OHIO | 34-1371693 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No) |
Canfield, OH | 44406 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
Class | Outstanding at July 31, 2011 | |
Common Stock, No Par Value | 18,700,453 shares |
Page Number | ||||||||
Included in Part I of this report: |
||||||||
1 | ||||||||
2 | ||||||||
3 | ||||||||
4-20 | ||||||||
21-32 | ||||||||
33 | ||||||||
33 | ||||||||
34 | ||||||||
34 | ||||||||
34 | ||||||||
34 | ||||||||
34 | ||||||||
34 | ||||||||
34-35 | ||||||||
36 | ||||||||
10-Q Certifications |
||||||||
Section 906 Certifications |
||||||||
Exhibit 3.2 | ||||||||
Exhibit 31.a | ||||||||
Exhibit 31.b | ||||||||
Exhibit 32.a | ||||||||
Exhibit 32.b | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT |
(In Thousands of Dollars) | ||||||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Cash and due from banks |
$ | 28,170 | $ | 30,772 | ||||
Federal funds sold |
16,969 | 6,533 | ||||||
TOTAL CASH AND CASH EQUIVALENTS |
45,139 | 37,305 | ||||||
Securities available for sale |
358,335 | 314,347 | ||||||
Loans |
568,704 | 590,367 | ||||||
Less allowance for loan losses |
10,876 | 9,307 | ||||||
NET LOANS |
557,828 | 581,060 | ||||||
Premises and equipment, net |
14,599 | 13,944 | ||||||
Bank owned life insurance |
14,699 | 11,529 | ||||||
Goodwill |
3,709 | 3,709 | ||||||
Other intangibles |
2,956 | 3,211 | ||||||
Other assets |
16,956 | 17,646 | ||||||
TOTAL ASSETS |
$ | 1,014,221 | $ | 982,751 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Deposits: |
||||||||
Noninterest-bearing |
$ | 81,550 | $ | 77,728 | ||||
Interest-bearing |
688,513 | 683,322 | ||||||
TOTAL DEPOSITS |
770,063 | 761,050 | ||||||
Short-term borrowings |
108,720 | 105,634 | ||||||
Long-term borrowings |
23,572 | 24,733 | ||||||
Other liabilities |
3,290 | 3,286 | ||||||
TOTAL LIABILITIES |
905,645 | 894,703 | ||||||
Commitments and contingent liabilities |
||||||||
Stockholders Equity: |
||||||||
Common Stock Authorized 25,000,000 shares; issued
18,700,466 in 2011 and 15,699,184 in 2010 |
104,012 | 96,142 | ||||||
Retained (deficit) earnings |
(2,155 | ) | 14,502 | |||||
Accumulated other comprehensive income |
6,719 | 2,907 | ||||||
Treasury stock, at cost; 13 shares in 2011 and 2,053,149 in 2010 |
0 | (25,503 | ) | |||||
TOTAL STOCKHOLDERS EQUITY |
108,576 | 88,048 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 1,014,221 | $ | 982,751 | ||||
1
(In Thousands except Per Share Data) | ||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
INTEREST AND DIVIDEND INCOME |
||||||||||||||||
Loans, including fees |
$ | 8,354 | $ | 9,192 | $ | 16,820 | $ | 18,424 | ||||||||
Taxable securities |
2,048 | 2,261 | 3,917 | 4,502 | ||||||||||||
Tax exempt securities |
729 | 584 | 1,468 | 1,175 | ||||||||||||
Dividends |
53 | 47 | 99 | 100 | ||||||||||||
Federal funds sold |
10 | 15 | 19 | 24 | ||||||||||||
TOTAL INTEREST AND DIVIDEND INCOME |
11,194 | 12,099 | 22,323 | 24,225 | ||||||||||||
INTEREST EXPENSE |
||||||||||||||||
Deposits |
1,684 | 2,420 | 3,382 | 5,165 | ||||||||||||
Short-term borrowings |
104 | 234 | 201 | 519 | ||||||||||||
Long-term borrowings |
249 | 269 | 500 | 551 | ||||||||||||
TOTAL INTEREST EXPENSE |
2,037 | 2,923 | 4,083 | 6,235 | ||||||||||||
NET INTEREST INCOME |
9,157 | 9,176 | 18,240 | 17,990 | ||||||||||||
Provision for loan losses |
1,075 | 1,600 | 2,950 | 4,378 | ||||||||||||
NET INTEREST INCOME AFTER |
||||||||||||||||
PROVISION FOR LOAN LOSSES |
8,082 | 7,576 | 15,290 | 13,612 | ||||||||||||
NONINTEREST INCOME |
||||||||||||||||
Service charges on deposit accounts |
500 | 497 | 973 | 975 | ||||||||||||
Bank owned life insurance income, including death benefits |
119 | 131 | 278 | 257 | ||||||||||||
Trust fees |
1,365 | 1,197 | 2,703 | 2,429 | ||||||||||||
Security gains (losses) |
0 | (3 | ) | 0 | (3 | ) | ||||||||||
Insurance agency commissions |
28 | 110 | 92 | 172 | ||||||||||||
Investment commissions |
263 | 129 | 454 | 240 | ||||||||||||
Other operating income |
419 | 660 | 811 | 987 | ||||||||||||
TOTAL NONINTEREST INCOME |
2,694 | 2,721 | 5,311 | 5,057 | ||||||||||||
NONINTEREST EXPENSES |
||||||||||||||||
Salaries and employee benefits |
4,483 | 4,099 | 8,671 | 8,076 | ||||||||||||
Occupancy and equipment |
922 | 892 | 1,838 | 1,817 | ||||||||||||
State and local taxes |
238 | 224 | 485 | 456 | ||||||||||||
Professional fees |
267 | 381 | 503 | 690 | ||||||||||||
Advertising |
211 | 147 | 356 | 277 | ||||||||||||
FDIC insurance |
244 | 317 | 592 | 620 | ||||||||||||
Intangible amortization |
112 | 145 | 255 | 290 | ||||||||||||
Core processing charges |
245 | 237 | 490 | 476 | ||||||||||||
Other operating expenses |
1,370 | 1,203 | 2,716 | 2,475 | ||||||||||||
TOTAL NONINTEREST EXPENSES |
8,092 | 7,645 | 15,906 | 15,177 | ||||||||||||
INCOME BEFORE INCOME TAXES |
2,684 | 2,652 | 4,695 | 3,492 | ||||||||||||
INCOME TAXES |
567 | 618 | 888 | 611 | ||||||||||||
NET INCOME |
$ | 2,117 | $ | 2,034 | $ | 3,807 | $ | 2,881 | ||||||||
OTHER COMPREHENSIVE INCOME, NET OF TAX: |
||||||||||||||||
Change in net unrealized gains on securities,
net of reclassifications |
3,769 | 2,988 | 3,812 | 4,055 | ||||||||||||
COMPREHENSIVE INCOME |
$ | 5,886 | $ | 5,022 | $ | 7,619 | $ | 6,936 | ||||||||
NET INCOME PER SHARE basic and diluted |
$ | 0.11 | $ | 0.15 | $ | 0.21 | $ | 0.21 | ||||||||
DIVIDENDS PER SHARE |
$ | 0.03 | $ | 0.03 | $ | 0.06 | $ | 0.06 | ||||||||
2
(In Thousands of Dollars) | ||||||||
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Net income |
$ | 3,807 | $ | 2,881 | ||||
Adjustments to reconcile net income
to net cash from operating activities: |
||||||||
Provision for loan losses |
2,950 | 4,378 | ||||||
Depreciation and amortization |
829 | 861 | ||||||
Net amortization of securities |
2,540 | 504 | ||||||
Security (gains) losses |
0 | 3 | ||||||
Loss on sale of other real estate owned |
29 | 48 | ||||||
Income on bank owned life insurance |
(278 | ) | (257 | ) | ||||
Net change in other assets and liabilities |
(1,139 | ) | 863 | |||||
NET CASH FROM OPERATING ACTIVITIES |
8,738 | 9,281 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Proceeds from maturities and repayments of securities available for sale |
19,251 | 27,489 | ||||||
Proceeds from sales of securities available for sale |
3,361 | 1,896 | ||||||
Purchases of securities available for sale |
(63,277 | ) | (39,014 | ) | ||||
Loan originations and payments, net |
19,845 | (7,560 | ) | |||||
Proceeds from sale of other real estate owned |
141 | 354 | ||||||
Purchase of bank owned life insurance |
(3,000 | ) | 0 | |||||
Proceeds from BOLI death benefit |
108 | 0 | ||||||
Additions to premises and equipment |
(1,179 | ) | (632 | ) | ||||
NET CASH FROM INVESTING ACTIVITIES |
(24,750 | ) | (17,467 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Net change in deposits |
9,013 | (16,873 | ) | |||||
Net change in short-term borrowings |
3,086 | 11,999 | ||||||
Repayment of Federal Home Loan Bank borrowings and other debt |
(1,161 | ) | (1,889 | ) | ||||
Cash dividends paid |
(1,119 | ) | (813 | ) | ||||
Proceeds from dividend reinvestment |
255 | 240 | ||||||
Net proceeds from issuance of common shares |
13,772 | 0 | ||||||
NET CASH FROM FINANCING ACTIVITIES |
23,846 | (7,336 | ) | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS |
7,834 | (15,522 | ) | |||||
Beginning cash and cash equivalents |
37,305 | 51,160 | ||||||
Ending cash and cash equivalents |
$ | 45,139 | $ | 35,638 | ||||
Supplemental cash flow information: |
||||||||
Interest paid |
$ | 4,108 | $ | 6,435 | ||||
Income taxes paid |
$ | 2,085 | $ | 50 | ||||
Supplemental noncash disclosures: |
||||||||
Transfer of loans to other real estate |
$ | 437 | $ | 173 |
3
4
Gross | Gross | |||||||||||||||
(In Thousands of Dollars) | Amortized | Unrealized | Unrealized | Fair | ||||||||||||
June 30, 2011 | Cost | Gains | Losses | Value | ||||||||||||
U.S. Treasury and U.S. government
sponsored entities |
$ | 87,200 | $ | 3,750 | $ | (15 | ) | $ | 90,935 | |||||||
State and political subdivisions |
80,045 | 2,456 | (691 | ) | 81,810 | |||||||||||
Mortgage-backed securities residential |
157,505 | 4,620 | (395 | ) | 161,730 | |||||||||||
Collateralized mortgage obligations |
22,850 | 238 | 0 | 23,088 | ||||||||||||
Equity securities |
149 | 373 | (16 | ) | 506 | |||||||||||
Other securities |
250 | 16 | 0 | 266 | ||||||||||||
Totals |
$ | 347,999 | $ | 11,453 | $ | (1,117 | ) | $ | 358,335 | |||||||
(In Thousands of Dollars) December 31, 2010 |
||||||||||||||||
U.S. Treasury and U.S. government
sponsored entities |
$ | 67,376 | $ | 2,768 | $ | (166 | ) | $ | 69,978 | |||||||
State and political subdivisions |
81,397 | 1,215 | (2,146 | ) | 80,466 | |||||||||||
Mortgage-backed securities residential |
140,681 | 4,099 | (1,003 | ) | 143,777 | |||||||||||
Collateralized mortgage obligations |
20,021 | 1 | (362 | ) | 19,660 | |||||||||||
Equity securities |
149 | 66 | (16 | ) | 199 | |||||||||||
Other securities |
250 | 17 | 0 | 267 | ||||||||||||
Totals |
$ | 309,874 | $ | 8,166 | $ | (3,693 | ) | $ | 314,347 | |||||||
June 30, 2011 | ||||||||
Amortized | Fair | |||||||
(In Thousands of Dollars) | Cost | Value | ||||||
Maturity |
||||||||
Within one year |
$ | 4,300 | $ | 4,385 | ||||
One to five years |
98,306 | 102,048 | ||||||
Five to ten years |
40,161 | 40,699 | ||||||
Beyond ten years |
24,728 | 25,879 | ||||||
Mortgage-backed and CMO securities |
180,355 | 184,818 | ||||||
Total |
$ | 347,850 | $ | 357,829 | ||||
5
Less Than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
(In Thousands of Dollars) | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
June 30, 2011 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||
U.S. Treasury and U.S.
government-sponsored
entities |
$ | 4,976 | $ | (10 | ) | $ | 288 | $ | (5 | ) | $ | 5,264 | $ | (15 | ) | |||||||||
State and political
subdivisions |
22,234 | (580 | ) | 851 | (111 | ) | 23,085 | (691 | ) | |||||||||||||||
Mortgage-backed
securities residential |
43,337 | (395 | ) | 25 | (0 | ) | 43,362 | (395 | ) | |||||||||||||||
Equity securities |
0 | 0 | 7 | (16 | ) | 7 | (16 | ) | ||||||||||||||||
Total |
$ | 70,547 | $ | (985 | ) | $ | 1,171 | $ | (132 | ) | $ | 71,718 | $ | (1,117 | ) | |||||||||
Less Than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
(In Thousands of Dollars) | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
December 31, 2010 | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||
U.S. Treasury and U.S.
government-sponsored
entities |
$ | 8,458 | $ | (160 | ) | $ | 313 | $ | (6 | ) | $ | 8,771 | $ | (166 | ) | |||||||||
State and political
subdivisions |
36,118 | (1,981 | ) | 790 | (165 | ) | 36,908 | (2,146 | ) | |||||||||||||||
Mortgage-backed
securities residential |
45,567 | (1,002 | ) | 26 | (1 | ) | 45,593 | (1,003 | ) | |||||||||||||||
Collateralized mortgage
obligations |
19,594 | (362 | ) | 0 | 0 | 19,594 | (362 | ) | ||||||||||||||||
Equity securities |
0 | 0 | 8 | (16 | ) | 8 | (16 | ) | ||||||||||||||||
Total |
$ | 109,737 | $ | (3,505 | ) | $ | 1,137 | $ | (188 | ) | $ | 110,874 | $ | (3,693 | ) | |||||||||
6
June 30, | December 31, | |||||||
(In Thousands of Dollars) | 2011 | 2010 | ||||||
Commercial real estate |
||||||||
Owner occupied |
$ | 105,743 | $ | 111,261 | ||||
Non-owner occupied |
74,464 | 76,592 | ||||||
Other |
15,696 | 16,582 | ||||||
Commercial |
74,800 | 76,635 | ||||||
Residential real estate |
||||||||
1-4 family residential |
147,318 | 154,132 | ||||||
Home equity lines of credit |
22,658 | 23,624 | ||||||
Consumer |
||||||||
Indirect |
113,386 | 116,999 | ||||||
Direct |
11,507 | 11,302 | ||||||
Other |
1,464 | 1,485 | ||||||
Subtotal |
567,036 | 588,612 | ||||||
Net deferred loan (fees) costs |
1,668 | 1,755 | ||||||
Allowance for loan losses |
(10,876 | ) | (9,307 | ) | ||||
Net loans |
$ | 557,828 | $ | 581,060 | ||||
7
Commercial | Residential | |||||||||||||||||||||||
(In Thousands of Dollars) | Real Estate | Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
Allowance for loan losses |
||||||||||||||||||||||||
Beginning balance,
April 1, 2011 |
$ | 6,020 | $ | 1,878 | $ | 1,261 | $ | 842 | $ | 136 | $ | 10,137 | ||||||||||||
Provision for loan losses |
582 | 51 | 34 | 272 | 136 | 1,075 | ||||||||||||||||||
Recoveries |
6 | 12 | 402 | 279 | | 699 | ||||||||||||||||||
Loans charged off |
(555 | ) | (55 | ) | (155 | ) | (270 | ) | | (1,035 | ) | |||||||||||||
Ending balance,
June 30, 2011 |
$ | 6,053 | $ | 1,886 | $ | 1,542 | $ | 1,123 | $ | 272 | $ | 10,876 | ||||||||||||
Commercial | Residential | |||||||||||||||||||||||
(In Thousands of Dollars) | Real Estate | Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
Allowance for loan losses |
||||||||||||||||||||||||
Beginning balance,
January 1, 2011 |
$ | 5,780 | $ | 1,707 | $ | 881 | $ | 875 | $ | 64 | $ | 9,307 | ||||||||||||
Provision for loan losses |
905 | 334 | 1,154 | 349 | 208 | 2,950 | ||||||||||||||||||
Recoveries |
8 | 34 | 403 | 468 | | 913 | ||||||||||||||||||
Loans charged off |
(640 | ) | (189 | ) | (896 | ) | (569 | ) | | (2,294 | ) | |||||||||||||
Ending balance,
June 30, 2011 |
$ | 6,053 | $ | 1,886 | $ | 1,542 | $ | 1,123 | $ | 272 | $ | 10,876 | ||||||||||||
Three Months Ended | Six Months Ended | |||||||
(In Thousands of Dollars) | June 30, 2010 | June 30, 2010 | ||||||
Allowance for loan losses |
||||||||
Beginning balance |
$ | 8,220 | $ | 7,400 | ||||
Provision for loan losses |
1,600 | 4,378 | ||||||
Recoveries |
125 | 272 | ||||||
Loans charged off |
(1,690 | ) | (3,795 | ) | ||||
Ending balance |
$ | 8,255 | $ | 8,225 | ||||
8
Commercial | Residential | |||||||||||||||||||||||
(In Thousands of Dollars) | Real Estate | Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
Ending allowance balance attributable to loans: |
||||||||||||||||||||||||
Individually evaluated
for impairment |
$ | 348 | $ | 252 | $ | | $ | | $ | | $ | 600 | ||||||||||||
Collectively evaluated
for impairment |
5,705 | 1,634 | 1,542 | 1,123 | 272 | 10,276 | ||||||||||||||||||
Total ending allowance balance |
$ | 6,053 | $ | 1,886 | $ | 1,542 | $ | 1,123 | $ | 272 | $ | 10,876 | ||||||||||||
Loans: |
||||||||||||||||||||||||
Loans individually
evaluated for impairment |
$ | 5,152 | $ | 1,049 | $ | | $ | | $ | | $ | 6,201 | ||||||||||||
Loans collectively
evaluated for impairment |
190,226 | 73,751 | 169,303 | 129,223 | | 562,503 | ||||||||||||||||||
Total ending loans balance |
$ | 195,378 | $ | 74,800 | $ | 169,303 | $ | 129,223 | $ | | $ | 568,704 | ||||||||||||
Commercial | Residential | |||||||||||||||||||||||
(In Thousands of Dollars) | Real Estate | Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
Ending allowance balance attributable to loans: |
||||||||||||||||||||||||
Individually evaluated
for impairment |
$ | 572 | $ | 33 | $ | | $ | | $ | | $ | 605 | ||||||||||||
Collectively evaluated
for impairment |
5,208 | 1,674 | 881 | 875 | 64 | 8,702 | ||||||||||||||||||
Total ending allowance balance |
$ | 5,780 | $ | 1,707 | $ | 881 | $ | 875 | $ | 64 | $ | 9,307 | ||||||||||||
Loans: |
||||||||||||||||||||||||
Loans individually
evaluated for impairment |
$ | 6,045 | $ | 1,015 | $ | | $ | | $ | | $ | 7,060 | ||||||||||||
Loans collectively
evaluated for impairment |
197,849 | 75,620 | 177,067 | 132,771 | | 583,307 | ||||||||||||||||||
Total ending loans balance |
$ | 203,894 | $ | 76,635 | $ | 177,067 | $ | 132,771 | $ | | $ | 590,367 | ||||||||||||
9
Three | ||||||||||||||||||||
Six Months | Months | |||||||||||||||||||
Allowance | Ended | Ended | ||||||||||||||||||
Unpaid | for Loan | Average | Average | |||||||||||||||||
Principal | Recorded | Losses | Recorded | Recorded | ||||||||||||||||
June 30, 2011 | Balance | Investment | Allocated | Investment | Investment | |||||||||||||||
With no related allowance recorded: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Owner occupied |
$ | 1,203 | $ | 1,208 | $ | | $ | 1,236 | $ | 1,211 | ||||||||||
Non-owner occupied |
| | | | | |||||||||||||||
Other |
| | | | | |||||||||||||||
Commercial |
641 | 641 | | 671 | 655 | |||||||||||||||
Residential real estate |
||||||||||||||||||||
1-4 family residential |
| | | | | |||||||||||||||
Home equity lines of credit |
| | | | | |||||||||||||||
Consumer |
||||||||||||||||||||
Indirect |
| | | | | |||||||||||||||
Direct |
| | | | | |||||||||||||||
Other |
| | | | | |||||||||||||||
With an allowance recorded: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Owner occupied |
2,286 | 2,288 | 99 | 2,405 | 2,375 | |||||||||||||||
Non-owner occupied |
823 | 825 | 143 | 894 | 833 | |||||||||||||||
Other |
830 | 831 | 106 | 812 | 802 | |||||||||||||||
Commercial |
405 | 408 | 252 | 459 | 445 | |||||||||||||||
Residential real estate |
||||||||||||||||||||
1-4 family residential |
| | | | | |||||||||||||||
Home equity lines of credit |
| | | | | |||||||||||||||
Consumer |
||||||||||||||||||||
Indirect |
| | | | | |||||||||||||||
Direct |
| | | | | |||||||||||||||
Other |
| | | | | |||||||||||||||
Total |
$ | 6,188 | $ | 6,201 | $ | 600 | $ | 6,477 | $ | 6,321 | ||||||||||
10
Allowance for | ||||||||||||
Unpaid Principal | Recorded | Loan Losses | ||||||||||
December 31, 2010 | Balance | Investment | Allocated | |||||||||
With no related allowance recorded: |
||||||||||||
Commercial real estate |
||||||||||||
Owner occupied |
$ | 821 | $ | 818 | $ | | ||||||
Non-owner occupied |
466 | 465 | | |||||||||
Other |
365 | 364 | | |||||||||
Commercial |
800 | 798 | | |||||||||
Residential real estate |
||||||||||||
1-4 family residential |
| | | |||||||||
Home equity lines of credit |
| | | |||||||||
Consumer |
||||||||||||
Indirect |
| | | |||||||||
Direct |
| | | |||||||||
Other |
| | | |||||||||
With an allowance recorded: |
||||||||||||
Commercial real estate |
||||||||||||
Owner occupied |
3,147 | 3,141 | 134 | |||||||||
Non-owner occupied |
167 | 167 | 3 | |||||||||
Other |
1,097 | 1,090 | 435 | |||||||||
Commercial |
219 | 217 | 33 | |||||||||
Residential real estate |
||||||||||||
1-4 family residential |
| | | |||||||||
Home equity lines of credit |
| | | |||||||||
Consumer |
||||||||||||
Indirect |
| | | |||||||||
Direct |
| | | |||||||||
Other |
| | | |||||||||
Total |
$ | 7,082 | $ | 7,060 | $ | 605 | ||||||
June 30, 2011 | December 31, 2010 | |||||||||||||||
Loans Past | Loans Past | |||||||||||||||
Due over 90 | Due over 90 | |||||||||||||||
Days Still | Days Still | |||||||||||||||
(In Thousands of Dollars) | Nonaccrual | Accruing | Nonaccrual | Accruing | ||||||||||||
Commercial real estate |
||||||||||||||||
Owner occupied |
$ | 1,365 | $ | | $ | 1,960 | $ | | ||||||||
Non-owner occupied |
421 | | 550 | | ||||||||||||
Other |
885 | | 1,462 | | ||||||||||||
Commercial |
408 | | 400 | | ||||||||||||
Residential real estate |
||||||||||||||||
1-4 family residential |
3,726 | 29 | 3,362 | 190 | ||||||||||||
Home equity lines of credit |
931 | 20 | 815 | 10 | ||||||||||||
Consumer |
||||||||||||||||
Indirect |
14 | 51 | 27 | 53 | ||||||||||||
Direct |
| 38 | | 48 | ||||||||||||
Other |
| | | 24 | ||||||||||||
Total |
$ | 7,750 | $ | 138 | $ | 8,576 | $ | 325 | ||||||||
11
Greater | ||||||||||||||||||||||||
30-59 | 60-89 | than 90 | ||||||||||||||||||||||
Days Past | Days Past | Days Past | Total Past | Loans Not | ||||||||||||||||||||
(In Thousands of Dollars) | Due | Due | Due | Due | Past Due | Total | ||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||
Owner occupied |
$ | 114 | $ | | $ | 1,365 | $ | 1,479 | $ | 103,980 | $ | 105,459 | ||||||||||||
Non-owner occupied |
15 | | 421 | 436 | 73,828 | 74,264 | ||||||||||||||||||
Other |
| | 885 | 885 | 14,770 | 15,655 | ||||||||||||||||||
Commercial |
261 | 35 | 408 | 704 | 74,096 | 74,800 | ||||||||||||||||||
Residential real estate |
||||||||||||||||||||||||
1-4 family residential |
1,209 | 185 | 3,755 | 5,149 | 141,497 | 146,646 | ||||||||||||||||||
Home equity lines of credit |
111 | 147 | 951 | 1,209 | 21,449 | 22,658 | ||||||||||||||||||
Consumer |
||||||||||||||||||||||||
Indirect |
1,221 | 352 | 65 | 1,638 | 114,613 | 116,251 | ||||||||||||||||||
Direct |
113 | 18 | 38 | 169 | 11,338 | 11,507 | ||||||||||||||||||
Other |
12 | 1 | | 13 | 1,451 | 1,464 | ||||||||||||||||||
Total |
$ | 3,056 | $ | 738 | $ | 7,888 | $ | 11,682 | $ | 557,022 | $ | 568,704 | ||||||||||||
Greater | ||||||||||||||||||||||||
30-59 | 60-89 | than 90 | ||||||||||||||||||||||
Days Past | Days Past | Days Past | Total Past | Loans Not | ||||||||||||||||||||
(In Thousands of Dollars) | Due | Due | Due | Due | Past Due | Total | ||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||
Owner occupied |
$ | 407 | $ | 91 | $ | 1,960 | $ | 2,458 | $ | 108,509 | $ | 110,967 | ||||||||||||
Non-owner occupied |
499 | 59 | 550 | 1,108 | 75,281 | 76,389 | ||||||||||||||||||
Other |
| | 1,462 | 1,462 | 15,076 | 16,538 | ||||||||||||||||||
Commercial |
286 | 275 | 400 | 961 | 75,674 | 76,635 | ||||||||||||||||||
Residential real estate |
||||||||||||||||||||||||
1-4 family residential |
2,981 | 435 | 3,552 | 6,968 | 146,475 | 153,443 | ||||||||||||||||||
Home equity lines of credit |
334 | 16 | 825 | 1,175 | 22,449 | 23,624 | ||||||||||||||||||
Consumer |
||||||||||||||||||||||||
Indirect |
1,668 | 519 | 80 | 2,267 | 117,716 | 119,983 | ||||||||||||||||||
Direct |
253 | 91 | 48 | 392 | 10,911 | 11,303 | ||||||||||||||||||
Other |
9 | 1 | 24 | 34 | 1,451 | 1,485 | ||||||||||||||||||
Total |
$ | 6,437 | $ | 1,487 | $ | 8,901 | $ | 16,825 | $ | 573,542 | $ | 590,367 | ||||||||||||
12
Special | Sub- | |||||||||||||||||||||||
(In Thousands of Dollars) | Pass | Mention | standard | Doubtful | Not Rated | Total | ||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||
Owner occupied |
$ | 87,297 | $ | 5,902 | $ | 12,260 | $ | | $ | | $ | 105,459 | ||||||||||||
Non-owner occupied |
62,191 | 1,162 | 10,911 | | | 74,264 | ||||||||||||||||||
Other |
12,639 | 597 | 2,419 | | | 15,655 | ||||||||||||||||||
Commercial |
66,646 | 4,302 | 3,852 | | | 74,800 | ||||||||||||||||||
Total |
$ | 228,773 | $ | 11,963 | $ | 29,442 | $ | | $ | | $ | 270,178 | ||||||||||||
Special | Sub- | |||||||||||||||||||||||
(In Thousands of Dollars) | Pass | Mention | standard | Doubtful | Not Rated | Total | ||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||
Owner occupied |
$ | 91,976 | $ | 3,893 | $ | 15,098 | $ | | $ | | $ | 110,967 | ||||||||||||
Non-owner occupied |
63,502 | 1,075 | 11,812 | | | 76,389 | ||||||||||||||||||
Other |
12,005 | 786 | 3,747 | | | 16,538 | ||||||||||||||||||
Commercial |
65,358 | 4,076 | 7,201 | | | 76,635 | ||||||||||||||||||
Total |
$ | 232,841 | $ | 9,830 | $ | 37,858 | $ | | $ | | $ | 280,529 | ||||||||||||
Residential Real Estate | Consumer | |||||||||||||||||||
Home Equity | ||||||||||||||||||||
1-4 Family | Lines of | |||||||||||||||||||
(In Thousands of Dollars) | Residential | Credit | Indirect | Direct | Other | |||||||||||||||
Performing |
$ | 142,891 | $ | 21,707 | $ | 116,186 | $ | 11,469 | $ | 1,465 | ||||||||||
Nonperforming |
3,755 | 951 | 65 | 38 | | |||||||||||||||
Total |
$ | 146,646 | $ | 22,658 | $ | 116,251 | $ | 11,507 | $ | 1,465 | ||||||||||
13
Residential Real Estate | Consumer | |||||||||||||||||||
Home Equity | ||||||||||||||||||||
1-4 Family | Lines of | |||||||||||||||||||
(In Thousands of Dollars) | Residential | Credit | Indirect | Direct | Other | |||||||||||||||
Performing |
$ | 149,891 | $ | 22,799 | $ | 119,903 | $ | 11,255 | $ | 1,461 | ||||||||||
Nonperforming |
3,552 | 825 | 80 | 48 | 24 | |||||||||||||||
Total |
$ | 153,443 | $ | 23,624 | $ | 119,983 | $ | 11,303 | $ | 1,485 | ||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
(In Thousands, except Share and | June 30, | June 30, | ||||||||||||||
Per Share Data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Basic EPS computation |
||||||||||||||||
Numerator Net income |
$ | 2,117 | $ | 2,034 | $ | 3,807 | $ | 2,881 | ||||||||
Denominator Weighted average shares outstanding |
18,674,213 | 13,546,569 | 17,820,254 | 13,533,302 | ||||||||||||
Basic earnings per share |
$ | .11 | $ | .15 | $ | .21 | $ | .21 | ||||||||
Diluted EPS computation |
||||||||||||||||
Numerator Net income |
$ | 2,117 | $ | 2,034 | $ | 3,807 | $ | 2,881 | ||||||||
Denominator Weighted average shares outstanding for basic earnings per share |
18,674,213 | 13,546,569 | 17,820,254 | 13,533,302 | ||||||||||||
Effect of Stock Options |
0 | 0 | 0 | 0 | ||||||||||||
Weighted averages shares for diluted earnings per share |
18,674,213 | 13,546,569 | 17,820,254 | 13,533,302 | ||||||||||||
Diluted earnings per share |
$ | .11 | $ | .15 | $ | .21 | $ | .21 | ||||||||
14
15
Fair Value Measurements at | ||||||||||||||||
June 30, 2011 Using: | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets | Significant Other | Significant | ||||||||||||||
for Identical | Observable | Unobservable | ||||||||||||||
Carrying | Assets | Inputs | Inputs | |||||||||||||
(In Thousands of Dollars) | Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Financial Assets |
||||||||||||||||
Investment securities available-for sale |
||||||||||||||||
U.S. Treasury and U.S. government
sponsored entities |
$ | 90,935 | $ | 0 | $ | 90,935 | $ | 0 | ||||||||
State and political subdivisions |
81,810 | 0 | 81,810 | 0 | ||||||||||||
Mortgage-backed securities-residential |
161,730 | 0 | 161,718 | 12 | ||||||||||||
Collateralized mortgage obligations |
23,088 | 0 | 23,088 | 0 | ||||||||||||
Equity securities |
506 | 506 | 0 | 0 | ||||||||||||
Other securities |
266 | 0 | 266 | 0 | ||||||||||||
Total investment securities |
$ | 358,335 | $ | 506 | $ | 357,817 | $ | 12 | ||||||||
16
Fair Value Measurements at | ||||||||||||||||
December 31, 2010 Using: | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets | Significant Other | Significant | ||||||||||||||
for Identical | Observable | Unobservable | ||||||||||||||
Carrying | Assets | Inputs | Inputs | |||||||||||||
(In Thousands of Dollars) | Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Financial Assets |
||||||||||||||||
Investment securities available-for sale |
||||||||||||||||
U.S. Treasury and U.S. government
sponsored entities |
$ | 69,978 | $ | 0 | $ | 69,978 | $ | 0 | ||||||||
State and political subdivisions |
80,466 | 0 | 80,466 | 0 | ||||||||||||
Mortgage-backed securities-residential |
143,777 | 0 | 143,765 | 12 | ||||||||||||
Collateralized mortgage obligations |
19,660 | 0 | 19,660 | 0 | ||||||||||||
Equity securities |
199 | 199 | 0 | 0 | ||||||||||||
Other securities |
267 | 0 | 267 | 0 | ||||||||||||
Total investment securities |
$ | 314,347 | $ | 199 | $ | 314,136 | $ | 12 | ||||||||
Investment Securities | ||||||||||||||||
Available-for-sale | ||||||||||||||||
(Level 3) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(In Thousands of Dollars) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Beginning balance |
$ | 12 | $ | 13 | $ | 12 | $ | 13 | ||||||||
Total unrealized gains or losses: |
||||||||||||||||
Included in other
comprehensive income or loss |
0 | 0 | 0 | 0 | ||||||||||||
Purchases, sales, issuances and
settlements, net |
0 | 0 | 0 | 0 | ||||||||||||
Transfer in and/or out |
0 | 0 | 0 | 0 | ||||||||||||
Ending balance |
$ | 12 | $ | 13 | $ | 12 | $ | 13 | ||||||||
Fair Value Measurements | ||||||||||||||||
at June 30, 2011 Using: | ||||||||||||||||
Quoted Prices | Significant | |||||||||||||||
in Active | Other | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
(In Thousands of Dollars) | Carrying Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Financial assets: |
||||||||||||||||
Impaired loans |
||||||||||||||||
Commercial real estate |
||||||||||||||||
Owner occupied |
$ | 441 | $ | 0 | $ | 0 | $ | 441 | ||||||||
Non-owner occupied |
680 | 0 | 0 | 680 | ||||||||||||
Other |
724 | 0 | 0 | 724 | ||||||||||||
Commercial |
153 | 0 | 0 | 153 |
17
Fair Value Measurements | ||||||||||||||||
at December 31, 2010 Using: | ||||||||||||||||
Quoted Prices | Significant | |||||||||||||||
in Active | Other | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
(In Thousands of Dollars) | Carrying Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Financial assets: |
||||||||||||||||
Impaired loans |
||||||||||||||||
Commercial real estate |
||||||||||||||||
Owner occupied |
$ | 1,239 | $ | 0 | $ | 0 | $ | 1,239 | ||||||||
Non-owner occupied |
164 | 0 | 0 | 164 | ||||||||||||
Other |
662 | 0 | 0 | 662 | ||||||||||||
Commercial |
186 | 0 | 0 | 186 |
(In Thousands of Dollars) | ||||||||
June 30, 2011 | Carrying Amount | Fair Value | ||||||
Financial assets |
||||||||
Cash and cash equivalents |
$ | 45,139 | $ | 45,139 | ||||
Securities available-for-sale |
358,335 | 358,335 | ||||||
Restricted stock |
4,224 | n/a | ||||||
Loans, net |
557,828 | 574,353 | ||||||
Accrued interest receivable |
4,086 | 4,086 | ||||||
Financial liabilities |
||||||||
Deposits |
770,063 | 774,535 | ||||||
Short-term borrowings |
108,720 | 108,720 | ||||||
Long-term borrowings |
23,572 | 26,068 | ||||||
Accrued interest payable |
678 | 678 |
(In Thousands of Dollars) | ||||||||
December 31, 2010 | Carrying Amount | Fair Value | ||||||
Financial assets |
||||||||
Cash and cash equivalents |
$ | 37,305 | $ | 37,305 | ||||
Securities available-for-sale |
314,347 | 314,347 | ||||||
Restricted stock |
3,977 | n/a | ||||||
Loans, net |
581,060 | 590,331 | ||||||
Accrued interest receivable |
4,125 | 4,125 | ||||||
Financial liabilities |
||||||||
Deposits |
761,050 | 764,170 | ||||||
Short-term borrowings |
105,634 | 105,634 | ||||||
Long-term borrowings |
24,733 | 27,080 | ||||||
Accrued interest payable |
703 | 703 |
18
(In Thousands of Dollars) | Trust | Bank | Consolidated | |||||||||||||
June 30, 2011 | Segment | Segment | Others | Totals | ||||||||||||
Assets |
||||||||||||||||
Cash and due from banks |
$ | 2,019 | $ | 43,147 | $ | (27 | ) | $ | 45,139 | |||||||
Securities available for sale |
2,387 | 355,821 | 127 | 358,335 | ||||||||||||
Net loans |
0 | 557,828 | 0 | 557,828 | ||||||||||||
Premises and equipment, net |
109 | 14,490 | 0 | 14,599 | ||||||||||||
Goodwill and other intangibles |
6,665 | 0 | 0 | 6,665 | ||||||||||||
Other assets |
545 | 30,759 | 351 | 31,655 | ||||||||||||
Total Assets |
$ | 11,725 | $ | 1,002,045 | $ | 451 | $ | 1,014,221 | ||||||||
Liabilities and Stockholders Equity |
||||||||||||||||
Deposits, borrowings and
other liabilities |
$ | 613 | $ | 910,132 | $ | (5,100 | ) | $ | 905,645 | |||||||
Stockholders equity |
11,112 | 91,913 | 5,551 | 108,576 | ||||||||||||
Total Liabilities and Stockholders
Equity |
$ | 11,725 | $ | 1,002,045 | $ | 451 | $ | 1,014,221 | ||||||||
(In Thousands of Dollars) | Trust | Bank | Consolidated | |||||||||||||
December 31, 2010 | Segment | Segment | Others | Totals | ||||||||||||
Assets |
||||||||||||||||
Cash and due from banks |
$ | 1,122 | $ | 36,343 | $ | (160 | ) | $ | 37,305 | |||||||
Securities available for sale |
2,627 | 311,601 | 119 | 314,347 | ||||||||||||
Net loans |
0 | 581,060 | 0 | 581,060 | ||||||||||||
Premises and equipment, net |
113 | 13,831 | 0 | 13,944 | ||||||||||||
Goodwill and other intangibles |
6,920 | 0 | 0 | 6,920 | ||||||||||||
Other assets |
425 | 28,336 | 414 | 29,175 | ||||||||||||
Total Assets |
$ | 11,207 | $ | 971,171 | $ | 373 | $ | 982,751 | ||||||||
Liabilities and Stockholders Equity |
||||||||||||||||
Deposits, borrowings and
other liabilities |
$ | 368 | $ | 894,052 | $ | 283 | $ | 894,703 | ||||||||
Stockholders equity |
10,839 | 77,119 | 90 | 88,048 | ||||||||||||
Total Liabilities and Stockholders Equity |
$ | 11,207 | $ | 971,171 | $ | 373 | $ | 982,751 | ||||||||
19
(In Thousands of Dollars) | ||||||||||||||||
For the Three Months Ended | Trust | Bank | Consolidated | |||||||||||||
June 30, 2011 | Segment | Segment | Others | Totals | ||||||||||||
Net interest income |
$ | 11 | $ | 9,158 | $ | (12 | ) | $ | 9,157 | |||||||
Provision for loan losses |
0 | 1,075 | 0 | 1,075 | ||||||||||||
Service fees, security gains and
other noninterest income |
1,377 | 1,356 | (39 | ) | 2,694 | |||||||||||
Noninterest expense |
1,149 | 6,743 | 200 | 8,092 | ||||||||||||
Income before taxes |
239 | 2,696 | (251 | ) | 2,684 | |||||||||||
Income taxes |
82 | 570 | (85 | ) | 567 | |||||||||||
Net Income |
$ | 157 | $ | 2,126 | $ | (166 | ) | $ | 2,117 | |||||||
(In Thousands of Dollars) | ||||||||||||||||
For the Six Months Ended | Trust | Bank | Consolidated | |||||||||||||
June 30, 2011 | Segment | Segment | Others | Totals | ||||||||||||
Net interest income |
$ | 22 | $ | 18,243 | $ | (25 | ) | $ | 18,240 | |||||||
Provision for loan losses |
0 | 2,950 | 0 | 2,950 | ||||||||||||
Service fees, security gains and
other noninterest income |
2,727 | 2,661 | (77 | ) | 5,311 | |||||||||||
Noninterest expense |
2,349 | 13,255 | 302 | 15,906 | ||||||||||||
Income before taxes |
400 | 4,699 | (404 | ) | 4,695 | |||||||||||
Income taxes |
137 | 888 | (137 | ) | 888 | |||||||||||
Net Income |
$ | 263 | $ | 3,811 | $ | (267 | ) | $ | 3,807 | |||||||
(In Thousands of Dollars) | ||||||||||||||||
For the Three Months Ended | Trust | Bank | Consolidated | |||||||||||||
June 30, 2010 | Segment | Segment | Others | Totals | ||||||||||||
Net interest income |
$ | 20 | $ | 9,168 | $ | (12 | ) | $ | 9,176 | |||||||
Provision for loan losses |
0 | 1,600 | 0 | 1,600 | ||||||||||||
Service fees, security gains and
other noninterest income |
1,254 | 1,158 | 309 | 2,721 | ||||||||||||
Noninterest expense |
1,115 | 6,365 | 165 | 7,645 | ||||||||||||
Income before taxes |
159 | 2,361 | 132 | 2,652 | ||||||||||||
Income taxes |
55 | 518 | 45 | 618 | ||||||||||||
Net Income |
$ | 104 | $ | 1,843 | $ | 87 | $ | 2,034 | ||||||||
(In Thousands of Dollars) | ||||||||||||||||
For the Six Months Ended | Trust | Bank | Consolidated | |||||||||||||
June 30, 2010 | Segment | Segment | Others | Totals | ||||||||||||
Net interest income |
$ | 39 | $ | 17,971 | $ | (20 | ) | $ | 17,990 | |||||||
Provision for loan losses |
0 | 4,378 | 0 | 4,378 | ||||||||||||
Service fees, security gains and
other noninterest income |
2,486 | 2,226 | 345 | 5,057 | ||||||||||||
Noninterest expense |
2,257 | 12,711 | 209 | 15,177 | ||||||||||||
Income before taxes |
268 | 3,108 | 116 | 3,492 | ||||||||||||
Income taxes |
93 | 479 | 39 | 611 | ||||||||||||
Net Income |
$ | 175 | $ | 2,629 | $ | 77 | $ | 2,881 | ||||||||
20
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
| general economic conditions in market areas where we conduct business, which could materially impact credit quality trends; |
| business conditions in the banking industry; |
| the regulatory environment; |
| fluctuations in interest rates; |
| demand for loans in the market areas where we conduct business; |
| rapidly changing technology and evolving banking industry standards; |
| competitive factors, including increased competition with regional and national financial institutions; |
| new service and product offerings by competitors and price pressures; and other like items. |
21
At or for the Three Months | At or for the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
(In Thousands, except Per Share Data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Total Assets |
$ | 1,014,221 | $ | 1,014,804 | $ | 1,014,221 | $ | 1,014,804 | ||||||||
Net Income |
$ | 2,117 | $ | 2,034 | $ | 3,807 | $ | 2,881 | ||||||||
Basic and Diluted Earnings Per Share |
$ | .11 | $ | .15 | $ | .21 | $ | .21 | ||||||||
Return on Average Assets (Annualized) |
.83 | % | .79 | % | .76 | % | .57 | % | ||||||||
Return on Average Equity (Annualized) |
8.05 | % | 9.78 | % | 7.69 | % | 6.89 | % | ||||||||
Efficiency Ratio (tax equivalent basis) |
64.42 | % | 62.15 | % | 63.50 | % | 62.93 | % | ||||||||
Equity to Asset Ratio |
10.71 | % | 8.57 | % | 10.71 | % | 8.57 | % | ||||||||
Tangible Common Equity Ratio * |
10.11 | % | 7.92 | % | 10.11 | % | 7.92 | % | ||||||||
Dividends to Net Income |
26.45 | % | 19.96 | % | 29.39 | % | 28.18 | % | ||||||||
Net Loans to Assets |
55.00 | % | 59.62 | % | 55.00 | % | 59.62 | % | ||||||||
Loans to Deposits |
73.85 | % | 80.62 | % | 73.85 | % | 80.62 | % |
* | The tangible common equity ratio is calculated by dividing total common stockholders equity by total assets, after reducing both amounts by intangible assets. The tangible common equity ratio is not required by U.S. GAAP or by applicable bank regulatory requirements, but is a metric used by management to evaluate the adequacy of the Companys capital levels. Since there is no authoritative requirement to calculate the tangible common equity ratio, the Companys tangible common equity ratio is not necessarily comparable to similar capital measures disclosed or |
22
used by other companies in the financial services industry. Tangible common equity and tangible assets are non-U.S. GAAP financial measures and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with U.S. GAAP. With respect to the calculation of the actual unaudited tangible common equity ratio as of June 30, 2011 and 2010, reconciliations of tangible common equity to U.S. GAAP total common stockholders equity and tangible assets to U.S. GAAP total assets are set forth below: |
(In Thousands of Dollars) | June 30, 2011 | June 30, 2010 | ||||||
Reconciliation of Common Stockholders Equity
to Tangible Common Equity |
||||||||
Stockholders Equity |
$ | 108,576 | $ | 86,991 | ||||
Less Goodwill and other intangibles |
6,665 | 7,210 | ||||||
Tangible Common Equity |
$ | 101,911 | $ | 79,781 | ||||
(In Thousands of Dollars) | June 30, 2011 | June 30, 2010 | ||||||
Reconciliation of Total Assets to Tangible Assets |
||||||||
Total Assets |
$ | 1,014,221 | $ | 1,014,804 | ||||
Less Goodwill and other intangibles |
6,665 | 7,210 | ||||||
Tangible Assets |
$ | 1,007,556 | $ | 1,007,594 | ||||
23
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||
AVERAGE | AVERAGE | |||||||||||||||||||||||
BALANCE | INTEREST | RATE (1) | BALANCE | INTEREST | RATE (1) | |||||||||||||||||||
EARNING ASSETS |
||||||||||||||||||||||||
Loans (3) (5) (6) |
$ | 562,446 | $ | 8,444 | 6.02 | % | $ | 599,884 | $ | 9,286 | 6.21 | % | ||||||||||||
Taxable securities (4) |
269,339 | 2,048 | 3.05 | 255,423 | 2,261 | 3.55 | ||||||||||||||||||
Tax-exempt securities (4) (6) |
76,049 | 1,111 | 5.86 | 58,103 | 875 | 6.04 | ||||||||||||||||||
Equity Securities (2) (6) |
4,343 | 53 | 4.89 | 4,126 | 47 | 4.57 | ||||||||||||||||||
Federal funds sold |
40,287 | 10 | 0.10 | 36,325 | 15 | 0.17 | ||||||||||||||||||
Total earning assets |
952,464 | 11,666 | 4.91 | 953,861 | 12,484 | 5.25 | ||||||||||||||||||
NONEARNING ASSETS |
||||||||||||||||||||||||
Cash and due from banks |
18,820 | 22,933 | ||||||||||||||||||||||
Premises and equipment |
13,794 | 14,405 | ||||||||||||||||||||||
Allowance for Loan Losses |
(10,563 | ) | (8,048 | ) | ||||||||||||||||||||
Unrealized gains (losses) on securities |
6,073 | 8,245 | ||||||||||||||||||||||
Other assets (3) |
43,244 | 41,877 | ||||||||||||||||||||||
Total Assets |
$ | 1,023,832 | $ | 1,033,273 | ||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||
Time deposits |
$ | 248,816 | $ | 1,280 | 2.06 | % | $ | 300,567 | $ | 1,912 | 2.55 | % | ||||||||||||
Savings deposits |
332,426 | 385 | 0.46 | 295,564 | 471 | 0.64 | ||||||||||||||||||
Demand deposits |
109,679 | 19 | 0.07 | 107,979 | 37 | 0.14 | ||||||||||||||||||
Short term borrowings |
117,610 | 104 | 0.35 | 146,094 | 234 | 0.64 | ||||||||||||||||||
Long term borrowings |
23,643 | 249 | 4.22 | 25,357 | 269 | 4.26 | ||||||||||||||||||
Total Interest-Bearing Liabilities |
832,174 | 2,037 | 0.98 | 875,561 | 2,923 | 1.34 | ||||||||||||||||||
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS EQUITY |
||||||||||||||||||||||||
Demand deposits |
82,715 | 70,528 | ||||||||||||||||||||||
Other Liabilities |
3,399 | 3,733 | ||||||||||||||||||||||
Stockholders equity |
105,544 | 83,451 | ||||||||||||||||||||||
Total Liabilities and
Stockholders Equity |
$ | 1,023,832 | $ | 1,033,273 | ||||||||||||||||||||
Net interest income and interest rate spread |
$ | 9,629 | 3.93 | % | $ | 9,561 | 3.91 | % | ||||||||||||||||
Net interest margin |
4.05 | % | 4.02 | % |
(1) | Rates are calculated on an annualized basis. | |
(2) | Equity securities include restricted stock, which is included in other assets on the consolidated balance sheets. | |
(3) | Non-accrual loans and overdraft deposits are included in other assets. | |
(4) | Includes unamortized discounts and premiums. Average balance and yield are computed using the average historical amortized cost. | |
(5) | Interest on loans includes fee income of $401 thousand and $564 thousand for 2011 and 2010 respectively and is reduced by amortization of $441 thousand and $448 thousand for 2011 and 2010 respectively. | |
(6) | For 2011, adjustments of $90 thousand and $382 thousand respectively are made to tax equate income on tax exempt loans and tax exempt securities. For 2010, adjustments of $94 thousand and $291 thousand respectively are made to tax equate income on tax exempt loans and tax exempt securities. These adjustments are based on a marginal federal income tax rate of 35%, less disallowances. |
24
Six Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||
AVERAGE | AVERAGE | |||||||||||||||||||||||
BALANCE | INTEREST | RATE (1) | BALANCE | INTEREST | RATE (1) | |||||||||||||||||||
EARNING ASSETS |
||||||||||||||||||||||||
Loans (3) (5) (6) |
$ | 567,849 | $ | 16,998 | 6.04 | % | $ | 600,034 | $ | 18,612 | 6.26 | % | ||||||||||||
Taxable securities (4) |
252,588 | 3,917 | 3.13 | 248,726 | 4,502 | 3.65 | ||||||||||||||||||
Tax-exempt securities (4) (6) |
76,557 | 2,235 | 5.89 | 58,449 | 1,760 | 6.07 | ||||||||||||||||||
Equity Securities (2) (6) |
4,235 | 99 | 4.71 | 4,126 | 100 | 4.89 | ||||||||||||||||||
Federal funds sold |
34,920 | 19 | 0.11 | 31,063 | 24 | 0.16 | ||||||||||||||||||
Total earning assets |
936,149 | 23,268 | 5.01 | 942,398 | 24,998 | 5.35 | ||||||||||||||||||
NONEARNING ASSETS |
||||||||||||||||||||||||
Cash and due from banks |
22,943 | 22,705 | ||||||||||||||||||||||
Premises and equipment |
13,840 | 14,394 | ||||||||||||||||||||||
Allowance for Loan Losses |
(10,064 | ) | (7,565 | ) | ||||||||||||||||||||
Unrealized gains (losses) on securities |
4,851 | 7,383 | ||||||||||||||||||||||
Other assets (3) |
42,412 | 41,941 | ||||||||||||||||||||||
Total Assets |
$ | 1,010,131 | $ | 1,021,256 | ||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||
Time deposits |
$ | 250,811 | $ | 2,588 | 2.08 | % | $ | 310,383 | $ | 4,080 | 2.65 | % | ||||||||||||
Savings deposits |
328,139 | 757 | 0.47 | 288,020 | 1,000 | 0.70 | ||||||||||||||||||
Demand deposits |
110,469 | 37 | 0.07 | 106,474 | 85 | 0.16 | ||||||||||||||||||
Short term borrowings |
111,586 | 201 | 0.36 | 134,673 | 519 | 0.78 | ||||||||||||||||||
Long term borrowings |
23,819 | 500 | 4.23 | 25,999 | 551 | 4.27 | ||||||||||||||||||
Total Interest-Bearing Liabilities |
824,824 | 4,083 | 1.00 | 865,549 | 6,235 | 1.45 | ||||||||||||||||||
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS EQUITY |
||||||||||||||||||||||||
Demand deposits |
82,074 | 69,194 | ||||||||||||||||||||||
Other Liabilities |
3,356 | 2,252 | ||||||||||||||||||||||
Stockholders equity |
99,877 | 84,261 | ||||||||||||||||||||||
Total
Liabilities and Stockholders Equity |
$ | 1,010,131 | $ | 1,021,256 | ||||||||||||||||||||
Net interest income and interest rate spread |
$ | 19,185 | 4.01 | % | $ | 18,763 | 3.90 | % | ||||||||||||||||
Net interest margin |
4.14 | % | 4.02 | % |
(1) | Rates are calculated on an annualized basis. | |
(2) | Equity securities include restricted stock, which is included in other assets on the consolidated balance sheets. | |
(3) | Non-accrual loans and overdraft deposits are included in other assets. | |
(4) | Includes unamortized discounts and premiums. Average balance and yield are computed using the average historical amortized cost. | |
(5) | Interest on loans includes fee income of $837 thousand and $994 thousand for 2011 and 2010 respectively and is reduced by amortization of $888 thousand and $882 thousand for 2011 and 2010 respectively. | |
(6) | For 2011, adjustments of $178 thousand and $767 thousand respectively are made to tax equate income on tax exempt loans and tax exempt securities. For 2010, adjustments of $188 thousand and $585 thousand respectively are made to tax equate income on tax exempt loans and tax exempt securities. These adjustments are based on a marginal federal income tax rate of 35%, less disallowances. |
25
For the Three Months Ended | ||||||||||||||||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||
Trust | Bank and | Total | Trust | Bank and | Total | |||||||||||||||||||
(In Thousands of Dollars) | Company | Others | Company | Company | Others | Company | ||||||||||||||||||
Noninterest expense |
||||||||||||||||||||||||
Salaries and employee
benefits |
$ | 704 | $ | 3,779 | $ | 4,483 | $ | 630 | $ | 3,469 | $ | 4,099 | ||||||||||||
Occupancy and equipment |
130 | 792 | 922 | 124 | 768 | 892 | ||||||||||||||||||
State and local taxes |
24 | 214 | 238 | 29 | 195 | 224 | ||||||||||||||||||
Professional fees |
12 | 255 | 267 | 15 | 366 | 381 | ||||||||||||||||||
Advertising |
3 | 208 | 211 | 0 | 147 | 147 | ||||||||||||||||||
FDIC insurance |
0 | 244 | 244 | 0 | 317 | 317 | ||||||||||||||||||
Intangible amortization |
112 | 0 | 112 | 145 | 0 | 145 | ||||||||||||||||||
Core processing charges |
0 | 245 | 245 | 0 | 237 | 237 | ||||||||||||||||||
Other operating expenses |
164 | 1,206 | 1,370 | 172 | 1,031 | 1,203 | ||||||||||||||||||
Total noninterest expense |
$ | 1,149 | $ | 6,943 | $ | 8,092 | $ | 1,115 | $ | 6,530 | $ | 7,645 | ||||||||||||
26
For the Six Months Ended | ||||||||||||||||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||
Trust | Bank and | Total | Trust | Bank and | Total | |||||||||||||||||||
(In Thousands of Dollars) | Company | Others | Company | Company | Others | Company | ||||||||||||||||||
Noninterest expense |
||||||||||||||||||||||||
Salaries and employee
benefits |
$ | 1,416 | $ | 7,255 | $ | 8,671 | $ | 1,280 | $ | 6,796 | $ | 8,076 | ||||||||||||
Occupancy and equipment |
269 | 1,569 | 1,838 | 248 | 1,569 | 1,817 | ||||||||||||||||||
State and local taxes |
49 | 436 | 485 | 59 | 397 | 456 | ||||||||||||||||||
Professional fees |
23 | 480 | 503 | 30 | 660 | 690 | ||||||||||||||||||
Advertising |
3 | 353 | 356 | 2 | 275 | 277 | ||||||||||||||||||
FDIC insurance |
0 | 592 | 592 | 0 | 620 | 620 | ||||||||||||||||||
Intangible amortization |
255 | 0 | 255 | 290 | 0 | 290 | ||||||||||||||||||
Core processing charges |
0 | 490 | 490 | 0 | 476 | 476 | ||||||||||||||||||
Other operating expenses |
334 | 2,382 | 2,716 | 348 | 2,127 | 2,475 | ||||||||||||||||||
Total noninterest expense |
$ | 2,349 | $ | 13,557 | $ | 15,906 | $ | 2,257 | $ | 12,920 | $ | 15,177 | ||||||||||||
27
6/30/11 | 3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 | ||||||||||||||||
Nonperforming loans |
$ | 7,865 | $ | 11,011 | $ | 8,901 | $ | 9,207 | $ | 9,954 | ||||||||||
Nonperforming loans as a % of total loans |
1.38 | % | 1.91 | % | 1.51 | % | 1.52 | % | 1.62 | % | ||||||||||
Loans delinquent 30-89 days |
3,758 | 3,392 | 7,924 | 5,888 | 5,652 | |||||||||||||||
Loans delinquent 30-89 days as a % of
total loans |
.66 | % | .59 | % | 1.34 | % | .97 | % | .92 | % | ||||||||||
Allowance for loan losses |
$ | 10,876 | $ | 10,137 | $ | 9,307 | $ | 7,785 | $ | 8,255 | ||||||||||
Allowance for loan losses as a % of loans |
1.91 | % | 1.76 | % | 1.58 | % | 1.28 | % | 1.35 | % | ||||||||||
Allowance for loan losses as a % of
nonperforming loans |
138.28 | % | 92.06 | % | 104.56 | % | 84.56 | % | 82.93 | % | ||||||||||
Annualized net charge-offs to average
net loans outstanding |
.24 | % | .74 | % | .46 | % | 1.31 | % | 1.04 | % | ||||||||||
Non-performing assets |
8,664 | 11,867 | 9,433 | 9,533 | 10,099 | |||||||||||||||
Non-performing assets as a % of total
assets |
0.85 | % | 1.17 | % | .96 | % | .90 | % | 1.00 | % | ||||||||||
Net charge-offs for the quarter |
336 | 1,045 | 677 | 1,970 | 1,565 |
28
29
30
31
32
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Changes In Interest Rate | June 30, 2011 | December 31, 2010 | ALCO | |||
(basis points) | Result | Result | Guidelines | |||
Net Interest Income Change |
||||||
+200 |
-3.11% | -3.54% | 15.00% | |||
-200 |
-4.37% | -3.10% | 15.00% | |||
Net Present Value |
||||||
Of Equity Change |
||||||
+200 |
.89% | -2.24% | 20.00% | |||
-200 |
-34.87% | -32.08% | 20.00% |
Item 4. | Controls and Procedures |
33
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds Purchases of equity securities by the issuer. |
Item 3. | Defaults Upon Senior Securities |
Item 4. | (Removed and Reserved). |
Item 5. | Other Information |
Item 6. | Exhibits |
3.1 | Articles of Incorporation of Farmers National Banc Corp., as amended
(incorporated by reference from Exhibit 4.1 to the Companys Registration
Statement on Form S-3 filed with the SEC on October 3, 2001 (File No.
333-70806). |
|||
3.2 | Amended Code of Regulations of Farmers National Banc Corp. (filed herewith). |
|||
10.1 | Farmers National Banc Corp. Form of Indemnification Agreement (incorporated
by reference from Exhibit 10.1 to the Companys Current Report on Form 8-K
filed with the SEC on April 29, 2011). |
|||
10.2 | Farmers National Banc Corp. Cash Incentive Plan (incorporated by reference
from Exhibit 10.1 to the Companys Current Report on Form 8-K filed with
the SEC on June 24, 2011). |
|||
10.3 | Farmers National Banc Corp. Long-Term Incentive Plan (incorporated by
reference from Exhibit 10.1 to the Companys Current Report on Form 8-K
filed with the SEC on June 29, 2011). |
34
10.4 | Retirement Agreement by and between Farmers National Banc Corp., the
Farmers National Bank of Canfield and Frank L. Paden (incorporated by
reference from Exhibit 10.2 to the Companys Current Report on Form
8-K filed with the SEC on June 29, 2011). |
|||
31.1 | Rule 13a-14(a)/15d-14(a) Certification of John S. Gulas, President
and Chief Executive Officer of the Company (filed herewith). |
|||
31.2 | Rule 13a-14(a)/15d-14(a) Certification of Carl D. Culp, Executive
Vice President, Chief Financial Officer and Treasurer of the Company
(filed herewith). |
|||
32.1 | Certification pursuant to 18 U.S.C. Section 1350 of John S. Gulas,
President and Chief Executive Officer of the Company (filed
herewith). |
|||
32.2 | Certification pursuant to 18 U.S.C. Section 1350 of Carl D. Culp,
Executive Vice President, Chief Financial Officer and Treasurer of
the Company (filed herewith). |
|||
101 | * | The following materials from the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2011, formatted in XBRL
(Extensible Business Reporting Language): (i) the Consolidated
Balance Sheets; (ii) the Consolidated Statements of Income and
Comprehensive Income; (iii) the Consolidated Statements of Cash
Flows; and (iv) Notes to Consolidated Financial Statements, tagged as
blocks of text. |
* | As provided in Rule 406T of Regulation S-T, this information shall not be deemed filed for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liability under those sections. |
35
FARMERS NATIONAL BANC CORP. |
||
Dated: August 9, 2011 |
||
/s/John S. Gulas
|
||
President and Chief Executive Officer |
||
Dated: August 9, 2011 |
||
/s/Carl D. Culp
|
||
Executive Vice President
and Treasurer |
36
/s/ John S. Gulas
|
||
Chief Executive Officer |
/s/ Carl D. Culp
|
||
Chief Financial Officer |
/s/ John S. Gulas
|
||
Chief Executive Officer |
||
August 9, 2011 |
/s/ Carl D. Culp
|
||
Chief Financial Officer |
||
August 9, 2011 |
Consolidated Balance Sheets (Unaudited) (Parenthetical)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Stockholders' Equity: | Â | Â |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 18,700,466 | 15,699,184 |
Treasury stock, at cost | 13 | 2,053,149 |
Consolidated Statements of Income and Comprehensive 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 | $ 8,354 | $ 9,192 | $ 16,820 | $ 18,424 |
Taxable securities | 2,048 | 2,261 | 3,917 | 4,502 |
Tax exempt securities | 729 | 584 | 1,468 | 1,175 |
Dividends | 53 | 47 | 99 | 100 |
Federal funds sold | 10 | 15 | 19 | 24 |
TOTAL INTEREST AND DIVIDEND INCOME | 11,194 | 12,099 | 22,323 | 24,225 |
INTEREST EXPENSE | Â | Â | Â | Â |
Deposits | 1,684 | 2,420 | 3,382 | 5,165 |
Short-term borrowings | 104 | 234 | 201 | 519 |
Long-term borrowings | 249 | 269 | 500 | 551 |
TOTAL INTEREST EXPENSE | 2,037 | 2,923 | 4,083 | 6,235 |
NET INTEREST INCOME | 9,157 | 9,176 | 18,240 | 17,990 |
Provision for loan losses | 1,075 | 1,600 | 2,950 | 4,378 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 8,082 | 7,576 | 15,290 | 13,612 |
NONINTEREST INCOME | Â | Â | Â | Â |
Service charges on deposit accounts | 500 | 497 | 973 | 975 |
Bank owned life insurance income, including death benefits | 119 | 131 | 278 | 257 |
Trust fees | 1,365 | 1,197 | 2,703 | 2,429 |
Security gains (losses) | 0 | (3) | 0 | (3) |
Insurance agency commissions | 28 | 110 | 92 | 172 |
Investment commissions | 263 | 129 | 454 | 240 |
Other operating income | 419 | 660 | 811 | 987 |
TOTAL NONINTEREST INCOME | 2,694 | 2,721 | 5,311 | 5,057 |
NONINTEREST EXPENSES | Â | Â | Â | Â |
Salaries and employee benefits | 4,483 | 4,099 | 8,671 | 8,076 |
Occupancy and equipment | 922 | 892 | 1,838 | 1,817 |
State and local taxes | 238 | 224 | 485 | 456 |
Professional fees | 267 | 381 | 503 | 690 |
Advertising | 211 | 147 | 356 | 277 |
FDIC insurance | 244 | 317 | 592 | 620 |
Intangible amortization | 112 | 145 | 255 | 290 |
Core processing charges | 245 | 237 | 490 | 476 |
Other operating expenses | 1,370 | 1,203 | 2,716 | 2,475 |
TOTAL NONINTEREST EXPENSES | 8,092 | 7,645 | 15,906 | 15,177 |
INCOME BEFORE INCOME TAXES | 2,684 | 2,652 | 4,695 | 3,492 |
INCOME TAXES | 567 | 618 | 888 | 611 |
NET INCOME | 2,117 | 2,034 | 3,807 | 2,881 |
OTHER COMPREHENSIVE INCOME, NET OF TAX: | Â | Â | Â | Â |
Change in net unrealized gains on securities, net of reclassifications | 3,769 | 2,988 | 3,812 | 4,055 |
COMPREHENSIVE INCOME | $ 5,886 | $ 5,022 | $ 7,619 | $ 6,936 |
NET INCOME PER SHARE - basic and diluted | $ 0.11 | $ 0.15 | $ 0.21 | $ 0.21 |
DIVIDENDS PER SHARE | $ 0.03 | $ 0.03 | $ 0.06 | $ 0.06 |
Document and Entity Information (USD $)
In Millions, except Share data |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Jul. 31, 2011
|
Jun. 30, 2010
|
|
Document and Entity Information [Abstract] | Â | Â | Â |
Entity Registrant Name | FARMERS NATIONAL BANC CORP /OH/ | Â | Â |
Entity Central Index Key | 0000709337 | 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 | $ 56.8 |
Entity Common Stock, Shares Outstanding | Â | 18,700,453 | Â |
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|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Loans: [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans: |
Loans:
Loan balances were as follows:
The following tables present the activity in the allowance for loan losses by portfolio
segment for the three and six months ending June 30, 2011.
Three Months Ended June 30, 2011
Six Months Ended June 30, 2011
The following table presents the activity in the allowance for loan losses for the three and six
months ending June 30, 2010.
The following tables present the balance in the allowance for loan losses and the recorded
investment in loans by portfolio segment and based on impairment method as of June 30, 2011 and
December 31, 2010. The recorded investment in loans includes the unpaid principal balance and
unamortized loan origination fees and costs but excludes accrued interest receivable, which is not
considered to be material:
June 30, 2011
December 31, 2010
Interest income recognized during impairment for the three and six months ending June 30, 2011
and June 30, 2010 was immaterial.
The following tables present loans individually evaluated for impairment by class of loans as of
June 30, 2011 and December 31, 2010 and the average recorded investment by class for the six months
ended June 30, 2011:
(In Thousands of Dollars)
(In Thousands of Dollars)
The following table presents the recorded investment in nonaccrual and loans past due over 90
days still on accrual by class of loans as of June 30, 2011 and December 31, 2010:
Nonaccrual loans and loans past due 90 days still on accrual included both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.
The following table presents the aging of the recorded investment in past due loans as of June
30, 2011 and December 31, 2010 by class of loans:
June 30, 2011
December 31, 2010
|
Comprehensive Income:
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Comprehensive Income: [Abstract] | Â |
Comprehensive Income: |
Comprehensive Income:
Comprehensive income consists of net income and other comprehensive income or loss. Other
comprehensive income or loss consists solely of the change in net unrealized gains and losses on
securities available for sale, net of reclassification for gains or losses recognized in income.
|
Estimates:
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Estimates: [Abstract] | Â |
Estimates: |
Estimates:
To prepare financial statements in conformity with U.S. GAAP, management makes estimates and
assumptions based on available information. These estimates and assumptions affect the amounts
reported in the financial statements and the disclosures provided, and future results could differ.
The allowance for loan losses, deferred tax assets, carrying amount of goodwill and fair values of
financial instruments are particularly subject to change.
|
Credit Quality Indicators:
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Credit Quality Indicators: [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Quality Indicators: |
Credit Quality Indicators:
The Company categorizes loans into risk categories based on relevant information about the ability
of borrowers to service their debt such as: current financial information, historical payment
experience, credit documentation, public information, and current economic trends, among other
factors. The Company analyzes loans individually by classifying the loans as to credit risk. This
analysis is performed on a monthly basis. The Company uses the following definitions for risk
ratings:
Special Mention. Loans classified as special mention have a potential weakness that deserves
management’s close attention. If left uncorrected, these potential weaknesses may result in
deterioration of the repayment prospects for the loan or of the institution’s credit position at
some future date. Special mention assets are not adversely classified and do not expose an
institution to sufficient risk to warrant adverse classification.
Substandard. Loans classified as substandard are inadequately protected by the current net worth
and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have
a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Substandard
loans are characterized by the distinct possibility that the institution will sustain some loss if
the deficiencies are not corrected.
Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as
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.
Loans not meeting the criteria above that are analyzed individually as part of the above described
process are considered to be pass rated loans. As of June 30, 2011 and December 31, 2010, and
based on the most recent analysis performed, the risk category of loans by class of loans is as
follows:
June 30, 2011
December 31, 2010
The Company considers the performance of the loan portfolio and its impact on the allowance
for loan losses. For residential, consumer and indirect loan classes, the Company also evaluates
credit quality based on the aging status of the loan, which was previously presented, and by
payment activity. The following table presents the recorded investment in residential, consumer
and indirect auto loans based on payment activity as of June 30, 2011 and December 31, 2010.
Nonperforming loans are loans past due 90 days and still accruing interest and nonaccrual loans.
June 30, 2011
|
Fair Value
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Value [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value |
Fair Value
Fair value is the exchange price that would be received for an asset or paid to transfer a
liability (exit price) in the principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the measurement date. There are three levels
of inputs that may be used to measure fair values:
Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets
that the entity has the ability to access as of the measurement date.
Level 2 — Significant other observable inputs other than Level 1
prices such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data.
Level 3 — Significant unobservable inputs that reflect a reporting
entity’s own assumptions about the assumptions that market
participants would use in pricing an asset or liability.
The Company used the following methods and significant assumptions to estimate the fair value of
each type of financial instrument:
Investment Securities: The fair values for investment securities are determined by quoted
market prices, if available (Level 1). For securities where quoted prices are not available, fair
values are calculated based on market prices of similar securities (Level 2). For securities where
quoted prices or market prices of similar securities are not available, fair values are calculated
using discounted cash flows or other market indicators (Level 3).
Impaired Loans: The fair value of impaired loans with specific allocations of the
allowance for loan losses is generally based on recent real estate appraisals. These appraisals
may utilize a single valuation approach or a combination of approaches including comparable sales
and the income approach. Adjustments are routinely made in the appraisal process by the appraisers
to adjust for differences between the comparable sales and income data available. Such adjustments
are usually significant and typically result in a Level 3 classification of the inputs for
determining fair value.
Assets Measured on a Recurring Basis
Assets measured at fair value on a recurring basis are summarized below:
There were no significant transfers between level 1 and level 2 during the three and six month
periods ending June 30, 2011.
The table below presents a reconciliation and income statement classification of gains and losses
for all assets measured at fair value on a recurring basis:
Assets Measured on a Non-Recurring Basis
Assets measured at fair value on a non-recurring basis are summarized below:
Impaired loans, which are measured for impairment using the fair value of the collateral for
collateral dependent loans, had a principal balance of $2.6 million with a valuation allowance of
$561 thousand, resulting in an additional provision for loan loss of $66 thousand and $397 thousand
for the three and six month periods ending June 30, 2011. At December 31, 2010, impaired loans had
a principal balance of $2.8 million, with a valuation allowance of $565 thousand. Excluded from
the fair value of impaired loans, at June 30, 2011 and December 31, 2010, discussed above are $1.8
million of loans classified as troubled debt restructurings, which are not carried at fair value.
The carrying amounts and estimated fair values of financial instruments, at June 30, 2011 and
December 31, 2010 are as follows:
The methods and assumptions used to estimate fair value are described as follows:
Carrying amount is the estimated fair value for cash and cash equivalents, accrued interest
receivable and payable, demand deposits, short-term debt, and variable rate loans or deposits that
reprice frequently and fully. The methods for determining the fair values for securities were
described previously. For fixed rate loans or deposits and for variable rate loans or deposits
with infrequent repricing or repricing limits, fair value is based on discounted cash flows using
current market rates applied to the estimated life and credit risk. Fair value of debt is based on
current rates for similar financing. It was not practicable to determine the fair value of
restricted stock due to restrictions placed on its transferability. The fair value of
off-balance-sheet items is not considered material.
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Earnings Per Share:
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Earnings Per Share: [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share: |
Earnings Per Share:
The computation of basic and diluted earnings per share is shown in the following table:
Stock options for 28,500 and 34,000 shares were not considered in the computing of diluted
earnings per share for 2011 and 2010, respectively, because they were antidilutive.
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Troubled Debt Restructurings:
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6 Months Ended |
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Jun. 30, 2011
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Troubled Debt Restructurings: [Abstract] | Â |
Troubled Debt Restructurings: |
Troubled Debt Restructurings:
Included in loans individually impaired are loans with balances of $3.4 million and $3.0 million
for which the Company has modified the repayment terms at June 30, 2011 and December 31, 2010. The
Company has allocated $40 thousand of specific reserves to customers whose loan terms have been
modified in troubled debt restructurings as of June 30, 2011 and December 31, 2010. There are no
commitments to lend additional amounts to borrowers with loans that are classified as troubled debt
restructurings at June 30, 2011 and December 31, 2010.
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Principles of Consolidation:
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6 Months Ended |
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Jun. 30, 2011
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Principles of Consolidation: [Abstract] | Â |
Principles of Consolidation: |
Principles of Consolidation:
Farmers National Banc Corp. (the “Company”) is a multi-bank holding company registered under the
Bank Holding Company Act of 1956, as amended. The Company provides full banking services through
its nationally chartered subsidiary, The Farmers National Bank of Canfield (the “Bank”). The
Company provides trust services through its subsidiary, Farmers Trust Company (the “Trust”), and
insurance services through the Bank’s subsidiary, Farmers National Insurance. The consolidated
financial statements include the accounts of the Company, the Bank, the Trust and Farmers National
Insurance. All significant intercompany balances and transactions have been eliminated in the
consolidation.
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Segments:
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6 Months Ended |
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Jun. 30, 2011
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Segments: [Abstract] | Â |
Segments: |
Segments:
The Company provides a broad range of financial services to individuals and companies in
northeastern Ohio. While the Company’s chief decision makers monitor the revenue streams of the
various products and services, operations are managed and financial performance is primarily
aggregated and reported in two lines of business, the Bank segment and the Trust segment.
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Shareholders Equity:
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6 Months Ended |
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Jun. 30, 2011
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Shareholders' Equity: [Abstract] | Â |
Shareholders' Equity: |
Shareholders’ Equity:
The Company successfully completed a rights and public offering of 5,000,000 common shares in
January 2011. As part of this rights offering the Company issued 2,946,864 shares of authorized
but unissued shares and reissued 2,053,136 shares of treasury stock. Total proceeds from the
offering net of offering costs of $1.2 million were $13.8 million. Since the Company’s cost basis
of the treasury shares was greater than the price paid for stock issued in the rights offering, the
difference of $19.3 million was recorded as a reduction to retained earnings. Other changes to
retained earnings for the six months ended June 30, 2011 were net income of $3.8 million and
partially offset by dividends paid to shareholders of $1.1 million. In addition to the rights and
public offering, common stock increased by $255 thousand during the six months ended June 30, 2011
due to the issuance of 54,418 shares of stock through the Company’s dividend reinvestment program.
Accumulated other comprehensive income increased $3,8 million from December 31, 2010 to June 30,
2011 due to the after tax impact of increases in fair value of securities available for sale during
that period.
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Recent Accounting Pronouncements
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6 Months Ended |
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Jun. 30, 2011
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Recent Accounting Pronouncements [Abstract] | Â |
Recent Accounting Pronouncements |
Recent Accounting Pronouncements
ASU No. 2010-20, “Receivables (Topic 310) — Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses.” ASU 2010-20 requires entities to provide
disclosures designed to facilitate financial statement users’ evaluation of (i) the nature of
credit risk inherent in the entity’s portfolio of financing receivables, (ii) how that risk is
analyzed and assessed in arriving at the allowance for credit losses and (iii) the changes and
reasons for those changes in the allowance for credit losses. Disclosures must be disaggregated by
portfolio segment, the level at which an entity develops and documents a systematic method for
determining its allowance for credit losses, and class of financing receivable, which is generally
a disaggregation of portfolio segments. The required disclosures include, among other things, a
rollforward of the allowance for credit losses as well as information about modified, impaired,
non-accrual and past due loans and credit quality indicators. ASU 2010-20 became effective for the
Company’s consolidated financial statements as of December 31, 2010, as it relates to disclosures
required as of the end of a reporting period. Disclosures that relate to activity during a
reporting period became effective for the Company’s consolidated financial statements beginning on
January 1, 2011. ASU 2011-01, “Receivables (Topic
310) — Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update
No. 2010-20,” temporarily deferred the effective date for disclosures related to troubled debt
restructurings to coincide with the effective date of the then proposed ASU 2011-02, “Receivables
(Topic 310) — A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt
Restructuring,” which is further discussed below.
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.” ASU 2010-28
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. ASU 2010-28 became effective for the Company on
January 1, 2011 and did not have a significant impact on the Company’s consolidated financial
statements.
ASU No. 2011-02, “Receivables (Topic 310) — A Creditor’s Determination of Whether a Restructuring
Is a Troubled Debt Restructuring.” ASU 2011-02 clarifies which loan modifications constitute
troubled debt restructurings and is intended to assist creditors in determining whether a
modification of the terms of a receivable meets the criteria to be considered a troubled debt
restructuring, both for purposes of recording an impairment loss and for disclosure of troubled
debt restructurings. In evaluating whether a restructuring constitutes a troubled debt
restructuring, a creditor must separately conclude, under the guidance clarified by ASU 2011-02,
that both of the following exist: (a) the restructuring constitutes a concession; and (b) the
debtor is experiencing financial difficulties. ASU 2011-02 will be effective for the Company on
July 1, 2011, and applies retrospectively to restructurings occurring on or after January 1, 2011.
Adoption of ASU 2011-02 is not expected have a significant impact on the Company’s consolidated
financial statements.
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Securities:
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Jun. 30, 2011
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Securities: [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities: |
Securities:
The following table summarizes the amortized cost and fair value of the available-for-sale
investment securities portfolio at June 30, 2011 and December 31, 2010 and the corresponding
amounts of unrealized gains and losses recognized in accumulated other comprehensive income were as
follows:
There was one security sale during the three and six month periods ended June 30, 2011. Proceeds
from the sale were $3.4 million with no gain or loss recognized. Proceeds from sales of securities
were $1.9 million for the three and six month periods ended June 30, 2010. Gross losses of $3
thousand were realized on these sales, during the second quarter of 2010.
The amortized cost and fair value of the debt securities portfolio are shown by expected maturity.
Expected maturities may differ from contractual maturities if issuers have the right to call or
prepay obligations with or without call or prepayment penalties. Mortgage backed securities are
not due at a single maturity date and are shown separately.
The following table summarizes the investment securities with unrealized losses at June 30, 2011
and December 31, 2010, aggregated by major security type and length of time in a continuous
unrealized loss position:
Other-Than-Temporary-Impairment
Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a
quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.
Investment securities are generally evaluated for OTTI under Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 320, Investments — Debt and Equity Securities.
Consideration is given to the length of time and the extent to which the fair value has been less
than cost, the financial condition and near-term prospects of the issuer, whether the market
decline was affected by macroeconomic conditions and whether the Company has the intent to sell the
debt security or more likely than not will be required to sell the debt security before its
anticipated recovery. In analyzing an issuer’s financial condition, the Company may consider
whether the securities are issued by the federal government or its agencies, or U.S. government
sponsored enterprises, whether downgrades by bond rating agencies have occurred, and the results of
reviews of the issuer’s financial condition. The assessment of whether an other-than-temporary
decline exists involves a high degree of subjectivity and judgment and is based on the information
available to management at a point in time.
When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity
intends to sell the security or it is more likely than not it will be required to sell the security
before recovery of its amortized cost basis. If an entity intends to sell or it is more likely
than not it will be required to sell the security before recovery of its amortized cost basis, the
OTTI shall be recognized in earnings equal to the entire difference between the investment’s
amortized cost basis and its fair value at the balance sheet date. The previous amortized cost
basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.
For debt securities that do not meet the aforementioned criteria, the amount of impairment is split
into two components as follows: 1) OTTI related to credit loss, which must be recognized in the
income statement and 2) OTTI related to other factors, which is recognized in other comprehensive
income or loss. The credit loss is defined as the difference between the present value of the cash
flows expected to be collected and the
amortized cost basis. For equity securities, the entire amount of impairment is recognized through
earnings.
As of June 30, 2011, the Company’s security portfolio consisted of 414 securities, 53 of which were
in an unrealized loss position. The majority of the unrealized losses on the Company’s securities
are related to its holdings of U.S. government-sponsored entities, state and political
subdivisions, and mortgage-backed securities as discussed below.
Unrealized losses on debt securities issued by U.S. government-sponsored entities have not been
recognized into income because the securities are of high credit quality, management does not have
the intent to sell these securities before their anticipated recovery and the decline in fair value
is largely due to fluctuations in market interest rates and not credit quality. Consequently, the
fair value of such debt securities is expected to recover as the securities approach their maturity
date.
Unrealized losses on debt securities at June 30, 2011 relative to obligations of state and
political subdivisions have not been recognized into income. Generally, these debt securities have
maintained their investment grade ratings and management does not have the intent to sell these
securities before their anticipated recovery, which may be at maturity.
All of the Company’s holdings of mortgage-backed securities were issued by U.S. government
sponsored enterprises. Unrealized losses on mortgage-backed securities have not been recognized
into income. Because the decline in fair value is attributable to changes in interest rates and
illiquidity, and not credit quality, and because the Company does not have the intent to sell these
mortgage-backed securities and it is likely that it will not be required to sell the securities
before their anticipated recovery, the Company does not consider these securities to be OTTI.
|
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Basis of Presentation:
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Basis of Presentation: [Abstract] | Â |
Basis of Presentation: |
Basis of Presentation:
The unaudited condensed consolidated financial statements have been prepared in conformity with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by U.S. generally accepted accounting principles (“U.S.
GAAP”) for complete financial statements. The financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the Company’s 2010 Annual
Report to Shareholders included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2010. The interim consolidated financial statements include all adjustments
(consisting of only normal recurring items) that, in the opinion of management, are necessary for a
fair presentation of the financial position and results of operations for the periods presented.
The results of operations for the interim periods disclosed herein are not necessarily indicative
of the results that may be expected for a full year.
|
Stock Based Compensation:
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Stock Based Compensation: [Abstract] | Â |
Stock Based Compensation: |
Stock Based Compensation:
The Company’s Stock Option Plan (the “Plan”), permitted the grant of share options to its
directors, officers and employees. Under the terms of the Plan no additional shares can be issued.
Option awards were granted with an exercise price equal to the market price of the Company’s
common shares at the date of grant, with a vesting period of 5 years and have 10-year contractual
terms. At June 30, 2011 there were 28,500 outstanding options of which 25,500 were fully vested
and are exercisable.
The fair value of each option award is estimated on the date of grant using a Black-Scholes model.
Total compensation cost charged against income for the stock option plan for the six month period
ended June 30, 2011 was not material. No related income tax benefit was recorded.
|
Segment Information
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Segment Information [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
Segment Information
The reportable segments are determined by the products and services offered, primarily
distinguished between banking and trust operations. They are also distinguished by the level of
information provided to the chief operating decision makers in the Company, who use such
information to review performance of various components of the business, which are then aggregated.
Loans, investments, and deposits provide the revenues in the banking operation, and trust service
fees provide the revenue in trust operations. All operations are domestic.
Significant segment totals are reconciled to the financial statements as follows:
|