| Quarterly Financial Information |
24. QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
The following
table presents summarized quarterly data for each of the years
indicated.
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Unaudited |
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2013:
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First
Quarter |
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Second
Quarter |
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Third
Quarter |
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Fourth
Quarter |
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Total |
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(Dollars in thousands,
except per share data) |
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Interest
income
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$ |
16,436 |
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$ |
15,987 |
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$ |
16,009 |
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$ |
16,312 |
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$ |
64,744 |
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Interest
expense
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3,519 |
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3,351 |
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3,305 |
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3,238 |
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13,413 |
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Net interest
income
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12,917 |
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12,636 |
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12,704 |
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13,074 |
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51,331 |
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Provision for loan
losses
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2,064 |
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1,113 |
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657 |
(1) |
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282 |
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4,116 |
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Net interest income after
provision for loan losses
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10,853 |
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11,523 |
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12,047 |
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12,792 |
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47,215 |
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Non-interest
income
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5,693 |
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6,384 |
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3,548 |
(2) |
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4,124 |
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19,749 |
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Non-interest
expenses
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13,864 |
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14,368 |
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13,528 |
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14,977 |
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56,737 |
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Income before
taxes
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2,682 |
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3,539 |
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2,067 |
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1,939 |
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10,227 |
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Income tax expense
(benefit)(3)
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— |
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150 |
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350 |
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(300 |
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200 |
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Net income
(loss)
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$ |
2,682 |
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$ |
3,389 |
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$ |
1,717 |
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$ |
2,239 |
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$ |
10,027 |
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Earnings (loss) per
share:
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Basic earnings
(loss)
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$ |
0.06 |
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$ |
(0.06 |
) |
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$ |
0.03 |
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$ |
0.04 |
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$ |
0.07 |
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Diluted earnings
(loss)
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0.06 |
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(0.06 |
) |
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0.03 |
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0.04 |
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0.07 |
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| 1. |
The decrease in provision
for loan losses in the third quarter was due primarily to a
recovery of $1.9 million resulting from the sale of one
nonperforming loan. |
| 2. |
The decline in
noninterest income in the third quarter was driven by no gains
recognized on sales of available for sale securities. Further
impacting the decline was lower mortgage banking income due to
fewer loans originated for sale. The rise in longer-term rates in
the second quarter negatively impacted the volume of loans
originated for sale in the subsequent quarters. |
| 3. |
The Company recognized income tax expense of $200,000 for the
year ended December 31, 2013 as a result of a 2013 alternative
minimum tax (AMT) liability. While the Company has significant
net operating loss (NOL) carryforwards available to offset taxable
income for both regular tax and AMT purposes, tax laws only permit
the AMT NOL carryforward to offset 90% of current year taxable
income for purposes of determining the AMT liability. Thus, an AMT
liability of $200,000 was generated for the current year by
applying the AMT rate of 20% to AMT taxable income. While tax laws
permit the Company to carry forward this $200,000 in the form of an
AMT credit to be used in future periods, the resulting deferred tax
benefit is fully offset by a valuation allowance. The changes
related to income tax expense, from quarter to quarter, are due to
changes in estimates of AMT taxable income during the
year.
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Unaudited |
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2012:
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First
Quarter |
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Second
Quarter |
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Third
Quarter |
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Fourth
Quarter |
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Total |
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(Dollars in thousands,
except per share data) |
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Interest
income
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$ |
21,562 |
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$ |
20,894 |
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$ |
18,191 |
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$ |
17,797 |
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$ |
78,444 |
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Interest
expense
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5,683 |
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4,474 |
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4,063 |
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3,786 |
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18,006 |
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Net interest
income
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15,879 |
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16,420 |
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14,128 |
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14,011 |
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60,438 |
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Provision for loan
losses
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680 |
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6,264 |
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30,279 |
(1) |
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2,102 |
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39,325 |
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Net interest income after
provision for loan losses
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15,199 |
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10,156 |
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(16,151 |
) |
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11,909 |
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21,113 |
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Non-interest
income
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5,091 |
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6,949 |
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3,752 |
(2) |
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6,939 |
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22,731 |
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Non-interest
expenses
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16,494 |
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17,043 |
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17,330 |
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14,302 |
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65,169 |
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Income (loss) before
taxes
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3,796 |
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62 |
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(29,729 |
) |
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4,546 |
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(21,325 |
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Income tax expense
(benefit)(3)
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— |
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— |
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(2,838 |
) |
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1,950 |
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(888 |
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Net income
(loss)
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$ |
3,796 |
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$ |
62 |
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$ |
(26,891 |
) |
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$ |
2,596 |
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$ |
(20,437 |
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Earnings (loss) per
share:
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Basic earnings
(loss)
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$ |
0.12 |
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$ |
— |
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$ |
(0.82 |
) |
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$ |
0.08 |
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$ |
(0.62 |
) |
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Diluted earnings
(loss)
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0.12 |
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— |
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(0.82 |
) |
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0.08 |
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(0.62 |
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| 1. |
The increase in provision
for loan losses in the third quarter was due primarily to a bulk
sale of nonperforming assets. |
| 2. |
The decline in
noninterest income in the third quarter was driven by lower gains
recognized on a lower volume of sales of available for sale
securities. Further impacting the decline was the recognition in
the third quarter of the valuation allowance on certain properties
to absorb estimated closing costs at the time of
disposal. |
| 3. |
The Company recognized a
tax benefit of $888,000 for the year ended December 31, 2012,
because it was both (i) in a pre-tax operating loss position,
and (ii) had unrealized gains on available for sale securities
in its securities portfolio that were recorded in other
comprehensive income. Beginning in the third quarter, the Company
both recognized a pre-tax operating loss and at the same time, had
unrealized gains on available for sale securities recorded in other
comprehensive income. As a result, the tax benefit recognized in
the third quarter was equal to the current year-to-date change
(through September) in other comprehensive income multiplied by the
Company’s statutory tax rate of 35%. In the fourth quarter,
the year-to-date change in other comprehensive income had
compressed, causing a reduction in the benefit previously
recognized, and resulting in income tax expense for the
quarter. |
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