x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2013 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . |
CALIFORNIA | 91-2112732 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
2126 Inyo Street, Fresno, California | 93721 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Small reporting company x |
PART I. Financial Information | |||
Item 1.Financial Statements | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Item 5. | |||
Item 6. | |||
(in thousands except shares) | June 30, 2013 | December 31, 2012 | |||||
Assets | |||||||
Cash and due from banks | $ | 23,754 | $ | 27,481 | |||
Cash and due from FRB | 114,515 | 114,146 | |||||
Cash and cash equivalents | 138,269 | 141,627 | |||||
Interest-bearing deposits in other banks | 1,511 | 1,507 | |||||
Investment securities available for sale (at fair value) | 25,527 | 31,844 | |||||
Loans and leases | 405,041 | 400,057 | |||||
Unearned fees and unamortized loan origination costs | (6 | ) | (24 | ) | |||
Allowance for credit losses | (11,157 | ) | (11,784 | ) | |||
Net loans | 393,878 | 388,249 | |||||
Accrued interest receivable | 1,536 | 1,694 | |||||
Premises and equipment – net | 11,922 | 12,262 | |||||
Other real estate owned | 17,221 | 23,932 | |||||
Intangible assets | 155 | 249 | |||||
Goodwill | 4,488 | 4,488 | |||||
Cash surrender value of life insurance | 16,941 | 16,681 | |||||
Investment in limited partnerships | 4,240 | 4,312 | |||||
Deferred income taxes - net | 10,146 | 9,724 | |||||
Other assets | 9,828 | 12,308 | |||||
Total assets | $ | 635,662 | $ | 648,877 | |||
Liabilities & Shareholders' Equity | |||||||
Liabilities | |||||||
Deposits | |||||||
Noninterest bearing | $ | 219,693 | $ | 217,014 | |||
Interest bearing | 327,408 | 346,273 | |||||
Total deposits | 547,101 | 563,287 | |||||
Accrued interest payable | 60 | 71 | |||||
Accounts payable and other liabilities | 5,911 | 6,010 | |||||
Junior subordinated debentures (at fair value) | 10,882 | 10,068 | |||||
Total liabilities | 563,954 | 579,436 | |||||
Shareholders' Equity | |||||||
Common stock, no par value 20,000,000 shares authorized, 14,508,275 issued and outstanding at June 30, 2013, and 14,217,303 at December 31, 2012 | 44,416 | 43,173 | |||||
Retained earnings | 27,429 | 26,179 | |||||
Accumulated other comprehensive (loss) income | (137 | ) | 89 | ||||
Total shareholders' equity | 71,708 | 69,441 | |||||
Total liabilities and shareholders' equity | $ | 635,662 | $ | 648,877 |
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands except shares and EPS) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Interest Income: | |||||||||||||||
Loans, including fees | $ | 5,554 | $ | 5,966 | $ | 11,020 | $ | 12,009 | |||||||
Investment securities – AFS – taxable | 140 | 457 | 338 | 978 | |||||||||||
Interest on deposits in FRB | 70 | 43 | 135 | 94 | |||||||||||
Interest on deposits in other banks | 2 | 10 | 4 | 20 | |||||||||||
Total interest income | 5,766 | 6,476 | 11,497 | 13,101 | |||||||||||
Interest Expense: | |||||||||||||||
Interest on deposits | 331 | 437 | 742 | 915 | |||||||||||
Interest on other borrowings | 93 | 72 | 153 | 136 | |||||||||||
Total interest expense | 424 | 509 | 895 | 1,051 | |||||||||||
Net Interest Income Before Provision for Credit Losses | 5,342 | 5,967 | 10,602 | 12,050 | |||||||||||
Provision for Credit Losses | 39 | 1,004 | 30 | 1,006 | |||||||||||
Net Interest Income | 5,303 | 4,963 | 10,572 | 11,044 | |||||||||||
Noninterest Income: | |||||||||||||||
Customer service fees | 902 | 897 | 1,681 | 1,801 | |||||||||||
Increase in cash surrender value of bank-owned life insurance | 140 | 144 | 277 | 280 | |||||||||||
Impairment loss on investment securities | — | (149 | ) | — | (172 | ) | |||||||||
(Loss) gain on fair value of financial liability | (103 | ) | 364 | (660 | ) | (112 | ) | ||||||||
Gain on sale of other investment | — | 1,807 | — | 1,807 | |||||||||||
Other | 168 | 177 | 328 | 445 | |||||||||||
Total noninterest income | 1,107 | 3,240 | 1,626 | 4,049 | |||||||||||
Noninterest Expense: | |||||||||||||||
Salaries and employee benefits | 2,113 | 2,176 | 4,474 | 4,598 | |||||||||||
Occupancy expense | 883 | 840 | 1,788 | 1,605 | |||||||||||
Data processing | 33 | 19 | 93 | 37 | |||||||||||
Professional fees | 375 | 439 | 820 | 683 | |||||||||||
Regulatory assessments | 339 | 417 | 698 | 783 | |||||||||||
Director fees | 59 | 69 | 117 | 136 | |||||||||||
Amortization of intangibles | 46 | 79 | 93 | 170 | |||||||||||
Correspondent bank service charges | 81 | 80 | 157 | 160 | |||||||||||
Loss on California tax credit partnership | 32 | 81 | 65 | 184 | |||||||||||
Net cost (gain) on operation of OREO | (336 | ) | (293 | ) | (1,218 | ) | 329 | ||||||||
Other | 529 | 646 | 1,140 | 1,272 | |||||||||||
Total noninterest expense | 4,154 | 4,553 | 8,227 | 9,957 | |||||||||||
Income Before Provision for Taxes | 2,256 | 3,650 | 3,971 | 5,136 | |||||||||||
Provision for Taxes on Income | 859 | 1,478 | 1,499 | 1,912 | |||||||||||
Net Income | $ | 1,397 | $ | 2,172 | $ | 2,472 | $ | 3,224 | |||||||
Net Income per common share | |||||||||||||||
Basic | $ | 0.10 | $ | 0.15 | $ | 0.17 | $ | 0.22 | |||||||
Diluted | $ | 0.10 | $ | 0.15 | $ | 0.17 | $ | 0.22 | |||||||
Shares on which net income per common shares were based | |||||||||||||||
Basic | 14,506,389 | 14,364,176 | 14,504,740 | 14,364,176 | |||||||||||
Diluted | 14,507,783 | 14,364,176 | 14,508,329 | 14,364,176 |
Three Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2013 | Six Months Ended June 30, 2012 | ||||||||||||
Net Income | $ | 1,397 | $ | 2,172 | $ | 2,472 | $ | 3,224 | |||||||
Unrealized holdings gains (losses) on securities | (305 | ) | 39 | (415 | ) | 628 | |||||||||
Unrealized gains on unrecognized post retirement costs | 21 | — | 40 | — | |||||||||||
Other comprehensive (loss) income, before tax | (284 | ) | 39 | (375 | ) | 628 | |||||||||
Tax benefit (expense) related to securities | 122 | 15 | 166 | (218 | ) | ||||||||||
Tax expense related to unrecognized post retirement costs | (8 | ) | — | (17 | ) | — | |||||||||
Total other comprehensive (loss) income | (170 | ) | 54 | (226 | ) | 410 | |||||||||
Comprehensive income | $ | 1,227 | $ | 2,226 | $ | 2,246 | $ | 3,634 |
Common stock | ||||||||||||||||||
(In thousands except shares) | Number of Shares | Amount | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||
Balance December 31, 2011 | 13,531,832 | $ | 41,435 | $ | 21,447 | $ | (709 | ) | $ | 62,173 | ||||||||
Other comprehensive income | 410 | 410 | ||||||||||||||||
Common stock dividends | 271,974 | 642 | (642 | ) | 0 | |||||||||||||
Stock-based compensation expense | 10 | 10 | ||||||||||||||||
Net Income | 3,224 | 3,224 | ||||||||||||||||
Balance June 30, 2012 | 13,803,806 | $ | 42,087 | $ | 24,029 | $ | (299 | ) | $ | 65,817 | ||||||||
Other comprehensive income | 388 | 388 | ||||||||||||||||
Common stock dividends | 278,736 | 694 | (694 | ) | ||||||||||||||
Common stock issuance | 134,761 | 383 | 383 | |||||||||||||||
Stock-based compensation expense | 9 | 9 | ||||||||||||||||
Net Income | 2,844 | 2,844 | ||||||||||||||||
Balance December 31, 2012 | 14,217,303 | $ | 43,173 | $ | 26,179 | $ | 89 | $ | 69,441 | |||||||||
Other comprehensive (loss) income | (226 | ) | (226 | ) | ||||||||||||||
Common stock dividends | 285,770 | 1,222 | (1,222 | ) | 0 | |||||||||||||
Stock options exercised | 5,202 | 12 | 12 | |||||||||||||||
Stock-based compensation expense | 9 | 9 | ||||||||||||||||
Net Income | 2,472 | 2,472 | ||||||||||||||||
Balance June 30, 2013 | 14,508,275 | $ | 44,416 | $ | 27,429 | $ | (137 | ) | $ | 71,708 |
Six Months Ended June 30, | |||||||
(In thousands) | 2013 | 2012 | |||||
Cash Flows From Operating Activities: | |||||||
Net Income | $ | 2,472 | $ | 3,224 | |||
Adjustments to reconcile net income:to cash provided by operating activities: | |||||||
Provision for credit losses | 30 | 1,006 | |||||
Depreciation and amortization | 620 | 603 | |||||
Amortization of investment securities | 14 | 16 | |||||
Accretion of investment securities | (34 | ) | (129 | ) | |||
Decrease in accrued interest receivable | 158 | 191 | |||||
Decrease in accrued interest payable | (11 | ) | (16 | ) | |||
Increase (decrease) in accounts payable and accrued liabilities | 89 | (40 | ) | ||||
Decrease in unearned fees | (18 | ) | (51 | ) | |||
Increase in income taxes payable | 1,771 | 1,852 | |||||
Stock-based compensation expense | 9 | 10 | |||||
Deferred income taxes | 272 | (332 | ) | ||||
Gain on sale of other real estate owned | (1,949 | ) | (337 | ) | |||
Impairment loss on other real estate owned | 118 | — | |||||
Impairment loss on investment securities | — | 172 | |||||
Impairment loss on investment in bank stock | — | 69 | |||||
Increase in surrender value of life insurance | (294 | ) | (280 | ) | |||
Loss on fair value option of financial liabilities | 660 | 112 | |||||
Loss on tax credit limited partnership interest | 65 | 184 | |||||
Amortization of Goodwill and CDI | 93 | 170 | |||||
Gain on sale of other investment | — | (1,807 | ) | ||||
Net (increase) decrease in other assets | (221 | ) | 349 | ||||
Net cash provided by operating activities | 3,844 | 4,966 | |||||
Cash Flows From Investing Activities: | |||||||
Net (increase) decrease in interest-bearing deposits with banks | (4 | ) | 84 | ||||
Redemption of correspondent bank stock | 433 | 293 | |||||
Maturities and calls of available-for-sale securities | 3,600 | — | |||||
Principal payments of available-for-sale securities | 2,322 | 3,476 | |||||
Net (increase) decrease in loans | (3,750 | ) | 10,590 | ||||
Cash proceeds from sales of other real estate owned | 6,651 | 3,532 | |||||
Cash proceeds from sale of other investment | — | 2,174 | |||||
Cash proceeds from sale of premises and equipment | — | 36 | |||||
Capital expenditures for premises and equipment | (280 | ) | (520 | ) | |||
Net cash provided by investing activities | 8,972 | 19,665 | |||||
Cash Flows From Financing Activities: | |||||||
Net decrease in demand deposits and savings accounts | (10,786 | ) | (20,686 | ) | |||
Net decrease in certificates of deposit | (5,400 | ) | (28,739 | ) |
Proceeds from exercise of stock options | 12 | — | |||||
Net cash used in financing activities | (16,174 | ) | (49,425 | ) | |||
Net decrease in cash and cash equivalents | (3,358 | ) | (24,794 | ) | |||
Cash and cash equivalents at beginning of period | 141,627 | 124,184 | |||||
Cash and cash equivalents at end of period | $ | 138,269 | $ | 99,390 |
1. | Organization and Summary of Significant Accounting and Reporting Policies |
2. | Investment Securities Available for Sale and Other Investments |
(In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value (Carrying Amount) | |||||||||||
June 30, 2013 | |||||||||||||||
Securities available for sale: | |||||||||||||||
U.S. Government agencies | $ | 18,306 | $ | 739 | $ | (8 | ) | $ | 19,037 | ||||||
U.S. Government collateralized mortgage obligations | 2,492 | 193 | — | 2,685 | |||||||||||
Mutual Funds | 4,000 | — | (195 | ) | 3,805 | ||||||||||
Total securities available for sale | $ | 24,798 | $ | 932 | $ | (203 | ) | $ | 25,527 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value (Carrying Amount) | ||||||||||||
December 31, 2012 | |||||||||||||||
Securities available for sale: | |||||||||||||||
U.S. Government agencies | $ | 23,433 | $ | 933 | $ | — | $ | 24,366 | |||||||
U.S. Government collateralized mortgage obligations | 3,266 | 251 | — | 3,517 | |||||||||||
Mutual Funds | 4,000 | — | (39 | ) | 3,961 | ||||||||||
Total securities available for sale | $ | 30,699 | $ | 1,184 | $ | (39 | ) | $ | 31,844 |
June 30, 2013 | |||||||
Amortized Cost | Fair Value (Carrying Amount) | ||||||
(In thousands) | |||||||
Due in one year or less | $ | 4,034 | $ | 3,839 | |||
Due after one year through five years | 9,129 | 9,164 | |||||
Due after five years through ten years | 2,186 | 2,347 | |||||
Due after ten years | 6,957 | 7,492 | |||||
Collateralized mortgage obligations | 2,492 | 2,685 | |||||
$ | 24,798 | $ | 25,527 |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
June 30, 2013 | Fair Value (Carrying Amount) | Unrealized Losses | Fair Value (Carrying Amount) | Unrealized Losses | Fair Value (Carrying Amount) | Unrealized Losses | |||||||||||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. Government agencies | $ | 7,128 | $ | (8 | ) | $ | — | $ | — | $ | 7,128 | $ | (8 | ) | |||||||||
U.S. Government agency collateral mortgage obligations | — | — | — | — | — | — | |||||||||||||||||
Mutual Funds | 3,805 | (195 | ) | — | — | 3,805 | (195 | ) | |||||||||||||||
Total impaired securities | $ | 10,933 | $ | (203 | ) | $ | — | $ | — | $ | 10,933 | $ | (203 | ) | |||||||||
December 31, 2012: | |||||||||||||||||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. Government agencies | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
U.S. Government agency collateral mortgage obligations | — | — | — | — | — | — | |||||||||||||||||
Mutual Funds | 3,961 | (39 | ) | — | — | 3,961 | (39 | ) | |||||||||||||||
Total impaired securities | $ | 3,961 | $ | (39 | ) | $ | — | $ | — | $ | 3,961 | $ | (39 | ) |
June 30, 2012 | RALI 2006-QS1G A10 | RALI 2006 QS8 A1 | CWALT 2007- 8CB A9 | ||||||||||||
(in thousands) | Rated D | Rated D | Rated CCC | Total | |||||||||||
Amortized cost – before OTTI | $ | 3,719 | $ | 1,138 | $ | 7,015 | $ | 11,872 | |||||||
Credit loss | (713 | ) | (239 | ) | (1,325 | ) | (2,277 | ) | |||||||
Other impairment (OCI) | (403 | ) | (122 | ) | (758 | ) | (1,283 | ) | |||||||
Carrying amount – June 30, 2012 | $ | 2,603 | $ | 777 | $ | 4,932 | $ | 8,312 | |||||||
Total impairment - June 30, 2012 | $ | (1,116 | ) | $ | (361 | ) | $ | (2,083 | ) | $ | (3,560 | ) |
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | ||||||||||||
(in thousands) | June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||
Beginning balance - credit losses | $ | — | $ | 2,208 | $ | — | $ | 2,257 | |||||||
Additions: | |||||||||||||||
Initial credit impairments | — | — | — | — | |||||||||||
Subsequent credit impairments | — | 149 | — | 172 | |||||||||||
Reductions: | |||||||||||||||
For securities sold or credit losses realized on principal payments | — | (80 | ) | — | (152 | ) | |||||||||
Due to change in intent or requirement to sell | — | — | — | — | |||||||||||
For increase expected in cash flows | — | — | — | — | |||||||||||
Ending balance - credit losses | $ | — | $ | 2,277 | $ | — | $ | 2,277 |
3. | Loans and Leases |
(In thousands) | June 30, 2013 | December 31, 2012 | |||||
Commercial and business loans | $ | 73,372 | $ | 69,780 | |||
Government program loans | 2,407 | 2,337 | |||||
Total commercial and industrial | 75,779 | 72,117 | |||||
Real estate – mortgage: | |||||||
Commercial real estate | 146,634 | 133,599 | |||||
Residential mortgages | 54,972 | 55,016 | |||||
Home Improvement and Home Equity loans | 1,581 | 1,319 | |||||
Total real estate mortgage | 203,187 | 189,934 | |||||
RE construction and development | 86,583 | 90,941 | |||||
Agricultural | 29,027 | 36,169 | |||||
Installment | 10,465 | 10,884 | |||||
Commercial lease financing | 0 | 12 | |||||
Total Loans | $ | 405,041 | $ | 400,057 |
• | Commercial real estate mortgage loans comprise the largest segment of this loan category and are available on all types of income producing and commercial properties, including: office buildings and shopping centers; apartments and motels; owner-occupied buildings; manufacturing facilities and more. Commercial real estate mortgage loans can also be used to refinance existing debt. Although real estate associated with the business is the primary collateral for commercial real estate mortgage loans, the underlying real estate is not the source of repayment. Commercial real estate loans are made under the premise that the loan will be repaid from the borrower's business operations, rental income associated with the real property, or personal assets. |
• | Residential mortgage loans are provided to individuals to finance or refinance single-family residences. Residential mortgages are not a primary business line offered by the Company, and are generally of a shorter term than conventional mortgages, with maturities ranging from 3 to 15 years on average. |
• | Home Improvement and Home Equity loans comprise a relatively small portion of total real estate mortgage loans, and are offered to borrowers for the purpose of home improvements, although the proceeds may be used for other purposes. Home equity loans are generally secured by junior trust deeds, but may be secured by 1st trust deeds. |
June 30, 2013 | Loans 30-60 Days Past Due | Loans 61-89 Days Past Due | Loans 90 or More Days Past Due | Total Past Due Loans | Current Loans | Total Loans | Accruing Loans 90 or More Days Past Due | ||||||||||||||||||||
Commercial and Business Loans | $ | 174 | $ | — | $ | — | $ | 174 | $ | 73,198 | $ | 73,372 | $ | — | |||||||||||||
Government Program Loans | — | — | 61 | 61 | 2,346 | 2,407 | — | ||||||||||||||||||||
Total Commercial and Industrial | 174 | — | 61 | 235 | 75,544 | 75,779 | — | ||||||||||||||||||||
Commercial Real Estate Loans | 1,632 | 495 | 5,328 | 7,455 | 139,179 | 146,634 | — | ||||||||||||||||||||
Residential Mortgages | 451 | — | 257 | 708 | 54,264 | 54,972 | — | ||||||||||||||||||||
Home Improvement and Home Equity Loans | 86 | 34 | — | 120 | 1,461 | 1,581 | — | ||||||||||||||||||||
Total Real Estate Mortgage | 2,169 | 529 | 5,585 | 8,283 | 194,904 | 203,187 | — | ||||||||||||||||||||
Total RE Construction and Development Loans | — | 318 | — | 318 | 86,265 | 86,583 | — | ||||||||||||||||||||
Agricultural Loans | — | — | — | — | 29,027 | 29,027 | — | ||||||||||||||||||||
Consumer Loans | 108 | 26 | — | 134 | 10,110 | 10,244 | — | ||||||||||||||||||||
Overdraft protection Lines | — | — | — | — | 92 | 92 | — | ||||||||||||||||||||
Overdrafts | — | — | — | — | 129 | 129 | — | ||||||||||||||||||||
Total Installment/other | 108 | 26 | — | 134 | 10,331 | 10,465 | — | ||||||||||||||||||||
Commercial Lease Financing | — | — | — | — | — | — | — | ||||||||||||||||||||
Total Loans | $ | 2,451 | $ | 873 | $ | 5,646 | $ | 8,970 | $ | 396,071 | $ | 405,041 | $ | — |
December 31, 2012 | Loans 30-60 Days Past Due | Loans 61-89 Days Past Due | Loans 90 or More Days Past Due | Total Past Due Loans | Current Loans | Total Loans | Accruing Loans 90 or More Days Past Due | ||||||||||||||||||||
Commercial and Business Loans | $ | 65 | $ | — | $ | 256 | $ | 321 | $ | 69,459 | $ | 69,780 | $ | — | |||||||||||||
Government Program Loans | 88 | — | — | 88 | 2,249 | 2,337 | — | ||||||||||||||||||||
Total Commercial and Industrial | 153 | — | 256 | 409 | 71,708 | 72,117 | — | ||||||||||||||||||||
Commercial Real Estate Loans | 3,152 | 2,130 | 5,328 | 10,610 | 122,989 | 133,599 | — | ||||||||||||||||||||
Residential Mortgages | 333 | 322 | 437 | 1,092 | 53,924 | 55,016 | — | ||||||||||||||||||||
Home Improvement and Home Equity Loans | 119 | 140 | — | 259 | 1,060 | 1,319 | — | ||||||||||||||||||||
Total Real Estate Mortgage | 3,604 | 2,592 | 5,765 | 11,961 | 177,973 | 189,934 | — | ||||||||||||||||||||
Total RE Construction and Development Loans | — | — | — | — | 90,941 | 90,941 | — | ||||||||||||||||||||
Agricultural Loans | — | 136 | — | 136 | 36,033 | 36,169 | — | ||||||||||||||||||||
Consumer Loans | 305 | 34 | — | 339 | 10,300 | 10,639 | — | ||||||||||||||||||||
Overdraft protection Lines | — | — | — | — | 90 | 90 | — | ||||||||||||||||||||
Overdrafts | — | — | — | — | 155 | 155 | — | ||||||||||||||||||||
Total Installment | 305 | 34 | — | 339 | 10,545 | 10,884 | — | ||||||||||||||||||||
Commercial Lease Financing | — | — | — | — | 12 | 12 | — | ||||||||||||||||||||
Total Loans | $ | 4,062 | $ | 2,762 | $ | 6,021 | $ | 12,845 | $ | 387,212 | $ | 400,057 | $ | — |
June 30, 2013 | December 31, 2012 | ||||||
Commercial and Business Loans | $ | 339 | $ | 1,093 | |||
Government Program Loans | 61 | 88 | |||||
Total Commercial and Industrial | 400 | 1,181 | |||||
Commercial Real Estate Loans | 7,518 | 8,415 | |||||
Residential Mortgages | 1,617 | 1,834 | |||||
Home Improvement and Home Equity Loans | — | 10 | |||||
Total Real Estate Mortgage | 9,135 | 10,259 | |||||
Total RE Construction and Development Loans | 1,050 | 1,730 | |||||
Total Agricultural Loans | — | 136 | |||||
Consumer Loans | 80 | 119 | |||||
Overdraft protection Lines | — | — | |||||
Overdrafts | — | — | |||||
Total Installment | 80 | 119 | |||||
Commercial lease Financing | — | — | |||||
Total Loans | $ | 10,665 | $ | 13,425 |
- | For loans secured by collateral including real estate and equipment the fair value of the collateral less selling costs will determine the carrying value of the loan. The difference between the recorded investment in the loan and the fair value, less selling costs, determines the amount of impairment. The Company uses the measurement method based on fair value of collateral when the loan is collateral dependent and foreclosure is probable. |
- | The discounted cash flow method of measuring the impairment of a loan is used for unsecured loans or for loans secured by collateral where the fair value cannot be easily determined. Under this method, the Company assesses both the amount and timing of cash flows expected from impaired loans. The estimated cash flows are discounted using the loan's effective interest rate. The difference between the amount of the loan on the Bank's books and the discounted cash flow amounts determines the amount of impairment to be provided. This method is used for most of the Company’s troubled debt restructurings or other impaired loans where some payment stream is being collected. |
- | The observable market price method of measuring the impairment of a loan is only used by the Company when the sale of loans or a loan is in process. |
June 30, 2013 | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | Average Recorded Investment | Interest Recognized | ||||||||||||||||||||
Commercial and Business Loans | $ | 1,078 | $ | 450 | $ | 463 | $ | 913 | $ | 14 | $ | 973 | $ | 22 | |||||||||||||
Government Program Loans | 90 | 61 | — | 61 | — | 71 | — | ||||||||||||||||||||
Total Commercial and Industrial | 1,168 | 511 | 463 | 974 | 14 | 1,044 | 22 | ||||||||||||||||||||
Commercial Real Estate Loans | 10,437 | 5,992 | 4,226 | 10,218 | 380 | 10,246 | 66 | ||||||||||||||||||||
Residential Mortgages | 6,882 | 3,173 | 3,628 | 6,801 | 139 | 6,859 | 112 | ||||||||||||||||||||
Home Improvement and Home Equity Loans | 44 | — | 44 | 44 | 2 | 27 | — | ||||||||||||||||||||
Total Real Estate Mortgage | 17,363 | 9,165 | 7,898 | 17,063 | 521 | 17,132 | 178 | ||||||||||||||||||||
Total RE Construction and Development Loans | 2,411 | 2,420 | — | 2,420 | — | 1,917 | 10 | ||||||||||||||||||||
Total Agricultural Loans | 319 | 51 | — | 51 | — | 121 | 5 | ||||||||||||||||||||
Consumer Loans | 95 | 74 | — | 74 | — | 96 | 2 | ||||||||||||||||||||
Overdraft protection Lines | — | — | — | — | — | — | — | ||||||||||||||||||||
Overdrafts | — | — | — | — | — | — | — | ||||||||||||||||||||
Total Installment/other | 95 | 74 | — | 74 | — | 96 | 2 | ||||||||||||||||||||
Commercial Lease Financing | — | — | — | — | — | — | — | ||||||||||||||||||||
Total Impaired Loans | $ | 21,356 | $ | 12,221 | $ | 8,361 | $ | 20,582 | $ | 535 | $ | 20,310 | $ | 217 |
December 31, 2012 | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | Average Recorded Investment | Interest Recognized | ||||||||||||||||||||
Commercial and Business Loans | $ | 1,488 | $ | 767 | $ | 576 | $ | 1,343 | $ | 37 | $ | 5,468 | $ | 26 | |||||||||||||
Government Program Loans | 109 | 88 | — | 88 | — | 147 | — | ||||||||||||||||||||
Total Commercial and Industrial | 1,597 | 855 | 576 | 1,431 | 37 | 5,615 | 26 | ||||||||||||||||||||
Commercial Real Estate Loans | 11,393 | 6,818 | 4,237 | 11,055 | 436 | 8,498 | 135 | ||||||||||||||||||||
Residential Mortgages | 7,461 | 3,726 | 3,666 | 7,392 | 185 | 4,416 | 251 | ||||||||||||||||||||
Home Improvement and Home Equity Loans | 10 | 10 | — | 10 | — | 21 | — | ||||||||||||||||||||
Total Real Estate Mortgage | 18,864 | 10,554 | 7,903 | 18,457 | 621 | 12,935 | 386 | ||||||||||||||||||||
Total RE Construction and Development Loans | 1,730 | 1,730 | — | 1,730 | — | 7,298 | — | ||||||||||||||||||||
Total Agricultural Loans | 504 | 192 | — | 192 | — | 991 | 50 | ||||||||||||||||||||
Consumer Loans | 139 | 121 | — | 121 | — | 200 | 6 | ||||||||||||||||||||
Overdraft protection Lines | — | — | — | — | — | — | — | ||||||||||||||||||||
Overdrafts | — | — | — | — | — | — | — | ||||||||||||||||||||
Total Installment | 139 | 121 | — | 121 | — | 200 | 6 | ||||||||||||||||||||
Lease Financing | — | — | — | — | — | — | — | ||||||||||||||||||||
Total Impaired Loans | $ | 22,834 | $ | 13,452 | $ | 8,479 | $ | 21,931 | $ | 658 | $ | 27,039 | $ | 468 |
◦ | The reduction (absolute or contingent) of the stated interest rate. |
◦ | The extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk. |
◦ | The reduction (absolute or contingent) of the face amount or maturity amount of debt as stated in the instrument or agreement. |
◦ | The reduction (absolute or contingent) of accrued interest. |
Six Months Ended June 30, 2013 | |||||||||||||||||
Number of Contracts | Pre- Modification Outstanding Recorded Investment | Post- Modification Outstanding Recorded Investment | Number of Contracts in Default | Recorded Investment on Defaulted TDRs | |||||||||||||
Troubled Debt Restructurings | |||||||||||||||||
Commercial and Business Loans | — | $ | — | $ | — | — | $ | — | |||||||||
Government Program Loans | — | — | — | — | — | ||||||||||||
Commercial Real Estate Term Loans | — | — | — | 1 | 106 | ||||||||||||
Single Family Residential Loans | — | — | — | — | — | ||||||||||||
Home Improvement and Home Equity Loans | — | — | — | — | — | ||||||||||||
RE Construction and Development Loans | 18 | 1,405 | 1,405 | — | — | ||||||||||||
Agricultural Loans | — | — | — | — | — | ||||||||||||
Consumer Loans | — | — | — | — | — | ||||||||||||
Overdraft protection Lines | — | — | — | — | — | ||||||||||||
Commercial Lease Financing | — | — | — | — | — | ||||||||||||
Total Loans | 18 | $ | 1,405 | $ | 1,405 | 1 | $ | 106 |
Three Months Ended June 30, 2013 | |||||||||||||||||
Number of Contracts | Pre- Modification Outstanding Recorded Investment | Post- Modification Outstanding Recorded Investment | Number of Contracts in Default | Recorded Investment on Defaulted TDRs | |||||||||||||
Troubled Debt Restructurings | |||||||||||||||||
Commercial and Business Loans | — | $ | — | $ | — | — | $ | — | |||||||||
Government Program Loans | — | — | — | — | — | ||||||||||||
Commercial Real Estate Term Loans | — | — | — | — | — | ||||||||||||
Single Family Residential Loans | — | — | — | — | — | ||||||||||||
Home Improvement and Home Equity Loans | 1 | 44 | 44 | — | — | ||||||||||||
RE Construction and Development Loans | 12 | 793 | 793 | — | — | ||||||||||||
Agricultural Loans | — | — | — | — | — | ||||||||||||
Consumer Loans | — | — | — | — | — | ||||||||||||
Overdraft protection Lines | — | — | — | — | — | ||||||||||||
Commercial Lease Financing | — | — | — | — | — | ||||||||||||
Total Loans | 13 | $ | 837 | $ | 837 | — | $ | — |
Six Months Ended June 30, 2012 | |||||||||||||||||
Number of Contracts | Pre- Modification Outstanding Recorded Investment | Post- Modification Outstanding Recorded Investment | Number of Contracts in Default | Recorded Investment on Defaulted TDRs | |||||||||||||
Troubled Debt Restructurings | |||||||||||||||||
Commercial and Business Loans | — | $ | — | $ | — | — | $ | — | |||||||||
Government Program Loans | — | — | — | — | — | ||||||||||||
Commercial Real Estate Term Loans | 5 | 1,330 | 1,321 | — | — | ||||||||||||
Single Family Residential Loans | — | — | — | — | — | ||||||||||||
Home Improvement and Home Equity Loans | — | — | — | — | — | ||||||||||||
RE Construction and Development Loans | — | — | — | — | — | ||||||||||||
Agricultural Loans | — | — | — | — | — | ||||||||||||
Consumer Loans | — | — | — | — | — | ||||||||||||
Overdraft protection Lines | — | — | — | — | — | ||||||||||||
Commercial Lease Financing | — | — | — | — | — | ||||||||||||
Total Loans | 5 | $ | 1,330 | $ | 1,321 | — | $ | — |
Three Months Ended June 30, 2012 | |||||||||||||||||
Number of Contracts | Pre- Modification Outstanding Recorded Investment | Post- Modification Outstanding Recorded Investment | Number of Contracts in Default | Recorded Investment on Defaulted TDRs | |||||||||||||
Troubled Debt Restructurings | |||||||||||||||||
Commercial and Business Loans | — | $ | — | $ | — | — | $ | — | |||||||||
Government Program Loans | — | — | — | — | — | ||||||||||||
Commercial Real Estate Term Loans | 1 | 20 | 20 | — | — | ||||||||||||
Single Family Residential Loans | — | — | — | — | — | ||||||||||||
Home Improvement and Home Equity Loans | — | — | — | — | — | ||||||||||||
RE Construction and Development Loans | — | — | — | — | — | ||||||||||||
Agricultural Loans | — | — | — | — | — | ||||||||||||
Consumer Loans | — | — | — | — | — | ||||||||||||
Overdraft protection Lines | — | — | — | — | — | ||||||||||||
Commercial Lease Financing | — | — | — | — | — | ||||||||||||
Total Loans | 1 | $ | 20 | $ | 20 | — | $ | — |
Six Months Ended June 30, 2013 | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Home Equity | RE Construction Development | Agricultural | Installment & Other | Lease Financing | Total | ||||||||||||||||||||||||||
Beginning balance | $ | 990 | $ | 5,395 | $ | 7,289 | $ | 10 | $ | 2,860 | $ | 191 | $ | 38 | $ | — | $ | 16,773 | |||||||||||||||||
Defaults | — | (106 | ) | — | — | — | — | — | — | (106 | ) | ||||||||||||||||||||||||
Additions | — | — | — | 44 | 1,361 | — | — | — | 1,405 | ||||||||||||||||||||||||||
Principal reductions | (178 | ) | (1,074 | ) | (506 | ) | (10 | ) | (1,810 | ) | (140 | ) | (38 | ) | — | (3,756 | ) | ||||||||||||||||||
Ending balance | $ | 812 | $ | 4,215 | $ | 6,783 | $ | 44 | $ | 2,411 | $ | 51 | $ | — | $ | — | $ | 14,316 | |||||||||||||||||
Allowance for loan loss | $ | 14 | $ | 380 | $ | 139 | $ | 2 | $ | — | $ | — | $ | — | $ | — | $ | 535 |
Six Months Ended June 30, 2012 | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Home Equity | RE Construction Development | Agricultural | Installment & Other | Lease Financing | Total | ||||||||||||||||||||||||||
Beginning balance | $ | 2,619 | $ | 6,850 | $ | 3,457 | $ | 36 | $ | 6,034 | $ | — | $ | 54 | $ | — | $ | 19,050 | |||||||||||||||||
Defaults | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Additions | — | 919 | 325 | — | — | 57 | 20 | — | 1,321 | ||||||||||||||||||||||||||
Principal reductions | (260 | ) | (1,414 | ) | (8 | ) | (24 | ) | (1,887 | ) | — | (15 | ) | — | (3,608 | ) | |||||||||||||||||||
Ending balance | $ | 2,359 | $ | 6,355 | $ | 3,774 | $ | 12 | $ | 4,147 | $ | 57 | $ | 59 | $ | — | $ | 16,763 | |||||||||||||||||
Allowance for loan loss | $ | 166 | $ | 347 | $ | 153 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 666 |
Three months ended June 30, 2013 | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Home Equity | RE Construction Development | Agricultural | Installment & Other | Lease Financing | Total | ||||||||||||||||||||||||||
Beginning balance | $ | 877 | $ | 4,258 | $ | 6,901 | $ | 9 | $ | 2,661 | $ | 190 | $ | 38 | $ | — | $ | 14,934 | |||||||||||||||||
Defaults | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Additions | — | — | — | 44 | 793 | — | — | — | 837 | ||||||||||||||||||||||||||
Principal reductions | (65 | ) | (43 | ) | (118 | ) | (9 | ) | (1,043 | ) | (139 | ) | (38 | ) | — | (1,455 | ) | ||||||||||||||||||
Ending balance | $ | 812 | $ | 4,215 | $ | 6,783 | $ | 44 | $ | 2,411 | $ | 51 | $ | — | $ | — | $ | 14,316 | |||||||||||||||||
Allowance for loan loss | $ | 14 | $ | 380 | $ | 139 | $ | 2 | $ | — | $ | — | $ | — | $ | — | $ | 535 |
Three months ended June 30, 2012 | Commercial and Industrial | Commercial Real Estate | Residential Mortgages | Home Equity | RE Construction Development | Agricultural | Installment & Other | Lease Financing | Total | ||||||||||||||||||||||||||
Beginning balance | $ | 2,469 | $ | 6,413 | $ | 3,768 | $ | 36 | $ | 4,964 | $ | 58 | $ | 52 | $ | — | $ | 17,760 | |||||||||||||||||
Defaults | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Additions | — | — | — | — | — | — | 20 | — | 20 | ||||||||||||||||||||||||||
Principal reductions | (110 | ) | (58 | ) | 6 | (24 | ) | (817 | ) | (1 | ) | (13 | ) | — | (1,017 | ) | |||||||||||||||||||
Ending balance | $ | 2,359 | $ | 6,355 | $ | 3,774 | $ | 12 | $ | 4,147 | $ | 57 | $ | 59 | $ | — | $ | 16,763 | |||||||||||||||||
Allowance for loan loss | $ | 166 | $ | 347 | $ | 153 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 666 |
- | Grades 1 and 2 – These grades include loans which are given to high quality borrowers with high credit quality and sound financial strength. Key financial ratios are generally above industry averages and the borrower’s strong earnings history or net worth. These may be secured by deposit accounts or high-grade investment securities. |
- | Grade 3 – This grade includes loans to borrowers with solid credit quality with minimal risk. The borrower’s balance sheet and financial ratios are generally in line with industry averages, and the borrower has historically demonstrated the ability to manage economic adversity. Real estate and asset-based loans assigned this risk rating must have characteristics, which place them well above the minimum underwriting requirements for those departments. Asset-based borrowers assigned this rating must exhibit extremely favorable leverage and cash flow characteristics, and consistently demonstrate a high level of unused borrowing capacity. |
- | Grades 4 and 5 – These include “pass” grade loans to borrowers of acceptable credit quality and risk. The borrower’s balance sheet and financial ratios may be below industry averages, but above the lowest industry quartile. Leverage is above and liquidity is below industry averages. Inadequacies evident in financial performance and/or management sufficiency are offset by readily available features of support, such as adequate collateral, or good guarantors having the liquid assets and/or cash flow capacity to repay the debt. The borrower may have recognized a loss over three or four years, however recent earnings trends, while perhaps somewhat cyclical, are improving and cash flows are adequate to cover debt service and fixed obligations. Real estate and asset-borrowers fully comply with all underwriting standards and are performing according to projections would be assigned this rating. These also include grade 5 loans which are “leveraged” or on management’s “watch list.” While still considered pass loans (loans given a grade 5), the borrower’s financial condition, cash flow or operations evidence more than average risk and short term weaknesses , these loans warrant a higher than average level of monitoring, supervision and attention from the Company, but do not reflect credit weakness trends that weaken or inadequately protect the Company’s credit position. Loans with a grade rating of 5 are not normally acceptable as new credits unless they are adequately secured or carry substantial endorser/guarantors. |
- | Grade 6 – This grade includes “special mention” loans which are loans that are currently protected but are potentially weak. This generally is an interim grade classification and should usually be upgraded to an Acceptable rating or downgraded to Substandard within a reasonable time period. Weaknesses in special mention loans may, if not checked or corrected, weaken the asset or inadequately protect the Company’s credit position at some future date. Special mention loans are often loans with weaknesses inherent from the loan origination, loan servicing, and perhaps some technical deficiencies. The main theme in special mention credits is the distinct probability that the classification will deteriorate to a more adverse class if the noted deficiencies are not addressed by the loan officer or loan management. |
- | Grade 7 – This grade includes “substandard” loans which are inadequately supported by the current sound net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that may impair the regular liquidation of the debt. Substandard loans exhibit a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Substandard loans also include impaired loans. |
- | Grade 8 - This grade includes “doubtful” loans which exhibit the same characteristics as the Substandard loans with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include a proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. |
- | Grade 9 - This grade includes loans classified “loss” which are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off the asset even though partial recovery may be achieved in the future. |
Commercial and Industrial | Commercial RE | RE Construction and Development | Agricultural | Total | |||||||||||||||
June 30, 2013 | |||||||||||||||||||
(000's) | |||||||||||||||||||
Grades 1 and 2 | $ | 807 | $ | — | $ | — | $ | 20 | $ | 827 | |||||||||
Grade 3 | 19 | 5,409 | 836 | — | 6,264 | ||||||||||||||
Grades 4 and 5 – pass | 73,290 | 129,173 | 71,443 | 29,007 | 302,913 | ||||||||||||||
Grade 6 – special mention | 978 | 1,845 | — | — | 2,823 | ||||||||||||||
Grade 7 – substandard | 685 | 10,207 | 14,304 | — | 25,196 | ||||||||||||||
Grade 8 – doubtful | — | — | — | — | — | ||||||||||||||
Total | $ | 75,779 | $ | 146,634 | $ | 86,583 | $ | 29,027 | $ | 338,023 |
Commercial and Industrial | Commercial RE | RE Construction and Development | Agricultural | Total | |||||||||||||||
December 31, 2012 | |||||||||||||||||||
(000's) | |||||||||||||||||||
Grades 1 and 2 | $ | 825 | $ | — | $ | — | $ | 60 | $ | 885 | |||||||||
Grade 3 | 2,071 | 5,947 | 856 | — | 8,874 | ||||||||||||||
Grades 4 and 5 – pass | 66,098 | 116,606 | 75,191 | 35,973 | 293,868 | ||||||||||||||
Grade 6 – special mention | 1,867 | — | 141 | — | 2,008 | ||||||||||||||
Grade 7 – substandard | 1,256 | 11,046 | 14,753 | 136 | 27,191 | ||||||||||||||
Grade 8 – doubtful | — | — | — | — | — | ||||||||||||||
Total | $ | 72,117 | $ | 133,599 | $ | 90,941 | $ | 36,169 | $ | 332,826 |
June 30, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||||
Residential Mortgages | Home Improvement and Home Equity | Installment | Total | Residential Mortgages | Home Improvement and Home Equity | Installment | Total | ||||||||||||||||||||||||
(000's) | |||||||||||||||||||||||||||||||
Not graded | $ | 29,614 | $ | 1,537 | $ | 8,536 | $ | 39,687 | $ | 30,727 | $ | 1,309 | $ | 9,221 | $ | 41,257 | |||||||||||||||
Pass | 23,097 | 0 | 1,813 | 24,910 | 20,572 | 0 | 1,422 | 21,994 | |||||||||||||||||||||||
Special Mention | — | 0 | 36 | 36 | 909 | 0 | 49 | 958 | |||||||||||||||||||||||
Substandard | 2,261 | 44 | 80 | 2,385 | 2,808 | 10 | 192 | 3,010 | |||||||||||||||||||||||
Total | $ | 54,972 | $ | 1,581 | $ | 10,465 | $ | 67,018 | $ | 55,016 | $ | 1,319 | $ | 10,884 | $ | 67,219 |
Six Months Ended | Commercial and Industrial | Real Estate Mortgage | RE Construction Development | Agricultural | Installment & Other | Commercial Lease Financing | Unallocated | Total | |||||||||||||||||||||||
June 30, 2013 (in 000's) | |||||||||||||||||||||||||||||||
Beginning balance | $ | 1,614 | $ | 1,292 | $ | 2,814 | $ | 352 | $ | 288 | $ | 1 | $ | 5,423 | $ | 11,784 | |||||||||||||||
Provision for credit losses | 1,362 | 600 | 158 | 27 | 24 | (1 | ) | (2,140 | ) | 30 | |||||||||||||||||||||
Charge-offs | (349 | ) | (216 | ) | — | (136 | ) | (27 | ) | — | — | (728 | ) | ||||||||||||||||||
Recoveries | 38 | 3 | — | — | 30 | — | — | 71 | |||||||||||||||||||||||
Net charge-offs | (311 | ) | (213 | ) | — | (136 | ) | 3 | — | — | (657 | ) | |||||||||||||||||||
Ending balance | $ | 2,665 | $ | 1,679 | $ | 2,972 | $ | 243 | $ | 315 | $ | — | $ | 3,283 | $ | 11,157 | |||||||||||||||
Period-end amount allocated to: | |||||||||||||||||||||||||||||||
Loans individually evaluated for impairment | 380 | 139 | 2 | — | — | — | 14 | 535 | |||||||||||||||||||||||
Loans collectively evaluated for impairment | 2,285 | 1,540 | 2,970 | 243 | 315 | — | 3,269 | 10,622 | |||||||||||||||||||||||
Ending balance | $ | 2,665 | $ | 1,679 | $ | 2,972 | $ | 243 | $ | 315 | $ | — | $ | 3,283 | $ | 11,157 |
Six Months Ended | Commercial and Industrial | Real Estate Mortgage | RE Construction Development | Agricultural | Installment & Other | Commercial Lease Financing | Unallocated | Total | |||||||||||||||||||||||
June 30, 2012 (in 000's) | |||||||||||||||||||||||||||||||
Beginning balance | $ | 6,787 | $ | 1,416 | $ | 4,579 | $ | 508 | $ | 116 | $ | 1 | $ | 241 | $ | 13,648 | |||||||||||||||
Provision for credit losses | (2,521 | ) | (313 | ) | 1,231 | 1,938 | 344 | 2 | 325 | 1,006 | |||||||||||||||||||||
Charge-offs | (763 | ) | (53 | ) | (10 | ) | (2,169 | ) | (137 | ) | — | — | (3,132 | ) | |||||||||||||||||
Recoveries | 61 | 4 | — | — | 23 | — | — | 88 | |||||||||||||||||||||||
Net charge-offs | (702 | ) | (49 | ) | (10 | ) | (2,169 | ) | (114 | ) | — | — | (3,044 | ) | |||||||||||||||||
Ending balance | $ | 3,564 | $ | 1,054 | $ | 5,800 | $ | 277 | $ | 346 | $ | 3 | $ | 566 | $ | 11,610 | |||||||||||||||
Period-end amount allocated to: | |||||||||||||||||||||||||||||||
Loans individually evaluated for impairment | 166 | 670 | — | — | — | — | — | 836 | |||||||||||||||||||||||
Loans collectively evaluated for impairment | 3,398 | 384 | 5,800 | 277 | 346 | 3 | 566 | 10,774 | |||||||||||||||||||||||
Ending balance | $ | 3,564 | $ | 1,054 | $ | 5,800 | $ | 277 | $ | 346 | $ | 3 | $ | 566 | $ | 11,610 |
Three Months Ended | Commercial and Industrial | Real Estate Mortgage | RE Construction Development | Agricultural | Installment & Other | Commercial Lease Financing | Unallocated | Total | |||||||||||||||||||||||
June 30 2013 (in 000's) | |||||||||||||||||||||||||||||||
Beginning balance | $ | 1,462 | $ | 1,201 | $ | 1,805 | $ | 278 | $ | 250 | $ | — | $ | 6,407 | $ | 11,403 | |||||||||||||||
Provision for credit losses | 1,240 | 569 | 1,167 | 101 | 86 | — | (3,124 | ) | 39 | ||||||||||||||||||||||
Charge-offs | (59 | ) | (93 | ) | — | (136 | ) | (24 | ) | — | — | (312 | ) | ||||||||||||||||||
Recoveries | 22 | 2 | — | — | 3 | — | — | 27 | |||||||||||||||||||||||
Net charge-offs | (37 | ) | (91 | ) | — | (136 | ) | (21 | ) | — | — | (285 | ) | ||||||||||||||||||
Ending balance | $ | 2,665 | $ | 1,679 | $ | 2,972 | $ | 243 | $ | 315 | $ | — | $ | 3,283 | $ | 11,157 | |||||||||||||||
Period-end amount allocated to: | |||||||||||||||||||||||||||||||
Loans individually evaluated for impairment | 380 | 139 | 2 | — | — | — | 14 | 535 | |||||||||||||||||||||||
Loans collectively evaluated for impairment | 2,285 | 1,540 | 2,970 | 243 | 315 | — | 3,269 | 10,622 | |||||||||||||||||||||||
Ending balance | $ | 2,665 | $ | 1,679 | $ | 2,972 | $ | 243 | $ | 315 | $ | — | $ | 3,283 | $ | 11,157 |
Three Months Ended | Commercial and Industrial | Real Estate Mortgage | RE Construction Development | Agricultural | Installment & Other | Commercial Lease Financing | Unallocated | Total | |||||||||||||||||||||||
June 30 2012 (in 000's) | |||||||||||||||||||||||||||||||
Beginning balance | $ | 5,220 | $ | 1,472 | $ | 4,523 | $ | 1,116 | $ | 87 | $ | 1 | $ | 631 | $ | 13,050 | |||||||||||||||
Provision for credit losses | (1,533 | ) | (401 | ) | 1,287 | 1,330 | 384 | 2 | (65 | ) | 1,004 | ||||||||||||||||||||
Charge-offs | (146 | ) | (20 | ) | (10 | ) | (2,169 | ) | (135 | ) | — | — | (2,480 | ) | |||||||||||||||||
Recoveries | 23 | 3 | — | — | 10 | — | — | 36 | |||||||||||||||||||||||
Net charge-offs | (123 | ) | (17 | ) | (10 | ) | (2,169 | ) | (125 | ) | — | — | (2,444 | ) | |||||||||||||||||
Ending balance | $ | 3,564 | $ | 1,054 | $ | 5,800 | $ | 277 | $ | 346 | $ | 3 | $ | 566 | $ | 11,610 | |||||||||||||||
Period-end amount allocated to: | |||||||||||||||||||||||||||||||
Loans individually evaluated for impairment | 166 | 670 | — | — | — | — | — | 836 | |||||||||||||||||||||||
Loans collectively evaluated for impairment | 3,398 | 384 | 5,800 | 277 | 346 | 3 | 566 | 10,774 | |||||||||||||||||||||||
Ending balance | $ | 3,564 | $ | 1,054 | $ | 5,800 | $ | 277 | $ | 346 | $ | 3 | $ | 566 | $ | 11,610 |
June 30, 2013 | December 31, 2012 | ||||||||||||||||||||||
Loans Individually Evaluated for Impairment | Loans Collectively Evaluated for Impairment | Total Loans | Loans Individually Evaluated for Impairment | Loans Collectively Evaluated for Impairment | Total Loans | ||||||||||||||||||
(000's) | |||||||||||||||||||||||
Commercial and Business Loans | $ | 913 | $ | 72,459 | $ | 73,372 | $ | 1,343 | $ | 68,437 | $ | 69,780 | |||||||||||
Government Program Loans | 61 | 2,346 | 2,407 | 88 | 2,249 | 2,337 | |||||||||||||||||
Total Commercial and Industrial | 974 | 74,805 | 75,779 | 1,431 | 70,686 | 72,117 | |||||||||||||||||
Commercial Real Estate Loans | 10,218 | 136,416 | 146,634 | 11,055 | 122,544 | 133,599 | |||||||||||||||||
Residential Mortgage Loans | 6,801 | 48,171 | 54,972 | 7,392 | 47,624 | 55,016 | |||||||||||||||||
Home Improvement and Home Equity Loans | 44 | 1,537 | 1,581 | 10 | 1,309 | 1,319 | |||||||||||||||||
Total Real Estate Mortgage | 17,063 | 186,124 | 203,187 | 18,457 | 171,477 | 189,934 | |||||||||||||||||
Total RE Construction and Development Loans | 2,420 | 84,163 | 86,583 | 1,730 | 89,211 | 90,941 | |||||||||||||||||
Total Agricultural Loans | 51 | 28,976 | 29,027 | 192 | 35,977 | 36,169 | |||||||||||||||||
Total Installment Loans | 74 | 10,391 | 10,465 | 121 | 10,763 | 10,884 | |||||||||||||||||
Commercial Lease Financing | — | — | — | — | 12 | 12 | |||||||||||||||||
Total Loans | $ | 20,582 | $ | 384,459 | $ | 405,041 | $ | 21,931 | $ | 378,126 | $ | 400,057 |
4. | Deposits |
(In thousands) | June 30, 2013 | December 31, 2012 | |||||
Noninterest-bearing deposits | $ | 219,693 | $ | 217,014 | |||
Interest-bearing deposits: | |||||||
NOW and money market accounts | 191,260 | 203,771 | |||||
Savings accounts | 42,163 | 43,117 | |||||
Time deposits: | |||||||
Under $100,000 | 30,787 | 32,532 | |||||
$100,000 and over | 63,198 | 66,853 | |||||
Total interest-bearing deposits | 327,408 | 346,273 | |||||
Total deposits | $ | 547,101 | $ | 563,287 | |||
Total brokered deposits included in time deposits above | $ | 16,232 | $ | 17,984 |
5. | Short-term Borrowings/Other Borrowings |
6. | Supplemental Cash Flow Disclosures |
Six Months Ended June 30, | |||||||
(In thousands) | 2013 | 2012 | |||||
Cash paid during the period for: | |||||||
Interest | $ | 752 | $ | 1,067 | |||
Income Taxes | $ | — | $ | — | |||
Noncash investing activities: | |||||||
Loans transferred to foreclosed assets | $ | 437 | $ | — | |||
OREO financed | $ | 2,328 | $ | — |
7. | Common Stock Dividend |
8. | Net Income per Common Share |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income available to common shareholders (in thousands) | $ | 1,397 | $ | 2,172 | $ | 2,472 | $ | 3,224 | |||||||
Weighted average shares issued | 14,506,389 | 14,364,176 | 14,504,740 | 14,364,176 | |||||||||||
Add: dilutive effect of stock options | 1,394 | — | 3,589 | — | |||||||||||
Weighted average shares outstanding adjusted for potential dilution | 14,507,783 | 14,364,176 | 14,508,329 | 14,364,176 | |||||||||||
Basic earnings per share | $ | 0.10 | $ | 0.15 | $ | 0.17 | $ | 0.22 | |||||||
Diluted earnings per share | $ | 0.10 | $ | 0.15 | $ | 0.17 | $ | 0.22 | |||||||
Anti-dilutive stock options excluded from earnings per share calculation | 158,000 | 189,000 | 163,000 | 189,000 |
9. | Taxes on Income |
10. | Junior Subordinated Debt/Trust Preferred Securities |
11. | Fair Value Measurements and Disclosure |
June 30, 2013 | |||||||||||||||||
(In thousands) | Carrying Amount | Estimated Fair Value | Quoted Prices In Active Markets for Identical Assets Level 1 | Significant Other Observable Inputs Level 2 | Significant Unobservable Inputs Level 3 | ||||||||||||
Financial Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 138,269 | $ | 138,269 | $ | 138,269 | |||||||||||
Interest-bearing deposits | 1,511 | 1,511 | 1,511 | ||||||||||||||
Investment securities | 25,527 | 25,527 | 10,813 | 14,714 | |||||||||||||
Loans | 393,878 | 392,738 | 392,738 | ||||||||||||||
Cash surrender value of life insurance | 16,941 | 16,941 | 16,941 | ||||||||||||||
Accrued interest receivable | 1,536 | 1,536 | 1,536 | ||||||||||||||
Financial Liabilities: | |||||||||||||||||
Deposits: | |||||||||||||||||
Noninterest-bearing | 219,693 | 219,693 | 219,693 | ||||||||||||||
NOW and money market | 191,260 | 191,260 | 191,260 | ||||||||||||||
Savings | 42,163 | 42,163 | 42,163 | ||||||||||||||
Time Deposits | 93,985 | 94,119 | 94,119 | ||||||||||||||
Total Deposits | 547,101 | 547,235 | 453,116 | 94,119 | |||||||||||||
Junior Subordinated Debt | 10,882 | 10,882 | 10,882 | ||||||||||||||
Accrued interest payable | 60 | 60 | 60 |
December 31, 2012 | |||||||||||||||||
(In thousands) | Carrying Amount | Estimated Fair Value | Quoted Prices In Active Markets for Identical Assets Level 1 | Significant Other Observable Inputs Level 2 | Significant Unobservable Inputs Level 3 | ||||||||||||
Financial Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 141,627 | $ | 141,627 | $ | 141,627 | |||||||||||
Interest-bearing deposits | 1,507 | 1,507 | 1,507 | ||||||||||||||
Investment securities | 31,844 | 31,844 | 13,593 | 18,251 | |||||||||||||
Loans | 388,249 | 386,836 | 386,836 | ||||||||||||||
Cash surrender value of life insurance | 16,681 | 16,681 | 16,681 | ||||||||||||||
Accrued interest receivable | 1,694 | 1,694 | 1,694 | ||||||||||||||
Financial Liabilities: | |||||||||||||||||
Deposits: | |||||||||||||||||
Noninterest-bearing | 217,014 | 217,014 | 217,014 | ||||||||||||||
NOW and money market | 203,771 | 203,771 | 203,771 | ||||||||||||||
Savings | 43,117 | 43,117 | 43,117 | ||||||||||||||
Time Deposits | 99,385 | 99,529 | 99,529 | ||||||||||||||
Total Deposits | 563,287 | 563,431 | 463,902 | 99,529 | |||||||||||||
Junior Subordinated Debt | 10,068 | 10,068 | 10,068 | ||||||||||||||
Accrued interest payable | 71 | 71 | 71 |
Financial Instrument | Valuation Technique | Unobservable Input | Weighted Average |
Subordinated Debt | Discounted cash flow | Discount Rate | 7.76% |
Description of Assets | June 30, 2013 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
AFS Securities (2): | |||||||||||||||
U.S. government agencies | $ | 19,037 | $ | 7,008 | $ | 12,029 | $ | — | |||||||
U.S. government agency CMO’s | 2,685 | — | 2,685 | — | |||||||||||
Mutual Funds | 3,805 | 3,805 | — | — | |||||||||||
Total AFS securities | $ | 25,527 | $ | 10,813 | $ | 14,714 | $ | — | |||||||
Impaired loans (1): | |||||||||||||||
Commercial and industrial | 463 | — | — | 463 | |||||||||||
Real estate mortgage | 7,898 | — | — | 7,898 | |||||||||||
RE construction & development | 0 | — | — | — | |||||||||||
Agricultural | 0 | — | — | — | |||||||||||
Installment/Other | 0 | — | — | — | |||||||||||
Total impaired loans | $ | 8,361 | $ | — | $ | — | $ | 8,361 | |||||||
Other real estate owned (1) | 17,221 | — | — | 17,221 | |||||||||||
Total | $ | 51,109 | $ | 10,813 | $ | 14,714 | $ | 25,582 |
Description of Liabilities | June 30, 2013 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||
Junior subordinated debt (2) | $ | 10,882 | — | — | $ | 10,882 | |||||||
Total | $ | 10,882 | — | — | $ | 10,882 |
Description of Assets | December 31, 2012 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
AFS Securities: | |||||||||||||||
U.S Govt agencies | $ | 24,366 | $ | 9,632 | $ | 14,734 | $ | — | |||||||
U.S Govt collateralized mortgage obligations | 3,517 | — | 3,517 | — | |||||||||||
Mutual Funds | 3,961 | 3,961 | — | — | |||||||||||
Total AFS securities | 31,844 | 13,593 | 18,251 | $ | — | ||||||||||
Impaired Loans (1): | |||||||||||||||
Commercial and industrial | 576 | — | — | 576 | |||||||||||
Real estate mortgage | 7,903 | — | — | 7,903 | |||||||||||
RE construction & development | — | — | — | — | |||||||||||
Agricultural | — | — | — | — | |||||||||||
Installment/Other | — | — | — | — | |||||||||||
Total impaired loans | $ | 8,479 | $ | — | $ | — | $ | 8,479 | |||||||
Other real estate owned (1) | 23,932 | — | — | 23,932 | |||||||||||
Total | $ | 64,255 | $ | 13,593 | $ | 18,251 | $ | 32,411 |
Description of Liabilities | December 31, 2012 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Junior subordinated debt (2) | $ | 10,068 | $ | — | $ | — | $ | 10,068 | |||||||
Total | $ | 10,068 | $ | — | $ | — | $ | 10,068 |
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2012 | ||||||||||||
Reconciliation of Assets: | Private label mortgage-backed securities | Private label mortgage-backed securities | Private label mortgage-backed securities | Private label mortgage-backed securities | |||||||||||
Beginning balance | $ | — | $ | — | $ | 8,566 | $ | 7,973 | |||||||
Total gains or (losses) included in earnings | — | — | (254 | ) | 339 | ||||||||||
Total gains or (losses) included in other comprehensive income | — | — | — | — | |||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | |||||||||||
Ending balance | $ | — | $ | — | $ | 8,312 | $ | 8,312 | |||||||
The amount of total gains or (losses) for the period included in earnings (or other comprehensive loss) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date | $ | — | $ | — | $ | (254 | ) | $ | 339 |
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | Three Months Ended June 30, 2012 | Six Months Ended June 30, 2012 | ||||||||||||
Reconciliation of Liabilities: | Junior Subordinated Debt | Junior Subordinated Debt | Junior Subordinated Debt | Junior Subordinated Debt | |||||||||||
Beginning balance | $ | 10,685 | $ | 10,068 | $ | 9,567 | $ | 9,027 | |||||||
Total losses (gains) included in earnings (or changes in net assets) | 103 | 660 | (364 | ) | 112 | ||||||||||
Transfers in and/or (out) of Level 3 | 94 | 154 | 73 | 137 | |||||||||||
Ending balance | $ | 10,882 | $ | 10,882 | $ | 9,276 | $ | 9,276 | |||||||
The amount of total losses (gains) for the period included in earnings attributable to the change in unrealized gains or losses relating to liabilities still held at the reporting date | $ | 103 | $ | 660 | $ | (364 | ) | $ | 112 |
12. | Goodwill and Intangible Assets |
June 30, 2013 | December 31, 2012 | ||||||
Goodwill | $ | 4,488 | $ | 4,488 | |||
Core deposit intangible assets | 155 | 249 | |||||
Total goodwill and intangible assets | $ | 4,643 | $ | 4,737 |
13. | Subsequent Events |
YTD Average 6/30/13 | YTD Average 12/31/12 | YTD Average 6/30/12 | |||
Loans and Leases | 72.80% | 74.20% | 76.88% | ||
Investment securities available for sale | 5.27% | 7.30% | 7.16% | ||
Interest-bearing deposits in other banks | 0.28% | 0.35% | 0.41% | ||
Interest-bearing deposits in FRB | 21.65% | 18.15% | 15.55% | ||
Total interest-earning assets | 100.00% | 100.00% | 100.00% | ||
NOW accounts | 15.28% | 14.44% | 14.59% | ||
Money market accounts | 41.37% | 37.39% | 35.00% | ||
Savings accounts | 12.36% | 11.99% | 11.92% | ||
Time deposits | 27.98% | 33.44% | 35.92% | ||
Other borrowings | 0.00% | 0.00% | 0.00% | ||
Subordinated debentures | 3.01% | 2.74% | 2.57% | ||
Total interest-bearing liabilities | 100.00% | 100.00% | 100.00% |
(in thousands) | June 30, 2013 | December 31, 2012 | June 30, 2012 | ||||||||
Provision for credit losses during period | $ | 30 | $ | 1,019 | $ | 1,006 | |||||
Allowance as % of nonperforming loans | 54.30 | % | 50.92 | % | 40.26 | % | |||||
Nonperforming loans as % total loans | 5.07 | % | 5.78 | % | 7.30 | % | |||||
Restructured loans as % total loans | 3.53 | % | 4.19 | % | 4.24 | % |
2013 | 2012 | ||||||||||||||||||||
(dollars in thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | |||||||||||||||
Assets: | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Loans and leases (1) | $ | 395,138 | $ | 11,020 | 5.62 | % | $ | 398,321 | $ | 12,009 | 6.06 | % | |||||||||
Investment Securities – taxable | 28,595 | 338 | 2.38 | % | 37,113 | 978 | 5.30 | % | |||||||||||||
Interest-bearing deposits in other banks | 1,509 | 4 | 0.53 | % | 2,104 | 20 | 1.91 | % | |||||||||||||
Interest-bearing deposits in FRB | 117,536 | 135 | 0.23 | % | 80,581 | 94 | 0.23 | % | |||||||||||||
Total interest-earning assets | 542,778 | $ | 11,497 | 4.27 | % | 518,119 | $ | 13,101 | 5.08 | % | |||||||||||
Allowance for credit losses | (11,506 | ) | (12,963 | ) | |||||||||||||||||
Noninterest-earning assets: | |||||||||||||||||||||
Cash and due from banks | 22,892 | 22,767 | |||||||||||||||||||
Premises and equipment, net | 12,077 | 12,736 | |||||||||||||||||||
Accrued interest receivable | 1,302 | 1,582 | |||||||||||||||||||
Other real estate owned | 21,675 | 25,476 | |||||||||||||||||||
Other assets | 47,665 | 49,931 | |||||||||||||||||||
Total average assets | $ | 636,883 | $ | 617,648 | |||||||||||||||||
Liabilities and Shareholders' Equity: | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
NOW accounts | $ | 52,757 | $ | 31 | 0.12 | % | $ | 49,136 | $ | 37 | 0.15 | % | |||||||||
Money market accounts | 142,810 | 354 | 0.50 | % | 117,864 | 363 | 0.62 | % | |||||||||||||
Savings accounts | 42,650 | 43 | 0.20 | % | 40,113 | 52 | 0.26 | % | |||||||||||||
Time deposits | 96,569 | 314 | 0.66 | % | 120,949 | 463 | 0.77 | % | |||||||||||||
Other borrowings | 0 | 0 | 0.00 | % | 0 | — | 0.00 | % | |||||||||||||
Junior subordinated debentures | 10,410 | 153 | 2.96 | % | 8,646 | 136 | 3.16 | % | |||||||||||||
Total interest-bearing liabilities | 345,196 | $ | 895 | 0.52 | % | 336,708 | $ | 1,051 | 0.63 | % | |||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||
Noninterest-bearing checking | 214,801 | 210,751 | |||||||||||||||||||
Accrued interest payable | 104 | 131 | |||||||||||||||||||
Other liabilities | 5,938 | 6,208 | |||||||||||||||||||
Total Liabilities | 566,039 | 553,798 | |||||||||||||||||||
Total shareholders' equity | 70,844 | 63,850 | |||||||||||||||||||
Total average liabilities and shareholders' equity | $ | 636,883 | $ | 617,648 | |||||||||||||||||
Interest income as a percentage of average earning assets | 4.27 | % | 5.08 | % | |||||||||||||||||
Interest expense as a percentage of average earning assets | 0.33 | % | 0.41 | % | |||||||||||||||||
Net interest margin | 3.94 | % | 4.67 | % |
(1) | Loan amounts include nonaccrual loans, but the related interest income has been included only if collected for the period prior to the loan being placed on a nonaccrual basis. Loan interest income includes loan fees of approximately $21,000 and $355,000 for the six months ended June 30, 2013 and 2012, respectively. |
2013 | 2012 | ||||||||||||||||||||
(dollars in thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | |||||||||||||||
Assets: | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Loans and leases (1) | $ | 396,203 | $ | 5,554 | 5.62 | % | $ | 392,013 | $ | 5,966 | 6.05 | % | |||||||||
Investment Securities – taxable | 26,396 | 140 | 2.13 | % | 36,096 | 457 | 5.04 | % | |||||||||||||
Interest-bearing deposits in other banks | 1,510 | 2 | 0.53 | % | 1,682 | 10 | 2.37 | % | |||||||||||||
Interest-bearing deposits in FRB | 119,860 | 70 | 0.23 | % | 72,544 | 43 | 0.24 | % | |||||||||||||
Total interest-earning assets | 543,969 | $ | 5,766 | 4.25 | % | 502,335 | $ | 6,476 | 5.13 | % | |||||||||||
Allowance for credit losses | (11,257 | ) | (12,171 | ) | |||||||||||||||||
Noninterest-earning assets: | |||||||||||||||||||||
Cash and due from banks | 22,773 | 22,081 | |||||||||||||||||||
Premises and equipment, net | 11,978 | 12,532 | |||||||||||||||||||
Accrued interest receivable | 1,287 | 1,506 | |||||||||||||||||||
Other real estate owned | 20,005 | 23,978 | |||||||||||||||||||
Other assets | 46,853 | 60,732 | |||||||||||||||||||
Total average assets | $ | 635,608 | $ | 610,993 | |||||||||||||||||
Liabilities and Shareholders' Equity: | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
NOW accounts | $ | 52,829 | $ | 16 | 0.12 | % | $ | 49,029 | $ | 15 | 0.12 | % | |||||||||
Money market accounts | 138,877 | 143 | 0.41 | % | 115,293 | 175 | 0.60 | % | |||||||||||||
Savings accounts | 42,204 | 20 | 0.19 | % | 39,513 | 22 | 0.22 | % | |||||||||||||
Time deposits | 95,281 | 152 | 0.64 | % | 117,447 | 225 | 0.76 | % | |||||||||||||
Other borrowings | 0 | 0 | 0.00 | % | 0 | — | 0.00 | % | |||||||||||||
Junior subordinated debentures | 10,721 | 93 | 3.48 | % | 8,791 | 72 | 3.26 | % | |||||||||||||
Total interest-bearing liabilities | 339,912 | $ | 424 | 0.50 | % | 330,073 | $ | 509 | 0.61 | % | |||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||
Noninterest-bearing checking | 218,089 | 199,083 | |||||||||||||||||||
Accrued interest payable | 97 | 126 | |||||||||||||||||||
Other liabilities | 6,076 | 6,206 | |||||||||||||||||||
Total Liabilities | 564,174 | 535,488 | |||||||||||||||||||
Total shareholders' equity | 71,434 | 75,505 | |||||||||||||||||||
Total average liabilities and shareholders' equity | $ | 635,608 | $ | 610,993 | |||||||||||||||||
Interest income as a percentage of average earning assets | 4.25 | % | 5.13 | % | |||||||||||||||||
Interest expense as a percentage of average earning assets | 0.32 | % | 0.40 | % | |||||||||||||||||
Net interest margin | 3.93 | % | 4.73 | % |
(1) | Loan amounts include nonaccrual loans, but the related interest income has been included only if collected for the period prior to the loan being placed on a nonaccrual basis. Loan interest income includes loan fees of approximately $13,000 and $196,000 for the quarters ended June 30, 2013 and 2012, respectively. |
Increase (decrease) in the six months ended June 30, 2013 compared to June 30, 2012 | |||||||||||
(In thousands) | Total | Rate | Volume | ||||||||
Increase (decrease) in interest income: | |||||||||||
Loans and leases | $ | (989 | ) | $ | (891 | ) | $ | (98 | ) | ||
Investment securities available for sale | (640 | ) | (452 | ) | (188 | ) | |||||
Interest-bearing deposits in other banks | (16 | ) | (16 | ) | — | ||||||
Interest-bearing deposits in FRB | 41 | (1 | ) | 42 | |||||||
Total interest income | (1,604 | ) | (1,360 | ) | (244 | ) | |||||
Increase (decrease) in interest expense: | |||||||||||
Interest-bearing demand accounts | (15 | ) | (77 | ) | 62 | ||||||
Savings and money market accounts | (9 | ) | (12 | ) | 3 | ||||||
Time deposits | (149 | ) | (63 | ) | (86 | ) | |||||
Other borrowings | — | 0 | — | ||||||||
Subordinated debentures | 17 | (9 | ) | 26 | |||||||
Total interest expense | (156 | ) | (161 | ) | 5 | ||||||
Increase (decrease) in net interest income | $ | (1,448 | ) | $ | (1,199 | ) | $ | (249 | ) |
(In thousands) | 2013 | 2012 | Amount of Change | Percent Change | ||||||||||
Customer service fees | $ | 1,681 | $ | 1,801 | $ | (120 | ) | (6.66 | )% | |||||
Increase in cash surrender value of BOLI | 277 | 280 | (3 | ) | (1.07 | )% | ||||||||
Impairment loss on investment securities, other than-temporary loss | — | (172 | ) | 172 | (100.00 | )% | ||||||||
(Loss) gain on fair value of financial liability | (660 | ) | (112 | ) | (548 | ) | (100.00 | )% | ||||||
Gain on sale of other investment | — | 1,807 | (1,807 | ) | (100.00 | )% | ||||||||
Other | 328 | 445 | (117 | ) | (26.29 | )% | ||||||||
Total noninterest income | $ | 1,626 | $ | 4,049 | $ | (2,423 | ) | (59.84 | )% |
(In thousands) | 2013 | 2012 | Amount of Change | Percent Change | ||||||||||
Salaries and employee benefits | $ | 4,474 | $ | 4,598 | $ | (124 | ) | (2.70 | )% | |||||
Occupancy expense | 1,788 | 1,605 | 183 | 11.40 | % | |||||||||
Data processing | 93 | 37 | 56 | 151.35 | % | |||||||||
Professional fees | 820 | 683 | 137 | 20.06 | % | |||||||||
FDIC/DFI insurance assessments | 698 | 783 | (85 | ) | (10.86 | )% | ||||||||
Director fees | 117 | 136 | (19 | ) | (13.97 | )% | ||||||||
Amortization of intangibles | 93 | 170 | (77 | ) | (45.29 | )% | ||||||||
Correspondent bank service charges | 157 | 160 | (3 | ) | (1.88 | )% | ||||||||
Loss on California tax credit partnership | 65 | 184 | (119 | ) | (64.67 | )% | ||||||||
Net (gain) cost on operation of OREO | (1,218 | ) | 329 | (1,547 | ) | (470.21 | )% | |||||||
Other | 1,140 | 1,272 | (132 | ) | (10.38 | )% | ||||||||
Total expense | $ | 8,227 | $ | 9,957 | $ | (1,730 | ) | (17.37 | )% |
June 30, 2013 | December 31, 2012 | |||||||||||||||||||
(In thousands) | Dollar Amount | % of Loans | Dollar Amount | % of Loans | Net Change | % Change | ||||||||||||||
Commercial and industrial | $ | 75,779 | 18.7 | % | $ | 72,117 | 18.0 | % | $ | 3,662 | 5.08 | % | ||||||||
Real estate – mortgage | 203,187 | 50.2 | % | 189,934 | 47.5 | % | 13,253 | 6.98 | % | |||||||||||
RE construction & development | 86,583 | 21.4 | % | 90,941 | 22.7 | % | (4,358 | ) | -4.79 | % | ||||||||||
Agricultural | 29,027 | 7.2 | % | 36,169 | 9.0 | % | (7,142 | ) | -19.75 | % | ||||||||||
Installment/other | 10,465 | 2.5 | % | 10,884 | 2.8 | % | (419 | ) | (3.85 | )% | ||||||||||
Commercial lease financing | — | 0.0 | % | 12 | 0.0 | % | (12 | ) | -100.00 | % | ||||||||||
Total Gross Loans | $ | 405,041 | 100.0 | % | $ | 400,057 | 100.0 | % | $ | 4,984 | 1.25 | % |
(In thousands) | June 30, 2013 | December 31, 2012 | Net Change | Percentage Change | ||||||||||
Noninterest bearing deposits | $ | 219,693 | $ | 217,014 | $ | 2,679 | 1.23 | % | ||||||
Interest bearing deposits: | ||||||||||||||
NOW and money market accounts | 191,260 | 203,771 | (12,511 | ) | -6.14 | % | ||||||||
Savings accounts | 42,163 | 43,117 | (954 | ) | -2.21 | % | ||||||||
Time deposits: | ||||||||||||||
Under $100,000 | 30,787 | 32,532 | (1,745 | ) | -5.36 | % | ||||||||
$100,000 and over | 63,198 | 66,853 | (3,655 | ) | -5.47 | % | ||||||||
Total interest bearing deposits | 327,408 | 346,273 | (18,865 | ) | -5.45 | % | ||||||||
Total deposits | $ | 547,101 | $ | 563,287 | $ | (16,186 | ) | -2.87 | % |
• | Plan to Strengthen Credit Risk Management Practices – Includes the responsibility of Board to establish appropriate risk tolerance guidelines and limits, timely and accurate identification and quantification of credit risk, strategies to minimize credit losses and reduce the level of problem assets, procedures for the ongoing review of the investment portfolio to evaluate other-than-temporary-impairment, stress testing for commercial real estate loans and portfolio segments, and measures to reduce the levels of other real estate owned. |
• | Plan to Improve Adversely Classified Assets – Includes specific plans and strategies to improve the Bank’s asset position through repayment, amortization, liquidation, additional collateral, or other means on each loan, relationship, or other asset in excess of $1.5 million including OREO, that are past due more than 90 days as of the date of the written agreement. |
• | Plan for Maintenance of Adequate Allowance for Loan Losses – Includes policies and procedures to ensure adherence to the Bank’s revised ALLL methodology, provides for periodic reviews of the methodology as appropriate, and provides for review of ALLL by the Board at least quarterly. |
(in 000's) | June 30, 2013 | December 31, 2012 | |||||
Specific allowance – impaired loans | $ | 535 | $ | 658 | |||
Formula allowance – classified loans not impaired | 2,991 | 2,871 | |||||
Formula allowance – special mention loans | 62 | 113 | |||||
Total allowance for special mention and classified loans | 3,588 | 3,642 | |||||
Formula allowance for pass loans | 4,286 | 2,719 | |||||
Unallocated allowance | 3,283 | 5,423 | |||||
Total allowance for loan losses | $ | 11,157 | $ | 11,784 | |||
Impaired loans | 20,582 | 21,931 | |||||
Classified loans not considered impaired | 11,992 | 13,105 | |||||
Total classified loans | $ | 32,574 | $ | 35,036 | |||
Special mention loans not considered impaired | $ | 2,858 | $ | 2,057 |
Balance | Reserve | Balance | Reserve | ||||||||||||
(in 000’s) | June 30, 2013 | June 30, 2013 | December 31, 2012 | December 31, 2012 | |||||||||||
Commercial and industrial | $ | 974 | $ | 14 | $ | 1,431 | $ | 37 | |||||||
Real estate – mortgage | 17,063 | 521 | 18,457 | 621 | |||||||||||
RE construction & development | 2,420 | — | 1,730 | — | |||||||||||
Agricultural | 51 | — | 192 | — | |||||||||||
Installment/other | 74 | — | 121 | — | |||||||||||
Commercial lease financing | — | — | — | — | |||||||||||
Total Impaired Loans | $ | 20,582 | $ | 535 | $ | 21,931 | $ | 658 |
Total TDRs | Nonaccrual TDRs | Accruing TDRs | |||||||||
(in thousands) | June 30, 2013 | June 30, 2013 | June 30, 2013 | ||||||||
Commercial and industrial | $ | 812 | $ | 241 | $ | 571 | |||||
Real estate - mortgage: | |||||||||||
Commercial real estate | 4,216 | 1,526 | 2,690 | ||||||||
Residential mortgages | 6,783 | 1,617 | 5,166 | ||||||||
Home equity loans | 44 | — | 44 | ||||||||
Total real estate mortgage | 11,043 | 3,143 | 7,900 | ||||||||
RE construction & development | 2,410 | 1,049 | 1,361 | ||||||||
Agricultural | 51 | — | 51 | ||||||||
Installment/other | — | — | — | ||||||||
Commercial lease financing | — | — | — | ||||||||
Total Troubled Debt Restructurings | $ | 14,316 | $ | 4,433 | $ | 9,883 |
Total TDRs | Nonaccrual TDRs | Accruing TDRs | |||||||||
(in thousands) | December 31, 2012 | December 31, 2012 | December 31, 2012 | ||||||||
Commercial and industrial | $ | 990 | $ | 740 | $ | 250 | |||||
Real estate - mortgage: | |||||||||||
Commercial real estate | 5,395 | 2,763 | 2,632 | ||||||||
Residential mortgages | 7,289 | 1,745 | 5,544 | ||||||||
Home equity loans | 10 | 10 | — | ||||||||
Total real estate mortgage | 12,694 | 4,518 | 8,176 | ||||||||
RE construction & development | 2,860 | 1,730 | 1,130 | ||||||||
Agricultural | 191 | 136 | 55 | ||||||||
Installment/other | 38 | 19 | 19 | ||||||||
Commercial lease financing | — | — | — | ||||||||
Total Troubled Debt Restructurings | $ | 16,773 | $ | 7,143 | $ | 9,630 |
(in thousands) | June 30, 2013 | December 31, 2012 | |||||
Commercial and industrial | $ | 978 | $ | 1,867 | |||
Real estate - mortgage: | |||||||
Commercial real estate | 1,845 | — | |||||
Residential mortgages | — | 909 | |||||
Home equity loans | — | — | |||||
Total real estate mortgage | 1,845 | 909 | |||||
RE construction & development | — | 141 | |||||
Agricultural | — | — | |||||
Installment/other | 36 | 49 | |||||
Commercial lease financing | — | — | |||||
Total Special Mention Loans | $ | 2,859 | $ | 2,966 |
(In thousands) | June 30, 2013 | June 30, 2012 | |||||
Total loans outstanding at end of period before deducting allowances for credit losses | $ | 405,035 | $ | 394,563 | |||
Average loans outstanding during period | 395,138 | 398,321 | |||||
Balance of allowance at beginning of period | 11,784 | 13,648 | |||||
Loans charged off: | |||||||
Real estate | (216 | ) | (63 | ) | |||
Commercial and industrial | (485 | ) | (2,932 | ) | |||
Installment and other | (27 | ) | (137 | ) | |||
Total loans charged off | (728 | ) | (3,132 | ) | |||
Recoveries of loans previously charged off: | |||||||
Real estate | 3 | 4 | |||||
Commercial and industrial | 38 | 61 | |||||
Installment and other | 30 | 23 | |||||
Total loan recoveries | 71 | 88 | |||||
Net loans charged off | (657 | ) | (3,044 | ) | |||
Provision charged to operating expense | 30 | 1,006 | |||||
Balance of allowance for credit losses at end of period | $ | 11,157 | $ | 11,610 | |||
Net loan charge-offs to total average loans (annualized) | 0.34 | % | 1.54 | % | |||
Net loan charge-offs to loans at end of period (annualized) | 0.32 | % | 1.54 | % | |||
Allowance for credit losses to total loans at end of period | 2.75 | % | 2.94 | % | |||
Net loan charge-offs to allowance for credit losses (annualized) | 11.78 | % | 52.44 | % | |||
Provision for credit losses to net charge-offs (annualized) | 9.13 | % | 66.10 | % |
(In thousands) | June 30, 2013 | December 31, 2012 | |||||
Nonaccrual Loans | $ | 10,665 | $ | 13,425 | |||
Restructured Loans (1) | 9,883 | 9,716 | |||||
Total nonperforming loans | 20,548 | 23,141 | |||||
Other real estate owned | 17,221 | 23,932 | |||||
Total nonperforming assets | $ | 37,769 | $ | 47,073 | |||
Loans past due 90 days or more, still accruing | $ | 0 | $ | 0 | |||
Nonperforming loans to total gross loans | 5.07 | % | 5.78 | % | |||
Nonperforming assets to total assets | 5.94 | % | 7.25 | % | |||
Allowance for loan losses to nonperforming loans | 54.30 | % | 50.92 | % |
(1) | Included in nonaccrual loans at June 30, 2013 and December 31, 2012 are restructured loans totaling $4,433,000 and $7,144,000, respectively. |
Balance | Balance | Change from | |||||||||
Nonaccrual Loans (in 000's): | June 30, 2013 | December 31, 2012 | December 31, 2012 | ||||||||
Commercial and industrial | $ | 400 | $ | 1,181 | $ | (781 | ) | ||||
Real estate - mortgage | 9,135 | 10,259 | (1,124 | ) | |||||||
RE construction & development | 1,050 | 1,730 | (680 | ) | |||||||
Agricultural | — | 136 | (136 | ) | |||||||
Installment/other | 80 | 119 | (39 | ) | |||||||
Commercial lease financing | 0 | 0 | 0 | ||||||||
Total Nonaccrual Loans | $ | 10,665 | $ | 13,425 | $ | (2,760 | ) |
Balance | |||
December 31, 2011 | $ | 124,184 | |
June 30, 2012 | $ | 99,390 | |
December 31, 2012 | $ | 141,627 | |
June 30, 2013 | $ | 138,269 |
• | Strengthen board oversight of the Bank’s management and operations by the Bank submitting a written plan to the Federal Reserve Bank to address and include (i) the actions that the board will take to improve the Bank’s conditions and maintain effective control over, and supervision of, the Bank’s major operations and activities, (ii) the responsibility of the board to monitor management’s adherence to approved policies and procedures, and applicable laws and regulations; and (iii) a description of the information and reports that are regularly reviewed by the board in its oversight of the operations and management of the Bank; |
• | Strengthen credit risk management practices of the Bank by the Bank submitting a written plan to the Federal Reserve Bank to address and include (i) the responsibility of the Board of Directors to establish appropriate risk tolerance guidelines and risk limits; (ii) timely and accurate identification and quantification of credit risk within the loan portfolio; (iii) strategies to minimize credit losses and reduce the level of problem assets; (iv) procedures for the on-going review of the investment portfolio to evaluate other-than temporary-impairment (“OTTI”) and accurate accounting for OTTI; (v) stress testing of commercial real estate loan and portfolio segments; and (vi) measures to reduce the amount of other real estate owned; |
• | Strengthen asset quality at the Bank by (i) not extending, renewing, or restructuring any credit to or for the benefit of any borrower, including any related interest of the borrower, whose loans or other extensions of credit were criticized in the Report of Examination or in any subsequent report of examination, without appropriate underwriting analysis, documentation, board or committee approval and certification that the board or committee reasonably believes that the extension of credit will not impair the Bank’s interest in obtaining repayment of the already outstanding credit and that the extension of credit or renewal will be repaid according to its terms, (ii) submitting to the Federal Reserve Bank an acceptable written plan designed to improve the Bank’s position through repayment, amortization, liquidation, additional collateral, or other means on each loan or other asset in excess of $1.5 million including other real estate owned that is past due as to principal or interest more than 90 days, on the Bank’s problem loan list, or was adversely classified in the Report of Examination or subsequent report of examination; |
• | Improve management of the Bank’s allowance for loan losses by (i) eliminating from its books, by charge-off or collection, all assets or portions of assets classified “loss” in the Report of Examination that have not been previously collected in full or charged off within 10 days of the Agreement, and, within 30 days from the receipt of any federal or state report of examination, charge off all assets classified “loss” unless otherwise approved in writing by the Federal Reserve Bank, (ii) maintain a sound process for determining, documenting, and recording an adequate allowance for loan and lease losses (“ALLL”) in accordance with regulatory reporting instructions and relevant supervisory guidance, and (iii) within 60 days of the date of the Agreement, submitting to the Federal Reserve Bank an acceptable written program for the maintenance of an adequate ALLL, including provision for a review of the ALLL by the board on at least a quarterly calendar basis and remedying any deficiency found in the ALLL in the quarter it is discovered, and the board maintaining written documentation of its review of the ALLL; |
• | Maintain sufficient capital at the Company and Bank by submitting to the Federal Reserve Bank an acceptable written plan to maintain sufficient capital at the Company, on a consolidated basis, and the Company and the Bank shall jointly submit to the Reserve Bank an acceptable written plan to maintain sufficient capital at the Bank, as a separate legal entity on a stand-alone basis that (i) complies with the applicable bank and bank holding company capital maintenance regulations and regulatory guidelines and that also considers the adequacy of the Bank’s capital, (ii) takes into account the volume of classified credits, concentrations of credit, ALLL, current and projected asset growth, and projected retained earnings, the source and timing of additional funds to fulfill the Company’s and the Bank’s future capital requirements, and a provision to notify the Federal Reserve Bank when either entity falls below the capital ratios in the accepted plan;. |
• | Submit a revised business plan and budget to the Federal Reserve Bank for 2010 and subsequent calendar years that the Bank is subject to the Agreement to improve the Bank’s earnings and overall condition, which plan at a minimum provides a realistic and comprehensive budget for the remainder of calendar year 2010, and description of the operating assumptions that form the basis for, and adequately support, major projected income, expense, and balance sheet components; |
• | Not make certain distributions, dividends, and payments, specifically that (i) the Company and Bank agreeing not to declare or pay any dividends without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors (“Director”), (ii) the Company not taking any other form of payment representing a reduction in capital from the Bank without the prior written approval of the Federal Reserve Bank, and (iii) the Company and its nonbank subsidiaries not making any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Federal Reserve Bank and the Director; |
• | Not incur debt or redeem stock, without the prior written approval of the Federal Reserve Bank. The Company agrees not to incur, increase, or guarantee any debt or purchase or redeem any shares of its stock; |
• | Correct violations of the laws by (i) the Bank immediately taking all necessary steps to correct all violations of law and regulation cited in the Report of Examination, (ii) the board of the Bank taking the necessary steps to ensure the Bank’s future compliance with all applicable laws and regulations, (iii) complying with the notice provisions of Section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of Governors of the Federal Reserve System (12 C.F.R. §§ 225.71 et seq) prior to appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position, and (iv) complying with the restrictions on indemnification and severance payments of Section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the FDIC’s regulations (12 C.F.R. Part 359); |
• | Comply with the Agreement by (i) appointing a compliance committee of the Bank (“Compliance Committee”) within 10 days of the date of the Agreement to monitor and coordinate the Bank’s compliance with the provisions of the Agreement, which Compliance Committee is composed of a majority of outside directors who are not executive officers or principal shareholders of the Bank and which is to meet at least monthly and report its findings to the board of directors of the Bank, and (ii) the Company and Bank within 30 days after the end of each calendar quarter following the date of the Agreement submitting to the Federal Reserve Bank written progress reports detailing the form and manner of all actions taken to secure compliance with the Agreement and the results of such actions. |
• | Develop and adopt a capital plan to maintain a ratio of tangible shareholders’ equity to total tangible assets equal to or greater than 9.5% and include in such capital plan a capital contingency plan for raising additional capital in the event of various contingencies; |
• | Maintain a ratio of tangible shareholders’ equity to total tangible assets equal to or greater than 9.5% |
• | Maintain an adequate allowance for loan losses and remedy any deficiency in the allowance for loan losses in the calendar quarter in which it is discovered; and |
• | Not establish any new branches or other offices without the prior written consent of the Commissioner of the California Department of Financial Institutions |
• | Provide progress reports within 30 days after the end of each calendar quarter following the date of the Order to the California Department of Financial Institutions detailing the form and manner of all actions taken to secure compliance with the Order and Agreement and the results of such actions. |
Company | Bank | To Be Well Capitalized under Prompt Corrective | |||||
Actual Capital Ratios | Actual Capital Ratios | Minimum Capital Ratios | Action Provisions | ||||
Total risk-based capital ratio | 16.28% | 16.43% | 10.00% | 10.00% | |||
Tier 1 capital to risk-weighted assets | 15.01% | 15.17% | 5.00% | 6.00% | |||
Leverage ratio | 11.02% | 11.16% | 4.00% | 5.00% |
(a) | Exhibits: |
11 | Computation of Earnings per Share* |
31.1 | Certification of the Chief Executive Officer of United Security Bancshares pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | Certification of the Chief Financial Officer of United Security Bancshares pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification of the Chief Executive Officer of United Security Bancshares pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 | Certification of the Chief Financial Officer of United Security Bancshares pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
United Security Bancshares | ||
Date: | August 2, 2013 | /S/ Dennis R. Woods |
Dennis R. Woods | ||
President and | ||
Chief Executive Officer | ||
/ S/ Richard B. Shupe | ||
Richard B. Shupe | ||
Senior Vice President and Chief Financial Officer |
Date: August 2, 2013 |
/S/ Dennis R. Woods |
Dennis R. Woods |
President and Chief Executive Officer |
Date: August 2, 2013 |
/S/ Richard B. Shupe |
Richard B. Shupe |
Senior Vice President and Chief Financial Officer |
/s/ Dennis R. Woods |
Dennis R. Woods |
President and Chief Executive Officer |
/s/ Richard B. Shupe |
Richard B. Shupe |
Senior Vice President and Chief Financial Officer |
Junior Subordinated Debt/Trust Preferred Securities
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6 Months Ended |
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Jun. 30, 2013
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Junior Subordinated Debt/Trust Preferred Securities [Abstract] | |
Junior Subordinated Debt/Trust Preferred Securities | Junior Subordinated Debt/Trust Preferred Securities Effective September 30, 2009 and beginning with the quarterly interest payment due October 1, 2009, the Company elected to defer interest payments on the Company's $15.0 million of junior subordinated debentures relating to its trust preferred securities. The terms of the debentures and trust indentures allow for the Company to defer interest payments for up to 20 consecutive quarters without default or penalty. During the period that the interest deferrals are elected, the Company will continue to record interest expense associated with the debentures. Upon the expiration of the deferral period, all accrued and unpaid interest will be due and payable. During the deferral period, the Company is precluded from paying cash dividends to shareholders or repurchasing its stock. The fair value guidance generally permits the measurement of selected eligible financial instruments at fair value at specified election dates. Effective January 1, 2008, the Company elected the fair value option for its junior subordinated debt issued under USB Capital Trust II. The rate paid on the junior subordinated debt issued under USB Capital Trust II is 3-month LIBOR plus 129 basis points, and is adjusted quarterly. At June 30, 2013 the Company performed a fair value measurement analysis on its junior subordinated debt using a cash flow model approach to determine the present value of those cash flows. The cash flow model utilizes the forward 3-month LIBOR curve to estimate future quarterly interest payments due over the thirty-year life of the debt instrument, adjusted for deferrals of interest payments per the Company’s election at September 30, 2009. These cash flows were discounted at a rate which incorporates a current market rate for similar-term debt instruments, adjusted for additional credit and liquidity risks associated with the junior subordinated debt. Although there is little market data in the current relatively illiquid credit markets, we believe the 7.76% discount rate used represents what a market participant would consider under the circumstances based on current market assumptions. The fair value calculation performed at June 30, 2013 resulted in a pretax loss adjustment of $103,000 ($60,000, net of tax) for the quarter ended June 30, 2013 and a pretax loss adjustment of $660,000 ($388,000, net of tax) for the six months ended June 30, 2013. The previous year’s fair value calculation performed at June 30, 2012 resulted in pretax gain adjustment of $364,000 ($214,000, net of tax) for the quarter ended June 30, 2012, and a pretax loss adjustment of $112,000 ($66,000, net of tax) for the six months ended June 30, 2012. |
Loans and Leases
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Jun. 30, 2013
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases | Loans and Leases Loans are comprised of the following:
The Company's loans are predominantly in the San Joaquin Valley and the greater Oakhurst/East Madera County area, as well as the Campbell area of Santa Clara County, although the Company does participate in loans with other financial institutions, they are primarily in the state of California. Commercial and industrial loans represent 18.7% of total loans at June 30, 2013 and are generally made to support the ongoing operations of small-to-medium sized commercial businesses. Commercial and industrial loans have a high degree of industry diversification and provide working capital, financing for the purchase of manufacturing plants and equipment, or funding for growth and general expansion of businesses. A substantial portion of commercial and industrial loans are secured by accounts receivable, inventory, leases, or other collateral including real estate. The remainder are unsecured; however, extensions of credit are predicated upon the financial capacity of the borrower. Repayment of commercial loans generally comes from the cash flow of the borrower. Real estate mortgage loans, representing 50.2% of total loans at June 30, 2013, are secured by trust deeds on primarily commercial property, but are also secured by trust deeds on single family residences. Repayment of real estate mortgage loans generally comes from the cash flow of the borrower.
Real estate construction and development loans, representing 21.4% of total loans at June 30, 2013, consist of loans for residential and commercial construction projects, as well as land acquisition and development, or land held for future development. Loans in this category are secured by real estate including improved and unimproved land, as well as single-family residential, multi-family residential, and commercial properties in various stages of completion. All real estate loans have established equity requirements. Repayment on construction loans generally comes from long-term mortgages with other lending institutions obtained at completion of the project. Agricultural loans represent 7.2% of total loans at June 30, 2013 and are generally secured by land, equipment, inventory and receivables. Repayment is from the cash flow of the borrower. Installment loans represent 2.6% of total loans at June 30, 2013 and generally consist of loans to individuals for household, family and other personal expenditures such as credit cards, automobiles or other consumer items. Commercial lease financing loans, consist of loans to small businesses, which are secured by commercial equipment. Repayment of the lease obligation is from the cash flow of the borrower. The Company has no commercial lease financing loans at June 30, 2013. In the normal course of business, the Company is party to financial instruments with off-balance sheet risk to meet the financing needs of its customers. At June 30, 2013 and December 31, 2012, these financial instruments include commitments to extend credit of $51,583,000 and $60,050,000, respectively, and standby letters of credit of $2,323,000 and $2,404,000, respectively. These instruments involve elements of credit risk in excess of the amount recognized on the balance sheet. The contract amounts of these instruments reflect the extent of the involvement the Company has in off-balance sheet financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amounts of those instruments. The Company uses the same credit policies as it does for on-balance sheet instruments. Commitments to extend credit are agreements to lend to a customer, as long as there is no violation of any condition established in the contract. Substantially all of these commitments are at floating interest rates based on the Prime rate. Commitments generally have fixed expiration dates. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation. Collateral held varies but includes accounts receivable, inventory, leases, property, plant and equipment, residential real estate and income-producing properties. Standby letters of credit are generally unsecured and are issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Past Due Loans The Company monitors delinquency and potential problem loans on an ongoing basis through weekly reports to the Loan Committee and monthly reports to the Board of Directors. The following is a summary of delinquent loans at June 30, 2013 (in thousands):
The following is a summary of delinquent loans at December 31, 2012 (in thousands):
Nonaccrual Loans Commercial, construction and commercial real estate loans are placed on non-accrual status under the following circumstances: - When there is doubt regarding the full repayment of interest and principal. - When principal and/or interest on the loan has been in default for a period of 90-days or more, unless the asset is both well secured and in the process of collection that will result in repayment in the near future. - When the loan is identified as having loss elements and/or is risk rated "8" Doubtful. Other circumstances which jeopardize the ultimate collectability of the loan including certain troubled debt restructurings, identified loan impairment, and certain loans to facilitate the sale of OREO. Loans meeting any of the preceding criteria are placed on non-accrual status and the accrual of interest for financial statement purposes is discontinued. Previously accrued but unpaid interest is reversed and charged against interest income. All other loans where principal or interest is due and unpaid for 90 days or more are placed on non-accrual and the accrual of interest for financial statement purposes is discontinued. Previously accrued but unpaid interest is reversed and charged against interest income. When a loan is placed on non-accrual status and subsequent payments of interest (and principal) are received, the interest received may be accounted for in two separate ways. Cost recovery method: If the loan is in doubt as to full collection, the interest received in subsequent payments is diverted from interest income to a valuation reserve and treated as a reduction of principal for financial reporting purposes. Cash basis: This method is only used if the recorded investment or total contractual amount is expected to be fully collectible, under which circumstances the subsequent payments of interest is credited to interest income as received. Loans on non-accrual status are usually not returned to accrual status unless all delinquent principal and/or interest has been brought current, there is no identified element of loss, and current and continued satisfactory performance is expected (loss of the contractual amount not the carrying amount of the loan). Repayment ability is generally demonstrated through the timely receipt of at least six monthly payments on a loan with monthly amortization. Nonaccrual loans totaled $10,665,000 and $13,425,000 at June 30, 2013 and December 31, 2012, respectively. There were no remaining undisbursed commitments to extend credit on nonaccrual loans at June 30, 2013 or December 31, 2012. The following is a summary of nonaccrual loan balances at June 30, 2013 and December 31, 2012.
Impaired Loans 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, including principal and interest, according to the contractual terms of the loan agreement. The Company applies its normal loan review procedures in making judgments regarding probable losses and loan impairment. The Company evaluates for impairment those loans on non-accrual status, graded doubtful, graded substandard or those that are troubled debt restructures. The primary basis for inclusion in impaired status under generally accepted accounting pronouncements is that it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. A loan is not considered impaired if there is merely an insignificant delay or shortfall in the amounts of payments and the Company expects to collect all amounts due, including interest accrued, at the contractual interest rate for the period of the delay. Review for impairment does not include large groups of smaller balance homogeneous loans that are collectively evaluated to estimate the allowance for loan losses. The Company’s present allowance for loan losses methodology, including migration analysis, captures required reserves for these loans in the formula allowance. For loans determined to be impaired, the Company evaluates impairment based upon either the fair value of underlying collateral, discounted cash flows of expected payments, or observable market price.
The method for recognizing interest income on impaired loans is dependent on whether the loan is on nonaccrual status or is a troubled debt restructuring. For income recognition, the existing nonaccrual and troubled debt restructuring policies are applied to impaired loans. Generally, except for certain troubled debt restructurings which are performing under the restructure agreement, the Company does not recognize interest income received on impaired loans, but reduces the carrying amount of the loan for financial reporting purposes. Loans other than certain homogeneous loan portfolios are reviewed on a quarterly basis for impairment. Impaired loans are written down to estimated realizable values by the establishment of specific reserves or charge-offs when required. The following is a summary of impaired loans at, and for the six months ended June 30, 2013 (in thousands).
The following is a summary of impaired loans at, and for the year ended, December 31, 2012 (in thousands).
In most cases, the Company uses the cash basis method of income recognition for impaired loans. In the case of certain troubled debt restructurings for which the loan is performing under the current contractual terms for a reasonable period of time, income is recognized under the accrual method. The average recorded investment in impaired loans for the quarter ended June 30, 2013 and 2012 was $21,542,000 and $28,402,000, respectively. The average recorded investment in impaired loans for the six months ended June 30, 2013 and 2012 was $20,310,000 and $30,706,000, respectively. Interest income recognized on impaired loans for the quarters ended June 30, 2013 and 2012 was approximately $121,000 and $127,000, respectively. Interest income recognized on impaired loans for the six months ended June 30, 2013 and 2012 was approximately $217,000 and $253,000, respectively. Troubled Debt Restructurings Under the circumstances, when the Company grants a concession to a borrower as part of a loan restructuring, the restructuring is accounted for as a troubled debt restructuring (TDR). TDRs are reported as a component of impaired loans. A TDR is a type of restructuring in which the Company, for economic or legal reasons related to the borrower's financial difficulties, grants a concession (either imposed by court order, law, or agreement between the borrower and the Bank) to the borrower that it would not otherwise consider. Although the restructuring may take different forms, the Company's objective is to maximize recovery of its investment by granting relief to the borrower. A TDR may include, but is not limited to, one or more of the following: - A transfer from the borrower to the Company of receivables from third parties, real estate, other assets, or an equity interest in the borrower is granted to fully or partially satisfy the loan. - A modification of terms of a debt such as one or a combination of:
For a restructured loan to return to accrual status there needs to be, among other factors, at least 6 months successful payment history. In addition, the Company performs a financial analysis of the credit to determine whether the borrower has the ability to continue to meet payments over the remaining life of the loan. This includes, but is not limited to, a review of financial statements and cash flow analysis of the borrower. Only after determination that the borrower has the ability to perform under the terms of the loans, will the restructured credit be considered for accrual status. Although the Company does not have a policy which specifically addresses when a loan may be removed from TDR classification, as a matter of practice, loans classified as TDR’s generally remain classified as such until the loan either reaches maturity or its outstanding balance is paid off. The following tables illustrates TDR activity for the periods indicated:
The Company makes various types of concessions when structuring TDRs including rate reductions, payment extensions, and forbearance. At June 30, 2013, the Company had 52 restructured loans totaling $14,316,000 as compared to 58 restructured loans totaling $16,773,000 at December 31, 2012. The following tables summarize TDR activity by loan category for the six months ended June 30, 2013 and June 30, 2012.
The following tables summarize TDR activity by loan category for the quarters ended June 30, 2013 and June 30, 2012.
Credit Quality Indicators As part of its credit monitoring program, the Company utilizes a risk rating system which quantifies the risk the Company estimates it has assumed during the life of a loan. The system rates the strength of the borrower and the facility or transaction, and is designed to provide a program for risk management and early detection of problems. For each new credit approval, credit extension, renewal, or modification of existing credit facilities, the Company assigns risk ratings utilizing the rating scale identified in this policy. In addition, on an on-going basis, loans and credit facilities are reviewed for internal and external influences impacting the credit facility that would warrant a change in the risk rating. Each loan credit facility is to be given a risk rating that takes into account factors that materially affect credit quality. When assigning risk ratings, the Company evaluates two risk rating approaches, a facility rating and a borrower rating as follows: Facility Rating: The facility rating is determined by the analysis of positive and negative factors that may indicate that the quality of a particular loan or credit arrangement requires that it be rated differently from the risk rating assigned to the borrower. The Company assesses the risk impact of these factors: Collateral - The rating may be affected by the type and quality of the collateral, the degree of coverage, the economic life of the collateral, liquidation value and the Company's ability to dispose of the collateral. Guarantees - The value of third party support arrangements varies widely. Unconditional guaranties from persons with demonstrable ability to perform are more substantial than that of closely related persons to the borrower who offer only modest support. Unusual Terms - Credit may be extended on terms that subject the Company to a higher level of risk than indicated in the rating of the borrower. Borrower Rating: The borrower rating is a measure of loss possibility based on the historical, current and anticipated financial characteristics of the borrower in the current risk environment. To determine the rating, the Company considers at least the following factors: - Quality of management - Liquidity - Leverage/capitalization - Profit margins/earnings trend - Adequacy of financial records - Alternative funding sources - Geographic risk - Industry risk - Cash flow risk - Accounting practices - Asset protect ion - Extraordinary risks The Company assigns risk ratings to loans other than consumer loans and other homogeneous loan pools based on the following scale. The risk ratings are used when determining borrower ratings as well as facility ratings. When the borrower rating and the facility ratings differ, the lowest rating applied is:
The Company did not carry any loans graded as loss at June 30, 2013 or December 31, 2012. The following tables summarize the credit risk ratings for commercial, construction, and other non-consumer related loans for June 30, 2013 and December 31, 2012:
The Company follows consistent underwriting standards outlined in its loan policy for consumer and other homogeneous loans but, does not specifically assign a risk rating when these loans are originated. Consumer loans are monitored for credit risk and are considered “pass” loans until some issue or event requires that the credit be downgraded to special mention or worse. The following tables summarize the credit risk ratings for consumer related loans and other homogeneous loans for June 30, 2013 and December 31, 2012:
Allowance for Loan Losses The Company analyzes risk characteristics inherent in each loan portfolio segment as part of the quarterly review of the adequacy of the allowance for loan losses. The following summarizes some of the key risk characteristics for the eleven segments of the loan portfolio (Consumer loans include three segments): Commercial and business loans – Commercial loans are subject to the effects of economic cycles and tend to exhibit increased risk as economic conditions deteriorate, or if the economic downturn is prolonged. The Company considers this segment to be one of higher risk given the size of individual loans and the balances in the overall portfolio. Government program loans – This is a relatively a small part of the Company’s loan portfolio, but has historically had a high percentage of loans that have migrated from pass to substandard given there vulnerability to economic cycles. Commercial real estate loans – This segment is considered to have more risk in part because of the vulnerability of commercial businesses to economic cycles as well as the exposure to fluctuations in real estate prices because most of these loans are secured by real estate. Losses in this segment have however been historically low because most of the loans are real estate secured. Residential mortgages – This segment is considered to have low risk factors both from the Company and peer statistics. These loans are secured by first deeds of trust. The losses experienced over the past twelve quarters are isolated to approximately seven loans and are generally the result of short sales. Home improvement and home equity loans – Because of their junior lien position, these loans have an inherently higher risk level. Because residential real estate has been severely distressed in the recent past, the anticipated risk for this loan segment has increased. Real estate construction and development loans –In a normal economy, this segment of loans is considered to have a higher risk profile due to construction and market value issues in conjunction with normal credit risks. In the current distressed residential real estate markets the risk has increased. Agricultural loans – This segment is considered to have risks associated with weather, insects, and marketing issues. In addition, concentrations in certain crops or certain agricultural areas can increase risk. Installment loans (includes consumer loans, overdrafts, and overdraft protection lines) – This segment is higher risk because many of the loans are unsecured. Commercial lease financing – This segment of the portfolio is small, but is considered to be vulnerable to economic cycles given the nature of the leasing relationship where businesses are relatively small or have minimal cash flow. This lending program was terminated in 2005. The following summarizes the activity in the allowance for credit losses by loan category for the six months ended June 30, 2013 and 2012.
The following summarizes the activity in the allowance for credit losses by loan category for the quarters ended June 30, 2013 and 2012.
The following summarizes information with respect to the loan balances at June 30, 2013 and December 31, 2012.
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Deposits (Tables)
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Deposits Summary | Deposits include the following:
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Disclosure | Fair Value Measurements and Disclosure The following summary disclosures are made in accordance with the guidance provided by ASC Topic 825 “Fair Value Measurements and Disclosures” (formerly Statement of Financial Accounting Standards No. 107, “Disclosures about Fair Value of Financial Instruments,”) which requires the disclosure of fair value information about both on- and off-balance sheet financial instruments where it is practicable to estimate that value. Generally accepted accounting guidance clarifies the definition of fair value, describes methods used to appropriately measure fair value in accordance with generally accepted accounting principles and expands fair value disclosure requirements. This guidance applies whenever other accounting pronouncements require or permit fair value measurements. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels (Level 1, Level 2, and Level 3). Level 1 inputs are unadjusted quoted prices in active markets (as defined) for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, and reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized at the periods indicated:
The Company performs fair value measurements on certain assets and liabilities as the result of the application of current accounting guidelines. Some fair value measurements, such as available-for-sale securities (AFS) and junior subordinated debt are performed on a recurring basis, while others, such as impairment of loans, other real estate owned, goodwill and other intangibles, are performed on a nonrecurring basis. The Company’s Level 1 financial assets consist of money market funds and highly liquid mutual funds for which fair values are based on quoted market prices. The Company’s Level 2 financial assets include highly liquid debt instruments of U.S. government agencies, collateralized mortgage obligations, and debt obligations of states and political subdivisions, whose fair values are obtained from readily-available pricing sources for the identical or similar underlying security that may, or may not, be actively traded. The Company’s Level 3 financial assets include certain investments securities, certain impaired loans, other real estate owned, goodwill, and intangible assets where the assumptions may be made by us or third parties about assumptions that market participants would use in pricing the asset or liability. From time to time, the Company recognizes transfers between Level 1, 2, and 3 when a change in circumstances warrants a transfer. There were no significant transfers in or out of Level 1 and Level 2 fair value measurements during the three months ended June 30, 2013. The following methods and assumptions were used in estimating the fair values of financial instruments: Cash and Cash Equivalents - The carrying amounts reported in the balance sheets for cash and cash equivalents approximate their estimated fair values. Interest-bearing Deposits – Interest bearing deposits in other banks consist of fixed-rate certificates of deposits. Accordingly, fair value has been estimated based upon interest rates currently being offered on deposits with similar characteristics and maturities. Investments – Available for sale securities are valued based upon open-market price quotes obtained from reputable third-party brokers that actively make a market in those securities. Market pricing is based upon specific CUSIP identification for each individual security. To the extent there are observable prices in the market, the mid-point of the bid/ask price is used to determine fair value of individual securities. If that data is not available for the last 30 days, a Level 2-type matrix pricing approach based on comparable securities in the market is utilized. Level-2 pricing may include using a forward spread from the last observable trade or may use a proxy bond like a TBA mortgage to come up with a price for the security being valued. Changes in fair market value are recorded through other comprehensive loss as the securities are available for sale. Loans - Fair values of variable rate loans, which reprice frequently and with no significant change in credit risk, are based on carrying values adjusted for credit risk. Fair values for all other loans, except impaired loans, are estimated using discounted cash flows over their remaining maturities, using interest rates at which similar loans would currently be offered to borrowers with similar credit ratings and for the same remaining maturities. Impaired Loans - Fair value measurements for impaired loans are performed pursuant to authoritative accounting guidance and are based upon either collateral values supported by appraisals, observed market prices, or discounted cash flows. Changes are not recorded directly as an adjustment to current earnings or comprehensive income, but rather as an adjustment component in determining the overall adequacy of the loan loss reserve. Such adjustments to the estimated fair value of impaired loans may result in increases or decreases to the provision for credit losses recorded in current earnings. Other Real Estate Owned - Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (OREO) are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized. Goodwill and Core Deposit Intangibles - Goodwill is not amortized but is evaluated periodically for impairment. Fair value of goodwill is determined by comparing the fair value of the operating unit with its carrying value. Fair value is determined on a discounted cash flow methodology using estimated market discount rates and projections of future cash flows for the related operating unit. In addition to projected cash flows, other market metrics are utilized including industry multiples of earnings and price-to-book ratios to estimate what a market participant would pay for the operating unit in the current business environment. Determining the fair value involves a significant amount of judgment, including estimates of changes in revenue growth, changes in discount rates, competitive forces within the industry, and other specific industry and market valuation conditions. If it is determined that goodwill impairment exists, impairment amounts are recorded as an impairment loss in other non-interest expense, and the carrying value of goodwill is reduced by the amount of the impairment. Core deposit intangibles are amortized over the estimated useful lives of the related deposits and are evaluated for impairment periodically. Core deposit intangibles are reviewed for impairment utilizing a discounted cash flow methodology based upon the anticipated deposit runoff over the estimated lives of the deposits, generally six to eight years. If it is determined that impairment exists on the core deposit intangible, impairment amounts are recorded as an impairment loss in other non-interest expense, and the carrying value of core deposit intangible is reduced by the amount of the impairment. Bank-owned Life Insurance – Fair values of life insurance policies owned by the Company approximate the insurance contract’s cash surrender value. Deposits – In accordance with authoritative accounting guidance, fair values for transaction and savings accounts are equal to the respective amounts payable on demand at June 30, 2013 and December 31, 2012 (i.e., carrying amounts). The Company believes that the fair value of these deposits is clearly greater than that prescribed under authoritative accounting guidance. Fair values of fixed-maturity certificates of deposit were estimated using the rates currently offered for deposits with similar remaining maturities. Junior Subordinated Debt – The fair value of the junior subordinated debt was determined based upon a discounted cash flows model utilizing observable market rates and credit characteristics for similar debt instruments. In its analysis, the Company used characteristics that market participants generally use, and considered factors specific to (a) the liability, (b) the principal (or most advantageous) market for the liability, and (c) market participants with whom the reporting entity would transact in that market. For the six months ended June 30, 2013, cash flows were discounted at a rate which incorporates a current market rate for similar-term debt instruments, adjusted for credit and liquidity risks associated with similar junior subordinated debt and circumstances unique to the Company. The Company believes that the subjective nature of theses inputs, due primarily to the current economic environment, require the junior subordinated debt to be classified as a Level 3 fair value. Accrued Interest Receivable and Payable - The carrying value of these instruments is a reasonable estimate of fair value. Off-balance sheet instruments - Off-balance sheet instruments consist of commitments to extend credit, standby letters of credit and derivative contracts. Fair values of commitments to extend credit are estimated using the interest rate currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present counterparties’ credit standing. There was no material difference between the contractual amount and the estimated value of commitments to extend credit at June 30, 2013 and December 31, 2012. Fair values of standby letters of credit are based on fees currently charged for similar agreements. The fair value of commitments generally approximates the fees received from the customer for issuing such commitments. These fees are not material to the Company’s consolidated balance sheet and results of operations. The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at June 30, 2013:
Management believes that the credit risk adjusted spread utilized in the fair value measurement of the junior subordinated debentures carried at fair value is indicative of the nonperformance risk premium a willing market participant would require under current market conditions, that is, the inactive market. Management attributes the change in fair value of the junior subordinated debentures during the period to market changes in the nonperformance expectations and pricing of this type of debt, and not as a result of changes to our entity-specific credit risk. The narrowing of the credit risk adjusted spread above the Company’s contractual spreads has primarily contributed to the negative fair value adjustments. Generally, an increase in the credit risk adjusted spread and/or a decrease in the three month LIBOR swap curve will result in positive fair value adjustments (and decrease the fair value measurement). Conversely, a decrease in the credit risk adjusted spread and/or an increase in the three month LIBOR swap curve will result in negative fair value adjustments (and increase the fair value measurement). The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring and non-recurring basis as of June 30, 2013 (in 000’s):
(1)Nonrecurring (2)Recurring The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring and non-recurring basis as of December 31, 2012 (in 000’s):
(1)Nonrecurring (2)Recurring The Company recorded an impairment loss of $118,000 on other real estate owned during the six months ended June 30, 2013. There were no fair value impairment adjustments for the nonrecurring fair value measurements performed during the six months ended June 30, 2012. The following tables provide a reconciliation of assets and liabilities at fair value using significant unobservable inputs (Level 3) on a recurring basis during the six months ended June 30, 2013 and 2012 (in 000’s):
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Deposits (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Deposits [Abstract] | ||
Noninterest-bearing deposits | $ 219,693 | $ 217,014 |
Interest-bearing deposits [Abstract] | ||
NOW and money market accounts | 191,260 | 203,771 |
Savings accounts | 42,163 | 43,117 |
Time deposits [Abstract] | ||
Under $100,000 | 30,787 | 32,532 |
$100,000 and over | 63,198 | 66,853 |
Total interest-bearing deposits | 327,408 | 346,273 |
Total deposits | 547,101 | 563,287 |
Total brokered deposits included in time deposits above | $ 16,232 | $ 17,984 |
Fair Value Measurements and Disclosure (Tables)
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized at the periods indicated:
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Description of the Valuation Technique, Unobservable Input, and Qualitative Information about the Unobservable Inputs for the Company's Assets and Liabilities Classified as Level 3 and Measured at Fair Value on a Recurring Basis | The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at June 30, 2013:
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Assets and Liabilities Measured at Fair Value on Recurring and Non-recurring Basis | The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring and non-recurring basis as of June 30, 2013 (in 000’s):
(1)Nonrecurring (2)Recurring The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring and non-recurring basis as of December 31, 2012 (in 000’s):
(1)Nonrecurring (2)Recurring |
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Significant Unobservable Inputs (Level 3) on a Recurring Basis | The following tables provide a reconciliation of assets and liabilities at fair value using significant unobservable inputs (Level 3) on a recurring basis during the six months ended June 30, 2013 and 2012 (in 000’s):
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Net Income per Common Share (Tables)
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Jun. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Income (Loss) Per Share | The following table provides a reconciliation of the numerator and the denominator of the basic EPS computation with the numerator and the denominator of the diluted EPS computation:
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Fair Value Measurements and Disclosure (Details 2) (Junior Subordinated Debt [Member])
|
6 Months Ended |
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Jun. 30, 2013
|
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Junior Subordinated Debt [Member]
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Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Valuation Technique | Discounted cash flow |
Weighted Average (in hundredths) | 7.76% |
Supplemental Cash Flow Disclosures (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Cash paid during the period for [Abstract] | ||
Interest | $ 752 | $ 1,067 |
Income Taxes | 0 | 0 |
Noncash investing activities [Abstract] | ||
Loans transferred to foreclosed assets | 437 | 0 |
OREO financed | $ 2,328 | $ 0 |
Fair Value Measurements and Disclosure (Details-Textual) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
|
Jun. 30, 2013
Core Deposits Intangible Assets [Member]
Minimum [Member]
|
Jun. 30, 2013
Core Deposits Intangible Assets [Member]
Maximum [Member]
|
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Finite-Lived Intangible Assets [Line Items] | ||||
Estimated lives of intangibles | 6 years | 8 years | ||
Impairment loss on OREO | $ 118 | $ 0 |
Investment Securities Available for Sale and Other Investments Investment Securities Available for Sale and Other Investments (Details 1) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | |||||
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Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2012
Private Label Mortgage-Backed Securities [Member]
|
Jun. 30, 2013
Private Label Mortgage-Backed Securities [Member]
|
Jun. 30, 2012
RALI 2006 QS1G A10 Rated D [Member]
|
Jun. 30, 2013
RALI 2006 QS1G A10 Rated D [Member]
|
Jun. 30, 2012
RALI 2006 QS8 AI Rated D [Member]
|
Jun. 30, 2013
RALI 2006 QS8 AI Rated D [Member]
|
Jun. 30, 2012
CWALT 2007 8CB A9 Rated CCC [Member]
|
Jun. 30, 2013
CWALT 2007 8CB A9 Rated CCC [Member]
|
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Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||||||||
Amortized cost - before OTTI | $ 20,794 | $ 11,872 | $ 3,719 | $ 1,138 | $ 7,015 | |||||
Credit loss | (2,277) | (713) | (239) | (1,325) | ||||||
Other impairment (OCI) | (1,283) | (1,283) | (403) | (122) | (758) | |||||
Carrying amount – June 30, 2012 | 25,527 | 31,844 | 8,312 | 8,312 | 2,603 | 777 | 4,932 | |||
Total impairment - June 30, 2012 | $ (3,560) | $ (1,116) | $ (361) | $ (2,083) |
Taxes on Income (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 3 Months Ended | 6 Months Ended | |
---|---|---|---|---|
Jun. 30, 2013
Y
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Dec. 31, 2012
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Jun. 30, 2013
Internal Revenue Service (IRS) [Member]
|
Jun. 30, 2013
Internal Revenue Service (IRS) [Member]
|
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Income Tax Disclosure [Abstract] | ||||
Likelihood of unfavorable settlement | more than 50 percent | |||
Valuation allowance | $ 2,686 | $ 2,686 | ||
Number of calendar years pretax losses taken for determining valuation allowance | 3 | |||
Income Tax Examination [Line Items] | ||||
Income tax examination, year under examination | 2010 | |||
Income tax examination, description | During 2010, the Company amended its federal tax returns for the year 2004 through 2009 to utilize the five-year NOL carry-back provisions allowed by the IRS for 2009. |
Supplemental Cash Flow Disclosures (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Disclosures |
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Organization and Summary of Significant Accounting and Reporting Policies
|
6 Months Ended |
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Jun. 30, 2013
|
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Organization and Summary of Significant Accounting and Reporting Policies [Abstract] | |
Organization and Summary of Significant Accounting and Reporting Policies | Organization and Summary of Significant Accounting and Reporting Policies The consolidated financial statements include the accounts of United Security Bancshares, and its wholly owned subsidiary United Security Bank (the “Bank”) and two bank subsidiaries, USB Investment Trust (the “REIT”) and United Security Emerging Capital Fund, (collectively the “Company” or “USB”). Intercompany accounts and transactions have been eliminated in consolidation. These unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information on a basis consistent with the accounting policies reflected in the audited financial statements of the Company included in its 2012 Annual Report on Form 10-K. These interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of a normal recurring, nature) considered necessary for a fair presentation have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for any other interim period or for the year as a whole. Certain reclassifications have been made to the 2012 financial statements to conform to the classifications used in 2013. Recently Issued Accounting Standards: In February 2013, The Financial Accounting Standards Board (FASB) today issued Accounting Standards Update No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting reclassifications out of accumulated other comprehensive income. ASU 2013-02 requires an organization to present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income–but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. The amendments are effective for reporting periods beginning after December 15, 2012. The amounts reclassified out of net income were not significant and this ASU did not have a significant impact on the Company’s financial statements. In January 2013, the FASB issued ASU No. 2013-01 Balance Sheet (Topic 210) Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies that ordinary trade receivables and receivables are not in the scope of ASU 2011-11. It further clarifies that the scope of ASU No. 2011-11 applies to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in FASB Accounting Standards Codification® or subject to a master netting arrangement or similar agreement. Both ASU 2011-11 and ASU 2013-1 are effective for annual periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company adopted these ASU’s during the first quarter of 2013 and they did not have a material impact on its financial statements. In December 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-11 Balance Sheet (Topic 210) Disclosures about Offsetting Assets and Liabilities. The ASU enhances disclosures in order to improve the comparability of offsetting (netting) assets and liabilities reported in accordance with U.S. generally accepted accounting principles ("GAAP") and International Financial Reporting Standards ("I FRS") by requiring entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the statements of condition and instruments and transactions subject to an agreement similar to a master netting arrangement. This ASU did not have a significant impact on the Company’s financial statements. |
Deposits
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Jun. 30, 2013
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Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | Deposits Deposits include the following:
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Investment Securities Available for Sale and Other Investments
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Jun. 30, 2013
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities Available for Sale and Other Investments | Investment Securities Available for Sale and Other Investments Following is a comparison of the amortized cost and fair value of securities available-for-sale, as of June 30, 2013 and December 31, 2012:
The amortized cost and fair value of securities available for sale at June 30, 2013, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay obligations with or without call or prepayment penalties. Contractual maturities on collateralized mortgage obligations cannot be anticipated due to allowed paydowns. Mutual funds are included in the due in the one year or less category below.
There were no realized gains or losses on sales of available-for-sale securities for the periods ended June 30, 2013 and 2012, respectively. There were no other-than-temporary impairment losses for the three and six months ended June 30, 2013. There were other-than-temporary impairment losses on certain of the Company’s private label mortgage-backed securities of $149,000 and $172,000 for the three and six months ended June 30, 2012. At June 30, 2013 available-for-sale securities with an amortized cost of approximately $20,794,000 (fair value of $21,718,000) were pledged as collateral for FHLB borrowings and public funds balances. The Company had no held-to-maturity or trading securities at June 30, 2013 or December 31, 2012. Management periodically evaluates each available-for-sale investment security in an unrealized loss position to determine if the impairment is temporary or other-than-temporary. The following summarizes temporarily impaired investment securities:
The Company evaluates investment securities for other-than-temporary impairment (“OTTI”) at least quarterly, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held-to-maturity are generally evaluated for OTTI under ASC Topic 320, “Investments – Debt and Equity Instruments.” Certain purchased beneficial interests, including non-agency mortgage-backed securities, asset-backed securities, and collateralized debt obligations, are evaluated under ASC Topic 325-40 “Beneficial Interest in Securitized Financial Assets.” In the first segment, the Company considers many factors in determining OTTI, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to the Company at the time of the evaluation. The second segment of the portfolio uses the OTTI guidance that is specific to purchased beneficial interests including private label mortgage-backed securities. Under this model, the Company compares the present value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows. An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows. Other-than-temporary-impairment occurs when the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary-impairment shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the other-than-temporary-impairment shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total other-than-temporary-impairment related to the credit loss is recognized in earnings, and is determined based on the difference between the present value of cash flows expected to be collected and the current amortized cost of the security. The amount of the total other-than-temporary-impairment related to other factors shall be recognized in other comprehensive (loss) income, net of applicable taxes. The previous amortized cost basis less the other-than-temporary-impairment recognized in earnings shall become the new amortized cost basis of the investment. At June 30, 2013, the decline in market value of the impaired securities is attributable to changes in interest rates, and not credit quality. Because the Company does not have the intent to sell these impaired securities and it is not more likely than not that it will be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2013. At June 30, 2013 and December 31, 2012, the Company had no securities which have been impaired more than twelve months. At June 30, 2013, the Company had two U.S. Government agency securities and a mutual fund which have been impaired for less than twelve months. The two U.S. Government agency securities had an aggregate fair value of $7,128,000 and unrealized losses of $8,000. The mutual fund had a fair value of $3,805,000 and an unrealized loss of $195,000. At June 30, 2012, the Company had three private label mortgage-backed securities which have been impaired more than twelve months. The three private label mortgage-backed securities had an aggregate fair value of $8,312,000 and unrealized losses of approximately $1,283,000 at June 30, 2012. All three private label mortgage-backed securities were rated less than high credit quality at June 30, 2012. The Company evaluated these three private label mortgage-backed securities for OTTI by comparing the present value of expected cash flows to previous estimates to determine whether there had been adverse changes in cash flows during the period. The OTTI evaluation was conducted utilizing the services of a third party specialist and consultant in Mortgage Backed Securities (MBS) and Collateralized Mortgage Obligations (CMO) products. The cash flow assumptions used in the evaluation at June 30, 2012 utilized a discounted cash flow valuation technique using a “Liquidation Scenario” whereby loans are evaluated by delinquency and are assigned probability of default and loss factors deemed appropriate in the current economic environment. The liquidation scenario assumes that all loans 60 or more days past due are liquidated and losses are realized over a period of between six and twenty-four months based upon current 3-month trailing loss severities obtained from reputable financial data sources. In determining fair value under the discounted cash flow analysis, all loans within the mortgage pools, including those less than 60 or more past due, are evaluated for other-than-temporary impairment utilizing the following components: - Collateral Cash Flows: Loan level cash flows are evaluated based upon estimated prepayment speeds, default rates, and estimated loss severities of liquidated assets. - Prepayment Assumptions: Prepayment speeds are based upon the borrower’s incentive to pay as well as their ability to pay based upon their credit. In addition, CPR and CRR rates are evaluated. - Default Rates: The default assumptions are vectored and are expressed as conditional default rates (CDR), which are based upon the current status of the loan. The model assumes that the 60 day plus population will move to repossession inventory subject to loss migration assumptions and liquidate over the next 24 months. Defaults vector from month 25 to month 36 to the month 37 CDR value. The loans less than 60 days delinquent influence the month 37 CDR value. The default assumptions continue from month 37 but vector down over an extended period of at least 15 years from the valuation date. Default rate assumptions are benchmarked to the recent results experienced by major servicers of of non-Agency MBS for securities with similar attributes and forecasts from the industry experts and industry research. - Loss Severity: Estimates of loss severity for each loan are based upon initial LTV ratios, loan’s lien position, mortgage insurance coverage, and any change in the property’s price since loan was originated. - Bond Waterfall: With other components of the individual loans within the collateralized mortgage pools evaluated, the cash flows are allocated to securities based upon contractual waterfall rules provided in the securities prospectus. - Internal Rate of Return: Future estimated cash flow streams are discounted at pre-tax yield rates calculated using both credit and non-credit components to determine what the required IRR’s would be for similar securities in a market that is generally illiquid. As a result of the impairment evaluation, the Company determined that there had been adverse changes in cash flows in all three of the private label mortgage-backed securities, and concluded that these three private label mortgage-backed securities were other-than-temporarily impaired. At June 30, 2012, the three private label mortgage-backed securities had cumulative other-than-temporary-impairment losses of $3,560,000, $1,283,000 of which was recorded in other comprehensive loss. During the six months ended June 30, 2012, the company recorded OTTI impairment expense of $172,000 on the three private label mortgage-backed securities. These three private label mortgage-backed securities remained classified as available for sale at June 30, 2012 and were subsequently sold during the fourth quarter of 2012. The following table details the three private label mortgage-backed securities with other-than-temporary-impairment, their credit rating at June 30, 2012, the related credit losses recognized in earnings during the quarter, and impairment losses in other comprehensive loss:
The following table summarizes amounts related to credit losses recognized in earnings for the three and six months ended ended June 30, 2013 and 2012.
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Common Stock Dividend (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
0 Months Ended | 3 Months Ended | 6 Months Ended | 0 Months Ended | |||
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Jun. 25, 2013
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Jun. 30, 2013
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Mar. 31, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Jul. 12, 2013
Subsequent Event [Member]
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Subsequent Event [Line Items] | |||||||
Additional number of shares issued to shareholders (in shares) | 142,157 | 143,613 | |||||
Common stock dividend issued | 1.00% | ||||||
Amount transferred from retained earnings to common stocks based on closing price on declaration date | $ 603 | $ 619 | |||||
Closing price of common stock on declaration date (in dollars per share) | $ 4.20 | ||||||
Percentage of stock dividend declared on common stocks outstanding (in hundredths) | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | ||
Common stock dividend declared | 1.00% |
Goodwill and Intangible Assets (Tables)
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Jun. 30, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | At June 30, 2013 and December 31, 2012 the Company had goodwill, core deposit intangibles, and other identified intangible assets which were recorded in connection with various business combinations and purchases. The following table summarizes the carrying value of those assets at June 30, 2013 and December 31, 2012.
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