|
x
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
o
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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COMMUNITY PARTNERS BANCORP
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(Exact Name of Registrant as Specified in Its Charter)
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New Jersey
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20-3700861
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer Identification Number)
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766 Shrewsbury Avenue, Tinton Falls, New Jersey 07724
|
||
(Address of Principal Executive Offices, including Zip Code)
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(732) 389-8722
|
||
(Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class
|
Name of each exchange on which registered
|
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Common Stock, no par value
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The NASDAQ Stock Market LLC
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Preferred Stock Purchase Rights
|
||
(Title of Class)
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer (Do not check if a smaller reporting company)
|
o
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Smaller reporting company
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x
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PART I
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|||
1
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|||
18
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|||
24
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|||
25
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|||
26
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|||
26
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|||
PART II
|
|||
26
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|||
26
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|||
27
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|||
51
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|||
51
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|||
51
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|||
51
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|||
52
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|||
PART III
|
|||
52
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|||
52
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|||
53
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|||
53
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|||
53
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|||
PART IV
|
|||
54
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|||
55
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Dividend Rate Following Investment Date
|
||||||
Increase in Qualified Small Business Lending
from the Baseline
|
First 9
Quarters*
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Quarter 10
to Year 4.5
|
After Year
4.5
|
|||
0% or less
|
5%
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7%
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9%
|
|||
More than 0%, but less than 2.5%
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5%
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5%
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9%
|
|||
2.5% or more, but less than 5%
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4%
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4%
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9%
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|||
5% or more, but less than 7.5%
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3%
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3%
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9%
|
|||
7.5% or more, but less than 10%
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2%
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2%
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9%
|
|||
10% or more
|
1%
|
1%
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9%
|
|||
* For the first nine quarters, the dividend rate will be adjusted quarterly.
|
·
|
a prohibition on personal loans made or arranged by the issuer to its directors and executive officers (except for loans made by a bank subject to Regulation O);
|
|
·
|
independence requirements for audit committee members;
|
|
·
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disclosure of whether at least one member of the audit committee is a “financial expert” (as such term is defined by the SEC) and if not, why not;
|
|
·
|
independence requirements for outside auditors;
|
|
·
|
certification of financial statements and reports on Forms 10-K and 10-Q by the chief executive officer and the chief financial officer;
|
|
·
|
the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve month period following initial publication of any financial statements that later require restatement due to corporate misconduct;
|
|
·
|
disclosure of a code of ethics for financial officers and filing a Form 8-K for a change or waiver of such code; and
|
|
·
|
various increased criminal penalties for violations of securities laws.
|
|
·
|
The Dodd-Frank Act repealed the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts. Depending on competitive responses, this significant change to existing law could have an adverse impact on the Company’s interest expense.
|
|
·
|
The Dodd-Frank Act also broadens the base for FDIC insurance assessments. Assessments will now be based on the average consolidated total assets less tangible equity capital of a financial institution.
|
|
·
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The Dodd-Frank Act also permanently increases the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2008, and non-interest bearing transaction accounts have unlimited deposit insurance through December 31, 2012.
|
|
·
|
Bank and thrift holding companies with assets of less than $15 billion as of December 31, 2009, such as the Company, will be permitted to include trust preferred securities that were issued before May 19, 2010, as Tier 1 capital; however, trust preferred securities issued by a bank or thrift holding company (other than those with assets of less than $500 million) after May 19, 2010, will no longer count as Tier 1 capital. Trust preferred securities still will be entitled to be treated as Tier 2 capital.
|
|
·
|
The Dodd-Frank Act centralized responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau (“CFPB”), and giving it responsibility for implementing, examining and enforcing compliance with federal consumer protection laws.
|
|
·
|
The “Durbin Amendment” provisions of the Dodd-Frank Act provided that debit card interchange fees must be reasonable and proportional to the cost incurred by the issuer with respect to the transaction. In June 2011, the Federal Reserve adopted regulations setting the maximum permissible interchange fee as the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction, with an additional adjustment of up to one cent per transaction, with an additional adjustment of up to one cent per transaction if the issuer implements certain fraud-prevention standards.
|
|
·
|
The Dodd-Frank Act created a new systemic risk oversight body, the Financial Stability Oversight Council (“FSOC”), to oversee and coordinate the efforts of the primary U.S. financial regulatory agencies in establishing regulations to address financial stability concerns.
|
|
·
|
The Dodd-Frank Act directs the FSOC to make recommendations to the Federal Reserve as to enhanced supervision and prudential standards applicable to large, interconnected financial institutions, including bank holding companies with total consolidated assets of $50 billion or more, and authorizes the Federal Reserve to establish such standards either on its own or upon the recommendations of the FSOC.
|
|
·
|
The Dodd-Frank Act includes provisions permitting national and insured state banks to engage in de novo interstate branching if, under the laws of the state where the new branch is to be established, as state bank chartered in that state would be permitted to establish a branch.
|
|
·
|
The Dodd-Frank Act requires various U.S. financial regulatory agencies to implement comprehensive rules governing the supervision, structure, trading and regulation of swap and over the-counter derivative markets and participants. The Dodd-Frank Act requires a large number of rules in this area, many of which are not yet final.
|
|
·
|
The Dodd-Frank Act requires the federal financial regulatory agencies to adopt rules that prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring certain unregistered investment companies (defined as hedge funds and private equity funds), with implementation starting as early as July 2012. The statutory provision is commonly referred to as the “Volcker Rule”. In October 2011, federal regulators proposed rules to implement the Volcker Rule. We do not currently anticipate that the Volcker Rule will have a material effect on our operations. However, until a final rule is adopted, the precise financial impact of the rule cannot be determined.
|
|
·
|
In October 2011, the Federal Reserve issued a final rule implementing resolution planning requirements in the Dodd-Frank Act. The final rule requires bank holding companies with assets of $50 billion or more and nonbank financial firms designated by FSOC for supervision by the Federal Reserve to annually submit resolution plans to the FDIC and Federal Reserve. Each plan shall describe the company’s strategy for rapid and orderly resolution in bankruptcy during times of financial distress. Under the final rule, companies will submit their initial resolution plans on a staggered basis.
|
|
·
|
the viability of the contractor;
|
|
·
|
the value of the project being subject to successful completion;
|
|
·
|
the contractor’s ability to complete the project, to meet deadlines and time schedules and to stay within cost estimates; and
|
|
·
|
concentrations of such loans with a single contractor and its affiliates.
|
·
|
changes to regulatory capital requirements;
|
·
|
exclusion of hybrid securities, including trust preferred securities, issued on or after May 19, 2010 from tier 1 capital;
|
·
|
creation of new government regulatory agencies (such as the Financial Stability Oversight Council, which will oversee systemic risk, and the Consumer Financial Protection Bureau, which will develop and enforce rules for bank and non-bank providers of consumer financial products);
|
·
|
potential limitations on federal preemption;
|
·
|
changes to deposit insurance assessments;
|
·
|
regulation of debit interchange fees we earn;
|
·
|
changes in retail banking regulations, including potential limitations on certain fees we may charge; and
|
·
|
changes in regulation of consumer mortgage loan origination and risk retention.
|
Office Location
|
Address
|
Description
|
Opened
|
||||
Corporate Headquarters
|
766 Shrewsbury Avenue
Tinton Falls, NJ
|
17,626 sq. ft. building (leased)
|
10/12
|
||||
The Bank’s Main Office:
|
1250 Highway 35 South
Middletown, NJ
|
5,300 sq. ft. first-floor stand- alone building (leased)
|
02/00
|
||||
Allaire:
|
Monmouth Executive Airport
229 Airport Road, Bldg. 13
Farmingdale, NJ
|
3,800 sq. ft. building (leased)
|
02/04
|
||||
Atlantic Highlands:
|
84 First Avenue
Atlantic Highlands, NJ
|
700 sq. ft. store front (leased)
|
03/02
|
||||
Cliffwood:
|
Angel Street & Route 35
Aberdeen, NJ
|
2,500 sq. ft. building (leased)
|
11/04
|
(1) | |||
Cranford Office:
|
104 Walnut Avenue
Cranford, NJ
|
800 sq. ft. storefront (leased)
|
11/07
|
||||
Fanwood:
|
328 South Avenue
Fanwood, NJ
|
2,966 sq. ft. stand-alone building (leased)
|
03/08
|
||||
Manasquan:
|
240 Route 71
Manasquan, NJ
|
4,300 sq. ft. stand-alone building (leased)
|
06/08
|
||||
Navesink:
|
East Pointe Shopping Center
2345 Route 36
Atlantic Highlands, NJ
|
2,080 sq. ft. in strip shopping center (leased)
|
09/05
|
||||
Port Monmouth:
|
357 Highway 36
Port Monmouth, NJ
|
2,180 sq. ft. stand-alone building (leased)
|
06/01
|
||||
Red Bank:
|
City Centre Plaza
100 Water Street
Red Bank, NJ
|
512 sq. ft. in strip shopping center (leased)
|
09/02
|
(1) | |||
Red Bank:
|
140 Broad Street
Red Bank, NJ
|
2,350 sq. ft. store front (leased)
|
11/12
|
||||
Tinton Falls:
|
4050 Asbury Avenue
Tinton Falls, NJ
|
3,400 sq. ft. stand-alone building (leased)
|
10/06
|
||||
Tinton Falls:
|
656 Shrewsbury Avenue
Tinton Falls, NJ
|
3,650 sq. ft. stand-alone building (leased)
|
08/00
|
||||
West Long Branch:
|
359 Monmouth Road
West Long Branch, NJ
|
3,100 sq. ft. in strip shopping center (leased)
|
01/04
|
||||
Westfield:
|
520 South Avenue
Westfield, NJ
|
3,000 sq. ft. stand-alone building (leased)
|
10/98
|
||||
Westfield:
|
44 Elm Street
Westfield, NJ
|
3,000 sq. ft. downtown building (owned)
|
04/01
|
|
(1)
|
The Company has filed applications with its banking regulators to close these locations. For more information see “Item 9B. Other Information.”
|
2012
|
2011
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First Quarter
|
$
|
6.10
|
$
|
4.55
|
$
|
5.19
|
$
|
4.34
|
||||||||
Second Quarter
|
6.20
|
5.50
|
5.06
|
4.32
|
||||||||||||
Third Quarter
|
5.98
|
5.45
|
5.10
|
4.38
|
||||||||||||
Fourth Quarter
|
6.05
|
5.27
|
4.75
|
4.47
|
2012
|
2011
|
2010
|
||||||||||
Return on average assets
|
0.69
|
%
|
0.65
|
%
|
0.56
|
%
|
||||||
Return on average tangible assets (1)
|
0.71
|
%
|
0.67
|
%
|
0.57
|
%
|
||||||
Return on average equity
|
5.36
|
%
|
5.16
|
%
|
4.60
|
%
|
||||||
Return on average tangible equity (1)
|
6.75
|
%
|
6.64
|
%
|
6.05
|
%
|
||||||
Net interest margin
|
4.08
|
%
|
4.21
|
%
|
4.15
|
%
|
||||||
Average equity to average assets
|
12.84
|
%
|
12.54
|
%
|
12.08
|
%
|
||||||
Average tangible equity to average tangible assets (1)
|
10.47
|
%
|
10.02
|
%
|
9.45
|
%
|
|
(1)
|
The following table provided the reconciliation of Non-GAAP Financial Measures for the dates indicated:
|
2012
|
2011
|
2010
|
||||||||||
Net income available to common shareholders
|
$
|
4,367
|
$
|
3,494
|
$
|
3,039
|
||||||
Effect of accelerated portion of discount accretion
|
-
|
301
|
-
|
|||||||||
Net income available to common shareholders
|
||||||||||||
excluding accelerated discount accretion
|
$
|
4,367
|
$
|
3,795
|
$
|
3,039
|
||||||
Diluted earnings per common share
|
$
|
0.54
|
$
|
0.44
|
$
|
0.39
|
||||||
Effect of accelerated portion of discount accretion
|
-
|
.04
|
-
|
|||||||||
Diluted earnings per common share excluding
|
||||||||||||
excluding accelerated discount accretion
|
$
|
0.54
|
$
|
0.48
|
$
|
0.39
|
||||||
Book value per common share
|
$
|
10.02
|
$
|
9.46
|
$
|
9.12
|
||||||
Effect of intangible assets
|
(2.31
|
)
|
(2.33
|
)
|
(2.39
|
)
|
||||||
Tangible book value per common share
|
$
|
7.71
|
$
|
7.13
|
$
|
6.73
|
||||||
Return on average assets
|
0.69
|
%
|
0.65
|
%
|
0.56
|
%
|
||||||
Effect of intangible assets
|
0.02
|
%
|
0.02
|
%
|
0.01
|
%
|
||||||
Return on average tangible assets
|
0.71
|
%
|
0.67
|
%
|
0.57
|
%
|
||||||
Return on average equity
|
5.36
|
%
|
5.16
|
%
|
4.60
|
%
|
||||||
Effect of average intangible assets
|
1.39
|
%
|
1.48
|
%
|
1.45
|
%
|
||||||
Return on average tangible equity
|
6.75
|
%
|
6.64
|
%
|
6.05
|
%
|
||||||
Average equity to average assets
|
12.84
|
%
|
12.54
|
%
|
12.08
|
%
|
||||||
Effect of intangible assets
|
(2.37
|
%)
|
(2.52
|
%)
|
(2.63
|
%)
|
||||||
Average tangible equity to average tangible assets
|
10.47
|
%
|
10.02
|
%
|
9.45
|
%
|
Years ended December 31,
|
||||||||||||||||||||||||||||||||||||
2012
|
2011
|
2010
|
||||||||||||||||||||||||||||||||||
Average
balance
|
Interest
income/
expense
|
Average
rates
earned/
paid
|
Average
balance
|
Interest
income/
expense
|
Average
rates
earned/
paid
|
Average
balance
|
Interest
income/
expense
|
Average
rates
earned/
paid
|
||||||||||||||||||||||||||||
(in thousands, except for percentages)
|
||||||||||||||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||||||||||
Interest-Earning Assets:
|
||||||||||||||||||||||||||||||||||||
Interest bearing deposits in banks
|
$
|
31,748
|
$
|
81
|
0.26%
|
$
|
37,801
|
$
|
96
|
0.25%
|
$
|
30,808
|
$
|
78
|
0.25%
|
|||||||||||||||||||||
Federal funds sold
|
-
|
-
|
-
|
3,145
|
7
|
0.22%
|
12,704
|
27
|
0.21%
|
|||||||||||||||||||||||||||
Investment securities
|
65,624
|
1,565
|
2.38%
|
52,932
|
1,534
|
2.90%
|
45,885
|
1,596
|
3.48%
|
|||||||||||||||||||||||||||
Loans, net of unearned fees (1) (2)
|
545,986
|
29,192
|
5.35%
|
519,364
|
29,409
|
5.66%
|
514,553
|
29,578
|
5.75%
|
|||||||||||||||||||||||||||
Total Interest-Earning Assets
|
643,358
|
30,838
|
4.79%
|
613,242
|
31,046
|
5.06%
|
603,950
|
31,279
|
5.18%
|
|||||||||||||||||||||||||||
Non-Interest-Earning Assets:
|
||||||||||||||||||||||||||||||||||||
Allowance for loan loss
|
(7,351
|
)
|
(6,682
|
)
|
(6,869
|
)
|
||||||||||||||||||||||||||||||
Other assets
|
63,303
|
59,723
|
54,173
|
|||||||||||||||||||||||||||||||||
Total Assets
|
$
|
699,310
|
$
|
666,283
|
$
|
651,254
|
||||||||||||||||||||||||||||||
LIABILITIES & SHAREHOLDERS’ EQUITY
|
||||||||||||||||||||||||||||||||||||
Interest-Bearing Liabilities:
|
||||||||||||||||||||||||||||||||||||
NOW deposits
|
$
|
69,063
|
296
|
0.43%
|
$
|
57,378
|
257
|
0.45%
|
$
|
48,638
|
297
|
0.61%
|
||||||||||||||||||||||||
Savings deposits
|
217,879
|
1,605
|
0.74%
|
199,641
|
1,720
|
0.86%
|
199,380
|
2,212
|
1.11%
|
|||||||||||||||||||||||||||
Money market deposits
|
83,140
|
320
|
0.38%
|
88,095
|
508
|
0.58%
|
99,659
|
882
|
0.89%
|
|||||||||||||||||||||||||||
Time deposits
|
106,012
|
1,856
|
1.75%
|
116,331
|
2,202
|
1.89%
|
117,946
|
2,288
|
1.94%
|
|||||||||||||||||||||||||||
Securities sold under agreements to repurchase
|
18,266
|
107
|
0.59%
|
16,593
|
118
|
0.71%
|
15,367
|
165
|
1.07%
|
|||||||||||||||||||||||||||
Long-term debt
|
13,500
|
434
|
3.21%
|
13,500
|
433
|
3.21%
|
9,719
|
350
|
3.60%
|
|||||||||||||||||||||||||||
Total Interest-Bearing Liabilities
|
507,860
|
4,618
|
0.91%
|
491,538
|
5,238
|
1.07%
|
490,709
|
6,194
|
1.26%
|
|||||||||||||||||||||||||||
Non-Interest-Bearing Liabilities:
|
||||||||||||||||||||||||||||||||||||
Demand deposits
|
96,967
|
86,687
|
78,052
|
|||||||||||||||||||||||||||||||||
Other liabilities
|
4,726
|
4,525
|
3,854
|
|||||||||||||||||||||||||||||||||
Total Non-Interest-Bearing Liabilities
|
101,693
|
91,212
|
81,906
|
|||||||||||||||||||||||||||||||||
Shareholders’ Equity
|
89,757
|
83,533
|
78,639
|
|||||||||||||||||||||||||||||||||
Total Liabilities and Shareholders’ Equity
|
$
|
699,310
|
$
|
666,283
|
$
|
651,254
|
||||||||||||||||||||||||||||||
NET INTEREST INCOME
|
$
|
26,220
|
$
|
25,808
|
$
|
25,085
|
||||||||||||||||||||||||||||||
NET INTEREST SPREAD (3)
|
3.88%
|
3.99%
|
3.92%
|
|||||||||||||||||||||||||||||||||
NET INTEREST MARGIN (4)
|
4.08%
|
4.21%
|
4.15%
|
(1)
|
Included in interest income on loans are loan fees.
|
(2)
|
Includes non-performing loans.
|
(3)
|
The interest rate spread is the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities.
|
(4)
|
The interest rate margin is calculated by dividing net interest income by average interest-earning assets.
|
Years ended December 31,
|
||||||||||||||||||||||||
2012 vs. 2011
|
2011 vs. 2010
|
|||||||||||||||||||||||
Increase (decrease) due to change in
|
||||||||||||||||||||||||
Average
volume
|
Average
rate
|
Net
|
Average
volume
|
Average
rate
|
Net
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Interest Earned On:
|
||||||||||||||||||||||||
Interest bearing deposits in banks
|
$
|
(15
|
)
|
$
|
-
|
$
|
(15
|
)
|
$
|
18
|
$
|
-
|
$
|
18
|
||||||||||
Federal funds sold
|
(7
|
)
|
-
|
(7
|
)
|
(20
|
)
|
-
|
(20
|
)
|
||||||||||||||
Investment securities
|
276
|
(245
|
)
|
31
|
184
|
(246
|
)
|
(62
|
)
|
|||||||||||||||
Loans, net of unearned fees
|
1,512
|
(1,729
|
)
|
(217
|
)
|
277
|
(446
|
)
|
(169
|
)
|
||||||||||||||
Total Interest Income
|
1,766
|
(1,974
|
)
|
(208
|
)
|
459
|
(692
|
)
|
(233
|
)
|
||||||||||||||
Interest Paid On:
|
||||||||||||||||||||||||
NOW deposits
|
52
|
(13
|
)
|
39
|
53
|
(93
|
)
|
(40
|
)
|
|||||||||||||||
Savings deposits
|
158
|
(273
|
)
|
(115
|
)
|
3
|
(495
|
)
|
(492
|
)
|
||||||||||||||
Money market deposits
|
(29
|
)
|
(159
|
)
|
(188
|
)
|
(102
|
)
|
(272
|
)
|
(374
|
)
|
||||||||||||
Time deposits
|
(196
|
)
|
(150
|
)
|
(346
|
)
|
(31
|
)
|
(55
|
)
|
(86
|
)
|
||||||||||||
Securities sold under agreements to repurchase
|
12
|
(23
|
)
|
(11
|
)
|
13
|
(60
|
)
|
(47
|
)
|
||||||||||||||
Long-term debt
|
1
|
-
|
1
|
136
|
(53
|
)
|
83
|
|||||||||||||||||
Total Interest Expense
|
(2
|
)
|
(618
|
)
|
(620
|
)
|
72
|
(1,028
|
)
|
(956
|
)
|
|||||||||||||
Net Interest Income
|
$
|
1,768
|
$
|
(1,356
|
)
|
$
|
412
|
$
|
387
|
$
|
336
|
$
|
723
|
Years ended
|
%
|
|||||||||||||||
December 31,
|
Increase
|
Increase
|
||||||||||||||
(dollars in thousands)
|
2012
|
2011
|
(Decrease)
|
(Decrease)
|
||||||||||||
Salaries and employee benefits
|
$
|
10,915
|
$
|
10,539
|
$
|
376
|
3.6%
|
|||||||||
Occupancy and equipment
|
3,200
|
3,205
|
(5
|
)
|
(0.2%
|
)
|
||||||||||
Professional fees
|
754
|
851
|
(97
|
)
|
(11.4%
|
)
|
||||||||||
Advertising and marketing
|
270
|
225
|
45
|
20.0%
|
||||||||||||
Data processing
|
748
|
641
|
107
|
16.7%
|
||||||||||||
Insurance
|
345
|
390
|
(45
|
)
|
(11.5%
|
)
|
||||||||||
FDIC insurance and assessments
|
553
|
673
|
(120
|
)
|
(17.8%
|
)
|
||||||||||
Outside service fees
|
508
|
422
|
86
|
20.4%
|
||||||||||||
Amortization of identifiable intangibles
|
163
|
201
|
(38
|
)
|
(18.9%
|
)
|
||||||||||
OREO expenses, OREO impairment and sales, net
|
699
|
270
|
429
|
158.9%
|
||||||||||||
Loan workout expenses
|
240
|
166
|
74
|
44.6%
|
||||||||||||
Other operating
|
1,452
|
1,510
|
(58
|
)
|
(3.8%
|
)
|
||||||||||
Total Non-Interest Expenses
|
$
|
19,847
|
$
|
19,093
|
$
|
754
|
3.9%
|
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Investment securities available for sale at fair value:
|
||||||||||||
U.S. Government agency securities
|
$
|
-
|
$
|
2,258
|
$
|
5,786
|
||||||
Municipal securities
|
1,310
|
1,307
|
2,016
|
|||||||||
U.S. Government-sponsored enterprises (“GSE”) -
|
||||||||||||
Residential mortgage-backed securities
|
20,374
|
21,878
|
16,251
|
|||||||||
Collateralized residential mortgage obligations
|
22,996
|
17,163
|
5,745
|
|||||||||
Corporate debt securities, primarily financial institutions
|
3,655
|
2,528
|
3,087
|
|||||||||
Community Reinvestment Act (“CRA”) mutual fund
|
2,421
|
2,321
|
2,194
|
|||||||||
$
|
50,756
|
$
|
47,455
|
$
|
35,079
|
|||||||
Investment securities held to maturity at amortized cost:
|
||||||||||||
Municipal securities
|
$
|
17,799
|
$
|
11,296
|
$
|
8,522
|
||||||
GSE – Residential mortgage-backed securities
|
1,083
|
-
|
-
|
|||||||||
Collateralized residential mortgage obligations
|
892
|
-
|
-
|
|||||||||
Corporate debt securities, primarily financial institutions
|
1,812
|
1,809
|
2,307
|
|||||||||
$
|
21,586
|
$
|
13,105
|
$
|
10,829
|
December 31, 2012
|
Due within 1
year
|
Due 1 – 5 years
|
Due 5 – 10 years
|
Due after 10
years
|
Total
|
|||||||||||||||||||||||||||||||||||
(dollars in thousands)
|
Amortized
cost
|
Wtd
Avg
Yield
|
Amortized
cost
|
Wtd
Avg
Yield
|
Amortized
cost
|
Wtd
Avg
Yield
|
Amortized
cost
|
Wtd
Avg
Yield
|
Amortized
cost
|
Wtd
Avg
Yield
|
||||||||||||||||||||||||||||||
Investment securities available for sale:
|
||||||||||||||||||||||||||||||||||||||||
Municipal securities
|
$
|
-
|
-
|
$
|
-
|
-
|
$
|
424
|
4.40
|
%
|
$
|
831
|
4.52
|
%
|
$
|
1,255
|
4.48
|
%
|
||||||||||||||||||||||
GSE - Residential
|
||||||||||||||||||||||||||||||||||||||||
mortgage-backed securities
|
-
|
-
|
74
|
6.48
|
%
|
4,627
|
2.84
|
%
|
15,180
|
2.94
|
%
|
19,881
|
2.93
|
%
|
||||||||||||||||||||||||||
Collateralized residential
|
||||||||||||||||||||||||||||||||||||||||
mortgage obligations
|
-
|
-
|
-
|
-
|
1,470
|
2.25
|
%
|
21,185
|
2.23
|
%
|
22,655
|
2.23
|
%
|
|||||||||||||||||||||||||||
Corporate debt securities,
|
||||||||||||||||||||||||||||||||||||||||
primarily financial institutions
|
-
|
-
|
1,791
|
2.65
|
%
|
1,040
|
2.02
|
%
|
1,186
|
1.38
|
%
|
4,017
|
2.11
|
%
|
||||||||||||||||||||||||||
$
|
-
|
-
|
$
|
1,865
|
2.80
|
%
|
$
|
7,561
|
2.70
|
%
|
$
|
38,382
|
2.53
|
%
|
$
|
47,808
|
2.57
|
%
|
||||||||||||||||||||||
Investment securities held to maturity:
|
||||||||||||||||||||||||||||||||||||||||
Municipal securities
|
$
|
9,032
|
0.81
|
%
|
$
|
1,922
|
3.78
|
%
|
$
|
4,967
|
3.85
|
%
|
$
|
1,878
|
4.68
|
%
|
$
|
17,799
|
2.39
|
%
|
||||||||||||||||||||
GSE - Residential
|
||||||||||||||||||||||||||||||||||||||||
mortgage-backed securities
|
-
|
-
|
-
|
-
|
-
|
-
|
1,083
|
3.50
|
%
|
1,083
|
3.50
|
%
|
||||||||||||||||||||||||||||
Collateralized residential
|
||||||||||||||||||||||||||||||||||||||||
mortgage obligations
|
-
|
-
|
-
|
-
|
-
|
-
|
892
|
2.00
|
%
|
892
|
2.00
|
%
|
||||||||||||||||||||||||||||
Corporate debt securities
|
||||||||||||||||||||||||||||||||||||||||
primarily financial institutions
|
-
|
-
|
-
|
-
|
-
|
-
|
1,812
|
0.85
|
%
|
1,812
|
0.85
|
%
|
||||||||||||||||||||||||||||
$
|
9,032
|
0.81
|
%
|
$
|
1,922
|
3.78
|
%
|
$
|
4,967
|
3.85
|
%
|
$
|
5,665
|
2.81
|
%
|
$
|
21,586
|
2.30
|
%
|
December 31,
|
||||||||||||||||||||||||
2012
|
2011
|
2010
|
||||||||||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||||||||
(in thousands, except for percentages)
|
||||||||||||||||||||||||
Commercial and industrial
|
$ | 138,438 | 24.2% | $ | 136,869 | 25.8% | $ | 134,266 | 26.1% | |||||||||||||||
Real estate - construction
|
83,755 | 14.6% | 51,180 | 9.6% | 33,909 | 6.6% | ||||||||||||||||||
Real estate - commercial
|
288,060 | 50.4% | 270,688 | 51.0% | 262,996 | 51.2% | ||||||||||||||||||
Real estate - residential
|
20,875 | 3.6% | 19,201 | 3.6% | 21,473 | 4.2% | ||||||||||||||||||
Consumer
|
40,975 | 7.2% | 52,853 | 10.0% | 60,879 | 11.9% | ||||||||||||||||||
Unearned fees
|
(656 | ) | 0.0% | (661 | ) | 0.0% | (529 | ) | 0.0% | |||||||||||||||
Total loans
|
$ | 571,447 | 100.0% | $ | 530,130 | 100.0% | $ | 512,994 | 100.0% |
December 31,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||
(in thousands, except for percentages)
|
||||||||||||||||
Commercial and industrial
|
$
|
126,794
|
24.7%
|
$
|
114,758
|
25.6%
|
||||||||||
Real estate - construction
|
74,133
|
14.4%
|
81,774
|
18.2%
|
||||||||||||
Real estate - commercial
|
228,818
|
44.5%
|
177,650
|
39.6%
|
||||||||||||
Real estate - residential
|
19,381
|
3.8%
|
19,860
|
4.4%
|
||||||||||||
Consumer
|
64,723
|
12.6%
|
55,009
|
12.2%
|
||||||||||||
Unearned fees
|
(450
|
)
|
0.0%
|
(271
|
)
|
0.0%
|
||||||||||
Total loans
|
$
|
513,399
|
100.0%
|
$
|
448,780
|
100.0%
|
As of December 31, 2012
|
Due within 1
year
|
Due 1–5 years
|
Due after 5
years
|
Total
|
||||||||||||
(in thousands)
|
||||||||||||||||
Commercial and industrial
|
$
|
59,082
|
$
|
44,100
|
$
|
35,256
|
$
|
138,438
|
||||||||
Real estate - construction
|
32,508
|
9,704
|
41,543
|
83,755
|
||||||||||||
Real estate - commercial
|
17,291
|
32,671
|
238,098
|
288,060
|
||||||||||||
Total
|
$
|
108,881
|
$
|
86,475
|
$
|
314,897
|
$
|
510,253
|
||||||||
Fixed rate loans
|
$
|
27,328
|
$
|
61,644
|
$
|
42,704
|
$
|
131,676
|
||||||||
Variable rate loans
|
81,553
|
24,831
|
272,193
|
378,577
|
||||||||||||
Total
|
$
|
108,881
|
$
|
86,475
|
$
|
314,897
|
$
|
510,253
|
Years ended December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
Non-Performing Assets:
|
||||||||||||||||||||
Non-Performing Loans:
|
||||||||||||||||||||
Commercial and industrial
|
$
|
1,681
|
$
|
2,349
|
$
|
792
|
$
|
4,719
|
$
|
5,334
|
||||||||||
Real estate – construction
|
-
|
292
|
523
|
7,121
|
5,147
|
|||||||||||||||
Real estate – commercial
|
3,542
|
145
|
605
|
-
|
-
|
|||||||||||||||
Real estate – residential
|
263
|
263
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
1,986
|
2,191
|
3,729
|
2,311
|
2,477
|
|||||||||||||||
Total Non-Performing Loans
|
7,472
|
5,240
|
5,649
|
14,151
|
12,958
|
|||||||||||||||
Loans Past Due 90 days or More and Still Accruing
|
2
|
-
|
-
|
-
|
-
|
|||||||||||||||
Other Real Estate Owned
|
1,752
|
7,765
|
8,098
|
-
|
-
|
|||||||||||||||
Total Non-Performing Assets
|
$
|
9,226
|
$
|
13,005
|
$
|
13,747
|
$
|
14,151
|
$
|
12,958
|
||||||||||
Ratios:
|
||||||||||||||||||||
Non-Performing loans to total loans
|
1.31
|
%
|
0.99
|
%
|
1.10
|
%
|
2.76
|
%
|
2.89
|
%
|
||||||||||
Non-Performing assets to total assets
|
1.26
|
%
|
1.93
|
%
|
2.16
|
%
|
2.21
|
%
|
2.27
|
%
|
||||||||||
Troubled Debt Restructured Loans
|
$
|
9,551
|
$
|
7,579
|
$
|
5,435
|
$
|
4,717
|
$
|
-
|
Years ended December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(in thousands, except for percentages)
|
||||||||||||||||||||
Balance at beginning of year
|
$
|
7,310
|
$
|
6,246
|
$
|
6,184
|
$
|
6,815
|
$
|
4,675
|
||||||||||
Provision charged to expense
|
1,380
|
2,205
|
3,100
|
2,205
|
2,301
|
|||||||||||||||
Recoveries of loans charged off:
|
||||||||||||||||||||
Commercial and industrial
|
18
|
1
|
78
|
4
|
-
|
|||||||||||||||
Real estate – construction
|
169
|
58
|
15
|
-
|
-
|
|||||||||||||||
Consumer
|
3
|
52
|
-
|
-
|
-
|
|||||||||||||||
Loans charged-off:
|
||||||||||||||||||||
Commercial and industrial
|
(552
|
)
|
(482
|
)
|
(1,061
|
)
|
(526
|
)
|
-
|
|||||||||||
Real estate – construction
|
(59
|
)
|
(82
|
)
|
(1,420
|
)
|
(2,012
|
)
|
(158
|
)
|
||||||||||
Real estate – residential
|
-
|
-
|
(150
|
)
|
-
|
-
|
||||||||||||||
Consumer
|
(285
|
)
|
(688
|
)
|
(500
|
)
|
(302
|
)
|
(3
|
)
|
||||||||||
Charge-offs, net
|
(706
|
)
|
(1,141
|
)
|
(3,038
|
)
|
(2,836
|
)
|
(161
|
)
|
||||||||||
Balance of allowance at end of year
|
$
|
7,984
|
$
|
7,310
|
$
|
6, 246
|
$
|
6,184
|
$
|
6,815
|
||||||||||
Ratio of net charge-offs to average
loans outstanding
|
0.13
|
%
|
0.22
|
%
|
0.59
|
%
|
0.59
|
%
|
0.04
|
|||||||||||
Balance of allowance at period-end
as a percent of loans at year end
|
1.40
|
%
|
1.38
|
%
|
1.22
|
%
|
1.20
|
%
|
1.52
|
%
|
||||||||||
Ratio of allowance at period-end to
non-performing loans
|
106.85
|
%
|
139.50
|
%
|
110.57
|
%
|
43.70
|
%
|
52.59
|
%
|
December 31,
|
||||||||||||||||||||||||||||||||||||
2012
|
2011
|
2010
|
||||||||||||||||||||||||||||||||||
Percent of
|
Percent of
|
Percent of
|
||||||||||||||||||||||||||||||||||
(dollars in thousands)
|
Amount
|
Allowance
to total
allowance
|
Loans
to total
loans
|
Amount
|
Allowance
to total
allowance
|
Loans
to total
loans
|
Amount
|
Allowance
to total
allowance
|
Loans
to total
loans
|
|||||||||||||||||||||||||||
Balance applicable to :
|
||||||||||||||||||||||||||||||||||||
Commercial and industrial
|
$
|
1,837
|
23.0%
|
24.2%
|
$
|
2,448
|
33.5%
|
25.8%
|
$
|
2,081
|
33.3%
|
26.1%
|
||||||||||||||||||||||||
Real estate - construction
|
1,646
|
20.6%
|
14.6%
|
1,222
|
16.7%
|
9.6%
|
895
|
14.3%
|
6.6%
|
|||||||||||||||||||||||||||
Real estate - commercial
|
3,367
|
42.2%
|
50.4%
|
2,412
|
33.0%
|
51.0%
|
2,193
|
35.1%
|
51.2%
|
|||||||||||||||||||||||||||
Real estate - residential
|
217
|
2.7%
|
3.6%
|
256
|
3.5%
|
3.6%
|
276
|
4.4%
|
4.2%
|
|||||||||||||||||||||||||||
Consumer
|
811
|
10.2%
|
7.2%
|
880
|
12.0%
|
10.0%
|
793
|
12.7%
|
11.9%
|
|||||||||||||||||||||||||||
Unallocated
|
106
|
1.3%
|
0.0%
|
92
|
1.3%
|
0.0%
|
8
|
0.2%
|
0.0%
|
|||||||||||||||||||||||||||
Total
|
$
|
7,984
|
100.0%
|
100.0%
|
$
|
7,310
|
100.0%
|
100.0%
|
$
|
6,246
|
100.0%
|
100.0%
|
December 31,
|
||||||||||||||||||||||||
2009
|
2008
|
|||||||||||||||||||||||
Percent of
|
Percent of
|
|||||||||||||||||||||||
(dollars in thousands)
|
Amount
|
Allowance
to total
allowance
|
Loans
to total
loans
|
Amount
|
Allowance
to total
allowance
|
Loans
to total
loans
|
||||||||||||||||||
Balance applicable to :
|
||||||||||||||||||||||||
Commercial and industrial
|
$
|
1,974
|
31.9%
|
24.7%
|
$
|
1,769
|
26.0%
|
25.6%
|
||||||||||||||||
Real estate - construction
|
945
|
15.3%
|
14.4%
|
2,470
|
36.2%
|
18.2%
|
||||||||||||||||||
Real estate - commercial
|
2,495
|
40.4%
|
44.5%
|
1,617
|
23.8%
|
39.6%
|
||||||||||||||||||
Real estate - residential
|
126
|
2.0%
|
3.8%
|
146
|
2.1%
|
4.4%
|
||||||||||||||||||
Consumer
|
624
|
10.1%
|
12.6%
|
798
|
11.7%
|
12.2%
|
||||||||||||||||||
Unallocated
|
20
|
0.3%
|
0.0%
|
15
|
0.2%
|
0.0%
|
||||||||||||||||||
Total
|
$
|
6,184
|
100.0%
|
100.0%
|
$
|
6,815
|
100.0%
|
100.0%
|
Years ended December 31,
|
||||||||||||||||||||||||
2012
|
2011
|
2010
|
||||||||||||||||||||||
(dollars in thousands)
|
Average
Balance
|
Average
Rate
|
Average
Balance
|
Average
Rate
|
Average
Balance
|
Average
Rate
|
||||||||||||||||||
Non-interest bearing demand
|
$
|
96,967
|
-
|
$
|
86,687
|
-
|
$
|
78,052
|
-
|
|||||||||||||||
Interest-bearing demand (NOW)
|
69,063
|
0.43%
|
57,378
|
0.45%
|
48,638
|
0.61%
|
||||||||||||||||||
Savings deposits
|
217,879
|
0.74%
|
199,641
|
0.86%
|
199,380
|
1.11%
|
||||||||||||||||||
Money market deposits
|
83,140
|
0.38%
|
88,095
|
0.58%
|
99,659
|
0.89%
|
||||||||||||||||||
Time deposits
|
106,012
|
1.75%
|
116,331
|
1.89%
|
117,946
|
1.94%
|
||||||||||||||||||
Total
|
$
|
573,061
|
0.71%
|
$
|
548,132
|
0.85%
|
$
|
543,675
|
1.05%
|
December 31,
2012
|
||||
Due in three months or less
|
$
|
10,755
|
||
Due over three months through twelve months
|
13,883
|
|||
Due over one year through three years
|
17,394
|
|||
Due over three years
|
2,197
|
|||
Total certificates of deposit $100,000 and over
|
$
|
44,229
|
Rate
|
Original Term
|
Maturity
|
||||||||||||||||
(dollars in thousands)
|
At December 31,
|
|||||||||||||||||
Long-term debt:
|
2012
|
2011
|
2010
|
|||||||||||||||
Fixed Rate Note
|
$
|
7,500
|
$
|
7,500
|
$
|
7,500
|
3.97%
|
10 years
|
November 2017
|
|||||||||
Fixed Rate Note
|
1,500
|
1,500
|
1,500
|
1.67%
|
4 years
|
August 2014
|
||||||||||||
Fixed Rate Note
|
1,500
|
1,500
|
1,500
|
2.00%
|
5 years
|
August 2015
|
||||||||||||
Fixed Rate Note
|
1,500
|
1,500
|
1,500
|
2.41%
|
6 years
|
August 2016
|
||||||||||||
Fixed Rate Note
|
1,500
|
1,500
|
1,500
|
2.71%
|
7 years
|
August 2017
|
||||||||||||
$
|
13,500
|
$
|
13,500
|
$
|
13,500
|
3.18%
|
Years ended December 31,
|
||||||||||||
(dollars in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Repurchase agreements:
|
||||||||||||
Balance at year-end
|
$
|
16,710
|
$
|
16,218
|
$
|
14,857
|
||||||
Average during the year
|
18,266
|
16,593
|
15,367
|
|||||||||
Maximum month-end balance
|
19,860
|
19,524
|
17,532
|
|||||||||
Weighted average rate during the year
|
0.59
|
%
|
0.71
|
%
|
1.07
|
%
|
||||||
Weighted average rate at year end
|
0.52
|
%
|
0.55
|
%
|
0.81
|
%
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
(dollars in thousands)
|
||||||||
Home equity lines of credit
|
$ | 26,415 | $ | 27,524 | ||||
Commitments to fund commercial real estate and construction loans
|
50,032 | 72,409 | ||||||
Commitments to fund commercial and industrial loans
|
46,458 | 56,272 | ||||||
Commercial and financial letters of credit
|
4,195 | 5,066 | ||||||
$ | 127,100 | $ | 161,271 |
Actual
|
For Capital Adequacy
Purposes
|
To be Well Capitalized under
Prompt Corrective Action
Provisions
|
||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||
(dollars in thousands, except for percentages)
|
||||||||||||||||||
As of December 31, 2012
|
||||||||||||||||||
Total capital (to risk-weighted assets)
|
||||||||||||||||||
Community Partners Bancorp
|
$
|
80,835
|
13.28%
|
$ |
>48,696
|
>8.00%
|
$
|
N/A
|
N/A
|
|||||||||
Two River Community Bank
|
80,773
|
13.27%
|
>48,695
|
>8.00%
|
>60,869
|
>10.00%
|
||||||||||||
Tier 1 capital (to risk-weighted assets)
|
||||||||||||||||||
Community Partners Bancorp
|
73,220
|
12.03%
|
>24,346
|
>4.00%
|
N/A
|
N/A
|
||||||||||||
Two River Community Bank
|
73,159
|
12.02%
|
>24,346
|
>4.00%
|
>36,519
|
>6.00%
|
||||||||||||
Tier 1 capital (to average assets)
|
||||||||||||||||||
Community Partners Bancorp
|
73,220
|
10.36%
|
>28,270
|
>4.00%
|
N/A
|
N/A
|
||||||||||||
Two River Community Bank
|
73,159
|
10.35%
|
>28,274
|
>4.00%
|
>35,343
|
>5.00%
|
||||||||||||
As of December 31, 2011
|
||||||||||||||||||
Total capital (to risk-weighted assets)
|
||||||||||||||||||
Community Partners Bancorp
|
$
|
75,444
|
13.26%
|
$ |
>45,517
|
>8.00%
|
$
|
N/A
|
N/A
|
|||||||||
Two River Community Bank
|
75,340
|
13.25%
|
>45,488
|
>8.00%
|
>56,860
|
>10.00%
|
||||||||||||
Tier 1 capital (to risk-weighted assets)
|
||||||||||||||||||
Community Partners Bancorp
|
68,332
|
12.01%
|
>22,758
|
>4.00%
|
N/A
|
N/A
|
||||||||||||
Two River Community Bank
|
68,229
|
12.00%
|
>22,743
|
>4.00%
|
>34,115
|
>6.00%
|
||||||||||||
Tier 1 capital (to average assets)
|
||||||||||||||||||
Community Partners Bancorp
|
68,332
|
10.39%
|
>26,307
|
>4.00%
|
N/A
|
N/A
|
||||||||||||
Two River Community Bank
|
68,229
|
10.38%
|
>26,292
|
>4.00%
|
>32,866
|
>5.00%
|
Gradual change in interest rates
|
|||||||||||
December 31, 2012
|
200 basis point increase
|
200 basis point decrease
|
|||||||||
(dollars in thousands)
|
Dollar change
|
Percent of
change
|
Dollar change
|
Percent of
change
|
ALCO
Policy Guideline
|
||||||
Twelve month horizon:
|
|||||||||||
Net interest income change
|
$
|
(774)
|
-3.0%
|
$
|
(573)
|
-2.2%
|
-10.0%
|
Gradual change in interest rates
|
|||||||||||
December 31, 2011
|
200 basis point increase
|
200 basis point decrease
|
|||||||||
(dollars in thousands)
|
Dollar change
|
Percent of
change
|
Dollar change
|
Percent of
change
|
ALCO
Policy Guideline
|
||||||
Twelve month horizon:
|
|||||||||||
Net interest income change
|
$
|
(817)
|
-3.2%
|
$
|
(338)
|
-1.3%
|
-6.0%
|
Economic Value of Portfolio Equity
December 31, 2012
|
||||||||||||
Change in Interest Rates
(dollars in thousands)
|
Base Case
(0 bp)
|
-200bp
|
+200bp
|
ALCO
Policy Guideline
|
||||||||
Economic Value of Equity
|
$85,997
|
$
|
76,448
|
$
|
84,256
|
|||||||
$ Change
|
(9,549
|
)
|
(1,741
|
)
|
||||||||
% Change to Present Value of Equity
|
-11.1
|
%
|
-2.0
|
%
|
-25.0% |
December 31, 2011
|
||||||||||||
Change in Interest Rates
(dollars in thousands)
|
Base Case
(0 bp)
|
-200bp
|
+200bp
|
ALCO
Policy Guideline
|
||||||||
Economic Value of Equity
|
$79,322
|
$
|
69,763
|
$
|
78,345
|
|||||||
$ Change
|
(9,559
|
)
|
(977
|
)
|
||||||||
% Change to Present Value of Equity
|
-12.0
|
%
|
-1.2
|
%
|
-25.0% |
/s/ WILLIAM D. MOSS
|
/s/ A. RICHARD ABRAHAMIAN
|
|||
Name:
|
William D. Moss
|
Name:
|
A. Richard Abrahamian
|
|
Title:
|
President and Chief Executive Officer
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
Date:
|
March 29, 2013
|
Date:
|
March 29, 2013
|
|
Plan category
|
Number of securities
to be issued upon
exercise of outstanding
options, warrants and
rights
(a)
|
Weighted-average exercise
price of outstanding
options, warrants and
rights
(b)
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
|
Equity compensation plans
approved by security holders
|
921,605
|
$ 6.95
|
245,504 (1)
|
Equity compensation plans not
approved by security holders
|
-0-
|
N/A
|
-0-
|
Total
|
921,605
|
$ 6.95
|
245,504
|
|
(1)
|
The Company may issue these shares pursuant to options and restricted stock awards.
|
(a)
|
Financial Statements and Financial Statement Schedules
|
|
The following documents are filed as part of this report:
|
||
1.
|
Financial Statements of Community Partners Bancorp
|
|
Report of Independent Registered Public Accounting Firm
|
||
Consolidated Balance Sheets – December 31, 2012 and 2011
|
||
Consolidated Statements of Operations – Years Ended December 31, 2012 and 2011
|
||
Consolidated Statements of Comprehensive Income – Years Ended December 31, 2012 and 2011
|
||
Consolidated Statements of Shareholders’ Equity – Years Ended December 31, 2012 and 2011
|
||
Consolidated Statements of Cash Flows – Years Ended December 31, 2012 and 2011
|
||
Notes to Consolidated Financial Statements
|
||
2.
|
All schedules are omitted because either they are inapplicable or not required, or because the information required therein is included in the Consolidated Financial Statements and Notes thereto.
|
|
3.
|
See accompanying Index to Exhibits.
|
|
(b)
|
Exhibits
|
|
Exhibits required by Section 601 of Regulation S-K (see accompanying Index to Exhibits).
|
||
(c)
|
Financial Statement Schedules
|
|
See the Notes to the Consolidated Financial Statements included in this report.
|
Page
|
||
F-2
|
||
F-3
|
||
F-4
|
||
F-5
|
||
F-6
|
||
F-7
|
||
F-8
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
(In Thousands, Except Share Data)
|
||||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
15,349
|
$
|
7,597
|
||||
Interest-bearing deposits in bank
|
33,197
|
30,425
|
||||||
Cash and Cash Equivalents
|
48,546
|
38,022
|
||||||
Securities available for sale
|
50,756
|
47,455
|
||||||
Securities held to maturity (fair value of $21,935 and $13,222 at December 31, 2012
and December 31, 2011, respectively)
|
21,586
|
13,105
|
||||||
Restricted investments, at cost
|
3,040
|
2,237
|
||||||
Loans
|
571,447
|
530,130
|
||||||
Allowance for loan losses
|
(7,984
|
)
|
(7,310
|
)
|
||||
Net Loans
|
563,463
|
522,820
|
||||||
Other real estate owned
|
1,752
|
7,765
|
||||||
Bank-owned life insurance
|
13,457
|
12,998
|
||||||
Premises and equipment, net
|
3,243
|
2,640
|
||||||
Accrued interest receivable
|
1,884
|
1,928
|
||||||
Goodwill
|
18,109
|
18,109
|
||||||
Other intangible assets, net of accumulated amortization of $1,838
|
||||||||
and $1,675 at December 31, 2012 and December 31, 2011, respectively
|
268
|
431
|
||||||
Other assets
|
7,791
|
7,044
|
||||||
Total Assets
|
$
|
733,895
|
$
|
674,554
|
||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing
|
$
|
112,746
|
$
|
88,209
|
||||
Interest-bearing
|
494,024
|
465,703
|
||||||
Total Deposits
|
606,770
|
553,912
|
||||||
Securities sold under agreements to repurchase
|
16,710
|
16,218
|
||||||
Accrued interest payable
|
70
|
107
|
||||||
Long-term debt
|
13,500
|
13,500
|
||||||
Other liabilities
|
4,880
|
3,683
|
||||||
Total Liabilities
|
641,930
|
587,420
|
||||||
Shareholders’ Equity
|
||||||||
Preferred stock, no par value; 6,500,000 shares authorized;
|
||||||||
Preferred stock, Series B, none issued or outstanding
|
-
|
-
|
||||||
Preferred stock, Series C, $12,000,000 liquidation preference; 12,000 shares authorized; 12,000 issued
and outstanding at December 31, 2012 and December 31, 2011, respectively
|
12,000
|
12,000
|
||||||
Common stock, no par value; 25,000,000 shares authorized; 7,983,778 and 7,942,218
shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively
|
71,537
|
71,179
|
||||||
Retained earnings
|
8,060
|
3,693
|
||||||
Accumulated other comprehensive income
|
368
|
262
|
||||||
Total Shareholders’ Equity
|
91,965
|
87,134
|
||||||
Total Liabilities and Shareholders’ Equity
|
$
|
733,895
|
$
|
674,554
|
See notes to consolidated financial statements.
|
Years Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
(In Thousands, Except Per Share Data)
|
||||||||
Interest Income
|
||||||||
Loans, including fees
|
$
|
29,192
|
$
|
29,409
|
||||
Securities:
|
||||||||
Taxable
|
1,167
|
1,170
|
||||||
Tax-exempt
|
398
|
364
|
||||||
Federal funds sold and interest bearing deposits
|
81
|
103
|
||||||
Total Interest Income
|
30,838
|
31,046
|
||||||
Interest Expense
|
||||||||
Deposits
|
4,077
|
4,687
|
||||||
Securities sold under agreements to repurchase
|
107
|
118
|
||||||
Borrowings
|
434
|
433
|
||||||
Total Interest Expense
|
4,618
|
5,238
|
||||||
Net Interest Income
|
26,220
|
25,808
|
||||||
Provision for Loan Losses
|
1,380
|
2,205
|
||||||
Net Interest Income after Provision for Loan Losses
|
24,840
|
23,603
|
||||||
Non-Interest Income
|
||||||||
Total other-than-temporary impairment losses
|
(85
|
)
|
-
|
|||||
Less: Portion included in other comprehensive income (pre-tax)
|
5
|
-
|
||||||
Net other-than-temporary impairment charges to earnings
|
(80
|
)
|
-
|
|||||
Service fees on deposit accounts
|
604
|
542
|
||||||
Other loan fees
|
773
|
499
|
||||||
Earnings from investment in life insurance
|
459
|
372
|
||||||
Net realized gain on sale of securities
|
118
|
324
|
||||||
Net gain on sale of SBA loans
|
187
|
101
|
||||||
Other income
|
566
|
506
|
||||||
Total Non-Interest Income
|
2,627
|
2,344
|
||||||
Non-Interest Expenses
|
||||||||
Salaries and employee benefits
|
10,915
|
10,539
|
||||||
Occupancy and equipment
|
3,200
|
3,205
|
||||||
Professional
|
754
|
851
|
||||||
Advertising
|
270
|
225
|
||||||
Data processing
|
748
|
641
|
||||||
Insurance
|
345
|
390
|
||||||
FDIC insurance and assessments
|
553
|
673
|
||||||
Outside service fees
|
508
|
422
|
||||||
Amortization of identifiable intangibles
|
163
|
201
|
||||||
OREO expenses, OREO impairment and sales, net
|
699
|
270
|
||||||
Loan workout expenses
|
240
|
166
|
||||||
Other operating
|
1,452
|
1,510
|
||||||
Total Non-Interest Expenses
|
19,847
|
19,093
|
||||||
Income before Income Taxes
|
7,620
|
6,854
|
||||||
Income Tax Expense
|
2,805
|
2,546
|
||||||
Net Income
|
$
|
4,815
|
$
|
4,308
|
||||
Preferred stock dividends and discount accretion
|
(448
|
)
|
(814
|
)
|
||||
Net income available to common shareholders
|
$
|
4,367
|
$
|
3,494
|
||||
Earnings Per Common Share
|
||||||||
Basic
|
$
|
0.55
|
$
|
0.44
|
||||
Diluted
|
$
|
0.54
|
$
|
0.44
|
Years Ended
December 31,
|
||||||||
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Net income
|
$
|
4,815
|
$
|
4,308
|
||||
Other comprehensive income (loss):
|
||||||||
Reclassification adjustment for gains on sales of securities recognized in income,
net of income tax benefit 2012: $47; 2011 $133
|
(71
|
)
|
(194
|
)
|
||||
Unrealized holdings gains on securities available for sale, net of
income tax 2012: $110; net of income tax 2011: $190
|
180
|
288
|
|
|||||
Unrealized loss on securities for which a portion of the
impairment has been recognized in income, net of income
tax benefit 2012: $34; 2011: $0
|
(51
|
)
|
-
|
|||||
Reclassification adjustment for other-than-temporary credit losses
on securities included in net income, net income tax 2012: $32;
2011: $0
|
48
|
-
|
||||||
Other comprehensive income
|
106
|
94
|
|
|||||
Total comprehensive income
|
$
|
4,921
|
$
|
4,402
|
Common Stock
|
||||||||||||||||||||||||
(Dollars in Thousands)
|
Preferred
Stock
|
Outstanding
Shares
|
Amount
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Total
Shareholders’
Equity
|
||||||||||||||||||
Balance, January 1, 2011
|
$
|
8,628
|
7,620,929
|
$
|
70,067
|
$
|
1,325
|
$
|
168
|
$
|
80,188
|
|||||||||||||
Net Income
|
-
|
-
|
-
|
4,308
|
-
|
4,308
|
||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
94
|
94
|
||||||||||||||||||
Preferred stock, Series C issued
|
12,000
|
-
|
-
|
-
|
-
|
12,000
|
||||||||||||||||||
Preferred stock, Series C issuance costs
|
-
|
-
|
-
|
(48
|
)
|
-
|
(48
|
)
|
||||||||||||||||
Redemption of preferred stock, Series A
|
(9,000
|
)
|
-
|
-
|
-
|
-
|
(9,000
|
)
|
||||||||||||||||
Redemption of preferred stock, Series A
|
||||||||||||||||||||||||
warrant
|
-
|
-
|
(460
|
)
|
-
|
-
|
(460
|
)
|
||||||||||||||||
Dividends on preferred stock, Series C
|
-
|
-
|
-
|
(180
|
)
|
-
|
(180
|
)
|
||||||||||||||||
Dividends on preferred stock, Series A
|
-
|
-
|
-
|
(262
|
)
|
-
|
(262
|
)
|
||||||||||||||||
Preferred stock, Series A discount accretion
|
372
|
-
|
-
|
(372
|
)
|
-
|
-
|
|||||||||||||||||
Common stock dividend – 3%
|
-
|
231,328
|
1,078
|
(1,078
|
)
|
-
|
-
|
|||||||||||||||||
Stock option compensation expense
|
-
|
-
|
154
|
-
|
-
|
154
|
||||||||||||||||||
Options exercised
|
-
|
83,138
|
267
|
-
|
-
|
267
|
||||||||||||||||||
Tax-benefit-exercised non-qualified stock
|
-
|
-
|
41
|
-
|
-
|
41
|
||||||||||||||||||
options
|
||||||||||||||||||||||||
Employee stock purchase program
|
-
|
6,823
|
32
|
-
|
-
|
32
|
||||||||||||||||||
Balance, December 31, 2011
|
$
|
12,000
|
7,942,218
|
$
|
71,179
|
$
|
3,693
|
$
|
262
|
$
|
87,134
|
|||||||||||||
Net income
|
-
|
-
|
-
|
4,815
|
-
|
4,815
|
||||||||||||||||||
Other comprehensive income
|
106
|
106
|
||||||||||||||||||||||
Dividends on preferred stock, Series C
|
-
|
-
|
-
|
(448
|
)
|
-
|
(448
|
)
|
||||||||||||||||
Stock based compensation expense
|
-
|
-
|
183
|
-
|
-
|
183
|
||||||||||||||||||
Options exercised
|
-
|
37,130
|
124
|
-
|
-
|
124
|
||||||||||||||||||
Tax-benefit-exercised non-qualified stock
|
||||||||||||||||||||||||
options
|
-
|
-
|
13
|
-
|
-
|
13
|
||||||||||||||||||
Restricted stock awards-forfeiture
|
-
|
(4,133
|
)
|
(8
|
)
|
-
|
-
|
(8
|
)
|
|||||||||||||||
Employee stock purchase program
|
-
|
8,563
|
46
|
-
|
-
|
46
|
||||||||||||||||||
Balance, December 31, 2012
|
$
|
12,000
|
7,983,778
|
$
|
71,537
|
$
|
8,060
|
$
|
368
|
$
|
91,965
|
Years Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$
|
4,815
|
$
|
4,308
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
680
|
703
|
||||||
Provision for loan losses
|
1,380
|
2,205
|
||||||
Intangible amortization
|
163
|
201
|
||||||
Net amortization of securities premiums and discounts
|
284
|
178
|
||||||
Other-than-temporary impairment on securities available for sale
|
80
|
-
|
||||||
Net realized gain on sale of securities available for sale
|
(118
|
)
|
(324
|
)
|
||||
Deferred income taxes
|
(697
|
)
|
(478
|
)
|
||||
Earnings from investment in life insurance
|
(459
|
)
|
(372
|
)
|
||||
Net realized loss (gain) on sale of other real estate owned
|
197
|
(381
|
)
|
|||||
Impairment on property held for sale
|
-
|
100
|
||||||
Impairment on other real estate owned
|
360
|
275
|
||||||
Stock based compensation expense
|
175
|
154
|
||||||
Gain from sale of SBA loans
|
(187
|
)
|
(101
|
)
|
||||
Decrease (increase) in assets:
|
||||||||
Accrued interest receivable
|
44
|
(17
|
)
|
|||||
Other assets
|
(111
|
)
|
588
|
|||||
(Decrease) increase in liabilities:
|
||||||||
Accrued interest payable
|
(37
|
)
|
14
|
|||||
Other liabilities
|
1,197
|
(51
|
)
|
|||||
Net Cash Provided by Operating Activities
|
7,766
|
7,002
|
||||||
Cash Flows from Investing Activities
|
||||||||
Purchase of securities available for sale
|
(17,880
|
)
|
(30,212
|
)
|
||||
Purchase of securities held to maturity
|
(12,093
|
)
|
(5,993
|
)
|
||||
Proceeds from sales of securities available for sale
|
2,948
|
4,048
|
||||||
Proceeds from repayments and maturities of securities available for sale
|
11,575
|
14,096
|
||||||
Proceeds from repayments and maturities of securities held to maturity
|
3,589
|
3,706
|
||||||
Proceeds from sale of SBA loans
|
1,987
|
1,803
|
||||||
Purchase of restricted investments
|
(803
|
)
|
(817
|
)
|
||||
Net increase in loans
|
(44,348
|
)
|
(21,667
|
)
|
||||
Proceeds from the sale of other real estate owned
|
6,047
|
2,852
|
||||||
Improvements on other real estate owned
|
(66
|
)
|
(725
|
)
|
||||
Purchase of bank-owned life insurance
|
-
|
(3,452
|
)
|
|||||
Purchase of premises and equipment
|
(1,283
|
)
|
(254
|
)
|
||||
Net Cash Used in Investing Activities
|
(50,327
|
)
|
(36,615
|
)
|
||||
Cash Flows from Financing Activities
|
||||||||
Net increase in deposits
|
52,858
|
29,441
|
||||||
Net increase in securities sold under agreements to repurchase
|
492
|
1,361
|
||||||
Proceeds from issuance of preferred stock, Series C
|
-
|
12,000
|
||||||
Preferred stock, Series C, issuance costs
|
-
|
(48
|
)
|
|||||
Redemption of preferred stock, Series A
|
-
|
(9,000
|
)
|
|||||
Redemption of preferred stock, Series A warrants
|
-
|
(460
|
)
|
|||||
Cash dividends paid on preferred stocks
|
(448
|
)
|
(442
|
)
|
||||
Proceeds from employee stock purchase plan
|
46
|
32
|
||||||
Proceeds from exercise of stock options
|
124
|
267
|
||||||
Tax benefit of stock options exercised
|
13
|
41
|
||||||
Net Cash Provided by Financing Activities
|
53,085
|
33,192
|
||||||
Net Increase in Cash and Cash Equivalents
|
10,524
|
3,579
|
||||||
Cash and Cash Equivalents – Beginning
|
38,022
|
34,443
|
||||||
Cash and Cash Equivalents – Ending
|
$
|
48,546
|
$
|
38,022
|
||||
Supplementary Cash Flows Information
|
||||||||
Interest paid
|
$
|
4,655
|
$
|
5,224
|
||||
Income taxes paid
|
$
|
3,270
|
$
|
3,302
|
||||
Supplementary schedule of non-cash activities:
|
||||||||
Other real estate acquired in settlement of loans
|
$
|
525
|
$
|
1,688
|
A.
|
Organization and Basis of Presentation
|
B.
|
Nature of Operations
|
C.
|
Estimates
|
D.
|
Significant Concentrations of Credit Risk
|
E.
|
Comprehensive Income
|
F.
|
Statement of Cash Flows
|
G.
|
Securities
|
H.
|
Restricted Investments
|
I.
|
Loans Receivable
|
J.
|
Allowance for Loan Losses
|
|
1.
|
The loan’s observable market price;
|
|
2.
|
The fair value of the underlying collateral; or
|
|
3.
|
The present value (PV) of expected future cash flows.
|
|
1.
|
Changes in lending policy and procedures, including changes in underwriting standards and collection practices not previously considered in estimating credit losses.
|
|
2.
|
Changes in relevant economic and business conditions.
|
|
3.
|
Changes in nature and volume of the loan portfolio and in the terms of loans.
|
|
4.
|
Changes in experience, ability and depth of lending management and staff.
|
|
5.
|
Changes in the volume and severity of past due loans, the volume of non-accrual loans and the volume and severity of adversely classified loans.
|
|
6.
|
Changes in the quality of the loan review system.
|
|
7.
|
Changes in the value of underlying collateral for collateral-dependent loans.
|
|
8.
|
The existence and effect of any concentration of credit and changes in the level of such concentrations.
|
|
9.
|
The effect of other external forces such as competition, legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.
|
K.
|
Transfers of Financial Assets
|
L.
|
Other Real Estate Owned
|
M.
|
Bank-Owned Life Insurance
|
N.
|
Bank Premises and Equipment
|
O.
|
Advertising
|
P.
|
Income Taxes
|
Q.
|
Off-Balance Sheet Financial Instruments
|
R.
|
Earnings per Common Share
|
S.
|
Stock-Based Compensation
|
T.
|
Reclassification
|
U.
|
Goodwill and Other Intangible Assets
|
V.
|
Segment Reporting
|
W.
|
Subsequent Events
|
X.
|
Recent Accounting Pronouncements
|
December 31, 2012:
|
||||||||||||||||||||
Gross
|
Gross
Unrealized Losses
|
|||||||||||||||||||
Amortized
Cost
|
Unrealized
Gains
|
Noncredit
OTTI
|
Other
|
Fair
Value
|
||||||||||||||||
(In Thousands)
|
||||||||||||||||||||
Securities available for sale:
|
||||||||||||||||||||
Municipal securities
|
$
|
1,255
|
55
|
$
|
-
|
$
|
-
|
$
|
1,310
|
|||||||||||
U.S. Government-sponsored enterprises (“GSE”) -
Residential mortgage-backed securities
|
19,881
|
505
|
-
|
(12
|
)
|
20,374
|
||||||||||||||
Collateralized residential mortgage obligations
|
22,655
|
342
|
-
|
(1
|
)
|
22,996
|
||||||||||||||
Corporate debt securities, primarily financial
institutions |
4,017
|
49
|
(164
|
)
|
(247
|
)
|
3,655
|
|||||||||||||
47,808
|
951
|
(164
|
)
|
(260
|
)
|
48,335
|
||||||||||||||
Community Reinvestment Act (“CRA”)
mutual fund
|
2,344
|
77
|
-
|
-
|
2,421
|
|||||||||||||||
$
|
50,152
|
$
|
1,028
|
$
|
(164
|
)
|
$
|
(260
|
)
|
$
|
50,756
|
|||||||||
Securities held to maturity:
|
||||||||||||||||||||
Municipal securities
|
$
|
17,799
|
$
|
619
|
$
|
-
|
$
|
(4
|
)
|
$
|
18,414
|
|||||||||
GSE - Residential mortgage-backed securities
|
1,083
|
12
|
-
|
-
|
1,095
|
|||||||||||||||
Collateralized residential mortgage obligations
|
892
|
2
|
-
|
-
|
894
|
|||||||||||||||
Corporate debt securities, primarily financial
institutions |
1,812
|
-
|
-
|
(280
|
)
|
1,532
|
||||||||||||||
$
|
21,586
|
$
|
633
|
$
|
-
|
$
|
(284
|
)
|
$
|
21,935
|
December 31, 2011:
|
||||||||||||||||||||
Gross
|
Gross
Unrealized Losses
|
|||||||||||||||||||
Amortized
Cost
|
Unrealized
Gains
|
Noncredit
OTTI
|
Other
|
Fair
Value
|
||||||||||||||||
Securities available for sale:
|
(In Thousands)
|
|||||||||||||||||||
U.S. Government agency securities
|
$
|
2,250
|
$
|
8
|
$
|
-
|
$
|
-
|
$
|
2,258
|
||||||||||
Municipal securities
|
1,261
|
46
|
-
|
-
|
1,307
|
|||||||||||||||
GSE - Residential mortgage-backed securities
|
21,317
|
581
|
-
|
(20
|
)
|
21,878
|
||||||||||||||
Collateralized residential mortgage obligations
|
16,865
|
298
|
-
|
-
|
17,163
|
|||||||||||||||
Corporate debt securities, primarily financial
institutions |
3,067
|
-
|
(183
|
)
|
(356
|
)
|
2,528
|
|||||||||||||
44,760
|
933
|
(183
|
)
|
(376
|
)
|
45,134
|
||||||||||||||
CRA mutual fund
|
2,258
|
63
|
-
|
-
|
2,321
|
|||||||||||||||
$
|
47,018
|
$
|
996
|
$
|
(183
|
)
|
$
|
(376
|
)
|
$
|
47,455
|
|||||||||
Securities held to maturity:
|
||||||||||||||||||||
Municipal securities
|
$
|
11,296
|
$
|
613
|
$
|
-
|
$
|
(2
|
)
|
$
|
11,907
|
|||||||||
Corporate debt securities, primarily financial
institutions |
1,809
|
-
|
-
|
(494
|
)
|
1,315
|
||||||||||||||
$
|
13,105
|
$
|
613
|
$
|
-
|
$
|
(496
|
)
|
$
|
13,222
|
Available for Sale
|
Held to Maturity
|
|||||||||||||||
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Due in one year or less
|
$
|
-
|
$
|
-
|
$
|
9,032
|
$
|
9,034
|
||||||||
Due in one year through five years
|
1,791
|
1,805
|
1,922
|
2,049
|
||||||||||||
Due in five years through ten years
|
1,464
|
1,485
|
4,967
|
5,211
|
||||||||||||
Due after ten years
|
2,017
|
1,675
|
3,690
|
3,652
|
||||||||||||
5,272
|
4,965
|
19,611
|
19,946
|
|||||||||||||
GSE - Residential mortgage-backed securities
|
19,881
|
20,374
|
1,083
|
1,095
|
||||||||||||
Collateralized residential mortgage obligations
|
22,655
|
22,996
|
892
|
894
|
||||||||||||
$
|
47,808
|
$
|
48,335
|
$
|
21,586
|
$
|
21,935
|
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
|||||||||||||||||||
December 31, 2012:
|
(In Thousands)
|
|||||||||||||||||||||||
Municipal securities
|
$
|
2,222
|
$
|
(4
|
)
|
$
|
-
|
$
|
-
|
$
|
2,222
|
$
|
(4
|
)
|
||||||||||
GSE – Residential mortgage-backed securities
|
2,320
|
(12
|
)
|
-
|
-
|
2,320
|
(12
|
)
|
||||||||||||||||
Collateralized residential mortgage obligations
|
4,184
|
(1
|
)
|
-
|
-
|
4,184
|
(1
|
)
|
||||||||||||||||
Corporate debt securities, primarily financial
institutions
|
-
|
-
|
2,805
|
(691
|
)
|
2,805
|
(691
|
)
|
||||||||||||||||
Total Temporarily
Impaired Securities
|
$
|
8,726
|
$
|
(17
|
)
|
$
|
2,805
|
$
|
(691
|
)
|
$
|
11,531
|
$
|
(708
|
)
|
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
|||||||||||||||||||
December 31, 2011:
|
(In Thousands)
|
|||||||||||||||||||||||
Municipal securities
|
$
|
969
|
$
|
(2
|
)
|
$
|
-
|
$
|
-
|
$
|
969
|
$
|
(2
|
)
|
||||||||||
GSE – Residential mortgage-backed securities
|
3,490
|
(20
|
)
|
-
|
-
|
3,490
|
(20
|
)
|
||||||||||||||||
Corporate debt securities, primarily financial
institutions
|
1,252
|
(50
|
)
|
2,591
|
(983
|
)
|
3,843
|
(1,033
|
)
|
|||||||||||||||
Total Temporarily
Impaired Securities
|
$
|
5,711
|
$
|
(72
|
)
|
$
|
2,591
|
$
|
(983
|
)
|
$
|
8,302
|
$
|
(1,055
|
)
|
Beginning balance, January 1, 2011
|
$
|
228
|
||
Additional increases to the amount related to the credit loss
|
||||
for which an other-than-temporary impairment was
|
||||
previously recognized
|
-
|
|||
Ending balance, December 31, 2011
|
228
|
|||
Additional increases to the amount related to the credit loss
|
||||
for which an other-than-temporary impairment was
|
||||
previously recognized
|
80
|
|||
Ending balance, December 31, 2012
|
$
|
308
|
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Commercial and industrial
|
$
|
138,438
|
$
|
136,869
|
||||
Real estate – construction
|
83,755
|
51,180
|
||||||
Real estate – commercial
|
288,060
|
270,688
|
||||||
Real estate – residential
|
20,875
|
19,201
|
||||||
Consumer
|
40,975
|
52,853
|
||||||
572,103
|
530,791
|
|||||||
Allowance for loan losses
|
(7,984
|
)
|
(7,310
|
)
|
||||
Unearned fees
|
(656
|
)
|
(661
|
)
|
||||
Net Loans
|
$
|
563,463
|
$
|
522,820
|
December 31, 2012:
|
Loans
|
|||||||||||||||||||||||||||
Receivable
|
||||||||||||||||||||||||||||
(In Thousands)
|
30-59 Days
Past Due
|
60-89 Days
Past Due
|
Greater
than 90
|
Total Past
Due
|
Current
|
Total Loans
Receivable
|
>90 Days and
Accruing
|
|||||||||||||||||||||
Commercial and industrial
|
$
|
350
|
$
|
2,132
|
$
|
1,681
|
$
|
4,163
|
$
|
134,275
|
$
|
138,438
|
$
|
-
|
||||||||||||||
Real estate – construction
|
-
|
324
|
-
|
324
|
83,431
|
83,755
|
-
|
|||||||||||||||||||||
Real estate – commercial
|
2,609
|
231
|
3,542
|
6,382
|
281,678
|
288,060
|
-
|
|||||||||||||||||||||
Real estate – residential
|
590
|
-
|
263
|
853
|
20,022
|
20,875
|
-
|
|||||||||||||||||||||
Consumer
|
201
|
-
|
1,988
|
2,189
|
38,786
|
40,975
|
2
|
|||||||||||||||||||||
Total
|
$
|
3,750
|
$
|
2,687
|
$
|
7,474
|
$
|
13,911
|
$
|
558,192
|
$
|
572,103
|
$
|
2
|
December 31, 2011:
|
Loans
|
|||||||||||||||||||||||||||
Receivable
|
||||||||||||||||||||||||||||
(In Thousands)
|
30-59 Days
Past Due
|
60-89 Days
Past Due
|
Greater
than 90
|
Total Past
Due
|
Current
|
Total Loans
Receivable
|
>90 Days and
Accruing
|
|||||||||||||||||||||
Commercial and industrial
|
$
|
538
|
$
|
1,776
|
$
|
2,349
|
$
|
4,663
|
$
|
132,206
|
$
|
136,869
|
$
|
-
|
||||||||||||||
Real estate – construction
|
-
|
-
|
292
|
292
|
50,888
|
51,180
|
-
|
|||||||||||||||||||||
Real estate – commercial
|
5,499
|
-
|
145
|
5,644
|
265,044
|
270,688
|
-
|
|||||||||||||||||||||
Real estate – residential
|
-
|
998
|
263
|
1,261
|
17,940
|
19,201
|
-
|
|||||||||||||||||||||
Consumer
|
375
|
50
|
2,191
|
2,616
|
50,237
|
52,853
|
-
|
|||||||||||||||||||||
Total
|
$
|
6,412
|
$
|
2,824
|
$
|
5,240
|
$
|
14,476
|
$
|
516,315
|
$
|
530,791
|
$
|
-
|
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Commercial and industrial
|
$
|
1,681
|
$
|
2,349
|
||||
Real estate – construction
|
-
|
292
|
||||||
Real estate – commercial
|
3,542
|
145
|
||||||
Real estate – residential
|
263
|
263
|
||||||
Consumer
|
1,986
|
2,191
|
||||||
Total
|
$
|
7,472
|
$
|
5,240
|
December 31, 2012:
|
Recorded
Investment,
Net of
Charge-offs
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
(In Thousands)
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial and industrial
|
$
|
4,774
|
$
|
4,774
|
$
|
-
|
$
|
4,905
|
$
|
193
|
||||||||||
Real estate – construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Real estate – commercial
|
4,971
|
4,971
|
-
|
5,003
|
138
|
|||||||||||||||
Real estate – residential
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
352
|
352
|
-
|
361
|
16
|
|||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial and industrial
|
$
|
1,140
|
$
|
1,140
|
$
|
295
|
$
|
1,185
|
$
|
138
|
||||||||||
Real estate – construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Real estate – commercial
|
4,121
|
4,121
|
470
|
4,170
|
206
|
|||||||||||||||
Real estate – residential
|
263
|
263
|
60
|
263
|
-
|
|||||||||||||||
Consumer
|
1,780
|
1,780
|
233
|
1,794
|
-
|
|||||||||||||||
Total:
|
||||||||||||||||||||
Commercial and industrial
|
$
|
5,914
|
$
|
5,914
|
$
|
295
|
$
|
6,090
|
$
|
331
|
||||||||||
Real estate – construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Real estate – commercial
|
9,092
|
9,092
|
470
|
9,173
|
344
|
|||||||||||||||
Real estate – residential
|
263
|
263
|
60
|
263
|
-
|
|||||||||||||||
Consumer
|
2,132
|
2,132
|
233
|
2,155
|
16
|
|||||||||||||||
$
|
17,401
|
$
|
17,401
|
$
|
1,058
|
$
|
17,681
|
$
|
691
|
December 31, 2011:
|
Recorded
Investment,
Net of
Charge-offs
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
(In Thousands)
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial and industrial
|
$
|
3,423
|
$
|
3,423
|
$
|
-
|
$
|
3,436
|
$
|
139
|
||||||||||
Real estate – construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Real estate – commercial
|
3,510
|
3,510
|
-
|
3,529
|
160
|
|||||||||||||||
Real estate – residential
|
225
|
225
|
-
|
225
|
4
|
|||||||||||||||
Consumer
|
251
|
251
|
-
|
251
|
8
|
|||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial and industrial
|
$
|
2,914
|
$
|
3,161
|
$
|
928
|
$
|
2,876
|
$
|
55
|
||||||||||
Real estate – construction
|
292
|
292
|
63
|
414
|
20
|
|||||||||||||||
Real estate – commercial
|
4,228
|
4,228
|
188
|
4,265
|
244
|
|||||||||||||||
Real estate – residential
|
263
|
263
|
15
|
263
|
5
|
|||||||||||||||
Consumer
|
1,938
|
1,938
|
254
|
1,938
|
-
|
|||||||||||||||
Total:
|
||||||||||||||||||||
Commercial and industrial
|
$
|
6,337
|
$
|
6,584
|
$
|
928
|
$
|
6,312
|
$
|
194
|
||||||||||
Real estate – construction
|
292
|
292
|
63
|
414
|
20
|
|||||||||||||||
Real estate – commercial
|
7,738
|
7,738
|
188
|
7,794
|
404
|
|||||||||||||||
Real estate – residential
|
488
|
488
|
15
|
488
|
9
|
|||||||||||||||
Consumer
|
2,189
|
2,189
|
254
|
2,189
|
8
|
|||||||||||||||
$
|
17,044
|
$
|
17,291
|
$
|
1,448
|
$
|
17,197
|
$
|
635
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
||||||||||||||||
(In Thousands)
|
||||||||||||||||||||
December 31, 2012:
|
||||||||||||||||||||
Commercial and industrial
|
$
|
119,195
|
$
|
7,196
|
$
|
12,047
|
$
|
-
|
$
|
138,438
|
||||||||||
Real estate – construction
|
78,119
|
1,443
|
4,193
|
-
|
83,755
|
|||||||||||||||
Real estate – commercial
|
267,768
|
4,648
|
15,644
|
-
|
288,060
|
|||||||||||||||
Real estate – residential
|
20,507
|
-
|
368
|
-
|
20,875
|
|||||||||||||||
Consumer
|
38,394
|
140
|
2,441
|
-
|
40,975
|
|||||||||||||||
Total:
|
$
|
523,983
|
$
|
13,427
|
$
|
34,693
|
$
|
-
|
$
|
572,103
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
||||||||||||||||
(In Thousands)
|
||||||||||||||||||||
December 31, 2011:
|
||||||||||||||||||||
Commercial and industrial
|
$
|
119,531
|
$
|
4,683
|
$
|
12,655
|
$
|
-
|
$
|
136,869
|
||||||||||
Real estate – construction
|
50,346
|
-
|
834
|
-
|
51,180
|
|||||||||||||||
Real estate – commercial
|
255,877
|
4,300
|
10,511
|
-
|
270,688
|
|||||||||||||||
Real estate – residential
|
18,938
|
-
|
263
|
-
|
19,201
|
|||||||||||||||
Consumer
|
49,973
|
144
|
2,736
|
-
|
52,853
|
|||||||||||||||
Total:
|
$
|
494,665
|
$
|
9,127
|
$
|
26,999
|
$
|
-
|
$
|
530,791
|
Allowance for Credit Losses
|
Commercial
and
Industrial
|
Real Estate -
Commercial
|
Real Estate -
Construction
|
Real Estate –
Residential
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||||||
Beginning balance,
January 1, 2012
|
$
|
2,448
|
$
|
2,412
|
$
|
1,222
|
$
|
256
|
$
|
880
|
$
|
92
|
$
|
7,310
|
||||||||||||||
Charge-offs
|
(552
|
)
|
-
|
(59
|
)
|
-
|
(285
|
)
|
-
|
(896
|
)
|
|||||||||||||||||
Recoveries
|
18
|
-
|
169
|
-
|
3
|
-
|
190
|
|||||||||||||||||||||
Provision
|
(77
|
)
|
955
|
314
|
(39
|
)
|
213
|
14
|
1,380
|
|||||||||||||||||||
Ending balance,
December 31, 2012
|
$
|
1,837
|
$
|
3,367
|
$
|
1,646
|
$
|
217
|
$
|
811
|
$
|
106
|
$
|
7,984
|
Allowance for Credit Losses
|
Commercial
and
Industrial
|
Real Estate -
Commercial
|
Real Estate -
Construction
|
Real Estate -
Residential
|
Consumer
|
Unallocated
|
Total
|
|||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||||||
Beginning balance,
January 1, 2011
|
$
|
2,081
|
$
|
2,193
|
$
|
895
|
$
|
276
|
$
|
793
|
$
|
8
|
$
|
6,246
|
||||||||||||||
Charge-offs
|
(482
|
)
|
-
|
(82
|
)
|
-
|
(688
|
)
|
-
|
(1,252
|
)
|
|||||||||||||||||
Recoveries
|
1
|
-
|
58
|
-
|
52
|
-
|
111
|
|||||||||||||||||||||
Provision
|
848
|
219
|
351
|
(20
|
)
|
723
|
84
|
2,205
|
||||||||||||||||||||
Ending balance,
December 31, 2011
|
$
|
2,448
|
$
|
2,412
|
$
|
1,222
|
$
|
256
|
$
|
880
|
$
|
92
|
$
|
7,310
|
Allowance for Loan Losses
|
Loans Receivable
|
|||||||||||||||||||||||
December 31, 2012:
|
Balance
|
Balance
Related to
Loans
Individually
Evaluated
for
Impairment
|
Balance
Related to
Loans
Collectively
Evaluated
for
Impairment
|
Balance
|
Balance
Individually
Evaluated for
Impairment
|
Balance
Collectively
Evaluated for
Impairment
|
||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||
Commercial and industrial
|
$
|
1,837
|
$
|
295
|
$
|
1,542
|
$
|
138,438
|
$
|
5,914
|
$
|
132,524
|
||||||||||||
Real estate – construction
|
1,646
|
-
|
1,646
|
83,755
|
-
|
83,755
|
||||||||||||||||||
Real estate – commercial
|
3,367
|
470
|
2,897
|
288,060
|
9,092
|
278,968
|
||||||||||||||||||
Real estate – residential
|
217
|
60
|
157
|
20,875
|
263
|
20,612
|
||||||||||||||||||
Consumer
|
811
|
233
|
578
|
40,975
|
2,132
|
38,843
|
||||||||||||||||||
Unallocated
|
106
|
-
|
106
|
-
|
-
|
-
|
||||||||||||||||||
Total:
|
$
|
7,984
|
$
|
1,058
|
$
|
6,926
|
$
|
572,103
|
$
|
17,401
|
$
|
554,702
|
Allowance for Loan Losses
|
Loans Receivable
|
|||||||||||||||||||||||
December 31, 2011:
|
Balance
|
Balance
Related to
Loans
Individually
Evaluated
for
Impairment
|
Balance
Related to
Loans
Collectively
Evaluated
for
Impairment
|
Balance
|
Balance
Individually
Evaluated for
Impairment
|
Balance
Collectively
Evaluated for
Impairment
|
||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||
Commercial and industrial
|
$
|
2,448
|
$
|
928
|
$
|
1,520
|
$
|
136,869
|
$
|
6,337
|
$
|
130,532
|
||||||||||||
Real estate – construction
|
1,222
|
63
|
1,159
|
51,180
|
292
|
50,888
|
||||||||||||||||||
Real estate – commercial
|
2,412
|
188
|
2,224
|
270,688
|
7,738
|
262,950
|
||||||||||||||||||
Real estate – residential
|
256
|
15
|
241
|
19,201
|
488
|
18,713
|
||||||||||||||||||
Consumer
|
880
|
254
|
626
|
52,853
|
2,189
|
50,664
|
||||||||||||||||||
Unallocated
|
92
|
-
|
92
|
-
|
-
|
-
|
||||||||||||||||||
Total:
|
$
|
7,310
|
$
|
1,448
|
$
|
5,862
|
$
|
530,791
|
$
|
17,044
|
$
|
513,747
|
December 31, 2012
|
||||||||||||
Number of
Contracts
|
Pre-Modification
Outstanding
Recorded
Investment
|
Post-Modification
Outstanding
Recorded
Investment
|
||||||||||
Troubled Debt Restructuring:
|
(Dollars in Thousands)
|
|||||||||||
Commercial and industrial
|
4
|
$
|
2,167
|
$
|
2,142
|
|||||||
Real estate – construction
|
-
|
-
|
-
|
|||||||||
Real estate – commercial
|
2
|
279
|
277
|
|||||||||
Real estate – residential
|
-
|
-
|
-
|
|||||||||
Consumer
|
1
|
155
|
146
|
|||||||||
Total
|
7
|
$
|
2,601
|
$
|
2,565
|
December 31, 2011
|
||||||||||||
Number of
Contracts
|
Pre-Modification
Outstanding
Recorded
Investment
|
Post-Modification
Outstanding
Recorded
Investment
|
||||||||||
Troubled Debt Restructuring:
|
(Dollars in Thousands)
|
|||||||||||
Commercial and industrial
|
2
|
$
|
374
|
$
|
361
|
|||||||
Real estate – construction
|
-
|
-
|
-
|
|||||||||
Real estate – commercial
|
1
|
2,630
|
2,626
|
|||||||||
Real estate – residential
|
-
|
-
|
-
|
|||||||||
Consumer
|
-
|
-
|
-
|
|||||||||
Total
|
3
|
$
|
3,004
|
$
|
2,987
|
As of December 31, 2012
|
||||||||
Troubled Debt Restructuring That Subsequently Defaulted:
|
Number of
Contracts
|
Recorded
Investment
|
||||||
(Dollars in Thousands)
|
||||||||
Commercial and industrial
|
- | $ | - | |||||
Real estate – construction
|
- | - | ||||||
Real estate – commercial
|
1 | 476 | ||||||
Real estate – residential
|
- | - | ||||||
Consumer
|
- | - | ||||||
Total
|
1 | $ | 476 |
As of December 31, 2011
|
||||||||
Troubled Debt Restructuring That Subsequently Defaulted:
|
Number of
Contracts
|
Recorded
Investment
|
||||||
(Dollars in Thousands)
|
||||||||
Commercial and industrial
|
- | $ | - | |||||
Real estate – construction
|
- | - | ||||||
Real estate – commercial
|
- | - | ||||||
Real estate – residential
|
- | - | ||||||
Consumer
|
2 | 252 | ||||||
Total
|
2 | $ | 252 |
Estimated
Useful Lives
|
2012
|
2011
|
|||||||
(In Thousands)
|
|||||||||
Land
|
Indefinite
|
$
|
400
|
$
|
400
|
||||
Buildings
|
30 years
|
899
|
899
|
||||||
Leasehold improvements
|
5-15 years
|
4,516
|
4,281
|
||||||
Furniture and equipment
|
2 - 7 years
|
7,490
|
6,442
|
||||||
13,305
|
12,022
|
||||||||
Less accumulated depreciation and amortization
|
(10,062
|
)
|
(9,382
|
)
|
|||||
$
|
3,243
|
$
|
2,640
|
2013
|
$
|
124
|
||
2014
|
86
|
|||
2015
|
48
|
|||
2016
|
10
|
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Demand, non-interest bearing
|
$
|
112,746
|
$
|
88,209
|
||||
Demand, interest bearing, money market and savings
|
394,317
|
352,025
|
||||||
Time, $100,000 and over
|
44,229
|
52,794
|
||||||
Time, other
|
55,478
|
60,884
|
||||||
$
|
606,770
|
$
|
553,912
|
2013
|
$
|
52,519
|
||
2014
|
26,514
|
|||
2015
|
11,320
|
|||
2016
|
3,830
|
|||
2017
|
3,393
|
|||
Thereafter
|
2,131
|
|||
$
|
99,707
|
2012
|
2011
|
||||||||
(Dollars In Thousands)
|
|||||||||
Repurchase agreements:
|
|||||||||
Balance at year-end
|
$ | 16,710 | $ | 16,218 | |||||
Average during the year
|
18,266 | 16,593 | |||||||
Maximum month-end balance
|
19,860 | 19,524 | |||||||
Weighted average rate during the year
|
0.59 | % | 0.71 | % | |||||
Weighted average rate at December 31
|
0.52 | % | 0.55 | % |
2012
|
2011
|
Rate |
Original Term
|
Maturity
|
|||||||||||
(Dollars In Thousands)
|
|||||||||||||||
Fixed Rate Note
|
$
|
7,500
|
$
|
7,500
|
3.97%
|
10 years
|
November 2017
|
||||||||
Fixed Rate Note
|
1,500
|
1,500
|
1.67%
|
4 years
|
August 2014
|
||||||||||
Fixed Rate Note
|
1,500
|
1,500
|
2.00%
|
5 years
|
August 2015
|
||||||||||
Fixed Rate Note
|
1,500
|
1,500
|
2.41%
|
6 years
|
August 2016
|
||||||||||
Fixed Rate Note
|
1,500
|
1,500
|
2.71%
|
7 years
|
August 2017
|
||||||||||
$
|
13,500
|
$
|
13,500
|
3.18%
|
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Current
|
$
|
3,502
|
$
|
3,024
|
||||
Deferred
|
(697
|
)
|
(478
|
)
|
||||
$
|
2,805
|
$
|
2,546
|
2012
|
2011
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
(Dollars In Thousands)
|
||||||||||||||||
Pre-tax book income
|
$
|
2,591
|
34.0
|
%
|
$
|
2,330
|
34.0
|
%
|
||||||||
Tax exempt interest
|
(168
|
)
|
(2.2
|
)
|
(124
|
)
|
(1.8
|
)
|
||||||||
Bank-owned life insurance income
|
(156
|
)
|
(2.0
|
)
|
(126
|
)
|
(1.8
|
)
|
||||||||
State income taxes, net of federal income
tax benefit |
419
|
5.5
|
379
|
5.5
|
||||||||||||
Other
|
119
|
1.5
|
87
|
1.2
|
||||||||||||
$
|
2,805
|
36.8
|
%
|
$
|
2,546
|
37.1
|
%
|
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$
|
3,210
|
$
|
2,940
|
||||
Depreciation and amortization
|
1,541
|
1,460
|
||||||
Deferred compensation
|
128
|
25
|
||||||
Other real estate owned (“OREO”) write-downs
|
327
|
183
|
||||||
Other
|
194
|
162
|
||||||
5,400
|
4,770
|
|||||||
Deferred tax liabilities:
|
||||||||
Purchase accounting adjustments
|
(333
|
)
|
(402
|
)
|
||||
Unrealized gain on investment securities available for sale
|
(237
|
)
|
(176
|
)
|
||||
Other
|
(247
|
)
|
(245
|
)
|
||||
(817
|
)
|
(823
|
)
|
|||||
Net Deferred Tax Asset
|
$
|
4,583
|
$
|
3,947
|
Years Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
(In Thousands, Except Per Share Data)
|
||||||||
Net income
|
$
|
4,815
|
$
|
4,308
|
||||
Preferred stock dividends and discount accretion
|
(448
|
)
|
(814
|
)
|
||||
Net income applicable to common shareholders
|
$
|
4,367
|
$
|
3,494
|
||||
Weighted average common shares outstanding
|
7,950
|
7,900
|
||||||
Effect of dilutive securities, stock options
|
174
|
115
|
||||||
Weighted average common shares outstanding used to calculate
diluted earnings per share
|
8,124
|
8,015
|
||||||
Basic earnings per common share
|
$
|
0.55
|
$
|
0.44
|
||||
Diluted earnings per common share
|
$
|
0.54
|
$
|
0.44
|
2013
|
$
|
1,223
|
||
2014
|
1,240
|
|||
2015
|
1,215
|
|||
2016
|
1,197
|
|||
2017
|
1,493
|
|||
Thereafter
|
3,360
|
|||
$
|
9,728
|
|
·
|
The Company granted to directors non-qualified stock options to purchase an aggregate of 61,800 shares of Company common stock. These options are scheduled to vest 20% per year over five years beginning December 12, 2012. These options were granted with an exercise price of $5.19 per share based upon the $4.69 trading price of Company’s common stock on the grant date.
|
|
·
|
The Company granted to employees incentive stock options to purchase an aggregate of 71,379 shares of Company common stock. These options are scheduled to vest 20% per year over five years beginning December 12, 2012. The options were granted with an exercise price of $5.19 per share based upon the $4.69 trading price of Company’s common stock on the grant date.
|
Number of
Shares
|
Weighted
Average
Price
|
Weighted
Average
Remaining
Contractual
Life
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Options outstanding, December 31, 2011
|
917,581 | $ | 6.82 | |||||||||||||
Options granted
|
68,400 | 5.50 | ||||||||||||||
Options exercised
|
(37,130 | ) | 3.34 | |||||||||||||
Options forfeited
|
(27,246 | ) | 3.91 | |||||||||||||
Options outstanding, December 31, 2012
|
921,605 | $ | 6.95 | 4.9 years | $ | 911,624 | ||||||||||
Options exercisable, end of year
|
610,593 | $ | 8.23 | 3.3 years | $ | 552,848 | ||||||||||
Options price range at end of year
|
$3.01 to $14.17 |
Options Outstanding
|
|||||||||
Range of Exercise Prices
|
Number
Outstanding
at December
31, 2012
|
Weighted-
Average
Remaining
Contractual
Life
|
Weighted-
Average
Exercise
Price
|
||||||
$3.01 - $3.91
|
373,275
|
6.0 years
|
$
|
3.35
|
|||||
$4.39 - $4.94
|
14,156
|
4.8 years
|
4.39
|
||||||
$5.01 - $5.95
|
195,153
|
9.2 years
|
5.30
|
||||||
$6.11 - $6.38
|
563
|
0.8 years
|
6.27
|
||||||
$7.23 - $7.95
|
1,095
|
1.3 years
|
7.39
|
||||||
$8.13 - $9.86
|
61,664
|
0.2 years
|
8.27
|
||||||
$11.17 - $14.17
|
275,699
|
1.2 years
|
12.83
|
||||||
921,605
|
Dividend yield
|
0.00
|
%
|
||
Expected volatility
|
29.39
|
%
|
||
Risk-free interest rate
|
1.06
|
%
|
||
Forfeiture rate
|
5.00
|
%
|
||
Expected life
|
7.5 years
|
|||
Fair value of options granted
|
$
|
1.87
|
Dividend yield
|
0.00
|
%
|
||
Expected volatility
|
29.97
|
%
|
||
Risk-free interest rate
|
1.18
|
%
|
||
Forfeiture rate
|
0.00
|
%
|
||
Expected life
|
7.5 years
|
|||
Fair value of options granted
|
$
|
1.94
|
Dividend yield
|
0.00
|
%
|
||
Expected volatility
|
30.82
|
%
|
||
Risk-free interest rate
|
1.40
|
%
|
||
Forfeiture rate
|
0.00
|
%
|
||
Expected life
|
7.5 years
|
|||
Fair value of options granted
|
$
|
2.09
|
Dividend yield
|
0.00
|
%
|
||
Expected volatility
|
30.58
|
%
|
||
Risk-free interest rate
|
1.45
|
%
|
||
Forfeiture rate
|
5.00
|
%
|
||
Expected life
|
7.5 years
|
|||
Fair value of options granted
|
$
|
1.53
|
Number of Shares
|
Weighted
Average Price
|
|||||||
Unvested at December 31, 2010
|
22,042
|
$
|
3.93
|
|||||
Granted
|
-
|
-
|
||||||
Unvested at December 31, 2011
|
22,042
|
$
|
3.93
|
|||||
Forfeited
|
(4,133
|
)
|
3.93
|
|||||
Unvested at December 31, 2012
|
17,909
|
$
|
3.93
|
Actual
|
For Capital Adequacy
Purposes
|
To be Well Capitalized under
Prompt Corrective Action
Provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||
As of December 31, 2012
|
||||||||||||||||||||||||
Total capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Community Partners Bancorp
|
$ |
80,835
|
13.28
|
%
|
$ |
>48,696
|
>8.00
|
%
|
$ |
N/A
|
N/A
|
|||||||||||||
Two River Community Bank
|
80,773
|
13.27
|
%
|
>48,695
|
>8.00
|
%
|
>60,869
|
>10.00
|
%
|
|||||||||||||||
Tier 1 capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Community Partners Bancorp
|
73,220
|
12.03
|
%
|
>24,346
|
>4.00
|
%
|
N/A
|
N/A
|
||||||||||||||||
Two River Community Bank
|
73,159
|
12.02
|
%
|
>24,346
|
>4.00
|
%
|
>36,519
|
>6.00
|
%
|
|||||||||||||||
Tier 1 capital (to average assets)
|
||||||||||||||||||||||||
Community Partners Bancorp
|
73,220
|
10.36
|
%
|
>28,270
|
>4.00
|
%
|
N/A
|
N/A
|
||||||||||||||||
Two River Community Bank
|
73,159
|
10.35
|
%
|
>28,274
|
>4.00
|
%
|
>35,343
|
>5.00
|
%
|
|||||||||||||||
As of December 31, 2011
|
||||||||||||||||||||||||
Total capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Community Partners Bancorp
|
$ |
75,444
|
13.26
|
%
|
$ |
>45,517
|
>8.00
|
%
|
$ |
N/A
|
N/A
|
|||||||||||||
Two River Community Bank
|
75,340
|
13.25
|
%
|
>45,488
|
>8.00
|
%
|
>56,860
|
>10.00
|
%
|
|||||||||||||||
Tier 1 capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Community Partners Bancorp
|
68,332
|
12.01
|
%
|
>22,758
|
>4.00
|
%
|
N/A
|
N/A
|
||||||||||||||||
Two River Community Bank
|
68,229
|
12.00
|
%
|
>22,743
|
>4.00
|
%
|
>34,115
|
>6.00
|
%
|
|||||||||||||||
Tier 1 capital (to average assets)
|
||||||||||||||||||||||||
Community Partners Bancorp
|
68,332
|
10.39
|
%
|
>26,307
|
>4.00
|
%
|
N/A
|
N/A
|
||||||||||||||||
Two River Community Bank
|
68,229
|
10.38
|
%
|
>26,292
|
>4.00
|
%
|
>32,866
|
>5.00
|
%
|
|
Level 1:
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
Level 2:
|
Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
|
|
Level 3:
|
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).
|
Description
|
(Level 1)
Quoted Prices
in Active
Markets for
Identical
Assets
|
(Level 2)
Significant
Other
Observable
Inputs
|
(Level 3)
Significant
Unobservable
Inputs
|
Total
|
||||||||||||
(In Thousands)
|
||||||||||||||||
At December 31, 2012
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
Municipal securities
|
$
|
-
|
$
|
1,310
|
$
|
-
|
$
|
1,310
|
||||||||
GSE: Residential mortgage-backed
securities
|
-
|
20,374
|
-
|
20,374
|
||||||||||||
Collateralized residential mortgage
obligations
|
22,996
|
-
|
22,996
|
|||||||||||||
Corporate debt securities, primarily financial
institutions
|
-
|
3,627
|
28
|
3,655
|
||||||||||||
CRA mutual fund
|
2,421
|
-
|
-
|
2,421
|
||||||||||||
Total
|
$
|
2,421
|
$
|
48,307
|
$
|
28
|
$
|
50,756
|
||||||||
At December 31, 2011
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
U.S. Government agency securities
|
$
|
-
|
$
|
2,258
|
$
|
-
|
$
|
2,258
|
||||||||
Municipal securities
|
-
|
1,307
|
-
|
1,307
|
||||||||||||
GSE: Residential mortgage-backed
securities
|
-
|
21,878
|
-
|
21,878
|
||||||||||||
Collateralized residential mortgage
obligations
|
17,163
|
-
|
17,163
|
|||||||||||||
Corporate debt securities, primarily financial
institutions
|
-
|
2,439
|
89
|
2,528
|
||||||||||||
CRA mutual fund
|
2,321
|
-
|
-
|
2,321
|
||||||||||||
Total
|
$
|
2,321
|
$
|
45,045
|
$
|
89
|
$
|
47,455
|
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
|
||||||||
Securities available for sale
|
||||||||
December 31, 2012
|
December 31, 2011
|
|||||||
(In Thousands)
|
||||||||
Beginning balance January 1
|
$
|
89
|
$
|
29
|
||||
Total gains/(losses):
|
||||||||
Included in earnings
|
(80
|
)
|
-
|
|||||
Included in other comprehensive income
|
19
|
60
|
||||||
Ending Balance
|
$
|
28
|
$
|
89
|
Description
|
(Level 1)
Quoted Prices
in Active
Markets for
Identical
Assets
|
(Level 2)
Significant
Other
Observable
Inputs
|
(Level 3)
Significant
Unobservable
Inputs
|
Total
|
||||||||||||
(In Thousands)
|
||||||||||||||||
At December 31, 2012
|
||||||||||||||||
Impaired loans
|
$
|
-
|
$
|
-
|
$
|
6,246
|
$
|
6,246
|
||||||||
Other real estate owned
|
-
|
-
|
1,752
|
1,752
|
||||||||||||
At December 31, 2011
|
||||||||||||||||
Impaired loans
|
$
|
-
|
$
|
-
|
$
|
8,187
|
$
|
8,187
|
||||||||
Other real estate owned
|
-
|
-
|
7,765
|
7,765
|
||||||||||||
Property held for sale
|
-
|
-
|
1,000
|
1,000
|
|
·
|
Impaired loans – Impaired loans measured at fair value are those loans in which the Company has measured impairment generally based on the fair value of the loan’s collateral. This method of fair value measurement is used on all of the Company’s impaired loans. Fair value is generally determined based upon either independent third party appraisals of the properties or discounted cash flows based upon the expected proceeds. The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The discount range for appraisal values range from 0.0% to 5.0% (weighted average of 1.5%), and liquidation expenses range from 2.2% to 13.6% (weighted average of 6.7%). These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.
|
|
·
|
Other Real Estate Owned (“OREO”) – Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and carried at fair value less cost to sell. Fair value is based upon the appraised value of the collateral, adjusted by management for factors such as economic conditions and other market factors. The discount range for collateral adjustment to OREO ranges from 3.5% to 8.5% (weighted average of 5.7%). These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement. At December 31, 2012, properties totaling $1,752,000 as compared to $7,765,000 at December 31, 2011, were acquired through foreclosure and are carried at fair value less estimated selling costs based on current appraisals.
|
|
·
|
Property held for sale – This real estate property is carried in other assets as property held for sale at fair value based upon the appraised value of the property.
|
Fair Value Measurements at December 31, 2012
|
||||||||||||||||||||
(in thousands)
|
Carrying
Amount
|
Estimated
Fair
Value
|
(Level 1)
Quoted Prices
in Active
Markets for
Identical
Assets
|
(Level 2)
Significant
Other
Observable
Inputs
|
(Level 3)
Significant
Unobservable
Inputs
|
|||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
48,546
|
$
|
48,546
|
$
|
48,546
|
$
|
-
|
$
|
-
|
||||||||||
Securities available for sale
|
50,756
|
50,756
|
2,421
|
48,307
|
28
|
|||||||||||||||
Securities held to maturity
|
21,586
|
21,935
|
-
|
21,935
|
-
|
|||||||||||||||
Restricted investments
|
3,040
|
3,040
|
-
|
-
|
3,040
|
|||||||||||||||
Loans receivable
|
563,463
|
565,653
|
-
|
-
|
565,653
|
|||||||||||||||
Accrued interest receivable
|
1,884
|
1,884
|
-
|
237
|
1,647
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
606,770
|
608,329
|
-
|
608,329
|
-
|
|||||||||||||||
Securities sold under agreements to repurchase
|
16,710
|
16,710
|
-
|
16,710
|
-
|
|||||||||||||||
Long-term debt
|
13,500
|
14,921
|
-
|
14,921
|
-
|
|||||||||||||||
Accrued interest payable
|
70
|
70
|
-
|
70
|
-
|
|||||||||||||||
Off-balance sheet financial instruments:
|
||||||||||||||||||||
Commitments to extend credit and outstanding
letters of credit
|
-
|
-
|
-
|
-
|
-
|
2011
|
||||||||
Carrying
Amount
|
Estimated
Fair
Value
|
|||||||
(in thousands)
|
||||||||
Financial assets:
|
||||||||
Cash and cash equivalents
|
$
|
38,022
|
$
|
38,022
|
||||
Securities available for sale
|
47,455
|
47,455
|
||||||
Securities held to maturity
|
13,105
|
13,222
|
||||||
Restricted investments
|
2,237
|
2,237
|
||||||
Loans receivable
|
522,820
|
516,174
|
||||||
Accrued interest receivable
|
1,928
|
1,928
|
||||||
Financial liabilities:
|
||||||||
Deposits
|
553,912
|
556,442
|
||||||
Securities sold under agreements to repurchase
|
16,218
|
16,218
|
||||||
Long-term debt
|
13,500
|
14,950
|
||||||
Accrued interest payable
|
107
|
107
|
||||||
Off-balance sheet financial instruments:
|
||||||||
Commitments to extend credit and outstanding
letters of credit
|
-
|
-
|
Dividend Rate Following Investment Date
|
||||||
Increase in Qualified Small Business Lending
from the Baseline
|
First 9
Quarters*
|
Quarter 10
to Year 4.5
|
After Year
4.5
|
|||
0% or less
|
5%
|
7%
|
9%
|
|||
More than 0%, but less than 2.5%
|
5%
|
5%
|
9%
|
|||
2.5% or more, but less than 5%
|
4%
|
4%
|
9%
|
|||
5% or more, but less than 7.5%
|
3%
|
3%
|
9%
|
|||
7.5% or more, but less than 10%
|
2%
|
2%
|
9%
|
|||
10% or more
|
1%
|
1%
|
9%
|
* For the first nine quarters, the dividend rate will be adjusted quarterly.
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Assets
|
||||||||
Cash and cash equivalents
|
$
|
114
|
$
|
190
|
||||
Investments in subsidiaries
|
91,904
|
87,031
|
||||||
Other assets
|
25
|
39
|
||||||
Total assets
|
$
|
92,043
|
$
|
87,260
|
||||
Liabilities and Shareholders’ Equity
|
||||||||
Other liabilities
|
$
|
78
|
$
|
126
|
||||
Shareholders’ equity
|
91,965
|
87,134
|
||||||
Total liabilities and shareholders’ equity
|
$
|
92,043
|
$
|
87,260
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Other operating expenses
|
$
|
175
|
$
|
152
|
||||
Loss before income taxes
|
(175
|
)
|
(152
|
)
|
||||
Income tax expense
|
2
|
2
|
||||||
Loss before undistributed income of subsidiaries
|
(177
|
)
|
(154
|
)
|
||||
Equity in undistributed income of subsidiaries
|
4,992
|
4,462
|
||||||
Net income
|
$
|
4,815
|
$
|
4,308
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
(In Thousands)
|
||||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
4,815
|
$
|
4,308
|
||||
Adjustments to reconcile net income
to net cash provided by operating
activities:
|
||||||||
Equity in undistributed net income of subsidiaries
|
(4,992
|
)
|
(4,462
|
)
|
||||
Stock option compensation expense
|
175
|
154
|
||||||
Other, net
|
191
|
578
|
||||||
Net cash provided by operating activities
|
189
|
578
|
||||||
Cash flows from investing activities:
|
||||||||
Contributions to subsidiary, net
|
-
|
(3,000
|
)
|
|||||
Net cash used in investing activities
|
-
|
(3,000
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from exercise of stock options
|
124
|
267
|
||||||
Tax benefit of stock options exercised
|
13
|
41
|
||||||
Proceeds from issuance of preferred stock, Series C
|
-
|
12,000
|
||||||
Preferred stock, Series C issuance costs
|
-
|
(48
|
)
|
|||||
Redemption of preferred stock, Series A
|
-
|
(9,000
|
)
|
|||||
Redemption of preferred stock, Series A warrants
|
-
|
(460
|
)
|
|||||
Proceeds from employee stock purchase program
|
46
|
32
|
||||||
Cash dividends paid on preferred stocks
|
(448
|
)
|
(442
|
)
|
||||
Net cash (used in) provided by financing activities
|
(265
|
)
|
2,390
|
|||||
Decrease in cash and cash equivalents
|
(76
|
)
|
(32
|
)
|
||||
Cash and cash equivalents at beginning of period
|
190
|
222
|
||||||
Cash and cash equivalents at end of year
|
$
|
114
|
$
|
190
|
2012
|
||||||||||||||||
Fourth Quarter
|
Third Quarter
|
Second Quarter
|
First Quarter
|
|||||||||||||
Interest income
|
$
|
7,762
|
$
|
7,739
|
$
|
7,609
|
$
|
7,728
|
||||||||
Interest expense
|
1,113
|
1,126
|
1,157
|
1,222
|
||||||||||||
Net interest income
|
6,649
|
6,613
|
6,452
|
6,506
|
||||||||||||
Provision for loan losses
|
430
|
330
|
270
|
350
|
||||||||||||
Net interest income after provision for loan losses
|
6,219
|
6,283
|
6,182
|
6,156
|
||||||||||||
Non-interest income
|
702
|
597
|
760
|
568
|
||||||||||||
Non-interest expense
|
4,963
|
4,919
|
5,063
|
4,902
|
||||||||||||
Income before income taxes
|
1,958
|
1,961
|
1,879
|
1,822
|
||||||||||||
Income taxes
|
718
|
727
|
693
|
667
|
||||||||||||
Net income
|
1,240
|
1,234
|
1,186
|
1,155
|
||||||||||||
Preferred stock dividends
|
(130
|
)
|
(31
|
)
|
(150
|
)
|
(137
|
)
|
||||||||
Net income available to common shareholders
|
$
|
1,110
|
$
|
1,203
|
$
|
1,036
|
$
|
1,018
|
||||||||
Per common share data:
|
||||||||||||||||
Basic earnings
|
$
|
0.14
|
$
|
0.15
|
$
|
0.13
|
$
|
0.13
|
||||||||
Diluted earnings
|
$
|
0.14
|
$
|
0.15
|
$
|
0.13
|
$
|
0.13
|
2011
|
||||||||||||||||
Fourth Quarter
|
Third Quarter
|
Second Quarter
|
First Quarter
|
|||||||||||||
Interest income
|
$
|
7,739
|
$
|
7,819
|
$
|
7,843
|
$
|
7,645
|
||||||||
Interest expense
|
1,276
|
1,302
|
1,348
|
1,312
|
||||||||||||
Net interest income
|
6,463
|
6,517
|
6,495
|
6,333
|
||||||||||||
Provision for loan losses
|
350
|
730
|
600
|
525
|
||||||||||||
Net interest income after provision for loan losses
|
6,113
|
5,787
|
5,895
|
5,808
|
||||||||||||
Non-interest income
|
522
|
899
|
868
|
436
|
||||||||||||
Non-interest expense
|
4,716
|
4,920
|
5,052
|
4,786
|
||||||||||||
Income before income taxes
|
1,919
|
1,766
|
1,711
|
1,458
|
||||||||||||
Income taxes
|
717
|
661
|
633
|
535
|
||||||||||||
Net income
|
1,202
|
1,105
|
1,078
|
923
|
||||||||||||
Preferred stock dividends & discount accretion
|
(126
|
)
|
(402
|
)
|
(143
|
)
|
(143
|
)
|
||||||||
Net income available to common shareholders
|
$
|
1,076
|
$
|
703
|
$
|
935
|
$
|
780
|
||||||||
Per common share data:
|
||||||||||||||||
Basic earnings
|
$
|
0.14
|
$
|
0.09
|
$
|
0.12
|
$
|
0.10
|
||||||||
Diluted earnings
|
$
|
0.13
|
$
|
0.09
|
$
|
0.12
|
$
|
0.10
|
COMMUNITY PARTNERS BANCORP
|
|||
Date: March 29, 2013
|
By:
|
/s/ WILLIAM D. MOSS
|
|
William D. Moss
|
|||
President and Chief Executive Officer
|
|||
Signature
|
Capacity
|
Date
|
||
/s/ FRANK J. PATOCK, JR.
|
Chairman of the Board
|
March 29, 2013
|
||
Frank J. Patock, Jr.
|
||||
/s/ CHARLES T. PARTON
|
Vice Chairman of the Board
|
March 29, 2013
|
||
Charles T. Parton
|
||||
/s/ JAMES M. BOLLERMAN
|
Director
|
March 29, 2013
|
||
James M. Bollerman
|
||||
/s/ ROBERT E. GREGORY
|
Director
|
March 29, 2013
|
||
Robert E. Gregory
|
||||
/s/ ROBERT B. GROSSMAN, MD
|
Director
|
March 29, 2013
|
||
Robert B. Grossman, MD
|
||||
/s/ JOHN E. HOLOBINKO, ESQ.
|
Director
|
March 29, 2013
|
||
John E. Holobinko, ESQ.
|
||||
/s/ WILLIAM F. LaMORTE
|
Director
|
March 29, 2013
|
||
William F. LaMorte
|
||||
/s/ JOSEPH F.X. O’SULLIVAN
|
Director
|
March 29, 2013
|
||
Joseph F.X. O’Sullivan
|
||||
/s/ JOHN J. PERRI, JR. CPA
|
Director
|
March 29, 2013
|
||
John J. Perri, Jr. CPA
|
||||
/s/ WILLIAM STATTER
|
Director
|
March 29, 2013
|
||
William Statter
|
||||
/s/ ANDREW A. VITALE, CPA
|
Director
|
March 29, 2013
|
||
Andrew A. Vitale, CPA
|
||||
/s/ ROBIN ZAGER
|
Director
|
March 29, 2013
|
||
Robin Zager
|
/s/ WILLIAM D. MOSS
|
President, Chief Executive Officer, Director
|
March 29, 2013
|
||
William D. Moss
|
||||
/s/ A. RICHARD ABRAHAMIAN
|
Executive Vice President, Chief Financial Officer
|
March 29, 2013
|
||
A Richard Abrahamian
|
(Principal Financial and Accounting Officer)
|
|||
Exhibit
No.
|
Description
|
||
3.1
|
Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-3 (File No. 333-182855) filed with the SEC on July 26, 2012)
|
||
3.2
|
By-laws of the Registrant, as amended (incorporated by reference to Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-51889) for the quarterly period ended September 30, 2011 filed with the SEC on November 10, 2011)
|
||
4.1
|
Specimen certificate representing the Registrant’s common stock, no par value per share (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-4/A filed with the SEC on January 6, 2006 (the “January S-4/A”))
|
||
4.2
|
Specimen certificate representing the Registrant’s Senior Non-Cumulative Perpetual Stock, Series C, without par value (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 12, 2011)
|
||
4.3
|
Shareholder Rights Agreement, dated as of July 20, 2011, by and between the Registrant and Registrar and Transfer Company (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 26, 2011)
|
||
4.4
|
Form of Rights Certificate of the Registrant (incorporated by reference to Exhibit B to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 26, 2011)
|
||
10.0
|
#
|
Community Partners Bancorp Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 filed with the SEC on February 18, 2011).
|
|
10.1
|
#
|
Supplemental Executive Retirement Agreement between Two River Community Bank and William D. Moss (incorporated by reference to Exhibit 10.5 to the S-4)
|
|
10.2
|
#
|
Supplemental Executive Retirement Agreement between Two River Community Bank and Alan Turner (incorporated by reference to Exhibit 10.8 to the S-4)
|
|
10.3
|
#
|
Two River Community Bank 2003 Incentive Stock Option Plan (incorporated by reference to Exhibit 10.9 to the S-4)
|
|
10.4
|
#
|
Two River Community Bank 2003 Non-qualified Stock Option Plan (incorporated by reference to Exhibit 10.10 to the S-4)
|
|
10.5
|
Services agreement between Two River Community Bank and Phoenix International Ltd., Inc. dated November 18, 1999, and subsequent amendment #1 dated February 1, 2005 (incorporated by reference to Exhibit 10.24 to the S-4)
|
||
10.6
|
Remote processing services agreement between Harland Financial Solutions, Inc. and Two River Community Bank, dated February 27, 2006
|
||
10.7
|
#
|
Community Partners Bancorp 2007 Equity Incentive Plan (incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 17, 2007)
|
|
10.8
|
Form of Incentive Stock Option Agreement under 2007 Equity Incentive Plan
|
||
10.9
|
Form of Non-qualified Stock Option Agreement under 2007 Equity Incentive Plan
|
10.10
|
Securities Purchase Agreement, effective August 11, 2011, between the Registrant and the United States Department of the Treasury (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 12, 2011)
|
||
10.11
|
#
|
First Amendment to the Two River Community Bank Supplemental Executive Retirement Agreement dated July 7, 2005 by and between Two River Community Bank and William D. Moss, effective as of January 1, 2005 (incorporated by reference to Exhibit 10.13 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 filed with the SEC on May 15, 2009)
|
|
10.12
|
#
|
First Amendment to the Two River Community Bank Supplemental Executive Retirement Agreement dated January 1, 2005 by and between Two River Community Bank and Alan B. Turner, effective as of January 1, 2005 (incorporated by reference to Exhibit 10.20 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 filed with the SEC on May 15, 2009)
|
|
10.13
|
#
|
Employment Agreement, effective as of May 28, 2010, by and between Community Partners Bancorp, Two River Community Bank and William D. Moss (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 filed with SEC on August 16, 2010)
|
|
10.14
|
#
|
First Amendment to Employment Agreement, effective as of July 22, 2010, by and between Community Partners Bancorp, Two River Community Bank and William D. Moss (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 filed with SEC on August 16, 2010)
|
10.15
|
#
|
Change in Control Agreement, effective as of June 1, 2010, by and between Community Partners Bancorp, Two River Community Bank and Alan B. Turner (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 filed with SEC on August 16, 2010)
|
|
10.16
|
#
|
First Amendment to Change in Control Agreement, effective as of July 22, 2010, by and between Community Partners Bancorp, Two River Community Bank and Alan B. Turner (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 filed with SEC on August 16, 2010)
|
|
10.17
|
#
|
Second Amendment to the Two River Community Bank Supplemental Executive Retirement Agreement dated March 1, 2010 by and between Two River Community Bank and Alan Turner
|
|
10.18
|
#
|
Second Amendment to the Two River Community Bank Supplemental Executive Retirement Agreement dated June 11, 2010 by and between Two River Community Bank and William D. Moss, effective as of June 1, 2010(incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 filed with SEC on August 16, 2010)
|
|
10.19
|
#
|
Third Amendment to the Two River Community Bank Supplemental Executive Retirement Agreement dated June 11, 2010 by and between Two River Community Bank and Alan B. Turner, effective as of June 1, 2010(incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 filed with SEC on August 16, 2010)
|
|
10.20
|
#
|
Change in Control Agreement, effective as of July 20, 2010, by and between Community Partners Bancorp, Two River Community Bank and A. Richard Abrahamian (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 filed with SEC on August 16, 2010)
|
|
10.21
|
#
|
Restricted Stock Agreement, dated as of September 30, 2010, by and between Community Partners Bancorp, Two River Community Bank and William D. Moss and supplemented effective October 20, 2010 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010 filed with SEC on November 15, 2010)
|
|
10.22
|
#
|
Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010 filed with SEC on November 15, 2010)
|
|
10.23
|
#
|
Change in Control Agreement, effective as of April 20, 2011, by and between Community Partners Bancorp, Two River Community Bank and Robert C. Werner (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with SEC on April 21, 2011)
|
10.24
|
#
|
Two River Community Bank 2012 Incentive Bonus Program (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 filed with SEC on August 14, 2012)
|
|||
21
|
*
|
Subsidiaries of the Registrant
|
|||
23
|
*
|
Consent of Independent Registered Public Accounting Firm
|
|||
31.1
|
*
|
Certification of William D. Moss, President and Chief Executive Officer of the Registrant, pursuant to Securities Exchange Act Rule 13a-14(a)
|
|||
31.2
|
*
|
Certification of A. Richard Abrahamian, Chief Financial Officer of the Registrant, pursuant to Securities Exchange Act Rule 13a-14(a)
|
|||
32
|
*
|
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by William D. Moss, President and Chief Executive Officer of the Registrant, and A. Richard Abrahamian, Chief Financial Officer of the Registrant
|
|||
101.INS**
|
XBRL Instance Document
|
||||
101.SCH**
|
XBRL Taxonomy Extension Schema
|
||||
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase
|
||||
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase
|
||||
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase
|
||||
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase
|
* Filed herewith.
|
|||
** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. |
HARLAND FINANCIAL SOLUTIONS, INC. | TWO RIVER COMMUNITY BANK | ||||
By: | /s/ W. Zayas | By: | /s/ Michael J. Gormley | ||
Name: | W. Zayas | Name: | Michael J. Gormley | ||
Title: | SVP + G.M. | Title: | EVP CFO | ||
Date: | 3/3/06 | Date: | 2/27/2006 |
|
1.
|
In Section 2.13, HFS agrees that any change to the Services shall not materially decrease or fundamentally alter any deliverables of the Services provided hereunder.
|
|
2.
|
In Section 4.4:
|
|
§
|
In the second sentence of the first paragraph is replaced with the following:
|
|
§
|
With respect to the second paragraph describing instances in which fee increases may exceed the percentage set forth in the immediately preceding section, HFS agrees that any such increases will not exceed 30% of the then-current applicable recurring fee(s) listed in Schedule 1.
|
|
3.
|
The parties agree that the limitations of Section 8.1 and Section 8.2 shall not apply to the extent that damages are the result of the gross negligence or willful misconduct of HFS.
|
|
4.
|
Section 9.1 is deleted in its entirety, and replaced with the following:
|
|
5.
|
The fifth sentence of Section 9.2, describing the location for dispute resolution, is deleted and replaced with the following:
|
CUSTOMER: | HFS: | |||||
Two River Community Bank | Harland Financial Solutions, Inc. | |||||
BY: | /s/ Michael J. Gormley | BY: | /s/ W. Zayas | |||
NAME: | Michael J. Gormley | NAME: | W. Zayas | |||
TITLE: | EVP CFO | TITLE: | SVP + G.M. | |||
DATE: | 2/27/2006 | EFFECTIVE DATE: | 3/3/06 | |||
1250 Highway 35 South
Middletown, NJ 07748
|
400 SW Sixth Avenue
Portland, OR 97204
|
A.
|
Recurring Charges. Commencing the month the Live Date occurs and for each month thereafter during the term of the Agreement, Customer agrees to pay the fees set forth in this Section 1:
|
|
1)
|
Live Date. On the Live Date, Customer shall pay to HFS the following payments, which amounts are due and payable to HFS on the Live Date:
|
|
(i)
|
a Monthly Asset Value Payment (as defined below) prorated for the number of days remaining in the then current month; and
|
|
(ii)
|
a Monthly Asset Value Payment, which shall be applied by HFS towards the actual Monthly Asset Value Payment for the Customer’s last month Remote Processing Services under this Agreement (the amount by which the actual Monthly Asset Value Payment for such exceeds the payment made at this time shall be invoiced separately as of the last such month).
|
|
2)
|
Recurring Monthly Charges. Customer shall pay to HFS a Monthly Asset Value Payment based on the Total Bank Assets as of the last business day of the immediately preceding month. Each Monthly Asset Value payment shall be due and payable within thirty (30) days of Customer’s receipt of an invoice for such amount.
|
|
3)
|
Monthly Asset Value Payment. For purposes of this Section 1(A), “Monthly Asset Value Payment” shall mean and be determined according to the following formula:
|
|
4)
|
Reporting Requirements. On or before the third (3rd) business day of each calendar month, Customer shall submit to HFS (by such means as directed by HFS from time to time (i.e., via email, fax or other means where confirmation of receipt by HFS is available) its Asset Value as of the last business day of the immediately preceding calendar month. Upon request, Customer shall promptly confirm its Asset Value on the Live Date for purposes of the payment referenced in Section 1(A)(1) above. In the event Customer fails to provide its Asset Value in a timely manner as provided in the Section, HFS shall have the right and option to either (i) wait on the Asset Value to be provided or (ii) rely on the most recently provided Asset Value for Customer and proceed with invoicing for charges as provided hereunder (and adjusting the charges for the immediately following months if the Asset Value is subsequently determined to have been incorrect).
|
B.
|
One Time, Annual and Monthly Recurring Fees Based on Interfaces and Third-Party Products.
|
|
1)
|
HFS Interfaces to Third Party Products and Additional Fees (Any existing standard HFS Interface is available
|
Function/ Services Utilized
|
Third Party
Products*
|
One Time
Set-Up
Fee
|
One Time
Interface
License Fee
|
Annual
Support Fee
|
Monthly
Fee
|
Monthly
Transmission
Fee
|
All Existing HFS Standard Interfaces are included
|
N/A
|
N/A
|
N/A
|
Included
|
N/A
|
|
2)
|
Third Party Products Licensed Pursuant to Section 2.18 of the Agreement and Additional Fees
|
Third Party
Vendor
|
Functions/Services Utilized
|
One Time
License Fees
|
Implementation Fees
|
Annual Support Fee
|
Star
|
Off-line ATM via Phoenix XM
|
N/A
|
N/A
|
Included
|
|
3)
|
Third Party Interfaces Not Licensed Under the Agreement
|
Third Party
Products
|
Function/Services Utilized
|
N/A
|
|
4)
|
Third Party Interfaces Licensed Under the Agreement and Additional Fees
|
Product Related to
Third Party Interface
|
Third Party
Products
|
One Time
Set-Up Fee
|
One Time
Interface
License Fee
|
Annual
Support Fee
|
Monthly
Fee
|
Monthly
Transmission
Fee
|
None
|
|
5)
|
Third Party Interfaces Not Licensed Under the Agreement and Additional Fees
|
C.
|
HFS One Time System Implementation Fees†
|
One Time Fees |
Set-Up for standard HFS Phoenix Banking System, Definitions, Deposits, Loans, Relationship Information Management, and General Ledger Setup, including Database Server
|
$97,647.00 (The Town Bank)
|
|
Phoenix Teller Application
|
$ included
|
|
Network Design Fee for each Customer Connection to the Data Center (Does not include Customer’s internal systems
|
$ N/A
|
|
Holding Company
|
$4,500
|
|
On-line ATM Implementation – The Town Bank - $14,859.50 (Optional)
|
||
On-line ATM Implementation – Two River Community Bank - $18,825 (Optional)
|
D.
|
Recurring Monthly Fees for Data Communications
|
Monthly Fees
|
Terminal Access
|
Included
|
|
Equipment Charges DSU/CSU
|
Included
|
|
Communications Hardware maintenance
|
(as set forth in Schedule 4)*
|
|
High-Speed Frame Relay
|
(as set forth in Schedule 4)*
|
|
Backup Circuit (ISDN)
|
(as set forth in Schedule 4)*
|
|
Internet Bandwidth
|
(as set forth in Schedule 4)*
|
E.
|
Additional Data Conversion Fees (see Schedule 5)†
|
ATM/Debit Card Conversion
|
Included
|
|
Deposit Account Transaction History
|
$10,000
|
|
Loan Account Transaction History
|
$10,000
|
|
Internet Banking Conversion
|
$7,500
|
F.
|
Training Fees†
|
Training at Implementation
|
Included (as set forth in Schedule 5)
|
G.
|
Recurring Monthly Fees for Other Services
|
Minimum Monthly Fees
|
Business Recovery Services
|
$ Included
|
|
Provide extract files for Credit Bureau Reporting to third party
|
$ Included
|
|
Provide extract files for Delinquent Child Support match to third party
|
$ Included
|
|
Provide extract files for OFAC match to third party
|
$ Included
|
|
Additional Databases (Reporting, etc.)
|
$400/each
|
H.
|
Recurring Fees for Remote Processing Services Based on Actual Usage of Such Specific Services. Customer agrees to pay the following fees for each month during the term of this Agreement based on its usage of the services set forth in this Section 2:
|
1. Additional Services
|
Recurring Fees Based on Usage of Services
|
|
(1) Research
|
Based upon actual time at HFS’ then current hourly rate otherwise charged for Consulting Services*
|
|
(2) Database Mass Changes
|
Based upon actual time at HFS’ then current hourly rate otherwise charged for Consulting Services*
|
|
(3) Third Party Certification of Communications
HFS certified vendors
Non-certified vendors
|
Based upon actual time at HFS’ then current hourly rate otherwise charged for Consulting Services*
Based upon actual time at HFS’ then current hourly rate otherwise charged for Consulting Services*
|
|
(4) Custom Extracts/Development
|
Based upon actual time at HFS’ then current hourly rate otherwise charged for Consulting Services*
|
|
(5) Develop Crystal Reports
|
Based upon actual time at HFS’ then current hourly rate otherwise charged for Consulting Services*
|
|
*These are not Consulting Services (although charged at then current hourly rate) and do not require a Statement of Work. These services are provided as part of the Remote Processing Services.
|
||
2. Fees for Forms and Reports
|
||
Design Teller Receipts
|
$200.00 per receipt
|
I.
|
De-conversion Fees Following Termination. In the event of termination, Phoenix agrees to provide reasonable de-conversion assistance and Customer’s Phoenix database (provided that new core provider signs an HFS nondisclosure agreement) for which Customer agrees to pay in advance to Phoenix a de-conversion fee equal to two (2) times the average Monthly Asset Value Payment for the Phoenix Core System for the three (3) months prior to termination.
|
J.
|
Early Termination Right
|
|
o
|
Customer must pay all Monthly Asset Value Payments as well as any other recurring fees which would have been incurred during the remainder of the 5-year term had this termination right not been exercised. Monthly Asset Value Payments for the remainder of the term shall be determined using Customer’s asset size as of the last Monthly Asset Value Payment prior to the merger or acquisition:
|
|
o
|
In addition, prior to performance of de-conversion services by HFS, Customer must pay to HFS an early termination fee equal to the difference between the total Monthly Asset Value Payments paid or payable during the 5-year term and the total Monthly Asset Value Payments that would be or would have been payable by Customer over the 5-year term had the discount described in Section A(3) of this Schedule 1 not been applied.
|
K.
|
Approval Condition
|
Initials: | ||||
HFS
|
/s/ WZ | |||
Customer |
/s/ MJG
|
|||
2/27/06
|
1.
|
On-Line Processing Hours (all such hours subject to holiday schedule set forth in Section 3 below):
|
2.
|
Report Delivery
|
3.
|
HFS Holiday Schedule
|
4.
|
Service Level Response Guidelines
|
5.
|
Service Level for Remote Processing Services
|
A.
|
HFS shall make commercially reasonable efforts to ensure the Remote Processing Services are available for use by Customer not less than 96% of each calendar month. The “availability” will be measured as the percentage of minutes each day that the Remote Processing Services are available for use by Customer, and will be measured as the number of minutes per month that the Remote Processing Services are capable of receiving and processing Customer’s data. The “availability” of the Remote Processing Services shall be measured on a daily basis. A one hundred and eighty (180) minute period shall be excluded from the calculation each day because HFS will be performing system maintenance at this time each day. Additionally, the following “downtime” for the Remote Processing Services shall not be considered as available time for purposes of calculating the “availability” of Remote Process Services for each month: (i) “downtime” based on HFS performing system maintenance during the two (2) Sundays during each calendar month reserved for such purpose (as set forth in Schedule 2.1), and (ii) “downtime” caused by factors outside HFS’ control (such as downtimes caused by parties other than HFS like third party communication providers or Customer).
|
B.
|
Customer shall advise HFS in writing of any divergence from the “availability” terms set forth herein.
|
C.
|
HFS agrees that, if HFS is unable to provide the “availability” for the Remote Processing Services represented in Section A above for a given calendar month, HFS will provide priority support to Customer until the represented “availability” level is satisfied. Additionally, in the event HFS is unable to provide the “availability” represented in Section A for more than six (6) consecutive calendar months, Customer, as its sole and exclusive remedy and HFS entire liability, shall have the right to a credit of one (1) Monthly Asset Value Payment (as set forth in Schedule 1.A.), toward its Recurring Fees for Remote Processing Services during the next calendar month (provided that such written notice is provided within thirty (30) days of the end of the sixth consecutive month).
|
Initials: | ||||
HFS
|
/s/ WZ | |||
Customer |
/s/ MJG
|
|||
2/27/06
|
Customer Database Information
|
Retention Period from
Creation Date
|
Daily Production Files
EOM
EOQ
EOY
|
60 days
13 months
5 calendar quarters
7 years (offsite)
|
Initials: | ||||
HFS
|
/s/ WZ | |||
Customer |
/s/ MJG
|
|||
2/27/06
|
Initials: | ||||
HFS
|
/s/ WZ | |||
Customer |
/s/ MJG
|
|||
2/27/06
|
1.
|
Consulting Services for Training.
|
|
§
|
10 days Account Processing Training
|
2.
|
Additional Consulting Services for Conversion of Customer Data and Customer Databases.
|
3.
|
Conversion Date.
|
Initials: | ||||
HFS
|
/s/ WZ | |||
Customer |
/s/ MJG
|
|||
2/27/06
|
1.
|
Customer will designate a Customer installation manager to be HFS ’s primary contact. The Customer installation manager will be responsible for coordination of proper resources from Customer management and operations to ensure timely completion of all Customer obligations related to the implementation of the RPS Products; including, but not limited to:
|
|
·
|
Review and selection of procession options.
|
|
·
|
Establishing Chart of Accounts.
|
|
·
|
Gathering information for product and parameter set-up.
|
|
·
|
Analysis and verification of pre-installation test output.
|
|
·
|
Availability of Customer to assist in balancing and verification of data accuracy.
|
2.
|
Customer will designate a training manager to coordinate attendance at HFS’ training classes and to supervise the training of all other Customer personnel by HFS. The Customer training manager will verify that personnel selected by Customer to attend HFS’ training classes have sufficient product knowledge and experience to teach other Customer staff. The training manager will also assure that there is sufficient time set aside for the training of all necessary and available Customer personnel.
|
3.
|
Customer will notify third parties in writing of its intent to use HFS as the data processing service provider and will support HFS in HFS’ set-up, converting, testing and preparing the RPS Products for production use.
|
4.
|
Customer will select and order all forms, coupons, and other items necessary for supporting Customer’s operations.
|
5.
|
Customer will prepare its installation site for all necessary equipment, communication and telecom lines, including proper electrical connections and air conditioning.
|
6.
|
Customer will use only the equipment that has been certified for use with the RPS Products by HFS. HFS may be contracted to provide equipment and installation services as Consulting Services pursuant to the Agreement.
|
Initials: | ||||
HFS
|
/s/ WZ | |||
Customer |
/s/ MJG
|
|||
2/27/06
|
(1)
|
Customer is prohibited from using the Third Party Products for purposes outside the scope defined in the Agreement.
|
(2)
|
Customer’s use of the Third Products shall be restricted to the number of specified users, workstations, seats or servers, as applicable, set forth in Schedule 1 for such Third Party Product. Customer is prohibited from (i) sublicensing, timesharing, rental, facility management, or service bureau usage of the Third Party Products; and (ii) permitting third parties to remotely access and use the Third Party Products over the internet, unless otherwise authorized in the Agreement. “Service bureau” shall mean an arrangement pursuant to which (i) third parties are permitted to access and use the Third Party Products directly or indirectly by any means to process their own data; or (ii) Customer uses the Third Party Products to process the data of any third party other than as authorized in the Agreement.
|
(3)
|
The third party owner of the Third Party Products retains title to the Third Party Products, and all copies thereof, and associated intellectual property rights therein. Customer may not copy the Third Party Products other than as expressly authorized in the Agreement or in writing by HFS, and must include on all copies of the Third Party Products all copyright, government restricted rights and other proprietary notices or legends included on the Sybase Program when it was shipped to such licensee.
|
(4)
|
Only object code versions of the Third Party Products are licensed to Customer, and any reverse engineering, disassembly or decompilation to derive source code is prohibited (except to the extent expressly allowed under applicable law).
|
(5)
|
Customer agrees to comply with all export and re-export restrictions and regulations (“Export Restrictions”) imposed by the government of the United States. If any Third Party Product license is provided to U.S. government licensee use, duplication or disclosure of the software and documentation by the U.S. Government shall be provided subject to terms and conditions consistent with these Mandatory Terms and any applicable FAR provisions, for example, FAR 52.227-19.
|
(6)
|
Although copyrighted, the Third Party Products may be unpublished and contain proprietary and confidential information of the owner of such Third Party Products. Customer agrees to maintain the Third Party Products in confidence and protect the Third Party Products with at least the same degree of care with which it protects its own similar confidential information and consistent with the terms of the Agreement for Confidential Information relate to the RPS Products.
|
(7)
|
Upon termination of the license for the Third Party Products, Customer shall destroy or return all copies of the Third Party Products consistent with the terms of the Agreement.
|
(8)
|
HFS shall have the right to conduct and/or direct an independent accounting firm to conduct, during normal business hours, an audit of the appropriate records of Customer to verify the number of copies of the Third Party Products in use and the computer systems and the number of users, workstations, seats or servers, as applicable licensed for or using the Third Party Products.
|
(9)
|
The owners of the Third Party Products shall be considered third party beneficiaries of this Agreement for purposes solely of the Third Party Products.
|
Initials: | ||||
HFS
|
/s/ WZ | |||
Customer |
/s/ MJG
|
|||
2/27/06
|
Portion of Option by
|
|
Number of Underlying Shares
|
Scheduled Vesting Date
|
December 11, 2013
|
|
December 11, 2014
|
|
December 11, 2015
|
|
December 11, 2016
|
|
December 11, 2017
|
COMMUNITY PARTNERS BANCORP
|
|||
|
By:
|
||
William D. Moss
|
|||
President and Chief Executive Officer | |||
PARTICIPANT:
|
|||
Date: _____________________
|
|
_____
|
cash in the amount of $______ |
|
_____
|
certified or bank cashier’s check in the amount of $_____ |
|
_____
|
by surrender of shares of the Company’s common stock with a value of $_____ represented by certificate number_____, duly endorsed for transfer to the Company with signature guaranteed, which may be (i) shares which were received by the Participant upon exercise of one or more incentive stock options, but only if such shares had been held by the Participant for a least the greater of (A) two years from the date the incentive stock options were granted or (B) one year after the transfer of shares to the Participant, (ii) shares which were received by the Participant upon exercise of one or more nonqualified stock options, but only if such shares had been held by the Participant for at least six months, or (iii) shares which were received by the Participant upon the vesting of one or more shares of restricted stock of the Company, but only if and to the extent that such shares had been held by the Participant for at least six months after vesting.
|
________________________________
Name:
________________________________
Address
________________________________
|
Portion of Option by
|
|
Number of Underlying Shares
|
Scheduled Vesting Date
|
1,000 |
December 12, 2012
|
1,000 |
December 12, 2013
|
1,000 |
December 12, 2014
|
1,000 |
December 12, 2015
|
1,000 |
December 12, 2016
|
COMMUNITY PARTNERS BANCORP
|
|||
|
By:
|
||
William D. Moss
|
|||
President and Chief Executive Officer | |||
PARTICIPANT:
|
|||
Date: _____________________
|
|
_____
|
cash in the amount of $______ |
|
_____
|
certified or bank cashier’s check in the amount of $_____ |
|
_____
|
by surrender of shares of the Company’s common stock with a value of $_____ represented by certificate number(s) ________, duly endorsed for transfer to the Company with signature guaranteed, which may, but need not, consist of or include (i) shares which were received by me upon exercise of one or more nonqualified stock options, but only if such shares have been held by me for at least six months, or (ii) shares which were awarded to, and received by, me as restricted stock of the Company, but only if and to the extent that such shares have been held by me for at least six months after vesting.
|
________________________________
Name:
________________________________
________________________________
(PRINT ADDRESS)
|
|
2.1.1
|
Amount of Benefit. The annual benefit under this Section 2.1 is Seventy-One Thousand Dollars ($71,000).
|
EXECUTIVE: | BANK: | ||
TWO RIVER COMMUNITY BANK | |||
By | |||
ALAN B. TURNER | Title |
|
|
|
|
Schedule A Attached to 2nd Amendment Dated March 1, 2010
|
Plan Year Reporting
|
|
Schedule A
|
Birth Date: 8/29/1963
|
Early Termination
|
Disability
|
Change in Control
|
Pre-retire.
|
|||||||
Normal Retirement: 8/29/2028, Age 65
|
Death
|
||||||||||
Annual Benefit2
|
Annual Benefit2
|
Annual Benefit2
|
Benefit
|
||||||||
Amount Payable at
|
Amount Payable at
|
Amount Payable at
|
Lump Sum
|
||||||||
Separation from Service
|
Normal Retirement Age
|
Separation from Service
|
Benefit
|
||||||||
Based On
|
Based On
|
Based On
|
Based On
|
||||||||
Values
|
Age
|
Accrual
|
Accrual
|
Benefit
|
Accrual
|
||||||
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
|||||||
Mar 20101
|
46
|
5,605
|
18,597
|
34,367
|
330,548
|
||||||
Dec 2010
|
47
|
7,172
|
22,542
|
35,509
|
341,530
|
||||||
Dec 2011
|
48
|
9,166
|
27,002
|
36,929
|
355,191
|
||||||
Dec 2012
|
49
|
11,294
|
31,183
|
38,406
|
369,399
|
||||||
Dec 2013
|
50
|
13,565
|
35,102
|
39,943
|
384,175
|
||||||
Dec 2014
|
51
|
15,988
|
38,774
|
41,540
|
399,542
|
||||||
Dec 2015
|
52
|
18,573
|
42,216
|
43,202
|
415,524
|
||||||
Dec 2016
|
53
|
21,331
|
45,442
|
44,930
|
432,145
|
||||||
Dec 2017
|
54
|
24,274
|
48,466
|
46,727
|
449,431
|
||||||
Dec 2018
|
55
|
27,414
|
51,299
|
48,596
|
467,408
|
||||||
Dec 2019
|
56
|
30,764
|
53,955
|
50,540
|
486,104
|
||||||
Dec 2020
|
57
|
34,338
|
56,444
|
52,562
|
505,548
|
||||||
Dec 2021
|
58
|
38,152
|
58,777
|
54,664
|
525,770
|
||||||
Dec 2022
|
59
|
42,222
|
60,963
|
56,851
|
546,801
|
||||||
Dec 2023
|
60
|
46,564
|
63,013
|
59,125
|
568,673
|
||||||
Dec 2024
|
61
|
51,196
|
64,933
|
61,490
|
591,420
|
||||||
Dec 2025
|
62
|
56,139
|
66,733
|
63,949
|
615,077
|
||||||
Dec 2026
|
63
|
61,413
|
68,420
|
66,507
|
639,680
|
||||||
Dec 2027
|
64
|
67,041
|
70,001
|
69,168
|
665,267
|
||||||
Aug 2028
|
65
|
71,000
|
71,000
|
71,000
|
682,891
|
Name of Subsidiary
|
|
State or Other Jurisdiction of
Incorporation or Organization
|
Two River Community Bank
|
New Jersey
|
|
TRCB Investment Company*
|
New Jersey
|
|
Two River Community Bank Employer’s Trust*
|
New Jersey
|
|
TRCB Holdings One LLC*
|
New Jersey
|
|
TRCB Holdings Two LLC*
|
New Jersey
|
|
TRCB Holdings Three LLC*
|
New Jersey
|
|
TRCB Holdings Four LLC*
|
New Jersey
|
|
TRCB Holdings Five LLC*
|
New Jersey
|
|
TRCB Holdings Six LLC*
|
New Jersey
|
|
1.
|
I have reviewed this annual report on Form 10-K of Community Partners Bancorp;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
/s/ WILLIAM D. MOSS
|
||
Name:
|
William D. Moss
|
|
Title:
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K of Community Partners Bancorp;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
/s/ A. RICHARD ABRAHAMIAN
|
||
Name:
|
A. Richard Abrahamian
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
/s/ WILLIAM D. MOSS
|
||
Name:
|
William D. Moss
|
|
Title:
|
President and Chief Executive Officer
|
|
Date:
|
March 29, 2013
|
|
/s/ A. RICHARD ABRAHAMIAN
|
||
Name:
|
A. Richard Abrahamian
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
Date:
|
March 29, 2013
|
Earnings Per Common Share (Table)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
|
Borrowings (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Debt Instrument [Line Items] | ||
Short-term Debt | $ 0 | $ 0 |
Unsecured Line of Credit [member]
|
||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Current Borrowing Capacity | 17,000 | |
FHLB [Member]
|
||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Current Borrowing Capacity | 38,909 | |
Pledged Assets Separately Reported, Loans Pledged for Federal Home Loan Bank, at Fair Value | $ 52,409 |
Loans Receivable and Allowance for Loan Losses (Schedule of Financing Receivables, Non Accrual Status) (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual Loans | $ 7,472 | $ 5,240 |
Commercial and industrial [Member]
|
||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual Loans | 1,681 | 2,349 |
Real estate - construction [Member]
|
||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual Loans | 292 | |
Real estate - commercial [Member]
|
||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual Loans | 3,542 | 145 |
Real estate - residential [Member]
|
||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual Loans | 263 | 263 |
Consumer [Member]
|
||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual Loans | $ 1,986 | $ 2,191 |
Lease Commitments and Total Rental Expense (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Lease Commitments and total Rental Expense [Abstract] | ||
Operating Leases, Rent Expense, Net | $ 1,478 | $ 1,368 |
Summary of Quarterly Results (Table)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Quarterly Results (Unaudited) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information [Table Text Block] | Note 20 – Summary of Quarterly Results (Unaudited)
The following summarizes the consolidated results of operations during 2012 and 2011, on a quarterly basis, for Community Partners. Note that certain balances may not cross-foot due to rounding.
(in thousands, except per share data):
|
Bank Premises and Equipment (Table)
|
24 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank Premises and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Table Text Block] |
|
Income Taxes (Schedule of Effective Income Tax Rate Reconcilliatrion) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
Sep. 30, 2012
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Dec. 31, 2011
|
Sep. 30, 2011
|
Jun. 30, 2011
|
Mar. 31, 2011
|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Income Taxes [Abstract] | ||||||||||
Pre-tax book income: Percent | 34.00% | 34.00% | ||||||||
Tax exempt interest: Percent | (2.20%) | (1.80%) | ||||||||
Effective Income Tax Rate Reconciliation Earnings On Investment Life Insurance | (2.00%) | (1.80%) | ||||||||
State income taxes, net of federal income tax benefit: Percentage | 5.50% | 5.50% | ||||||||
Other: Percentage | 1.50% | 1.20% | ||||||||
Effective Income Tax Rate, Continuing Operations, Total: Percentage | 36.80% | 37.10% | ||||||||
Pre-tax book income: Amount | $ 2,591 | $ 2,330 | ||||||||
Tax exempt interest: Amount | (168) | (124) | ||||||||
Bank-owned life insurance income: Amount | (156) | (126) | ||||||||
State income taxes, net of federal income tax benefit | 419 | 379 | ||||||||
Other: Amount | 119 | 87 | ||||||||
INCOME TAX EXPENSE | $ 718 | $ 727 | $ 693 | $ 667 | $ 717 | $ 661 | $ 633 | $ 535 | $ 2,805 | $ 2,546 |
Earnings Per Common Share (Narrative) (Details)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Earnings Per Common Share [Abstract] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 345,000 | 474,000 |
Stock Option Plans (Restricted Stock) (Details) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2010
|
|
Stock Option Plans [Abstract] | ||
Number of Shares, Unvested at, | 22,042 | 22,042 |
Number of Shares, Forfeited | (4,133) | |
Number of Shares, Unvested at, | 17,909 | 22,042 |
Weighted Average Price, Unvested At, | $ 3.93 | $ 3.93 |
Weighted Average Price, Forfeited, | $ 3.93 | |
Weighted Average Price, Unvested At, | $ 3.93 | $ 3.93 |
Fair Value Measurement (Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation) (Details) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Ending balance, | $ 50,756 | $ 47,455 |
Fair Value, Inputs, Level 3 [Member]
|
||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Beginning balance, | 89 | 29 |
Gains/(losses) for the period: Included in earnings | (80) | |
Gains/(losses) for the period: Included in other comprehensive income | 19 | 60 |
Ending balance, | $ 28 | $ 89 |
Lease Commitments and Total Rental Expense (Schedule of Rent Expense) (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
---|---|
Lease Commitments and total Rental Expense [Abstract] | |
2013 | $ 1,223 |
2014 | 1,240 |
2015 | 1,215 |
2016 | 1,197 |
2017 | 1,493 |
Thereafter | 3,360 |
Operating Leases, Future Minimum Payments Due, Total | $ 9,728 |
Employee Benefit Plans (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified |
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Employee Benefit Plans [Abstract] | ||
Defined Contribution Plan, Maximum Annual Contribution Per Employee, Percent | 100.00% | |
Defined Contribution Plan, Employer Discretionary Contribution Amount | $ 241 | $ 229 |
Accrued Employee Benefits, Current | 767 | 582 |
Defined Contribution Plan, Cost Recognized | $ 214 | $ 91 |
Fair Value of Financial Instruments
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Note 17 – Fair Value of Financial Instruments
Accounting guidance establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).
An asset's or liability's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2012 and 2011 are as follows:
The following table presents a reconciliation of the securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2012 and 2011:
For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2012 and 2011 are as follows:
The following valuation techniques were used to measure fair value of assets in the tables above:
· Impaired loans – Impaired loans measured at fair value are those loans in which the Company has measured impairment generally based on the fair value of the loan's collateral. This method of fair value measurement is used on all of the Company's impaired loans. Fair value is generally determined based upon either independent third party appraisals of the properties or discounted cash flows based upon the expected proceeds. The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The discount range for appraisal values range from 0.0% to 5.0% (weighted average of 1.5%), and liquidation expenses range from 2.2% to 13.6% (weighted average of 6.7%). These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.
· Other Real Estate Owned ("OREO") – Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and carried at fair value less cost to sell. Fair value is based upon the appraised value of the collateral, adjusted by management for factors such as economic conditions and other market factors. The discount range for collateral adjustment to OREO ranges from 3.5% to 8.5% (weighted average of 5.7%). These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement. At December 31, 2012, properties totaling $1,752,000 as compared to $7,765,000 at December 31, 2011, were acquired through foreclosure and are carried at fair value less estimated selling costs based on current appraisals.
· Property held for sale – This real estate property is carried in other assets as property held for sale at fair value based upon the appraised value of the property.
The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company's assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company's financial instruments at December 31, 2012 and December 31, 2011:
Cash and Cash Equivalents (carried at cost):
The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets' fair values.
Securities:
The fair value of securities available-for-sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted prices. For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). At December 31, 2012 and December 31, 2011, the Company determined that no active market existed for our one pooled trust preferred security. This security is classified as a Level 3 investment. Management's best estimate of fair value consists of both internal and external support on the Level 3 investment. Internal cash flow models project expected future interest and principal receivables due to our security based on the application of assumptions, including default probabilities, on the underlying preferred securities. The models then apply the resulting distributions from the underlying securities through the liability model, according to the deal's "priority of payments." For fair value purposes, a present value formula is then applied to our security's cash flows, steeply discounting the cash flows in accordance with the level of risk a reasonable market participant may demand for an investment such as ours. Due to the subordination of the security, discount margins contemplated in the valuation at December 31, 2012 ranged from Libor +15% to Libor +25%, with a midpoint of Libor +20%. The resultant fair values have been validated by means of comparison to indicative exit pricing obtained from broker/dealers (where available) were used to support the fair value of the Level 3 investment.
Restricted Investments (carried at cost):
The carrying amount of restricted investment in Federal Home Loan Bank stock, Atlantic Central Bankers Bank stock and Solomon Hess SBA Loan Fund approximates fair value, and considers the limited marketability of such securities.
Loans Receivable (carried at cost):
The fair values of loans, excluding collateral dependent impaired loans, are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans, including liquidity. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. The valuation of the loan portfolio reflects discounts that the Company believes are consistent with transactions occurring in the marketplace for both performing and distressed loan types. The carrying value that fair value is compared to is net of the allowance for loan losses and other associated premiums and discounts. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Due to the significant judgment involved in evaluating credit quality risk, loans are classified within level 3 of the fair value hierarchy.
Accrued Interest Receivable and Payable (carried at cost):
The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.
Deposit Liabilities (carried at cost):
The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date, (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.
Securities Sold Under Agreements to Repurchase (carried at cost):
The carrying amounts of these short-term borrowings approximate their fair values.
Long-term Debt (carried at cost):
Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.
Off-Balance Sheet Financial Instruments (disclosed at cost):
Fair values for the Company's off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties' credit standing. The fair values of such fees are not material at December 31, 2012 and 2011.
The estimated fair values of the Company's financial instruments at December 31, 2012 were as follows:
The estimated fair value of the Company's financial instruments at December 31, 2011 were as follows
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Regulatory Matters (Table)
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Dec. 31, 2012
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Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block] |
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Earnings Per Common Share (Schedule of Earnings Per Share, Basic and Diluted) (Details) (USD $)
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Dec. 31, 2012
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Sep. 30, 2012
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Dec. 31, 2011
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Dec. 31, 2012
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Dec. 31, 2011
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Earnings Per Common Share [Abstract] | ||||||||||
Net income | $ 1,240,000 | $ 1,234,000 | $ 1,186,000 | $ 1,155,000 | $ 1,202,000 | $ 1,105,000 | $ 1,078,000 | $ 923,000 | $ 4,815,000 | $ 4,308,000 |
Preferred stock dividend and discount accretion | 130,000 | 31,000 | 150,000 | 137,000 | 126,000 | 402,000 | 143,000 | 143,000 | (448,000) | (814,000) |
Net income applicable to common shareholders | 1,110,000 | 1,203,000 | 1,036,000 | 1,018,000 | 1,076,000 | 703,000 | 935,000 | 780,000 | 4,367,000 | 3,494,000 |
Weighted Average Number of Shares Outstanding, Basic | 7,950 | 7,900 | ||||||||
Effect of dilutive securities, stock options and warrants | $ 174 | $ 115 | ||||||||
Weighted Average Number of Shares Outstanding, Diluted | 8,124 | 8,015 | ||||||||
Earnings Per Share Basic | $ 0.14 | $ 0.15 | $ 0.13 | $ 0.13 | $ 0.14 | $ 0.09 | $ 0.12 | $ 0.10 | $ 0.55 | $ 0.44 |
Earnings Per Share Diluted | $ 0.14 | $ 0.15 | $ 0.13 | $ 0.13 | $ 0.13 | $ 0.09 | $ 0.12 | $ 0.10 | $ 0.54 | $ 0.44 |
Borrowings (Table)
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Schedule of Maturities of Long-term Debt [Table Text Block] |
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Deposits (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified |
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Deposits [Abstract] | ||
Demand Deposit Overdrafts Reclassified as Loan Balances, Amount | $ 882 | $ 191 |
Summary of Significant Accounting Policies (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
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Dec. 31, 2011
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Investment in Federal Home Loan Bank Stock, Fair Value Disclosure | $ 1,465 | $ 1,405 |
Investment in Solomon Hess SBA Loan Fund | 1,500 | 757 |
Loan Participations and Assignments [Member]
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Investment Sold, Not yet Purchased, at Fair Value | $ 6,923 | $ 1,678 |
Summary of Significant Accounting Policies
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Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 1 – Summary of Significant Accounting Policies
A. Organization and Basis of Presentation
The accompanying consolidated financial statements include the accounts of Community Partners Bancorp (the "Company" or "Community Partners"), a bank holding company, and its wholly-owned subsidiary, Two River Community Bank ("the Bank" or "Two River") and the Bank's wholly-owned subsidiaries, TRCB Investment Corporation, TRCB Holdings One LLC, TRCB Holdings Two LLC, TRCB Holdings Three LLC, TRCB Holdings Four LLC, TRCB Holdings Five LLC, TRCB Holdings Six LLC and wholly-owned trust, Two River Community Bank Employer's Trust. All inter-company balances and transactions have been eliminated in the consolidated financial statements.
B. Nature of Operations
Community Partners is a bank holding company whose principal activity is the ownership of Two River Community Bank. Through its banking subsidiary, the Company provides banking services to small and medium-sized businesses, professionals and individual consumers primarily in Monmouth County, New Jersey and Union County, New Jersey. The Company competes with other banking and financial institutions in its market communities.
The Company and its bank subsidiary are subject to regulations of certain state and federal agencies and, accordingly, they are periodically examined by those regulatory authorities. As a consequence of the extensive regulation of commercial banking activities, the Company's and the Bank's businesses are susceptible to being affected by state and federal legislation and regulations.
C. Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The principal material estimates that are particularly susceptible to significant change in the near term relate to: the allowance for loan losses, certain intangible assets, such as goodwill and core deposit intangible, the potential impairment of restricted investments, the valuation of deferred tax assets, valuation of other real estate owned and the determination of other-than-temporary impairment on securities.
D. Significant Concentrations of Credit Risk
Most of the Company's activities are with customers located within Monmouth and Union counties of New Jersey. Note 2 discusses the types of securities that the Company invests in. Note 3 discusses the types of lending that the Company engages in. Although the Company actively manages the diversification of its loan portfolio, a substantial portion of its debtors' ability to honor their contracts is dependent upon the strength of the local economy. The loan portfolio includes commercial real estate, which is comprised of owner occupied and investment real estate, including general office, medical, manufacturing and retail space. Construction loans, short-term in nature, comprise another portion of the portfolio, along with commercial and industrial loans. The latter includes lines of credit and equipment loans. From time to time, the Company may purchase or sell an interest in a loan from or to another lender (participation loan) in order to manage its portfolio risk. Loans purchased by the Company are typically located in central New Jersey and meet the Company's own independent underwriting guidelines. The Company does not have any significant concentrations in any one industry or customer.
E. Comprehensive Income
Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale and unrealized losses related to factors other than credit or debt securities which have been determined to be other-than-temporarily impaired.
F. Statement of Cash Flows
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, interest bearing demand deposits in banks, and Federal funds sold. Interest-bearing deposits are due from the Federal Reserve Bank of New York. Generally, Federal funds are purchased and sold for one-day periods.
G. Securities
Securities classified as available for sale are those securities that the Company intends to hold for an indefinite period of time but not necessarily to maturity. Securities available for sale are carried at fair value. Any decision to sell a security classified as available for sale would be based on various factors, including significant movement in interest rates, changes in maturity mix of the Company's assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Unrealized gains or losses are reported as increases or decreases in other comprehensive income, net of the related deferred tax effect. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities available for sale are recorded on the trade date and are determined using the specific identification method.
Securities classified as held to maturity are those securities the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs or changes in general economic conditions. These securities are carried at cost adjusted for the amortization of premium and accretion of discount, computed by the interest method over the terms of the securities.
Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date.
Other-than-temporary accounting guidance specifies that (a) if a company does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporary impaired unless there is a credit loss. When an entity does not intend to sell the security, and it is more likely than not, the entity will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. For held to maturity debt securities, the amount of an other-than-temporary impairment recorded in other comprehensive income for the noncredit portion of a previous other-than-temporary impairment should be amortized prospectively over the remaining life of the security on the basis of the timing of future cash flows of the security.
H. Restricted Investments
Restricted investments, which represents the required investment in the common stock of correspondent banks, is carried at cost and as of December 31, 2012 and 2011, consists of the common stock of the Federal Home Loan Bank of New York ("FHLB") and Atlantic Central Bankers Bank ("ACBB"). Federal law requires a member institution of the FHLB to hold stock of its district FHLB according to a predetermined formula. The recorded investment in FHLB common stock was $1,465,000 and $1,405,000 at December 31, 2012 and 2011, respectively.
Restricted investments also include the Solomon Hess SBA Loan Fund, utilized for the purpose of the Bank satisfying its CRA lending requirements. As this fund operates as a private fund, shares in the Fund are not publicly traded and therefore have no readily determinable market value. An investor can have their interest in the Fund redeemed for the balance of their capital account at any quarter end assuming they give the Fund 60 days' notice. The investment in this Fund is recorded at cost which was $1,500,000 and $757,000 at December 31, 2012 and 2011, respectively. The Company does not record the investment at fair value on a recurring basis.
Management evaluates the restricted investments for impairment in accordance with U.S. generally accepted accounting principles. Management's determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. Management believes no impairment charge is necessary related to restricted investments as of December 31, 2012.
I. Loans Receivable
Loans receivable, which management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan.
The loans receivable portfolio is segmented into commercial and consumer loans. Commercial loans consist of the following classes: commercial and industrial, real estate-construction and real estate-commercial. Consumer loans consist of the following classes: real estate-residential and consumer.
For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest previously accrued on these loans is reversed from income. Interest received on nonaccrual loans including impaired loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.
J. Allowance for Loan Losses
The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses represents management's estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management's estimate of losses inherent in its unfunded loan commitments and is recorded in other liabilities on the consolidated balance sheet, which at December 31, 2012 and 2011, the Company had no such reserves. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectable are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely.
The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management's performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.
The allowance consists of specific, general and unallocated components. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of the loan. The specific component relates to loans that are classified as impaired. When a loan is impaired, there are three acceptable methods under ASC 310-10-35 for measuring the impairment:
1. The loan's observable market price;
2. The fair value of the underlying collateral; or
3. The present value (PV) of expected future cash flows.
Loans that are considered "collateral-dependent" should be evaluated under the "Fair market value of collateral." Loans that are still expected to be supported by repayment from the borrower should be evaluated under the "Present value of future cash flows."
For the most part, the Company measures impairment under the "Fair market value of collateral" for any loan that would rely on the value of collateral for recovery in the event of default. The individual impairment analysis for each loan is clearly documented as to the chosen valuation method.
The general component covers pools of loans by loan class including commercial and industrial, real estate-construction and real estate-commercial not considered impaired as well as smaller balance homogeneous loans such as real estate-residential and consumer.
These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors. These qualitative risk factors include:
1. Changes in lending policy and procedures, including changes in underwriting standards and collection practices not previously considered in estimating credit losses.
2. Changes in relevant economic and business conditions.
3. Changes in nature and volume of the loan portfolio and in the terms of loans.
4. Changes in experience, ability and depth of lending management and staff.
5. Changes in the volume and severity of past due loans, the volume of non-accrual loans and the volume and severity of adversely classified loans.
6. Changes in the quality of the loan review system.
7. Changes in the value of underlying collateral for collateral-dependent loans.
8. The existence and effect of any concentration of credit and changes in the level of such concentrations.
9. The effect of other external forces such as competition, legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.
Each factor is assigned a risk value to reflect low, moderate or high risk assessments based on management's best judgment using current market, macro and other relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation in each factor and accompanies the allowance for loan loss calculation.
An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.
The Company engages in a variety of lending activities, including commercial and industrial, real estate-commercial, real estate-construction, real estate-residential and consumer loans. The Company focuses its lending activities on individuals, professionals and small to medium sized businesses.
The Company originates commercial business loans to professionals, sole proprietorships and small businesses in our market areas. We extend commercial business loans on a secured and unsecured basis. Secured commercial loans are generally collateralized by residential and nonresidential real estate, marketable securities, accounts receivable, inventory, industrial/commercial machinery and equipment and furniture and fixtures. To further enhance our security position, we generally require personal guarantees of the principal owners of the entities to which we extend credit. These loans are made on both lines of credit and fixed-term basis ranging from one to five years in duration. When making commercial business loans, we consider the financial statements and/or tax returns of the borrower, the borrower's payment history along with the principal owners' payment history, the debt service capabilities of the borrower, the projected cash flows of the business, and the value of the collateral and the financial strength of the guarantor.
Commercial real estate loans are made to local commercial, retail and professional firms and individuals for the acquisition of new property or the refinancing of existing property. These loans are typically related to commercial businesses and secured by the underlying real estate used in these businesses or real property of the principals. Commercial real estate loans typically require a loan to value ratio of not greater than 75%. These loans are generally offered on a fixed or variable rate basis, subject to rate re-adjustments every five years and amortization schedules ranging from 5 to 25 years.
Commercial loans are often larger and may involve greater risks than other types of lending. Because payments of such loans are often dependent on the successful operation of the business involved, repayment of such loans may be more sensitive than other types of loans and are subject to adverse conditions in the real estate market or the general economy. We are also involved with off-balance sheet financial instruments, which include collateralized commercial and standby letters of credit. We seek to minimize these risks through our underwriting guidelines and prudent risk management techniques. Any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value. Environmental surveys and inspections are obtained when circumstances suggest that the possibility of the presence of hazardous materials. There can be no assurances, however, of success in the efforts to minimize these risks.
During 2011, the Company was approved and granted Preferred Lending Status by the Small Business Administration ("SBA"), which allows the Company delegated authority to approve and close SBA loans up to $5.0 million. The Company maintains prudent credit risk management to monitor and evaluate the value of real estate and other collateral used to secure SBA loans. All SBA loans are originated in compliance with all applicable federal lending regulations, including but not limited to the Equal Credit Opportunity Act. The Bank currently participates in SBA's 7a and 504 loan programs, which typically provide guarantees up to 75% per loan. The Bank generally sells the guaranteed portion of selected loans to a third party and retains the servicing rights. No servicing asset has been recognized due to immateriality. Our philosophy remains to be prudent and focused on the cash flow of the businesses and financial strength of the guarantors.
The Company originates fixed-rate and adjustable-rate loans to individuals and builders to finance the construction of residential dwellings. We also originate construction loans for commercial development projects, including apartment buildings, restaurants, shopping centers and owner-occupied properties used for businesses. Our construction loans generally provide for the payment of interest only during the construction phase which is usually twelve months for residential properties and twelve to eighteen months for commercial properties. At the end of the construction phase, the loan either converts to a permanent mortgage loan or is paid off. Before making a commitment to fund a construction loan, we require an appraisal of the property by a bank approved independent licensed appraiser, an inspection of the property before disbursement of funds during the stages of the construction process, and approval from an identified source for the permanent takeout.
The Company offers a full range of residential real estate and consumer loans. These loans consist of residential mortgages, home equity lines of credit, equity loans, personal loans, automobile loans and overdraft protection. We do not originate subprime or negative amortization loans. Each residential mortgage loan is evidenced by a promissory note secured by a mortgage or deed of trust creating a first lien on one-to-four family residential property. Residential real estate properties underlying residential mortgage loans consist of single-family detached units, individual condominium units, two-to-four family dwellings units and townhouses. Our home equity revolving lines of credit come with a floating interest rate tied to the prime rate. Lines of credit are available to qualified applicants in amounts up to $350,000 for up to 15 years. We also offer fixed rate home equity loans in amounts up to $350,000 for a term of up to 15 years. Credit is based on the income and cash flow of the individual borrowers, real estate collateral supporting the mortgage debt and past credit history.
Consumer loans may entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly. In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency often does not warrant further substantial collection efforts against the borrower. In addition, consumer loan collections depend on the borrower's continuing financial stability, and therefore are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.
A loan is considered impaired when, based on current information events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and industrial, real estate-commercial, real estate-construction, real estate-residential and consumer loans by either the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of the collateral if the loan is collateral dependent.
An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. The estimated fair values of substantially all of the Company's impaired loans are measured based on the estimated fair value of the loan's collateral.
For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.
For commercial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower's financial statements, inventory reports, accounts receivable aging or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets.
Loans whose terms are modified are classified as troubled debt restructurings if the Company grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involves a reduction in interest rates or a modification of a loan's amortization schedule. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification. Loans classified as troubled debt restructurings are designated as impaired.
The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower's overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated annually for commercial loans or when credit deficiencies arise, such as delinquent loan payments, for commercial and consumer loans. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans criticized special mention have potential weaknesses that deserve management's close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristics that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectable and are charged to the allowance for loan losses. Loans not classified are rated pass.
In addition, Federal regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses and may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management's comprehensive analysis of the loan portfolio, management believes the current level of the allowance for loan losses is adequate.
K. Transfers of Financial Assets
Transfers of financial assets, including loan participation sales, are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. The balance of participations sold to other banks that are serviced by the Company was $6,923,000 and $1,678,000 at December 31, 2012 and 2011, respectively.
L. Other Real Estate Owned
Other Real Estate Owned ("OREO") includes real estate acquired through foreclosure or by deed in lieu of foreclosure. Real estate owned is carried at the lower of cost or fair value, less estimated costs to sell. When a property is acquired, the excess of the loan balance over fair value, less selling costs, is charged to the allowance for loan losses. Operating results from real estate owned, including rental income, operating expenses, and gains and losses realized from the sales of real estate owned are recorded as incurred. OREO is periodically reviewed to ensure that the fair value of the property supports the carrying value.
M. Bank-Owned Life Insurance
The Company invests in bank-owned life insurance ("BOLI") as a source of funding for employee benefit expenses. BOLI involves the purchasing of life insurance by the Company's wholly-owned trust on a chosen group of employees. The Company is the owner and beneficiary of the policies. This life insurance investment is carried at the cash surrender value of the underlying policies. Income generated from the increase in cash surrender value of the policies is included in non-interest income on the statements of operations.
N. Bank Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation. Depreciation is charged to operations on a straight-line basis over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the shorter of their estimated life or the lease term.
O. Advertising
The Company expenses advertising costs as incurred.
P. Income Taxes
Deferred income taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company and its subsidiary file a consolidated Federal income tax return.
The Company analyzes each tax position taken in its tax returns and determines the likelihood that the position will be realized. Only tax positions that are "more likely than not" to be realized can be recognized in the Company's financial statements. For tax positions that do not meet this recognition threshold, the Company will record an unrecognized tax benefit for the difference between the position taken on the tax return and the amount recognized in the financial statements. The Company does not have any material unrecognized tax benefits or accrued interest or penalties at December 31, 2012 or 2011 or during the years then ended. No unrecognized tax benefits are expected to arise within the next twelve months. The Company's policy is to account for interest as a component of interest expense and penalties as a component of other expenses. The Company and its subsidiaries are subject to U.S. Federal income tax as well as income tax of the State of New Jersey. The Company is no longer subject to examination by taxing authorities for the years before January 1, 2009.
Q. Off-Balance Sheet Financial Instruments
In the ordinary course of business, the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit and letters of credit. Such financial instruments are recorded in the balance sheet when they are funded.
R. Earnings per Common Share
Earnings per common share are calculated on the basis of the weighted average number of common shares outstanding during the year. All weighted average, actual shares or per share information in the financial statements have been adjusted retroactively for the effect of stock dividends. Basic earnings per common share excludes dilution and is calculated by dividing income available to common shareholders by the weighted average common shares outstanding excluding restricted stock awards outstanding during the period. Diluted earnings per common share takes into account the potential dilution that could occur if certain outstanding securities to issue common stock were exercised and converted into common stock. Potential common shares relate to outstanding stock options, warrants and restricted stock awards, and are determined using the treasury stock method.
S. Stock-Based Compensation
Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.
The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Sholes model is used to estimate the fair value of stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock awards.
T. Reclassification
Certain amounts in the 2011 financial statements have been reclassified to conform to the presentation used in the 2012 financial statements. These reclassifications had no effect on net income.
U. Goodwill and Other Intangible Assets
The Company's goodwill was recognized in connection with the acquisition of the Town Bank in April 2006. Accounting principles generally accepted in the United States of America requires that goodwill be tested for impairment annually or more frequently if impairment indicators arise utilizing a two-step methodology. Step one requires the Company to determine the fair value of the reporting unit and compare it to the carrying value, including goodwill, of such reporting unit. The reporting unit was determined to be our community banking operations, which is our only operating segment. If the fair value of the reporting unit exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds fair value, there is an indication of impairment and the second step is performed to determine the amount of impairment, if any. The second step compares the fair value of the reporting unit to the aggregate fair values of its individual assets, liabilities and identified intangibles.
The Company performed its annual goodwill impairment analysis as of September 30, 2012. Based on the results of the step one goodwill impairment analysis, the Company determined that there was no impairment on the current goodwill balance. See Note 5 for additional details.
V. Segment Reporting
The Company acts as an independent community financial services provider, and offers traditional banking and related financial services to individual, business and government customers. Through its branch, automated teller machine networks, and internet banking services, the Company offers a full array of commercial and retail financial services, including taking of time, savings and demand deposits; the making of commercial, consumer and mortgage loans; and the providing of other financial services. Management does not separately allocate expenses, including the cost of funding loan demand, between the commercial, retail, and consumer banking operations of the Company. Accordingly, all significant operating decisions are based upon analysis of the Bank as one segment or unit.
W. Subsequent Events
The Company has evaluated events and transactions occurring subsequent to the balance sheet date of December 31, 2012 for items that should potentially be recognized or disclosed in these financial statements.
X. Recent Accounting Pronouncements
ASU 2011-04; This ASU amends FASB ASC Topic 820, Fair Value Measurements, to bring U.S. GAAP for fair value measurements in line with International Accounting Standards. The ASU clarifies existing guidance for items such as: the application of the highest and best use concept to non-financial assets and liabilities; the application of fair value measurement to financial instruments classified in a reporting entity's stockholder's equity; and disclosure requirements regarding quantitative information about unobservable inputs used in the fair value measurements of level 3 assets. The ASU also creates an exception to Topic 820 for entities which carry financial instruments within a portfolio or group, under which the entity is now permitted to base the price used for fair valuation upon a price that would be received to sell the net asset position or transfer a net liability position in an orderly transaction. The ASU also allows for the application of premiums and discounts in a fair value measurement if the financial instrument is categorized in level 2 or 3 of the fair value hierarchy. Lastly, the ASU contains new disclosure requirements regarding fair value amounts categorized as level 3 in the fair value hierarchy such as: disclosure of the valuation process used; effects of and relationships between unobservable inputs; usage of nonfinancial assets for purposes other than their highest and best use when that is the basis of the disclosed fair value; and categorization by level of items disclosed at fair value, but not measured at fair value for financial statement purposes. For public entities, this ASU is effective for interim and annual periods beginning after December 15, 2011. The adoption of this ASU did not have a material impact on our financial position or results of operation and resulted in expanded fair value disclosures.
ASU 2011-05; The provisions of this ASU amend FASB ASC Topic 220, Comprehensive Income, to facilitate the continued alignment of U.S. GAAP with International Accounting Standards. The ASU prohibits the presentation of the components of comprehensive income in the statement of stockholder's equity. Reporting entities are allowed to present either: a statement of comprehensive income, which reports both net income and other comprehensive income; or separate, but consecutive, statements of net income and other comprehensive income. Under previous GAAP, all 3 presentations were acceptable. Regardless of the presentation selected, the Reporting Entity is required to present all reclassifications between other comprehensive and net income on the face of the new statement or statements. The provisions of this ASU are effective for fiscal years and interim periods beginning after December 31, 2011 for public entities. The adoption of this ASU did not have a material impact on our financial position or results of operation and resulted in the Consolidated Statements of Comprehensive Income.
ASU 2011-08; In September, 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment. The purpose of this ASU is to simplify how entities test goodwill for impairment by adding a new first step to the pre-existing goodwill impairment test under ASC Topic 350, Intangibles – Goodwill and Other. This amendment gives the entity the option to first assess a variety of qualitative factors such as economic conditions, cash flows, and competition to determine whether it was more likely than not that the fair value of goodwill has fallen below its carrying value. If the entity determines that it is not likely that the fair value has fallen below its carrying value, then the entity will not have to complete the original two-step test under Topic 350. The amendments in this ASU are effective for impairment tests performed for fiscal years beginning after December 15, 2011. This ASU did not have an impact on its consolidated financial statements.
ASU 2011-12; In December, 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update 2011-05. In response to stakeholder concerns regarding the operational ramifications of the presentation of these reclassifications for current and previous years, the FASB has deferred the implementation date of this provision to allow time for further consideration. The requirement in ASU 2011-05, Presentation of Comprehensive Income, for the presentation of a combined statement of comprehensive income or separate, but consecutive, statements of net income and other comprehensive income is still effective for fiscal years and interim periods beginning after December 15, 2011 for public companies. The implementation of ASU 2011-12 is not expected to have a material impact on our financial position or results of operation.
ASU 2013-02; In February, 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires disclosure of the effects of reclassifications out of accumulated other comprehensive income ("AOCI") on net income line items only for those items that are reported in their entirety in net income in the period of reclassification. For AOCI reclassification items that are not reclassified in their entirety into net income, a cross reference will be required to other U.S. GAAP disclosures. The amendments are effective for reporting periods beginning on or after December 15, 2012. The implementation of ASU 2013-02 is not expected to have a material impact on our financial position or results of operation.
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Bank Premises and Equipment (Narrative) (Details) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Bank Premises and Equipment [Abstract] | ||
Construction in Progress, Gross | $ 1,000,000 | $ 1,000,000 |
Impairment of Real Estate | $ 0 | $ 100,000 |
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