[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
United States
|
26-0776123
|
(State or other jurisdiction of incorporation of organization)
|
(IRS Employer Identification No.)
|
Page Number
|
|
PART I FINANCIAL INFORMATION
|
|
Item 1. Financial Statements
|
|
Condensed Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010
|
3
|
Condensed Consolidated Statements of Income for the Three and Nine Month Periods Ended September 30, 2011 and 2010 (unaudited)`
|
4
|
Condensed Consolidated Statement of Stockholders’ Equity for the Nine Month Periods Ended September 30, 2011 (unaudited)
|
5
|
Condensed Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 2011 and 2010 (unaudited)
|
6
|
Selected Notes to Condensed Consolidated Financial Statements
|
7
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
30
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
42
|
Item 4. Controls and Procedures
|
42
|
PART II OTHER INFORMATION
|
43
|
Item 1. Legal Proceedings
|
43
|
Item 1A Risk Factors
|
43
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
43
|
Item 3. Defaults Upon Senior Securities
|
43
|
Item 4. (Removed and Reserved)
|
43
|
Item 5. Other Information
|
43
|
Item 6. Exhibits
|
44
|
SIGNATURES
|
|
EXHIBITS
|
SOUND FINANCIAL, INC AND SUBSIDIARY
|
||||||||
Condensed Consolidated Balance Sheets
|
||||||||
(Dollars in thousands)
|
||||||||
(unaudited)
|
||||||||
SEPTEMBER 30,
|
DECEMBER 31,
|
|||||||
2011
|
2010
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 13,039 | $ | 9,092 | ||||
Available-for-sale securities (AFS), at fair value
|
3,138 | 4,541 | ||||||
Federal Home Loan Bank stock, at cost
|
2,444 | 2,444 | ||||||
Loans held for sale
|
1,129 | 902 | ||||||
Loans
|
302,946 | 299,246 | ||||||
Less allowance for loan losses
|
(4,007 | ) | (4,436 | ) | ||||
Total loans, net
|
298,939 | 294,810 | ||||||
Accrued interest receivable
|
1,196 | 1,280 | ||||||
Premises and equipment, net
|
2,311 | 3,295 | ||||||
Bank-owned life insurance, net
|
6,918 | 6,729 | ||||||
Mortgage servicing rights, at fair value
|
2,683 | 3,200 | ||||||
Other real estate owned and repossessed assets, net
|
3,191 | 2,625 | ||||||
Other assets
|
4,635 | 5,721 | ||||||
Total assets
|
$ | 339,623 | $ | 334,639 | ||||
LIABILITIES
|
||||||||
Deposits
|
||||||||
Interest-bearing
|
$ | 268,161 | $ | 251,424 | ||||
Noninterest-bearing demand
|
31,685 | 27,070 | ||||||
Total deposits
|
299,846 | 278,494 | ||||||
Borrowings
|
8,667 | 24,849 | ||||||
Accrued interest payable
|
76 | 121 | ||||||
Other liabilities
|
2,337 | 4,020 | ||||||
Advance payments from borrowers for taxes and insurance
|
520 | 252 | ||||||
Total liabilities
|
311,446 | 307,736 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 6)
|
||||||||
STOCKHOLDERS' EQUITY
|
||||||||
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none outstanding
|
- | - | ||||||
Common stock, $0.01 par value, 24,000,000 shares authorized, 2,954,295 issued and outstanding as of September 30, 2011 and December 31, 2010
|
30 | 30 | ||||||
Additional paid-in capital
|
11,907 | 11,808 | ||||||
Unearned shares - Employee Stock Ownership Plan (“ESOP”)
|
(809 | ) | (809 | ) | ||||
Retained earnings
|
17,676 | 16,545 | ||||||
Accumulated other comprehensive loss, net of tax
|
(627 | ) | (671 | ) | ||||
Total stockholders’ equity
|
28,177 | 26,903 | ||||||
Total liabilities and stockholders’ equity
|
$ | 339,623 | $ | 334,639 |
SOUND FINANCIAL, INC. AND SUBSIDIARY | ||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
(Dollars in thousands, except per share amounts)
|
||||||||||||||||
(Unaudited) | ||||||||||||||||
THREE MONTHS ENDED
|
NINE MONTHS ENDED
|
|||||||||||||||
SEPTEMBER 30,
|
SEPTEMBER 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
INTEREST INCOME
|
||||||||||||||||
Loans, including fees
|
$ | 4,556 | $ | 4,852 | $ | 13,787 | $ | 14,229 | ||||||||
Interest and dividends on investments,
|
||||||||||||||||
cash and cash equivalents
|
57 | 78 | 176 | 395 | ||||||||||||
Total interest income
|
4,613 | 4,930 | 13,963 | 14,624 | ||||||||||||
INTEREST EXPENSE
|
||||||||||||||||
Deposits
|
626 | 890 | 1,893 | 2,892 | ||||||||||||
FHLB advances and other borrowings
|
55 | 153 | 223 | 471 | ||||||||||||
Total interest expense
|
681 | 1,043 | 2,116 | 3,363 | ||||||||||||
NET INTEREST INCOME
|
3,932 | 3,887 | 11,847 | 11,261 | ||||||||||||
PROVISION FOR LOAN LOSSES
|
1,300 | 950 | 3,350 | 3,150 | ||||||||||||
NET INTEREST INCOME
|
||||||||||||||||
AFTER PROVISION FOR LOAN LOSSES
|
2,632 | 2,937 | 8,497 | 8,111 | ||||||||||||
NONINTEREST INCOME
|
||||||||||||||||
Service charges and fee income
|
516 | 559 | 1,514 | 1,637 | ||||||||||||
Earnings on cash surrender value
|
||||||||||||||||
of bank-owned life insurance
|
61 | 66 | 189 | 200 | ||||||||||||
Mortgage servicing income
|
110 | 75 | 318 | 382 | ||||||||||||
Fair value adjustment on mortgage servicing rights
|
(491 | ) | (284 | ) | (235 | ) | (197 | ) | ||||||||
Gain (loss) on sale of securities
|
- | - | (33 | ) | 64 | |||||||||||
Other-than-temporary impairment losses on securities
|
(56 | ) | (47 | ) | (96 | ) | (98 | ) | ||||||||
Loss on sale of fixed assets
|
- | - | (80 | ) | - | |||||||||||
Gain on sale of loans
|
126 | 343 | 263 | 465 | ||||||||||||
Total noninterest income
|
266 | 712 | 1,840 | 2,453 | ||||||||||||
NONINTEREST EXPENSE
|
||||||||||||||||
Salaries and benefits
|
1,189 | 1,353 | 3,942 | 4,513 | ||||||||||||
Operations
|
602 | 750 | 1,869 | 2,397 | ||||||||||||
Regulatory assessments
|
103 | 205 | 454 | 644 | ||||||||||||
Occupancy
|
288 | 328 | 835 | 1,018 | ||||||||||||
Data processing
|
218 | 212 | 685 | 673 | ||||||||||||
Losses and expenses on other real estate owned and repossessed assets
|
274 | 202 | 958 | 291 | ||||||||||||
Total noninterest expense
|
2,674 | 3,050 | 8,743 | 9,536 | ||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES
|
224 | 599 | 1,594 | 1,028 | ||||||||||||
PROVISION FOR INCOME TAXES
|
43 | 178 | 463 | 272 | ||||||||||||
NET INCOME
|
$ | 181 | $ | 421 | $ | 1,131 | $ | 756 | ||||||||
BASIC EARNINGS PER SHARE
|
$ | 0.06 | $ | 0.14 | $ | 0.39 | $ | 0.26 | ||||||||
DILUTED EARNINGS PER SHARE
|
$ | 0.06 | $ | 0.14 | $ | 0.39 | $ | 0.26 | ||||||||
Shares
|
Common Stock
|
Additional Paid-in Capital
|
Unearned
ESOP Shares
|
Retained Earnings
|
Accumulated Other Comprehensive Loss, net of tax
|
Total Stockholders’ Equity
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
BALANCE, December 31, 2010
|
2,954 | $ | 30 | $ | 11,808 | $ | (809 | ) | $ | 16,545 | $ | (671 | ) | $ | 26,903 | |||||||||||||
Other comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
- | - | - | 1,131 | 1,131 | |||||||||||||||||||||||
Net unrealized gain in fair value of available for sale securities, net of tax of $22
|
- | - | - | - | 44 | 44 | ||||||||||||||||||||||
Total comprehensive income
|
1,175 | |||||||||||||||||||||||||||
Compensation related to stock options and restricted stock
|
- | 99 | - | - | - | 99 | ||||||||||||||||||||||
BALANCE, September 30, 2011
|
2,954 | $ | 30 | 11,907 | $ | (809 | ) | $ | 17,676 | $ | (627 | ) | $ | 28,177 | ||||||||||||||
NINE MONTHS ENDED SEPTEMBER 30,
|
||||||||
2011
|
2010
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income
|
$ | 1,131 | $ | 756 | ||||
Adjustments to reconcile net income to net cash from operating activities
|
||||||||
Accretion of net premium on investments
|
- | (231 | ) | |||||
Loss (gain) on sale of available for sale securities
|
33 | (64 | ) | |||||
Other-than-temporary impairment losses on securities
|
96 | 98 | ||||||
Provision for loan losses
|
3,350 | 3,150 | ||||||
Depreciation and amortization
|
286 | 374 | ||||||
Compensation expense related to stock options and restricted stock
|
99 | 99 | ||||||
Fair value adjustment on mortgage servicing rights
|
235 | 197 | ||||||
Additions to mortgage servicing rights
|
(329 | ) | (392 | ) | ||||
Amortization of mortgage servicing rights
|
611 | 671 | ||||||
Increase in cash surrender value of bank owned life insurance
|
(189 | ) | (200 | ) | ||||
Proceeds from sale of loans
|
32,912 | 40,640 | ||||||
Originations of loans held for sale
|
(32,876 | ) | (39,153 | ) | ||||
Loss on sale of other real estate owned and repossessed assets
|
802 | 291 | ||||||
Gain on sale of loans
|
(263 | ) | (465 | ) | ||||
(Decrease) increase in operating assets and liabilities
|
||||||||
Accrued interest receivable
|
84 | (7 | ) | |||||
Other assets
|
1,022 | (456 | ) | |||||
Accrued interest payable
|
(45 | ) | (33 | ) | ||||
Other liabilities
|
(1,683 | ) | (1,715 | ) | ||||
Net cash provided by operating activities
|
5,276 | 3,489 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Proceeds from principal payments, maturities and sales of available for sale securities
|
1,382 | 11,693 | ||||||
Purchase of available for sale investments
|
- | (5,832 | ) | |||||
Net increase in loans
|
(11,209 | ) | (24,859 | ) | ||||
Improvements to OREO and other repossessed assets
|
(30 | ) | - | |||||
Proceeds from sale of OREO and other repossessed assets
|
2,392 | 1,052 | ||||||
Sales (purchases) of premises and equipment
|
698 | (216 | ) | |||||
Net cash used by investing activities
|
(6,767 | ) | (18,162 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Net increase (decrease) in deposits
|
21,352 | (1,787 | ) | |||||
Proceeds from borrowings
|
61,700 | 65,700 | ||||||
Repayment of borrowings
|
(77,882 | ) | (55,490 | ) | ||||
Cash dividends paid
|
- | (27 | ) | |||||
Net change in advances from borrowers for taxes and insurance
|
268 | 187 | ||||||
Net cash provided by financing activities
|
5,438 | 8,583 | ||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
3,947 | (6,090 | ) | |||||
CASH AND CASH EQUIVALENTS, beginning of period
|
9,092 | 15,679 | ||||||
CASH AND CASH EQUIVALENTS, end of period
|
$ | 13,039 | $ | 9,589 |
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||
Cash paid for income taxes
|
$ | 1,185 | $ | 625 | ||||
Interest paid on deposits and borrowings
|
$ | 2,161 | $ | 3,396 | ||||
Net transfer of loans to other real estate owned
|
$ | 3,730 | $ | 3,254 |
Gross Unrealized
|
||||||||||||||||||||
Amortized
Cost
|
Gains
|
Losses 1 Year
or Less
|
Losses Greater
Than 1 Year
|
Estimated Fair
Value
|
||||||||||||||||
September 30, 2011
|
(in thousands)
|
|||||||||||||||||||
Agency mortgage-backed securities
|
$ | 53 | $ | 8 | $ | - | $ | - | $ | 61 | ||||||||||
Non-agency mortgage-backed securities
|
4,034 | - | - | (957 | ) | $ | 3,077 | |||||||||||||
Total
|
$ | 4,087 | $ | 8 | $ | - | $ | (957 | ) | $ | 3,138 | |||||||||
December 31, 2010
|
(in thousands)
|
|||||||||||||||||||
Agency mortgage-backed securities
|
$ | 54 | $ | 7 | $ | - | $ | - | $ | 61 | ||||||||||
Non-agency mortgage-backed securities
|
5,543 | 2 | - | (1,065 | ) | 4,480 | ||||||||||||||
Total
|
$ | 5,597 | $ | 9 | $ | - | $ | (1,065 | ) | $ | 4,541 | |||||||||
September 30, 2011
|
||||||||
Amortized Cost
|
Fair Value
|
|||||||
(in thousands)
|
||||||||
Due after ten years
|
$ | 4,087 | $ | 3,138 |
Nine Months Ended September 30,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Proceeds
|
$ | 1,118 | $ | 10,603 | ||||
Gross gains
|
3 | 90 | ||||||
Gross losses
|
(36 | ) | (26 | ) |
September 30, 2011
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Fair Value
|
Unrealized Loss
|
Fair Value
|
Unrealized Loss
|
Fair Value
|
Unrealized Loss
|
|||||||||||||||||||
September 30, 2011
|
(in thousands)
|
|||||||||||||||||||||||
Non-agency mortgage-backed securities
|
$ | - | $ | - | $ | 3,077 | $ | (957 | ) | $ | 3,077 | $ | (957 | ) | ||||||||||
Total
|
$ | - | $ | - | $ | 3,077 | $ | (957 | ) | $ | 3,077 | $ | (957 | ) | ||||||||||
December 31, 2010
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Fair Value
|
Unrealized Loss
|
Fair Value
|
Unrealized Loss
|
Fair Value
|
Unrealized Loss
|
|||||||||||||||||||
December 31, 2010
|
(in thousands)
|
|||||||||||||||||||||||
Non-agency mortgage-backed securities
|
$ | - | $ | - | $ | 3,842 | $ | (1,065 | ) | $ | 3,842 | $ | (1,065 | ) | ||||||||||
Total
|
$ | - | $ | - | $ | 3,842 | $ | (1,065 | ) | $ | 3,842 | $ | (1,065 | ) |
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Estimated credit losses, beginning balance
|
$ | 160 | $ | 61 | ||||
Additions for credit losses not previously recognized
|
96 | 98 | ||||||
Reduction for increases in cash flows
|
- | - | ||||||
Reduction for realized losses
|
- | - | ||||||
Estimated losses, ending balance
|
$ | 256 | $ | 159 |
September 30,
2011
|
December 31,
2010
|
|||||||
One-to-four family loans
|
(in thousands)
|
|||||||
First mortgages
|
$ | 104,851 | $ | 107,600 | ||||
Home equity
|
41,658 | 44,829 | ||||||
146,509 | 152,429 | |||||||
Commercial loans
|
||||||||
Commercial real estate
|
73,530 | 69,531 | ||||||
Multifamily residential
|
38,961 | 30,887 | ||||||
Business term loans and lines of credit
|
13,720 | 14,678 | ||||||
126,211 | 115,096 | |||||||
Consumer loans
|
||||||||
Manufactured housing
|
19,073 | 20,043 | ||||||
Auto and other consumer
|
11,579 | 12,109 | ||||||
30,652 | 32,152 | |||||||
Total loans
|
303,372 | 299,677 | ||||||
Deferred loan origination fees
|
(426 | ) | (431 | ) | ||||
Total loans, gross
|
302,946 | 299,246 | ||||||
Allowance for loan losses
|
(4,007 | ) | (4,436 | ) | ||||
Total loans, net
|
$ | 298,939 | $ | 294,810 |
One- to four- family first mortgage(1)
|
One- to four- family home equity
|
Commercial real estate(2)
|
Commercial business
|
Multifamily residential
|
Manufactured housing
|
Auto and other consumer
|
Serviced(3)
|
Unallocated
|
Total
|
|||||||||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance:
|
$ | 973 | $ | 1,043 | $ | 1,058 | $ | 221 | $ | 31 | $ | 339 | $ | 204 | $ | 65 | $ | 73 | $ | 4,007 | ||||||||||||||||||||
Ending balance: individually evaluated for impairment
|
248 | 116 | 5 | 83 | - | 40 | 19 | - | - | 511 | ||||||||||||||||||||||||||||||
Ending balance: collectively evaluated for impairment
|
725 | 927 | 1,053 | 138 | 31 | 299 | 185 | 65 | 73 | 3,496 | ||||||||||||||||||||||||||||||
Loans receivable:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance:
|
$ | 104,851 | $ | 41,658 | $ | 73,530 | $ | 13,720 | $ | 38,961 | $ | 19,073 | $ | 11,579 | $ | - | $ | - | $ | 303,372 | ||||||||||||||||||||
Ending balance: individually evaluated for impairment
|
5,514 | 1,081 | 2,901 | 268 | - | 198 | 131 | - | - | $ | 10,093 | |||||||||||||||||||||||||||||
Ending balance: collectively evaluated for impairment
|
99,337 | 40,577 | 70,629 | 13,452 | 38,961 | 18,875 | 11,448 | - | - | 293,279 | ||||||||||||||||||||||||||||||
One-to- four family first mortgage
|
One-to-four family home equity
|
Commercial real estate
|
Commercial business
|
Multifamily residential
|
Manufactured housing
|
Auto and other consumer
|
Serviced(1)
|
Unallocated
|
Total
|
|||||||||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance: | $ | 909 | $ | 1,480 | $ | 664 | $ | 163 | $ | - | $ | 293 | $ | 309 | $ | 65 | $ | 553 | $ | 4,436 | ||||||||||||||||||||
Ending balance: individually evaluated for impairment
|
504 | 509 | 39 | 1 | - | 58 | 6 | - | - | 1,117 | ||||||||||||||||||||||||||||||
Ending balance: collectively evaluated for impairment
|
405 | 971 | 625 | 162 | - | 235 | 303 | 65 | 553 | 3,319 | ||||||||||||||||||||||||||||||
Loans receivable:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance:
|
$ | 107,600 | $ | 44,829 | $ | 69,531 | $ | 14,678 | $ | 30,887 | $ | 20,043 | $ | 12,109 | $ | - | $ | - | $ | 299,677 | ||||||||||||||||||||
Ending balance: individually evaluated for impairment
|
6,676 | 1,894 | 2,782 | 222 | - | 118 | 38 | - | - | 11,730 | ||||||||||||||||||||||||||||||
Ending balance: collectively evaluated for impairment
|
100,924 | 42,935 | 66,749 | 14,456 | 30,887 | 19,925 | 12,071 | - | - | 287,947 | ||||||||||||||||||||||||||||||
Beginning
|
Ending
|
|||||||||||||||||||
Allowance
|
Charge-offs
|
Recoveries
|
Provision
|
Allowance
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
One- to four- family first mortgage
|
$ | 827 | $ | (261 | ) | $ | - | $ | 407 | $ | 973 | |||||||||
One- to four- family home equity
|
1,605 | (352 | ) | 1 | (211 | ) | 1,043 | |||||||||||||
Commercial real estate
|
1,213 | (807 | ) | 16 | 636 | 1,058 | ||||||||||||||
Commercial business
|
172 | (180 | ) | 38 | 191 | 221 | ||||||||||||||
Multifamily residential
|
- | - | - | 31 | 31 | |||||||||||||||
Manufactured housing
|
273 | (82 | ) | - | 148 | 339 | ||||||||||||||
Auto and other consumer
|
208 | (37 | ) | 8 | 25 | 204 | ||||||||||||||
Serviced
|
65 | - | - | - | 65 | |||||||||||||||
Unallocated
|
- | - | - | 73 | 73 | |||||||||||||||
$ | 4,363 | $ | (1,719 | ) | $ | 63 | $ | 1,300 | $ | 4,007 |
Beginning
|
Ending
|
|||||||||||||||||||
Allowance
|
Charge-offs
|
Recoveries
|
Provision
|
Allowance
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
One- to four- family first mortgage
|
$ | 909 | $ | (794 | ) | $ | 12 | $ | 846 | $ | 973 | |||||||||
One- to four- family home equity
|
1,480 | (1,144 | ) | 7 | 700 | 1,043 | ||||||||||||||
Commercial real estate
|
664 | (1,311 | ) | 34 | 1,671 | 1,058 | ||||||||||||||
Commercial business
|
163 | (188 | ) | 39 | 207 | 221 | ||||||||||||||
Multifamily residential
|
- | - | - | 31 | 31 | |||||||||||||||
Manufactured housing
|
294 | (283 | ) | - | 328 | 339 | ||||||||||||||
Auto and other consumer
|
309 | (199 | ) | 48 | 46 | 204 | ||||||||||||||
Serviced
|
65 | - | - | - | 65 | |||||||||||||||
Unallocated
|
552 | - | - | (479 | ) | 73 | ||||||||||||||
$ | 4,436 | $ | (3,919 | ) | $ | 140 | $ | 3,350 | $ | 4,007 |
Three Months Ended
|
Nine Months Ended,
|
|||||||
September 30,2010
|
September 30, 2010
|
|||||||
Balance, beginning of period
|
$ | 3,999 | $ | 3,468 | ||||
Provision for loan losses
|
950 | 3,150 | ||||||
Recoveries
|
154 | 196 | ||||||
Charge-offs
|
(1,183 | ) | (2,894 | ) | ||||
Balance, end of period
|
$ | 3,920 | $ | 3,920 |
One- to four- family first mortgages
|
One- to four- family home equity
|
Commercial Real Estate
|
Commercial Business
|
Multifamily residential
|
Manufactured housing
|
Auto and other consumer
|
Total
|
|||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||||||
Grade:
|
||||||||||||||||||||||||||||||||
Pass
|
$ | 86,618 | $ | 37,376 | $ | 65,368 | $ | 11,108 | $ | 38,753 | $ | 17,242 | $ | 10,388 | $ | 266,853 | ||||||||||||||||
Watch
|
13,839 | 3,045 | 5,261 | 2,467 | 208 | 1,607 | 1,097 | 27,524 | ||||||||||||||||||||||||
Special Mention
|
1,650 | 395 | 180 | 39 | - | 116 | 19 | 2,399 | ||||||||||||||||||||||||
Substandard
|
2,744 | 842 | 2,721 | 106 | - | 108 | 75 | 6,596 | ||||||||||||||||||||||||
Doubtful
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Total
|
$ | 104,851 | $ | 41,658 | $ | 73,530 | $ | 13,720 | $ | 38,961 | $ | 19,073 | $ | 11,579 | $ | 303,372 | ||||||||||||||||
One-to-four family first mortgages
|
One-to-four family home equity
|
Commercial Real Estate
|
Commercial Business
|
Multifamily residential
|
Manufactured housing
|
Auto and other consumer
|
Total
|
|||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||||||
Grade:
|
||||||||||||||||||||||||||||||||
Pass
|
$ | 101,087 | $ | 43,015 | $ | 66,749 | $ | 14,456 | $ | 30,887 | $ | 19,925 | $ | 12,071 | $ | 288,190 | ||||||||||||||||
Watch
|
2,749 | 447 | - | - | - | - | - | 3,196 | ||||||||||||||||||||||||
Special Mention
|
326 | 124 | 676 | 167 | - | - | 5 | 1,298 | ||||||||||||||||||||||||
Substandard
|
3,438 | 1,243 | 2,106 | 55 | - | 118 | 33 | 6,993 | ||||||||||||||||||||||||
Doubtful
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||
Total
|
$ | 107,600 | $ | 44,829 | $ | 69,531 | $ | 14,678 | $ | 30,887 | $ | 20,043 | $ | 12,109 | $ | 299,677 | ||||||||||||||||
Balance
|
||||
(in thousands)
|
||||
One- to four- family first mortgage
|
$ | 1,851 | ||
One- to four- home equity
|
600 | |||
Commercial business
|
170 | |||
Commercial real estate
|
1,164 | |||
Manufactured housing
|
82 | |||
Auto and other consumer
|
72 | |||
Total
|
$ | 3,939 |
Balance
|
||||
(in thousands)
|
||||
One- to four- family first mortgage
|
$ | 2,506 | ||
One- to four- family home equity
|
392 | |||
Total
|
$ | 2,898 | ||
One- to four- family first mortgages
|
One- to four- family home equity
|
Commercial real estate
|
Commercial business
|
Multifamily residential
|
Manufactured housing
|
Auto and other consumer
|
Total
|
|||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||||||
Performing
|
$ | 101,881 | $ | 40,829 | $ | 71,369 | $ | 13,426 | $ | 38,961 | $ | 18,991 | $ | 11,463 | $ | 296,920 | ||||||||||||||||
Nonperforming
|
2,970 | 829 | 2,161 | 294 | - | 82 | 116 | 6,452 | ||||||||||||||||||||||||
Total
|
$ | 104,851 | $ | 41,658 | $ | 73,530 | $ | 13,720 | $ | 38,961 | $ | 19,073 | $ | 11,579 | $ | 303,372 | ||||||||||||||||
One-to-four family first mortgages
|
One-to-four family home equity
|
Commercial real estate
|
Commercial business
|
Multifamily residential
|
Manufactured housing
|
Auto and other consumer
|
Total
|
|||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||||||
Performing
|
$ | 101,805 | $ | 43,345 | $ | 69,531 | $ | 14,678 | $ | 30,887 | $ | 20,043 | $ | 12,094 | $ | 292,383 | ||||||||||||||||
Nonperforming
|
5,795 | 1,484 | - | - | - | - | 15 | 7,294 | ||||||||||||||||||||||||
Total
|
$ | 107,600 | $ | 44,829 | $ | 69,531 | $ | 14,678 | $ | 30,887 | $ | 20,043 | $ | 12,109 | $ | 299,677 | ||||||||||||||||
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater Than 90 Days Past Due
|
Greater Than 90 Days Past Due and Still Accruing Interest
|
Total Past Due
|
Current
|
Total Loans
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
One- to four- family first mortgages
|
$ | - | $ | 1,521 | $ | 1,833 | $ | - | $ | 3,354 | $ | 101,497 | $ | 104,851 | ||||||||||||||
One- to four- family home equity
|
832 | 532 | 440 | - | 1,804 | 39,854 | 41,658 | |||||||||||||||||||||
Commercial real estate
|
43 | - | - | - | 43 | 73,487 | 73,530 | |||||||||||||||||||||
Commercial business
|
106 | - | 106 | - | 212 | 13,508 | 13,720 | |||||||||||||||||||||
Multifamily residential
|
- | - | - | - | - | 38,961 | 38,961 | |||||||||||||||||||||
Manufactured housing
|
101 | - | 82 | - | 183 | 18,890 | 19,073 | |||||||||||||||||||||
Auto and other consumer
|
217 | 6 | 4 | - | 227 | 11,352 | 11,579 | |||||||||||||||||||||
- | ||||||||||||||||||||||||||||
Total
|
$ | 1,299 | $ | 2,059 | $ | 2,465 | $ | - | $ | 5,823 | $ | 297,549 | $ | 303,372 | ||||||||||||||
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater Than 90 Days Past Due
|
Greater Than 90 Days Past Due and Still Accruing Interest
|
Total Past Due
|
Current
|
Total Loans
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
One-to-four family first mortgages
|
$ | - | $ | 182 | $ | 2,506 | $ | - | $ | 2,688 | $ | 104,912 | $ | 107,600 | ||||||||||||||
One-to-four family home equity
|
895 | 116 | 392 | - | 1,403 | 43,426 | 44,829 | |||||||||||||||||||||
Commercial real estate
|
- | 367 | - | - | 367 | 69,164 | 69,531 | |||||||||||||||||||||
Commercial business
|
- | - | - | - | - | 14,678 | 14,678 | |||||||||||||||||||||
Multifamily residential
|
- | - | - | - | - | 30,887 | 30,887 | |||||||||||||||||||||
Manufactured housing
|
307 | 224 | - | - | 531 | 19,512 | 20,043 | |||||||||||||||||||||
Auto and other consumer
|
162 | 18 | - | - | 180 | 11,929 | 12,109 | |||||||||||||||||||||
Total
|
$ | 1,364 | $ | 907 | $ | 2,898 | $ | - | $ | 5,169 | $ | 294,507 | $ | 299,677 |
Recorded Investment
|
Unpaid Principal Balance
|
Related Allowance
|
QTD Average Recorded Investment
|
YTD Average Recorded Investment
|
QTD Interest Income Recognized
|
YTD Interest Income Recognized
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||||||||||
One-to-four family first mortgages
|
$ | 3,496 | $ | 3,496 | $ | - | $ | 2,437 | $ | 2,307 | $ | 44 | $ | 111 | ||||||||||||||
One-to-four family home equity
|
793 | 793 | - | 623 | 625 | 5 | 20 | |||||||||||||||||||||
Commercial real estate
|
2,721 | 3,321 | - | 1,915 | 1,409 | 20 | 68 | |||||||||||||||||||||
Commercial business
|
26 | 26 | - | 82 | 106 | - | 1 | |||||||||||||||||||||
Multifamily residential
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Manufactured housing
|
26 | 26 | - | 13 | 39 | 1 | 2 | |||||||||||||||||||||
Auto and other consumer
|
55 | 55 | - | 39 | 55 | 1 | 2 | |||||||||||||||||||||
Total
|
$ | 7,117 | $ | 7,717 | $ | - | $ | 5,109 | $ | 4,541 | $ | 71 | $ | 204 | ||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||||||||||
One-to-four family first mortgages
|
$ | 2,018 | $ | 2,054 | $ | 248 | $ | 3,658 | $ | 3,441 | $ | 5 | $ | 35 | ||||||||||||||
One-to-four family home equity
|
288 | 288 | 116 | 865 | 808 | 3 | 11 | |||||||||||||||||||||
Commercial real estate
|
180 | 180 | 5 | 1,227 | 2,109 | 2 | 4 | |||||||||||||||||||||
Commercial business
|
242 | 242 | 83 | 163 | 168 | 1 | 9 | |||||||||||||||||||||
Multifamily residential
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Manufactured housing
|
172 | 172 | 40 | 145 | 105 | 2 | 8 | |||||||||||||||||||||
Auto and other consumer
|
76 | 76 | 19 | 46 | 49 | 2 | 5 | |||||||||||||||||||||
Total
|
$ | 2,976 | $ | 3,012 | $ | 511 | $ | 6,104 | $ | 6,680 | $ | 15 | $ | 72 | ||||||||||||||
Totals:
|
||||||||||||||||||||||||||||
One-to-four family first mortgages
|
$ | 5,514 | $ | 5,550 | $ | 248 | $ | 6,095 | $ | 5,748 | $ | 49 | $ | 146 | ||||||||||||||
One-to-four family home equity
|
1,081 | 1,081 | 116 | 1,488 | 1,433 | 8 | 31 | |||||||||||||||||||||
Commercial real estate
|
2,901 | 3,501 | 5 | 3,142 | 3,518 | 22 | 72 | |||||||||||||||||||||
Commercial business
|
268 | 268 | 83 | 245 | 274 | 1 | 10 | |||||||||||||||||||||
Multifamily residential
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Manufactured housing
|
198 | 198 | 40 | 158 | 144 | 3 | 10 | |||||||||||||||||||||
Auto and other consumer
|
131 | 131 | 19 | 85 | 104 | 3 | 7 | |||||||||||||||||||||
Total
|
$ | 10,093 | $ | 10,729 | $ | 511 | $ | 11,212 | $ | 11,222 | $ | 86 | $ | 276 |
Recorded Investment
|
Unpaid Principal Balance
|
Related Allowance
|
||||||||||
(in thousands)
|
||||||||||||
With no related allowance recorded:
|
||||||||||||
One-to-four family first mortgages
|
$ | 1,414 | $ | 1,414 | $ | - | ||||||
One-to-four family home equity
|
452 | 452 | - | |||||||||
Commercial real estate
|
509 | 509 | - | |||||||||
Commercial business
|
138 | 138 | - | |||||||||
Multifamily residential
|
- | - | - | |||||||||
Manufactured housing
|
- | - | - | |||||||||
Auto and other consumer
|
23 | 23 | - | |||||||||
Total
|
$ | 2,536 | $ | 2,536 | $ | - | ||||||
With an allowance recorded:
|
||||||||||||
One-to-four family first mortgages
|
$ | 5,262 | $ | 5,427 | $ | 504 | ||||||
One-to-four family home equity
|
1,442 | 1,442 | 509 | |||||||||
Commercial real estate
|
2,273 | 2,273 | 39 | |||||||||
Commercial business
|
84 | 84 | 1 | |||||||||
Multifamily residential
|
- | - | - | |||||||||
Manufactured housing
|
118 | 118 | 58 | |||||||||
Auto and other consumer
|
15 | 15 | 6 | |||||||||
Total
|
$ | 9,194 | $ | 9,359 | $ | 1,117 | ||||||
Totals:
|
||||||||||||
One-to-four family first mortgages
|
$ | 6,676 | $ | 6,841 | $ | 504 | ||||||
One-to-four family home equity
|
1,894 | 1,894 | 509 | |||||||||
Commercial real estate
|
2,782 | 2,782 | 39 | |||||||||
Commercial Business
|
222 | 222 | 1 | |||||||||
Multifamily residential
|
- | - | - | |||||||||
Manufactured Housing
|
118 | 118 | 58 | |||||||||
Auto and other consumer
|
38 | 38 | 6 | |||||||||
Total
|
$ | 11,730 | $ | 11,895 | $ | 1,117 |
September 30, 2011
|
||||||||||||
Accrual Status
|
Nonaccrual
Status
|
Total Modifications
|
||||||||||
(in thousands)
|
||||||||||||
One- to- four family first mortgages
|
$ | 1,119 | $ | - | $ | 1,119 | ||||||
One- to- four family home equity
|
229 | - | 229 | |||||||||
Commercial real estate
|
997 | - | 997 | |||||||||
Commercial business
|
124 | - | 124 | |||||||||
Auto and other consumer
|
44 | - | 44 | |||||||||
Total
|
$ | 2,513 | $ | - | $ | 2,513 | ||||||
Three months ended September 30, 2011
|
||||||||||||||||||||||||||||
Number of Contracts
|
Rate Modifications
|
Term Modifications
|
Interest Only Modifications
|
Payment Modifications
|
Combination Modifications
|
Total Modifications
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
One- to- four family first mortgages
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
One- to- four family home equity
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Commercial real estate
|
1 | - | - | - | - | 997 | 997 | |||||||||||||||||||||
Commercial business
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Auto and other consumer
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Total
|
1 | $ | - | $ | - | $ | - | $ | - | $ | 997 | $ | 997 | |||||||||||||||
Nine months ended September 30, 2011
|
||||||||||||||||||||||||||||
Number of Contracts
|
Rate Modifications
|
Term Modifications
|
Interest Only Modifications
|
Payment Modifications
|
Combination Modifications
|
Total Modifications
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
One- to- four family first mortgages
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
One- to- four family home equity
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Commercial real estate
|
1 | - | - | - | - | 997 | 997 | |||||||||||||||||||||
Commercial business
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Auto and other consumer
|
1 | - | - | - | - | 44 | 44 | |||||||||||||||||||||
Total
|
2 | $ | - | $ | - | $ | - | $ | - | $ | 1,041 | $ | 1,041 | |||||||||||||||
Three months ended September 30, 2011
|
Nine months ended September 30, 2011
|
|||||||
One- to- four family first mortgages
|
$ | 1,119 | $ | 1,119 | ||||
One- to- four family home equity
|
229 | 229 | ||||||
Total
|
$ | 1,348 | $ | 1,348 | ||||
Fair Value at September 30, 2011
|
||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
(in thousands)
|
||||||||||||||||
Mortgage Servicing Rights
|
$ | 2,683 | $ | - | $ | - | $ | 2,683 | ||||||||
Agency Mortgage-backed Securities
|
61 | - | 61 | - | ||||||||||||
Non-agency Mortgage-backed Securities
|
3,077 | - | 3,077 | - | ||||||||||||
Fair Value at December 31, 2010
|
||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
(in thousands)
|
||||||||||||||||
Mortgage Servicing Rights
|
$ | 3,200 | $ | - | $ | - | $ | 3,200 | ||||||||
Agency Mortgage-backed Securities
|
61 | - | 61 | - | ||||||||||||
Non-agency Mortgage-backed Securities
|
4,480 | - | 4,480 | - |
Fair Value at September 30, 2011
|
Nine Months Ended
September 30, 2011
|
||||||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total Losses
|
||||||||||||||||
(in thousands)
|
|||||||||||||||||||||
Loans Held for Sale
|
$ | 1,129 | $ | - | $ | 1,129 | $ | - | $ | - | |||||||||||
OREO and Repossessed Assets
|
3,191 | - | - | 3,191 | 958 | ||||||||||||||||
Impaired Loans
|
10,093 | - | - | 10,093 | 1,719 |
Fair Value at December 31, 2010
|
Year Ended December 31, 2010
|
||||||||||||||||||||
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total Losses
|
||||||||||||||||
(in thousands)
|
|||||||||||||||||||||
Loans Held for Sale
|
$ | 902 | $ | - | $ | 902 | $ | - | $ | - | |||||||||||
OREO and Repossessed Assets
|
2,625 | - | - | 2,625 | 461 | ||||||||||||||||
Impaired Loans
|
11,730 | - | - | 11,730 | 3,944 |
Mortgage
Servicing
Rights
|
||||
Beginning balance as of January 1, 2011
|
$ | 3,200 | ||
Servicing rights that result from transfers of financial assets
|
329 | |||
Other changes in Fair Value
|
(235 | ) | ||
Net disposals of servicing rights
|
(611 | ) | ||
Transfers in and/or out of Level 3
|
- | |||
Ending balance at September 30, 2011
|
$ | 2,683 |
Mortgage
Servicing
Rights
|
||||
Beginning balance at January 1, 2010
|
$ | 3,327 | ||
Adoption of fair value option on mortgage servicing rights
|
39 | |||
Fair Value as of January 1, 2010
|
3,366 | |||
Servicing rights that result from transfers of financial assets
|
392 | |||
Other changes in Fair Value
|
(209 | ) | ||
Net disposals of servicing rights
|
(671 | ) | ||
Transfers in and/or out of Level 3
|
- | |||
Ending balance at September 30, 2010
|
$ | 2,878 |
September 30, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Amount
|
Value
|
Amount
|
Value
|
|||||||||||||
Financial assets:
|
(in thousands)
|
|||||||||||||||
Cash and cash equivalents
|
$ | 13,039 | $ | 13,039 | $ | 9,092 | $ | 9,092 | ||||||||
Available for sale securities
|
3,138 | 3,138 | 4,541 | 4,541 | ||||||||||||
FHLB Stock
|
2,444 | 2,444 | 2,444 | 2,444 | ||||||||||||
Loans held for sale
|
1,129 | 1,129 | 902 | 902 | ||||||||||||
Loans, net
|
298,939 | 301,521 | 294,810 | 295,161 | ||||||||||||
Accrued interest receivable
|
1,196 | 1,196 | 1,280 | 1,280 | ||||||||||||
Bank-owned life insurance, net
|
6,918 | 6,918 | 6,729 | 6,729 | ||||||||||||
Mortgage servicing rights
|
2,683 | 2,683 | 3,200 | 3,200 | ||||||||||||
Financial liabilities:
|
||||||||||||||||
Demand deposits
|
$ | 168,051 | $ | 168,051 | $ | 148,111 | $ | 148,111 | ||||||||
Time deposits
|
131,795 | 132,843 | 130,383 | 131,503 | ||||||||||||
Borrowings
|
8,667 | 8,639 | 24,849 | 24,624 | ||||||||||||
Accrued interest payable
|
76 | 76 | 121 | 121 | ||||||||||||
Advance payments from borrowers for taxes and insurance
|
520 | 520 | 252 | 252 | ||||||||||||
|
Three Months
Ended September 30,
|
Nine Months
Ended September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net income
|
$ | 181 | $ | 421 | $ | 1,131 | $ | 756 | ||||||||
Weighted average number of shares outstanding, basic
|
2,921 | 2,909 | 2,924 | 2,916 | ||||||||||||
Effect of dilutive stock options
|
- | - | - | - | ||||||||||||
Weighted average number of shares outstanding, diluted
|
2,921 | 2,909 | 2,924 | 2,916 | ||||||||||||
Earnings per share, basic
|
$ | 0.06 | $ | 0.14 | $ | 0.39 | $ | 0.26 | ||||||||
Earnings per share, diluted
|
$ | 0.06 | $ | 0.14 | $ | 0.39 | $ | 0.26 |
Shares
|
Weighted-Average Exercise Price
|
Weighted-Average Remaining Contractual Term In Years
|
Aggregate Intrinsic Value
|
|||||||||||||
Outstanding at the beginning of the year
|
108,398 | $ | 7.93 | 8.34 | $ | - | ||||||||||
Granted
|
- | - | ||||||||||||||
Exercised
|
- | - | ||||||||||||||
Forfeited or expired
|
- | - | ||||||||||||||
Outstanding at September 30, 2011
|
108,398 | $ | 7.93 | 7.33 | $ | - | ||||||||||
Exercisable
|
21,680 | $ | 7.93 | 7.33 | $ | - | ||||||||||
Expected to vest, assuming a 0% forfeiture rate over the vesting term
|
108,398 | $ | 7.93 | 7.33 | $ | - |
Nonvested Shares
|
Shares
|
Weighted-Average Grant-Date Fair Value Per Share
|
Aggregate Intrinsic Value Per Share
|
|||||||||
Non-vested at January 1, 2011
|
41,626 | $ | 7.35 | |||||||||
Granted
|
- | - | ||||||||||
Vested
|
10,406 | $ | 7.35 | |||||||||
Forfeited
|
- | - | ||||||||||
Non-vested at September 30, 2011
|
31,220 | $ | 7.35 | $ | 6.50 | |||||||
Expected to vest assuming a 0% forfeiture rate over the vesting term
|
31,220 | $ | 7.35 | $ | 6.50 |
September 30, 2011
|
December
31, 2010
|
Amount Change
|
Percent Change
|
|||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||
One-to-four family loans
|
||||||||||||||||
First mortgages
|
$ | 104,851 | $ | 107,600 | $ | (2,749 | ) | -2.6 | % | |||||||
Home equity
|
41,658 | 44,829 | (3,171 | ) | -7.1 | % | ||||||||||
146,509 | 152,429 | (5,920 | ) | -3.9 | % | |||||||||||
Commercial loans
|
||||||||||||||||
Commercial real estate
|
73,530 | 69,531 | 3,999 | 5.8 | % | |||||||||||
Multifamily residential
|
38,961 | 30,887 | 8,074 | 26.1 | % | |||||||||||
Business term loans and lines of credit
|
13,720 | 14,678 | (958 | ) | -6.5 | % | ||||||||||
126,211 | 115,096 | 11,115 | 9.7 | % | ||||||||||||
Consumer loans
|
||||||||||||||||
Manufactured housing
|
19,073 | 20,043 | (970 | ) | -4.8 | % | ||||||||||
Auto and other consumer
|
11,579 | 12,109 | (530 | ) | -4.4 | % | ||||||||||
30,652 | 32,152 | (1,500 | ) | -4.7 | % | |||||||||||
Deferred loan origination fees
|
(426 | ) | (431 | ) | 5 | 1.2 | % | |||||||||
Total loans, gross
|
302,946 | 299,246 | 3,700 | 1.2 | % | |||||||||||
Allowance for loan losses
|
(4,007 | ) | (4,436 | ) | 429 | 9.7 | % | |||||||||
Total loans, net
|
$ | 298,939 | $ | 294,810 | $ | 4,129 | 1.4 | % |
Nonperforming Assets
|
||||||||||||||||
September 30, 2011
|
December 31, 2010
|
Amount
Change
|
Percent
Change
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Nonaccruing loans
|
$ | 3,939 | $ | 2,898 | $ | 1,041 | 35.9% | |||||||||
Accruing loans 90 days or more delinquent
|
-- | -- | -- |
NM
|
||||||||||||
Restructured loans(1)
|
2,513 | 4,396 | (1,883 | ) | -42.8% | |||||||||||
Foreclosed and repossessed assets
|
3,191 | 2,625 | 566 | 21.6% | ||||||||||||
Total
|
$ | 9,643 | $ | 9,919 | $ | 276 | 2.8% |
(1)
|
Performing in accordance with restructured loan terms
|
At and for the Period Ended September 30,
|
||||||||
2011
|
2010
|
|||||||
(Dollars in thousands)
|
||||||||
Balance at beginning of period
|
$ | 4,436 | $ | 3,468 | ||||
Charge-offs
|
(3,919 | ) | (2,893 | ) | ||||
Recoveries
|
140 | 196 | ||||||
Net charge-offs
|
(3,779 | ) | (2,697 | ) | ||||
Provisions charged to operations
|
3,350 | 3,150 | ||||||
Balance at end of period
|
$ | 4,007 | $ | 3,921 | ||||
Ratio of net charge-offs during the period to
average loans outstanding during the period
|
1.69 | % | 1.18 | % | ||||
Allowance as a percentage of non-
performing loans
|
62.1 | % | 45.6 | % | ||||
Allowance as a percentage of total
loans (end of period)
|
1.32 | % | 1.27 | % |
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Balance, beginning of period
|
$ | 4,363 | $ | 3,999 | $ | 4,436 | $ | 3,468 | ||||||||
Provision for loan losses
|
1300 | 950 | 3,350 | 3,150 | ||||||||||||
Recoveries
|
63 | 154 | 140 | 196 | ||||||||||||
Charge-offs
|
(1,719 | ) | (1,182 | ) | (3,919 | ) | (2,893 | ) | ||||||||
Balance, end of period
|
$ | 4,007 | $ | 3,921 | $ | 4,007 | $ | 3,921 |
As of September 30, 2011
|
As of December 31, 2010
|
|||||||||||||||
Amount
|
Wtd. Avg.
Rate
|
Amount
|
Wtd. Avg.
Rate
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Checking (noninterest)
|
$ | 27,988 | 0.00 | % | $ | 22,148 | 0.00 | % | ||||||||
NOW (interest)
|
22,851 | 0.10 | % | 22,186 | 0.14 | % | ||||||||||
Savings
|
22,235 | 0.11 | % | 21,598 | 0.18 | % | ||||||||||
Money Market
|
91,279 | 0.61 | % | 77,257 | 0.69 | % | ||||||||||
Escrow
|
3,697 | 0.00 | % | 4,922 | 0.00 | % | ||||||||||
Certificates
|
131,796 | 1.55 | % | 130,383 | 2.30 | % | ||||||||||
Total
|
299,846 | 0.89 | % | $ | 278,494 | 1.29 | % |
Quarter Ended
September 30,
|
Amount
|
Percent
|
||||||||||||||
2011
|
2010
|
Change
|
Change
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Service charges and fee income
|
$ | 516 | 559 | (43 | ) | 7.7 | % | |||||||||
Earnings on cash surrender value of bank owned life insurance
|
61 | 66 | (5 | ) | 7.6 | % | ||||||||||
Mortgage servicing income
|
110 | 75 | 35 | 46.7 | % | |||||||||||
Fair value adjustment on mortgage servicing rights
|
(491 | ) | (284 | ) | (207 | ) | 72.9 | % | ||||||||
Other-than-temporary impairment losses
|
(56 | ) | (47 | ) | (9 | ) | 19.2 | % | ||||||||
Gain on sale of loans
|
126 | 343 | (217 | ) | -63.3 | % |
Nine Months Ended
September 30,
|
Amount
|
Percent
|
||||||||||||||
2011
|
2010
|
Change
|
Change
|
|||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||
Service charges fee income
|
$ | 1,514 | $ | 1,637 | $ | (123 | ) | -7.5 | % | |||||||
Earnings on cash surrender value of bank owned life insurance
|
189 | 200 | (11 | ) | -5.5 | % | ||||||||||
Mortgage servicing income
|
318 | 382 | (64 | ) | -16.8 | % | ||||||||||
Fair value adjustment on mortgage servicing rights
|
(235 | ) | (197 | ) | (38 | ) | 19.3 | % | ||||||||
Gain (loss) on sale of securities
|
(33 | ) | 64 | (97 | ) | -151.6 | % | |||||||||
Other-than-temporary impairment losses
|
(96 | ) | (98 | ) | 2 | -2.0 | % | |||||||||
Loss on sale of fixed assets
|
(80 | ) | - | (80 | ) |
NM
|
||||||||||
Gain on sale of loans
|
263 | 465 | (202 | ) | -43.4 | % |
Quarter Ended September 30,
|
Amount
|
Percent
|
||||||||||||||
2011
|
2010
|
Change
|
Change
|
|||||||||||||
(Dollar amounts in thousands)
|
||||||||||||||||
Salaries and benefits
|
$ | 1,189 | $ | 1,353 | $ | (164 | ) | -12.1 | % | |||||||
Operations
|
602 | 750 | (148 | ) | -19.7 | % | ||||||||||
Regulatory assessments
|
103 | 205 | (102 | ) | -49.8 | % | ||||||||||
Occupancy
|
288 | 328 | (40 | ) | -12.2 | % | ||||||||||
Data processing
|
218 | 212 | 6 | 2.8 | % | |||||||||||
Losses and expenses on sale of OREO and repossessed assets
|
274 | 202 | 72 | 35.6 | % |
Nine Months Ended September 30,
|
Amount
|
Percent
|
||||||||||||||
2011
|
2010
|
Change
|
Change
|
|||||||||||||
Salaries and benefits
|
$ | 3,942 | $ | 4,513 | $ | (571 | ) | -12.7 | % | |||||||
Operations
|
1,869 | 2,397 | (528 | ) | -22.0 | % | ||||||||||
Regulatory assessments
|
454 | 644 | (190 | ) | -29.5 | % | ||||||||||
Occupancy
|
835 | 1,018 | (183 | ) | -18.0 | % | ||||||||||
Data processing
|
685 | 673 | 12 | 1.8 | % | |||||||||||
Losses and expenses on sale of OREO and repossessed assets
|
958 | 291 | 667 | 229.2 | % |
Off-balance sheet loan commitments
|
||||
(in thousands)
|
||||
Commitments to extend credit
|
4,872 | |||
Undisbursed non-revolving lines of credit
|
3,356 | |||
Undisbursed revolving lines of credit
|
28,501 | |||
Irrevocable letters of credit
|
265 | |||
Total loan commitments
|
$ | 36,994 |
Actual
|
Minimum Capital
Requirements
|
Minimum Required to Be Well-Capitalized Under Prompt
Corrective Action Provisions
|
Minimum Required
Under MOU
|
|||||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||
Tier 1 Capital to total adjusted assets(1)
|
$ | 27,763 | 8.18% | $ | 13,578 |
≥
|
4.00% | $ | 16,972 |
≥
|
5.00% | $ | 27,155 |
≥
|
8.0% | |||||||||||||
Tier 1 Capital to risk-weighted assets(2)
|
$ | 27,763 | 10.98% | $ | 10,116 |
≥
|
4.00% | (3) | $ | 15,173 |
≥
|
6.00% | - | N/A | ||||||||||||||
Total Capital to risk-weighted assets(2)
|
$ | 30,924 | 12.23% | $ | 20,231 |
≥
|
8.00% | $ | 25,289 |
≥
|
10.00% | $ | 30,347 |
≥
|
12.0% |
(1)
|
Based on total adjusted assets of $339.4 million.
|
(2)
|
Based on risk-weighted assets of $252.9 million.
|
(3)
|
The Tier 1 risk-based capital requirement for a well-capitalized institution is 6% of risk-weighted assets.
|
(a)
|
Evaluation of Disclosure Controls and Procedures.
|
(b)
|
Changes in Internal Controls over Financial Reporting.
|
Nothing to report.
|
|
Exhibit Number
|
Document
|
Reference to
Prior Filing
or Exhibit Number
Attached Hereto
|
||
3.1 |
Charter for Sound Financial, Inc.
|
* | ||
3.2 |
Bylaws of Sound Financial, Inc.
|
** | ||
4 |
Form of Stock Certificate of Sound Financial, Inc.
|
** | ||
10.1 |
Employment Agreement with Laura Lee Stewart
|
* | ||
10.2 |
Executive Long Term Compensation Agreement with Laura Lee Stewart
|
* | ||
10.3 |
Executive Long Term Compensation Agreement with Patricia Floyd
|
* | ||
10.4 |
Sound Community Incentive Compensation Achievement Plan
|
* | ||
10.5 |
Summary of Annual Bonus Plan
|
* | ||
10.6 |
Summary of Quarterly Bonus Plan
|
* | ||
10.7 |
Director Fee Arrangements for 2009
|
*** | ||
10.8 |
Sound Financial, Inc. 2008 Equity Incentive Plan
|
*** | ||
10.9 |
Form of Incentive Stock Option Agreement under the 2008 Equity Incentive Plan
|
+ | ||
10.10 |
Form of Non-Qualified Stock Option Agreement under the 2008 Equity Incentive Plan
|
+ | ||
10.11 |
Form of Restricted Stock Agreement under the 2008 Equity Incentive Plan
|
+ | ||
10.12 |
Employment Agreements with executive officers Matthew Deines and
Matthew Moran
|
++ | ||
11 |
Statement re computation of per share earnings
|
None
|
||
15 |
Letter re unaudited interim financial information
|
None
|
||
18.1 |
Letter re change in accounting principles
|
+++ | ||
19 |
Reports furnished to security holders
|
None
|
||
22 |
Published report regarding matters submitted to vote of security holders
|
None
|
||
23 |
Consents
|
None
|
||
24 |
Power of Attorney
|
None
|
||
31.1 |
Rule 13a–14(a) Certification of Chief Executive Officer
|
31.1 | ||
31.2 |
Rule 13a–14(a) Certification of Chief Financial Officer
|
31.2 | ||
32 |
Section 1350 Certification
|
32 | ||
101 |
Interactive Data File++++
|
101 |
* |
Filed as an exhibit to the Company's Form SB–2 registration statement filed on September 20, 2007 (File No.333–146196) pursuant to Section 5 of the Securities Act of 1933.
|
|
** |
Filed as an exhibit to Pre-effective Amendment No. 1 to the Company's Form SB–2 registration statement filed on November 2, 2007 (File No.333–146196) pursuant to Section 5 of the Securities Act of 1933.
|
|
*** |
Filed as an exhibit to the Company’s Form 10-K filed on March 31, 2009.
|
|
+ |
Filed as an exhibit to the Company’s Form 8-K filed on January 29. 2009.
|
|
++ |
Filed as an exhibit to the Company’s Form 8-K filed on November 5, 2009.
|
|
+++ |
Filed as an exhibit to the Company’s Form 10-Q filed on May 17, 2010.
|
|
++++ |
In accordance with 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, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
Rule 13a–14(a) Certification of Chief Executive Officer
|
31.1 | |||
Rule 13a–14(a) Certification of Chief Financial Officer, Principal Financial and Accounting Principal
|
31.2 | |||
Section 1350 Certification
|
32 | |||
Interactive Data File*
|
101 |
*
|
In accordance with 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, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
1.
|
I have reviewed this report on Form 10-Q of Sound Financial Inc;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
1.
|
I have reviewed this report on Form 10-Q of Sound Financial Inc;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock,, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 24,000,000 | 24,000,000 |
Common stock, issued (in shares) | 2,954,295 | 2,954,295 |
Common stock, outstanding (in shares) | 2,954,295 | 2,954,295 |
Document And Entity Information (USD $) | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Nov. 11, 2011 | Jun. 30, 2010 | |
Entity Registrant Name | Sound Financial, Inc. | ||
Entity Central Index Key | 0001410087 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 15,000,000 | ||
Entity Common Stock, Shares Outstanding | 2,954,295 | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2011 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Fair Value Measurements | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 5 – Fair Value Measurements A description of the valuation methodologies used for certain financial assets and financial liabilities measured at fair value is as follows: Mortgage Servicing Rights - The fair value of mortgage servicing rights is estimated using a discounted cash flow model based on market information from a third party. These assets are classified as Level 3. AFS Securities – AFS securities are recorded at fair value based on quoted market prices, if available. If quoted market prices are not available, management utilizes third-party pricing services or broker quotations from dealers in the specific instruments. Level 1 securities include those traded on an active exchange, as well as U.S. government and its agencies securities. Level 2 securities include agency and non-agency mortgage-backed securities and certain collateralized mortgage obligations. Loans Held for Sale - Residential mortgage loans held for sale are recorded at the lower of cost or fair value. The fair value of fixed-rate residential loans is based on whole loan forward prices obtained from government sponsored enterprises. These loans are classified as Level 2 and are measured on a nonrecurring basis. At June 30, 2011, loans held for sale were carried at cost. Impaired Loans - The fair value of collateral dependent loans is based on the current appraised value of the collateral or internally developed models which contain management's assumptions. These assets are classified as level 3 and are measured on a nonrecurring basis. Other Real Estate Owned (“OREO”) and Repossessed Assets - OREO and repossessed assets consist principally of properties acquired through foreclosure and are carried at the lower of cost or estimated market value less selling costs. The fair value is based on current appraised value or other sources of value. The following table presents the balances of assets measured at fair value on a recurring basis at September 30, 2011:
For the nine months ended September 30, 2011, there were no transfers between Level 1 and Level 2 or between Level 2 and Level 3. The following table presents the balance of assets measured at fair value on a nonrecurring basis and the total losses resulting from these fair value adjustments:
There were no liabilities carried at fair value, measured on a recurring or nonrecurring basis, at September 30, 2011 or December 31, 2010. The following table provides a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the nine months ended September 30, 2011 and 2010:
The estimated fair value of the Company's financial instruments is summarized as follows: The following methods and assumptions were used to estimate fair value of each class of financial instruments listed above: Cash and cash equivalents, accrued interest receivable and payable, and advance payments from borrowers for taxes and insurance - The estimated fair value is equal to the carrying amount. Available for sale securities – Available for sale securities are recorded at fair value based on quoted market prices, if available. If quoted market prices are not available, management utilizes third-party pricing services or broker quotations from dealers in the specific instruments. Level 1 securities include those traded on an active exchange, as well as U.S. government and its agencies securities. Level 2 securities include private label mortgage-backed securities. Loans - The estimated fair value for all fixed rate loans is determined by discounting the estimated cash flows using the current rate at which similar loans would be made to borrowers with similar credit ratings and maturities. The estimated fair value for variable rate loans is the carrying amount. The fair value for all loans also takes into account projected credit losses as a part of the estimate. Loans Held for Sale - Residential mortgage loans held for sale are recorded at the lower of cost or fair value. The fair value of fixed-rate residential loans is based on whole loan forward prices obtained from government sponsored enterprises. At September 30, 2011, loans held for sale were carried at cost, which approximates fair value. Mortgage Servicing Rights - The fair value of mortgage servicing rights is estimated using a discounted cash flow model based on market information from a third party. These assets are classified as Level 3. FHLB stock - The estimated fair value is equal to the par value of the stock, which approximates fair value. Bank-owned Life Insurance - The estimated fair value is equal to the cash surrender value of policies, net of surrender charges. Deposits - The estimated fair value of deposit accounts (savings, demand deposit, and money market accounts) is the carrying amount. The fair value of fixed-maturity time certificates of deposit are estimated by discounting the estimated cash flows using the current rate at which similar certificates would be issued. Borrowings - The fair value of FHLB advances are estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. Off-balance-sheet financial instruments - The fair value for the Company's off-balance-sheet loan commitments are estimated based on fees charged to others to enter into similar agreements taking into account the remaining terms of the agreements and credit standing of the Company's customers. The estimated fair value of these commitments is not significant. We assume interest rate risk (the risk that general interest rate levels will change) as a result of our normal operations. As a result, the fair values of our financial instruments will change when interest rate levels change, which may be favorable or unfavorable to us. Management attempts to match maturities of assets and liabilities to the extent necessary or possible to minimize interest rate risk. However, borrowers with fixed-rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by establishing early withdrawal penalties for certificates of deposit, creating interest rate floors for certain variable rate loans, adjusting terms of new loans and deposits, by borrowing at fixed rates for fixed terms and investing in securities with terms that mitigate our overall interest rate risk. |
Basis of Presentation | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1 – Basis of Presentation The accompanying financial information is unaudited and has been prepared from the consolidated financial statements of Sound Financial, Inc. (“we,” “us,” “our,” “Sound Financial,” or the “Company”) and its wholly owned subsidiary, Sound Community Bank (the “Bank”). These condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and Article 8 of Regulation S-X and do not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”) for a complete presentation of the Company's financial condition and results of operations. These unaudited financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC. In the opinion of management, the information reflects all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the condensed consolidated financial statements in accordance with GAAP. The results for the interim periods are not necessarily indicative of results for a full year. For further information, refer to the consolidated financial statements and footnotes for the year ended December 31, 2010, included in the Company's Annual Report on Form 10-K. Certain amounts in the prior quarters' financial statements have been reclassified to conform to the current presentation. These classifications do not have an impact on previously reported net income, retained earnings or earnings per share. |
Borrowings | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Borrowings [Abstract] | |
Borrowings | Note 7 – Borrowings The Company utilizes a loan agreement with the FHLB of Seattle. The terms of the agreement call for a blanket pledge of a portion of the Company's mortgage and commercial real estate portfolio based on the outstanding balance. At September 30, 2011, the amount available to borrow under this agreement is approximately 35% of total assets, or up to $118.9 million, subject to the availability of eligible collateral. The Company had outstanding borrowings under this arrangement of $8.7 million and $24.8 million at September 30, 2011 and December 31, 2010, respectively. The Company participates in the Federal Reserve Bank's Borrower-in-Custody program, which gives the Company access to overnight borrowings from the discount window. The terms of the program call for a pledge of specific assets. The Company had unused borrowing capacity under this program of $24.1 million and $24.9 million at September 30, 2011 and December 31, 2010, respectively. There were no outstanding borrowings at September 30, 2011 or December 31, 2010. The Company has access to an unsecured line of credit from the Pacific Coast Banker's Bank. The line has a one-year term maturing on June 30, 2012 and is renewable annually. As of September 30, 2011, the amount available under this line of credit is $2.0 million. There was no outstanding balance on this line of credit as of September 30, 2011 and December 31, 2010. |
Earnings Per Share | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (loss) Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 8 – Earnings Per Share Earnings per share are summarized in the following table (all figures are in thousands except earnings per share):
For the three and nine month periods ended September 30, 2011 and 2010, all options were anti-dilutive and were not included in the calculation for diluted earnings per share. |
Commitments and Contingencies | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 6 – Commitments and Contingencies In the normal course of operations, the Company engages in a variety of financial transactions that are not recorded in our financial statements. These transactions involve varying degrees of off-balance sheet credit, interest rate and liquidity risks. These transactions are used primarily to manage customers' requests for funding and take the form of loan commitments and lines of credit. |
Consolidated Statement of Stockholders' Equity (Unaudited) (Parenthetical) (Accumulated Other Comprehensive Loss, net of tax [Member], USD $) In Thousands | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Accumulated Other Comprehensive Loss, net of tax [Member] | |
Net unrealized gain in fair value of available for sale securities, tax | $ 22 |
Accounting Pronouncements Recently Issued or Adopted | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Accounting Pronouncements Recently Issued or Adopted [Abstract] | |
Accounting Pronouncements Recently Issued or Adopted | Note 2 – Accounting Pronouncements Recently Issued or Adopted In January 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. This ASU temporarily delays the effective date of the disclosures about troubled debt restructurings in Update 2010-20 for public entities. The delay is intended to allow the FASB time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. The guidance is effective for interim and annual periods ending after September 15, 2011. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements. In April 2011, the FASB issued ASU No. 2011-02, A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring. The update provides additional guidance relating to when creditors should classify loan modifications as troubled debt restructurings. The ASU also ends the deferral issued in January 2011 of the disclosures about troubled debt restructurings required by ASU No. 2010-20. The provisions of ASU No. 2011-02 and the disclosure requirements of ASU No. 2010-20 are effective for the Company's interim reporting period ending September 30, 2011. The guidance applies retrospectively to restructurings occurring on or after January 1, 2011. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements. In April 2011, the FASB issued ASU No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements. The update amends existing guidance to remove from the assessment of effective control, the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee and, as well, the collateral maintenance implementation guidance related to that criterion. ASU No. 2011-03 is effective for the Company's reporting period beginning on or after December 15, 2011. The guidance applies prospectively to transactions or modification of existing transactions that occur on or after the effective date and early adoption is not permitted. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. In April 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update amends existing guidance regarding the highest and best use and valuation premise by clarifying these concepts are only applicable to measuring the fair value of nonfinancial assets. The Update also clarifies that the fair value measurement of financial assets and financial liabilities which have offsetting market risks or counterparty credit risks that are managed on a portfolio basis, when several criteria are met, can be measured at the net risk position. Additional disclosures about Level 3 fair value measurements are required including a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, a description of the valuation process in place, and discussion of the sensitivity of fair value changes in unobservable inputs and interrelationships about those inputs as well as disclosure of the level of the fair value of items that are not measured at fair value in the financial statements but disclosure of fair value is required. The provisions of ASU No. 2011-04 are effective for the Company's reporting period beginning after December 15, 2011 and should be applied prospectively. The Company is currently evaluating the impact of this ASU and does not expect it to have a material impact on the Company's consolidated financial statements. In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. The update amends current guidance to allow a company the option of presenting the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The provisions do not change the items that must be reported in other comprehensive income or when an item of other comprehensive must be reclassified to net income. The amendments do not change the option for a company to present components of other comprehensive income either net of related tax effects or before related tax effects, with one amount shown for the aggregate income tax expense (benefit) related to the total of other comprehensive income items. The amendments do not affect how earnings per share is calculated or presented. The provisions of ASU No. 2011-05 are effective for the Company's reporting periods beginning after December 15, 2011 and should be applied retrospectively. Early adoption is permitted and there are no required transition disclosures. The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements. |
Investments | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Note 3 – Investments The amortized cost and fair value of our AFS securities and the corresponding amounts of gross unrealized gains and losses were as follows:
The amortized cost and fair value of mortgage-backed securities by contractual maturity, at September 30, 2011, are shown below. Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Securities with a carrying value of $61,000 at September 30, 2011 were pledged to secure Washington State Public Funds. Additionally, the Company has letters of credit with a notional amount of $24.0 million to secure public deposits. Sales of available for sale securities were as follows:
The following table summarizes the aggregate fair value and gross unrealized loss by length of time those investments have been continuously in an unrealized loss position:
The following table presents the cumulative roll forward of credit losses recognized in earnings relating to the Company's non-U.S. agency mortgage backed securities:
As of September 30, 2011, our securities portfolio consisted of two U.S. agency and five non-U.S. agency mortgage backed securities with a fair value of $3.1 million, of which, all five non-U.S. agency securities were in an unrealized loss position. The unrealized losses were caused by changes in interest rates and market illiquidity causing a decline in the fair value subsequent to the purchase. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than par. While management does not intend to sell the non-agency mortgage backed securities, and it is unlikely that the Company will be required to sell these securities before recovery of its amortized cost basis, management's impairment evaluation indicates that certain securities possess qualitative and quantitative factors that suggest an other-than-temporary impairment (OTTI). These factors include, but are not limited to: the length of time and extent of the fair value declines, ratings agency down grades, the potential for an increased level of actual defaults, and the extension in duration of the securities. In addition to the qualitative factors, management's evaluation includes an assessment of quantitative evidence that involves the use of cash flow modeling and present value calculations as determined by considering the applicable OTTI accounting guidance. The Company compares the present value of the current estimated cash flows to the present value of the previously estimated cash flows. Accordingly, if the present value of the current estimated cash flows is less than the present value of the previous period's present value, an adverse change is considered to exist and the security is considered OTTI. The associated “credit loss” is the amount by which the security's amortized cost exceeds the present value of the current estimated cash flows. Based upon the results of the cash flow modeling as of September 30, 2011, three securities reflected OTTI during the nine month period ended September 30, 2011. Estimating the expected cash flows and determining the present values of the cash flows involves the use of a variety of assumptions and complex modeling. In developing its assumptions, the Company considers all available information relevant to the collectability of the applicable security, including information about past events, current conditions, and reasonable and supportable forecasts. Furthermore, the Company asserts that the cash flows used in the determination of OTTI are its “best estimate” of cash flows. The Company engages a third party to perform the cash flow model. The model includes each individual non-agency mortgage backed securities' structural features. The modeled cash flows are discounted and they incorporate additional projected defaults based upon risk analysis of the financial condition and performance. Utilizing the quantitative change in the net present value of the cash flows compared to the amortized cost of the security, the Company recognized additional credit losses of $96,000 in non-cash pre-tax impairment charges for the nine months ended September 30, 2011. Cumulative at September 30, 2011, the Company has recognized a total of $256,000 of OTTI on three of the five non-agency mortgage backed securities. |
[OGR_'$07.@9R,E!O`,"&E$
M@QT\^/8>.]0=D;G#Q+J!>`B8M-_N63%1]$7\C7`#&3R:9_%3:>/S@12*$3DB
MPT,DGXOK_]S[K0F&>]1J-L].?SV<;AP-=9@SEAEI`IKHV3/CDUR"W[3PNXU.
M,^[ BN$%DKMN)8)]9G`)1PP;$D8$)GO4PT)]/+GD^A"?^^@PZ/+5Q
MS?K:'X`IAW4*9D/K2.QR2]=R0AT3LS]#7#1Q];K+N,[&JP]=K^\+=4=*)=U)
M:*819C0<3S3(@]K:T=*:&A363UA@?1!S"IQ%1KD]"_P';`H2L<0^]?PLP@M]
M/T62CP>T(`#T.U!O$QE:9L\:2"R2!,4(.C`#88SD)`Y_1IZ??*E="?QW5L@.
M39[Y)6NHH*+CE'KCBI96S]3'9@+REBO6!W*RPZ8;)L'84I'7T<(P:HZ[4N"H
MD&1-2-N/O!([ZY44$FL&1L;T[3RXQ2V,WADXC);^E,.`0]J>2+L-(/[:;WC^
M??70%:7 P7/'/`Z>P3-X=@<-M[T+GL$S>`;/X-E-[SK%\]#WIE,,
M8`;4@+IS;N][WI,7Y9PGIE0B9=6V55FQ0-+3!3#=BP?T@P&([A/188CY.2":
M$M%XL0;/X+EC'@?/O>&Y#Y,G072?B`YB;X0MC@`U*:A#W_,C^FLQ]SSU^:XT
MDO$B9=(LA6*)+'2Y$@K93Q?8="TD!&,\Y$`T*:+ISVD`T'T"&LDB\`R>.^9Q
M\-P;GH,I_=V#072OB`Z\N`<[P0#J7D$=>H%/'^ICR<]G\IT[(]<\3;-B,=@>
MV3`TP)1?&9$O!_@J*T;/6++HFA
MK-34:F2BK_QZEB"GO%G'F":+E-]QZ43(IC>+`8ULJN_#FOB82_QE,E'>@\1\
M/(C!.L<_$T^40JJ+@_8Q^S&<8%<_M5IG!UT&"@#$N_M8VOD/S*$TB:=F6%TF
MBI6'H+*R[Z0K-!>6!HRXG15$;*$9#I3"%+XH`?JGLX/3B"H2_$_MHX.SY$F>
MP'2I6912V=%UW/`.%N)4(4.-"KN-"EB1)BTYX8'><2$8$#:5F=T(3.@0#$_V
M_^*S*/\%Y-:XP`T(^Q%3>H>*C_=-&=P0M,+/;.9PBPJEP`"\.Z%
-&"E-SS9G=:ARNF5$&^S0M2#$/E]FA6[(]^NE#/NUW=]?I/U
^NHL4;8GC^ZWP_W-
M^0.^Q_/;+]8CWS-I=L1+]2AIR:FEWE8JG.=(AHY(O!,B>?`
M"\,&=NYKW^M@NC=,A\WL"=:^U\%T?Y@&S^"9$,_TI_DA\;E+?,Y*;:^B,6W=
M"2Y=BP1AA&<;B`;1G?,YB.X-T5,,O`#0E(`.QB`:1-,B&H,]030IHL$S>";$
M,_TNJ9ZG/#^6N
W
MZVT@Y^U`.@!2$19E#_)6.#A$EUT%CT)%*,U+A72S5:M(.]6$WN*A][<`EB"7
M?0F]P/&&W&?ON<\#1Q"$"<(%@?"M\+5%=8%F6(6QN^B@T,R8K#-Q[!&B9F,.
M`867CM=>P"+,+LD#5[W9@VA8*@53I]LF,SZO-QL=8K7:AOG1BZG3(0/>J\A$N/=HARI37Y)=RDTB!`A8]3E
M8FD:RY$$WB<-UICX)IQ8R[;L]3Q':P!X10R&OAP),=^EV9MB[WGPM<:&<:AB
ME&%H-)6[(Y;=2-$B#M2T3FKGYV>X
FJOYT>HBQ"''%6ED>N6LYSV*NJXTG/0Z*5>2
M]#ZI1PO+<=0'K?O7,:5)R5H.+T!S"BM:IBS1A74SM6P+H[8*`NXUZXE.UK5%
MX,>2PM6J*KI)4:J#H7(=?5^L4EFKVM0/78_QNJAFYWH[$54NI%9UH%&UU^IB
MOY"`G:N1J:LWU#^B*?4);=%_:%OT"RS'&ML$;8)V0:"]L#YFY=&\Z-S*S)AV
M3^2&U>YM%JN#T[8M0`]/N6VLQYEH&]21JP"/V=Q[$
M&`MKOFRFEH/CL2#X6X_2'6\\'S=KG5:GG`).0'WI0Q3[Q^?I4?NDM.BT#8]D
M9)"1\7S&O'!%U8,CKR!(LT)=/_<