | % | 160 | 57 | 103 | 181 | % | ||||||||||||||||
Other real estate expenses
|
42 | 29 | 13 | 45 | % | 98 | 39 | 59 | 151 | % | ||||||||||||||||
Other
|
167 | 126 | 41 | 33 | % | 317 | 232 | 85 | 37 | % | ||||||||||||||||
Total non-interest expense
|
$ | 3,092 | $ | 2,178 | $ | 914 | 42 | % | $ | 5,657 | $ | 4,289 | $ | 1,368 | 32 | % | ||||||||||
nm = not meaningful
|
|
·
|
An increase in salaries and benefits due to additional officers hired in the second half of 2010 and the first half of 2011 in preparation for planned future growth,
|
|
·
|
Stock option compensation for recently-hired officers (an increase of $25 thousand for the second quarter and $50 thousand for the six months),
|
|
·
|
Increased software and network management costs (included in data processing expenses in the table above),
|
|
·
|
Expenses of operating additional other real estate, and
|
|
·
|
Professional fees related to the pending acquisition, which totaled $254 thousand for the second quarter and first six months of 2011 (see Note 10 to the condensed consolidated financial statements).
|
Balance Sheet Growth
|
|||||||||||||||||||||||||||||||||||||||
(dollars in thousands)
|
Increase(Decrease) From Previous Quarter End*
|
||||||||||||||||||||||||||||||||||||||
June 30, 2011
|
March 31, 2011
|
December 31, 2010 | September 30, 2010 |
June 30, 2010
|
|||||||||||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||
Total Assets
|
$ | 7,650 | 14.1 | % | $ | (182 | ) | -0.3 | % | $ | 5,596 | 10.5 | % | $ | 3,423 | 6.5 | % | $ | 13,821 | 28.4 | % | ||||||||||||||||||
Earning Assets
|
10,801 | 21.2 | % | (1,384 | ) | -2.7 | % | 5,348 | 10.6 | % | 2,889 | 5.8 | % | 12,337 | 26.7 | % | |||||||||||||||||||||||
Loans
|
(1,426 | ) | -4.9 | % | (2,474 | ) | -8.3 | % | (2,638 | ) | -8.5 | % | (3,033 | ) | -9.6 | % | (6,589 | ) | -19.9 | % | |||||||||||||||||||
Deposits
|
7,622 | 17.5 | % | 1,418 | 3.3 | % | 7,619 | 18.3 | % | 4,495 | 11.1 | % | (4,225 | ) | -10.2 | % | |||||||||||||||||||||||
Borrowings
|
- | - | (349 | ) | -405.6 | % | (4,121 | ) | -365.8 | % | 328 | 31.4 | % | (1,858 | ) | -124.2 | % | ||||||||||||||||||||||
Warrant Liability
|
(407 | ) | -36.5 | % | (552 | ) | -44.5 | % | (3,362 | ) | -159.0 | % | (211 | ) | -9.7 | % | 8,602 | 100.0 | % | ||||||||||||||||||||
Shareholders' Equity
|
105 | 1.1 | % | (720 | ) | -7.5 | % | 1,891 | 20.1 | % | (562 | ) | -5.9 | % | 19,531 | 428.5 | % | ||||||||||||||||||||||
*Percentages shown as annualized rates
|
Loan Composition
|
||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
June 30, 2011
|
December 31, 2010
|
June 30, 2010
|
||||||||||||||||||||||
Type of Loan
|
Amount
|
Percentage
|
Amount
|
Percentage
|
Amount
|
Percentage
|
||||||||||||||||||
Construction and land development
|
$ | 9,866 | 8.5 | % | $ | 8,972 | 7.4 | % | $ | 9,659 | 7.7 | % | ||||||||||||
Commercial real estate - owner-occupied
|
31,572 | 27.2 | % | 35,135 | 29.2 | % | 34,977 | 27.8 | % | |||||||||||||||
Commercial real estate - non-owner-occupied
|
32,717 | 28.1 | % | 32,240 | 26.8 | % | 35,374 | 28.1 | % | |||||||||||||||
Residential real estate
|
15,338 | 13.2 | % | 16,641 | 13.9 | % | 17,414 | 13.8 | % | |||||||||||||||
All other real estate loans
|
2,951 | 2.5 | % | 2,989 | 2.5 | % | 3,100 | 2.5 | % | |||||||||||||||
Commercial and industrial loans
|
16,659 | 14.3 | % | 17,701 | 14.7 | % | 18,725 | 14.9 | % | |||||||||||||||
Agricultural loans
|
2,596 | 2.2 | % | 1,022 | 0.9 | % | 390 | 0.3 | % | |||||||||||||||
Municipal loans
|
2,429 | 2.1 | % | 2,987 | 2.5 | % | 3,589 | 2.8 | % | |||||||||||||||
Leases, net of unearned income
|
815 | 0.7 | % | 1,047 | 0.9 | % | 1,097 | 0.9 | % | |||||||||||||||
Consumer loans
|
1,382 | 1.2 | % | 1,491 | 1.2 | % | 1,571 | 1.2 | % | |||||||||||||||
Total loans
|
$ | 116,325 | 100.0 | % | $ | 120,225 | 100.0 | % | $ | 125,896 | 100.0 | % |
Non-Performing Assets*
|
||||||||||||
(in thousands)
|
June 30
|
December 31
|
June 30
|
|||||||||
2011
|
2010
|
2010
|
||||||||||
Loans in nonaccrual status:
|
||||||||||||
Nonaccrual loans held for investment
|
$ | 3,275 | $ | 1,993 | $ | 2,989 | ||||||
Nonaccrual loans held for sale**
|
4,762 | 10,011 | 6,431 | |||||||||
Loans past due 90 days or more and accruing
|
- | - | - | |||||||||
Restructured loans in accruing status
|
7 | - | 276 | |||||||||
Total nonperforming loans
|
8,044 | 12,004 | 9,696 | |||||||||
Foreclosed real estate
|
2,268 | 2,572 | 963 | |||||||||
Total nonperforming assets
|
$ | 10,312 | $ | 14,576 | $ | 10,659 | ||||||
Real estate held for possible future branch office
|
565 | 565 | 565 | |||||||||
Total nonperforming loans and other real estate owned
|
$ | 10,877 | $ | 15,141 | $ | 11,224 | ||||||
Allowance for loan and lease losses allocated to impaired loans
|
$ | 202 | $ | 9 | $ | 223 | ||||||
Allowance for loan and lease losses allocated to loans held for sale**
|
- | - | - | |||||||||
Allowance for loan and lease losses allocated to all other loans
|
2,980 | 3,189 | 3,508 | |||||||||
Total allowance for loan and lease losses
|
$ | 3,182 | $ | 3,198 | $ | 3,731 | ||||||
Asset quality ratios:
|
||||||||||||
Non-performing assets to total assets
|
4.58 | % | 6.69 | % | 5.11 | % | ||||||
Excluding loans held for sale**
|
2.58 | % | 2.25 | % | 2.20 | % | ||||||
Non-performing loans to total loans
|
6.92 | % | 9.98 | % | 7.70 | % | ||||||
Excluding loans held for sale**
|
3.09 | % | 1.90 | % | 3.00 | % | ||||||
Allowance for loan and lease losses to total loans
|
2.74 | % | 2.66 | % | 2.96 | % | ||||||
Excluding loans held for sale**
|
2.99 | % | 3.04 | % | 3.43 | % | ||||||
Allowance for loan and lease losses to total non-performing loans
|
40 | % | 27 | % | 38 | % | ||||||
Excluding non-performing loans held for sale**
|
97 | % | 160 | % | 114 | % | ||||||
* Table combines both bank and non-bank subsidiaries
|
||||||||||||
** Loans held for sale are carried at fair value
|
Other Real Estate Owned
|
||||
(dollars in thousands)
|
Six Months Ended
|
|||
June 30, 2011
|
||||
Balance of foreclosed real estate at beginning of year
|
$ | 2,572 | ||
Real estate held for possible future branch office
|
565 | |||
Total other real estate owned at beginning of year
|
$ | 3,137 | ||
Foreclosures during the period
|
1,069 | |||
Additional investments in other real estate
|
111 | |||
Sales of other real estate
|
(1,507 | ) | ||
Gains on sales of other real estate, net of writedowns
|
23 | |||
Balance of other real estate owned at end of period
|
$ | 2,833 |
Allowance for Loan and Lease Losses
|
||||||||||||||||
(dollars in thousands)
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Balance at beginning of period
|
$ | 3,245 | $ | 5,080 | $ | 3,198 | $ | 5,537 | ||||||||
Provision for loan losses
|
- | 5,250 | - | 5,450 | ||||||||||||
Loans charged off
|
(92 | ) | (6,599 | ) | (100 | ) | (7,288 | ) | ||||||||
Recoveries of previous charge-offs
|
29 | - | 84 | 32 | ||||||||||||
Net recoveries (charge-offs)
|
(63 | ) | (6,599 | ) | (16 | ) | (7,256 | ) | ||||||||
Balance at end of period
|
$ | 3,182 | $ | 3,731 | $ | 3,182 | $ | 3,731 | ||||||||
Allowance for loan losses as a percentage of:
|
||||||||||||||||
Period end loans
|
2.74 | % | 2.96 | % | 2.74 | % | 2.96 | % | ||||||||
Period end loans excluding loans held for sale*
|
2.99 | % | 3.43 | % | 2.99 | % | 3.43 | % | ||||||||
Total non-performing loans
|
40 | % | 38 | % | 40 | % | 38 | % | ||||||||
Non-performing loans excluding loans held for sale*
|
97 | % | 114 | % | 97 | % | 114 | % | ||||||||
As a percentage of average loans (annualized):
|
||||||||||||||||
Net charge-offs (recoveries)
|
0.21 | % | 20.21 | % | 0.03 | % | 10.96 | % | ||||||||
Provision for loan losses
|
0.00 | % | 16.08 | % | 0.00 | % | 8.23 | % | ||||||||
* Loans held for sale are carried at fair value
|
Mission Community Bank
|
|||||||||||||||||||||
Capital Ratios
|
Amount of Capital Required
|
||||||||||||||||||||
(dollars in thousands)
|
To Be
|
To Be Adequately
|
|||||||||||||||||||
Actual
|
Well-Capitalized
|
Capitalized
|
|||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||
As of June 30, 2011:
|
|||||||||||||||||||||
Total Capital (to Risk-Weighted Assets)
|
$ | 21,163 | 16.97 | % | $ | 12,468 | 10.0 | % | $ | 9,974 | 8.0 | % | |||||||||
Tier 1 Capital (to Risk-Weighted Assets)
|
$ | 19,583 | 15.71 | % | $ | 7,481 | 6.0 | % | $ | 4,987 | 4.0 | % | |||||||||
Tier 1 Capital (to Average Assets)
|
$ | 19,583 | 9.45 | % | $ | 10,358 | 5.0 | % | $ | 8,286 | 4.0 | % | |||||||||
As of December 31, 2010:
|
|||||||||||||||||||||
Total Capital (to Risk-Weighted Assets)
|
$ | 21,649 | 17.20 | % | $ | 12,587 | 10.0 | % | $ | 10,069 | 8.0 | % | |||||||||
Tier 1 Capital (to Risk-Weighted Assets)
|
$ | 20,054 | 15.93 | % | $ | 7,552 | 6.0 | % | $ | 5,035 | 4.0 | % | |||||||||
Tier 1 Capital (to Average Assets)
|
$ | 20,054 | 10.18 | % | $ | 9,852 | 5.0 | % | $ | 7,881 | 4.0 | % | |||||||||
As of June 30, 2010:
|
|||||||||||||||||||||
Total Capital (to Risk-Weighted Assets)
|
$ | 21,388 | 17.08 | % | $ | 12,524 | 10.0 | % | $ | 10,020 | 8.0 | % | |||||||||
Tier 1 Capital (to Risk-Weighted Assets)
|
$ | 19,794 | 15.80 | % | $ | 7,515 | 6.0 | % | $ | 5,010 | 4.0 | % | |||||||||
Tier 1 Capital (to Average Assets)
|
$ | 19,794 | 10.06 | % | $ | 9,836 | 5.0 | % | $ | 7,869 | 4.0 | % |
Loan Commitments
|
||||||||||||
(in thousands)
|
June 30
|
December 31
|
June 30
|
|||||||||
2011
|
2010
|
2010
|
||||||||||
Commitments to Extend Credit
|
$ | 22,255 | $ | 19,832 | $ | 18,444 | ||||||
Standby Letters of Credit
|
761 | 901 | 401 | |||||||||
$ | 23,016 | $ | 20,733 | $ | 18,845 |
Exhibit #
|
||
2.1
|
Plan of Reorganization and Agreement of Merger dated as of October 4, 2000 (A)
|
|
3.1
|
Restated Articles of Incorporation (I)
|
|
3.2
|
Certificate of Amendment to Articles of Incorporation (L)
|
|
3.3
|
Certificate of Amendment to Articles of Incorporation (Y)
|
|
3.4
|
Bylaws, as amended (B),(S)
|
|
4.1
|
Certificate of Determination for Series A Non-Voting Preferred Stock (B)
|
|
4.2
|
Certificate of Determination for Series B Non-Voting Preferred Stock (B)
|
|
4.3
|
Certificate of Determination for Series C Non-Voting Preferred Stock (D)
|
|
4.4
|
Purchase Agreement dated October 10, 2003, by and among Registrant, Mission Community Capital Trust I, and Bear Stearns & Co., Inc. (E)
|
|
4.5
|
Indenture dated as of October 14, 2003 by and between Registrant and Wells Fargo Bank, National Association, as trustee (E)
|
|
4.6
|
Declaration of Trust of Mission Community Capital Trust I dated October 10, 2003 (E)
|
|
4.7
|
Amended and Restated Declaration of Trust of Mission Community Capital Trust I dated October 14, 2003 by and among the Registrant, Wells Fargo Delaware Trust Company, as Trustee, and Anita M. Robinson and William C. Demmin, as Administrators (E)
|
|
4.8
|
Guarantee Agreement dated October 14, 2003 between Registrant, as Guarantor, and Wells Fargo Bank, National Association, as Guarantee Trustee (E)
|
|
4.9
|
Fee Agreement dated October 14, 2003 by and among the Registrant, Wells Fargo Delaware Trust Co., Bear Stearns & Co., Inc. and Mission Community Capital Trust I (E)
|
|
4.10
|
Certificate of Determination for Series D Preferred Stock (R)
|
|
4.11
|
Form of Common Stock Purchase Warrant (Z)
|
|
4.12
|
Form of Warrant Agreement for warrants issued pursuant to subscription rights (AA)
|
|
10.1
|
Purchase and Sale Agreement and Lease dated January, 1997, as amended (B)
|
|
10.2
|
Intentionally omitted
|
|
10.3
|
Lease Agreement – Paso Robles (B)
|
|
10.4
|
Lease Agreement – San Luis Obispo (B)
|
|
10.5
|
Lease Agreement – Arroyo Grande (B)
|
|
10.6
|
1998 Stock Option Plan, as amended (B)
|
|
10.7
|
Lease Agreement – 569 Higuera, San Luis Obispo (D)
|
|
10.8
|
Lease Agreement – 671 Tefft Street, Nipomo CA (C)
|
|
10.9
|
Intentionally omitted
|
|
10.10
|
Lease Agreement – 3480 S. Higuera, San Luis Obispo (F)
|
|
10.11
|
Salary Protection Agreement — Mr. Pigeon (G)
|
|
10.12
|
Intentionally omitted
|
|
10.13
|
Second Amended and Restated Employment Agreement dated August 28, 2006 between Anita M. Robinson and Mission Community Bank (J)
|
Exhibit #
|
||
10.14
|
Employment Agreement dated June 3, 2007 between Brooks Wise and Mission Community Bank (J)
|
|
10.15
|
Financial Advisory Services Agreement dated January 4, 2007 between the Company and Seapower Carpenter Capital, Inc. (K)
|
|
10.16
|
Common Stock Repurchase Agreement dated August 10, 2007 between Fannie Mae and the Company (M)
|
|
10.17
|
Build-to-Suit Lease Agreement between Walter Bros. Construction Co., Inc. and Mission Community Bank for property at South Higuera Street and Prado Road in San Luis Obispo, California (N)
|
|
10.18
|
Lease Agreement – 1670 South Broadway, Santa Maria (O)
|
|
10.19
|
Mission Community Bancorp 2008 Stock Incentive Plan (P)
|
|
10.20
|
Amendment No. 1 to Second Amended and Restated Employment Agreement dated December 29, 2008 by and among Mission Community Bancorp, Mission Community Bank, and Anita M. Robinson (Q)
|
|
10.21
|
Amendment No. 1 to Employment Agreement dated December 29, 2008 by and among Mission Community Bancorp, Mission Community Bank, and Brooks W. Wise (Q)
|
|
10.22
|
Amended and Restated Salary Protection Agreement dated December 29, 2008 by and between Mission Community Bank and Ronald B. Pigeon (Q)
|
|
10.23
|
Letter Agreement dated January 9, 2009 between Mission Community Bancorp and the United States Department of Treasury, which includes the Securities Purchase Agreement—Standard Terms attached thereto, with respect to the issuance and sale of the Series D Preferred Stock (R)
|
|
10.24
|
Side Letter Agreement dated January 9, 2009 amending the Stock Purchase Agreement between Mission Community Bancorp and the Department of the Treasury (R)
|
|
10.25
|
Side Letter Agreement dated January 9, 2009 between Mission Community Bancorp and The Department of the Treasury regarding maintenance of two open seats on the Board of Directors (R)
|
|
10.26
|
Side Letter Agreement dated January 9, 2009 between Mission Community Bancorp and The Department of the Treasury regarding CDFI status (R)
|
|
10.27
|
Securities Purchase Agreement dated December 22, 2009 between the Company and Carpenter Fund Manager GP, LLC (“Securities Purchase Agreement”) (U)
|
|
10.28
|
Form of Warrant to be issued in connection with the Securities Purchase Agreement (U)
|
|
10.29
|
Amendment No. 1 to Securities Purchase Agreement dated March 17, 2010 (V)
|
|
10.30
|
Amendment No. 2 to Employment Agreement of Brooks Wise dated March 22, 2010 (W)
|
|
10.31
|
Amendment No. 2 to Securities Purchase Agreement dated March 17, 2010 (X)
|
|
10.32
|
Employment Agreement dated July 1, 2010 between James W. Lokey and Mission Community Bancorp (Y)
|
|
10.33
|
Agreement and Plan of Merger dated as of June 24, 2011 by and among Carpenter Fund Manager GP, LLC; Mission Community Bancorp; Mission Community Bank; Santa Lucia Bancorp and Santa Lucia Bank (BB)
|
|
31.1
|
Certification of CEO pursuant to Section 302 of Sarbanes Oxley Act
|
|
31.2
|
Certification of CFO pursuant to Section 302 of Sarbanes Oxley Act
|
|
32.1
|
Certification of CEO pursuant to Section 906 of Sarbanes Oxley Act
|
|
32.2
|
Certification of CFO pursuant to Section 906 of Sarbanes Oxley Act
|
|
101
|
Interactive Data Files
|
(A)
|
Included in the Company’s Form 8-K filed on December 18, 2000, and incorporated by reference herein.
|
(B)
|
Included in the Company’s Form 10-KSB filed on April 2, 2001, and incorporated by reference herein.
|
(C)
|
Included in the Company’s Form 10-QSB filed August 12, 2002, and incorporated by reference herein.
|
(D)
|
Included in the Company’s Form 10-QSB filed on November 12, 2002, and incorporated by reference herein.
|
(E)
|
Included in the Company’s Form 8-K filed on October 21, 2003, and incorporated by reference herein.
|
(F)
|
Included in the Company’s Form 10-QSB filed on August 10, 2004, and incorporated by reference herein.
|
(G)
|
Included in the Company’s Form 8-K filed on January 19, 2005, and incorporated by reference herein.
|
(H)
|
Intentionally omitted
|
(I)
|
Included in the Company’s Form 10-QSB filed on August 14, 2006, and incorporated by reference herein.
|
(J)
|
Included in the Company’s Form 8-K filed on June 13, 2007, and incorporated by reference herein.
|
(K)
|
Included in the Form SB-2 Registration Statement of the Company filed on June 13, 2007, and incorporated by reference herein.
|
(L)
|
Included in Pre-Effective Amendment No. 1 to the Form SB-2 Registration Statement of the Company filed on July 24, 2007, and incorporated by reference herein.
|
(M)
|
Included in the Company’s Form 8-K filed on August 14, 2007, and incorporated by reference herein.
|
(N)
|
Included in the Company’s Form 8-K filed on October 23, 2007, and incorporated by reference herein.
|
(O)
|
Included in the Company’s Form 10-KSB filed on March 28, 2008, and incorporated by reference herein.
|
(P)
|
Included in the Company’s Form 10-Q filed on May 15, 2008, and incorporated by reference herein.
|
(Q)
|
Included in the Company’s Form 8-K filed on December 30, 2008, and incorporated by reference herein.
|
(R)
|
Included in the Company’s Form 8-K filed on January 14, 2009, and incorporated by reference herein.
|
(S)
|
Included in the Company’s Form 10-Q filed on August 14, 2009, and incorporated by reference herein.
|
(T)
|
Included in the Company’s Form 10-K filed on March 16, 2009, and incorporated by reference herein.
|
(U)
|
Included in the Company’s From 8-K filed on December 24, 2009, and incorporated by reference herein.
|
(V)
|
Included in the Company’s Form 8-K filed on March 22, 2010, and incorporated by reference herein.
|
(W)
|
Included in the Company’s Form 8-K filed on March 26, 2010, and incorporated by reference herein.
|
(X)
|
Included in the Company’s Form 8-K filed on June 1, 2010, and incorporated by reference herein.
|
(Y)
|
Included in the Company’s Form 8-K filed on August 2, 2010, and incorporated by reference herein.
|
(Z)
|
Included in the Company’s Form S-1 Registration Statement filed on August 31, 2010, and incorporated by reference herein.
|
(AA)
|
Included in Amendment No. 1 to the Company’s Form S-1 Registration Statement filed on October 1, 2010, and incorporated by reference herein.
|
(BB)
|
Included in the Company’s Form 8-K filed on June 27, 2011, and incorporated by reference herein.
|
|
(1)
|
I have reviewed this Form 10-Q/A of Mission Community Bancorp;
|
|
(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 issuer as of, and for, the periods presented in this report;
|
|
(4)
|
The issuer’s other certifying officer 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 issuer 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 issuer, 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 issuer’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 issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
|
(5)
|
The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’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 issuer’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 issuer’s internal control over financial reporting.
|
|
(1)
|
I have reviewed this Form 10-Q/A of Mission Community Bancorp;
|
|
(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 issuer as of, and for, the periods presented in this report;
|
|
(4)
|
The issuer’s other certifying officer 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 issuer 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 issuer, 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 issuer’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 issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
|
(5)
|
The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’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 issuer’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 issuer’s internal control over financial reporting.
|
1.
|
This Form 10-Q/A for the period ended June 30, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in this Form 10-Q/A for the period ended June 30, 2011 fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By: |
/s/ James W. Lokey
James W. Lokey
Chairman and Chief Executive Officer
|
1.
|
This Form 10-Q/A for the period ended June 30, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in this Form 10-Q/A for the period ended June 30, 2011 fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By: |
/s/ Mark R. Ruh
Mark R. Ruh
Executive Vice President
and Chief Financial Officer
|
Note 2 - Stock Based Compensation Plans
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Jun. 30, 2011
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Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
Note
2 – Stock Based Compensation Plans
The
Company has a stock option plan, adopted in 1998, which is
more fully described in Note J to the consolidated financial
statements in the Company’s Annual Report on Form
10-K. The 1998 Stock Option Plan has been
terminated with respect to the granting of future options
under the Plan. In 2008 the Company adopted the
Mission Community Bancorp 2008 Stock Incentive Plan, which
provides for the grant of various equity awards, including
stock options.
The
Company accounts for equity-based compensation arrangements,
including employee stock options, using the “modified
prospective method,” where stock-based compensation
expense is recognized using the fair value based method for
all new awards granted.
The
Company determines the fair value of options granted on the
date of grant using a Black-Scholes-Merton option pricing
model, which uses assumptions based on expected option life,
expected stock volatility and the risk-free interest rate.
The expected volatility assumptions used by the Company are
based on the historical volatility of the Company’s
common stock over the most recent period commensurate with
the estimated expected life of the Company’s stock
options. The Company bases its expected life assumption on
its historical experience and on the terms and conditions of
the stock options it grants to employees. The risk-free rate
is based on the U.S. Treasury yield curve for the periods
within the contractual life of the options in effect at the
time of the grant. The Company also makes assumptions
regarding estimated forfeitures that will impact the total
compensation expenses recognized.
The
fair value of options granted in the six months ended June
30, 2011, were estimated on the date of grant using the
following assumptions:
No
options were granted during the six months ended June 30,
2010.
During
the three-month periods ended June 30, 2011 and 2010, the
Company recognized pre-tax stock-based compensation expense
of $35,000 and $10,000, respectively. For the
six-month periods ended June 30, 2011 and 2010, stock-based
compensation expense was recognized totaling $69,000 and
$19,000, respectively. As of June 30, 2011, the
Company has unvested options outstanding with unrecognized
compensation expense totaling $303,000, which is scheduled to
be recognized as follows (in thousands):
No
options outstanding were “in the money” as of
June 30, 2011.
The
following table summarizes information about stock option
activity for the six months ended June 30, 2011:
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