-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GZv2phaMVK7frZsPUGzW80jS6d9aiBA5xrwaJr89rmSmt2c9XRfzh1GpuTZoaqHI eRuOu8t/BMI7RaAhew7OgA== 0001140361-11-003806.txt : 20110124 0001140361-11-003806.hdr.sgml : 20110124 20110124080422 ACCESSION NUMBER: 0001140361-11-003806 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20110124 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20110124 DATE AS OF CHANGE: 20110124 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Bank of Marin Bancorp CENTRAL INDEX KEY: 0001403475 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 208859754 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33572 FILM NUMBER: 11542614 BUSINESS ADDRESS: STREET 1: 504 REDWOOD BOULEVARD, SUITE 100 CITY: NOVATO STATE: CA ZIP: 94947 BUSINESS PHONE: 415-763-7781 MAIL ADDRESS: STREET 1: 504 REDWOOD BOULEVARD, SUITE 100 CITY: NOVATO STATE: CA ZIP: 94947 8-K 1 form8k.htm BANK OF MARIN BANCORP 8-K 1-24-2011 form8k.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 24, 2011

Bank of Marin Bancorp
(Exact name of Registrant as specified in its charter)

California
001-33572
20-8859754
(State or other jurisdiction of incorporation)
(File number)
(I.R.S. Employer Identification No.)

504 Redwood Blvd., Suite 100, Novato, CA
94947
(Address of principal executive office)
(Zip Code)

Registrant’s telephone number, including area code:  (415) 763-4520

Not Applicable
(Former name or former address, if changes since last report)

Check the appropriate box below if the Form 8-K filing is to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 
£
Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)

 
£
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 
£
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 
£
Pre-commencement communications pursuant to Rule 13e-4(c)) under the Exchange Act (17 CFR 240.13e-4(c))
 


 
 

 

Section 2 – Financial Information

Item 2.02
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On January 24, 2011, Bank of Marin Bancorp released its financial results for the quarter ended December 31, 2010.  A copy of the press release is included as Exhibit 99.1.

Section 9 - Financial Statements and Exhibits

Item 9.01
FINANCIAL STATEMENTS AND EXHIBITS

 
(d)
Exhibits.

 
99.1
Press Release dated January 24, 2011.

 
1

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: January 24, 2011
BANK OF MARIN BANCORP
     
 
by:
/s/ Christina J. Cook
     
   
Christina J. Cook
   
Executive Vice President
   
and Chief Financial Officer

 
2

 

EXHIBIT INDEX


Exhibit No.
Description
Page Number
     
Press Release dated January 24, 2011
1-8
 
 
3

EX-99.1 2 ex99_1.htm EXHIBIT 99.1 ex99_1.htm
EXHIBIT 99.1

Logo 1

FOR IMMEDIATE RELEASE
 
CONTACT: Sandy Pfaff
 
   
415-459-8800
 
   
sandy@pfaffpr.com
 

BANK OF MARIN BANCORP REPORTS RECORD ANNUAL EARNINGS OF $13.6 MILLION
DEMAND DEPOSITS GREW 22.4% OVER A YEAR AGO

NOVATO, CA, January 24, 2011 – Bank of Marin Bancorp (“Bancorp”, NASDAQ: BMRC) announced 2010 annual earnings of $13.6 million, an increase of $787 thousand, or 6.2% from $12.8 million a year ago.  Diluted earnings per share for the year ended December 31, 2010 totaled $2.55, up $0.36 from $2.19 in the prior year.

2010 fourth quarter earnings totaled $3.9 million, an increase of $549 thousand, or 16.3%, from $3.4 million in the third quarter of 2010, and an increase of $1.1 million, or 39.5%, from $2.8 million in the fourth quarter of 2009.  Diluted earnings per share increased to $0.73 from $0.63 in the third quarter of 2010 and $0.53 in the fourth quarter of 2009.

“We are pleased to end the year with record earnings,” said Russell A. Colombo, President and CEO.  “Earnings growth reflects a lower level of credit losses, continued focus on cost controls and loan growth in our two newest markets, San Francisco and Santa Rosa.”

Bancorp also provided the following highlights on its operating and financial performance for the fourth quarter of 2010:

 
·
Deposits grew $71.7 million, or 7.6%, over a year ago. Demand deposits grew $51.6 million or 22.4% over a year ago and comprised 27.8% of total deposits at December 31, 2010.

 
·
Credit quality remains solid with a modest level of non-performing loans at 1.37% of loans.  Net charge-offs in the fourth quarter of 2010 decreased to $682 thousand from $1.2 million in the prior quarter and $3.0 million in the same quarter a year ago. The provision for loan losses of $1.1 million decreased $350 thousand from the prior quarter and decreased $1.5 million from the same quarter a year ago.

 
·
Total risk-based capital ratio grew to 13.3%, up from 12.9% at September 30, 2010 and 12.3% at December 31, 2009, and continues to be well above industry requirements for a well-capitalized institution.

 
·
In the fourth quarter, Bancorp declared and paid an increased quarterly cash dividend of $0.16 per share, up from $0.15 in the previous quarter.

 
·
Bank of Marin (the “Bank”) expanded its community banking footprint into Sonoma County.  On October 14, 2010, the Bank opened a loan production office in Santa Rosa, which will be converted to a full service commercial banking office in the second quarter of 2011. In addition, in December 2010, the Bank signed a lease for a branch in downtown Sonoma. This office will open as the Bank’s fifth branch in Sonoma County by late spring 2011.

Loans and Credit Quality

Total loans reached $941.4 million at December 31, 2010, representing an increase of $23.7 million, or 2.6%, over December 31, 2009.  This growth primarily reflects growth in the Banks San Francisco and Santa Rosa markets and represents an increase in commercial real estate loans, partially offset by decreases in construction and commercial loans.

 
1

 

“Our credit risk is proactively managed,” said Christina J. Cook, Chief Financial Officer.  “We apply prudent underwriting fundamentals, build strong relationships with our customers and operate within markets we know.”

Non-performing loans totaled $12.9 million, or 1.37% of Bancorp’s loan portfolio at December 31, 2010, compared to $10.6 million, or 1.13% at September 30, 2010 and $11.6 million or 1.26% a year ago.  Accruing loans past due 30 to 89 days decreased to $352 thousand at December 31, 2010 from $4.6 million at September 30, 2010 and $835 thousand a year ago.

In the fourth quarter of 2010, Bancorp’s loan loss provision totaled $1.1 million, down $350 thousand from the prior quarter and down $1.5 million from the same quarter a year ago.  The provision for loan losses totaled $5.4 million and $5.5 million in 2010 and 2009, respectively. The allowance for loan losses of $12.4 million totaled 1.32% of loans at December 31, 2010 compared to 1.28% and 1.16% at September 30, 2010 and December 31, 2009, respectively. The increases in the allowance for loan losses as a percentage of loans from both a quarter ago and a year ago reflect a higher level of non-performing loans and the related specific reserves. Net charge-offs in the fourth quarter of 2010 decreased to $682 thousand from $1.2 million in the prior quarter and $3.0 million in the same quarter a year ago.  Net charge-offs in 2010 decreased to $3.6 million in 2010 from $4.8 million in 2009.

Deposits

Total deposits grew $71.7 million or 7.6% over a year ago to $1.0 billion.  The higher level of deposits reflects growth in most deposit categories, most notably in demand deposits of $51.6 million, or 22.4%.

“We have built a strong core deposit base reflecting the continued trust our customers place in us,” said Mr. Colombo.  “Our high level of demand deposits is attributable to the relationships we have built and the personalized service we provide.”

Earnings

Net interest income of $14.1 million in the fourth quarter of 2010 increased $669 thousand, or 5.0%, from the same period last year. Net interest income of $54.9 million for the full year increased $2.3 million, or 4.5% from 2009. The increases reflect growth in the interest-earning assets and reduction in the cost of funds, partially offset by reduction in the yield on investment securities. The tax-equivalent net interest margin was 4.92% in the fourth quarter of 2010, compared to 5.18% in the fourth quarter of 2009 and 4.88% in the prior quarter.  The tax-equivalent net interest margin was 4.95% in 2010 compared to 5.17% in 2009.  Decreases in the tax-equivalent net interest margin were primarily due to lower yields on investment securities (as a result of increased prepayments and lower yields on recent purchases) and a s hift in the relative composition of interest-earning assets from higher-yielding loans to lower-yielding cash held at the Federal Reserve Bank and other short-term investments. The excess liquidity from deposit inflows has not been deployed as the banking industry as a whole is experiencing challenges with loan demand from qualified borrowers.

Non-interest income in the fourth quarter of 2010 remained relatively unchanged from the same period last year. The 2010 non-interest income of $5.5 million increased $339 thousand, or 6.5% from last year due to higher Wealth Management and Trust Services fees and higher Visa debit card and merchant interchange fees.

Non-interest expense totaled $8.0 million in the fourth quarter of 2010, an increase of $274 thousand, or 3.5% from the same quarter a year ago, primarily due to higher personnel costs associated with franchise expansion.  Non-interest expense totaled $33.4 million in 2010, up $1.7 million, or 5.2% from $31.7 million in 2009. This increase reflected higher personnel costs and occupancy costs associated with franchise expansion, higher professional costs associated with strategic expansion initiatives and higher data processing costs, partially offset by  the 2009 Federal Deposit Insurance Corporation special assessment of $496 thousand.

 
2

 

About Bank of Marin Bancorp

Bank of Marin Bancorp's assets currently exceed $1 billion. Bank of Marin, as the sole subsidiary of Bank of Marin Bancorp, is the largest community bank in Marin County with sixteen offices in Marin, San Francisco and Sonoma counties. The Bank's Administrative offices are located in Novato, California. Bank of Marin offers business and personal banking, private banking and wealth management services, with a strong focus on supporting the local community. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index, is recognized as a Top 200 Community Bank, ranked number 42 in the U.S. by US Banker Magazine, and has received the highest five star rating from Bauer Financial for more than ten years (www.bauerfinancial.com). Celebrating its 21st anniversary in 2011, Bank of Ma rin has been recognized as one of the "Best Places to Work in the Bay Area" and one of the "Top Corporate Philanthropists" by the San Francisco Business Times.

Forward Looking Statements

This release may contain certain forward-looking statements that are based on management’s current expectations regarding economic, legislative, and regulatory issues that may impact Bancorp’s earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, the  economic downturn in the United State s and abroad, changes in interest rates, deposit flows, real estate values, and competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory and technological factors affecting Bancorp’s operations, pricing, products and services. These and other important factors are detailed in various securities law filings made periodically by Bancorp, copies of which are available from Bancorp without charge. Bancorp undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

 
3

 

BANK OF MARIN BANCORP
FINANCIAL HIGHLIGHTS
Year To Year Comparison
December 31, 2010

(dollars in thousands, except per share data;  unaudited)

FOURTH QUARTER
 
QTD 2010
   
QTD 2009
   
CHANGE
   
% CHANGE
 
                         
NET INCOME
  $ 3,908     $ 2,802     $ 1,106       39.5 %
DILUTED EARNINGS PER COMMON SHARE
  $ 0.73     $ 0.53     $ 0.20       37.7 %
RETURN ON AVERAGE ASSETS (ROA)
    1.28 %     0.97 %     0.31 %     32.0 %
RETURN ON AVERAGE EQUITY (ROE)
    12.81 %     10.15 %     2.66 %     26.2 %
EFFICIENCY RATIO
    52.12 %     52.70 %     (0.58 %)     (1.1 %)
TAX-EQUIVALENT NET INTEREST MARGIN 1
    4.92 %     5.18 %     (0.26 %)     (5.0 %)
NET CHARGE-OFFS
  $ 682     $ 3,025     $ (2,343 )     (77.5 %)
NET CHARGE-OFFS TO AVERAGE LOANS
    0.07 %     0.33 %     (0.26 %)     (78.8 %)
                                 
YEAR-TO-DATE
 
YTD 2010
   
YTD 2009
   
CHANGE
   
% CHANGE
 
                                 
NET INCOME
  $ 13,552     $ 12,765     $ 787       6.2 %
DILUTED EARNINGS PER COMMON SHARE 2
  $ 2.55     $ 2.19     $ 0.36       16.4 %
RETURN ON AVERAGE ASSETS (ROA)
    1.14 %     1.16 %     (0.02 %)     (1.7 %)
RETURN ON AVERAGE EQUITY (ROE)
    11.67 %     11.46 %     0.21 %     1.8 %
EFFICIENCY RATIO
    55.20 %     54.89 %     0.31 %     0.6 %
TAX-EQUIVALENT NET INTEREST MARGIN 1
    4.95 %     5.17 %     (0.22 %)     (4.3 %)
NET CHARGE-OFFS
  $ 3,577     $ 4,842     $ (1,265 )     (26.1 %)
NET CHARGE-OFFS TO AVERAGE LOANS
    0.38 %     0.53 %     (0.15 %)     (28.3 %)
                                 
AT PERIOD END
 
December 31, 2010
   
December 31, 2009
   
CHANGE
   
% CHANGE
 
                                 
TOTAL ASSETS
  $ 1,208,150     $ 1,121,672     $ 86,478       7.7 %
                                 
LOANS:
                               
COMMERCIAL
  $ 153,836     $ 164,643     $ (10,807 )     (6.6 %)
REAL ESTATE
                               
COMMERCIAL OWNER-OCCUPIED
  $ 142,590     $ 146,133     $ (3,543 )     (2.4 %)
COMMERCIAL INVESTOR
  $ 383,553     $ 332,752     $ 50,801       15.3 %
CONSTRUCTION
  $ 77,619     $ 91,289     $ (13,670 )     (15.0 %)
HOME EQUITY
  $ 86,932     $ 83,977     $ 2,955       3.5 %
OTHER RESIDENTIAL
  $ 69,991     $ 69,369     $ 622       0.9 %
INSTALLMENT AND OTHER CONSUMER LOANS
  $ 26,879     $ 29,585     $ (2,706 )     (9.1 %)
TOTAL LOANS
  $ 941,400     $ 917,748     $ 23,652       2.6 %
                                 
NON-PERFORMING LOANS 3:
                               
COMMERCIAL
  $ 2,486     $ 910     $ 1,576       173.2 %
REAL ESTATE
                               
COMMERCIAL OWNER-OCCUPIED
  $ 632     $ 3,722     $ (3,090 )     (83.0 %)
CONSTRUCTION
  $ 9,297     $ 6,520     $ 2,777       42.6 %
HOME EQUITY
  $ 0     $ 100     $ (100 )     (100.0 %)
OTHER RESIDENTIAL
  $ 148     $ 0     $ 148    
NM
 
INSTALLMENT AND OTHER CONSUMER LOANS
  $ 362     $ 313     $ 49       15.7 %
TOTAL NON-PERFORMING LOANS
  $ 12,925     $ 11,565     $ 1,360       11.8 %
                                 
TOTAL ACCRUING LOANS 30-89 DAYS PAST DUE
  $ 352     $ 835     $ (483 )     (57.8 %)
LOAN LOSS RESERVE TO LOANS
    1.32 %     1.16 %     0.16 %     13.8 %
LOAN LOSS RESERVE TO NON-PERFORMING LOANS
    0.96 x     0.92 x     0.04 x     4.3 %
NON-PERFORMING LOANS TO TOTAL LOANS
    1.37 %     1.26 %     0.11 %     8.7 %
TEXAS RATIO 4
    9.72 %     9.74 %     (0.02 %)     (0.2 %)
TOTAL DEPOSITS
  $ 1,015,739     $ 944,061     $ 71,678       7.6 %
LOAN TO DEPOSIT RATIO
    92.7 %     97.2 %     (4.5 %)     (4.6 %)
STOCKHOLDERS' EQUITY
  $ 121,920     $ 109,051     $ 12,869       11.8 %
BOOK VALUE PER SHARE
  $ 23.05     $ 20.85     $ 2.20       10.6 %
TANGIBLE COMMON EQUITY TO ASSETS 5
    10.09 %     9.72 %     0.37 %     3.8 %
TOTAL RISK BASED CAPITAL RATIO-BANK 6
    12.7 %     11.6 %     1.10 %     9.5 %
TOTAL RISK BASED CAPITAL RATIO-BANCORP 6
    13.3 %     12.3 %     1.00 %     8.1 %

1  Net interest income is annualized by dividing actual number of days in the period times 360 days.
2  The earnings per common share of $2.19 in 2009 were reduced by $0.25 as a result of Bancorp’s participation and withdrawal from the U.S. Department of the Treasury Capital Purchase Program (“TCPP”) and $0.06 related to an FDIC special assessment.  In March 2009, Bancorp repurchased all 28,000 shares of preferred stock issued under the TCPP on December 5, 2008.  A total of $28.2 million was paid to the Treasury, including accrued dividends of $179 thousand.  As a result of the participation in the TCPP and the related repurchase, net income available to common stockholders in 2009 was reduced by $354 thousand in preferred stock dividends and $945 thousand in accelerated accretion on the preferred stock.
3  Excludes accruing troubled-debt restructured loans of $1.2 million and $615 thousand at December 31, 2010 and 2009, respectively.
4  (Non-performing assets + 90 day delinquent loans)/(tangible common equity + allowance for loan losses)
5  Tangible common equity includes common stock, retained earnings and unrealized gain on available for sale securities, net of tax.
6  Current period estimated.

 
4

 


BANK OF MARIN BANCORP
CONSOLIDATED STATEMENT OF CONDITION
at December 31, 2010, September 30, 2010 and December 31, 2009

(in thousands, except share data; 2010 unaudited)
 
December 31, 2010
   
September 30, 2010
   
December 31, 2009
 
                   
Assets
                 
Cash and due from banks
  $ 65,724     $ 73,546     $ 23,660  
Short-term investments
    19,508       24,208       15,000  
Cash and cash equivalents
    85,232       97,754       38,660  
                         
Investment securities
                       
Held to maturity, at amortized cost
    34,917       29,809       30,396  
Available for sale (at fair value; amortized cost $109,070, $114,625 and $96,752 at December 31, 2010, September 30, 2010, and December 31, 2009, respectively)
    111,736       118,113       97,818  
Total investment securities
    146,653       147,922       128,214  
                         
Loans, net of allowance for loan losses of $12,392, $12,023 and $10,618 at December 31, 2010, September 30, 2010 and December 31, 2009, respectively)
    929,008       926,111       907,130  
Bank premises and equipment, net
    8,419       8,584       8,043  
Interest receivable and other assets
    38,838       38,843       39,625  
                         
Total assets
  $ 1,208,150     $ 1,219,214     $ 1,121,672  
                         
Liabilities and Stockholders' Equity
                       
                         
Liabilities
                       
Deposits
                       
Non-interest bearing
  $ 282,195     $ 276,320     $ 230,551  
Interest bearing
                       
Transaction accounts
    105,177       99,367       89,660  
Savings accounts
    56,760       52,991       47,871  
Money market accounts
    371,352       392,381       416,481  
CDARS® time accounts
    67,261       70,661       51,819  
Other time accounts
    132,994       131,558       107,679  
Total deposits
    1,015,739       1,023,278       944,061  
                         
Federal Home Loan Bank borrowings
    55,000       55,000       55,000  
Subordinated debenture
    5,000       5,000       5,000  
Interest payable and other liabilities
    10,491       17,322       8,560  
                         
Total liabilities
    1,086,230       1,100,600       1,012,621  
                         
Stockholders' Equity
                       
Preferred stock, no par value, $1,000 per share liquidation preference
                       
Authorized - 5,000,000 shares; none issued
    ---       ---       ---  
Common stock, no par value
                       
Authorized - 15,000,000 shares
                       
Issued and outstanding - 5,290,082 shares, 5,258,487 shares and 5,229,529 shares at December 31, 2010, September 30, 2010 and December 31, 2009, respectively
    55,383       54,664       53,789  
Retained earnings
    64,991       61,927       54,644  
Accumulated other comprehensive income, net
    1,546       2,023       618  
                         
Total stockholders' equity
    121,920       118,614       109,051  
                         
Total liabilities and stockholders' equity
  $ 1,208,150     $ 1,219,214     $ 1,121,672  

 
5

 

BANK OF MARIN BANCORP
CONSOLIDATED STATEMENT OF INCOME
 

   
3 Months Ended
   
Year Ended
 
(in thousands, except per share amounts; 2010 and quarterly data unaudited)
 
Dec. 31,
2010
   
Sep. 30,
2010
   
Dec. 31,
2009
   
Dec. 31,
2010
   
Dec. 31,
2009
 
                               
Interest income
                             
Interest and fees on loans
  $ 14,093     $ 14,296     $ 13,871     $ 56,239     $ 54,816  
Interest on investment securities
                                       
Securities on U.S. Government agencies
    792       829       833       3,234       3,304  
Obligations of state and political subdivisions
    291       284       285       1,146       1,103  
Corporate debt securities and other
    141       144       214       593       506  
Interest on Federal funds sold and short-term investments
    47       48       1       145       5  
Total interest income
    15,364       15,601       15,204       61,357       59,734  
                                         
Interest expense
                                       
Interest on interest-bearing transaction accounts
    29       32       29       110       115  
Interest on savings accounts
    25       27       25       104       94  
Interest on money market accounts
    339       602       876       2,467       3,235  
Interest on CDARS® time accounts
    179       221       171       842       721  
Interest on other time accounts
    373       391       353       1,495       1,541  
Interest on borrowed funds
    360       363       360       1,430       1,461  
Total interest expense
    1,305       1,636       1,814       6,448       7,167  
                                         
Net interest income
    14,059       13,965       13,390       54,909       52,567  
Provision for loan losses
    1,050       1,400       2,525       5,350       5,510  
Net interest income after provision for loan losses
    13,009       12,565       10,865       49,559       47,057  
                                         
Non-interest income
                                       
Service charges on deposit accounts
    442       446       459       1,797       1,782  
Wealth Management and Trust Services
    394       364       366       1,521       1,383  
Other income
    524       497       516       2,203       2,017  
Total non-interest income
    1,360       1,307       1,341       5,521       5,182  
                                         
Non-interest expense
                                       
Salaries and related benefits
    4,408       4,665       3,951       18,240       17,001  
Occupancy and equipment
    884       880       947       3,576       3,516  
Depreciation and amortization
    311       335       349       1,344       1,370  
FDIC insurance
    381       388       344       1,506       1,800  
Data processing
    494       491       477       1,916       1,650  
Professional services
    481       550       543       1,917       1,727  
Other expense
    1,078       1,198       1,152       4,858       4,632  
Total non-interest expense
    8,037       8,507       7,763       33,357       31,696  
Income before provision for income taxes
    6,332       5,365       4,443       21,723       20,543  
                                         
Provision for income taxes
    2,424       2,006       1,641       8,171       7,778  
Net income
  $ 3,908     $ 3,359     $ 2,802     $ 13,552     $ 12,765  
                                         
Preferred stock dividends and accretion
    ---       ---       ---       ---     $ (1,299 )
Net income available to common stockholders
  $ 3,908     $ 3,359     $ 2,802     $ 13,552     $ 11,466  
                                         
Net income per common share:
                                       
Basic
  $ 0.74     $ 0.64     $ 0.54     $ 2.59     $ 2.21  
Diluted
  $ 0.73     $ 0.63     $ 0.53     $ 2.55     $ 2.19  
                                         
Weighted average shares used to compute net income per common share:
                                       
Basic
    5,259       5,241       5,210       5,238       5,182  
Diluted
    5,342       5,311       5,295       5,314       5,242  
                                         
Dividends declared per common share
  $ 0.16     $ 0.15     $ 0.15     $ 0.61     $ 0.57  

 
6

 

Average Statements of Condition and Analysis of Net Interest Income

   
Three months ended
   
Three months ended
   
Three months ended
 
   
December 31, 2010
   
September 30, 2010
   
December 31, 2009
 
         
Interest
               
Interest
               
Interest
       
   
Average
   
Income/
   
Yield/
   
Average
   
Income/
   
Yield/
   
Average
   
Income/
   
Yield/
 
(Dollars in thousands; unaudited)
 
Balance
   
Expense
   
Rate
   
Balance
   
Expense
   
Rate
   
Balance
   
Expense
   
Rate
 
Assets
                                                     
Interest-bearing due from banks (1)
  $ 60,050     $ 47       0.31 %   $ 65,461     $ 48       0.29 %   $ 652     $ 1       0.60 %
Investment securities
                                                                       
U.S. Government agencies (2)
    95,910       792       3.30       94,255       829       3.52       69,312       833       4.81  
Corporate CMOs and other (2)
    15,628       141       3.61       12,333       144       4.67       13,046       214       6.56  
Obligations of state and political subdivisions (3)
    32,756       443       5.41       30,068       431       5.73       30,233       434       5.74  
Loans and banker's acceptances (1) (3) (4)
    932,570       14,184       5.95       935,116       14,374       6.01       913,538       13,934       5.97  
Total interest-earning assets (1)
    1,136,914       15,607       5.37       1,137,233       15,826       5.45       1,026,781       15,416       5.88  
Cash and non-interest-bearing due from banks
    36,567                       34,464                       88,060                  
Bank premises and equipment, net
    8,531                       8,524                       8,201                  
Interest receivable and other assets, net
    32,144                       32,056                       26,669                  
Total assets
  $ 1,214,156                     $ 1,212,277                     $ 1,149,711                  
Liabilities and Stockholders' Equity
                                                                       
Interest-bearing transaction accounts
  $ 102,117     $ 29       0.11 %   $ 102,982     $ 32       0.12 %   $ 91,256     $ 29       0.13 %
Savings accounts
    55,259       25       0.18       52,091       27       0.21       47,410       25       0.21  
Money market accounts
    380,165       339       0.35       388,549       602       0.61       428,843       876       0.81  
CDARS® time accounts
    70,453       179       1.01       78,318       221       1.12       51,303       171       1.32  
Other time accounts
    132,062       373       1.12       130,276       391       1.19       103,996       353       1.35  
Overnight borrowings (1)
    8       ---       0.29       ---       ---       ---       2       ---       1.09  
FHLB fixed-rate advances
    55,000       323       2.33       55,000       323       2.33       55,000       323       2.33  
Subordinated debenture (1)
    5,000       37       2.90       5,000       40       3.13       5,000       37       2.90  
Total interest-bearing liabilities
    800,064       1,305       0.65       812,216       1,636       0.80       782,810       1,814       0.92  
Demand accounts
    281,563                       271,591                       247,085                  
Interest payable and other liabilities
    11,524                       10,744                       10,326                  
Stockholders' equity
    121,005                       117,726                       109,490                  
Total liabilities & stockholders' equity
  $ 1,214,156                     $ 1,212,277                     $ 1,149,711                  
Tax-equivalent net interest income/margin (1)
          $ 14,302       4.92 %           $ 14,190       4.88 %           $ 13,602       5.18 %
Reported net interest income/margin
          $ 14,059       4.84 %           $ 13,965       4.81 %           $ 13,390       5.10 %
Tax-equivalent net interest rate spread
                    4.72 %                     4.65 %                     4.96 %
 
 
7

 
 
   
Year ended
   
Year ended
 
   
December 31, 2010
   
December 31, 2009
 
         
Interest
               
Interest
       
   
Average
   
Income/
   
Yield/
   
Average
   
Income/
   
Yield/
 
(Dollars in thousands; unaudited)
 
Balance
   
Expense
   
Rate
   
Balance
   
Expense
   
Rate
 
Assets
                                   
Interest-bearing due from banks (1)
  $ 43,028     $ 143       0.33 %   $ 164     $ 1       0.60 %
Federal funds sold
    3,049       2       0.07       1,752       4       0.23  
Investment securities
                                               
U.S. Government agencies (2)
    91,869       3,234       3.52       70,268       3,304       4.70  
Corporate CMOs and other (2)
    13,675       593       4.34       7,397       506       6.84  
Obligations of state and political subdivisions (3)
    30,893       1,741       5.64       29,221       1,677       5.74  
Loans and banker's acceptances (1) (3) (4)
    929,755       56,542       6.00       910,456       55,071       5.97  
Total interest-earning assets (1)
    1,112,269       62,255       5.52       1,019,258       60,563       5.86  
Cash and non-interest-bearing due from banks
    34,383                       46,594                  
Bank premises and equipment, net
    8,259                       8,140                  
Interest receivable and other assets, net
    31,262                       26,041                  
Total assets
  $ 1,186,173                     $ 1,100,033                  
Liabilities and Stockholders' Equity
                                               
Interest-bearing transaction accounts
  $ 98,168     $ 110       0.11 %   $ 90,159       115       0.13 %
Savings accounts
    51,738       104       0.20       45,944       94       0.20  
Money market accounts
    390,575       2,467       0.63       391,571       3,235       0.83  
CDARS® time accounts
    71,432       842       1.18       51,248       721       1.41  
Other time accounts
    124,631       1,495       1.20       97,924       1,541       1.57  
Overnight borrowings (1)
    2       ---       0.29       10,659       28       0.26  
FHLB fixed-rate advances
    55,000       1,281       2.33       53,794       1,253       2.33  
Subordinated debenture (1)
    5,000       149       2.94       5,000       180       3.55  
Total interest-bearing liabilities
    796,546       6,448       0.81       746,299       7,167       0.96  
Demand accounts
    263,742                       232,502                  
Interest payable and other liabilities
    9,791                       9,873                  
Stockholders' equity
    116,094                       111,359                  
Total liabilities & stockholders' equity
  $ 1,186,173                     $ 1,100,033                  
Tax-equivalent net interest income/margin (1)
          $ 55,807       4.95 %           $ 53,396       5.17 %
Reported net interest income/margin
          $ 54,909       4.87 %           $ 52,567       5.09 %
Tax-equivalent net interest rate spread
                    4.71 %                     4.90 %

(1) Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable.
(2) Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity.
(3) Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the Federal statutory rate of 35 percent.
(4) Average balances on loans outstanding include non-performing loans. The amortized portion of net loan origination fees is included in interest income on loans, representing an adjustment to the yield.
 
 
8

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