California | 33-0937517 |
(State of Incorporation) | (IRS Employer Identification No) |
Large accelerated filer ¨ | Accelerated filer þ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller Reporting Company £ |
| Page |
Part I - Financial Information | 1 |
Item 1. Financial Statements (Unaudited) | 1 |
Consolidated Balance Sheets | 1 |
Consolidated Statements of Income | 2 |
Consolidated Statements of Comprehensive Income | 3 |
Consolidated Statements of Cash Flows | 4 |
Notes to Unaudited Consolidated Financial Statements | 5 |
| |
Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations | 26 |
Forward-Looking Statements | 26 |
Critical Accounting Policies | 26 |
Overview of the Results of Operations and Financial Condition | 27 |
Earnings Performance | 28 |
Net Interest Income and Net Interest Margin | 28 |
Provision for Loan and Lease Losses | 31 |
Non-interest Revenue and Operating Expense | 32 |
Provision for Income Taxes | 34 |
Balance Sheet Analysis | 34 |
Earning Assets | 34 |
Investments | 34 |
Loan Portfolio | 35 |
Nonperforming Assets | 37 |
Allowance for Loan and Lease Losses | 38 |
Off-Balance Sheet Arrangements | 40 |
Other Assets | 40 |
Deposits and Interest-Bearing Liabilities | 41 |
Deposits | 41 |
Other Interest-Bearing Liabilities | 42 |
Non-Interest Bearing Liabilities | 43 |
Liquidity and Market Risk Management | 43 |
Capital Resources | 45 |
| |
Item 3. Qualitative & Quantitative Disclosures about Market Risk | 47 |
| |
Item 4. Controls and Procedures | 47 |
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Part II - Other Information | 48 |
Item 1. - Legal Proceedings | 48 |
Item 1A. - Risk Factors | 48 |
Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds | 48 |
Item 3. - Defaults upon Senior Securities | 48 |
Item 4. - (Removed and Reserved) | 48 |
Item 5. - Other Information | 48 |
Item 6. - Exhibits | 49 |
| |
Signatures | 50 |
SIERRA BANCORP | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(dollars in thousands) | |||||||
| | March 31, 2013 | | December 31, 2012 | | ||
| | (unaudited) | | (audited) | | ||
ASSETS | | | | | | | |
Cash and due from banks | | $ | 45,163 | | $ | 42,079 | |
Interest-bearing deposits in banks | | | 2,786 | | | 19,739 | |
Total Cash & Cash Equivalents | | | 47,949 | | | 61,818 | |
Investment securities available for sale | | | 398,755 | | | 380,188 | |
Loans held for sale | | | 789 | | | 210 | |
Loans and leases: | | | | | | | |
Gross loans and leases | | | 827,301 | | | 879,795 | |
Allowance for loan and lease losses | | | (13,199) | | | (13,873) | |
Deferred loan and lease fees, net | | | 1,127 | | | 1,156 | |
Net Loans and Leases | | | 815,229 | | | 867,078 | |
Premises and equipment, net | | | 21,346 | | | 21,830 | |
Operating leases, net | | | - | | | 12 | |
Foreclosed assets | | | 15,747 | | | 19,754 | |
Goodwill | | | 5,544 | | | 5,544 | |
Other assets | | | 81,003 | | | 81,469 | |
TOTAL ASSETS | | $ | 1,386,362 | | $ | 1,437,903 | |
| | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | |
LIABILITIES | | | | | | | |
Deposits: | | | | | | | |
Non-interest bearing | | $ | 342,048 | | $ | 352,597 | |
Interest bearing | | | 813,886 | | | 821,437 | |
Total Deposits | | | 1,155,934 | | | 1,174,034 | |
Federal funds purchased and repurchase agreements | | | 2,673 | | | 1,419 | |
Short-term borrowings | | | 6,600 | | | 36,650 | |
Long-term borrowings | | | - | | | 5,000 | |
Junior subordinated debentures | | | 30,928 | | | 30,928 | |
Other liabilities | | | 14,685 | | | 15,980 | |
TOTAL LIABILITIES | | | 1,210,820 | | | 1,264,011 | |
SHAREHOLDERS' EQUITY | | | | | | | |
Common stock, no par value; 24,000,000 shares authorized; 14,119,679 and 14,106,959 shares issued and outstanding at March 31, 2013 and | | | | | | | |
December 31, 2012, respectively | | | 64,541 | | | 64,384 | |
Additional paid in capital | | | 2,720 | | | 2,660 | |
Retained earnings | | | 104,615 | | | 103,128 | |
Accumulated other comprehensive income | | | 3,666 | | | 3,720 | |
TOTAL SHAREHOLDERS' EQUITY | | | 175,542 | | | 173,892 | |
| | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | $ | 1,386,362 | | $ | 1,437,903 | |
SIERRA BANCORP | |||
CONSOLIDATED STATEMENTS OF INCOME | |||
(dollars in thousands, except per share data, unaudited) |
| | For the Quarter | | For the Quarter | | ||
| | Ended March 31, | | Ended March 31, | | ||
| | 2013 | | 2012 | | ||
Interest income: | | | | | | | |
Interest and fees on loans | | $ | 10,907 | | $ | 11,144 | |
Interest on investment securities: | | | | | | | |
Taxable | | | 1,162 | | | 1,884 | |
Tax-exempt | | | 619 | | | 666 | |
Interest on federal funds sold and interest-bearing deposits | | | 28 | | | 14 | |
Total interest income | | | 12,716 | | | 13,708 | |
| | | | | | | |
Interest expense: | | | | | | | |
Interest on deposits | | | 660 | | | 885 | |
Interest on short-term borrowings | | | 4 | | | 5 | |
Interest on long-term borrowings | | | 33 | | | 131 | |
Interest on mandatorily redeemable trust preferred securities | | | 177 | | | 199 | |
Total interest expense | | | 874 | | | 1,220 | |
| | | | | | | |
Net Interest Income | | | 11,842 | | | 12,488 | |
| | | | | | | |
Provision for loan losses | | | 1,600 | | | 2,750 | |
| | | | | | | |
Net Interest Income after Provision for Loan Losses | | | 10,242 | | | 9,738 | |
| | | | | | | |
Non-interest revenue: | | | | | | | |
Service charges on deposit accounts | | | 2,072 | | | 2,287 | |
Gains on investment securities available-for-sale | | | 6 | | | 70 | |
Other income, net | | | 2,037 | | | 1,745 | |
Total other operating income | | | 4,115 | | | 4,102 | |
| | | | | | | |
Other operating expense: | | | | | | | |
Salaries and employee benefits | | | 5,920 | | | 5,665 | |
Occupancy expense | | | 1,551 | | | 1,489 | |
Other | | | 4,348 | | | 4,886 | |
Total other operating expenses | | | 11,819 | | | 12,040 | |
| | | | | | | |
Income before income taxes | | | 2,538 | | | 1,800 | |
| | | | | | | |
Provision for income taxes | | | 204 | | | (79) | |
| | | | | | | |
Net Income | | $ | 2,334 | | $ | 1,879 | |
| | | | | | | |
PER SHARE DATA | | | | | | | |
Book value | | $ | 12.43 | | $ | 12.07 | |
Cash dividends | | $ | 0.06 | | $ | 0.06 | |
Earnings per share basic | | $ | 0.17 | | $ | 0.13 | |
Earnings per share diluted | | $ | 0.16 | | $ | 0.13 | |
Average shares outstanding, basic | | | 14,113,502 | | | 14,101,879 | |
Average shares outstanding, diluted | | | 14,194,223 | | | 14,107,551 | |
| | | | | | | |
Total shareholder Equity (in thousands) | | $ | 175,542 | | $ | 170,245 | |
Shares outstanding | | | 14,119,679 | | | 14,103,209 | |
Dividends Paid | | $ | 846,665 | | $ | 846,097 | |
SIERRA BANCORP | ||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
(dollars in thousands, unaudited) |
| | For the Quarter | | For the Quarter | | ||
| | Ended March 31, 2013 | | Ended March 31, 2012 | | ||
| | | | | | | |
Net Income | | $ | 2,334 | | $ | 1,879 | |
Other comprehensive income, before tax: | | | | | | | |
Unrealized gains on securities: | | | | | | | |
Unrealized holding gains arising during period | | | (85) | | | 1,119 | |
Less: reclassification adjustment for gains (1) included in net income | | | (6) | | | (70) | |
Other comprehensive income, before tax | | | (91) | | | 1,049 | |
Income tax expense related to items of other comprehensive income, | | | | | | | |
net of tax | | | 37 | | | (446) | |
Other comprehensive income | | | (54) | | | 603 | |
| | | | | | | |
Comprehensive income | | $ | 2,280 | | $ | 2,482 | |
SIERRA BANCORP | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(dollars in thousands, unaudited) |
| | Quarter Ended March 31, | | ||||
| | 2013 | | 2012 | | ||
Cash flows from operating activities: | | | | | | | |
Net income | | $ | 2,334 | | $ | 1,879 | |
Adjustments to reconcile net income to net cash provided by operating | | | | | | | |
activities: | | | | | | | |
Gain on investment of securities | | | (6) | | | (70) | |
Gain on sales of loans | | | (36) | | | (50) | |
Loss on sale on foreclosed assets | | | 488 | | | 126 | |
Writedowns on foreclosed assets | | | 87 | | | 851 | |
Share-based compensation expense | | | 93 | | | 67 | |
Provision for loan losses | | | 1,600 | | | 2,750 | |
Depreciation and amortization | | | 590 | | | 585 | |
Net amortization on securities premiums and discounts | | | 2,096 | | | 1,920 | |
Decrease (Increase) in unearned net loan fees | | | 29 | | | (69) | |
Increase in cash surrender value of life insurance policies | | | (593) | | | (669) | |
Proceeds from sales of loans portfolio | | | 1,257 | | | 2,224 | |
Net Increase in loans held-for-sale | | | (1,800) | | | (1,583) | |
Decrease (Increase) in interest receivable and other assets | | | 1,057 | | | (218) | |
Decrease in other liabilities | | | (1,295) | | | (1,213) | |
Net Decrease in FHLB Stock | | | - | | | 319 | |
Deferred Income Tax Provision (Benefit) | | | 4 | | | (1) | |
Excess tax benefit from equity based compensation | | | (34) | | | (36) | |
Net cash provided by operating activities | | | 5,871 | | | 6,812 | |
| | | | | | | |
Cash flows from investing activities: | | | | | | | |
Maturities of securities available for sale | | | 140 | | | 135 | |
Proceeds from sales/calls of securities available for sale | | | 977 | | | 3,837 | |
Purchases of securities available for sale | | | (47,006) | | | (38,308) | |
Principal pay downs on securities available for sale | | | 25,141 | | | 23,139 | |
Net Decrease in loans receivable, net | | | 49,928 | | | 193 | |
Purchases of premises and equipment, net | | | (94) | | | (616) | |
Proceeds from sales of foreclosed assets | | | 3,725 | | | 2,012 | |
Net cash provided by (used in) investing activities | | | 32,811 | | | (9,608) | |
| | | | | | | |
Cash flows from financing activities: | | | | | | | |
(Decrease) Increase in deposits | | | (18,100) | | | 36,610 | |
Decrease in borrowed funds | | | (35,050) | | | (27,120) | |
Increase in repurchase agreements | | | 1,254 | | | 2,808 | |
Cash dividends paid | | | (847) | | | (846) | |
Stock options exercised | | | 158 | | | 14 | |
Excess tax benefit from equity based compensation | | | 34 | | | 36 | |
Net cash (used in) provided by financing activities | | | (52,551) | | | 11,502 | |
| | | | | | | |
(Decrease) Increase in cash and due from banks | | | (13,869) | | | 8,706 | |
| | | | | | | |
Cash and Cash Equivalents | | | | | | | |
Beginning of period | | | 61,818 | | | 63,036 | |
End of period | | $ | 47,949 | | $ | 71,742 | |
| | March 31, 2013 | | December 31, 2012 | | ||
Commitments to extend credit | | $ | 313,907 | | $ | 225,400 | |
Standby letters of credit | | $ | 6,727 | | $ | 6,690 | |
Commercial letters of credit | | $ | 8,536 | | $ | 8,539 | |
| ⋅ | Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. |
| ⋅ | Level 2: Significant observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data. |
| ⋅ | Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the factors that market participants would likely consider in pricing an asset or liability. |
| ⋅ | Cash and cash equivalents and fed funds sold: For cash and cash equivalents and fed funds sold, the carrying amount is estimated to be fair value. |
| ⋅ | Investment securities: The fair values of investment securities are determined by obtaining quoted prices on nationally recognized securities exchanges or by matrix pricing, which is a mathematical technique used widely in the industry to value debt securities by relying on their relationship to other benchmark quoted securities when quoted prices for specific securities are not readily available. |
| ⋅ | Loans and leases: For variable-rate loans and leases that re-price frequently with no significant change in credit risk or interest rate spread, fair values are based on carrying values. Fair values for other loans and leases are estimated by discounting projected cash flows at interest rates being offered at each reporting date for loans and leases with similar terms, to borrowers of comparable creditworthiness. The carrying amount of accrued interest receivable approximates its fair value. |
| ⋅ | Loans held for sale: Since loans designated by the Company as available-for-sale are typically sold shortly after making the decision to sell them, realized gains or losses are usually recognized within the same period and fluctuations in fair values are thus not relevant for reporting purposes. If available-for-sale loans stay on our books for an extended period of time, the fair value of those loans is determined using quoted secondary-market prices. |
| ⋅ | Collateral-dependent impaired loans: Impaired loans carried at fair value are those for which it is probable that the bank will be unable to collect all amounts due (including both interest and principal) according to the contractual terms of the original loan agreement, and the carrying value has been written down to the fair value of the loan. The carrying value is equivalent to the fair value of the collateral, net of expected disposition costs where applicable, for collateral-dependent loans. |
| ⋅ | Cash surrender value of life insurance policies: The fair values are based on net cash surrender values at each reporting date. |
| ⋅ | Investments in, and capital commitments to, limited partnerships: The fair values of our investments in WNC Institutional Tax Credit Fund Limited Partnerships and any other limited partnerships are estimated using quarterly indications of value provided by the general partner. The fair values of undisbursed capital commitments are assumed to be the same as their book values. |
| ⋅ | Other investments: Certain long-term investments for which no secondary market exists are carried at cost, and the carrying amount for those investments approximates their estimated fair value. |
| ⋅ | Deposits: Fair values for demand deposits and other non-maturity deposits are equal to the amount payable on demand at the reporting date, which is the carrying amount. Fair values for fixed-rate certificates of deposit are estimated using a cash flow analysis, discounted at interest rates being offered at each reporting date by the Bank for certificates with similar remaining maturities. The carrying amount of accrued interest payable approximates its fair value. |
| ⋅ | Short-term borrowings: The carrying amounts approximate fair values for federal funds purchased, overnight FHLB advances, borrowings under repurchase agreements, and other short-term borrowings maturing within ninety days of the reporting dates. Fair values of other short-term borrowings are estimated by discounting projected cash flows at the Company’s current incremental borrowing rates for similar types of borrowing arrangements. |
| ⋅ | Long-term borrowings: The fair values of the Company’s long-term borrowings are estimated using projected cash flows discounted at the Company’s current incremental borrowing rates for similar types of borrowing arrangements. |
| ⋅ | Subordinated debentures: The fair values of subordinated debentures are determined based on the current market value for like instruments of a similar maturity and structure. |
| ⋅ | Commitments to extend credit and letters of credit: If funded, the carrying amounts for currently unused commitments would approximate fair values for the newly created financial assets at the funding date. However, because of the high degree of uncertainty with regard to whether or not those commitments will ultimately be funded, fair values for loan commitments and letters of credit in their current undisbursed state cannot reasonably be estimated, and only notional values are disclosed in the table below. |
Fair Value of Financial Instruments | | | | | | | | | | | | | | | | |
(dollars in thousands, unaudited) | | March 31, 2013 | | |||||||||||||
| | | | | Estimated Fair Value | | ||||||||||
| | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | | Significant Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | | Total | | ||
Financial Assets: | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 47,949 | | $ | 47,949 | | $ | - | | $ | - | | $ | 47,949 | |
Investment securities available for sale | | | 398,755 | | | 2,102 | | | 396,653 | | | - | | | 398,755 | |
Loans and leases, net | | | 789,709 | | | - | | | 839,394 | | | - | | | 839,394 | |
Collateral dependent impaired loans | | | 25,520 | | | - | | | 25,520 | | | - | | | 25,520 | |
Loans held-for-sale | | | 789 | | | 789 | | | - | | | - | | | 789 | |
Cash surrender value of life insurance policies | | | 38,600 | | | - | | | 38,600 | | | - | | | 38,600 | |
Other investments | | | 6,370 | | | - | | | 6,370 | | | - | | | 6,370 | |
Investment in Limited Partnership | | | 10,095 | | | - | | | 10,095 | | | - | | | 10,095 | |
Accrued interest receivable | | | 4,771 | | | - | | | 4,771 | | | - | | | 4,771 | |
| | | | | | | | | | | | | | | | |
Financial Liabilities: | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | |
Noninterest-bearing | | $ | 342,048 | | $ | 342,048 | | $ | - | | $ | - | | $ | 342,048 | |
Interest-bearing | | | 813,886 | | | - | | | 814,289 | | | - | | | 814,289 | |
Fed Funds Purchased and Repurchase Agreements | | | 2,673 | | | - | | | 2,673 | | | - | | | 2,673 | |
Short-term borrowings | | | 6,600 | | | - | | | 6,600 | | | - | | | 6,600 | |
Long-term borrowings | | | - | | | - | | | - | | | - | | | - | |
Subordinated debentures | | | 30,928 | | | - | | | 19,237 | | | - | | | 19,237 | |
Limited partnership capital commitment | | | 962 | | | - | | | 962 | | | - | | | 962 | |
Accrued Interest Payable | | | 186 | | | - | | | 186 | | | - | | | 186 | |
| | Notional Amount | | |
Off-balance-sheet financial instruments: | | | | |
Commitments to extend credit | | $ | 313,907 | |
Standby letters of credit | | | 6,727 | |
Commercial lines of credit | | | 8,536 | |
| | December 31, 2012 | | |||||||||||||
| | | | | Estimated Fair Value | | ||||||||||
| | Carrying Amount | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total | | |||||
Financial Assets: | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 61,818 | | $ | 61,818 | | $ | - | | $ | - | | $ | 61,818 | |
Investment securities available for sale | | | 380,188 | | | 1,809 | | | 378,379 | | | - | | | 380,188 | |
Loans and leases, net | | | 839,629 | | | - | | | 873,309 | | | - | | | 873,309 | |
Collateral dependent impaired loans | | | 27,449 | | | - | | | 27,449 | | | - | | | 27,449 | |
Loans held-for-sale | | | 210 | | | 210 | | | - | | | - | | | 210 | |
Cash surrender value of life insurance policies | | | 38,007 | | | - | | | 38,007 | | | - | | | 38,007 | |
Other Investments | | | 6,370 | | | - | | | 6,370 | | | - | | | 6,370 | |
Investment in Limited Partnership | | | 10,316 | | | - | | | 10,316 | | | - | | | 10,316 | |
Accrued Interest Receivable | | | 5,095 | | | - | | | 5,095 | | | - | | | 5,095 | |
| | | | | | | | | | | | | | | | |
Financial Liabilities: | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | |
Noninterest-bearing | | $ | 352,597 | | $ | 352,597 | | $ | - | | $ | - | | $ | 352,597 | |
Interest-bearing | | | 821,437 | | | - | | | 821,911 | | | - | | | 821,911 | |
Fed Funds Purchased and Repurchase Agreements | | | 1,419 | | | - | | | 1,419 | | | - | | | 1,419 | |
Short-term borrowings | | | 36,650 | | | - | | | 36,650 | | | - | | | 36,650 | |
Long-term borrowings | | | 5,000 | | | - | | | 5,038 | | | - | | | 5,038 | |
Subordinated debentures | | | 30,928 | | | - | | | 12,141 | | | - | | | 12,141 | |
Limited partnership capital commitment | | | 962 | | | - | | | 962 | | | - | | | 962 | |
Accrued Interest Payable | | | 304 | | | - | | | 304 | | | - | | | 304 | |
| | Notional Amount | | |
Off-balance-sheet financial instruments: | | | | |
Commitments to extend credit | | $ | 225,400 | |
Standby letters of credit | | | 6,690 | |
Commercial lines of credit | | | 8,539 | |
| ⋅ | Investment Securities: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or by matrix pricing, which is a mathematical technique used widely in the industry to value debt securities by relying on the their relationship to other benchmark quoted securities. |
| ⋅ | Collateral Dependent Impaired loans: Impaired loans carried at fair value are those for which it is probable that the bank will be unable to collect all amounts due (including both interest and principal) according to the contractual terms of the original loan agreement, and the carrying value has been written down to the fair value of the loan. The carrying value is equivalent to the fair value of the collateral based on current appraisals, net of expected disposition costs where applicable, for collateral-dependent loans. |
| ⋅ | Foreclosed assets: Repossessed real estate (OREO) and other assets are carried at the lower of cost or fair value. Fair value is the appraised value less expected selling costs for OREO and some other assets such as mobile homes, and for all other assets fair value is represented by the estimated sales proceeds as determined using reasonably available sources. Foreclosed assets for which appraisals can be feasibly obtained are periodically measured for impairment using updated appraisals. Fair values for other foreclosed assets are adjusted as necessary, subsequent to a periodic re-evaluation of expected cash flows and the timing of resolution. If impairment is determined to exist, the book value of a foreclosed asset is immediately written down to its estimated impaired value through the income statement, thus the carrying amount is equal to the fair value and there is no valuation allowance. |
Fair Value Measurements - Recurring | | | | | | | | | | | | | |
(dollars in thousands, unaudited) | | | | | | | | | | | | | |
| | Fair Value Measurements at March 31, 2013, Using | | ||||||||||
| | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total | | ||||
Investment Securities | | | | | | | | | | | | | |
U.S. Government agencies | | $ | - | | $ | 4,684 | | $ | - | | $ | 4,684 | |
Obligations of states and | | | | | | | | | | | | | |
political subdivisions | | | - | | | 81,197 | | | - | | | 81,197 | |
U.S. Government agencies | | | | | | | | | | | | | |
collateralized by mortgage | | | | | | | | | | | | | |
obligations | | | - | | | 310,772 | | | - | | | 310,772 | |
Other Securities | | | 2,102 | | | - | | | - | | | 2,102 | |
| | | | | | | | | | | | | |
Total availabe-for-sale securities | | $ | 2,102 | | $ | 396,653 | | $ | - | | $ | 398,755 | |
| | Fair Value Measurements at December 31, 2012, Using | | ||||||||||
| | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total | | ||||
Investment Securities | | | | | | | | | | | | | |
U.S. Government agencies | | $ | - | | $ | 2,973 | | $ | - | | $ | 2,973 | |
Obligations of states and | | | | | | | | | | | | | |
political subdivisions | | | - | | | 73,986 | | | - | | | 73,986 | |
U.S. Government agencies | | | | | | | | | | | | | |
collateralized by mortgage | | | | | | | | | | | | | |
obligations | | | - | | | 301,389 | | | - | | | 301,389 | |
Other Securities | | | 1,809 | | | 31 | | | - | | | 1,840 | |
| | | | | | | | | | | | | |
Total availabe-for-sale securities | | $ | 1,809 | | $ | 378,379 | | $ | - | | $ | 380,188 | |
Fair Value Measurements - Nonrecurring | | | | | | | | | | | | | |
(dollars in thousands, unaudited) | | | | | | | | | | | | | |
| | Fair Value Measurements at March 31, 2013, Using | | ||||||||||
| | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total | | ||||
Collateral Dependent Impaired Loans | | $ | - | | $ | 25,520 | | $ | - | | $ | 25,520 | |
Foreclosed Assets | | $ | - | | $ | 15,747 | | $ | - | | $ | 15,747 | |
| | Fair Value Measurements at December 31, 2012, Using | | ||||||||||
| | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total | | ||||
Collateral Dependent Impaired Loans | | $ | - | | $ | 27,449 | | $ | - | | $ | 27,449 | |
Foreclosed Assets | | $ | - | | $ | 19,754 | | $ | - | | $ | 19,754 | |
| | March 31, 2013 | | ||||||||||
| | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value | | ||||
| | | | | | | | | | | | | |
U.S. Government agencies | | $ | 4,698 | | $ | 4 | | $ | (18) | | $ | 4,684 | |
Obligations of state and political subdivisions | | | 78,445 | | | 3,241 | | | (489) | | | 81,197 | |
U.S. Government agencies collateralized by | | | | | | | | | | | | | |
mortgage obligations | | | 308,044 | | | 3,779 | | | (1,051) | | | 310,772 | |
Equity Securities | | | 1,336 | | | 766 | | | - | | | 2,102 | |
| | $ | 392,523 | | $ | 7,790 | | $ | (1,558) | | $ | 398,755 | |
| | December 31, 2012 | | ||||||||||
| | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value | | ||||
| | | | | | | | | | | | | |
U.S. Government agencies | | $ | 2,987 | | $ | 3 | | $ | (17) | | $ | 2,973 | |
Obligations of state and political subdivisions | | | 70,736 | | | 3,430 | | | (180) | | | 73,986 | |
U.S. Government agencies collateralized by | | | | | | | | | | | | | |
mortgage obligations | | | 298,806 | | | 3,547 | | | (964) | | | 301,389 | |
Equity Securities | | | 1,336 | | | 508 | | | (4) | | | 1,840 | |
| | $ | 373,865 | | $ | 7,488 | | $ | (1,165) | | $ | 380,188 | |
| | March 31, 2013 | | ||||||||||
| | Less than Twelve Months | | Over Twelve Months | | ||||||||
| | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | ||||
| | | | | | | | | | | | | |
US Government Agencies | | $ | (18) | | $ | 1,993 | | $ | - | | $ | - | |
Obligations of State and Political Subdivisions | | | (475) | | | 22,550 | | | (15) | | | 318 | |
U.S. Government agencies collateralized by mortgage | | | | | | | | | | | | | |
obligations | | | (919) | | | 112,437 | | | (132) | | | 11,942 | |
Other Securities | | | - | | | - | | | - | | | - | |
Total | | $ | (1,412) | | $ | 136,980 | | $ | (147) | | $ | 12,260 | |
| | December 31, 2012 | | ||||||||||
| | Less than Twelve Months | | Over Twelve Months | | ||||||||
| | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | ||||
| | | | | | | | | | | | | |
US Government Agencies | | $ | (17) | | $ | 1,996 | | $ | - | | $ | - | |
Obligations of State and Political Subdivisions | | | (180) | | | 9,324 | | | - | | | - | |
U.S. Government agencies collateralized by mortgage | | | | | | | | | | | | | |
obligations | | | (903) | | | 106,799 | | | (61) | | | 6,965 | |
Other Securities | | | (4) | | | 242 | | | - | | | - | |
Total | | $ | (1,104) | | $ | 118,361 | | $ | (61) | | $ | 6,965 | |
| ⋅ | Pass: Larger non-homogeneous loans not meeting the risk rating definitions below, and smaller homogeneous loans that are not assessed on an individual basis. |
| ⋅ | Special Mention: Loans which have potential issues that deserve the close attention of management. If left uncorrected, those potential weaknesses could eventually diminish the prospects for full repayment of principal and interest according to the contractual terms of the loan agreement, or could result in deterioration of the Company’s credit position at some future date. |
| ⋅ | Substandard: Loans that have at least one clear and well-defined weakness which could jeopardize the ultimate recoverability of all principal and interest, such as a borrower displaying a highly leveraged position, unfavorable financial operating results and/or trends, uncertain repayment sources or a deteriorated financial condition. |
| ⋅ | Impaired: A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans include all nonperforming loans, loans classified as restructured troubled debt, and certain other loans that are still being maintained on accrual status. If the Bank grants a concession to a borrower in financial difficulty, the loan falls into the category of a troubled debt restructuring (TDR). A TDR may be nonperforming or performing, depending on its accrual status and the demonstrated ability of the borrower to comply with restructured terms. |
| | March 31, 2013 | | |||||||||||||
| | Pass | | Special Mention | | Substandard | | Impaired | | Total | | |||||
Real Estate: | | | | | | | | | | | | | | | | |
1-4 Family residential construction | | $ | 988 | | $ | 324 | | $ | - | | $ | - | | $ | 1,312 | |
Other construction/Land | | | 13,442 | | | 900 | | | 915 | | | 12,018 | | | 27,275 | |
1-4 Family - closed end | | | 69,821 | | | 2,237 | | | 792 | | | 23,291 | | | 96,141 | |
Equity Lines | | | 55,518 | | | 55 | | | 2,075 | | | 931 | | | 58,579 | |
Multi-family residential | | | 5,681 | | | 607 | | | - | | | - | | | 6,288 | |
Commercial real estate - owner occupied | | | 138,525 | | | 23,867 | | | 7,237 | | | 8,417 | | | 178,046 | |
Commercial real estate - non-owner occupied | | | 74,174 | | | 6,800 | | | 244 | | | 16,542 | | | 97,760 | |
Farmland | | | 82,583 | | | 2,205 | | | 3,499 | | | 1,923 | | | 90,210 | |
Total Real Estate | | | 440,732 | | | 36,995 | | | 14,762 | | | 63,122 | | | 555,611 | |
| | | | | | | | | | | | | | | | |
Agricultural | | | 25,659 | | | 449 | | | - | | | 659 | | | 26,767 | |
Commercial and Industrial | | | 183,516 | | | 4,570 | | | 371 | | | 4,850 | | | 193,307 | |
Small Business Administration | | | 15,176 | | | 1,624 | | | 731 | | | 3,146 | | | 20,677 | |
Direct finance leases | | | 3,743 | | | 4 | | | - | | | 150 | | | 3,897 | |
Consumer loans | | | 22,230 | | | 378 | | | 321 | | | 4,113 | | | 27,042 | |
Total Gross Loans and Leases | | $ | 691,056 | | $ | 44,020 | | $ | 16,185 | | $ | 76,040 | | $ | 827,301 | |
| December 31, 2012 | | |||||||||||||
| Pass | | Special Mention | | Substandard | | Impaired | | Total | | |||||
Real Estate: | | | | | | | | | | | | | | | |
1-4 Family residential construction | $ | 1,599 | | $ | 1,333 | | $ | 89 | | $ | 153 | | $ | 3,174 | |
Other construction/Land | | 13,270 | | | 952 | | | 1,132 | | | 12,648 | | | 28,002 | |
1-4 Family - closed end | | 73,002 | | | 2,484 | | | 1,208 | | | 23,222 | | | 99,916 | |
Equity Lines | | 58,161 | | | 96 | | | 1,949 | | | 1,258 | | | 61,464 | |
Multi-family residential | | 5,351 | | | 609 | | | - | | | - | | | 5,960 | |
Commercial real estate - owner occupied | | 144,207 | | | 22,895 | | | 6,562 | | | 8,950 | | | 182,614 | |
Commercial real estate - non-owner occupied | | 67,407 | | | 6,864 | | | 568 | | | 17,969 | | | 92,808 | |
Farmland | | 64,176 | | | 2,216 | | | 3,526 | | | 1,933 | | | 71,851 | |
Total Real Estate | | 427,173 | | | 37,449 | | | 15,034 | | | 66,133 | | | 545,789 | |
| | | | | | | | | | | | | | | |
Agricultural | | 21,333 | | | 462 | | | 24 | | | 663 | | | 22,482 | |
Commercial and Industrial | | 247,375 | | | 5,020 | | | 1,845 | | | 3,656 | | | 257,896 | |
Small Business Administration | | 15,002 | | | 1,551 | | | 743 | | | 3,227 | | | 20,523 | |
Direct finance leases | | 4,076 | | | 22 | | | - | | | 135 | | | 4,233 | |
Consumer loans | | 23,881 | | | 445 | | | 198 | | | 4,348 | | | 28,872 | |
Total Gross Loans and Leases | $ | 738,840 | | $ | 44,949 | | $ | 17,844 | | $ | 78,162 | | $ | 879,795 | |
| | March 31, 2013 | | |||||||||||||||||||
| | 30-59 Days Past Due | | 60-89 Days Past Due | | 90 Days Or More Past Due (2) | | Total Past Due | | Current | | Total Financing Receivables | | Non-Accrual Loans(1) | | |||||||
Real Estate: | | | | | | | | | | | | | | | | | | | | | | |
1-4 Family residential construction | | $ | - | | $ | - | | $ | - | | $ | - | | $ | 1,312 | | $ | 1,312 | | $ | - | |
Other construction/Land | | | 11 | | | 27 | | | 105 | | | 143 | | | 27,132 | | | 27,275 | | | 10,556 | |
1-4 Family - closed end | | | 1,656 | | | - | | | 806 | | | 2,462 | | | 93,679 | | | 96,141 | | | 15,493 | |
Equity Lines | | | 25 | | | 311 | | | 41 | | | 377 | | | 58,202 | | | 58,579 | | | 728 | |
Multi-family residential | | | - | | | - | | | - | | | - | | | 6,288 | | | 6,288 | | | - | |
Commercial real estate - owner occupied | | | 1,009 | | | - | | | 1,810 | | | 2,819 | | | 175,227 | | | 178,046 | | | 5,301 | |
Commercial real estate - non-owner occupied | | | 248 | | | - | | | 7,291 | | | 7,539 | | | 90,221 | | | 97,760 | | | 10,229 | |
Farmland | | | 925 | | | 230 | | | 1,679 | | | 2,834 | | | 87,376 | | | 90,210 | | | 1,923 | |
Total Real Estate | | | 3,874 | | | 568 | | | 11,732 | | | 16,174 | | | 539,437 | | | 555,611 | | | 44,230 | |
| | | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | - | | | - | | | 659 | | | 659 | | | 26,108 | | | 26,767 | | | 659 | |
Commercial and Industrial | | | 671 | | | 391 | | | 1,018 | | | 2,080 | | | 191,227 | | | 193,307 | | | 2,388 | |
Small Business Administration | | | 521 | | | 3 | | | 1,433 | | | 1,957 | | | 18,720 | | | 20,677 | | | 2,094 | |
Direct finance leases | | | - | | | 4 | | | 150 | | | 154 | | | 3,743 | | | 3,897 | | | 150 | |
Consumer loans | | | 230 | | | 30 | | | - | | | 260 | | | 26,782 | | | 27,042 | | | 1,045 | |
Total Gross Loans and Leases | | $ | 5,296 | | $ | 996 | | $ | 14,992 | | $ | 21,284 | | $ | 806,017 | | $ | 827,301 | | $ | 50,566 | |
| | December 31, 2012 | | |||||||||||||||||||
| | 30-59 Days Past Due | | 60-89 Days Past Due | | 90 Days Or More Past Due (2) | | Total Past Due | | Current | | Total Financing Receivables | | Non-Accrual Loans(1) | | |||||||
Real Estate: | | | | | | | | | | | | | | | | | | | | | | |
1-4 Family residential construction | | $ | - | | $ | - | | $ | 153 | | $ | 153 | | $ | 3,021 | | $ | 3,174 | | $ | 153 | |
Other construction/Land | | | 374 | | | 211 | | | - | | | 585 | | | 27,417 | | | 28,002 | | | 11,163 | |
1-4 Family - closed end | | | 1,335 | | | 88 | | | 376 | | | 1,799 | | | 98,117 | | | 99,916 | | | 15,381 | |
Equity Lines | | | 473 | | | 40 | | | 66 | | | 579 | | | 60,885 | | | 61,464 | | | 1,026 | |
Multi-family residential | | | 177 | | | - | | | - | | | 177 | | | 5,783 | | | 5,960 | | | - | |
Commercial real estate - owner occupied | | | 1,372 | | | 813 | | | 1,289 | | | 3,474 | | | 179,140 | | | 182,614 | | | 5,314 | |
Commercial real estate - non-owner occupied | | | 7,831 | | | - | | | 1,499 | | | 9,330 | | | 83,478 | | | 92,808 | | | 11,642 | |
Farmland | | | 231 | | | - | | | 1,679 | | | 1,910 | | | 69,941 | | | 71,851 | | | 1,933 | |
Total Real Estate | | | 11,793 | | | 1,152 | | | 5,062 | | | 18,007 | | | 527,782 | | | 545,789 | | | 46,612 | |
| | | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | 24 | | | 157 | | | 506 | | | 687 | | | 21,795 | | | 22,482 | | | 664 | |
Commercial and Industrial | | | 1,419 | | | 518 | | | 7 | | | 1,944 | | | 255,952 | | | 257,896 | | | 2,386 | |
Small Business Administration | | | 905 | | | - | | | 1,574 | | | 2,479 | | | 18,044 | | | 20,523 | | | 2,159 | |
Direct finance leases | | | - | | | 34 | | | 123 | | | 157 | | | 4,076 | | | 4,233 | | | 135 | |
Consumer loans | | | 238 | | | 189 | | | 87 | | | 514 | | | 28,358 | | | 28,872 | | | 1,138 | |
Total Gross Loans and Leases | | $ | 14,379 | | $ | 2,050 | | $ | 7,359 | | $ | 23,788 | | $ | 856,007 | | $ | 879,795 | | $ | 53,094 | |
| | For the Quarter Ended March 31, 2013 | | ||||||||||||||||||||||
| | Rate Modification | | Term Modification | | Interest Only Modification | | Rate & Term Modification | | Rate & Interest Only Modification | | Term & Interest Only Modification | | Rate, Term & Interest Only Modification | | Total | | ||||||||
Trouble Debt Restructurings | | | | | | | | | | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | | | | | | | | | | |
Other construction/Land | | $ | - | | $ | 247 | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | | $ | 247 | |
1-4 family - closed-end | | | - | | | 3,240 | | | - | | | - | | | - | | | - | | | - | | | 3,240 | |
Commercial RE - owner occupied | | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
Commercial RE - non owner occupied | | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
Total Real Estate Loans | | | - | | | 3,487 | | | - | | | - | | | - | | | - | | | - | | | 3,487 | |
Commercial and Industrial | | | - | | | 1,457 | | | - | | | - | | | - | | | - | | | - | | | 1,457 | |
Consumer loans | | | - | | | 263 | | | - | | | - | | | - | | | - | | | - | | | 263 | |
Small Business Administration Loans | | | - | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
| | $ | - | | $ | 5,207 | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | | $ | 5,207 | |
| | For the Quarter Ended March 31, 2012 | | ||||||||||||||||||||||
| | Rate Modification | | Term Modification | | Interest Only Modification | | Rate & Term Modification | | Rate & Interest Only Modification | | Term & Interest Only Modification | | Rate, Term & Interest Only Modification | | Total | | ||||||||
Trouble Debt Restructurings | | | | | | | | | | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | | | | | | | | | | |
Other construction/Land | | $ | - | | $ | - | | $ | - | | $ | 53 | | $ | - | | $ | - | | $ | - | | $ | 53 | |
1-4 family - closed-end | | | - | | | 110 | | | - | | | - | | | - | | | - | | | - | | | 110 | |
Commercial RE - owner occupied | | | - | | | 779 | | | - | | | 318 | | | - | | | - | | | - | | | 1,097 | |
Commercial RE - non owner occupied | | | - | | | 74 | | | - | | | - | | | - | | | - | | | - | | | 74 | |
Total Real Estate Loans | | | - | | | 963 | | | - | | | 371 | | | - | | | - | | | - | | | 1,334 | |
Commercial and Industrial | | | - | | | 25 | | | - | | | - | | | - | | | - | | | - | | | 25 | |
Consumer loans | | | - | | | 109 | | | - | | | 118 | | | - | | | - | | | - | | | 227 | |
Small Business Administration Loans | | | - | | | - | | | - | | | 475 | | | - | | | - | | | - | | | 475 | |
| | $ | - | | $ | 1,097 | | $ | - | | $ | 964 | | $ | - | | $ | - | | $ | - | | $ | 2,061 | |
| | For the Quarter Ended March 31, 2013 | | |||||||||||||
| | Number of Loans | | Pre- Modification Outstanding Recorded Investment | | Post- Modification Outstanding Recorded Investment | | Reserve Difference(1) | | Reserve | | |||||
Real Estate: | | | | | | | | | | | | | | | | |
Other Construction/Land | | | 1 | | $ | 249 | | $ | 247 | | $ | 6 | | $ | 4 | |
1-4 family - closed-end | | | 1 | | | 3,240 | | | 3,240 | | | - | | | - | |
Commercial RE- owner occupied | | | - | | | - | | | - | | | - | | | - | |
Commercial RE- non-owner occupied | | | - | | | - | | | - | | | - | | | - | |
Total Real Estate Loans | | | | | | 3,489 | | | 3,487 | | | 6 | | | 4 | |
| | | | | | | | | | | | | | | | |
Commercial and Industrial | | | 3 | | | 1,457 | | | 1,457 | | | (38) | | | 57 | |
Small Business Administration Loans | | | 5 | | | 263 | | | 263 | | | 31 | | | 39 | |
Consumer loans | | | - | | | - | | | - | | | - | | | - | |
| | | | | $ | 5,209 | | $ | 5,207 | | $ | (1) | | $ | 100 | |
| | For the Quarter Ended March 31, 2012 | | |||||||||||||
| | Number of Loans | | Pre- Modification Outstanding Recorded Investment | | Post- Modification Outstanding Recorded Investment | | Reserve Difference(1) | | Reserve | | |||||
Real Estate: | | | | | | | | | | | | | | | | |
Other Construction/Land | | | 1 | | $ | 53 | | $ | 53 | | $ | - | | $ | - | |
1-4 family - closed-end | | | 2 | | | 110 | | | 110 | | | 6 | | | 8 | |
Commercial RE- owner occupied | | | 2 | | | 747 | | | 1,097 | | | (71) | | | - | |
Commercial RE- non-owner occupied | | | 1 | | | 74 | | | 74 | | | 6 | | | 6 | |
Total Real Estate Loans | | | | | | 984 | | | 1,334 | | | (59) | | | 14 | |
| | | | | | | | | | | | | | | | |
Commercial and Industrial | | | 2 | | | 25 | | | 25 | | | (11) | | | 2 | |
Small Business Administration Loans | | | 1 | | | 468 | | | 475 | | | 2 | | | 118 | |
Consumer loans | | | 4 | | | 228 | | | 227 | | | (14) | | | 12 | |
| | | | | $ | 1,705 | | $ | 2,061 | | $ | (82) | | $ | 146 | |
| | Subsequent default three-months ended March 31, 2013 | | |||||||
| | Number of Loans | | Recorded Investment | | Charge-Offs | | |||
Real Estate: | | | | | | | | | | |
1-4 family closed-end | | | - | | $ | - | | $ | - | |
Equity Lines | | | - | | | - | | | - | |
Commercial RE- owner occupied | | | - | | | - | | | - | |
Total Real Estate Loans | | | | | | - | | | - | |
| | | | | | | | | | |
Agricultural products | | | - | | | - | | | - | |
Commercial and Industrial | | | 2 | | | 173 | | | 96 | |
Small Business Administration Loans | | | - | | | - | | | - | |
Consumer loans | | | 1 | | | 2 | | | 2 | |
| | | | | $ | 175 | | $ | 98 | |
| | Subsequent default three-months ended March 31, 2012 | | |||||||
| | Number of Loans | | Recorded Investment | | Charge-Offs | | |||
Real Estate: | | | | | | | | | | |
1-4 family - closed-end | | | 1 | | $ | 93 | | $ | - | |
Equity Lines | | | 1 | | | 213 | | | - | |
Commercial RE- owner occupied | | | 2 | | | 1,773 | | | - | |
Total Real Estate Loans | | | | | | 2,079 | | | - | |
| | | | | | | | | | |
Agricultural products | | | - | | | - | | | - | |
Commercial and Industrial | | | - | | | - | | | - | |
Small Business Administration Loans | | | - | | | - | | | - | |
Consumer Loans | | | 3 | | | 488 | | | - | |
| | | | | $ | 2,567 | | $ | - | |
| | For the Quarter Ended March 31, 2013 | | |||||||||||||
| | Unpaid Principal Balance(1) | | Recorded Investment(2) | | Related Allowance | | Average Recorded Investment | | Interest Income Recognized(3) | | |||||
With an Allowance Recorded | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | |
1-4 family residential construction | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | |
Other Construction/Land | | | 9,978 | | | 9,978 | | | 1,227 | | | 10,084 | | | 27 | |
1-4 Family - closed-end | | | 17,425 | | | 17,412 | | | 592 | | | 17,442 | | | 125 | |
Equity Lines | | | 575 | | | 541 | | | 68 | | | 541 | | | 4 | |
Commercial RE- owner occupied | | | 4,258 | | | 4,258 | | | 312 | | | 4,275 | | | 23 | |
Commercial RE- non-owner occupied | | | 13,762 | | | 13,604 | | | 894 | | | 13,603 | | | 105 | |
Farmland | | | 83 | | | 83 | | | - | | | 84 | | | - | |
Total Real Estate | | | 46,081 | | | 45,876 | | | 3,093 | | | 46,029 | | | 284 | |
Agriculture | | | - | | | - | | | - | | | - | | | - | |
Commercial and Industrial | | | 2,572 | | | 2,536 | | | 1,372 | | | 2,577 | | | 21 | |
Small Business Administration | | | 2,622 | | | 2,425 | | | 1,073 | | | 2,425 | | | 15 | |
Direct finance leases | | | 150 | | | 150 | | | 74 | | | 150 | | | - | |
Consumer loans | | | 4,140 | | | 4,088 | | | 603 | | | 4,136 | | | 65 | |
| | | 55,565 | | | 55,075 | | | 6,215 | | | 55,317 | | | 385 | |
With no Related Allowance Recorded | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | |
1-4 family residential construction | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | |
Other Construction/Land | | | 2,150 | | | 2,039 | | | - | | | 2,039 | | | - | |
1-4 Family - closed-end | | | 6,342 | | | 5,879 | | | - | | | 5,888 | | | - | |
Equity Lines | | | 504 | | | 390 | | | - | | | 444 | | | - | |
Commercial RE- owner occupied | | | 5,459 | | | 4,159 | | | - | | | 4,167 | | | - | |
Commercial RE- non-owner occupied | | | 4,257 | | | 2,938 | | | - | | | 3,974 | | | - | |
Farmland | | | 1,841 | | | 1,841 | | | - | | | 1,841 | | | - | |
Total Real Estate | | | 20,553 | | | 17,246 | | | - | | | 18,353 | | | - | |
Agriculture | | | 1,031 | | | 659 | | | - | | | 659 | | | - | |
Commercial and Industrial | | | 2,399 | | | 2,314 | | | - | | | 2,318 | | | 10 | |
Small Business Administration | | | 1,008 | | | 721 | | | - | | | 721 | | | - | |
Direct finance leases | | | - | | | - | | | - | | | - | | | - | |
Consumer loans | | | 46 | | | 25 | | | - | | | 25 | | | - | |
| | | 25,037 | | | 20,965 | | | - | | | 22,076 | | | 10 | |
Total | | $ | 80,602 | | $ | 76,040 | | $ | 6,215 | | $ | 77,393 | | $ | 395 | |
| | For the Year Ended December 31, 2012 | | |||||||||||||
| | Unpaid Principal Balance(1) | | Recorded Investment(2) | | Related Allowance | | Average Recorded Investment | | Interest Income Recognized(3) | | |||||
With an Allowance Recorded | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | |
1-4 family residential construction | | $ | 153 | | $ | 153 | | $ | 23 | | $ | 91 | | $ | - | |
Other Construction/Land | | | 10,313 | | | 10,313 | | | 1,244 | | | 10,755 | | | 86 | |
1-4 Family - closed-end | | | 19,218 | | | 18,910 | | | 955 | | | 19,024 | | | 401 | |
Equity Lines | | | 1,142 | | | 1,142 | | | 163 | | | 1,144 | | | 9 | |
Multifamily residential | | | - | | | - | | | - | | | - | | | - | |
Commercial RE- owner occupied | | | 5,846 | | | 5,585 | | | 563 | | | 5,666 | | | 126 | |
Commercial RE- non-owner occupied | | | 18,539 | | | 17,579 | | | 1,230 | | | 18,079 | | | 481 | |
Farmland | | | 254 | | | 254 | | | 2 | | | 259 | | | - | |
Total Real Estate | | | 55,465 | | | 53,936 | | | 4,180 | | | 55,018 | | | 1,103 | |
Agriculture | | | 28 | | | 28 | | | 28 | | | 28 | | | - | |
Commercial and Industrial | | | 2,955 | | | 2,920 | | | 934 | | | 3,100 | | | 51 | |
Small Business Administration | | | 2,704 | | | 2,507 | | | 1,038 | | | 2,507 | | | 53 | |
Direct finance leases | | | 135 | | | 135 | | | 67 | | | 135 | | | - | |
Consumer loans | | | 4,349 | | | 4,344 | | | 878 | | | 4,493 | | | 183 | |
| | | 65,636 | | | 63,870 | | | 7,125 | | | 65,281 | | | 1,390 | |
With no Related Allowance Recorded | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | |
1-4 family residential construction | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | |
Other Construction/Land | | | 2,335 | | | 2,335 | | | - | | | 2,346 | | | - | |
1-4 Family - closed-end | | | 4,312 | | | 4,312 | | | - | | | 4,491 | | | - | |
Equity Lines | | | 116 | | | 116 | | | - | | | 155 | | | 1 | |
Multifamily residential | | | - | | | - | | | - | | | - | | | - | |
Commercial RE- owner occupied | | | 4,298 | | | 3,365 | | | - | | | 3,540 | | | - | |
Commercial RE- non-owner occupied | | | 390 | | | 390 | | | - | | | 421 | | | 3 | |
Farmland | | | 1,679 | | | 1,679 | | | - | | | 1,686 | | | - | |
Total Real Estate | | | 13,130 | | | 12,197 | | | - | | | 12,639 | | | 4 | |
Agriculture | | | 1,008 | | | 635 | | | - | | | 1,017 | | | - | |
Commercial and Industrial | | | 735 | | | 736 | | | - | | | 740 | | | - | |
Small Business Administration | | | 1,008 | | | 720 | | | - | | | 720 | | | - | |
Direct finance leases | | | - | | | - | | | - | | | - | | | - | |
Consumer loans | | | 4 | | | 4 | | | - | | | 7 | | | - | |
| | | 15,885 | | | 14,292 | | | - | | | 15,123 | | | 4 | |
Total | | $ | 81,521 | | $ | 78,162 | | $ | 7,125 | | $ | 80,404 | | $ | 1,394 | |
Impaired Loans | | | | | | | |
(dollars in thousands, unaudited) | | | | | | | |
| | March 31, 2013 | | December 31, 2012 | | ||
| | | | | | | |
Impaired loans without a valuation allowance | | $ | 20,965 | | $ | 14,292 | |
Impaired loans with a valuation allowance | | | 55,075 | | | 63,870 | |
Total impaired loans (1) | | $ | 76,040 | | $ | 78,162 | |
Valuation allowance related to impaired loans | | $ | 6,215 | | $ | 7,125 | |
Total non-accrual loans | | $ | 50,566 | | $ | 53,094 | |
| | For the Quarter Ended March 31, 2013 | | |||||||||||||||||||
| | Real Estate | | Agricultural Products | | Commercial and Industrial | | Small Business Administration | | Direct Finance Leases | | Consumer | | Total | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | |
Beginning Balance | | $ | 8,034 | | $ | 258 | | $ | 2,056 | | $ | 1,246 | | $ | 165 | | $ | 2,114 | | $ | 13,873 | |
Charge-offs | | | (1,422) | | | (28) | | | (688) | | | (37) | | | (20) | | | (509) | | | (2,704) | |
Recoveries | | | 164 | | | - | | | 191 | | | - | | | 1 | | | 74 | | | 430 | |
Provision | | | (288) | | | 174 | | | 1,525 | | | 201 | | | (61) | | | 49 | | | 1,600 | |
| | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 6,488 | | $ | 404 | | $ | 3,084 | | $ | 1,410 | | $ | 85 | | $ | 1,728 | | $ | 13,199 | |
| | | | | | | | | | | | | | | | | | | | | | |
Reserves: | | | | | | | | | | | | | | | | | | | | | | |
Specific | | $ | 3,093 | | $ | - | | $ | 1,372 | | $ | 1,073 | | $ | 74 | | $ | 603 | | $ | 6,215 | |
General | | | 3,395 | | | 404 | | | 1,712 | | | 337 | | | 11 | | | 1,125 | | | 6,984 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | 6,488 | | $ | 404 | | $ | 3,084 | | $ | 1,410 | | $ | 85 | | $ | 1,728 | | $ | 13,199 | |
| | | | | | | | | | | | | | | | | | | | | | |
Loans evaluated for impairment: | | | | | | | | | | | | | | | | | | | | | | |
Individually | | $ | 63,122 | | $ | 659 | | $ | 4,850 | | $ | 3,146 | | $ | 150 | | $ | 4,113 | | $ | 76,040 | |
Collectively | | | 492,489 | | | 26,108 | | | 188,457 | | | 17,531 | | | 3,747 | | | 22,929 | | | 751,261 | |
| | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 555,611 | | $ | 26,767 | | $ | 193,307 | | $ | 20,677 | | $ | 3,897 | | $ | 27,042 | | $ | 827,301 | |
| | For the Year Ended December 31, 2012 | | |||||||||||||||||||
| | Real Estate | | Agricultural Products | | Commercial and Industrial | | Small Business Administration | | Direct Finance Leases | | Consumer | | Total | | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | |
Beginning Balance | | $ | 8,260 | | $ | 19 | | $ | 4,638 | | $ | 1,447 | | $ | 311 | | $ | 2,608 | | $ | 17,283 | |
Charge-offs | | | (11,108) | | | (634) | | | (3,517) | | | (753) | | | (198) | | | (2,568) | | | (18,778) | |
Recoveries | | | 302 | | | - | | | 483 | | | 95 | | | - | | | 278 | | | 1,158 | |
Provision | | | 10,580 | | | 873 | | | 452 | | | 457 | | | 52 | | | 1,796 | | | 14,210 | |
| | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 8,034 | | $ | 258 | | $ | 2,056 | | $ | 1,246 | | $ | 165 | | $ | 2,114 | | $ | 13,873 | |
| | | | | | | | | | | | | | | | | | | | | | |
Reserves: | | | | | | | | | | | | | | | | | | | | | | |
Specific | | $ | 4,180 | | $ | 28 | | $ | 934 | | $ | 1,038 | | $ | 67 | | $ | 878 | | $ | 7,125 | |
General | | | 3,854 | | | 230 | | | 1,122 | | | 208 | | | 98 | | | 1,236 | | | 6,748 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | 8,034 | | $ | 258 | | $ | 2,056 | | $ | 1,246 | | $ | 165 | | $ | 2,114 | | $ | 13,873 | |
| | | | | | | | | | | | | | | | | | | | | | |
Loans evaluated for impairment: | | | | | | | | | | | | | | | | | | | | | | |
Individually | | $ | 66,133 | | $ | 663 | | $ | 3,656 | | $ | 3,227 | | $ | 135 | | $ | 4,348 | | $ | 78,162 | |
Collectively | | | 479,656 | | | 21,819 | | | 254,240 | | | 17,296 | | | 4,098 | | | 24,524 | | | 801,633 | |
| | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 545,789 | | $ | 22,482 | | $ | 257,896 | | $ | 20,523 | | $ | 4,233 | | $ | 28,872 | | $ | 879,795 | |
| 1) | add a new regulatory capital component referred to as “Common Equity Tier 1 capital”, and establish threshold ratios for this new component (e.g., 6.5% to be “well-capitalized”); |
| 2) | impose a new “capital conservation buffer” of at least 2.5% of risk-weighted assets to be added to Common Equity Tier 1 capital, and limit dividend payments, share buybacks, and certain discretionary bonus payments to executive officers if the capital conservation buffer is not achieved; |
| 3) | provide a phase-out period for the inclusion of TRUPS as Tier 1 capital (although TRUPS would likely still be includible in Tier 2 capital); |
| 4) | require us to include accumulated other comprehensive income (AOCI) in Tier 1 capital, which could significantly increase capital volatility; |
| 5) | impose additional constraints on the inclusion of minority interests, mortgage servicing assets, and deferred tax assets in regulatory capital; |
| 6) | adjust risk-weightings for certain assets, including the assignment of a risk weighting of 150% to certain acquisition/development and construction loans, a risk weighting of 150% for loans that are more than 90-days past due or are on non-accrual status, and risk weightings for residential mortgages based on loan-to-value ratios and certain other loan characteristics; and |
| 7) | increase minimum required ratios over a phase-in period, and increase the threshold for a “well-capitalized” classification for the Tier 1 Risk-Based Capital Ratio from 6% to 8%. |
⋅ | Net interest income was down $646,000, or 5%, due to a 39 basis point drop in the Company’s net interest margin that was partially offset by a $58 million increase in average interest-earning assets. |
⋅ | The largest impact for the comparative quarters came from the loan loss provision, which was reduced by $1.150 million, or 42%, in the first quarter of 2013 relative to the first quarter of 2012. |
⋅ | Total operating expense fell by $221,000, or 2%, in the first quarter of 2013 relative to the first quarter of 2012. Salaries and benefits reflect an increase of $255,000, or 5%, due to regular annual salary increases and strategic staff additions, and occupancy expense also increased by $62,000, or 4%. However, other non-interest expenses fell by $538,000, or 11%, due primarily to a reduction in net OREO expense and other credit-related costs, and a drop in deposit costs resulting mainly from lower debit card processing costs. |
⋅ | The Company had an income tax accrual of $204,000, or 8% of pre-tax income in the first quarter of 2013, relative to an income tax benefit of $79,000 in the first quarter of 2012. The negative tax provision for 2012 was primarily the result of lower taxable income relative to the Company’s available tax credits. |
⋅ | The Company’s assets totaled $1.386 billion at March 31, 2013, a drop of $52 million, or 4%, relative to total assets of $1.438 billion at December 31, 2012, due to lower loan balances. |
⋅ | A drop in mortgage activity negatively impacted loan volume, as balances outstanding on mortgage warehouse lines fell by $52 million relative to year-end 2012 and total loans and leases declined by the same amount. |
⋅ | Total nonperforming assets fell by close to $7 million, or 9%, to $66 million at March 31, 2013 from $73 million at December 31, 2012. |
⋅ | The Company’s allowance for loan and lease losses was $13.2 million as of March 31, 2013, a decline of $674,000, or 5%, relative to year-end 2012 due mainly to a lower general reserve for unimpaired loans and the write-down of certain impaired collateral-dependent loan balances against previously established specific reserves was largely offset by the build-up of reserves on other impaired loans. The overall allowance declined but the relative drop in loan balances was greater, so the ratio of the allowance to gross loans increased slightly to 1.60% at March 31, 2013 from 1.58% at December 31, 2012. |
⋅ | Investment securities reflect a net increase of close to $19 million, or 5%, for the first three months of 2013, due to the addition of mortgage-backed and municipal securities. |
⋅ | Cash and due from banks fell by $14 million, or 22%, as the result of lower interest-earning balances in our Federal Reserve Bank account. |
⋅ | Total deposits declined by $18 million, or 2%, due primarily to the maturity of a $5 million wholesale brokered time deposit and the runoff of about $12 million in other time deposits. Declines in non-interest bearing demand deposits and interest-bearing transaction accounts were effectively offset by increases in savings and money market deposits. |
⋅ | There was no change in the balance of junior subordinated debentures (trust preferred securities), but other interest-bearing liabilities, comprised primarily of Federal Home Loan Bank borrowings, were reduced by a net $34 million, or 78%, during the first quarter of 2013. The reduction was primarily a result of lower loan balances, specifically in mortgage warehouse loans (a sub component of commercial and industrial loans). |
⋅ | Total capital increased by about $2 million, or 1%, during the first three months of 2013, ending the period with a balance of $176 million. Risk-based capital ratios increased, as well, due in large part to the drop in risk-adjusted assets. Our consolidated total risk-based capital ratio increased to 20.44% at March 31, 2013 from 19.36% at year-end 2012. Our tier one risk-based capital ratio was 19.19% and our tier one leverage ratio was 13.65% at March 31, 2013. |
Average Balances and Rates | | For the Quarter | | | For the Quarter | | ||||||||||||||
(dollars in thousands, except per share data) | | Ended March 31, 2013 | | | Ended March 31, 2012 | | ||||||||||||||
| | Average Balance (1) | | Income/ Expense | | Average Rate/Yield (2)(3) | | | Average Balance (1) | | Income/ Expense | | Average Rate/Yield (2)(3) | | ||||||
Assets | | | | | | | | | | | | | | | | | | | | |
Investments: | | | | | | | | | | | | | | | | | | | | |
Federal funds sold/Due from time | | $ | 45,258 | | $ | 28 | | | 0.25 | % | | $ | 23,783 | | $ | 14 | | | 0.23 | % |
Taxable | | | 311,076 | | | 1,145 | | | 1.47 | % | | | 338,721 | | | 1,881 | | | 2.20 | % |
Non-taxable | | | 76,505 | | | 619 | | | 4.90 | % | | | 73,267 | | | 666 | | | 5.45 | % |
Equity | | | 1,938 | | | 17 | | | 3.51 | % | | | 1,478 | | | 3 | | | 0.80 | % |
Total Investments | | | 434,777 | | | 1,809 | | | 1.96 | % | | | 437,249 | | | 2,564 | | | 2.63 | % |
| | | | | | | | | | | | | | | | | | | | |
Loans and Leases:(4) (5) | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | 23,779 | | | 233 | | | 3.97 | % | | | 14,182 | | | 145 | | | 4.11 | % |
Commercial | | | 206,605 | | | 2,599 | | | 5.10 | % | | | 109,872 | | | 1,556 | | | 5.70 | % |
Real Estate | | | 494,907 | | | 7,474 | | | 6.12 | % | | | 530,965 | | | 8,576 | | | 6.50 | % |
Consumer | | | 27,161 | | | 557 | | | 8.32 | % | | | 33,270 | | | 802 | | | 9.70 | % |
Direct Financing Leases | | | 3,269 | | | 44 | | | 5.46 | % | | | 4,890 | | | 65 | | | 5.35 | % |
Other | | | 53,127 | | | - | | | 0.00 | % | | | 55,150 | | | - | | | 0.00 | % |
Total Loans and Leases | | | 808,848 | | | 10,907 | | | 5.47 | % | | | 748,329 | | | 11,144 | | | 5.99 | % |
Total Interest Earning Assets (5) | | | 1,243,625 | | | 12,716 | | | 4.25 | % | | | 1,185,578 | | | 13,708 | | | 4.77 | % |
Other Earning Assets | | | 6,370 | | | | | | | | | | 6,995 | | | | | | | |
Non-Earning Assets | | | 142,573 | | | | | | | | | | 139,513 | | | | | | | |
Total Assets | | $ | 1,392,568 | | | | | | | | | $ | 1,332,086 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities and Shareholders' Equity | | | | | | | | | | | | | | | | | | | | |
Interest Bearing Deposits: | | | | | | | | | | | | | | | | | | | | |
Demand Deposits | | $ | 83,086 | | $ | 74 | | | 0.36 | % | | $ | 64,525 | | $ | 67 | | | 0.42 | % |
NOW | | | 197,613 | | | 98 | | | 0.20 | % | | | 192,260 | | | 194 | | | 0.41 | % |
Savings Accounts | | | 123,002 | | | 65 | | | 0.21 | % | | | 98,841 | | | 57 | | | 0.23 | % |
Money Market | | | 75,698 | | | 30 | | | 0.16 | % | | | 80,463 | | | 33 | | | 0.16 | % |
CDAR's | | | 14,785 | | | 14 | | | 0.38 | % | | | 18,229 | | | 15 | | | 0.33 | % |
Certificates of Deposit<$100,000 | | | 100,394 | | | 117 | | | 0.47 | % | | | 103,625 | | | 172 | | | 0.67 | % |
Certificates of Deposit≥$100,000 | | | 215,085 | | | 218 | | | 0.41 | % | | | 220,536 | | | 297 | | | 0.54 | % |
Brokered Deposits | | | 13,167 | | | 44 | | | 1.36 | % | | | 15,000 | | | 50 | | | 1.34 | % |
Total Interest Bearing Deposits | | | 822,830 | | | 660 | | | 0.33 | % | | | 793,479 | | | 885 | | | 0.45 | % |
Borrowed Funds: | | | | | | | | | | | | | | | | | | | | |
Federal Funds Purchased | | | 1 | | | - | | | 0.00 | % | | | - | | | - | | | 0.00 | % |
Repurchase Agreements | | | 1,650 | | | 3 | | | 0.74 | % | | | 2,954 | | | 5 | | | 0.68 | % |
Short Term Borrowings | | | 1,989 | | | 1 | | | 0.20 | % | | | 1,796 | | | - | | | 0.00 | % |
Long Term Borrowings | | | 4,222 | | | 33 | | | 3.17 | % | | | 12,912 | | | 131 | | | 4.08 | % |
TRUPS | | | 30,928 | | | 177 | | | 2.32 | % | | | 30,928 | | | 199 | | | 2.59 | % |
Total Borrowed Funds | | | 38,790 | | | 214 | | | 2.24 | % | | | 48,590 | | | 335 | | | 2.77 | % |
Total Interest Bearing Liabilities | | | 861,620 | | | 874 | | | 0.41 | % | | | 842,069 | | | 1,220 | | | 0.58 | % |
Demand Deposits | | | 337,665 | | | | | | | | | | 300,408 | | | | | | | |
Other Liabilities | | | 18,655 | | | | | | | | | | 19,305 | | | | | | | |
Shareholders' Equity | | | 174,628 | | | | | | | | | | 170,304 | | | | | | | |
Total Liabilities and Shareholders' Equity | | $ | 1,392,568 | | | | | | | | | $ | 1,332,086 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Interest Income/Interest Earning Assets | | | | | | | | | 4.25 | % | | | | | | | | | 4.77 | % |
Interest Expense/Interest Earning Assets | | | | | | | | | 0.28 | % | | | | | | | | | 0.41 | % |
Net Interest Income and Margin(6) | | | | | $ | 11,842 | | | 3.97 | % | | | | | $ | 12,488 | | | 4.36 | % |
(1) | Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs. |
(2) | Yields and net interest margin have been computed on a tax equivalent basis utilizing a 34% effective tax rate. |
(3) | Annualized |
(4) | Loan costs have been included in the calculation of interest income. Loan costs were approximately $61 thousand and $239 thousand for the quarters ended March 31, 2013 and 2012. |
Loans are gross of the allowance for possible loan losses. |
(5) | Non-accrual loans have been included in total loans for purposes of total earning assets. |
(6) | Net interest margin represents net interest income as a percentage of average interest-earning assets. |
Volume & Rate Variances | | Quarter Ended March 31, | | |||||||
(dollars in thousands) | | 2013 over 2012 | | |||||||
| | Increase(decrease) due to | | |||||||
| | Volume | | Rate | | Net | | |||
Assets: | | | | | | | | | | |
Investments: | | | | | | | | | | |
Federal funds sold / Due from time | | $ | 13 | | $ | 1 | | $ | 14 | |
Taxable | | | (154) | | | (582) | | | (736) | |
Non-taxable(1) | | | 29 | | | (76) | | | (47) | |
Equity | | | 1 | | | 13 | | | 14 | |
Total Investments | | | (111) | | | (644) | | | (755) | |
Loans and Leases: | | | | | | | | | | |
Agricultural | | | 98 | | | (10) | | | 88 | |
Commercial | | | 1,370 | | | (327) | | | 1,043 | |
Real Estate | | | (582) | | | (520) | | | (1,102) | |
Consumer | | | (147) | | | (98) | | | (245) | |
Direct Financing Leases | | | (22) | | | 1 | | | (21) | |
Other | | | - | | | - | | | - | |
Total Loans and Leases | | | 717 | | | (954) | | | (237) | |
Total Interest Earning Assets | | $ | 606 | | $ | (1,598) | | $ | (992) | |
Liabilities | | | | | | | | | | |
Interest Bearing Deposits: | | | | | | | | | | |
Demand Deposits | | $ | 19 | | $ | (12) | | $ | 7 | |
NOW | | | 5 | | | (101) | | | (96) | |
Savings Accounts | | | 14 | | | (6) | | | 8 | |
Money Market | | | (2) | | | (1) | | | (3) | |
CDAR's | | | (3) | | | 2 | | | (1) | |
Certificates of Deposit < $100,000 | | | (5) | | | (50) | | | (55) | |
Certificates of Deposit ≥ $100,000 | | | (7) | | | (72) | | | (79) | |
Brokered Deposits | | | (6) | | | - | | | (6) | |
Total Interest Bearing Deposits | | | 15 | | | (240) | | | (225) | |
Borrowed Funds: | | | | | | | | | | |
Federal Funds Purchased | | | - | | | - | | | - | |
Repurchase Agreements | | | (2) | | | - | | | (2) | |
Short Term Borrowings | | | - | | | 1 | | | 1 | |
Long Term Borrowings | | | (88) | | | (10) | | | (98) | |
TRUPS | | | - | | | (22) | | | (22) | |
Total Borrowed Funds | | | (90) | | | (31) | | | (121) | |
Total Interest Bearing Liabilities | | | (75) | | | (271) | | | (346) | |
Net Interest Margin/Income | | $ | 681 | | $ | (1,326) | | $ | (646) | |
(1) | Yields on tax exempt income have not been computed on a tax equivalent basis. |
Non Interest Income/Expense | | | | | | | | | | | | | | | | |
(dollars in thousands, unaudited) | | | | | | | | | | | | | | | | |
| | For the Quarter Ended March 31, | | |||||||||||||
| | 2013 | | | % of Total | | | 2012 | | | % of Total | | ||||
OTHER OPERATING INCOME: | | | | | | | | | | | | | | | | |
Service charges on deposit accounts | | $ | 2,072 | | | | 50.35 | % | | $ | 2,287 | | | | 55.75 | % |
Other service charges, commissions & fees | | | 1,451 | | | | 35.26 | % | | | 1,053 | | | | 25.67 | % |
Gains on sales of loans | | | 36 | | | | 0.87 | % | | | 50 | | | | 1.22 | % |
Gains on securities | | | 6 | | | | 0.15 | % | | | 70 | | | | 1.71 | % |
Loan servicing income | | | 3 | | | | 0.07 | % | | | 5 | | | | 0.12 | % |
Bank owned life insurance | | | 507 | | | | 12.33 | % | | | 586 | | | | 14.29 | % |
Other | | | 40 | | | | 0.97 | % | | | 51 | | | | 1.24 | % |
Total non-interest income | | $ | 4,115 | | | | 100.00 | % | | $ | 4,102 | | | | 100.00 | % |
As a % of average interest-earning assets (1) | | | | | | | 1.34 | % | | | | | | | 1.39 | % |
| | | | | | | | | | | | | | | | |
OTHER OPERATING EXPENSES: | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 5,920 | | | | 50.09 | % | | $ | 5,665 | | | | 47.05 | % |
Occupancy costs | | | | | | | | | | | | | | | | |
Furniture & equipment | | | 503 | | | | 4.26 | % | | | 483 | | | | 4.01 | % |
Premises | | | 1,048 | | | | 8.87 | % | | | 1,006 | | | | 8.36 | % |
Advertising and marketing costs | | | 421 | | | | 3.56 | % | | | 471 | | | | 3.91 | % |
Data processing costs | | | 494 | | | | 4.18 | % | | | 418 | | | | 3.47 | % |
Deposit services costs | | | 493 | | | | 4.17 | % | | | 579 | | | | 4.81 | % |
Loan services costs | | | | | | | | | | | | | | | | |
Loan processing | | | 155 | | | | 1.31 | % | | | 268 | | | | 2.23 | % |
Foreclosed assets | | | 774 | | | | 6.55 | % | | | 1,128 | | | | 9.37 | % |
Other operating costs | | | | | | | | | | | | | | | | |
Telephone & data communications | | | 425 | | | | 3.60 | % | | | 347 | | | | 2.88 | % |
Postage & mail | | | 179 | | | | 1.51 | % | | | 180 | | | | 1.50 | % |
Other | | | 128 | | | | 1.08 | % | | | 189 | | | | 1.57 | % |
Professional services costs | | | | | | | | | | | | | | | | |
Legal & accounting | | | 432 | | | | 3.66 | % | | | 362 | | | | 3.01 | % |
Other professional service | | | 608 | | | | 5.14 | % | | | 651 | | | | 5.41 | % |
Stationery & supply costs | | | 170 | | | | 1.44 | % | | | 207 | | | | 1.72 | % |
Sundry & tellers | | | 69 | | | | 0.58 | % | | | 86 | | | | 0.70 | % |
Total non-interest Expense | | $ | 11,819 | | | | 100.00 | % | | $ | 12,040 | | | | 100.00 | % |
As a % of average interest-earning assets (1) | | | | | | | 3.85 | % | | | | | | | 4.13 | % |
Efficiency Ratio (2) | | | 68.62 | % | | | | | | | 69.51 | % | | | | |
(1) | Annualized |
(2) | Tax Equivalent |
Investment Portfolio | | | | | | | | | | | | | |
(dollars in thousands, unaudited) | | March 31, 2013 | | December 31, 2012 | | ||||||||
| | Amortized | | Fair Market | | Amortized | | Fair Market | | ||||
| | Cost | | Value | | Cost | | Value | | ||||
Available for Sale | | | | | | | | | | | | | |
US Government Agencies & Corporations | | $ | 4,698 | | $ | 4,684 | | $ | 2,987 | | $ | 2,973 | |
Mortgage-backed securities | | | 308,044 | | | 310,772 | | | 298,806 | | | 301,389 | |
State & political subdivisions | | | 78,445 | | | 81,197 | | | 70,736 | | | 73,986 | |
Equity securities | | | 1,336 | | | 2,102 | | | 1,336 | | | 1,840 | |
Total Investment Securities | | $ | 392,523 | | $ | 398,755 | | $ | 373,865 | | $ | 380,188 | |
| | March 31, 2013 | | | December 31, 2012 | | ||
Real Estate: | | | | | | | | |
1-4 family residential construction | | $ | 1,312 | | | $ | 3,174 | |
Other Construction/Land | | | 27,275 | | | | 28,002 | |
1-4 family - closed-end | | | 96,141 | | | | 99,917 | |
Equity Lines | | | 58,579 | | | | 61,463 | |
Multi-family residential | | | 6,288 | | | | 5,960 | |
Commercial RE- owner occupied | | | 178,046 | | | | 182,614 | |
Commercial RE- non-owner occupied | | | 97,760 | | | | 92,808 | |
Farmland | | | 90,210 | | | | 71,851 | |
Total Real Estate | | | 555,611 | | | | 545,789 | |
Agricultural products | | | 26,767 | | | | 22,482 | |
Commercial and Industrial | | | 193,307 | | | | 257,896 | |
Small Business Administration Loans | | | 20,677 | | | | 20,523 | |
Direct finance leases | | | 3,897 | | | | 4,233 | |
Consumer loans | | | 27,042 | | | | 28,872 | |
Total Loans and Leases | | $ | 827,301 | | | $ | 879,795 | |
Percentage of Total Loans and Leases | | | | | | | | |
Real Estate: | | | | | | | | |
1-4 family residential construction | | | 0.16 | % | | | 0.35 | % |
Other Construction/land | | | 3.30 | % | | | 3.18 | % |
1-4 family - closed-end | | | 11.62 | % | | | 11.36 | % |
Equity Lines | | | 7.08 | % | | | 6.99 | % |
Multi-family residential | | | 0.76 | % | | | 0.68 | % |
Commercial RE- owner occupied | | | 21.52 | % | | | 20.76 | % |
Commercial RE- non-owner occupied | | | 11.82 | % | | | 10.55 | % |
Farmland | | | 10.90 | % | | | 8.17 | % |
Total Real Estate | | | 67.16 | % | | | 62.04 | % |
Agricultural products | | | 3.24 | % | | | 2.56 | % |
Commercial and Industrial | | | 23.37 | % | | | 29.31 | % |
Small Business Administration Loans | | | 2.50 | % | | | 2.33 | % |
Direct finance leases | | | 0.47 | % | | | 0.48 | % |
Consumer loans | | | 3.26 | % | | | 3.28 | % |
Total Loans and Leases | | | 100.00 | % | | | 100.00 | % |
(dollars in thousands, unaudited) | | March 31, 2013 | | | December 31, 2012 | | | March 31, 2012 | | |||
NON-ACCRUAL LOANS: | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | |
1-4 family residential construction | | $ | - | | | $ | 153 | | | $ | 1,974 | |
Other Construction/Land | | | 10,556 | | | | 11,163 | | | | 3,669 | |
1-4 family - closed-end | | | 15,493 | | | | 15,381 | | | | 5,578 | |
Equity Lines | | | 728 | | | | 1,026 | | | | 1,472 | |
Multi-family residential | | | - | | | | - | | | | 2,941 | |
Commercial RE- owner occupied | | | 5,301 | | | | 5,314 | | | | 5,440 | |
Commercial RE- non-owner occupied | | | 10,229 | | | | 11,642 | | | | 13,779 | |
Farmland | | | 1,923 | | | | 1,933 | | | | 6,655 | |
TOTAL REAL ESTATE | | $ | 44,230 | | | $ | 46,612 | | | $ | 41,508 | |
Agricultural Products | | | 659 | | | | 664 | | | | - | |
Commercial and Industrial | | | 2,388 | | | | 2,386 | | | | 2,942 | |
Small Business Administration Loans | | | 2,094 | | | | 2,159 | | | | 3,366 | |
Direct finance leases | | | 150 | | | | 135 | | | | 324 | |
Consumer loans | | | 1,045 | | | | 1,138 | | | | 1,831 | |
TOTAL NONPERFORMING LOANS | | $ | 50,566 | | | $ | 53,094 | | | $ | 49,971 | |
| | | | | | | | | | | | |
Foreclosed assets | | | 15,747 | | | | 19,754 | | | | 15,679 | |
Total nonperforming assets | | $ | 66,313 | | | $ | 72,848 | | | $ | 65,650 | |
Performing TDR's (1) | | $ | 19,759 | | | $ | 18,652 | | | $ | 37,655 | |
Nonperforming loans as a % of total gross loans and leases | | | 6.11 | % | | | 6.03 | % | | | 6.65 | % |
Nonperforming assets as a % of total gross loans and leases and foreclosed assets | | | 7.87 | % | | | 8.10 | % | | | 8.56 | % |
(1) | Performing TDRs are not included in nonperforming loans above, nor are they included in the numerators used to calculate the ratios disclosed in this table. |
Allowance for Loan and Lease Losses | | | | | | | | | | | | | |
(dollars in thousands, unaudited) | | For the Quarter | | | For the Year | | | For the Quarter | | | |||
| | Ended March 31, | | | Ended December 31, | | | Ended March 31, | | | |||
| | 2013 | | | 2012 | | | 2012 | | | |||
Balances: | | | | | | | | | | | | | |
Average gross loans and leases outstanding during period | | $ | 808,848 | | | $ | 789,333 | | | $ | 748,329 | | |
Gross loans and leases outstanding at end of period | | $ | 827,301 | | | $ | 879,795 | | | $ | 751,469 | | |
| | | | | | | | | | | | | |
Allowance for Loan and Lease Losses: | | | | | | | | | | | | | |
Balance at beginning of period | | $ | 13,873 | | | $ | 17,283 | | | $ | 17,283 | | |
Provision charged to expense | | | 1,600 | | | | 14,210 | | | | 2,750 | | |
Charge-offs | | | | | | | | | | | | | |
Real Estate | | | | | | | | | | | | | |
1-4 family residential construction | | | - | | | | 46 | | | | - | | |
Other Construction/Land | | | 264 | | | | 1,994 | | | | 278 | | |
1-4 family - closed-end | | | 157 | | | | 1,763 | | | | 375 | | |
Equity Lines | | | 496 | | | | 1,234 | | | | 238 | | |
Multi-family residential | | | - | | | | 1,262 | | | | - | | |
Commercial RE- owner occupied | | | 100 | | | | 2,117 | | | | 63 | | |
Commercial RE- non-owner occupied | | | 405 | | | | 2,522 | | | | - | | |
Farmland | | | - | | | | 170 | | | | - | | |
TOTAL REAL ESTATE | | $ | 1,422 | | | $ | 11,108 | | | $ | 954 | | |
Agricultural products | | | 28 | | | | 634 | | | | - | | |
Commercial & industrial loans | | | 688 | | | | 3,517 | | | | 1,091 | | |
Small Business Administration Loans | | | 37 | | | | 753 | | | | 86 | | |
Direct Finance Leases | | | 20 | | | | 198 | | | | 198 | | |
Consumer Loans | | | 509 | | | | 2,568 | | | | 625 | | |
Total | | $ | 2,704 | | | $ | 18,778 | | | $ | 2,954 | | |
Recoveries | | | | | | | | | | | | | |
Real Estate | | | | | | | | | | | | | |
1-4 family residential construction | | | - | | | | 7 | | | | - | | |
Other Construction/Land | | | 110 | | | | 61 | | | | 2 | | |
1-4 family - closed-end | | | 1 | | | | 40 | | | | 11 | | |
Equity Lines | | | 1 | | | | 21 | | | | 1 | | |
Multi-family residential | | | - | | | | - | | | | - | | |
Commercial RE- owner occupied | | | 9 | | | | 104 | | | | 91 | | |
Commercial RE- non-owner occupied | | | 43 | | | | 12 | | | | - | | |
Farmland | | | - | | | | 57 | | | | 26 | | |
TOTAL REAL ESTATE | | $ | 164 | | | $ | 302 | | | $ | 131 | | |
Agricultural products | | | - | | | | - | | | | - | | |
Commercial and Industrial | | | 191 | | | | 483 | | | | 125 | | |
Small Business Administration Loans | | | - | | | | 95 | | | | - | | |
Direct Finance Leases | | | 1 | | | | - | | | | - | | |
Consumer Loans | | | 74 | | | | 278 | | | | 73 | | |
Total | | $ | 430 | | | $ | 1,158 | | | $ | 329 | | |
Net loan charge offs (recoveries) | | $ | 2,274 | | | $ | 17,620 | | | $ | 2,625 | | |
Balance at end of period | | $ | 13,199 | | | $ | 13,873 | | | $ | 17,408 | | |
| | | | | | | | | | | | | |
RATIOS | | | | | | | | | | | | | |
Net Charge-offs to Average Loans and Leases (annualized) | | | 1.14 | % | | | 2.23 | % | | | 1.41 | % | |
Allowance for Loan Losses to | | | | | | | | | | | | | |
Gross Loans and Leases at End of Period | | | 1.60 | % | | | 1.58 | % | | | 2.32 | % | |
Allowance for Loan Losses to | | | | | | | | | | | | | |
NonPerforming Loans | | | 26.10 | % | | | 26.13 | % | | | 34.84 | % | |
Net Loan Charge-offs to Allowance | | | | | | | | | | | | | |
for Loan Losses at End of Period | | | 17.23 | % | | | 127.01 | % | | | 15.08 | % | |
Net Loan Charge-offs to | | | | | | | | | | | | | |
Provision for Loan Losses | | | 142.13 | % | | | 124.00 | % | | | 95.45 | % | |
Deposit Distribution | | | | | | | | | |
(dollars in thousands, unaudited) | | For the Quarter Ended | | | For the Year Ended | | | ||
| | March 31, 2013 | | | December 31, 2012 | | | ||
Interest Bearing Demand Deposits | | $ | 77,485 | | | $ | 84,655 | | |
Non-interest Bearing Demand Deposits | | | 342,048 | | | | 352,597 | | |
NOW | | | 200,085 | | | | 196,771 | | |
Savings | | | 129,602 | | | | 118,547 | | |
Money Market | | | 73,743 | | | | 71,222 | | |
CDAR's < $100,000 | | | 409 | | | | 791 | | |
CDAR's ≥ $100,000 | | | 12,857 | | | | 14,274 | | |
Customer Time deposit < $100,000 | | | 95,833 | | | | 101,893 | | |
Customer Time deposits ≥ $100,000 | | | 213,872 | | | | 218,284 | | |
Brokered Deposits | | | 10,000 | | | | 15,000 | | |
Total Deposits | | $ | 1,155,934 | | | $ | 1,174,034 | | |
| | | | | | | | | |
Percentage of Total Deposits | | | | | | | | | |
Interest Bearing Demand Deposits | | | 6.70 | % | | | 7.21 | % | |
Non-interest Bearing Demand Deposits | | | 29.59 | % | | | 30.03 | % | |
NOW | | | 17.31 | % | | | 16.76 | % | |
Savings | | | 11.21 | % | | | 10.10 | % | |
Money Market | | | 6.38 | % | | | 6.07 | % | |
CDAR's < $100,000 | | | 0.04 | % | | | 0.07 | % | |
CDAR's ≥ $100,000 | | | 1.11 | % | | | 1.22 | % | |
Customer Time deposit < $100,000 | | | 8.29 | % | | | 8.68 | % | |
Customer Time deposits ≥ $100,000 | | | 18.50 | % | | | 18.58 | % | |
Brokered Deposits | | | 0.87 | % | | | 1.28 | % | |
Total | | | 100.00 | % | | | 100.00 | % | |
-300 b.p. | -200 b.p. | -100 b.p. | +100 b.p. | +200 b.p. | +300 b.p. | +400 b.p. | ||||||||||||||||||||||
Change in Net Int. Inc. (in $000’s) | $ | -12,291 | $ | -8,865 | $ | -4,519 | $ | +2,187 | $ | +4,558 | $ | +6,614 | $ | +7,859 | ||||||||||||||
% Change | -24.79 | % | -17.88 | % | -9.12 | % | +4.41 | % | +9.19 | % | +13.34 | % | +15.85 | % |
-300 b.p. | -200 b.p. | -100 b.p. | +100 b.p. | +200 b.p. | +300 b.p. | |||||||||||||||||||
Change in EVE (in $000’s) | $ | -34,501 | $ | -50,690 | $ | -38,232 | $ | +43,817 | $ | +65,648 | $ | +78,365 | ||||||||||||
% Change | -11.13 | % | -16.35 | % | -12.33 | % | +14.13 | % | +21.18 | % | +25.28 | % |
Regulatory Capital Ratios | | | | | | | | | |
| | | | | | | | | |
| | March 31, | | | December 31, | | | ||
| | 2013 | | | 2012 | | | ||
Sierra Bancorp | | | | | | | | | |
Total Capital to Total Risk-weighted Assets | | | 20.44 | % | | | 19.36 | % | |
Tier 1 Capital to Total Risk-weighted Assets | | | 19.19 | % | | | 18.11 | % | |
Tier 1 Leverage Ratio | | | 13.65 | % | | | 13.34 | % | |
| | | | | | | | | |
Bank of the Sierra | | | | | | | | | |
Total Capital to Total Risk-weighted Assets | | | 19.93 | % | | | 19.14 | % | |
Tier 1 Capital to Total Risk-weighted Assets | | | 18.68 | % | | | 17.88 | % | |
Tier 1 Leverage Ratio | | | 13.29 | % | | | 13.17 | % | |
(c) | Stock Repurchases |
Exhibit # | | Description |
3.1 | | Restated Articles of Incorporation of Sierra Bancorp (1) |
3.2 | | Amended and Restated By-laws of the Company (2) |
10.1 | | 1998 Stock Option Plan (3) |
10.2 | | Salary Continuation Agreement for Kenneth R. Taylor (4) |
10.3 | | Salary Continuation Agreement for James C. Holly (4) |
10.4 | | Salary Continuation Agreement and Split Dollar Agreement for James F. Gardunio (5) |
10.5 | | Split Dollar Agreement for Kenneth R. Taylor (6) |
10.6 | | Split Dollar Agreement and Amendment thereto for James C. Holly (6) |
10.7 | | Director Retirement Agreement and Split dollar Agreement for Vincent Jurkovich (6) |
10.8 | | Director Retirement Agreement and Split dollar Agreement for Robert Fields (6) |
10.9 | | Director Retirement Agreement and Split dollar Agreement for Gordon Woods (6) |
10.10 | | Director Retirement Agreement and Split dollar Agreement for Morris Tharp (6) |
10.11 | | Director Retirement Agreement and Split dollar Agreement for Albert Berra (6) |
10.12 | | 401 Plus Non-Qualified Deferred Compensation Plan (6) |
10.13 | | Indenture dated as of March 17, 2004 between U.S. Bank N.A., as Trustee, and Sierra Bancorp, as Issuer (7) |
10.14 | | Amended and Restated Declaration of Trust of Sierra Statutory Trust II, dated as of March 17, 2004 (7) |
10.15 | | Guarantee Agreement between Sierra Bancorp and U.S. Bank National Association dated as of March 17, 2004 (7) |
10.16 | | Indenture dated as of June 15, 2006 between Wilmington Trust Co., as Trustee, and Sierra Bancorp, as Issuer (8) |
10.17 | | Amended and Restated Declaration of Trust of Sierra Capital Trust III, dated as of June 15, 2006 (8) |
10.18 | | Guarantee Agreement between Sierra Bancorp and Wilmington Trust Company dated as of June 15, 2006 (8) |
10.19 | | 2007 Stock Incentive Plan (9) |
10.20 | | Sample Retirement Agreement Entered into with Each Non-Employee Director Effective January 1, 2007 (10) |
10.21 | | Salary Continuation Agreement for Kevin J. McPhaill (10) |
10.22 | | First Amendment to the Salary Continuation Agreement for Kenneth R. Taylor (10) |
11 | | Statement of Computation of Per Share Earnings (11) |
31.1 | | Certification of Chief Executive Officer (Section 302 Certification) |
31.2 | | Certification of Chief Financial Officer (Section 302 Certification) |
32 | | Certification of Periodic Financial Report (Section 906 Certification) |
EX-101.INS | | XBRL INSTANCE DOCUMENT |
EX-101.SCH | | XBRL TAXONOMY EXTENSION SCHEMA |
EX-101.CAL | | XBRL TAXONOMY EXTENSION CALCULATION LINKBASE |
EX-101.DEF | | XBRL TAXONOMY EXTENSION DEFINITION LINKBASE |
EX-101.LAB | | XBRL TAXONOMY EXTENSION LABEL LINKBASE |
EX-101.PRE | | XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE |
(1) | Filed as Exhibit 3.1 to the Form 10-Q filed with the SEC on August 7, 2009 and incorporated herein by reference. |
(2) | Filed as an Exhibit to the Form 8-K filed with the SEC on February 21, 2007 and incorporated herein by reference. |
(3) | Filed as an Exhibit to the Registration Statement of Sierra Bancorp on Form S-4 filed with the Securities and Exchange Commission (“SEC”) (Registration No. 333-53178) on January 4, 2001 and incorporated herein by reference. |
(4) | Filed as Exhibits 10.5 and 10.7 to the Form 10-Q filed with the SEC on May 15, 2003 and incorporated herein by reference. |
(5) | Filed as an Exhibit to the Form 8-K filed with the SEC on August 11, 2005 and incorporated herein by reference. |
(6) | Filed as Exhibits 10.10, 10.12, and 10.15 through 10.20 to the Form 10-K filed with the SEC on March 15, 2006 and incorporated herein by reference. |
(7) | Filed as Exhibits 10.9 through 10.11 to the Form 10-Q filed with the SEC on May 14, 2004 and incorporated herein by reference. |
(8) | Filed as Exhibits 10.26 through 10.28 to the Form 10-Q filed with the SEC on August 9, 2006 and incorporated herein by reference. |
(9) | Filed as Exhibit 10.20 to the Form 10-K filed with the SEC on March 15, 2007 and incorporated herein by reference. |
(10) | Filed as an Exhibit to the Form 8-K filed with the SEC on January 8, 2007 and incorporated herein by reference. |
(11) | Computation of earnings per share is incorporated by reference to Note 6 of the Financial Statements included herein. |
May 8, 2013 | /s/ James C. Holly |
Date | SIERRA BANCORP |
James C. Holly | |
President & Chief Executive Officer | |
(Principal Executive Officer) | |
May 8, 2013 | /s/ Kenneth R. Taylor |
Date | SIERRA BANCORP |
Kenneth R. Taylor | |
Chief Financial Officer | |
(Principal Financial and Principal Accounting Officer) |
Exhibit 31.1 – Certification of Chief Executive Officer (Section 302 Certification)
I, James C. Holly, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Sierra Bancorp (“Registrant”);
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;
4. The Registrant’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 Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date: May 8, 2013
/s/ James C. Holly | |
James C. Holly | |
President & | |
Chief Executive Officer |
Exhibit 31.2 – Certification of Chief Financial Officer (Section 302 Certification)
I, Kenneth R. Taylor, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Sierra Bancorp (“Registrant”);
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;
4. The Registrant’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 Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date: May 8, 2013
/s/ Kenneth R. Taylor | |
Kenneth R. Taylor | |
Chief Financial Officer & | |
Chief Accounting Officer |
Exhibit 32 – Certification of Periodic Financial Report
James C. Holly and Kenneth R. Taylor hereby certify as follows:
1. They are the Chief Executive Officer and Chief Financial Officer, respectively, of Sierra Bancorp.
2. The Form 10-Q of Sierra Bancorp for the Quarter ended March 31, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and the information contained in the report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Sierra Bancorp.
May 8, 2013 | /s/ James C. Holly |
Date | James C. Holly |
President & | |
Chief Executive Officer | |
May 8, 2013 | /s/ Kenneth R. Taylor |
Date | Kenneth R. Taylor |
Chief Financial Officer & | |
Chief Accounting Officer |
Allowance for Loan and Lease Losses - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
Mar. 31, 2013
Minimum
|
Mar. 31, 2013
Maximum
|
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Troubled debt restructuring reserves amount | $ 2,719 | $ 3,224 | ||
Appraisal receiving period | 30 days | 60 days | ||
Percentage collateral to impaired loan balances | 80.00% | |||
General | $ 6,984 | $ 6,748 |
The Business of Sierra Bancorp - Additional Information (Detail)
|
Mar. 31, 2013
|
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Organization Consolidation and Presentation of Financial Statements Disclosure [Line Items] | |
Number of full service branch offices | 25 |
Number of operating locations | 6 |
Credit Quality and Nonperforming Assets - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan, classified as troubled debt restructuring | $ 51.6 | |
Loan, classified as troubled debt restructuring, non-accrual status | $ 31.8 | |
Loans Accruals Due | 90 days | 90 days |
Recent Developments - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
0 Months Ended |
---|---|
Jun. 12, 2012
|
|
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |
Tier 1 capital to be well capitalized ratio | 6.50% |
Required minimum Tier 1 capital ratio | 2.50% |
Risk weighting ratio to certain acquisition/development and construction loans | 150.00% |
Number of days loans past due | 90 days |
Amount excluded from tier 1 capital | $ 30 |
Maximum
|
|
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |
Tier 1 risk based capital required to be well capitalized to risk weighted assets | 8.00% |
Minimum
|
|
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |
Tier 1 risk based capital required to be well capitalized to risk weighted assets | 6.00% |
Current Accounting Developments
|
3 Months Ended |
---|---|
Mar. 31, 2013
|
|
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Current Accounting Developments | Note 3 Current Accounting Developments In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income . The objective of ASU 2013-02 is to improve the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 does not change current requirements for reporting net income or other comprehensive income in financial statements. However, it requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period, an entity is required to present significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. For public entities, this update is effective prospectively for reporting periods beginning after December 15, 2012. We adopted ASU 2013-02 effective the first quarter of 2013. The effect of adopting this standard enhanced our disclosures with regard to items reclassified out of accumulated comprehensive income. |
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