Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
CALIFORNIA (State or Other Jurisdiction of Incorporation or Organization) |
94-2792841 (I.R.S. Employer Identification Number) |
o Large accelerated filer | þ Accelerated filer | o Non-accelerated filer (Do not check if a smaller reporting company) | o Smaller reporting company |
1
At June 30, | At December 31, | |||||||
2011 | 2010 | |||||||
Assets: |
||||||||
Cash and due from banks |
$ | 52,874 | $ | 57,254 | ||||
Cash at Federal Reserve and other banks |
338,180 | 313,812 | ||||||
Cash and cash equivalents |
391,054 | 371,066 | ||||||
Securities available-for-sale |
264,992 | 277,271 | ||||||
Restricted equity securities |
9,199 | 9,133 | ||||||
Loans held for sale |
4,379 | 4,988 | ||||||
Loans |
1,396,062 | 1,419,571 | ||||||
Allowance for loan losses |
(43,962 | ) | (42,571 | ) | ||||
Total loans, net |
1,352,100 | 1,377,000 | ||||||
Foreclosed assets, net |
9,337 | 9,913 | ||||||
Premises and equipment, net |
20,142 | 19,120 | ||||||
Cash value of life insurance |
51,441 | 50,541 | ||||||
Accrued interest receivable |
6,549 | 7,131 | ||||||
Goodwill |
15,519 | 15,519 | ||||||
Other intangible assets, net |
475 | 580 | ||||||
Mortgage servicing rights |
4,818 | 4,605 | ||||||
Indemnification asset |
4,545 | 5,640 | ||||||
Other assets |
41,634 | 37,282 | ||||||
Total assets |
$ | 2,176,184 | $ | 2,189,789 | ||||
Liabilities and Shareholders Equity: |
||||||||
Liabilities: |
||||||||
Deposits: |
||||||||
Noninterest-bearing demand |
$ | 419,391 | $ | 424,070 | ||||
Interest-bearing |
1,417,340 | 1,428,103 | ||||||
Total deposits |
1,836,731 | 1,852,173 | ||||||
Accrued interest payable |
1,865 | 2,151 | ||||||
Reserve for unfunded commitments |
2,640 | 2,640 | ||||||
Other liabilities |
29,561 | 29,170 | ||||||
Other borrowings |
59,234 | 62,020 | ||||||
Junior subordinated debt |
41,238 | 41,238 | ||||||
Total liabilities |
1,971,269 | 1,989,392 | ||||||
Commitments and contingencies (Note 18)
|
||||||||
Shareholders equity: |
||||||||
Common stock, no par value: 50,000,000 shares authorized;
issued and outstanding: |
||||||||
15,978,958 at June 30, 2011 |
83,863 | |||||||
15,860,138 at December 31, 2010 |
81,554 | |||||||
Retained earnings |
118,408 | 117,533 | ||||||
Accumulated other comprehensive income, net of tax |
2,644 | 1,310 | ||||||
Total shareholders equity |
204,915 | 200,397 | ||||||
Total liabilities and shareholders equity |
$ | 2,176,184 | $ | 2,189,789 | ||||
2
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Interest and dividend income: |
||||||||||||||||
Loans, including fees |
$ | 21,735 | $ | 22,701 | $ | 43,457 | $ | 45,514 | ||||||||
Debt securities: |
||||||||||||||||
Taxable |
2,347 | 2,727 | 4,721 | 5,482 | ||||||||||||
Tax exempt |
136 | 188 | 276 | 396 | ||||||||||||
Dividends |
7 | 6 | 14 | 12 | ||||||||||||
Interest bearing cash at
Federal Reserve and other banks |
242 | 154 | 433 | 308 | ||||||||||||
Total interest and dividend income |
24,467 | 25,776 | 48,901 | 51,712 | ||||||||||||
Interest expense: |
||||||||||||||||
Deposits |
1,802 | 2,727 | 3,629 | 5,785 | ||||||||||||
Other borrowings |
600 | 602 | 1,193 | 1,196 | ||||||||||||
Junior subordinated debt |
312 | 313 | 622 | 619 | ||||||||||||
Total interest expense |
2,714 | 3,642 | 5,444 | 7,600 | ||||||||||||
Net interest income |
21,753 | 22,134 | 43,457 | 44,112 | ||||||||||||
Provision for loan losses |
5,561 | 10,000 | 12,562 | 18,500 | ||||||||||||
Net interest income after provision for loan losses |
16,192 | 12,134 | 30,895 | 25,612 | ||||||||||||
Noninterest income: |
||||||||||||||||
Service charges and fees |
6,121 | 6,082 | 11,903 | 11,817 | ||||||||||||
Gain on sale of loans |
495 | 577 | 1,220 | 1,162 | ||||||||||||
Commissions on sale of non-deposit investment products |
648 | 362 | 1,008 | 629 | ||||||||||||
Increase in cash value of life insurance |
450 | 426 | 900 | 852 | ||||||||||||
Other |
537 | 657 | 2,570 | 1,191 | ||||||||||||
Total noninterest income |
8,251 | 8,104 | 17,601 | 15,651 | ||||||||||||
Noninterest expense: |
||||||||||||||||
Salaries and related benefits |
10,715 | 9,985 | 21,508 | 20,135 | ||||||||||||
Other |
9,380 | 8,423 | 18,258 | 17,076 | ||||||||||||
Total noninterest expense |
20,095 | 18,408 | 39,766 | 37,211 | ||||||||||||
Income before income taxes |
4,348 | 1,830 | 8,730 | 4,052 | ||||||||||||
Provision for income taxes |
1,577 | 510 | 3,159 | 1,174 | ||||||||||||
Net income |
$ | 2,771 | $ | 1,320 | 5,571 | $ | 2,878 | |||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | 0.17 | $ | 0.08 | $ | 0.35 | $ | 0.18 | ||||||||
Diluted |
$ | 0.17 | $ | 0.08 | $ | 0.35 | $ | 0.18 |
3
Accumulated | ||||||||||||||||||||
Shares of | Other | |||||||||||||||||||
Common | Common | Retained | Comprehensive | |||||||||||||||||
Stock | Stock | Earnings | Income | Total | ||||||||||||||||
Balance at December 31, 2009 |
15,787,753 | $ | 79,508 | $ | 118,863 | $ | 2,278 | $ | 200,649 | |||||||||||
Comprehensive income: |
||||||||||||||||||||
Net income |
2,878 | 2,878 | ||||||||||||||||||
Change in net unrealized loss on securities available for sale, net |
1,854 | 1,854 | ||||||||||||||||||
Total comprehensive income |
4,732 | |||||||||||||||||||
Stock option vesting |
275 | 275 | ||||||||||||||||||
Stock options exercised |
146,403 | 1,229 | 1,229 | |||||||||||||||||
Tax benefit of stock options exercised |
390 | 390 | ||||||||||||||||||
Repurchase of common stock |
(74,018 | ) | (373 | ) | (991 | ) | (1,364 | ) | ||||||||||||
Dividends paid ($0.22 per share) |
(3,489 | ) | (3,489 | ) | ||||||||||||||||
Balance at June 30, 2010 |
15,860,138 | $ | 81,029 | $ | 117,261 | $ | 4,132 | $ | 202,422 | |||||||||||
Balance at December 31, 2010 |
15,860,138 | $ | 81,554 | $ | 117,533 | $ | 1,310 | $ | 200,397 | |||||||||||
Comprehensive income: |
||||||||||||||||||||
Net income |
5,571 | 5,571 | ||||||||||||||||||
Change in net unrealized gain on
securities available for sale, net |
1,334 | 1,334 | ||||||||||||||||||
Total comprehensive income |
6,905 | |||||||||||||||||||
Stock option vesting |
500 | 500 | ||||||||||||||||||
Stock options exercised |
296,250 | 2,428 | 2,428 | |||||||||||||||||
Tax benefit of stock options exercised |
296 | 296 | ||||||||||||||||||
Repurchase of common stock |
(177,430 | ) | (915 | ) | (1,830 | ) | (2,745 | ) | ||||||||||||
Dividends paid ($0.18 per share) |
(2,866 | ) | (2,866 | ) | ||||||||||||||||
Balance at June 30, 2011 |
15,978,958 | $ | 83,863 | $ | 118,408 | $ | 2,644 | $ | 204,915 | |||||||||||
4
For the six months ended June 30, | ||||||||
2011 | 2010 | |||||||
Operating activities: |
||||||||
Net income |
$ | 5,571 | $ | 2,878 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation of premises and equipment, and amortization |
1,612 | 1,810 | ||||||
Amortization of intangible assets |
105 | 137 | ||||||
Provision for loan losses |
12,562 | 18,500 | ||||||
Amortization of investment securities premium, net |
685 | 432 | ||||||
Originations of loans for resale |
(55,579 | ) | (36,420 | ) | ||||
Proceeds from sale of loans originated for resale |
56,973 | 37,508 | ||||||
Gain on sale of loans |
(1,220 | ) | (1,162 | ) | ||||
Change in market value of mortgage servicing rights |
222 | 618 | ||||||
Provision for losses on foreclosed assets |
1,087 | 55 | ||||||
Gain on sale of foreclosed assets |
(385 | ) | (350 | ) | ||||
Loss on disposal of fixed assets |
15 | 40 | ||||||
Increase in cash value of life insurance |
(900 | ) | (852 | ) | ||||
Stock option vesting expense |
500 | 275 | ||||||
Stock option excess tax benefits |
(296 | ) | (390 | ) | ||||
Bargain purchase gain |
| (232 | ) | |||||
Change in reserve for unfunded commitments |
| (800 | ) | |||||
Change in: |
||||||||
Interest receivable |
582 | 291 | ||||||
Interest payable |
(286 | ) | (1,127 | ) | ||||
Other assets and liabilities, net |
(3,900 | ) | 1,266 | |||||
Net cash from operating activities |
17,348 | 22,477 | ||||||
Investing activities: |
||||||||
Proceeds from maturities of securities available-for-sale |
39,352 | 42,816 | ||||||
Purchases of securities available-for-sale |
(25,456 | ) | (101,255 | ) | ||||
Redemption (purchase) of restricted equity securities, net |
(66 | ) | 447 | |||||
Loan principal (increases) decreases, net |
8,084 | 40,097 | ||||||
Proceeds from sale of foreclosed assets |
4,145 | 2,497 | ||||||
Improvements of foreclosed assets |
(17 | ) | | |||||
Proceeds from sale of premises and equipment |
1 | 2 | ||||||
Purchases of premises and equipment |
(2,288 | ) | (1,691 | ) | ||||
Cash received from acquisitions |
| 18,764 | ||||||
Net cash from investing activities |
23,755 | 1,677 | ||||||
Financing activities: |
||||||||
Net decrease in deposits |
(15,442 | ) | (33,564 | ) | ||||
Net change in short-term other borrowings |
(2,786 | ) | (11,301 | ) | ||||
Stock option excess tax benefits |
296 | 390 | ||||||
Repurchase of common stock |
(753 | ) | (338 | ) | ||||
Dividends paid |
(2,866 | ) | (3,489 | ) | ||||
Exercise of stock options |
436 | 203 | ||||||
Net cash from financing activities |
(21,115 | ) | (48,099 | ) | ||||
Net change in cash and cash equivalents |
19,988 | (23,945 | ) | |||||
Cash and cash equivalents at beginning of period |
371,066 | 346,589 | ||||||
Cash and cash equivalents at end of period |
$ | 391,054 | $ | 322,644 | ||||
Supplemental disclosure of noncash activities: |
||||||||
Loans transferred to other real estate owned |
$ | 4,254 | $ | 3,788 | ||||
Unrealized net gain on securities available for sale |
$ | 2,302 | $ | 3,200 | ||||
Market value of shares tendered by employees in-lieu of cash to pay for exercise options and/or related taxes |
$ | 1,992 | $ | 1,026 | ||||
Supplemental disclosure of cash flow activity: |
||||||||
Cash paid for interest expense |
$ | 5,730 | $ | 8,727 | ||||
Cash paid for income taxes |
$ | 2,620 | $ | 2,625 |
5
6
7
8
9
10
11
Granite | ||||
(in thousands) | May 28, 2010 | |||
Asset acquired: |
||||
Cash and cash equivalents |
$ | 18,764 | ||
Securities available-for-sale |
2,954 | |||
Restricted equity securities |
696 | |||
Covered loans |
64,802 | |||
Premises and equipment |
17 | |||
Core deposit intangible |
562 | |||
Covered foreclosed assets |
4,629 | |||
FDIC indemnification asset |
7,466 | |||
Other assets |
392 | |||
Total assets acquired |
$ | 100,282 | ||
Liabilities assumed: |
||||
Deposits |
$ | 95,001 | ||
Other borrowings |
5,000 | |||
Other liabilities |
49 | |||
Total liabilities assumed |
100,050 | |||
Net assets acquired/bargain purchase gain |
$ | 232 | ||
12
Granite | ||||
(in thousands) | May 28, 2010 | |||
Cost basis net assets acquired |
$ | 4,345 | ||
Cash payment received from FDIC |
3,940 | |||
Fair value adjustments: |
||||
Securities available-for-sale |
(118 | ) | ||
Loans |
(13,189 | ) | ||
Foreclosed assets |
(2,616 | ) | ||
Core deposit intangible |
562 | |||
FDIC indemnification asset |
7,466 | |||
Deposits |
(209 | ) | ||
Other |
51 | |||
Bargain purchase gain |
$ | 232 | ||
Granite | ||||
(in thousands) | May 28, 2010 | |||
Principal balance loans acquired |
$ | 77,991 | ||
Discount |
(13,189 | ) | ||
Covered loans, net |
$ | 64,802 | ||
Granite | ||||
(in thousands) | May 28, 2010 | |||
Undiscounted contractual cash flows |
$ | 99,179 | ||
Undiscounted cash flows not expected
to be collected (nonaccretable difference) |
(11,226 | ) | ||
Undiscounted cash flows
expected to be collected |
87,953 | |||
Accretable yield at acquisition |
(23,151 | ) | ||
Estimated fair value of Loans acquired at acquisition |
$ | 64,802 | ||
13
June 30, 2011 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(in thousands) | ||||||||||||||||
Securities Available-for-Sale |
||||||||||||||||
Obligations of U.S. government corporations and agencies |
$ | 242,914 | $ | 9,918 | | $ | 252,832 | |||||||||
Obligations of states and political subdivisions |
11,840 | 395 | (75 | ) | 12,160 | |||||||||||
Total securities available-for-sale |
$ | 254,754 | $ | 10,313 | $ | (75 | ) | $ | 264,992 | |||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(in thousands) | ||||||||||||||||
Securities Available-for-Sale |
||||||||||||||||
Obligations of U.S. government corporations and agencies |
$ | 255,884 | $ | 8,623 | $ | (326 | ) | $ | 264,181 | |||||||
Obligations of states and political subdivisions |
12,452 | 141 | (52 | ) | 12,541 | |||||||||||
Corporate debt securities |
1,000 | | (451 | ) | 549 | |||||||||||
Total securities available-for-sale |
$ | 269,336 | $ | 8,764 | $ | (829 | ) | $ | 277,271 | |||||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
(in thousands) | ||||||||
Investment Securities |
||||||||
Due in one year |
$ | 22 | $ | 22 | ||||
Due after one year through five years |
25,176 | 26,336 | ||||||
Due after five years through ten years |
75,073 | 76,535 | ||||||
Due after ten years |
154,483 | 162,099 | ||||||
Totals |
$ | 254,754 | $ | 264,992 | ||||
14
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
June 30, 2011 | (in thousands) | |||||||||||||||||||||||
Securities Available-for-Sale: |
||||||||||||||||||||||||
Obligations of U.S. government corporations and agencies |
$ | 11 | | | | $ | 11 | | ||||||||||||||||
Obligations of states and political subdivisions |
1,649 | (75 | ) | | | 1,649 | (75 | ) | ||||||||||||||||
Total securities available-for-sale |
$ | 1,660 | $ | (75 | ) | | | $ | 1,660 | $ | (75 | ) | ||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
December 31, 2010 | (in thousands) | |||||||||||||||||||||||
Securities Available-for-Sale: |
||||||||||||||||||||||||
Obligations of U.S. government corporations and agencies |
$ | 54,760 | $ | (326 | ) | | | $ | 54,760 | $ | (326 | ) | ||||||||||||
Obligations of states and political subdivisions |
1,345 | (22 | ) | 513 | (30 | ) | 1,858 | (52 | ) | |||||||||||||||
Corporate debt securities |
| | 549 | (451 | ) | 549 | (451 | ) | ||||||||||||||||
Total securities available-for-sale |
$ | 56,105 | $ | (348 | ) | $ | 1,062 | $ | (481 | ) | $ | 57,167 | $ | (829 | ) | |||||||||
15
June 30, 2011 | December 31, 2010 | |||||||||||||||||||||||
Originated | PCI | Total | Originated | PCI | Total | |||||||||||||||||||
Mortgage loans on real estate: |
||||||||||||||||||||||||
Residential 1-4 family |
$ | 121,474 | $ | 6,398 | $ | 127,872 | $ | 123,623 | $ | 7,597 | $ | 131,220 | ||||||||||||
Commercial |
679,922 | 24,661 | 704,583 | 682,103 | 25,739 | 707,842 | ||||||||||||||||||
Total mortgage loan on real estate |
801,396 | 31,059 | 832,455 | 805,726 | 33,336 | 839,062 | ||||||||||||||||||
Consumer: |
||||||||||||||||||||||||
Home equity lines of credit |
324,662 | 6,302 | 330,964 | 329,080 | 7,072 | 336,152 | ||||||||||||||||||
Home equity loans |
14,830 | | 14,830 | 17,588 | | 17,588 | ||||||||||||||||||
Auto Indirect |
16,741 | | 16,732 | 24,577 | | 24,577 | ||||||||||||||||||
Other |
18,601 | | 18,610 | 15,622 | | 15,622 | ||||||||||||||||||
Total consumer loans |
374,834 | 6,302 | 381,136 | 386,867 | 7,072 | 393,939 | ||||||||||||||||||
Commercial |
132,487 | 8,037 | 140,524 | 133,032 | 10,364 | 143,396 | ||||||||||||||||||
Construction: |
||||||||||||||||||||||||
Residential |
18,042 | 4,445 | 22,435 | 19,459 | 4,463 | 23,922 | ||||||||||||||||||
Commercial |
21,433 | | 21,485 | 21,029 | | 21,029 | ||||||||||||||||||
Total construction |
39,475 | 4,445 | 43,920 | 40,488 | 4,463 | 44,951 | ||||||||||||||||||
Total loans |
1,348,192 | 49,843 | 1,398,035 | 1,366,113 | 55,235 | 1,421,348 | ||||||||||||||||||
Net deferred loan (fees) costs |
(1,973 | ) | | (1,973 | ) | (1,777 | ) | | (1,777 | ) | ||||||||||||||
Total loans, net of deferred loan fees |
$ | 1,346,219 | $ | 49,843 | $ | 1,396,062 | $ | 1,364,336 | $ | 55,235 | $ | 1,419,571 | ||||||||||||
Noncovered loans |
$ | 1,346,192 | | $ | 1,346,219 | $ | 1,364,336 | | $ | 1,364,336 | ||||||||||||||
Covered loans |
| 49,843 | 49,843 | | 55,235 | 55,235 | ||||||||||||||||||
Total loans |
$ | 1,346,192 | $ | 49,843 | $ | 1,396,062 | $ | 1,364,336 | $ | 55,235 | $ | 1,419,571 | ||||||||||||
Allowance for loan loss |
$ | (41,592 | ) | $ | (2,370 | ) | $ | (43,962 | ) | $ | (40,963 | ) | $ | (1,608 | ) | $ | (42,571 | ) | ||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Change in accretable yield: |
||||||||||||||||
Balance at beginning of period |
$ | 14,399 | | $ | 17,717 | | ||||||||||
Acquisitions |
| $ | 23,151 | $ | 23,151 | |||||||||||
Accretion to interest income |
(994 | ) | (369 | ) | (2,028 | ) | (369 | ) | ||||||||
Reclassification (to) from Nonaccretable difference |
52 | | (2,232 | ) | | |||||||||||
Balance at end of period |
$ | 13,457 | $ | 22,782 | $ | 13,457 | $ | 22,782 | ||||||||
16
Allowance for Loan Losses Three months ended June 30, 2011 | ||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||
Beginning balance |
$ | 3,544 | $ | 12,027 | $ | 16,296 | $ | 911 | $ | 481 | $ | 704 | $ | 6,967 | $ | 1,395 | $ | 899 | $ | 43,224 | ||||||||||||||||||||
Charge-offs |
(321 | ) | (1,621 | ) | (1,928 | ) | (264 | ) | (100 | ) | (304 | ) | (202 | ) | (395 | ) | (95 | ) | (5,230 | ) | ||||||||||||||||||||
Recoveries |
| 38 | 86 | | 56 | 165 | 41 | 20 | 1 | 407 | ||||||||||||||||||||||||||||||
Provision |
(702 | ) | 2,975 | 2,026 | 524 | (53 | ) | 257 | 6 | 677 | (149 | ) | 5,561 | |||||||||||||||||||||||||||
Ending balance |
$ | 2,521 | $ | 13,419 | $ | 16,480 | $ | 1,171 | $ | 384 | $ | 822 | $ | 6,812 | $ | 1,697 | $ | 656 | $ | 43,962 | ||||||||||||||||||||
Allowance for Loan Losses Six months ended June 30, 2011 | ||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||
Beginning balance |
$ | 3,007 | $ | 12,700 | $ | 15,054 | $ | 795 | $ | 1,229 | $ | 701 | $ | 5,991 | $ | 1,824 | $ | 1,270 | $ | 42,571 | ||||||||||||||||||||
Charge-offs |
(1,446 | ) | (1,989 | ) | (5,529 | ) | (264 | ) | (235 | ) | (533 | ) | (1,758 | ) | (430 | ) | (95 | ) | (12,279 | ) | ||||||||||||||||||||
Recoveries |
112 | 66 | 247 | 2 | 183 | 374 | 62 | 22 | 40 | 1,108 | ||||||||||||||||||||||||||||||
Provision |
848 | 2,642 | 6,708 | 638 | (793 | ) | 280 | 2,517 | 281 | (559 | ) | 12,562 | ||||||||||||||||||||||||||||
Ending balance |
$ | 2,521 | $ | 13,419 | $ | 16,480 | $ | 1,171 | $ | 384 | $ | 822 | $ | 6,812 | $ | 1,697 | $ | 656 | $ | 43,962 | ||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||||||||||||||
Individ. evaluated
for impairment |
$ | 955 | $ | 2,181 | $ | 1,408 | $ | 129 | $ | 113 | $ | 22 | $ | 206 | $ | 286 | $ | 509 | $ | 5,809 | ||||||||||||||||||||
Loans pooled for
evaluation |
$ | 1,552 | $ | 11,224 | $ | 14,629 | $ | 1,042 | $ | 271 | $ | 800 | $ | 4,968 | $ | 1,150 | $ | 147 | $ | 35,783 | ||||||||||||||||||||
Loans acquired with
deteriorated
credit quality |
$ | 14 | $ | 14 | $ | 443 | | | | $ | 1,638 | $ | 261 | | $ | 2,370 | ||||||||||||||||||||||||
Loans, net of unearned fees As of June 30, 2011 | ||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||||||||||||||
Total loans |
$ | 127,083 | $ | 701,674 | $ | 332,532 | $ | 14,905 | $ | 16,767 | $ | 18,660 | $ | 140,531 | $ | 22,479 | $ | 21,431 | $ | 1,396,062 | ||||||||||||||||||||
Individ. evaluated
for impairment |
$ | 11,292 | $ | 65,734 | $ | 8,271 | $ | 492 | $ | 936 | $ | 93 | $ | 5,385 | $ | 6,250 | $ | 7,329 | $ | 105,782 | ||||||||||||||||||||
Loans pooled for
evaluation |
$ | 109,393 | $ | 611,279 | $ | 317,959 | $ | 14,413 | $ | 15,831 | $ | 18,567 | $ | 127,109 | $ | 11,784 | $ | 14,102 | $ | 1,240,437 | ||||||||||||||||||||
Loans acquired with
deteriorated
credit quality |
$ | 6,398 | $ | 24,661 | $ | 6,302 | | | | $ | 8,037 | $ | 4,445 | | $ | 49,843 | ||||||||||||||||||||||||
17
Allowance for Loan Losses Three months ended June 30, 2010 | ||||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||||
Beginning balance |
$ | 2,131 | $ | 6,679 | $ | 14,428 | $ | 907 | $ | 1,645 | $ | 657 | $ | 7,067 | $ | 304 | $ | 2,522 | $ | 36,340 | ||||||||||||||||||||||
Charge-offs |
(293 | ) | (1,497 | ) | (3,095 | ) | (303 | ) | (337 | ) | (543 | ) | (535 | ) | (1,782 | ) | (39 | ) | (8,424 | ) | ||||||||||||||||||||||
Recoveries |
| 28 | 24 | 7 | 167 | 182 | 103 | 3 | | 514 | ||||||||||||||||||||||||||||||||
Provision |
1,002 | 4,153 | 2,551 | 1,305 | (13 | ) | 302 | (455 | ) | 1,748 | (593 | ) | 10,000 | |||||||||||||||||||||||||||||
Ending balance |
$ | 2,840 | $ | 9,363 | $ | 13,908 | $ | 1,916 | $ | 1,462 | $ | 598 | $ | 6,180 | $ | 273 | $ | 1,890 | $ | 38,430 | ||||||||||||||||||||||
Ending balance: |
Allowance for Loan Losses Six months ended June 30, 2010 | ||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||
Beginning balance |
$ | 2,618 | $ | 5,071 | $ | 13,483 | $ | 940 | $ | 1,986 | $ | 616 | $ | 6,958 | $ | 2,067 | $ | 1,734 | $ | 35,473 | ||||||||||||||||||||
Charge-offs |
(748 | ) | (4,064 | ) | (5,337 | ) | (711 | ) | (863 | ) | (883 | ) | (1,061 | ) | (2,819 | ) | (39 | ) | (16,525 | ) | ||||||||||||||||||||
Recoveries |
| 55 | 68 | 7 | 327 | 384 | 117 | 24 | | 982 | ||||||||||||||||||||||||||||||
Provision |
970 | 8,301 | 5,694 | 1,680 | 12 | 481 | 166 | 1,001 | 195 | 18,500 | ||||||||||||||||||||||||||||||
Ending balance |
$ | 2,840 | $ | 9,363 | $ | 13,908 | $ | 1,916 | $ | 1,462 | $ | 598 | $ | 6,180 | $ | 273 | $ | 1,890 | $ | 38,430 | ||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||||||||||||||
Individ. evaluated
for impairment |
$ | 494 | $ | 857 | $ | 2,977 | $ | 368 | $ | 461 | $ | 67 | $ | 1,147 | $ | 46 | $ | 511 | $ | 6,928 | ||||||||||||||||||||
Loans pooled for
evaluation |
$ | 2,346 | $ | 8,506 | $ | 10,931 | $ | 1,548 | $ | 1,001 | $ | 531 | $ | 5,033 | $ | 227 | $ | 1,379 | $ | 31,502 | ||||||||||||||||||||
Loans acquired with
deteriorated
credit quality |
| | | | | | | | | | ||||||||||||||||||||||||||||||
Loans, net of unearned fees As of June 30, 2010 | ||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||||||||||||||
Total loans |
$ | 121,638 | $ | 729,218 | $ | 346,795 | $ | 46,580 | $ | 34,189 | $ | 15,143 | $ | 162,503 | $ | 10,320 | $ | 34,554 | $ | 1,500,940 | ||||||||||||||||||||
Individ. evaluated
for impairment |
$ | 7,556 | $ | 57,485 | $ | 9,960 | $ | 1,026 | $ | 1,759 | $ | 190 | $ | 3,351 | $ | 1,252 | $ | 12,397 | $ | 94,976 | ||||||||||||||||||||
Loans pooled for
evaluation |
$ | 106,304 | $ | 641,933 | $ | 328,109 | $ | 45,554 | $ | 32,430 | $ | 14,953 | $ | 147,786 | $ | 4,330 | $ | 22,157 | $ | 1,343,556 | ||||||||||||||||||||
Loans acquired with
deteriorated
credit quality |
$ | 7,778 | $ | 29,800 | $ | 8,726 | | | | $ | 11,366 | $ | 4,738 | | $ | 62,408 | ||||||||||||||||||||||||
| Pass This grade represents loans ranging from acceptable to very little or no credit risk. These loans typically meet most if not all policy standards in regard to: loan amount as a percentage of collateral value, debt service coverage, profitability, leverage, and working capital. |
| Special Mention This grade represents Other Assets Especially Mentioned in accordance with regulatory guidelines and includes loans that display some potential weaknesses which, if left unaddressed, may result in deterioration of the repayment prospects for the asset or may inadequately protect the Companys position in the future. These loans warrant more than normal supervision and attention. |
| Substandard This grade represents Substandard loans in accordance with regulatory guidelines. Loans within this rating typically exhibit weaknesses that are well defined to the point that repayment is jeopardized. Loss potential is, however, not necessarily evident. The underlying collateral supporting the credit appears to have sufficient value to protect the Company from loss of principal and accrued interest, or the loan has been written down to the point where this is true. There is a definite need for a well defined workout/rehabilitation program. |
18
| Doubtful This grade represents Doubtful loans in accordance with regulatory guidelines. An asset classified as Doubtful has all the weaknesses inherent in a loan classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and financing plans. |
| Loss This grade represents Loss loans in accordance with regulatory guidelines. A loan classified as Loss is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan, even though some recovery may be affected in the future. The portion of the loan that is graded loss should be charged off no later than the end of the quarter in which the loss is identified. |
Credit Quality Indicators-As of June 30, 2011 | ||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||
Originated loans: |
||||||||||||||||||||||||||||||||||||||||
Pass |
$ | 104,754 | $ | 543,687 | $ | 310,264 | $ | 14,176 | $ | 15,261 | $ | 18,409 | $ | 116,396 | $ | 8,353 | $ | 8,855 | $ | 1,140,155 | ||||||||||||||||||||
Special mention |
1,282 | 50,797 | 1,219 | | 39 | 11 | 8,115 | 3,394 | 4,990 | 69,847 | ||||||||||||||||||||||||||||||
Substandard |
14,649 | 82,529 | 14,747 | 729 | 1,467 | 240 | 7,983 | 6,287 | 7,586 | 136,217 | ||||||||||||||||||||||||||||||
Loss |
| | | | | | | | | | ||||||||||||||||||||||||||||||
Total |
$ | 120,685 | $ | 677,013 | $ | 326,230 | $ | 14,905 | $ | 16,767 | $ | 18,660 | $ | 132,494 | $ | 18,034 | $ | 21,431 | $ | 1,346,219 | ||||||||||||||||||||
PCI loans |
$ | 6,398 | $ | 24,661 | $ | 6,302 | | | | $ | 8,037 | $ | 4,445 | | $ | 49,843 | ||||||||||||||||||||||||
Total loans |
$ | 127,083 | $ | 701,674 | $ | 332,532 | $ | 14,905 | $ | 16,767 | $ | 18,660 | $ | 140,531 | $ | 22,479 | $ | 21,431 | $ | 1,396,062 | ||||||||||||||||||||
Credit Quality Indicators-As of December 31, 2010 | ||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||
Originated loans: |
||||||||||||||||||||||||||||||||||||||||
Pass |
$ | 106,967 | $ | 543,492 | $ | 312,315 | $ | 16,740 | $ | 22,405 | $ | 15,363 | $ | 108,511 | $ | 8,190 | $ | 8,940 | $ | 1,142,923 | ||||||||||||||||||||
Special mention |
1,259 | 60,171 | 1,884 | 23 | 45 | 11 | 14,518 | 3,395 | 4,397 | 85,703 | ||||||||||||||||||||||||||||||
Substandard |
14,664 | 75,582 | 16,538 | 913 | 2,207 | 255 | 10,020 | 7,857 | 7,674 | 135,710 | ||||||||||||||||||||||||||||||
Total |
$ | 122,890 | $ | 679,245 | $ | 330,737 | $ | 17,676 | $ | 24,657 | $ | 15,629 | $ | 133,049 | $ | 19,442 | $ | 21,011 | $ | 1,364,336 | ||||||||||||||||||||
PCI loans |
$ | 7,597 | $ | 25,739 | $ | 7,072 | | | | $ | 10,364 | $ | 4,463 | | $ | 55,235 | ||||||||||||||||||||||||
Total loans |
$ | 130,487 | $ | 704,984 | $ | 337,809 | $ | 17,676 | $ | 24,657 | $ | 15,629 | $ | 143,413 | $ | 23,905 | $ | 21,011 | $ | 1,419,571 | ||||||||||||||||||||
19
Analysis of Past Due and Nonaccrual Originated Loans-As of June 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | |||||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | |||||||||||||||||||||||||||||||||
Originated loans: |
|||||||||||||||||||||||||||||||||||||||||||
Past due: |
|||||||||||||||||||||||||||||||||||||||||||
30-59 Days |
$ | 359 | $ | 13,138 | $ | 3,479 | $ | 318 | $ | 464 | $ | 69 | $ | 1,463 | $ | 64 | $ | 5,180 | $ | 24,534 | |||||||||||||||||||||||
60-89 Days |
122 | 963 | 2,233 | 80 | 184 | 16 | 442 | 337 | 400 | 4,777 | |||||||||||||||||||||||||||||||||
> 90 Days |
4,543 | 10,595 | 3,256 | 138 | 247 | | 2,840 | 547 | 476 | 22,642 | |||||||||||||||||||||||||||||||||
Total past due |
5,024 | 24,696 | 8,968 | 536 | 895 | 85 | 4,745 | 948 | 6,056 | 51,953 | |||||||||||||||||||||||||||||||||
Current |
115,661 | 652,317 | 317,262 | 14,369 | 15,872 | 18,575 | 127,749 | 17,086 | 15,375 | 1,294,266 | |||||||||||||||||||||||||||||||||
Total loans |
$ | 120,685 | $ | 677,013 | $ | 326,230 | $ | 14,905 | $ | 16,767 | $ | 18,660 | $ | 132,494 | $ | 18,034 | $ | 21,431 | $ | 1,346,219 | |||||||||||||||||||||||
> 90 Days and
still accruing |
| | | | | | | | | | |||||||||||||||||||||||||||||||||
Nonaccrual loans |
$ | 10,623 | $ | 42,832 | $ | 7,363 | $ | 426 | $ | 864 | $ | 93 | $ | 4,180 | $ | 6,250 | $ | 1,089 | $ | 73,720 | |||||||||||||||||||||||
Analysis of Past Due and Nonaccrual PCI Loans-As of June 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | |||||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | |||||||||||||||||||||||||||||||||
PCI Loans: |
|||||||||||||||||||||||||||||||||||||||||||
Past due: |
|||||||||||||||||||||||||||||||||||||||||||
30-59 Days |
| $ | 333 | | | | | | $ | 528 | | $ | 861 | ||||||||||||||||||||||||||||||
60-89 Days |
| | 110 | | | | 796 | | | 906 | |||||||||||||||||||||||||||||||||
> 90 Days |
| 1,549 | 335 | | | | 771 | 30 | | 2,685 | |||||||||||||||||||||||||||||||||
Total past due |
| 1,882 | 445 | | | | 1,567 | 558 | | 4,452 | |||||||||||||||||||||||||||||||||
Current |
6,398 | 22,779 | 5,857 | | | | 6,470 | 3,887 | | 45,391 | |||||||||||||||||||||||||||||||||
Total PCI loans |
$ | 6,398 | $ | 24,661 | $ | 6,302 | | | | $ | 8,037 | $ | 4,445 | | $ | 49,843 | |||||||||||||||||||||||||||
20
Analysis of Past Due and Nonaccrual Originated Loans-As of December 31, 2010 | |||||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | |||||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | |||||||||||||||||||||||||||||||||
Originated loans: |
|||||||||||||||||||||||||||||||||||||||||||
Past due: |
|||||||||||||||||||||||||||||||||||||||||||
30-59 Days |
$ | 2,822 | $ | 11,191 | $ | 3,546 | $ | 158 | $ | 604 | $ | 68 | $ | 1,405 | $ | 270 | | $ | 20,064 | ||||||||||||||||||||||||
60-89 Days |
1,139 | 1,864 | 2,209 | | 401 | 33 | 893 | | 275 | 6,814 | |||||||||||||||||||||||||||||||||
> 90 Days |
7,980 | 20,748 | 6,843 | 694 | 403 | 7 | 401 | 1,781 | 612 | 39,469 | |||||||||||||||||||||||||||||||||
Total past due |
11,941 | 33,803 | 12,598 | 852 | 1,408 | 108 | 2,699 | 2,051 | 887 | 66,347 | |||||||||||||||||||||||||||||||||
Current |
110,949 | 645,442 | 318,139 | 16,824 | 23,249 | 15,521 | 130,350 | 17,391 | 20,124 | 1,297,989 | |||||||||||||||||||||||||||||||||
Total loans |
$ | 122,890 | $ | 679,245 | $ | 330,737 | $ | 17,676 | $ | 24,657 | $ | 15,629 | $ | 133,049 | $ | 19,442 | $ | 21,011 | $ | 1,364,336 | |||||||||||||||||||||||
> 90 Days and
still accruing |
| $ | 147 | | | | | | $ | 98 | | $ | 245 | ||||||||||||||||||||||||||||||
Nonaccrual loans |
$ | 11,771 | $ | 38,778 | $ | 10,604 | $ | 701 | $ | 1,296 | $ | 83 | $ | 4,618 | $ | 7,019 | $ | 872 | $ | 75,742 | |||||||||||||||||||||||
Analysis of Past Due and Nonaccrual PCI Loans-As of December 31, 2010 | ||||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||||
PCI Loans: |
||||||||||||||||||||||||||||||||||||||||||
Past due: |
||||||||||||||||||||||||||||||||||||||||||
30-59 Days |
| $ | 1,749 | | | | | $ | 241 | | | $ | 1,990 | |||||||||||||||||||||||||||||
60-89 Days |
| 353 | 505 | | | | 79 | | | 937 | ||||||||||||||||||||||||||||||||
> 90 Days |
562 | 300 | 34 | | | | 2,299 | 358 | | 3,553 | ||||||||||||||||||||||||||||||||
Total past due |
562 | 2,402 | 539 | | | | 2,619 | 358 | | 6,480 | ||||||||||||||||||||||||||||||||
Current |
7,689 | 28,197 | 8,331 | | | | 8,797 | 4,855 | | 57,869 | ||||||||||||||||||||||||||||||||
Total PCI loans |
$ | 8,251 | $ | 30,599 | $ | 8,870 | | | | $ | 11,416 | $ | 5,213 | | $ | 64,349 | ||||||||||||||||||||||||||
21
Impaired Originated Loans-As June 30, 2011 | ||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||
With no related
allowance recorded: |
||||||||||||||||||||||||||||||||||||||||
Recorded investment |
$ | 7,613 | $ | 44,873 | $ | 4,311 | $ | 362 | $ | 548 | $ | 34 | $ | 4,791 | $ | 4,501 | $ | 6,472 | $ | 73,505 | ||||||||||||||||||||
Unpaid principal |
$ | 10,165 | $ | 51,637 | $ | 7,009 | $ | 783 | $ | 1,005 | $ | 37 | $ | 5,815 | $ | 9,280 | $ | 6,666 | $ | 92,397 | ||||||||||||||||||||
Average recorded
Investment |
$ | 6,903 | $ | 45,180 | $ | 4,833 | $ | 527 | $ | 631 | $ | 42 | $ | 4,846 | $ | 5,288 | $ | 6,541 | $ | 74,791 | ||||||||||||||||||||
Interest income Recognized |
$ | 13 | $ | 814 | $ | 4 | $ | 3 | $ | 6 | $ | 1 | $ | 57 | $ | 2 | $ | 189 | $ | 1,089 | ||||||||||||||||||||
With an
allowance recorded: |
||||||||||||||||||||||||||||||||||||||||
Recorded investment |
$ | 3,679 | $ | 20,861 | $ | 3,960 | $ | 130 | $ | 388 | $ | 59 | $ | 594 | $ | 1,749 | $ | 857 | $ | 32,277 | ||||||||||||||||||||
Unpaid principal |
$ | 4,069 | $ | 23,516 | $ | 4,603 | $ | 295 | $ | 476 | $ | 63 | $ | 743 | $ | 2,706 | $ | 906 | $ | 37,377 | ||||||||||||||||||||
Related allowance |
$ | 955 | $ | 2,181 | $ | 1,408 | $ | 129 | $ | 113 | $ | 22 | $ | 206 | $ | 286 | $ | 509 | $ | 5,809 | ||||||||||||||||||||
Average recorded
Investment |
$ | 4,827 | $ | 15,105 | $ | 4,661 | $ | 105 | $ | 528 | $ | 47 | $ | 838 | $ | 1,300 | $ | 843 | $ | 28,254 | ||||||||||||||||||||
Interest income
Recognized |
$ | 17 | $ | 408 | $ | 24 | $ | 1 | $ | 2 | | $ | 8 | $ | (18 | ) | $ | 6 | $ | 448 | ||||||||||||||||||||
Impaired Originated Loans-As of December 31, 2010 | ||||||||||||||||||||||||||||||||||||||||
RE Mortgage | Home Equity | Auto | Other | Construction | ||||||||||||||||||||||||||||||||||||
(in thousands) | Resid. | Comm. | Lines | Loans | Indirect | Consum. | C&I | Resid. | Comm. | Total | ||||||||||||||||||||||||||||||
With no related
allowance recorded: |
||||||||||||||||||||||||||||||||||||||||
Recorded investment |
$ | 6,192 | $ | 45,487 | $ | 5,354 | $ | 691 | $ | 714 | $ | 49 | $ | 4,900 | $ | 6,075 | $ | 6,609 | $ | 76,071 | ||||||||||||||||||||
Unpaid principal |
$ | 7,521 | $ | 52,962 | $ | 8,755 | $ | 1,002 | $ | 1,349 | $ | 52 | $ | 5,571 | $ | 10,854 | $ | 6,797 | $ | 94,863 | ||||||||||||||||||||
Average recorded
Investment |
$ | 4,599 | $ | 32,575 | $ | 4,688 | $ | 425 | $ | 607 | $ | 66 | $ | 3,330 | $ | 8,137 | $ | 3,962 | $ | 58,389 | ||||||||||||||||||||
Interest income
Recognized |
$ | 99 | $ | 1,609 | $ | 93 | $ | 17 | $ | 37 | $ | 4 | $ | 186 | $ | 123 | $ | 377 | $ | 2,545 | ||||||||||||||||||||
With an
allowance recorded: |
||||||||||||||||||||||||||||||||||||||||
Recorded investment |
$ | 5,975 | $ | 9,349 | $ | 5,362 | $ | 79 | $ | 667 | $ | 34 | $ | 1,081 | $ | 850 | $ | 828 | $ | 24,225 | ||||||||||||||||||||
Unpaid principal |
$ | 6,278 | $ | 11,122 | $ | 6,379 | $ | 82 | $ | 793 | $ | 37 | $ | 1,398 | $ | 1,235 | $ | 898 | $ | 28,222 | ||||||||||||||||||||
Related allowance |
$ | 1,654 | $ | 1,042 | $ | 2,933 | $ | 78 | $ | 239 | $ | 14 | $ | 590 | $ | 116 | $ | 279 | $ | 6,945 | ||||||||||||||||||||
Average recorded
Investment |
$ | 4,204 | $ | 5,844 | $ | 4,373 | $ | 326 | $ | 1,112 | $ | 84 | $ | 1,285 | $ | 1,597 | $ | 563 | $ | 19,388 | ||||||||||||||||||||
Interest income
Recognized |
$ | 222 | $ | 506 | $ | 129 | $ | 5 | $ | 17 | $ | 1 | $ | 46 | $ | 14 | $ | 22 | $ | 962 | ||||||||||||||||||||
22
Six months ended June 30, 2011 | Six months ended June 30, 2010 | |||||||||||||||||||||||
Noncovered | Covered | Total | Noncovered | Covered | Total | |||||||||||||||||||
Beginning balance, net |
$ | 5,000 | $ | 4,913 | $ | 9,913 | $ | 3,726 | | $ | 3,726 | |||||||||||||
Additions/transfers from loans |
4,271 | | 4,271 | 3,788 | $ | 4,629 | 8,417 | |||||||||||||||||
Dispositions/sales |
(2,914 | ) | (846 | ) | (3,760 | ) | (1,838 | ) | ($305 | ) | (2,143 | ) | ||||||||||||
Valuation adjustments |
(493 | ) | (594 | ) | (1,087 | ) | (55 | ) | | (55 | ) | |||||||||||||
Ending balance, net |
$ | 5,864 | $ | 3,473 | $ | 9,337 | $ | 5,621 | $ | 4,324 | $ | 9,945 | ||||||||||||
Ending valuation allowance |
($896 | ) | ($740 | ) | ($1,636 | ) | ($241 | ) | | ($241 | ) | |||||||||||||
Ending number of foreclosed assets |
47 | 11 | 58 | 26 | 10 | 36 | ||||||||||||||||||
Proceeds from sale of foreclosed assets |
$ | 3,167 | $ | 978 | $ | 4,145 | $ | 2,192 | $ | 305 | $ | 2,497 | ||||||||||||
Gain (loss) on sale of foreclosed assets |
$ | 253 | $ | 132 | $ | 385 | $ | 350 | | $ | 350 | |||||||||||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Premises |
$ | 20,321 | $ | 19,902 | ||||
Furniture and equipment |
24,536 | 26,009 | ||||||
44,857 | 45,911 | |||||||
Less: Accumulated depreciation |
(28,452 | ) | (30,556 | ) | ||||
16,405 | 15,355 | |||||||
Land and land improvements |
3,737 | 3,765 | ||||||
$ | 20,142 | $ | 19,120 | |||||
Six months ended June 30, | ||||||||
2011 | 2010 | |||||||
Beginning balance |
$ | 50,541 | $ | 48,694 | ||||
Increase in cash value of life insurance |
900 | 852 | ||||||
Ending balance |
$ | 51,441 | $ | 49,546 | ||||
December 31, | June 30, | |||||||||||||||
(Dollar in Thousands) | 2010 | Additions | Reductions | 2011 | ||||||||||||
Goodwill |
$ | 15,519 | | | $ | 15,519 | ||||||||||
December 31, | June 30, | |||||||||||||||
(Dollar in Thousands) | 2010 | Additions | Reductions | 2011 | ||||||||||||
Core deposit intangibles |
$ | 3,927 | | | $ | 3,927 | ||||||||||
Accumulated amortization |
(3,347 | ) | | (105 | ) | (3,452 | ) | |||||||||
Core deposit intangibles, net |
$ | 580 | | $ | (105 | ) | $ | 475 | ||||||||
23
Estimated Core Deposit | ||||
Years Ended | Intangible Amortization | |||
2011 |
$ | 145 | ||
2012 |
81 | |||
2013 |
81 | |||
2014 |
80 | |||
2015 |
80 | |||
Thereafter |
113 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Mortgage servicing rights: | ||||||||||||||||
Balance at beginning of period |
$ | 4,808 | $ | 4,310 | $ | 4,605 | $ | 4,089 | ||||||||
Additions |
172 | 292 | 435 | 562 | ||||||||||||
Change in fair value |
(162 | ) | (569 | ) | (222 | ) | (618 | ) | ||||||||
Balance at end of period |
$ | 4,818 | $ | 4,033 | $ | 4,818 | $ | 4,033 | ||||||||
Servicing, late and ancillary fees received |
$ | 370 | $ | 315 | $ | 731 | $ | 622 | ||||||||
Balance of loans serviced at: |
||||||||||||||||
Beginning of period |
$ | 583,625 | $ | 518,803 | $ | 573,300 | $ | 505,947 | ||||||||
End of period |
$ | 584,113 | $ | 527,436 | $ | 584,113 | $ | 527,436 | ||||||||
Weighted-average prepayment speed (CPR) |
14.5 | % | 18.0 | % | ||||||||||||
Discount rate |
9.0 | % | 9.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Beginning balance |
$ | 6,689 | | $ | 5,640 | | ||||||||||
Effect of actual covered losses and
change in estimated future covered losses |
204 | $ | 7,515 | 1,885 | $ | 7,515 | ||||||||||
Reimbursable expenses (revenue), net |
(19 | ) | | 103 | | |||||||||||
Payments received |
(2,329 | ) | | (3,083 | ) | | ||||||||||
Ending balance |
$ | 4,545 | $ | 7,515 | $ | 4,545 | $ | 7,515 | ||||||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Deferred tax asset, net |
$ | 26,786 | $ | 28,046 | ||||
Software |
1,044 | 1,127 | ||||||
Prepaid expenses & miscellaneous other assets |
13,804 | 8,109 | ||||||
Total other assets |
$ | 41,634 | $ | 37,282 | ||||
24
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Noninterest-bearing demand |
$ | 419,391 | $ | 424,070 | ||||
Interest-bearing demand |
401,040 | 395,413 | ||||||
Savings |
618,413 | 585,850 | ||||||
Time certificates, $100,000 and over |
207,843 | 235,992 | ||||||
Other time certificates |
190,044 | 210,848 | ||||||
Total deposits |
$ | 1,836,731 | $ | 1,852,173 | ||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Balance at beginning of period |
$ | 2,690 | $ | 3,640 | $ | 2,640 | $ | 3,640 | ||||||||
Provision for losses unfunded commitments |
(50 | ) | (800 | ) | | (800 | ) | |||||||||
Balance at end of period |
$ | 2,640 | $ | 2,840 | $ | 2,640 | $ | 2,840 | ||||||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Deferred compensation |
$ | 8,364 | $ | 8,289 | ||||
Supplemental retirement |
10,489 | 9,873 | ||||||
Additional minimum pension liability |
5,770 | 5,770 | ||||||
Joint beneficiary agreements |
1,964 | 1,851 | ||||||
Miscellaneous other liabilities |
2,974 | 3,387 | ||||||
Total other liabilities |
$ | 29,561 | $ | 29,170 | ||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Borrowing under security repurchase agreement, rate is fixed at 4.72%
and principal is callable in its entirety by lender on a quarterly basis
until final maturity on August 30, 2012. |
$ | 50,000 | $ | 50,000 | ||||
Other collateralized borrowings, fixed rate, as of
June 30, 2011 of 0.15% payable on July 1, 2011 |
9,234 | 12,020 | ||||||
Total other borrowings |
$ | 59,234 | $ | 62,020 | ||||
25
26
June 30, | December 31, | |||||||
(in thousands) | 2011 | 2010 | ||||||
Financial instruments whose amounts represent risk: |
||||||||
Commitments to extend credit: |
||||||||
Commercial loans |
$ | 124,090 | $ | 116,785 | ||||
Consumer loans |
378,328 | 380,269 | ||||||
Real estate mortgage loans |
17,151 | 14,366 | ||||||
Real estate construction loans |
5,043 | 7,174 | ||||||
Standby letters of credit |
5,017 | 5,022 | ||||||
Deposit account overdraft privilege |
55,993 | 38,600 |
27
28
Weighted | Weighted | |||||||||||||||||||||||
Average | Average Fair | |||||||||||||||||||||||
Number | Option Price | Exercise | Value on | |||||||||||||||||||||
of Shares | per Share | Price | Date of Grant | |||||||||||||||||||||
Outstanding at December 31, 2010 |
1,425,185 | $ | 8.05 | to | $ | 25.91 | $ | 15.78 | ||||||||||||||||
Options granted |
| | to | | | | ||||||||||||||||||
Options exercised |
(296,250 | ) | $ | 8.05 | to | $ | 8.20 | $ | 8.20 | |||||||||||||||
Options forfeited |
| | to | | | |||||||||||||||||||
Outstanding at June 30, 2011 |
1,128,935 | $ | 11.72 | to | $ | 25.91 | $ | 17.77 |
Currently | Currently Not | Total | ||||||||||
(dollars in thousands except exercise price) | Exercisable | Exercisable | Outstanding | |||||||||
Number of options |
918,845 | 210,090 | 1,128,935 | |||||||||
Weighted average exercise price |
$ | 17.68 | $ | 18.16 | $ | 17.77 | ||||||
Intrinsic value (thousands) |
$ | 563 | $ | 24 | $ | 587 | ||||||
Weighted average remaining contractual term (yrs.) |
3.82 | 7.96 | 4.59 |
29
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Service charges on deposit accounts |
$ | 3,700 | $ | 4,443 | $ | 7,130 | $ | 8,221 | ||||||||
ATM and interchange fees |
1,776 | 1,531 | 3,421 | 2,899 | ||||||||||||
Other service fees |
437 | 362 | 843 | 692 | ||||||||||||
Mortgage banking service fees |
370 | 315 | 731 | 623 | ||||||||||||
Change in value of mortgage servicing rights |
(162 | ) | (569 | ) | (222 | ) | (618 | ) | ||||||||
Total service charges and fees |
6,121 | 6,082 | 11,903 | 11,817 | ||||||||||||
Gain on sale of loans |
495 | 577 | 1,220 | 1,162 | ||||||||||||
Commissions on sale of non-deposit investment products |
648 | 362 | 1,008 | 629 | ||||||||||||
Increase in cash value of life insurance |
450 | 426 | 900 | 852 | ||||||||||||
Change in indemnification asset |
144 | | 1,836 | | ||||||||||||
Gain on sale of foreclosed assets |
185 | 310 | 385 | 350 | ||||||||||||
Legal settlement |
| | | 400 | ||||||||||||
Sale of customer checks |
67 | 54 | 126 | 102 | ||||||||||||
Lease brokerage income |
95 | 21 | 128 | 58 | ||||||||||||
Gain (loss) on disposal of fixed assets |
(6 | ) | (15 | ) | (15 | ) | (40 | ) | ||||||||
Commission rebates |
(16 | ) | (17 | ) | (33 | ) | (33 | ) | ||||||||
Bargain purchase gain on acquisition |
| 232 | | 232 | ||||||||||||
Other |
68 | 72 | 143 | 122 | ||||||||||||
Total other noninterest income |
2,130 | 2,022 | 5,698 | 3,834 | ||||||||||||
Total noninterest income |
$ | 8,251 | $ | 8,104 | $ | 17,601 | $ | 15,651 | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Base salaries, net of deferred loan origination costs |
$ | 7,198 | $ | 6,990 | $ | 14,202 | $ | 13,964 | ||||||||
Incentive compensation |
783 | 526 | 1,699 | 1,072 | ||||||||||||
Benefits and other compensation costs |
2,734 | 2,469 | 5,607 | 5,099 | ||||||||||||
Total salaries and benefits expense |
10,715 | 9,985 | 21,508 | 20,135 | ||||||||||||
Occupancy |
1,402 | 1,407 | 2,862 | 2,736 | ||||||||||||
Equipment |
880 | 1,060 | 1,801 | 2,034 | ||||||||||||
Data processing and software |
956 | 661 | 1,808 | 1,336 | ||||||||||||
ATM network charges |
507 | 446 | 989 | 904 | ||||||||||||
Telecommunications |
520 | 461 | 926 | 874 | ||||||||||||
Postage |
219 | 311 | 435 | 558 | ||||||||||||
Courier service |
221 | 201 | 429 | 398 | ||||||||||||
Advertising |
739 | 627 | 1,171 | 1,148 | ||||||||||||
Assessments |
518 | 812 | 1,385 | 1,596 | ||||||||||||
Operational losses |
118 | 120 | 227 | 187 | ||||||||||||
Professional fees |
573 | 704 | 860 | 1,420 | ||||||||||||
Foreclosed assets expense |
115 | 66 | 282 | 263 | ||||||||||||
Provision for foreclosed asset losses |
638 | 55 | 1,087 | 55 | ||||||||||||
Change in reserve for unfunded commitments |
(50 | ) | (800 | ) | | (800 | ) | |||||||||
Intangible amortization |
20 | 72 | 105 | 137 | ||||||||||||
Other |
2,004 | 2,220 | 3,891 | 4,230 | ||||||||||||
Total other noninterest expense |
9,380 | 8,423 | 18,258 | 17,076 | ||||||||||||
Total noninterest income |
$ | 20,095 | $ | 18,408 | $ | 39,766 | $ | 37,211 | ||||||||
30
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Federal statutory income tax rate |
35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||
State income taxes, net of federal tax benefit |
5.7 | 3.8 | 5.7 | 4.1 | ||||||||||||
Tax-exempt interest on municipal obligations |
(1.1 | ) | (3.5 | ) | (1.1 | ) | (3.3 | ) | ||||||||
Increase in cash value of insurance policies |
(3.6 | ) | (8.1 | ) | (3.6 | ) | (7.4 | ) | ||||||||
Other |
0.2 | 0.7 | 0.2 | 0.5 | ||||||||||||
Effective Tax Rate |
36.2 | % | 27.9 | % | 36.2 | % | 29.0 | % | ||||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net income |
$ | 2,771 | $ | 1,320 | $ | 5,571 | $ | 2,878 | ||||||||
Average number of common shares outstanding |
15,922 | 15,860 | 15,891 | 15,841 | ||||||||||||
Effect of dilutive stock options |
32 | 248 | 98 | 250 | ||||||||||||
Average number of common shares outstanding
used to calculate diluted earnings per share |
15,954 | 16,108 | 15,989 | 16,091 | ||||||||||||
Options excluded from diluted earnings per share
because the effect of these optioins was antidilutive |
826 | 341 | 795 | 362 |
Three months ended | Six months ended | |||||||||||||||
June 30, | June, 30 | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in thousands) |
||||||||||||||||
Unrealized holding gains (losses) on
available-for-sale securities |
$ | 2,689 | $ | 3,588 | $ | 2,302 | $ | 3,200 | ||||||||
Tax effect |
(1,131 | ) | (1,183 | ) | (968 | ) | (1,346 | ) | ||||||||
Unrealized holding gains (losses) on
available-for-sale securities, net of tax |
$ | 1,558 | $ | 2,405 | $ | 1,334 | $ | 1,854 | ||||||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Net unrealized gains (losses) on available-for-sale securities |
$ | 10,238 | $ | 7,936 | ||||
Tax effect |
(4,305 | ) | (3,337 | ) | ||||
Unrealized holding gains (losses) on available-for-sale securities, net of tax |
5,933 | 4,599 | ||||||
Minimum pension liability |
(5,770 | ) | (5,770 | ) | ||||
Tax effect |
2,426 | 2,426 | ||||||
Minimum pension liability, net of tax |
(3,344 | ) | (3,344 | ) | ||||
Joint beneficiary agreement liability |
96 | 96 | ||||||
Tax effect |
(41 | ) | (41 | ) | ||||
Joint beneficiary agreement liability, net of tax |
55 | 55 | ||||||
Accumulated other comprehensive income (loss) |
$ | 2,644 | $ | 1,310 | ||||
31
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net pension cost included the following components: |
||||||||||||||||
Service cost-benefits earned during the period |
$ | 165 | $ | 131 | $ | 329 | $ | 262 | ||||||||
Interest cost on projected benefit obligation |
210 | 191 | 420 | 382 | ||||||||||||
Amortization of net obligation at transition |
| | 1 | 1 | ||||||||||||
Amortization of prior service cost |
38 | 38 | 76 | 76 | ||||||||||||
Recognized net actuarial loss |
97 | 55 | 193 | 109 | ||||||||||||
Net periodic pension cost |
$ | 510 | $ | 415 | $ | 1,019 | $ | 830 | ||||||||
Company contributions to pension plans |
$ | 226 | $ | 189 | $ | 403 | $ | 379 | ||||||||
Pension plan payouts to participants |
$ | 226 | $ | 189 | $ | 403 | $ | 379 |
Balance December 31, 2009 |
$ | 5,245 | ||
Advances/new loans |
1,999 | |||
Removed/payments |
(4,673 | ) | ||
Balance December 31, 2010 |
$ | 2,571 | ||
Advances/new loans |
200 | |||
Removed/payments |
(629 | ) | ||
Balance June 30, 2011 |
$ | 2,142 | ||
Level 1 | Valuation is based upon quoted prices for identical instruments traded in active markets. | |
Level 2 | Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |
Level 3 | Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. |
32
Fair value at June 30, 2011 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Securities available-for-sale: |
||||||||||||||||
Obligations
of U.S. government corporations and agencies |
$ | 252,832 | | $ | 252,832 | | ||||||||||
Obligations of states and
political subdivisions |
12,160 | | 12,160 | | ||||||||||||
Mortgage servicing rights |
4,818 | | | 4,818 | ||||||||||||
Total assets measured at fair value |
$ | 269,810 | | $ | 264,992 | $ | 4,818 | |||||||||
Fair value at December 31, 2010 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Securities available-for-sale: |
||||||||||||||||
Obligations of U.S. government
corporations and agencies |
$ | 264,181 | | $ | 264,181 | | ||||||||||
Obligations of states and
political subdivisions |
12,541 | | 12,541 | | ||||||||||||
Corporate debt securities |
549 | | 549 | | ||||||||||||
Mortgage servicing rights |
4,605 | | | 4,605 | ||||||||||||
Total assets measured at fair value |
$ | 281,876 | | $ | 277,271 | $ | 4,605 | |||||||||
33
Change | ||||||||||||||||||||
Beginning | Transfers | Included | Ending | |||||||||||||||||
Three months ended June 30, | Balance | into Level 3 | in Earnings | Issuances | Balance | |||||||||||||||
2011: Mortgage servicing rights |
$ | 4,808 | | $ | (162 | ) | $ | 172 | $ | 4,818 | ||||||||||
2010: Mortgage servicing rights |
$ | 4,310 | | $ | (569 | ) | $ | 292 | $ | 4,033 |
Change | ||||||||||||||||||||
Beginning | Transfers | Included | Ending | |||||||||||||||||
Six months ended June 30, | Balance | into Level 3 | in Earnings | Issuances | Balance | |||||||||||||||
2011: Mortgage servicing rights |
$ | 4,605 | | $ | (222 | ) | $ | 435 | $ | 4,818 | ||||||||||
2010: Mortgage servicing rights |
$ | 4,089 | | $ | (618 | ) | $ | 562 | $ | 4,033 |
As of June 30, 2011 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Fair value: |
||||||||||||||||
Impaired originated loans |
$ | 37,189 | | | $ | 37,189 | ||||||||||
Noncovered foreclosed assets |
5,864 | | | 5,864 | ||||||||||||
Covered foreclosed assets |
3,473 | | | 3,473 | ||||||||||||
Total assets measured at fair value |
$ | 46,526 | | | $ | 46,526 | ||||||||||
As of June 30, 2010 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Fair value: |
||||||||||||||||
Impaired originated loans |
$ | 24,992 | | | $ | 24,992 | ||||||||||
Noncovered foreclosed assets |
5,621 | | | 5,621 | ||||||||||||
Covered foreclosed assets |
4,324 | | | 4,324 | ||||||||||||
Total assets measured at fair value |
$34,937 | | | $ | 34,937 | |||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Impaired originated loan |
$ | 5,551 | $ | 4,686 | $ | 7,676 | $ | 6,821 | ||||||||
Non-covered foreclosed assets |
425 | 55 | 493 | 55 | ||||||||||||
Covered foreclosed assets |
213 | | 594 | | ||||||||||||
Total loss from nonrecurring fair value adjustments |
$ | 6,189 | $ | 4,741 | $ | 8,763 | $ | 6,876 | ||||||||
34
June 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Financial assets: |
||||||||||||||||
Cash and due from banks |
$ | 52,874 | $ | 52,784 | $ | 57,254 | $ | 57,254 | ||||||||
Cash at Federal Reserve and other banks |
338,180 | 338,180 | 313,812 | 313,812 | ||||||||||||
Securities available-for-sale |
264,992 | 264,992 | 277,271 | 277,271 | ||||||||||||
Restricted equity securities |
9,199 | 9,199 | 9,133 | 9,133 | ||||||||||||
Loans held for sale |
4,379 | 4,379 | 4,988 | 4,988 | ||||||||||||
Loans, net |
1,396,062 | 1,461,021 | 1,377,000 | 1,451,151 | ||||||||||||
Cash value of life insurance |
51,441 | 51,441 | 50,541 | 50,541 | ||||||||||||
Mortgage servicing rights |
4,818 | 4,818 | 4,605 | 4,605 | ||||||||||||
Indemnification asset |
4,545 | 4,545 | 5,640 | 5,640 | ||||||||||||
Financial liabilities: |
||||||||||||||||
Deposits |
1,836,731 | 1,839,626 | 1,852,173 | 1,854,763 | ||||||||||||
Other borrowings |
59,234 | 61,716 | 62,020 | 65,716 | ||||||||||||
Junior subordinated debt |
41,238 | 23,093 | 41,238 | 21,444 |
Contract | Fair | Contract | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Off-balance sheet: |
||||||||||||||||
Commitments |
$ | 524,612 | $ | 5,246 | $ | 518,595 | $ | 5,186 | ||||||||
Standby letters of credit |
5,017 | 50 | 5,022 | 50 | ||||||||||||
Overdraft privilege commitments |
55,993 | 560 | 38,600 | 386 |
35
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Interest Income (FTE) |
$ | 21,833 | $ | 22,245 | $ | 43,620 | $ | 44,346 | ||||||||
Provision for loan losses |
(5,561 | ) | (10,000 | ) | (12,562 | ) | (18,500 | ) | ||||||||
Noninterest income |
8,251 | 8,104 | 17,601 | 15,651 | ||||||||||||
Noninterest expense |
(20,095 | ) | (18,408 | ) | 39,766 | (37,211 | ) | |||||||||
Provision for income taxes (FTE) |
(1,657 | ) | (621 | ) | (3,322 | ) | (1,408 | ) | ||||||||
Net income |
$ | 2,771 | $ | 1,320 | $ | 5,571 | $ | 2,878 | ||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | 0.17 | $ | 0.08 | $ | 0.35 | $ | 0.18 | ||||||||
Diluted |
$ | 0.17 | $ | 0.08 | $ | 0.35 | $ | 0.18 | ||||||||
Per share: |
||||||||||||||||
Dividends paid |
$ | 0.09 | $ | 0.09 | $ | 0.18 | $ | 0.22 | ||||||||
Book value at period end |
$ | 12.82 | $ | 12.76 | ||||||||||||
Tangible book value at period end |
$ | 11.82 | $ | 11.74 | ||||||||||||
Average common shares outstanding |
15,922 | 15,860 | 15,891 | 15,841 | ||||||||||||
Average diluted common shares outstanding |
15,953 | 16,108 | 15,988 | 16,091 | ||||||||||||
Shares outstanding at period end |
15,979 | 15,860 | ||||||||||||||
At period end: |
||||||||||||||||
Loans, net |
$ | 1,352,100 | $ | 1,466,669 | ||||||||||||
Total assets |
2,176,184 | 2,224,645 | ||||||||||||||
Total deposits |
1,836,731 | 1,889,949 | ||||||||||||||
Other borrowings |
59,234 | 60,452 | ||||||||||||||
Junior subordinated debt |
41,238 | 41,238 | ||||||||||||||
Shareholders equity |
$ | 204,915 | $ | 202,422 | ||||||||||||
Financial Ratios: |
||||||||||||||||
During the period (annualized): |
||||||||||||||||
Return on assets |
0.51 | % | 0.24 | % | 0.51 | % | 0.26 | % | ||||||||
Return on equity |
5.39 | % | 2.61 | % | 5.44 | % | 2.82 | % | ||||||||
Net interest margin1 |
4.31 | % | 4.41 | % | 4.31 | % | 4.40 | % | ||||||||
Net loan charge-offs to average loans |
1.38 | % | 2.16 | % | 1.60 | % | 2.12 | % | ||||||||
Efficiency ratio1 |
66.8 | % | 60.7 | % | 65.0 | % | 62.0 | % | ||||||||
Average equity to average assets |
9.38 | % | 9.29 | % | 9.34 | % | 9.35 | % | ||||||||
At period end: |
||||||||||||||||
Equity to assets |
9.42 | % | 8.43 | % | ||||||||||||
Total capital to risk-adjusted assets |
14.55 | % | 13.55 | % |
1 | Fully taxable equivalent (FTE) |
36
37
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Interest Income (FTE) |
$ | 21,833 | $ | 22,245 | $ | 43,620 | $ | 44,346 | ||||||||
Provision for loan losses |
(5,561 | ) | (10,000 | ) | (12,562 | ) | (18,500 | ) | ||||||||
Noninterest income |
8,251 | 8,104 | 17,601 | 15,651 | ||||||||||||
Noninterest expense |
(20,095 | ) | (18,408 | ) | (39,766 | ) | (37,211 | ) | ||||||||
Provision for income taxes (FTE) |
(1,657 | ) | (621 | ) | (3,322 | ) | (1,408 | ) | ||||||||
Net income |
$ | 2,771 | $ | 1,320 | $ | 5,571 | $ | 2,878 | ||||||||
Three months ended | Six month ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Interest income |
$ | 24,467 | $ | 25,776 | $ | 48,901 | $ | 51,712 | ||||||||
Interest expense |
(2,714 | ) | (3,642 | ) | (5,444 | ) | (7,600 | ) | ||||||||
FTE adjustment |
80 | 111 | 163 | 234 | ||||||||||||
Net interest income (FTE) |
$ | 21,833 | $ | 22,245 | $ | 43,620 | $ | 44,346 | ||||||||
Net interest margin (FTE) |
4.31 | % | 4.41 | % | 4.31 | % | 4.40 | % | ||||||||
38
For the three months ended | ||||||||||||||||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||
Interest | Rates | Interest | Rates | |||||||||||||||||||||
Average | Income/ | Earned | Average | Income/ | Earned | |||||||||||||||||||
Balance | Expense | /Paid | Balance | Expense | /Paid | |||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Loans |
$ | 1,393,989 | $ | 21,735 | 6.24 | % | $ | 1,463,475 | $ | 22,701 | 6.20 | % | ||||||||||||
Investment securities taxable |
271,089 | 2,354 | 3.47 | % | 278,799 | 2,733 | 3.92 | % | ||||||||||||||||
Investment securities nontaxable |
11,839 | 216 | 7.31 | % | 15,502 | 299 | 7.71 | % | ||||||||||||||||
Cash at Federal Reserve and other banks |
351,512 | 242 | 0.28 | % | 261,910 | 154 | 0.24 | % | ||||||||||||||||
Total interest-earning assets |
2,028,429 | 24,547 | 4.84 | % | 2,019,686 | 25,887 | 5.13 | % | ||||||||||||||||
Other assets |
164,222 | 171,974 | ||||||||||||||||||||||
Total assets |
$ | 2,192,651 | $ | 2,191,660 | ||||||||||||||||||||
Liabilities and shareholders equity: |
||||||||||||||||||||||||
Interest-bearing demand deposits |
408,109 | 358 | 0.35 | % | 386,788 | 586 | 0.61 | % | ||||||||||||||||
Savings deposits |
613,924 | 372 | 0.24 | % | 541,710 | 613 | 0.45 | % | ||||||||||||||||
Time deposits |
406,436 | 1,072 | 1.06 | % | 544,320 | 1,528 | 1.12 | % | ||||||||||||||||
Other borrowings |
59,139 | 600 | 4.06 | % | 61,629 | 602 | 3.91 | % | ||||||||||||||||
Junior subordinated debt |
41,238 | 312 | 3.03 | % | 41,238 | 313 | 3.04 | % | ||||||||||||||||
Total interest-bearing liabilities |
1,528,846 | 2,714 | 0.71 | % | 1,575,685 | 3,642 | 0.92 | % | ||||||||||||||||
Noninterest-bearing deposits |
424,331 | 376,300 | ||||||||||||||||||||||
Other liabilities |
33,711 | 36,147 | ||||||||||||||||||||||
Shareholders equity |
205,763 | 203,528 | ||||||||||||||||||||||
Total liabilities and shareholders equity |
$ | 2,192,651 | $ | 2,191,660 | ||||||||||||||||||||
Net interest spread(1) |
4.13 | % | 4.21 | % | ||||||||||||||||||||
Net interest income and interest margin(2)
|
$ | 21,833 | 4.31 | % | $ | 22,245 | 4.41 | % | ||||||||||||||||
(1) | Net interest spread represents the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities. | |
(2) | Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets. |
39
For the six months ended | ||||||||||||||||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||
Interest | Rates | Interest | Rates | |||||||||||||||||||||
Average | Income/ | Earned | Average | Income/ | Earned | |||||||||||||||||||
Balance | Expense | /Paid | Balance | Expense | /Paid | |||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Loans |
$ | 1,395,160 | $ | 43,457 | 6.23 | % | $ | 1,466,580 | $ | 45,514 | 6.21 | % | ||||||||||||
Investment securities taxable |
273,793 | 4,735 | 3.46 | % | 271,988 | 5,494 | 4.04 | % | ||||||||||||||||
Investment securities nontaxable |
11,951 | 439 | 7.34 | % | 16,406 | 630 | 7.68 | % | ||||||||||||||||
Cash at Federal Reserve and other banks |
345,453 | 433 | 0.25 | % | 259,317 | 308 | 0.24 | % | ||||||||||||||||
Total interest-earning assets |
2,026,357 | 49,064 | 4.84 | % | 2,014,291 | 51,946 | 5.16 | % | ||||||||||||||||
Other assets |
164,650 | 166,108 | ||||||||||||||||||||||
Total assets |
$ | 2,191,007 | $ | 2,180,399 | ||||||||||||||||||||
Liabilities and shareholders equity: |
||||||||||||||||||||||||
Interest-bearing demand deposits |
405,188 | 707 | 0.35 | % | 377,724 | 1,201 | 0.64 | % | ||||||||||||||||
Savings deposits |
603,004 | 739 | 0.25 | % | 531,978 | 1,255 | 0.47 | % | ||||||||||||||||
Time deposits |
419,301 | 2,183 | 1.04 | % | 552,293 | 3,329 | 1.21 | % | ||||||||||||||||
Other borrowings |
59,181 | 1,193 | 4.03 | % | 61,736 | 1,196 | 3.87 | % | ||||||||||||||||
Junior subordinated debt |
41,238 | 622 | 3.02 | % | 41,238 | 619 | 3.00 | % | ||||||||||||||||
Total interest-bearing liabilities |
1,527,912 | 5,444 | 0.71 | % | 1,564,969 | 7,600 | 0.97 | % | ||||||||||||||||
Noninterest-bearing deposits |
424,710 | 375,159 | ||||||||||||||||||||||
Other liabilities |
33,736 | 36,407 | ||||||||||||||||||||||
Shareholders equity |
204,649 | 203,864 | ||||||||||||||||||||||
Total liabilities and shareholders equity |
$ | 2,191,007 | $ | 2,180,399 | ||||||||||||||||||||
Net interest spread(1) |
4.13 | % | 4.19 | % | ||||||||||||||||||||
Net interest income and interest margin(2) |
$ | 43,620 | 4.31 | % | $ | 44,346 | 4.40 | % | ||||||||||||||||
(1) | Net interest spread represents the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities. | |
(2) | Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets. |
40
Three months ended June 30, 2011 | ||||||||||||
compared with three months | ||||||||||||
ended June 30, 2010 | ||||||||||||
Volume | Rate | Total | ||||||||||
Increase (decrease) in interest income: |
||||||||||||
Loans |
$ | (1,077 | ) | $ | 111 | $ | (966 | ) | ||||
Investment securities |
(117 | ) | (345 | ) | (462 | ) | ||||||
Cash at Federal Reserve and other banks |
54 | 34 | 88 | |||||||||
Total interest-earning assets |
(1,140 | ) | (200 | ) | (1,340 | ) | ||||||
Increase (decrease) in interest expense: |
||||||||||||
Interest-bearing demand deposits |
33 | (261 | ) | (228 | ) | |||||||
Savings deposits |
81 | (322 | ) | (241 | ) | |||||||
Time deposits |
(386 | ) | (70 | ) | (456 | ) | ||||||
Other borrowings |
(24 | ) | 22 | (2 | ) | |||||||
Junior subordinated debt |
| (1 | ) | (1 | ) | |||||||
Total interest-bearing liabilities |
(296 | ) | (632 | ) | (928 | ) | ||||||
Increase (decrease) in Net Interest Income |
$ | (844 | ) | $ | 432 | $ | (412 | ) | ||||
Six months ended June 30, 2011 | ||||||||||||
compared with six months | ||||||||||||
ended June 30, 2010 | ||||||||||||
Volume | Rate | Total | ||||||||||
Increase (decrease) in interest income: |
||||||||||||
Loans |
$ | (2,218 | ) | $ | 161 | $ | (2,057 | ) | ||||
Investment securities |
(56 | ) | (894 | ) | (950 | ) | ||||||
Cash at Federal Reserve and other banks |
103 | 22 | 125 | |||||||||
Total interest-earning assets |
(2,171 | ) | (711 | ) | (2,882 | ) | ||||||
Increase (decrease) in interest expense: |
||||||||||||
Interest-bearing demand deposits |
88 | (582 | ) | (494 | ) | |||||||
Savings deposits |
167 | (683 | ) | (516 | ) | |||||||
Time deposits |
(805 | ) | (341 | ) | (1,146 | ) | ||||||
Other borrowings |
(49 | ) | 46 | (3 | ) | |||||||
Junior subordinated debt |
| 3 | 3 | |||||||||
Total interest-bearing liabilities |
(599 | ) | (1,557 | ) | (2,156 | ) | ||||||
Increase (decrease) in Net Interest Income |
$ | (1,572 | ) | $ | 846 | $ | (726 | ) | ||||
41
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Service charges on deposit accounts |
$ | 3,700 | $ | 4,443 | $ | 7,130 | $ | 8,221 | ||||||||
ATM and interchange fees |
1,776 | 1,531 | 3,421 | 2,899 | ||||||||||||
Other service fees |
437 | 362 | 843 | 692 | ||||||||||||
Mortgage banking service fees |
370 | 315 | 731 | 623 | ||||||||||||
Change in value of mortgage servicing rights |
(162 | ) | (569 | ) | (222 | ) | (618 | ) | ||||||||
Total service charges and fees |
6,121 | 6,082 | 11,903 | 11,817 | ||||||||||||
Gain on sale of loans |
495 | 577 | 1,220 | 1,162 | ||||||||||||
Commissions on sale of non-deposit investment products |
648 | 362 | 1,008 | 629 | ||||||||||||
Increase in cash value of life insurance |
450 | 426 | 900 | 852 | ||||||||||||
Change in indemnification asset |
144 | | 1,836 | | ||||||||||||
Gain on sale of foreclosed assets |
185 | 310 | 385 | 350 | ||||||||||||
Legal settlement |
| | | 400 | ||||||||||||
Sale of customer checks |
67 | 54 | 126 | 102 | ||||||||||||
Lease brokerage income |
95 | 21 | 128 | 58 | ||||||||||||
Gain (loss) on disposal of fixed assets |
(6 | ) | (15 | ) | (15 | ) | (40 | ) | ||||||||
Commission rebates |
(16 | ) | (17 | ) | (33 | ) | (33 | ) | ||||||||
Bargain purchase gain on acquisition |
| 232 | | 232 | ||||||||||||
Other |
68 | 72 | 143 | 122 | ||||||||||||
Total other noninterest income |
2,130 | 2,022 | 5,698 | 3,834 | ||||||||||||
Total noninterest income |
$ | 8,251 | $ | 8,104 | $ | 17,601 | $ | 15,651 | ||||||||
42
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Base salaries, net of deferred loan origination costs |
$ | 7,198 | $ | 6,990 | $ | 14,202 | $ | 13,964 | ||||||||
Incentive compensation |
783 | 526 | 1,699 | 1,072 | ||||||||||||
Benefits and other compensation costs |
2,734 | 2,469 | 5,607 | 5,099 | ||||||||||||
Total salaries and benefits expense |
10,715 | 9,985 | 21,508 | 20,135 | ||||||||||||
Occupancy |
1,402 | 1,407 | 2,862 | 2,736 | ||||||||||||
Equipment |
880 | 1,060 | 1,801 | 2,034 | ||||||||||||
Data processing and software |
956 | 661 | 1,808 | 1,336 | ||||||||||||
ATM network charges |
507 | 446 | 989 | 904 | ||||||||||||
Telecommunications |
520 | 461 | 926 | 874 | ||||||||||||
Postage |
219 | 311 | 435 | 558 | ||||||||||||
Courier service |
221 | 201 | 429 | 398 | ||||||||||||
Advertising |
739 | 627 | 1,171 | 1,148 | ||||||||||||
Assessments |
518 | 812 | 1,385 | 1,596 | ||||||||||||
Operational losses |
118 | 120 | 227 | 187 | ||||||||||||
Professional fees |
573 | 704 | 860 | 1,420 | ||||||||||||
Foreclosed assets expense |
115 | 66 | 282 | 263 | ||||||||||||
Provision for foreclosed asset losses |
638 | 55 | 1,087 | 55 | ||||||||||||
Change in reserve for unfunded commitments |
(50 | ) | (800 | ) | | (800 | ) | |||||||||
Intangible amortization |
20 | 72 | 105 | 137 | ||||||||||||
Other |
2,004 | 2,220 | 3,891 | 4,230 | ||||||||||||
Total other noninterest expense |
9,380 | 8,423 | 18,258 | 17,076 | ||||||||||||
Total noninterest income |
$ | 20,095 | $ | 18,408 | $ | 39,766 | $ | 37,211 | ||||||||
Average full time equivalent staff |
672 | 655 | 671 | 653 | ||||||||||||
Noninterest expense to revenue (FTE) |
66.8 | % | 60.7 | % | 65.0 | % | 62.0 | % |
43
44
June 30, 2011 | December 31, 2010 | ||||||||||||||||
(dollars in thousands) | Fair Value | % | Fair Value | % | |||||||||||||
Securities Available-for-Sale: |
|||||||||||||||||
Obligations of U.S. government corporations and agencies |
$ | 252,832 | 95.4 | % | $ | 264,181 | 95.3 | % | |||||||||
Obligations of states and political subdivisions |
12,160 | 4.6 | % | 12,541 | 4.5 | % | |||||||||||
Corporate debt securities |
| | 549 | 0.2 | % | ||||||||||||
Total securities available-for-sale |
$ | 264,992 | 100.0 | % | $ | 277,271 | 100.0 | % | |||||||||
45
June 30, | December 31, | |||||||
(in thousands) | 2011 | 2010 | ||||||
Real estate mortgage |
$ | 828,757 | $ | 835,471 | ||||
Consumer |
382,864 | 395,771 | ||||||
Commercial |
140,531 | 143,413 | ||||||
Real estate construction |
43,910 | 44,916 | ||||||
Total loans |
$ | 1,396,062 | $ | 1,419,571 | ||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Real estate mortgage |
59.4 | % | 58.8 | % | ||||
Consumer |
27.4 | % | 27.9 | % | ||||
Commercial |
10.1 | % | 10.1 | % | ||||
Real estate construction |
3.1 | % | 3.2 | % | ||||
Total loans |
100.0 | % | 100.0 | % | ||||
46
47
48
June 30, | December 31, | |||||||
(dollars in thousands) | 2011 | 2010 | ||||||
Performing nonaccrual loans |
$ | 51,078 | $ | 36,518 | ||||
Nonperforming nonaccrual loans |
22,642 | 39,224 | ||||||
Total nonaccrual loans |
73,720 | 75,742 | ||||||
Originated loans 90 days past due and still accruing |
| 245 | ||||||
Total nonperforming loans |
73,720 | 75,987 | ||||||
Noncovered foreclosed assets |
5,864 | 5,000 | ||||||
Covered foreclosed assets |
3,473 | 4,913 | ||||||
Total nonperforming assets |
$ | 83,057 | $ | 85,900 | ||||
U.S. government, including its agencies and its government-sponsored agencies, guaranteed portion of nonperforming loans |
$ | 3,496 | $ | 3,937 | ||||
Indemnified portion of covered foreclosed assets |
$ | 2,778 | $ | 3,930 | ||||
PCI loans 90 days past due and still accruing |
$ | 2,685 | $ | 3,553 | ||||
Nonperforming assets to total assets |
3.82 | % | 3.92 | % | ||||
Nonperforming loans to total loans |
5.28 | % | 5.35 | % | ||||
Allowance for loan losses to nonperforming loans |
60 | % | 56 | % |
Balance at | Advances/ | Pay- | Transfers to | Balance at | ||||||||||||||||||||||||||||
March 31, | New | Capitalized | downs | Charge-offs/ | Foreclosed | Category | June 30, | |||||||||||||||||||||||||
(dollars in thousands): | 2011 | NPA | Costs | /Sales | Write-downs | Assets | Changes | 2011 | ||||||||||||||||||||||||
Real estate mortgage: |
||||||||||||||||||||||||||||||||
Residential |
$ | 12,148 | $ | 416 | $ | 9 | $ | (831 | ) | $ | (321 | ) | $ | (797 | ) | | $ | 10,624 | ||||||||||||||
Commercial |
35,834 | 10,659 | 1 | (1,680 | ) | (1,621 | ) | (361 | ) | | 42,832 | |||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||||||
Home equity lines |
9,033 | 1,627 | 466 | (486 | ) | (1,928 | ) | (1,337 | ) | | 7,363 | |||||||||||||||||||||
Home equity loans |
717 | 29 | 57 | (41 | ) | (264 | ) | (84 | ) | | 426 | |||||||||||||||||||||
Auto indirect |
1,058 | 133 | | (228 | ) | (100 | ) | | | 863 | ||||||||||||||||||||||
Other consumer |
78 | 78 | 1 | (12 | ) | (21 | ) | | | 93 | ||||||||||||||||||||||
Commercial |
4,330 | 909 | | (857 | ) | (202 | ) | | | 4,180 | ||||||||||||||||||||||
Construction: |
||||||||||||||||||||||||||||||||
Residential |
6,653 | 205 | 29 | (73 | ) | (395 | ) | (169 | ) | | 6,250 | |||||||||||||||||||||
Commercial |
1,202 | | | (18 | ) | (95 | ) | | | 1,089 | ||||||||||||||||||||||
Total nonperforming loans |
71,053 | 14,025 | 563 | (4,226 | ) | (4,947 | ) | (2,748 | ) | | 73,720 | |||||||||||||||||||||
Noncovered foreclosed assets |
4,472 | | | (931 | ) | (425 | ) | 2,748 | | 5,864 | ||||||||||||||||||||||
Covered foreclosed assets |
4,511 | | | (825 | ) | (213 | ) | | | 3,473 | ||||||||||||||||||||||
Total nonperforming assets |
$ | 80,036 | $ | 14,025 | $ | 563 | $ | (5,982 | ) | $ | (5,585 | ) | | | $ | 83,057 | ||||||||||||||||
49
Balance at | Advances/ | Pay- | Transfers to | Balance at | ||||||||||||||||||||||||||||
December 31, | New | Capitalized | downs | Charge-offs/ | Foreclosed | Category | March 31, | |||||||||||||||||||||||||
(dollars in thousands): | 2010 | NPA | Costs | /Sales | Write-downs | Assets | Changes | 2011 | ||||||||||||||||||||||||
Real estate mortgage: |
||||||||||||||||||||||||||||||||
Residential |
$ | 11,771 | $ | 1,816 | $ | 62 | $ | (376 | ) | $ | (1,125 | ) | | | $ | 12,148 | ||||||||||||||||
Commercial |
38,925 | 443 | | (2,275 | ) | (368 | ) | (911 | ) | 20 | 35,834 | |||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||||||
Home equity lines |
10,604 | 2,654 | 581 | (623 | ) | (3,601 | ) | (582 | ) | | 9,033 | |||||||||||||||||||||
Home equity loans |
701 | 23 | | (7 | ) | | | | 717 | |||||||||||||||||||||||
Auto indirect |
1,296 | 173 | 1 | (277 | ) | (135 | ) | | | 1,058 | ||||||||||||||||||||||
Other consumer |
83 | 237 | | (13 | ) | (229 | ) | | | 78 | ||||||||||||||||||||||
Commercial |
4,618 | 1,802 | | (514 | ) | (1,556 | ) | | (20 | ) | 4,330 | |||||||||||||||||||||
Construction: |
||||||||||||||||||||||||||||||||
Residential |
7,117 | | 12 | (124 | ) | (35 | ) | (30 | ) | (287 | ) | 6,653 | ||||||||||||||||||||
Commercial |
872 | 479 | | (436 | ) | | | 287 | 1,202 | |||||||||||||||||||||||
Total nonperforming loans |
75,987 | 7,627 | 656 | (4,645 | ) | (7,049 | ) | (1,523 | ) | | 71,053 | |||||||||||||||||||||
Noncovered foreclosed assets |
5,000 | | | (1,983 | ) | (68 | ) | 1,523 | | 4,472 | ||||||||||||||||||||||
Covered foreclosed assets |
4,913 | | | (21 | ) | (381 | ) | | | 4,511 | ||||||||||||||||||||||
Total nonperforming assets |
$ | 85,900 | $ | 7,627 | 656 | $ | (6,649 | ) | $ | (7,498 | ) | | | $ | 80,036 | |||||||||||||||||
50
51
52
| with respect to the economy, management considered the effects of changes in GDP, unemployment, CPI, debt statistics, housing starts, housing sales, auto sales, agricultural prices, and other economic factors which serve as indicators of economic health and trends and which may have an impact on the performance of our borrowers, and | |
| with respect to changes in the interest rate environment, management considered the recent changes in interest rates and the resultant economic impact it may have had on borrowers with high leverage and/or low profitability; and | |
| with respect to changes in energy prices, management considered the effect that increases, decreases or volatility may have on the performance of our borrowers, and | |
| with respect to loans to borrowers in new markets and growth in general, management considered the relatively short seasoning of such loans and the lack of experience with such borrowers. |
53
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Allowance for originated loan losses: |
||||||||
Specific allowance |
$ | 5,809 | $ | 6,945 | ||||
Formula allowance |
32,352 | 31,070 | ||||||
Environmental factors allowance |
3,431 | 2,948 | ||||||
Allowance for originated loan losses |
41,592 | 40,963 | ||||||
Allowance for PCI loan losses |
2,370 | 1,608 | ||||||
Allowance for loan losses |
$ | 43,962 | $ | 42,571 | ||||
Allowance for loan losses to loans |
3.15 | % | 3.00 | % |
June 30, | December 31, | |||||||
(dollars in thousands) | 2011 | 2010 | ||||||
Real estate mortgage |
$ | 15,940 | $ | 15,707 | ||||
Consumer |
18,857 | 17,779 | ||||||
Commercial |
6,812 | 5,991 | ||||||
Real estate construction |
2,353 | 3,094 | ||||||
Total allowance for loan losses |
$ | 43,962 | $ | 42,571 | ||||
June 30, | December 31, | |||||||
(dollars in thousands) | 2011 | 2010 | ||||||
Real estate mortgage |
36.3 | % | 36.9 | % | ||||
Consumer |
42.9 | % | 41.8 | % | ||||
Commercial |
15.5 | % | 14.1 | % | ||||
Real estate construction |
5.3 | % | 7.2 | % | ||||
Total allowance for loan losses |
100.0 | % | 100.0 | % | ||||
54
Three months | Six months | |||||||||||||||
ended June 30, | ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Allowance for loan losses: |
||||||||||||||||
Balance at beginning of period |
$ | 43,224 | $ | 36,340 | $ | 42,571 | $ | 35,473 | ||||||||
Provision for loan losses |
5,561 | 10,000 | 12,562 | 18,500 | ||||||||||||
Loans charged off: |
||||||||||||||||
Real estate mortgage: |
||||||||||||||||
Residential |
(321 | ) | (293 | ) | (1,446 | ) | (748 | ) | ||||||||
Commercial |
(1,621 | ) | (1,497 | ) | (1,989 | ) | (4,064 | ) | ||||||||
Consumer: |
||||||||||||||||
Home equity lines |
(1,928 | ) | (3,095 | ) | (5,529 | ) | (5,337 | ) | ||||||||
Home equity loans |
(264 | ) | (303 | ) | (264 | ) | (711 | ) | ||||||||
Auto indirect |
(100 | ) | (337 | ) | (235 | ) | (863 | ) | ||||||||
Other consumer |
(304 | ) | (543 | ) | (533 | ) | (883 | ) | ||||||||
Commercial |
(202 | ) | (535 | ) | (1,758 | ) | (1,061 | ) | ||||||||
Construction: |
||||||||||||||||
Residential |
(395 | ) | (1,782 | ) | (430 | ) | (2,819 | ) | ||||||||
Commercial |
(95 | ) | (39 | ) | (95 | ) | (39 | ) | ||||||||
Total loans charged off |
(5,230 | ) | (8,424 | ) | (12,279 | ) | (16,525 | ) | ||||||||
Recoveries of previously
charged-off loans: |
||||||||||||||||
Real estate mortgage: |
||||||||||||||||
Residential |
| | 112 | | ||||||||||||
Commercial |
38 | 28 | 66 | 55 | ||||||||||||
Consumer: |
||||||||||||||||
Home equity lines |
86 | 24 | 247 | 68 | ||||||||||||
Home equity loans |
| 7 | 2 | 7 | ||||||||||||
Auto indirect |
56 | 167 | 183 | 327 | ||||||||||||
Other consumer |
165 | 182 | 374 | 384 | ||||||||||||
Commercial |
41 | 103 | 62 | 117 | ||||||||||||
Construction: |
||||||||||||||||
Residential |
20 | 3 | 22 | 24 | ||||||||||||
Commercial |
1 | | 40 | | ||||||||||||
Total recoveries of
previously charged off loans |
407 | 514 | 1,108 | 982 | ||||||||||||
Net charge-offs |
(4,823 | ) | (7,910 | ) | (11,171 | ) | (15,543 | ) | ||||||||
Balance at end of period |
$ | 43,962 | $ | 38,430 | $ | 43,962 | $ | 38,430 | ||||||||
Reserve for unfunded commitments: |
||||||||||||||||
Balance at beginning of period |
$ | 2,690 | $ | 3,640 | $ | 2,640 | $ | 3,640 | ||||||||
Provision for losses
unfunded commitments |
(50 | ) | (800 | ) | | (800 | ) | |||||||||
Balance at end of period |
$ | 2,640 | $ | 2,840 | $ | 2,640 | $ | 2,840 | ||||||||
55
Three months | Six months | |||||||||||||||
ended June 30, | ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Balance at end of period: |
||||||||||||||||
Allowance for loan losses |
$ | 43,962 | $ | 38,430 | $ | 43,962 | $ | 38,430 | ||||||||
Reserve for unfunded commitments |
2,640 | 2,840 | 2,640 | 2,840 | ||||||||||||
Allowance for loan losses and Reserve for unfunded commitments |
$ | 46,602 | $ | 41,270 | $ | 46,602 | $ | 41,270 | ||||||||
As a percentage of total loans at end of period: |
||||||||||||||||
Allowance for loan losses |
3.15 | % | 2.55 | % | 3.15 | % | 2.55 | % | ||||||||
Reserve for unfunded commitments |
0.19 | % | 0.19 | % | 0.19 | % | 0.19 | % | ||||||||
Allowance for loan losses and Reserve for unfunded commitments |
3.34 | % | 2.74 | % | 3.34 | % | 2.74 | % | ||||||||
Average total loans |
$ | 1,393,989 | $ | 1,463,475 | $ | 1,395,160 | $ | 1,466,580 | ||||||||
Ratios (annualized): |
||||||||||||||||
Net charge-offs during period to average
loans outstanding during period |
1.38 | % | 2.16 | % | 1.60 | % | 2.12 | % | ||||||||
Provision for loan losses to
average loans outstanding |
1.60 | % | 2.73 | % | 1.80 | % | 2.52 | % |
Balance at | Advances/ | Balance at | ||||||||||||||||||||||||||||||
March 31, | New | Capitalized | Valuation | Transfers | Category | June 30, | ||||||||||||||||||||||||||
(dollars in thousands): | 2011 | NPA | Costs | Sales | Adjustments | from Loans | Changes | 2011 | ||||||||||||||||||||||||
Noncovered: |
||||||||||||||||||||||||||||||||
Land & Construction |
$ | 1,978 | | | | $ | (403 | ) | $ | 169 | | $ | 1,744 | |||||||||||||||||||
Residential real estate |
1,366 | | | (700 | ) | (22 | ) | 2,219 | | 2,863 | ||||||||||||||||||||||
Commercial real estate |
1,128 | | | (231 | ) | | 360 | | 1,257 | |||||||||||||||||||||||
Total noncovered |
4,472 | | | (931 | ) | (425 | ) | 2,748 | | 5,864 | ||||||||||||||||||||||
Covered: |
||||||||||||||||||||||||||||||||
Land & Construction |
2,957 | | | (605 | ) | (144 | ) | | | 2,208 | ||||||||||||||||||||||
Residential real estate |
186 | | | | (6 | ) | | | 180 | |||||||||||||||||||||||
Commercial real estate |
1,368 | | | (220 | ) | (63 | ) | | | 1,085 | ||||||||||||||||||||||
Total covered |
4,511 | | | (825 | ) | (213 | ) | | | 3,473 | ||||||||||||||||||||||
Total foreclosed assets |
$ | 8,983 | | | $ | (1,756 | ) | $ | (638 | ) | $ | 2,748 | | $ | 9,337 | |||||||||||||||||
Balance at | Advances/ | Balance at | ||||||||||||||||||||||||||||||
December 31, | New | Capitalized | Valuation | Transfers | Category | March 31, | ||||||||||||||||||||||||||
(dollars in thousands): | 2010 | NPA | Costs | Sales | Adjustments | from Loans | Changes | 2011 | ||||||||||||||||||||||||
Noncovered: |
||||||||||||||||||||||||||||||||
Land & Construction |
$ | 2,211 | | | $ | (263 | ) | | $ | 30 | | $ | 1,978 | |||||||||||||||||||
Residential real estate |
2,449 | | | (1,613 | ) | (51 | ) | 581 | | 1,366 | ||||||||||||||||||||||
Commercial real estate |
340 | | | (107 | ) | (17 | ) | 912 | | 1,128 | ||||||||||||||||||||||
Total noncovered |
5,000 | | | (1,983 | ) | (68 | ) | 1,523 | | 4,472 | ||||||||||||||||||||||
Covered: |
||||||||||||||||||||||||||||||||
Land & Construction |
3,016 | | | | (59 | ) | | | 2,957 | |||||||||||||||||||||||
Residential real estate |
186 | | | | | | | 186 | ||||||||||||||||||||||||
Commercial real estate |
1,711 | | | (21 | ) | (322 | ) | | | 1,368 | ||||||||||||||||||||||
Total covered |
4,913 | | | (21 | ) | (381 | ) | | | 4,511 | ||||||||||||||||||||||
Total foreclosed assets |
$ | 9,913 | | | $ | (2,004 | ) | $ | (449 | ) | $ | 1,523 | | $ | 8,983 | |||||||||||||||||
56
June 30, | December 31, | |||||||
(dollars in thousands) | 2011 | 2010 | ||||||
Core-deposit intangible |
$ | 475 | $ | 580 | ||||
Goodwill |
15,519 | 15,519 | ||||||
Total intangible assets |
$ | 15,994 | $ | 16,099 | ||||
57
As of | As | Minimum | ||||||||||
June 30, | December 31, | Regulatory | ||||||||||
2011 | 2010 | Requirement | ||||||||||
Tier I Capital |
13.28 | % | 12.93 | % | 4.00 | % | ||||||
Total Capital |
14.55 | % | 14.20 | % | 8.00 | % | ||||||
Leverage ratio |
10.38 | % | 10.03 | % | 4.00 | % |
58
59
(c) Total number of | ||||||||||||||||
shares purchased as | (d) Maximum number | |||||||||||||||
part of publicly | of shares that may yet | |||||||||||||||
(a) Total number | (b) Average price | announced plans or | be purchased under the | |||||||||||||
Period | of shares purchased | paid per share | programs | plans or programs | ||||||||||||
Apr. 1-30, 2011 |
| | | 333,400 | ||||||||||||
May 1-31, 2011 |
| | | 333,400 | ||||||||||||
Jun. 1-31, 2011 |
| | | 333,400 | ||||||||||||
Total |
| | | 333,400 |
3.1
|
Restated Articles of Incorporation, filed as Exhibit 3.1 to TriCos Current Report on Form 8-K filed on March 16, 2009. | |
3.2
|
Bylaws of TriCo Bancshares, as amended, filed as Exhibit 3.1 to TriCos Current Report on Form 8-K filed February 17, 2011. | |
4
|
Certificate of Determination of Preferences of Series AA Junior Participating Preferred Stock filed as Exhibit 3.3 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2001. | |
10.1
|
Rights Agreement dated June 25, 2001, between TriCo and Mellon Investor Services LLC filed as Exhibit 1 to TriCos Form 8-A dated July 25, 2001 and amended on July 8, 2011 as described in TriCos Form 8-A/A dated July 8, 2011. | |
10.2*
|
Form of Change of Control Agreement dated as of August 23, 2005, between TriCo, Tri Counties Bank and each of Dan Bailey, Bruce Belton, Craig Carney, Gary Coelho, Rick Miller, Richard OSullivan, Thomas Reddish, and Ray Rios filed as Exhibit 10.2 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2005. | |
10.5*
|
TriCos 1995 Incentive Stock Option Plan filed as Exhibit 4.1 to TriCos Form S-8 Registration Statement dated August 23, 1995 (No. 33-62063). | |
10.6*
|
TriCos 2001 Stock Option Plan, as amended, filed as Exhibit 10.7 to TriCos Quarterly Report on Form 10-Q for the quarter ended June 30, 2005. | |
10.7*
|
TriCos 2009 Equity Incentive plan, included as Appendix A to TriCos definitive proxy statement filed on April 4, 2009. | |
10.8*
|
Amended Employment Agreement between TriCo and Richard Smith dated as of August 23, 2005 filed as Exhibit 10.8 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2005. | |
10.9*
|
Tri Counties Bank Executive Deferred Compensation Plan restated April 1, 1992, and January 1, 2005 filed as Exhibit 10.9 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2005. | |
10.10*
|
Tri Counties Bank Deferred Compensation Plan for Directors effective January 1, 2005 filed as Exhibit 10.10 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2005. | |
10.11*
|
2005 Tri Counties Bank Deferred Compensation Plan for Executives and Directors effective January 1, 2005 filed as Exhibit 10.11 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2005. | |
10.13*
|
Tri Counties Bank Supplemental Retirement Plan for Directors dated September 1, 1987, as restated January 1, 2001, and amended and restated January 1, 2004 filed as Exhibit 10.12 to TriCos Quarterly Report on Form 10-Q for the quarter ended June 30, 2004. | |
10.14*
|
2004 TriCo Bancshares Supplemental Retirement Plan for Directors effective January 1, 2004 filed as Exhibit 10.13 to TriCos Quarterly Report on Form 10-Q for the quarter ended June 30, 2004. | |
10.15*
|
Tri Counties Bank Supplemental Executive Retirement Plan effective September 1, 1987, as amended and restated January 1, 2004 filed as Exhibit 10.14 to TriCos Quarterly Report on Form 10-Q for the quarter ended June 30, 2004. | |
10.16*
|
2004 TriCo Bancshares Supplemental Executive Retirement Plan effective January 1, 2004 filed as Exhibit 10.15 to TriCos Quarterly Report on Form 10-Q for the quarter ended June 30, 2004. | |
10.17*
|
Form of Joint Beneficiary Agreement effective March 31, 2003 between Tri Counties Bank and each of George Barstow, Dan Bay, Ron Bee, Craig Carney, Robert Elmore, Greg Gill, Richard Miller, Richard OSullivan, Thomas Reddish, Jerald Sax, and Richard Smith, filed as Exhibit 10.14 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. |
60
10.18*
|
Form of Joint Beneficiary Agreement effective March 31, 2003 between Tri Counties Bank and each of Don Amaral, William Casey, Craig Compton, John Hasbrook, Michael Koehnen, Donald Murphy, Carroll Taresh, and Alex Vereschagin, filed as Exhibit 10.15 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. | |
10.19*
|
Form of Tri-Counties Bank Executive Long Term Care Agreement effective June 10, 2003 between Tri Counties Bank and each of Craig Carney, Richard Miller, Richard OSullivan, and Thomas Reddish, filed as Exhibit 10.16 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. | |
10.20*
|
Form of Tri-Counties Bank Director Long Term Care Agreement effective June 10, 2003 between Tri Counties Bank and each of Don Amaral, William Casey, Craig Compton, John Hasbrook, Michael Koehnen, Donald Murphy, Carroll Taresh, and Alex Vereschagin, filed as Exhibit 10.17 to TriCos Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. | |
10.21*
|
Form of Indemnification Agreement between TriCo Bancshares/Tri Counties Bank and each of the directors of TriCo Bancshares/Tri Counties Bank effective on the date that each director is first elected, filed as Exhibit 10.18 to TriCoS Annual Report on Form 10-K for the year ended December 31, 2003. | |
10.22*
|
Form of Indemnification Agreement between TriCo Bancshares/Tri Counties Bank and each of Dan Bailey, Craig Carney, Rick Miller, Richard OSullivan, Thomas Reddish, Ray Rios, and Richard Smith filed as Exhibit 10.21 to TriCos Quarterly Report on Form 10-Q for the quarter ended June 30, 2004. | |
10.23
|
Purchase and Assumption Agreement Whole Bank All Deposits, among the Federal Deposit Insurance Corporation, receiver of Granite Community Bank, N.A., Granite Bay, California, the Federal Deposit Insurance Corporation and Tri Counties Bank, dated as of May 28, 2010, and related addendum filed as Exhibit 2.1 to the Companys Current Report on Form 8-K filed June 3, 2010. | |
21.1
|
Tri Counties Bank, a California banking corporation, TriCo Capital Trust I, a Delaware business trust, and TriCo Capital Trust II, a Delaware business trust, are the only subsidiaries of Registrant. | |
31.1
|
Rule 13a-14(a)/15d-14(a) Certification of CEO | |
31.2
|
Rule 13a-14(a)/15d-14(a) Certification of CFO | |
32.1
|
Section 1350 Certification of CEO | |
32.2
|
Section 1350 Certification of CFO | |
101.1
|
The following materials from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statement of Changes in Shareholders' Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.(****) |
* | Management contract or compensatory plan or arrangement | |
**** | Pursuant to Rule 406T of Regulation S-T, the XBRL files on Exhibit 101.1 hereto 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 and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
TRICO BANCSHARES (Registrant) |
||||
Date: August 9, 2011 | /s/ Thomas J. Reddish | |||
Thomas J. Reddish | ||||
Executive Vice President and Chief Financial Officer (Duly authorized officer and principal financial officer) |
61
1. | I have reviewed this report on Form 10-Q of TriCo Bancshares; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we 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 subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial data; and | ||
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 9, 2011 | /s/ Richard P. Smith | |||
Richard P. Smith | ||||
President and Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of TriCo Bancshares; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we 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 subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial data; and | ||
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 9, 2011 | /s/ Thomas J. Reddish | |||
Thomas J. Reddish | ||||
Executive Vice President and Chief Financial Officer |
||||
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Richard P. Smith | ||||
Richard P. Smith | ||||
President and Chief Executive Officer | ||||
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Thomas J. Reddish | ||||
Thomas J. Reddish | ||||
Executive Vice President and Chief Financial Officer |
||||
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Shareholders' equity: | Â | Â |
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 15,978,958 | 15,860,138 |
Common stock, shares outstanding | 15,978,958 | 15,860,138 |
Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Interest and dividend income: | Â | Â | Â | Â |
Loans, including fees | $ 21,735 | $ 22,701 | $ 43,457 | $ 45,514 |
Debt securities: | Â | Â | Â | Â |
Taxable | 2,347 | 2,727 | 4,721 | 5,482 |
Tax exempt | 136 | 188 | 276 | 396 |
Dividends | 7 | 6 | 14 | 12 |
Interest bearing cash at Federal Reserve and other banks | 242 | 154 | 433 | 308 |
Total interest and dividend income | 24,467 | 25,776 | 48,901 | 51,712 |
Interest expense: | Â | Â | Â | Â |
Deposits | 1,802 | 2,727 | 3,629 | 5,785 |
Other borrowings | 600 | 602 | 1,193 | 1,196 |
Junior subordinated debt | 312 | 313 | 622 | 619 |
Total interest expense | 2,714 | 3,642 | 5,444 | 7,600 |
Net interest income | 21,753 | 22,134 | 43,457 | 44,112 |
Provision for loan losses | 5,561 | 10,000 | 12,562 | 18,500 |
Net interest income after provision for loan losses | 16,192 | 12,134 | 30,895 | 25,612 |
Noninterest income: | Â | Â | Â | Â |
Service charges and fees | 6,121 | 6,082 | 11,903 | 11,817 |
Gain on sale of loans | 495 | 577 | 1,220 | 1,162 |
Commissions on sale of non-deposit investment products | 648 | 362 | 1,008 | 629 |
Increase in cash value of life insurance | 450 | 426 | 900 | 852 |
Other | 537 | 657 | 2,570 | 1,191 |
Total noninterest income | 8,251 | 8,104 | 17,601 | 15,651 |
Noninterest expense: | Â | Â | Â | Â |
Salaries and related benefits | 10,715 | 9,985 | 21,508 | 20,135 |
Other | 9,380 | 8,423 | 18,258 | 17,076 |
Total noninterest expense | 20,095 | 18,408 | 39,766 | 37,211 |
Income before income taxes | 4,348 | 1,830 | 8,730 | 4,052 |
Provision for income taxes | 1,577 | 510 | 3,159 | 1,174 |
Net income | $ 2,771 | $ 1,320 | $ 5,571 | $ 2,878 |
Earnings per share: | Â | Â | Â | Â |
Basic | $ 0.17 | $ 0.08 | $ 0.35 | $ 0.18 |
Diluted | $ 0.17 | $ 0.08 | $ 0.35 | $ 0.18 |
Other Borrowings
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Borrowings & Junior Subordinated Debt [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Borrowings |
Note 16 — Other Borrowings
A summary of the balances of other borrowings follows:
During August 2007, the Company entered into a security repurchase agreement with principal balance
of $50,000,000 and terms as described above. As of June 30, 2011, the Company has pledged as
collateral and sold under an agreement to repurchase investment securities with fair value of
$58,895,000 under this security repurchase agreement. The Company did not enter into any other
repurchase agreements during the three months ended June 30, 2011 or the year ended December 31,
2010. The average balance of repurchase agreements during the three months ended June 30, 2011 was
$50,000,000, with an average rate of 4.72%.
The Company had $9,234,000 and $12,020,000 of other collateralized borrowings at June 30, 2011 and
December 31, 2010, respectively. Other collateralized borrowings are generally overnight maturity
borrowings from non-financial institutions that are collateralized by securities owned by the
Company. As of June 30, 2011, the Company has pledged as collateral and sold under agreements to
repurchase investment securities with fair value of $19,374,000 under these other collateralized
borrowings.
The Company maintains a collateralized line of credit with the Federal Home Loan Bank of San
Francisco. Based on the FHLB stock requirements at June 30, 2011, this line provided for maximum
borrowings of $437,764,000 of which none was outstanding, leaving
$437,764,000 available. As of June 30, 2011, the Company has designated loans totaling
$980,865,000 as potential collateral under this collateralized line of credit with the FHLB.
The Company maintains a collateralized line of credit with the Federal Reserve Bank of San
Francisco. As of June 30, 2011, this line provided for maximum borrowings of $43,407,000 of which
none was outstanding, leaving $43,407,000 available. As of June 30, 2011, the Company has
designated investment securities with fair value of $750,000 and loans totaling $68,801,000 as
potential collateral under this collateralized line of credit with the FRB.
The Company has available unused correspondent banking lines of credit from commercial banks
totaling $5,000,000 for federal funds transactions at June 30, 2011.
|
Document and Entity Information (USD $)
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Aug. 05, 2011
|
Jun. 30, 2010
|
|
Document and Entity Information [Abstract] | Â | Â | Â |
Entity Registrant Name | TRICO BANCSHARES / | Â | Â |
Entity Central Index Key | 0000356171 | Â | Â |
Document Type | 10-Q | Â | Â |
Document Period End Date | Jun. 30, 2011 | ||
Amendment Flag | false | Â | Â |
Document Fiscal Year Focus | 2011 | Â | Â |
Document Fiscal Period Focus | Q2 | Â | Â |
Current Fiscal Year End Date | --12-31 | Â | Â |
Entity Well-known Seasoned Issuer | No | Â | Â |
Entity Voluntary Filers | No | Â | Â |
Entity Current Reporting Status | Yes | Â | Â |
Entity Filer Category | Accelerated Filer | Â | Â |
Entity Public Float | Â | Â | $ 197,007,000 |
Entity Common Stock, Shares Outstanding | Â | 15,978,958 | Â |
Shareholders' Equity
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Shareholders' Equity & Comprehensive Income [Abstract] | Â |
Shareholders' Equity |
Note 19 — Shareholders’ Equity
Dividends Paid
The Bank paid to the Company cash dividends in the aggregate amounts of $4,035,000 during the six
months ended June 30, 2011. The Bank is regulated by the FDIC and the State of California
Department of Financial Institutions. Absent approval from the Commissioner of Financial
Institutions of California, California banking laws generally limit the Bank’s ability to pay
dividends to the lesser of (1) retained earnings or (2) net income for the last three fiscal years,
less cash distributions paid during such period.
Shareholders’ Rights Plan
On June 25, 2001, the Company announced that its Board of Directors adopted and entered into a
Shareholder Rights Plan designed to protect and maximize shareholder value and to assist the Board
of Directors in ensuring fair and equitable benefit to all shareholders in the event of a hostile
bid to acquire the Company.
The Company adopted this Rights Plan to protect stockholders from coercive or otherwise unfair
takeover tactics. In general terms, the Rights Plan imposes a significant penalty upon any person
or group that acquires 15% or more of the Company’s outstanding common stock without approval of
the Company’s Board of Directors. The Rights Plan was not adopted in response to any known attempt
to acquire control of the Company.
Under the Rights Plan, a dividend of one Preferred Stock Purchase Right was declared for each
common share held of record as of the close of business on July 10, 2001. No separate certificates
evidencing the rights will be issued unless and until they become exercisable.
The rights generally will not become exercisable unless an acquiring entity accumulates or
initiates a tender offer to purchase 15% or more of the Company’s common stock. In that event,
each right will entitle the holder, other than the unapproved acquirer and its affiliates, to
purchase either the Company’s common stock or shares in an acquiring entity at one-half of market
value.
The rights’ initial exercise price, which is subject to adjustment, is $49.00 per right. The
Company’s Board of Directors generally will be entitled to redeem the rights at a redemption price
of $0.01 per right until an acquiring entity acquires a 15% position. On July 8, 2011, the Company
amended the Rights Plan to extend its maturity until July 10, 2021.
Stock Repurchase Plan
On August 21, 2007, the Board of Directors adopted a plan to repurchase, as conditions warrant, up
to 500,000 shares of the Company’s common stock on the open market. The timing of purchases and the
exact number of shares to be purchased will depend on market conditions. The 500,000 shares
authorized for repurchase under this stock repurchase plan represented approximately 3.2% of the
Company’s 15,814,662 outstanding common shares as of August 21, 2007. This stock repurchase plan
has no expiration date. As of June 30, 2011, the Company had repurchased 166,600 shares under this
plan.
Stock Repurchased Under Equity Compensation Plans
During the six months ended June 30, 2011 employees tendered 177,430 shares of the Company’s common
stock in lieu of cash to exercise options to purchase shares of the Company’s stock or to pay
income taxes related to such exercises as permitted by the Company’s shareholder-approved equity
compensation plans. Such tendered shares are considered repurchased shares but are not counted
against the repurchase plan noted above.
|
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Allowance for Loan Losses
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Jun. 30, 2011
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Loans & Allowance for Loan Losses [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses |
Note 5 — Allowance for Loan Losses
The following tables summarize the activity in the allowance for loan losses, and ending balance of
loans, net of unearned fees for the periods indicated.
The following tables summarize the activity in the allowance for loan losses, and ending balance of
loans, net of unearned fees for the periods indicated.
As part of the on-going monitoring of the credit quality of the Company’s loan portfolio,
management tracks certain credit quality indicators including, but not limited to, trends relating
to (i) the level of criticized and classified loans, (ii) net charge-offs, (iii) non-performing
loans, and (iv) delinquency within the portfolio.
The Company utilizes a risk grading system to assign a risk grade to each of its loans. Loans are
graded on a scale ranging from Pass to Loss. A description of the general characteristics of the
risk grades is as follows:
The following tables present ending loan balances by loan category and risk grade for the periods
indicated:
Consumer loans, whether unsecured or secured by real estate, automobiles, or other personal
property, are primarily susceptible to three primary risks; non-payment due to income loss,
over-extension of credit and, when the borrower is unable to pay, shortfall in collateral value.
Typically non-payment is due to loss of job and will follow general economic trends in the
marketplace driven primarily by rises in the unemployment rate. Loss of collateral value can be
due to market demand shifts, damage to collateral itself or a combination of the two.
Problem consumer loans are generally identified by payment history of the borrower (delinquency).
The Bank manages its consumer loan portfolios by monitoring delinquency and contacting borrowers to
encourage repayment, suggest modifications if appropriate, and, when continued scheduled payments
become unrealistic, initiate repossession or foreclosure through appropriate channels. Collateral
values may be determined by appraisals obtained through Bank approved, licensed appraisers,
qualified independent third parties, public value information (blue book values for autos), sales
invoices, or other appropriate means. Appropriate valuations are obtained at initiation of the
credit and periodically (every 3-12 months depending on collateral type) once repayment is
questionable and the loan has been classified.
Commercial real estate loans generally fall into two categories, owner-occupied and non-owner
occupied. Loans secured by owner occupied real estate are primarily susceptible to changes in the
business conditions of the related business. This may be driven by, among other things, industry
changes, geographic business changes, changes in the individual fortunes of the business owner, and
general economic conditions and changes in business cycles. These same risks apply to commercial
loans whether secured by equipment or other personal property or unsecured. Losses on loans
secured by owner occupied real estate, equipment, or other personal property generally are dictated
by the value of underlying collateral at the time of default and liquidation of the collateral.
When default is driven by issues related specifically to the business owner, collateral values tend
to provide better repayment support and may result in little or no loss. Alternatively, when
default is driven by more general economic conditions, underlying collateral generally has devalued
more and results in larger losses due to default. Loans secured by non-owner occupied real estate
are primarily susceptible to risks associated with swings in occupancy or vacancy and related
shifts in lease rates, rental rates or room rates. Most often these shifts are a result of changes
in general economic or market conditions or overbuilding and resultant over-supply. Losses are
dependent on value of underlying collateral at the time of default. Values are generally driven by
these same factors and influenced by interest rates and required rates of return as well as changes
in occupancy costs.
Construction loans, whether owner occupied or non-owner occupied commercial real estate loans or
residential development loans, are not only susceptible to the related risks described above but
the added risks of construction itself including cost over-runs, mismanagement of the project, or
lack of demand or market changes experienced at time of completion. Again, losses are primarily
related to underlying collateral value and changes therein as described above.
Problem commercial loans are generally identified by periodic review of financial information which
may include financial statements, tax returns, rent rolls and payment history of the borrower
(delinquency). Based on this information the Bank may decide to take any of several courses of
action including demand for repayment, additional collateral or guarantors, and, when repayment
becomes unlikely through Borrower’s income and cash flow, repossession or foreclosure of the
underlying collateral.
Collateral values may be determined by appraisals obtained through Bank approved, licensed
appraisers, qualified independent third parties, public value information (blue book values for
autos), sales invoices, or other appropriate means. Appropriate valuations are obtained at
initiation of the credit and periodically (every 3-12 months depending on collateral type) once
repayment is questionable and the loan has been classified.
Once a loan becomes delinquent and repayment becomes questionable, a Bank collection officer will
address collateral shortfalls with the borrower and attempt to obtain additional collateral. If
this is not forthcoming and payment in full is unlikely, the Bank will estimate its probable loss,
using a recent valuation as appropriate to the underlying collateral less estimated costs of sale,
and charge the loan down to the estimated net realizable amount. Depending on the length of time
until ultimate collection, the Bank may revalue the underlying collateral and take additional
charge-offs as warranted. Revaluations may occur as often as every 3-12 months depending on the
underlying collateral and volatility of values. Final charge-offs or recoveries are taken when
collateral is liquidated and actual loss is known. Unpaid balances on loans after or during
collection and liquidation may also be pursued through lawsuit and attachment of wages or judgment
liens on borrower’s other assets.
The following table shows the ending balance of current, past due, and nonaccrual originated loans
by loan category as of June 30, 2011:
The following table shows the contractual ending balance of current, past due, and nonaccrual PCI
loans by loan category as of June 30, 2011 (this table is prepared on an individual loan basis):
At June 30, 2011, the Company had no nonaccruing PCI loans.
The following table shows the ending balance of current, past due, and nonaccrual originated loans
by loan category as of December 31, 2010:
The following table shows the contractual ending balance of current, past due, and nonaccrual PCI
loans by loan category as of December 31, 2010 (this table is prepared on an individual loan
basis):
At December 31, 2010, the Company had no nonaccruing PCI loans.
Impaired originated loans are those where management has concluded that it is probable that the
borrower will be unable to pay all amounts due under the contractual terms. The following tables
show the recorded investment (financial statement balance), unpaid principal balance, average
recorded investment, and interest income recognized for impaired originated loans, segregated by
those with no related allowance recorded and those with an allowance recorded for the periods
indicated.
At June 30, 2011, $50,337,000 of originated loans were TDR and classified as impaired. The Company
did not have any obligations to lend additional funds on these loans as of June 30, 2011.
At December 31, 2010, $36,423,000 of originated loans were TDR and classified as impaired. The
Company had obligations to lend $415,000 of additional funds on these TDR as of December 31,
2010.
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Stock Options and Other Equity-Based Incentive Instruments
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Jun. 30, 2011
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Stock Options and Other Equity-Based Incentive Instruments [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options and Other Equity-Based Incentive Instruments |
Note 20 — Stock Options and Other Equity-Based Incentive Instruments
In March 2009, the Company’s Board of Directors adopted the TriCo Bancshares 2009 Equity Incentive
Plan (2009 Plan) covering officers, employees, directors of, and consultants to, the Company. The
2009 Plan was approved by the Company’s shareholders in May 2009. The 2009 Plan allows for the
granting of the following types of “stock awards” (Awards): incentive stock options, nonstatutory
stock options, performance awards, restricted stock, restricted stock unit awards and stock
appreciation rights. Subject to certain adjustments, the maximum aggregate number of shares of
TriCo’s common stock which may be issued pursuant to or subject to Awards is 650,000. The number
of shares available for issuance under the 2009 Plan shall be reduced by: (i) one share for each
share of common stock issued pursuant to a stock option or a Stock Appreciation Right and (ii) two
shares for each share of common stock issued pursuant to a Performance Award, a Restricted Stock
Award or a Restricted Stock Unit Award. When Awards made under the 2009 Plan expire or are
forfeited or cancelled, the underlying shares will become available for future Awards under the
2009 Plan. To the extent that a share of common stock pursuant to an Award that counted as two
shares against the number of shares again becomes available for issuance under the 2009 Plan, the
number of shares of common stock available for issuance under the 2009 Plan shall increase by two
shares. Shares awarded and delivered under the 2009 Plan may be authorized but unissued, or
reacquired shares. As of June 30, 2011, 215,000 options for the purchase of common shares remain
outstanding, and 435,000 remain available for grant, under the 2009 Plan.
In May 2001, the Company adopted the TriCo Bancshares 2001 Stock Option Plan (2001 Plan) covering
officers, employees, directors of, and consultants to, the Company. Under the 2001 Plan, the option
exercise price cannot be less than the fair market value of the Common Stock at the date of grant
except in the case of substitute options. Options for the 2001 Plan expire on the tenth
anniversary of the grant date. Vesting schedules under the 2001 Plan are determined individually
for each grant. As of June 30, 2011, 913,935 options for the purchase of common shares remain
outstanding under the 2001 Plan. No new options may be granted under the 2001 Plan.
Stock option activity is summarized in the following table for the time period indicated:
The following table shows the number, weighted-average exercise price, intrinsic value, and
weighted average remaining contractual life of options exercisable, options not yet exercisable and
total options outstanding as of June 30, 2011:
The 210,090 options that are not currently exercisable as of June 30, 2011 are expected to vest, on
a weighted-average basis, over the next 2.96 years, and the Company is expected to recognize
$1,701,000 of pre-tax compensation costs related to these options as they vest.
|
Commitments and Contingencies
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Commitments and Contingencies [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies |
Note 18 — Commitments and Contingencies
Restricted Cash Balances— Reserves (in the form of deposits with the Federal Reserve Bank) of
$18,933,000 and $13,351,000 were maintained to satisfy Federal regulatory requirements at June 30,
2011 and December 31, 2010, respectively. These reserves are included in cash and due from banks
in the accompanying balance sheets.
Lease Commitments— The Company leases 45 sites under non-cancelable operating leases. The leases
contain various provisions for increases in rental rates, based either on changes in the published
Consumer Price Index or a predetermined escalation schedule. Substantially all of the leases
provide the Company with the option to extend the lease term one or more times following expiration
of the initial term. The Company currently does not have any capital leases.
Financial Instruments with Off-Balance-Sheet Risk— The Company is a party to financial instruments
with off-balance sheet risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit, standby letters of
credit, and deposit account overdraft privilege. Those instruments involve, to varying degrees,
elements of risk in excess of the amount recognized in the balance sheet. The contract amounts of
those instruments reflect the extent of involvement the Company has in particular classes of
financial instruments.
The Company’s exposure to loss in the event of nonperformance by the other party to the financial
instrument for commitments to extend credit and standby letters of credit written is represented by
the contractual amount of those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet instruments. The Company’s
exposure to loss in the event of nonperformance by the other party to the financial instrument for
deposit account overdraft privilege is represented by the overdraft privilege amount disclosed to
the deposit account holder.
The following table presents a summary of the Bank’s commitments and contingent liabilities:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation
of any condition established in the contract. Commitments generally have fixed expiration dates of
one year or less or other termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Company evaluates each customer’s credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the
Company upon extension of credit, is based on Management’s credit evaluation of the customer.
Collateral held varies, but may include accounts receivable, inventory, property, plant and
equipment, residential properties, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. Those guarantees are primarily issued to support
private borrowing arrangements. Most standby letters of credit are issued for one year or less.
The credit risk involved in issuing letters of credit is essentially the same as that involved in
extending loan facilities to customers. Collateral requirements vary, but in general follow the
requirements for other loan facilities.
The Deposit account overdraft privilege amount represents the unused overdraft privilege available
on Demand Deposit accounts covered by the Company’s Overdraft Privilege service. The Company has
established a per account overdraft privilege coverage amount for its Demand Deposit accounts which
meet the qualification requirements. The overdraft privilege service allows qualifying depositors
to overdraft their Demand Deposit account up to an amount that has been established in advance.
Legal Proceedings—During 2007, Visa Inc. (“Visa”) announced that it completed restructuring
transactions in preparation for an initial public offering of its Class A stock, and, as part of
those transactions, the Bank’s membership interest was exchanged for 16,653 shares of Class B
common stock in Visa. In March 2008, Visa completed its initial public offering. Following the
initial public offering, the Company received $275,400 proceeds as a mandatory partial redemption
of 6,439 shares, reducing the Company’s holdings from 16,653 shares to 10,214 shares of Class B
common stock. A conversion ratio of 0.71429 was established for the conversion rate of Class B
shares into Class A shares. Using the proceeds from this offering, Visa also established a $3.0
billion escrow account to cover settlements, resolution of pending litigation and related claims
(“covered litigation”).
In October 2008, Visa announced that it had reached a settlement with Discover Card related to an
antitrust lawsuit. The Bank and other Visa member banks were obligated to fund the settlement and
share in losses resulting from this litigation that were not already provided for in the escrow
account. In December 2008, Visa deposited additional funds into the escrow account to cover the
remaining amount of the settlement. The deposit of funds into the escrow account further reduced
the conversion ratio applicable to Class B common stock outstanding from 0.71429 per Class A share
to 0.6296 per Class A share.
In July 2009, Visa deposited an additional $700 million into the litigation escrow account. While
the outcome of the remaining litigation cases remains unknown, this addition to the escrow account
provides additional reserves to cover potential losses. As a result of the deposit, the conversion
ratio applicable to Class B common stock outstanding decreased further from 0.6296 per Class A
share to 0.5824 per Class A share. In May 2010, Visa deposited an additional $500 million into
the litigation escrow account. As a result of the deposit, the conversion ratio applicable to Class
B common stock outstanding decreased further from 0.5824 per Class A share to 0.5550 per Class A
share. In October 2010, Visa deposited an additional $800 million into the litigation escrow
account. As a result of the deposit, the conversion ratio applicable to Class B common stock
outstanding decreased further from 0.5550 per Class A share to 0.5102 per Class A share.
The remaining unredeemed shares of Visa Class B common stock are restricted and may not be
transferred until the later of (1) three years from the date of the initial public offering or (2)
the period of time necessary to resolve the covered litigation. If the funds in the escrow account
are insufficient to settle all the covered litigation, Visa may sell additional Class A shares, use
the proceeds to settle litigation, and further reduce the conversion ratio. If funds remain in the
escrow account after all litigation is settled, the Class B conversion ratio will be increased to
reflect that surplus. As of December 31, 2010, the value of the Class A shares was $70.38 per
share. Utilizing the new conversion ratio effective in July 2009, the value of unredeemed Class A
equivalent shares owned by the Company was $367,000 as of December 31, 2010, and has not been
reflected in the accompanying financial statements.
The Company is a defendant in legal actions arising from normal business activities. Management
believes, after consultation with legal counsel, that these actions are without merit or that the
ultimate liability, if any, resulting from them will not materially affect the Company’s
consolidated financial position or results from operations.
Other Commitments and Contingencies—The Company has entered into employment agreements or change
of control agreements with certain officers of the Company providing severance payments and
accelerated vesting of benefits under supplemental retirement agreements to the officers in the
event of a change in control of the Company and termination for other than cause or after a
substantial and material change in the officer’s title, compensation or responsibilities.
Mortgage loans sold to investors may be sold with servicing rights retained, with only the standard
legal representations and warranties regarding recourse to the Bank. Management believes that any
liabilities that may result from such recourse provisions are not significant.
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Mortgage Servicing Rights
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Mortgage Servicing Rights |
Note 10 — Mortgage Servicing Rights
The following tables summarize the activity in, and the main assumptions we used to determine the
fair value of mortgage servicing rights for the periods indicated (dollars in thousands):
The changes in fair value of MSRs that occurred during the three and six months ended June 30, 2011
and 2010 were mainly due to principal reductions and changes in estimated life of the MSRs.
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General Summary of Significant Accounting Policies
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6 Months Ended |
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Jun. 30, 2011
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General Summary of Significant Accounting Policies [Abstract] | Â |
General Summary of Significant Accounting Policies |
Note 1 — General Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange Commission. The results of
operations reflect interim adjustments, all of which are of a normal recurring nature and which, in
the opinion of management, are necessary for a fair presentation of the results for the interim
periods presented. The interim results are not necessarily indicative of the results expected for
the full year. These unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and accompanying notes as well as
other information included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2010.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, and its wholly-owned
subsidiary, Tri Counties Bank (the “Bank”). All significant intercompany accounts and transactions
have been eliminated in consolidation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires Management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. On an on-going basis, the Company evaluates its estimates, including those
related to the adequacy of the allowance for loan losses, investments, intangible assets, income
taxes and contingencies. The Company bases its estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions. The allowance for loan losses, goodwill and other intangible
assets, income taxes, and the valuation of mortgage servicing rights are the only accounting
estimates that materially affect the Company’s consolidated financial statements.
Significant Group Concentration of Credit Risk
The Company grants agribusiness, commercial, consumer, and residential loans to customers located
throughout the northern San Joaquin Valley, the Sacramento Valley and northern mountain regions of
California. The Company has a diversified loan portfolio within the business segments located in
this geographical area. The Company currently classifies all its operation into one business
segment that it denotes as community banking.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash
on hand, amounts due from banks and federal funds sold.
Investment Securities
The Company classifies its debt and marketable equity securities into one of three categories:
trading, available-for-sale or held-to-maturity. Trading securities are bought and held
principally for the purpose of selling in the near term. Held-to-maturity securities are those
securities which the Company has the ability and intent to hold until maturity. All other
securities not included in trading or held-to-maturity are classified as available-for-sale.
During the six months ended June 30, 2011 and the year ended December 31, 2010, the Company did not
have any securities classified as either held-to-maturity or trading.
Available-for-sale securities are recorded at fair value. Unrealized gains and losses, net of the
related tax effect, on available-for-sale securities are reported as a separate component of other
accumulated comprehensive income (loss) in shareholders’ equity until realized.
Premiums and discounts are amortized or accreted over the life of the related investment security
as an adjustment to yield using the effective interest method. Dividend and interest income are
recognized when earned. Realized gains and losses are derived from the amortized cost of the
security sold.
The Company assesses an other-than-temporary impairment (“OTTI”) based on whether it intends to
sell a security or if it is likely that the Company would be required to sell the security before
recovery of the amortized cost basis of the investment, which may be maturity. For debt securities,
if we intend to sell the security or it is likely that we will be required to sell the security
before recovering its cost basis, the entire impairment loss would be recognized in earnings as an
OTTI. If we do not intend to sell the security and it is not likely that we will be required to
sell the security but we do not expect to recover the entire amortized cost basis of the security,
only the portion of the impairment loss representing credit losses would be recognized in earnings.
The credit loss on a security is measured as the difference between the amortized cost basis and
the present value of the cash flows expected to be collected. Projected cash flows are discounted
by the original or current effective interest rate depending on the nature of the security being
measured for potential OTTI. The remaining impairment related to all other factors, the difference
between the present value of the cash flows expected to be collected and fair value, is recognized
as a charge to other comprehensive income (“OCI”). Impairment losses related to all other factors
are presented as separate categories within OCI. For investment securities held to maturity, this
amount is accreted over the remaining life of the debt security prospectively based on the amount
and timing of future estimated cash flows. The accretion of the amount recorded in OCI increases
the
carrying value of the investment and does not affect earnings. If there is an indication of
additional credit losses the security is re-evaluated according to the procedures described above.
No OTTI losses were recognized in the six months ended June 30, 2011 or the year ended December 31,
2010.
Restricted Equity Securities
Restricted equity securities represent the Company’s investment in the stock of the Federal Home
Loan Bank of San Francisco (“FHLB”) and are carried at par value, which reasonably approximates its
fair value. While technically these are considered equity securities, there is no market for the
FHLB stock. Therefore, the shares are considered as restricted investment securities. Management
periodically evaluates FHLB stock for other-than-temporary impairment. Management’s determination
of whether these investments are impaired is based on its assessment of the ultimate recoverability
of cost rather than by recognizing temporary declines in value. The determination of whether a
decline affects the ultimate recoverability of cost is influenced by criteria such as (1) the
significance of any decline in net assets of the FHLB as compared to the capital stock amount for
the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make
payments required by law or regulation and the level of such payments in relation to the operating
performance of the FHLB, (3) the impact of legislative and regulatory changes on institutions and,
accordingly, the customer base of the FHLB, and (4) the liquidity position of the FHLB.
As a member of the FHLB system, the Company is required to maintain a minimum level of investment
in FHLB stock based on specific percentages of its outstanding mortgages, total assets, or FHLB
advances. The Company may request redemption at par value of any stock in excess of the minimum
required investment. Stock redemptions are at the discretion of the FHLB.
Loans Held for Sale
Loans originated and intended for sale in the secondary market are carried at the lower of
aggregate cost or fair value, as determined by aggregate outstanding commitments from investors of
current investor yield requirements. Net unrealized losses are recognized through a valuation
allowance by charges to noninterest income.
Mortgage loans held for sale are generally sold with the mortgage servicing rights retained by the
Company. The carrying value of mortgage loans sold is reduced by the cost allocated to the
associated mortgage servicing rights. Gains or losses on the sale of loans that are held for sale
are recognized at the time of the sale and determined by the difference between net sale proceeds
and the net book value of the loans less the estimated fair value of any retained mortgage
servicing rights.
Loans and Allowance for Loan Losses
Loans originated by the Company, i.e., not purchased or acquired in a business combination, are
reported at the principal amount outstanding, net of deferred loan fees and costs. Loan
origination and commitment fees and certain direct loan origination costs are deferred, and the net
amount is amortized as an adjustment of the related loan’s yield over the actual life of the loan.
Originated loans on which the accrual of interest has been discontinued are designated as
nonaccrual loans.
Originated loans are placed in nonaccrual status when reasonable doubt exists as to the full,
timely collection of interest or principal, or a loan becomes contractually past due by 90 days or
more with respect to interest or principal and is not well secured and in the process of
collection. When an originated loan is placed on nonaccrual status, all interest previously
accrued but not collected is reversed. Income on such loans is then recognized only to the extent
that cash is received and where the future collection of principal is probable. Interest accruals
are resumed on such loans only when they are brought fully current with respect to interest and
principal and when, in the judgment of Management, the loan is estimated to be fully collectible as
to both principal and interest.
An allowance for loan losses for originated loans is established through a provision for loan
losses charged to expense. Originated loans and deposit related overdrafts are charged against the
allowance for loan losses when Management believes that the collectability of the principal is
unlikely or, with respect to consumer installment loans, according to an established delinquency
schedule. The allowance is an amount that Management believes will be adequate to absorb probable
losses inherent in existing loans and leases, based on evaluations of the collectability,
impairment and prior loss experience of loans and leases. The evaluations take into consideration
such factors as changes in the nature and size of the portfolio, overall portfolio quality, loan
concentrations, specific problem loans, and current economic conditions that may affect the
borrower’s ability to pay. The Company defines an originated loan as impaired when it is probable
the Company will be unable to collect all amounts due according to the contractual terms of the
loan agreement. Impaired originated loans are measured based on the present value of expected
future cash flows discounted at the loan’s original effective interest rate. As a practical
expedient, impairment may be measured based on the loan’s observable market price or the fair value
of the collateral if the loan is collateral dependent. When the measure of the impaired loan is
less than the recorded investment in the loan, the impairment is recorded through a valuation
allowance.
In situations related to originated loans where, for economic or legal reasons related to a
borrower’s financial difficulties, the Company grants a concession for other than an insignificant
period of time to the borrower that the Company would not otherwise consider, the related loan is
classified as a troubled debt restructuring (TDR). The Company strives to identify borrowers in
financial difficulty early and work with them to modify to more affordable terms before their loan
reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness,
payment forbearance and other actions intended to minimize the economic loss and to avoid
foreclosure or repossession of the collateral. In cases where the Company grants the borrower new
terms that provide for a reduction of either interest or principal, the Company measures any
impairment on the restructuring as noted above for impaired loans. TDR loans are classified as
impaired until they are fully paid off or charged off. Loans that are in nonaccrual status at the
time they become TDR loans, remain in
nonaccrual status until the borrower demonstrates a sustained period of performance which the
Company generally believes to be six consecutive months of payments, or equivalent. Otherwise, TDR
loans are subject to the same nonaccrual and charge-off policies as noted above with respect to
their restructured principal balance.
Credit risk is inherent in the business of lending. As a result, the Company maintains an
allowance for loan losses to absorb losses inherent in the Company’s originated loan portfolio.
This is maintained through periodic charges to earnings. These charges are included in the
Consolidated Income Statements as provision for loan losses. All specifically identifiable and
quantifiable losses are immediately charged off against the allowance. However, for a variety of
reasons, not all losses are immediately known to the Company and, of those that are known, the full
extent of the loss may not be quantifiable at that point in time. The balance of the Company’s
allowance for originated loan losses is meant to be an estimate of these unknown but probable
losses inherent in the portfolio.
The Company formally assesses the adequacy of the allowance for originated loan losses on a
quarterly basis. Determination of the adequacy is based on ongoing assessments of the probable
risk in the outstanding originated loan portfolio, and to a lesser extent the Company’s originated
loan commitments. These assessments include the periodic re-grading of credits based on changes in
their individual credit characteristics including delinquency, seasoning, recent financial
performance of the borrower, economic factors, changes in the interest rate environment, growth of
the portfolio as a whole or by segment, and other factors as warranted. Loans are initially graded
when originated. They are re-graded as they are renewed, when there is a new loan to the same
borrower, when identified facts demonstrate heightened risk of nonpayment, or if they become
delinquent. Re-grading of larger problem loans occurs at least quarterly. Confirmation of the
quality of the grading process is obtained by independent credit reviews conducted by consultants
specifically hired for this purpose and by various bank regulatory agencies.
The Company’s method for assessing the appropriateness of the allowance for originated loan losses
includes specific allowances for impaired originated loans and leases, formula allowance factors
for pools of credits, and allowances for changing environmental factors (e.g., interest rates,
growth, economic conditions, etc.). Allowance factors for loan pools are based on historical loss
experience by product type. Allowances for impaired loans are based on analysis of individual
credits. Allowances for changing environmental factors are Management’s best estimate of the
probable impact these changes have had on the originated loan portfolio as a whole. The allowance
for originated loans is included in the allowance for loan losses.
Acquired loans are valued as of acquisition date in accordance with Financial Accounting Standards
Board Accounting Standards Codification (“FASB ASC”) Topic 805, Business Combinations. Loans
purchased with evidence of credit deterioration since origination for which it is probable that all
contractually required payments will not be collected are referred to as purchased credit impaired
(PCI) loans. PCI loans are accounted for under FASB ASC Topic 310-30, Loans and Debt Securities
Acquired with Deteriorated Credit Quality. In addition, because of the significant credit discounts
associated with the loans acquired in the Granite acquisition, the Company elected to account for
all loans acquired in the Granite acquisition under FASB ASC Topic 310-30, and classify them all as
PCI loans. Under FASB ASC Topic 805 and FASB ASC Topic 310-30, PCI loans are recorded at fair value
at acquisition date, factoring in credit losses expected to be incurred over the life of the loan.
Accordingly, an allowance for loan losses is not carried over or recorded as of the acquisition
date. Fair value is defined as the present value of the future estimated principal and interest
payments of the loan, with the discount rate used in the present value calculation representing the
estimated effective yield of the loan. Default rates, loss severity, and prepayment speed
assumptions are periodically reassessed and our estimate of future payments is adjusted
accordingly. The difference between contractual future payments and estimated future payments is
referred to as the nonaccretable difference. The difference between estimated future payments and
the present value of the estimated future payments is referred to as the accretable yield. The
accretable yield represents the amount that is expected to be recorded as interest income over the
remaining life of the loan. If after acquisition, the Company determines that the estimated future
cash flows of a PCI loan are expected to be more than the originally estimated, an increase in the
discount rate (effective yield) would be made such that the newly increased accretable yield would
be recognized, on a level yield basis, over the remaining estimated life of the loan. If after
acquisition, the Company determines that the estimated future cash flows of a PCI loan are expected
to be less than the previously estimated, the discount rate would first be reduced until the
present value of the reduced cash flow estimate equals the previous present value however, the
discount rate may not be lowered below its original level at acquisition. If the discount rate has
been lowered to its original level and the present value has not been sufficiently lowered, an
allowance for loan loss would be established through a provision for loan losses charged to expense
to decrease the present value to the required level. If the estimated cash flows improve after an
allowance has been established for a loan, the allowance may be partially or fully reversed
depending on the improvement in the estimated cash flows. Only after the allowance has been fully
reversed may the discount rate be increased. PCI loans are put on nonaccrual status when cash
flows cannot be reasonably estimated. PCI loans are charged off when evidence suggests cash flows
are not recoverable. Foreclosed assets from PCI loans are recorded in foreclosed assets at fair
value with the fair value at time of foreclosure representing cash flow from the loan. ASC 310-30
allows PCI loans with similar risk characteristics and acquisition time frame to be “pooled” and
have their cash flows aggregated as if they were one loan.
Loans are also categorized as “covered” or “noncovered”. Covered loans refer to loans covered by a
Federal Deposit Insurance Corporation (“FDIC”) loss sharing agreement. Noncovered loans refer to
loans not covered by a FDIC loss sharing agreement.
Foreclosed Assets
Foreclosed assets include assets acquired through, or in lieu of, loan foreclosure. Foreclosed
assets are held for sale and are initially recorded at fair value at the date of foreclosure,
establishing a new cost basis. Subsequent to foreclosure, management periodically performs
valuations and the assets are carried at the lower of carrying amount or fair value less cost to
sell. Revenue and expenses from operations and changes in the valuation allowance are included in
other noninterest expense. Foreclosed assets that are not subject to a FDIC loss-share agreement
are referred to as noncovered foreclosed assets.
Foreclosed assets acquired through FDIC-assisted acquisitions that are subject to a FDIC loss-share
agreement, and all assets acquired via foreclosure of covered loans are referred to as covered
foreclosed assets. Covered foreclosed assets are reported exclusive of expected reimbursement cash
flows from the FDIC. Foreclosed covered loan collateral is transferred into covered foreclosed
assets at the loan’s carrying value, inclusive of the acquisition date fair value discount.
Covered foreclosed assets are initially recorded at estimated fair value on the acquisition date
based on similar market comparable valuations less estimated selling costs. Any subsequent
valuation adjustments due to declines in fair value will be charged to noninterest expense, and
will be mostly offset by noninterest income representing the corresponding increase to the FDIC
indemnification asset for the offsetting loss reimbursement amount. Any recoveries of previous
valuation adjustments will be credited to noninterest expense with a corresponding charge to
noninterest income for the portion of the recovery that is due to the FDIC.
Premises and Equipment
Land is carried at cost. Buildings and equipment, including those acquired under capital lease,
are stated at cost less accumulated depreciation and amortization. Depreciation and amortization
expenses are computed using the straight-line method over the estimated useful lives of the related
assets or lease terms. Asset lives range from 3-10 years for furniture and equipment and 15-40
years for land improvements and buildings.
Goodwill and Other Intangible Assets
Goodwill represents the excess of costs over fair value of net assets of businesses acquired.
Goodwill and other intangible assets acquired in a purchase business combination and determined to
have an indefinite useful life are not amortized, but instead tested for impairment at least
annually. Intangible assets with estimable useful lives are amortized over their respective
estimated useful lives to their estimated residual values, and reviewed for impairment.
The Company has identifiable intangible assets consisting of core deposit intangibles (CDI) and
minimum pension liability. CDI are amortized using an accelerated method over a period of ten
years. Intangible assets related to minimum pension liability are adjusted annually based upon
actuarial estimates.
Impairment of Long-Lived Assets and Goodwill
Long-lived assets, such as premises and equipment, and purchased intangibles subject to
amortization, are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset to estimated undiscounted
future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds
its estimated future cash flows, an impairment charge is recognized by the amount by which the
carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be
separately presented in the balance sheet and reported at the lower of the carrying amount or fair
value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed
group classified as held for sale would be presented separately in the appropriate asset and
liability sections of the balance sheet.
As of December 31 of each year, goodwill is tested for impairment, and is tested for impairment
more frequently if events and circumstances indicate that the asset might be impaired. An
impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair
value. This determination is made at the reporting unit level and consists of two steps. First, the
Company determines the fair value of a reporting unit and compares it to its carrying amount.
Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is
recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied
fair value of that goodwill. The implied fair value of goodwill is determined by allocating the
fair value of the reporting unit in a manner similar to a purchase price allocation. The residual
fair value after this allocation is the implied fair value of the reporting unit goodwill.
Currently, and historically, the Company is comprised of only one reporting unit that operates
within the business segment it has identified as “community banking”.
Mortgage Servicing Rights
Mortgage servicing rights (MSR) represent the Company’s right to a future stream of cash flows
based upon the contractual servicing fee associated with servicing mortgage loans. Our MSR arise
from residential mortgage loans that we originate and sell, but retain the right to service the
loans. For sales of residential mortgage loans, a portion of the cost of originating the loan is
allocated to the servicing right based on the fair values of the loan and the servicing right. The
net gain from the retention of the servicing right is included in gain on sale of loans in
noninterest income when the loan is sold. Fair value is based on market prices for comparable
mortgage servicing contracts, when available, or alternatively, is based on a valuation model that
calculates the present value of estimated future net servicing income. The valuation model
incorporates assumptions that market participants would use in estimating future net servicing
income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation
rate, ancillary income, prepayment speeds and default rates and losses. MSR are included in other
assets. Servicing fees are recorded in noninterest income when earned.
The determination of fair value of our MSR requires management judgment because they are not
actively traded. The determination of fair value for MSR requires valuation processes which combine
the use of discounted cash flow models and extensive analysis of current market data to arrive at
an estimate of fair value. The cash flow and prepayment assumptions used in our discounted cash
flow model are based on empirical data drawn from the historical performance of our MSR, which we
believe are consistent with assumptions used by market participants valuing similar MSR, and from
data obtained on the performance of similar MSR. The key assumptions used in the valuation of MSR
include mortgage prepayment speeds and the discount rate. These variables can, and generally will,
change from quarter to quarter as market conditions and projected interest rates change. The key
risks inherent with MSR are prepayment speed and changes in interest rates. The Company uses an
independent third party to determine fair value of MSR.
Indemnification Asset
The Company has elected to account for amounts receivable under loss-share agreements with the FDIC
as indemnification assets in accordance with FASB ASC Topic 805, Business Combinations. FDIC
indemnification assets are initially recorded at fair value, based on the discounted value of
expected future cash flows under the loss-share agreements. The difference between the fair value
and the undiscounted cash flows the Company expects to collect from the FDIC will be accreted into
noninterest income over the life of the FDIC indemnification asset.
FDIC indemnification assets are reviewed quarterly and adjusted for any changes in expected cash
flows based on recent performance and expectations for future performance of the covered
portfolios. These adjustments are measured on the same basis as the related covered loans and
covered other real estate owned. Any increases in cash flow of the covered assets over those
expected will reduce the FDIC indemnification asset and any decreases in cash flow of the covered
assets under those expected will increase the FDIC indemnification asset. Increases and decreases
to the FDIC indemnification asset are recorded as adjustments to noninterest income.
Reserve for Unfunded Commitments
The reserve for unfunded commitments is established through a provision for losses — unfunded
commitments charged to noninterest expense. The reserve for unfunded commitments is an amount that
Management believes will be adequate to absorb probable losses inherent in existing commitments,
including unused portions of revolving lines of credits and other loans, standby letters of
credits, and unused deposit account overdraft privilege. The reserve for unfunded commitments is
based on evaluations of the collectability, and prior loss experience of unfunded commitments. The
evaluations take into consideration such factors as changes in the nature and size of the loan
portfolio, overall loan portfolio quality, loan concentrations, specific problem loans and related
unfunded commitments, and current economic conditions that may affect the borrower’s or depositor’s
ability to pay.
Income Taxes
The Company’s accounting for income taxes is based on an asset and liability approach. The Company
recognizes the amount of taxes payable or refundable for the current year, and deferred tax assets
and liabilities for the future tax consequences that have been recognized in its financial
statements or tax returns. The measurement of tax assets and liabilities is based on the
provisions of enacted tax laws.
Off-Balance Sheet Credit Related Financial Instruments
In the ordinary course of business, the Company has entered into commitments to extend credit,
including commitments under credit card arrangements, commercial letters of credit, and standby
letters of credit. Such financial instruments are recorded when they are funded.
Geographical Descriptions
For the purpose of describing the geographical location of the Company’s loans, the Company has
defined northern California as that area of California north of, and including, Stockton; central
California as that area of the state south of Stockton, to and including, Bakersfield; and southern
California as that area of the state south of Bakersfield.
Reclassifications
Certain amounts reported in previous financial statements have been reclassified to conform to the
presentation in this report. These reclassifications did not affect previously reported net income
or total shareholders’ equity.
Recent Accounting Pronouncements
FASB issued Accounting Standards Update (ASU) No. 2010-20, Receivables (Topic 310): Disclosures
about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This Update
amends Topic 310 to improve the disclosures that an entity provides about the credit quality of its
financing receivables and the related allowance for credit losses. As a result of these amendments,
an entity is required to disaggregate by portfolio segment or class certain existing disclosures
and provide certain new disclosures about its financing receivables and related allowance for
credit losses. The amendments in this Update apply to all entities, both public and nonpublic.
The amendments in this Update affect all entities with financing receivables, excluding short-term
trade accounts receivable or receivables measured at fair value or lower of cost or fair value.
For public entities, the disclosures required by this Update as of the end of a reporting period
are effective for interim and annual reporting periods ending on or after December 15, 2010. The
disclosures about activity that occurs during a reporting period are effective for interim and
annual reporting periods beginning on or after December 15, 2010. For nonpublic entities, the
disclosures are effective for annual reporting periods ending on or after December 15, 2011. The
amendments in this Update encourage, but do not require, comparative disclosures for earlier
reporting periods that ended before initial adoption. However, an entity should provide comparative
disclosures for those reporting periods ending after initial adoption. As this ASU is
disclosure-related only, the adoption of this ASU did not impact the Bank’s financial condition or
results of operations.
FASB issued ASU No. 2010-28, Intangibles — Goodwill and Other (Topic 350): When to Perform Step 2
of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. This
update modifies Step 1 of the goodwill impairment test for reporting units with zero or negative
carrying amounts. For those reporting units, an entity is required to perform Step 2 of the
goodwill impairment test if it is more likely than not that a goodwill impairment exists. In
determining whether it is more likely than not that a goodwill impairment exists, an entity should
consider whether there are any adverse qualitative factors indicating that an impairment may exist
such as if an event occurs or circumstances change that would more likely than not reduce the fair
value of a reporting unit below its carrying amount. This update was effective for the Company on
January 1, 2011 and is not expected have a significant impact on the Company’s financial
statements.
FASB issued ASU No. 2011-02, Receivables (Topic 310): A Creditor’s Determination of Whether a
Restructuring Is a Troubled Debt Restructuring. This Update provides additional guidance relating
to when creditors should classify loan modifications as troubled debt restructurings. This Update
also ends the deferral issued in January 2010 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 Update is not expected to have a material impact on the Company’s consolidated
financial statements.
FASB issued ASU No. 2011-03, Transfers and Servicing (Topic 860): Reconsideration of Effective
Control for Repurchase Agreements. This Update is intended to improve financial reporting of
repurchase agreements and other agreements that both entitle and obligate a transferor to
repurchase or redeem financial assets before their maturity. ASU 2011-03 removes from the
assessment of effective control (i) 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 (ii) the collateral maintenance guidance related to that criterion.
ASU 2011-03 will be effective for the Company on January 1, 2012 and is not expected to have a
significant impact on the Company’s financial statements.
FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair
Value Measurement and Disclousre Requirements in U.S. GAAP and IFRSs. ASU 2011-04 amends Topic 820,
Fair Value Measurements and Disclosures, to converge the fair value measurement guidance in U.S.
generally accepted accounting principles and International Financial Reporting Standards. ASU
2011-04 clarifies the application of existing fair value measurement requirements, changes certain
principles in Topic 820 and requires additional fair value disclosures. ASU 2011-04 is effective
for annual periods beginning after December 15, 2011, and is not expected to have a significant
impact on the Company’s financial statements.
FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220) — Presentation of Comprehensive
Income. ASU 2011-05 amends Topic 220, Comprehensive Income, to require that all nonowner changes in
stockholders’ equity be presented in either a single continuous statement of comprehensive income
or in two separate but consecutive statements. Additionally, ASU 2011-05 requires entities to
present, on the face of the financial statements, reclassification adjustments for items that are
reclassified from other comprehensive income to net income in the statement or statements where the
components of net income and the components of other comprehensive income are presented. The option
to present components of other comprehensive income as part of the statement of changes in
stockholders’ equity was eliminated. ASU 2011-05 is effective for annual periods beginning after
December 15, 2011, and is not expected to have a significant impact on the Company’s financial
statements.
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Premises and Equipment
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Premises and Equipment [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premises and Equipment |
Note 7
— Premises and Equipment
Premises and equipment were comprised of:
Depreciation expense for premises and equipment amounted to $604,000 and $707,000 for the three
months ended June 30, 2011 and 2010, respectively. Depreciation expense for premises and equipment
amounted to $1,250,000 and $1,407,000 for the six months ended June 30, 2011 and 2010,
respectively.
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Other Assets
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Other Assets [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets |
Note 12 — Other Assets
Other assets were comprised of (in thousands):
The majority of prepaid expenses & miscellaneous other assets at June 30, 2011 and December 31,
2010 consisted of prepaid FDIC assessment and prepaid taxes. In November of 2009, the FDIC adopted
an amendment to its assessment regulations to require insured institutions to prepay, on December
30, 2009, their estimated quarterly risk-based assessments for the fourth quarter of calendar 2009
and for all of the calendar years 2010, 2011 and 2012. The amount of the prepayment was generally
determined based upon an institution’s assessment rate in effect on September 30, 2009, adjusted to
reflect a 5% growth and as an assessment rate increase of three cents per $100 of deposits
effective January 1, 2011. The Bank’s prepayment amount was $10,544,000.
|
Cash Value of Life Insurance
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Cash Value of Life Insurance [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Value of Life Insurance |
Note 8 — Cash Value of Life Insurance
A summary of the activity in the balance of cash value of life insurance follows (in thousands):
The Bank is the owner and beneficiary of 140 life insurance policies, issued by 6 life insurance
companies, covering 39 current and former employees and directors (Insured). These life insurance
policies are recorded on the Company’s financial statements at their reported cash (surrender)
values. As a result of current tax law, and the nature of these policies, the Bank records any
increase in cash value of these policies as nontaxable noninterest income. If the Bank decided to
surrender any of the policies prior to the death of the insured, such surrender may result in a tax
expense related to the life-to-date cumulative increase in cash value of the policy. If the Bank
retains such policies until the death of the insured, the Bank would receive nontaxable proceeds
from the insurance company equal to the death benefit of the policies. The Bank has entered into
Joint Beneficiary Agreements (JBAs) with certain of the insured that for certain of the policies
provide some level of sharing of the death benefit, less the cash surrender value, among the Bank
and the beneficiaries of the insured upon the receipt of death benefits. See Note 15 of these
financial statements for additional information on of JBAs.
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Retirement Plans
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Jun. 30, 2011
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Retirement Plans [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans |
Note 25 — Retirement Plans
The Company has supplemental retirement plans for current and former directors and key
executives. These plans are non-qualified defined benefit plans and are unsecured and unfunded.
The Company has purchased insurance on the lives of the participants and intends (but is not
required) to use the cash values of these policies to pay the retirement obligations. The
following table sets forth the net periodic benefit cost recognized for the plans:
For the year ending December 31, 2011, the Company currently expects to contribute and pay out
as benefits $758,000 to participants under the plans.
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Foreclosed Assets
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Foreclosed Assets [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreclosed Assets |
Note 6 — Foreclosed Assets
A summary of the activity in the balance of foreclosed assets follows (in thousands):
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Condensed Consolidated Statements of Changes In Shareholders' Equity (Unaudited) (Parenthetical) (USD $)
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6 Months Ended | |
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Jun. 30, 2011
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Jun. 30, 2010
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Dividends paid, per share | $ 0.18 | $ 0.22 |
Retained Earnings
|
 |  |
Dividends paid, per share | $ 0.18 | $ 0.22 |
Business Combinations
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Jun. 30, 2011
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Business Combinations |
Note 2 — Business Combinations
On May 28, 2010, the Office of the Comptroller of the Currency closed Granite Community Bank
(“Granite”), Granite Bay, California and appointed the FDIC as receiver. That same date, the Bank
assumed the banking operations of Granite from the FDIC under a whole bank purchase and assumption
agreement with loss sharing. Under the terms of the loss sharing agreement, the FDIC will cover a
substantial portion of any future losses on loans, related unfunded loan commitments, other real
estate owned (OREO)/foreclosed assets and accrued interest on loans for up to 90 days. The FDIC
will absorb 80% of losses and share in 80% of loss recoveries on the covered assets acquired from
Granite. The loss sharing arrangements for non-single family residential and single family
residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery
provisions are in effect for 8 years and 10 years, respectively, from the acquisition date. With
this agreement, the Bank added one traditional bank branch in each of Granite Bay, Roseville and
Auburn, California. This acquisition is consistent with the Bank’s community banking expansion
strategy and provides further opportunity to fill in the Bank’s market presence in the greater
Sacramento, California market.
The operations of Granite are included in the Company’s operating results from May 28, 2010, and
through December 31, 2010 added revenue of $4,967,000, including a bargain purchase gain of
$232,000, noninterest expense of $2,078,000 and a provision for loan losses of $1,608,000, that
resulted in a contribution to net income after-tax of approximately $743,000. Such operating
results are not necessarily indicative of future operating results. Granite’s results of operations
prior to the acquisition are not included in the Company’s operating results. During the quarter
ended September 30, 2010, the Company completed the conversion of Granite’s information and product
delivery systems. As of December 31, 2010, nonrecurring expenses related to the Granite
acquisition and systems conversion were approximately $250,000.
The assets acquired and liabilities assumed for the Granite acquisition have been accounted for
under the acquisition method of accounting (formerly the purchase method). The assets and
liabilities, both tangible and intangible, were recorded at their estimated fair values as of the
acquisition dates. The fair values of the assets acquired and liabilities assumed were determined
based on the requirements of the Fair Value Measurements and Disclosures topic of the FASB ASC. The
tax treatment of FDIC assisted acquisitions is complex and subject to interpretations that may
result in future adjustments of deferred taxes as of the acquisition date. The terms of the
agreements provide for the FDIC to indemnify the Bank against claims with respect to liabilities of
Granite not assumed by the Bank and certain other types of claims identified in the agreement. The
application of the acquisition method of accounting resulted in the recognition of a bargain
purchase gain of $232,000 in the Granite acquisition. A summary of the net assets received in the
Granite acquisition, at their estimated fair values, is presented below:
The acquired loan portfolio and foreclosed assets are referred to as “covered loans” and “covered
foreclosed assets”, respectively, and these are recorded in Loans and Foreclosed assets,
respectively, in the Company’s consolidated balance sheet. Collectively these balances are referred
to as “covered assets”.
In FDIC-assisted transactions, only certain assets and liabilities are transferred to the acquirer
and, depending on the nature and amount of the acquirer’s bid, the FDIC may be required to make a
cash payment to the acquirer. In the Granite acquisition, net assets with a cost basis of
$4,345,000 were transferred to the Bank. In the Granite acquisition, the Company recorded a
bargain purchase gain of $232,000 representing the excess of the estimated fair value of the assets
acquired over the estimated fair value of the liabilities assumed.
The Bank did not immediately acquire all the real estate, banking facilities, furniture or
equipment of Granite as part of the purchase and assumption agreement. However, the Bank had the
option to purchase or lease the real estate and furniture and equipment from the FDIC. During the
quarter ended September 30, 2010, the Bank elected to close the Roseville branch and assume the
leases for the Granite Bay and Auburn branches. The Bank purchased the existing furniture and
equipment in the Granite Bay and Auburn branches from the FDIC for approximately $100,000.
A summary of the estimated fair value adjustments resulting in the bargain purchase gain in the
Granite acquisition are presented below:
The following table reflects the estimated fair value of the acquired loans at the acquisition
date:
In estimating the fair value of the covered loans at the acquisition date, we (a) calculated the
contractual amount and timing of undiscounted principal and interest payments and (b) estimated the
amount and timing of undiscounted expected principal and interest payments. The difference between
these two amounts represents the nonaccretable difference.
On the acquisition date, the amount by which the undiscounted expected cash flows exceed the
estimated fair value of the acquired loans is the “accretable yield”. The accretable yield is then
measured at each financial reporting date and represents the difference between the remaining
undiscounted expected cash flows and the current carrying value of the loans.
The following table presents a reconciliation of the undiscounted contractual cash flows,
nonaccretable difference, accretable yield, and fair value of covered loans for each respective
acquired loan portfolio at the acquisition dates:
|
Comprehensive Income
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Shareholders' Equity & Comprehensive Income [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income |
Note 24 — Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains and losses be
included in net income. Although certain changes in assets and liabilities, such as unrealized
gains and losses on available-for-sale securities, are reported as a separate component of the
equity section of the balance sheet, such items, along with net income, are components of
comprehensive income. The components of other comprehensive income and related tax effects are as
follows:
The components of accumulated other comprehensive loss, included in shareholders’ equity, are as follows:
|
Investment Securities
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Investment Securities [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities |
Note 3 — Investment Securities
The amortized cost and estimated fair values of investments in debt and equity securities are
summarized in the following tables:
No investment securities were sold during the six months ended June 30, 2011 or the year ended
December 31, 2010. Investment securities with an aggregate carrying value of $121,308,000 and
$140,100,000 at June 30, 2011 and December 31, 2010, respectively, were pledged as collateral for
specific borrowings, lines of credit and local agency deposits.
The amortized cost and estimated fair value of debt securities at June 30, 2011 by contractual
maturity are shown below. Actual maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call or prepayment
penalties. At June 30, 2011, obligations of U.S. government corporations and agencies with a cost
basis totaling $242,914,000 consist almost entirely of mortgage-backed securities whose contractual
maturity, or principal repayment, will follow the repayment of the underlying mortgages. For
purposes of the following table, the entire outstanding balance of these mortgage-backed securities
issued by U.S. government corporations and agencies is categorized based on final maturity date.
At June 30, 2011, the Company estimates the average remaining life of these mortgage-backed
securities issued by U.S. government corporations and agencies to be approximately 3.3 years.
Average remaining life is defined as the time span after which the principal balance has been
reduced by half.
Gross unrealized losses on investment securities and the fair value of the related securities,
aggregated by investment category and length of time that individual securities have been in a
continuous unrealized loss position, were as follows:
Obligations of U.S. government corporations and agencies: Unrealized losses on investments in
obligations of U.S. government corporations and agencies are caused by interest rate increases. The
contractual cash flows of these securities are guaranteed by U.S. Government Sponsored Entities
(principally Fannie Mae and Freddie Mac). It is expected that the securities would not be settled
at a price less than the amortized cost of the investment. Because the decline in fair value is
attributable to changes in interest rates and not credit quality, and because the Company does not
intend to sell and more likely than not will not be required to sell, these investments are not
considered other-than-temporarily impaired. At June 30, 2011, one debt securities representing
obligations of U.S. government corporations and agencies had an unrealized loss with aggregate
depreciation of 0.03% from the Company’s amortized cost basis.
Obligations of states and political subdivisions: The unrealized losses on investments in
obligations of states and political subdivisions are caused by increases in required yields by
investors in these types of securities. It is expected that the securities would not be settled at
a price less than the amortized cost of the investment. Because the decline in fair value is
attributable to changes in interest rates and not credit quality, and because the Company does not
intend to sell and more likely than not will not be required to sell, these investments are not
considered other-than-temporarily impaired. At June 30, 2011, three debt securities representing
obligations of states and political subdivisions had unrealized losses with aggregate depreciation
of 4.35% from the Company’s amortized cost basis.
Corporate debt securities: The unrealized losses on investments in corporate debt securities were
caused by increases in required yields by investors in similar types of securities. It is expected
that the securities would not be settled at a price less than the amortized cost of the investment.
Because the decline in fair value is attributable to changes in interest rates and not credit
quality, and because the Company does not intend to sell and more likely than not will not be
required to sell, these investments are not considered other-than-temporarily impaired. At June
30, 2011, the Company had no corporate debt securities.
|
Noninterest Income and Expenses
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Noninterest Income and Expenses [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest Income and Expenses |
Note 21 — Noninterest Income and Expenses
The components of other noninterest income were as follows (in thousands):
The components of noninterest expense were as follows (in thousands):
|
Related Party Transactions
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
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Related Party Transactions [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions |
Note 26 — Related Party Transactions
Certain directors, officers, and companies with which they are associated were customers of, and
had banking transactions with, the Company or the Bank in the ordinary course of business. It is
the Company’s policy that all loans and commitments to lend to officers and directors be made on
substantially the same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other borrowers of the Bank.
The following table summarizes the activity in these loans for the periods indicated (in
thousands):
|
Earnings Per Share
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Earnings Per Share [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
Note 23 — Earnings Per Share
Basic earnings per share represents income available to common shareholders divided by the
weighted-average number of common shares outstanding during the period. Diluted earnings per share
reflects additional common shares that would have been outstanding if dilutive potential common
shares had been issued, as well as any adjustments to income that would result from assumed
issuance. Potential common shares that may be issued by the Company relate solely from outstanding
stock options, and are determined using the treasury stock method. Earnings per share have been
computed based on the following:
|
Indemnification Asset
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Indemnification Asset [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indemnification Asset |
Note 11 — Indemnification Asset
A summary of the activity in the balance of indemnification asset follows (in thousands):
|
Loans
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Loans & Allowance for Loan Losses [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans |
Note 4 — Loans
A summary of the balances of loans follows (in thousands):
The following is a summary of the change in accretable yield for PCI loans during the periods
indicated (in thousands):
Throughout these financial statements, and in particular in this Note 4 and Note 5, when we refer
to “Loans” or “Allowance for loan losses” we mean all categories of loans, including originated and
PCI. When we are not referring to all categories of loans, we will indicate which we are referring
to — originated or PCI.
|
Reserve for Unfunded Commitments
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Reserve for Unfunded Commitments [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve for Unfunded Commitments |
Note 14 — Reserve for Unfunded Commitments
The following tables summarize the activity in reserve for unfunded commitments for the periods
indicated (dollars in thousands):
|
Income Taxes
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Income Taxes [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
Note 22 — Income Taxes
The provisions for income taxes applicable to income before taxes differ from amounts computed by
applying the statutory Federal income tax rates to income before taxes. The effective tax rate and
the statutory federal income tax rate are reconciled for the periods indicated as follows:
|
Other Liabilities
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Other Liabilities [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities |
Note 15 — Other Liabilities
Other liabilities were comprised of (in thousands):
|
Junior Subordinated Debt
|
6 Months Ended |
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Jun. 30, 2011
|
|
Other Borrowings & Junior Subordinated Debt [Abstract] | Â |
Junior Subordinated Debt |
Note 17 — Junior Subordinated Debt
On July 31, 2003, the Company formed a subsidiary business trust, TriCo Capital Trust I, to issue
trust preferred securities. Concurrently with the issuance of the trust preferred securities, the
trust issued 619 shares of common stock to the Company for $1,000 per share or an aggregate of
$619,000. In addition, the Company issued a Junior Subordinated Debenture to the Trust in the
amount of $20,619,000. The terms of the Junior Subordinated Debenture are materially consistent
with the terms of the trust preferred securities issued by TriCo Capital Trust I. Also on July 31,
2003, TriCo Capital Trust I completed an offering of 20,000 shares of cumulative trust preferred
securities for cash in an aggregate amount of $20,000,000. The trust preferred securities are
mandatorily redeemable upon maturity on October 7, 2033 with an interest rate that resets quarterly
at three-month LIBOR plus 3.05%. TriCo Capital Trust I has the right to redeem the trust
preferred securities on or after October 7, 2008. The trust preferred securities were issued
through an underwriting syndicate to which the Company paid underwriting fees of $7.50 per trust
preferred security or an aggregate of $150,000. The net proceeds of $19,850,000 were used to
finance the opening of new branches, improve bank services and technology, repurchase shares of the
Company’s common stock under its repurchase plan and increase the Company’s capital. The trust
preferred securities have not been and will not be registered under the Securities Act of 1933, as
amended, or applicable state securities laws and were sold pursuant to an exemption from
registration under the Securities Act of 1933. The trust preferred securities may not be offered
or sold in the United States absent registration or an applicable exemption from the registration
requirements of the Securities Act of 1933, as amended, and applicable state securities laws.
The $20,619,000 of junior subordinated debentures issued by TriCo Capital Trust I are reflected as
junior subordinated debt in the consolidated balance sheets. The common stock issued by TriCo
Capital Trust I are recorded in other assets in the consolidated balance sheets.
On June 22, 2004, the Company formed a second subsidiary business trust, TriCo Capital Trust II, to
issue trust preferred securities. Concurrently with the issuance of the trust preferred
securities, the trust issued 619 shares of common stock to the Company for $1,000 per share or an
aggregate of $619,000. In addition, the Company issued a Junior Subordinated Debenture to the
Trust in the amount of $20,619,000. The terms of the Junior Subordinated Debenture are materially
consistent with the terms of the trust preferred securities issued by TriCo Capital Trust II. Also
on June 22, 2004, TriCo Capital Trust II completed an offering of 20,000 shares of cumulative trust
preferred securities for cash in an aggregate amount of $20,000,000. The trust preferred
securities are mandatorily redeemable upon maturity on July 23, 2034 with an interest rate that
resets quarterly at three-month LIBOR plus 2.55%. TriCo Capital Trust II has the right to redeem
the trust preferred securities on or after July 23, 2009. The trust preferred securities were
issued through an underwriting syndicate to which the Company paid underwriting fees of $2.50 per
trust preferred security or an aggregate of $50,000. The net proceeds of $19,950,000 were used to
finance the opening of new branches, improve bank services and technology, repurchase shares of the
Company’s common stock under its repurchase plan and increase the Company’s capital. The trust
preferred securities have not been and will not be registered under the Securities Act of 1933, as
amended, or applicable state securities laws and were sold pursuant to an exemption from
registration under the Securities Act of 1933. The trust preferred securities may not be offered
or sold in the United States absent registration or an applicable exemption from the registration
requirements of the Securities Act of 1933, as amended, and applicable state securities laws.
The $20,619,000 of junior subordinated debentures issued by TriCo Capital Trust II are reflected as
junior subordinated debt in the consolidated balance sheets. The common stock issued by TriCo
Capital Trust II is recorded in other assets in the consolidated balance sheets.
The debentures issued by TriCo Capital Trust I and TriCo Capital Trust II, less the common
securities of TriCo Capital Trust I and TriCo Capital Trust II, continue to qualify as Tier 1 or
Tier 2 capital under interim guidance issued by the Board of Governors of the Federal Reserve
System (Federal Reserve Board).
|
Goodwill and Other Intangible Assets
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Goodwill and Other Intangible Assets [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets |
Note 9 — Goodwill and Other Intangible Assets
The following table summarizes the Company’s goodwill intangible as of the dates indicated.
The following table summarizes the Company’s core deposit intangibles as of the dates indicated.
The Company recorded additions to CDI of $562,000 in conjunction with the Granite acquisition on
May 28, 2010. The following table summarizes the Company’s estimated core deposit intangible
amortization (dollars in thousands):
|
Fair Value Measurement
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Value Measurement [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement |
Note 27 — Fair Value Measurement
The Company utilizes fair value measurements to record fair value adjustments to certain assets and
liabilities and to determine fair value disclosures. In estimating fair value, the Company utilizes
valuation techniques that are consistent with the market approach, income approach, and/or the cost
approach. Inputs to valuation techniques include the assumptions that market participants would
use in pricing an asset or liability including assumptions about the risk inherent in a particular
valuation technique, the effect of a restriction on the sale or use of an asset and the risk of
nonperformance. Securities available-for-sale and mortgage servicing rights are recorded at fair
value on a recurring basis. Additionally, from time to time, the Company may be required to record
at fair value other assets on a nonrecurring basis, such as loans held for sale, loans held for
investment and certain other assets. These nonrecurring fair value adjustments typically involve
application of lower of cost or market accounting or impairment write-downs of individual assets.
Transfers between levels of the fair value hierarchy are recognized on the actual date of the event
or circumstances that caused the transfer, which generally corresponds with the Company’s quarterly
valuation process.
The Company groups assets and liabilities at fair value in three levels, based on the markets in
which the assets and liabilities are traded and the observable nature of the assumptions used to
determine fair value. These levels are:
Securities available-for-sale - Securities available-for-sale are recorded at fair value on a
recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices
are not available, fair values are measured using independent pricing models or other model-based
valuation techniques such as the present value of future cash flows, adjusted for the security’s
credit rating, prepayment
assumptions and other factors such as credit loss assumptions. Level 1 securities include those
traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that
are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2
securities include mortgage-backed securities issued by government sponsored entities, municipal
bonds and corporate debt securities. Securities classified as Level 3 include asset-backed
securities in less liquid markets.
Loans held for sale — Loans held for sale are carried at the lower of cost or market value. The
fair value of loans held for sale is based on what secondary markets are currently offering for
loans with similar characteristics. As such, we classify those loans subjected to nonrecurring fair
value adjustments as Level 2.
Impaired originated loans — originated loans are not recorded at fair value on a recurring basis.
However, from time to time, an originated loan is considered impaired and an allowance for loan
losses is established. Originated loans for which it is probable that payment of interest and
principal will not be made in accordance with the contractual terms of the loan agreement are
considered impaired. The fair value of an impaired originated loan is estimated using one of
several methods, including collateral value, market value of similar debt, enterprise value,
liquidation value and discounted cash flows. Those impaired originated loans not requiring an
allowance represent loans for which the fair value of the expected repayments or collateral exceed
the recorded investments in such loans. Impaired originated loans where an allowance is
established based on the fair value of collateral require classification in the fair value
hierarchy. When the fair value of the collateral is based on an observable market price or a
current appraised value which uses substantially observable data, the Company records the impaired
originated loan as nonrecurring Level 2. When an appraised value is not available or management
determines the fair value of the collateral is further impaired below the appraised value, or the
appraised value contains a significant unobservable assumption, and there is no observable market
price, the Company records the impaired originated loan as nonrecurring Level 3.
Foreclosed assets - Foreclosed assets include assets acquired through, or in lieu of, loan
foreclosure. Foreclosed assets are held for sale and are initially recorded at fair value at the
date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, management
periodically performs valuations and the assets are carried at the lower of carrying amount or fair
value less cost to sell. The fair value of foreclosed assets is established using current real
estate appraisals. Revenue and expenses from operations and changes in the valuation allowance are
included in other noninterest expense. The Company records foreclosed assets as nonrecurring Level
3.
Mortgage servicing rights - Mortgage servicing rights are carried at fair value. A valuation model,
which utilizes a discounted cash flow analysis using a discount rate and prepayment speed
assumptions is used in the computation of the fair value measurement. While the prepayment speed
assumption is currently quoted for comparable instruments, the discount rate assumption currently
requires a significant degree of management judgment. As such, the Company classifies mortgage
servicing rights subjected to recurring fair value adjustments as Level 3.
The table below presents the recorded amount of assets and liabilities measured at fair value on a
recurring basis (in thousands):
The following table provides a reconciliation of assets and liabilities measured at fair value
using significant unobservable inputs (Level 3) on a recurring basis during the three and six
months ended June 30, 2011 and 2010. The amount included in the “Transfer into Level 3” column
represents the beginning balance of an item in the period (interim quarter) for which it was
designated as a Level 3 fair value measure (in thousands):
The tables below present the recorded amount of assets and liabilities measured at fair value on a
nonrecurring basis, as of the dates indicated, that had a write-down or an additional allowance
provided during the periods indicated (in thousands):
The following table presents the losses resulting from nonrecurring fair value adjustments that occurred in the periods indicated:
In addition to the methods and assumptions used to estimate the fair value of each class of
financial instrument noted above, the following methods and assumptions were used to estimate the
fair value of other classes of financial instruments for which it is practical to estimate the fair
value.
Short-term Instruments - Cash and due from banks, fed funds purchased and sold, accrued interest
receivable and payable, and short-term borrowings are considered short-term instruments. For these
short-term instruments their carrying amount approximates their fair value.
Securities - For all securities, fair values are based on quoted market prices or dealer quotes.
Restricted Equity Securities - The carrying value of restricted equity securities approximates fair
value as the shares can only be redeemed by the issuing institution at par.
Originated loans - The fair value of variable rate originated loans is the current carrying value.
The interest rates on these originated loans are regularly adjusted to market rates. The fair
value of other types of fixed rate originated loans is estimated by discounting the future cash
flows using current rates at which similar loans would be made to borrowers with similar credit
ratings for the same remaining maturities. The allowance for loan losses is a reasonable estimate
of the valuation allowance needed to adjust computed fair values for credit quality of certain
originated loans in the portfolio.
PCI Loans - PCI loans are measured at estimated fair value on the date of acquisition. Carrying
value is calculated as the present value of expected cash flows and approximates fair value.
Cash Value of Life Insurance - The fair values of insurance policies owned are based on the
insurance contract’s cash surrender value.
FDIC Indemnification Asset — The FDIC indemnification asset is recorded at fair value, based on the
discounted value of expected future cash flows under the loss-share agreement.
Deposit Liabilities - The fair value of demand deposits, savings accounts, and certain money market
deposits is the amount payable on demand at the reporting date. These values do not consider the
estimated fair value of the Company’s core deposit intangible, which is a significant unrecognized
asset of the Company. The fair value of time deposits and other borrowings is based on the
discounted value of contractual cash flows.
Other Borrowings - The fair value of other borrowings is calculated based on the discounted value
of the contractual cash flows using current rates at which such borrowings can currently be
obtained.
Junior Subordinated Debentures - The fair value of junior subordinated debentures is estimated
using a discounted cash flow model. The future cash flows of these instruments are extended to the
next available redemption date or maturity date as appropriate based upon the spreads of recent
issuances or quotes from brokers for comparable bank holding companies compared to the contractual
spread of each junior subordinated debenture measured at fair value.
Commitments to Extend Credit and Standby Letters of Credit - The fair value of commitments is
estimated using the fees currently charged to enter into similar agreements, taking into account
the remaining terms of the agreements and the present credit worthiness of the counter parties.
For fixed rate loan commitments, fair value also considers the difference between current levels of
interest rates and the committed rates. The fair value of letters of credit is based on fees
currently charged for similar agreements or on the estimated cost to terminate them or otherwise
settle the obligation with the counter parties at the reporting date.
Fair values for financial instruments are management’s estimates of the values at which the
instruments could be exchanged in a transaction between willing parties. These estimates are
subjective and may vary significantly from amounts that would be realized in actual transactions.
In addition, other significant assets are not considered financial assets including, any mortgage
banking operations, deferred tax assets, and premises and equipment. Further, the tax
ramifications related to the realization of the unrealized gains and losses can have a significant
effect on the fair value estimates and have not been considered in any of these estimates.
The estimated fair values of the Company’s financial instruments are as follows:
TRICO BANCSHARES
(dollars in thousands, except per share amounts; unaudited)
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Deposits
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Deposits [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits |
Note 13 — Deposits
A summary of the balances of deposits follows (in thousands):
Certificate of deposit balances of $5,000,000 and $5,000,000 from the State of California were
included in time certificates, $100,000 and over, at June 30, 2011 and December 31, 2010,
respectively. The Bank participates in a deposit program offered by the State of California whereby
the State may make deposits at the Bank’s request subject to collateral and credit worthiness
constraints. The negotiated rates on these State deposits are generally more favorable than other
wholesale funding sources available to the Bank. Overdrawn deposit balances of $1,733,000 and
$1,513,000 were classified as consumer loans at June 30, 2011 and December 31, 2010, respectively.
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