|
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
PENNSYLVANIA
|
23-2451943
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
Common Stock ($1.00 par value)
|
12,138,191 Shares Outstanding on November 3, 2011
|
Part I. Financial Information
|
||
Item 1. Financial Statements
|
||
Consolidated Balance Sheet (Unaudited) – September 30, 2011 and December 31, 2010
|
Page 3
|
|
Consolidated Statement of Operations (Unaudited) - Three Months and Nine Months Ended September 30, 2011 and 2010
|
Page 4
|
|
Consolidated Statement of Cash Flows (Unaudited) - Nine Months Ended September 30, 2011 and 2010
|
Page 5
|
|
Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) - Nine Months Ended September 30, 2011 and 2010
|
Page 6
|
|
Notes to Unaudited Consolidated Financial Statements
|
Pages 7 – 34
|
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
Pages 35 – 53
|
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
Pages 53 – 56
|
|
Item 4. Controls and Procedures
|
Page 56
|
|
Part II. Other Information
|
Pages 57 – 58
|
|
Signatures
|
Page 59
|
|
Exhibit 31.1. Rule 13a-14(a)/15d-14(a) Certification - Chief Executive Officer
|
Page 60
|
|
Exhibit 31.2. Rule 13a-14(a)/15d-14(a) Certification - Chief Financial Officer
|
Page 61
|
|
Exhibit 32. Section 1350 Certifications
|
Page 62
|
PART 1 - FINANCIAL INFORMATION
|
||||||||
ITEM 1. FINANCIAL STATEMENTS
|
||||||||
CONSOLIDATED BALANCE SHEET (Unaudited)
|
September 30,
|
December 31,
|
||||||
(In Thousands Except Share Data)
|
2011
|
2010
|
||||||
ASSETS
|
||||||||
Cash and due from banks:
|
||||||||
Noninterest-bearing
|
$ | 20,608 | $ | 16,840 | ||||
Interest-bearing
|
35,146 | 29,461 | ||||||
Total cash and cash equivalents
|
55,754 | 46,301 | ||||||
Available-for-sale securities, at fair value
|
472,113 | 443,956 | ||||||
Loans held for sale
|
1,218 | 5,247 | ||||||
Loans receivable
|
705,879 | 730,411 | ||||||
Allowance for loan losses
|
(8,177 | ) | (9,107 | ) | ||||
Loans, net
|
697,702 | 721,304 | ||||||
Bank-owned life insurance
|
20,761 | 21,822 | ||||||
Accrued interest receivable
|
5,144 | 4,960 | ||||||
Bank premises and equipment, net
|
19,372 | 22,636 | ||||||
Foreclosed assets held for sale
|
1,596 | 537 | ||||||
Deferred tax asset, net
|
7,927 | 16,054 | ||||||
Intangible asset - Core deposit intangibles
|
240 | 326 | ||||||
Intangible asset - Goodwill
|
11,942 | 11,942 | ||||||
Other assets
|
18,285 | 21,503 | ||||||
TOTAL ASSETS
|
$ | 1,312,054 | $ | 1,316,588 | ||||
LIABILITIES
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing
|
$ | 177,326 | $ | 158,767 | ||||
Interest-bearing
|
818,404 | 845,581 | ||||||
Total deposits
|
995,730 | 1,004,348 | ||||||
Short-term borrowings
|
19,234 | 18,413 | ||||||
Long-term borrowings
|
128,024 | 148,495 | ||||||
Accrued interest and other liabilities
|
7,856 | 6,388 | ||||||
TOTAL LIABILITIES
|
1,150,844 | 1,177,644 | ||||||
STOCKHOLDERS' EQUITY
|
||||||||
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation preference per share; no shares issued at September 30, 2011 and December 31, 2010
|
0 | 0 | ||||||
Common stock, par value $1.00 per share; authorized 20,000,000 shares in 2011 and 2010; issued 12,447,219 at September 30, 2011 and 12,408,212 at December 31, 2010
|
12,447 | 12,408 | ||||||
Paid-in capital
|
67,322 | 66,648 | ||||||
Retained earnings
|
78,085 | 65,920 | ||||||
Treasury stock, at cost; 306,589 shares at September 30, 2011 and 254,614 shares at December 31, 2010
|
(5,128 | ) | (4,431 | ) | ||||
Sub-total
|
152,726 | 140,545 | ||||||
Accumulated other comprehensive income (loss):
|
||||||||
Unrealized gains (losses) on available-for-sale securities
|
8,787 | (1,351 | ) | |||||
Defined benefit plans
|
(303 | ) | (250 | ) | ||||
Total accumulated other comprehensive income (loss)
|
8,484 | (1,601 | ) | |||||
TOTAL STOCKHOLDERS' EQUITY
|
161,210 | 138,944 | ||||||
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
|
$ | 1,312,054 | $ | 1,316,588 |
CONSOLIDATED STATEMENT OF OPERATIONS
|
3 Months Ended
|
Fiscal Year To Date
|
||||||||||||||
(In Thousands, Except Per Share Data) (Unaudited)
|
Sept. 30,
|
Sept. 30,
|
9 Months Ended Sept. 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(Current)
|
(Prior Year)
|
(Current)
|
(Prior Year)
|
|||||||||||||
INTEREST INCOME
|
||||||||||||||||
Interest and fees on loans
|
$ | 10,799 | $ | 11,153 | $ | 32,521 | $ | 33,112 | ||||||||
Interest on balances with depository institutions
|
13 | 26 | 45 | 102 | ||||||||||||
Interest on loans to political subdivisions
|
372 | 395 | 1,119 | 1,192 | ||||||||||||
Interest on trading securities
|
0 | 0 | 0 | 1 | ||||||||||||
Income from available-for-sale and held-to-maturity securities:
|
||||||||||||||||
Taxable
|
2,784 | 2,641 | 8,326 | 8,425 | ||||||||||||
Tax-exempt
|
1,285 | 1,223 | 3,860 | 3,588 | ||||||||||||
Dividends
|
64 | 57 | 187 | 194 | ||||||||||||
Total interest and dividend income
|
15,317 | 15,495 | 46,058 | 46,614 | ||||||||||||
INTEREST EXPENSE
|
||||||||||||||||
Interest on deposits
|
1,775 | 2,916 | 6,610 | 9,131 | ||||||||||||
Interest on short-term borrowings
|
6 | 15 | 20 | 166 | ||||||||||||
Interest on long-term borrowings
|
1,327 | 1,708 | 4,122 | 5,638 | ||||||||||||
Total interest expense
|
3,108 | 4,639 | 10,752 | 14,935 | ||||||||||||
Net interest income
|
12,209 | 10,856 | 35,306 | 31,679 | ||||||||||||
(Credit) provision for loan losses
|
(37 | ) | 189 | (198 | ) | 472 | ||||||||||
Net interest income after (credit) provision for loan losses
|
12,246 | 10,667 | 35,504 | 31,207 | ||||||||||||
OTHER INCOME
|
||||||||||||||||
Service charges on deposit accounts
|
1,230 | 1,166 | 3,586 | 3,449 | ||||||||||||
Service charges and fees
|
218 | 191 | 643 | 594 | ||||||||||||
Trust and financial management revenue
|
785 | 876 | 2,608 | 2,605 | ||||||||||||
Interchange revenue from debit card transactions
|
490 | 427 | 1,427 | 1,226 | ||||||||||||
Net gains from sale of loans
|
263 | 275 | 677 | 478 | ||||||||||||
Increase in cash surrender value of life insurance
|
127 | 121 | 381 | 352 | ||||||||||||
Insurance commissions, fees and premiums
|
66 | 65 | 192 | 186 | ||||||||||||
Impairment loss on limited partnership investment
|
0 | 0 | (948 | ) | 0 | |||||||||||
Other operating income
|
820 | 441 | 1,661 | 1,480 | ||||||||||||
Sub-total
|
3,999 | 3,562 | 10,227 | 10,370 | ||||||||||||
Total other-than-temporary impairment losses on available-for-sale securities
|
0 | 0 | 0 | (381 | ) | |||||||||||
Portion of (gain) loss recognized in other comprehensive loss (before taxes)
|
0 | 0 | 0 | (52 | ) | |||||||||||
Net impairment losses recognized in earnings
|
0 | 0 | 0 | (433 | ) | |||||||||||
Realized gains on available-for-sale securities, net
|
26 | 388 | 2,028 | 1,198 | ||||||||||||
Net realized gains on available-for-sale securities
|
26 | 388 | 2,028 | 765 | ||||||||||||
Total other income
|
4,025 | 3,950 | 12,255 | 11,135 | ||||||||||||
OTHER EXPENSES
|
||||||||||||||||
Salaries and wages
|
3,451 | 3,354 | 10,321 | 9,631 | ||||||||||||
Pensions and other employee benefits
|
1,020 | 980 | 3,344 | 2,902 | ||||||||||||
Occupancy expense, net
|
641 | 654 | 2,038 | 2,004 | ||||||||||||
Furniture and equipment expense
|
498 | 500 | 1,435 | 1,610 | ||||||||||||
FDIC Assessments
|
174 | 382 | 688 | 1,201 | ||||||||||||
Pennsylvania shares tax
|
345 | 305 | 984 | 916 | ||||||||||||
Other operating expense
|
1,923 | 1,907 | 5,299 | 5,518 | ||||||||||||
Total other expenses
|
8,052 | 8,082 | 24,109 | 23,782 | ||||||||||||
Income before income tax provision
|
8,219 | 6,535 | 23,650 | 18,560 | ||||||||||||
Income tax provision
|
2,230 | 1,671 | 6,423 | 4,389 | ||||||||||||
Net income
|
5,989 | 4,864 | 17,227 | 14,171 | ||||||||||||
U.S Treasury preferred dividends
|
0 | 729 | 0 | 1,474 | ||||||||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
$ | 5,989 | $ | 4,135 | $ | 17,227 | $ | 12,697 | ||||||||
Net income per share – basic
|
$ | 0.49 | $ | 0.34 | $ | 1.42 | $ | 1.05 | ||||||||
Net income per share – diluted
|
$ | 0.49 | $ | 0.34 | $ | 1.42 | $ | 1.05 |
Nine Months Ended September 30,
|
||||||||
(In Thousands) (Unaudited)
|
2011
|
2010
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$ | 17,227 | $ | 14,171 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
(Credit) provision for loan losses
|
(198 | ) | 472 | |||||
Realized gains on available-for-sale securities, net
|
(2,028 | ) | (765 | ) | ||||
Gain on sale of foreclosed assets, net
|
(8 | ) | (113 | ) | ||||
Depreciation expense
|
1,584 | 1,787 | ||||||
Gain on disposition of premises and equipment
|
(324 | ) | (442 | ) | ||||
Accretion and amortization on securities, net
|
1,045 | 1,740 | ||||||
Accretion and amortization on loans, deposits and borrowings, net
|
(27 | ) | (179 | ) | ||||
Amortization of mortgage servicing rights
|
48 | 0 | ||||||
Impairment loss on limited partnership interest
|
948 | 0 | ||||||
Increase in cash surrender value of life insurance
|
(381 | ) | (352 | ) | ||||
Stock-based compensation
|
386 | 50 | ||||||
Amortization of core deposit intangibles
|
86 | 132 | ||||||
Deferred income taxes
|
2,936 | 6,360 | ||||||
Gains on sales of mortgage loans, net
|
(677 | ) | (478 | ) | ||||
Origination of mortgage loans for sale
|
(15,166 | ) | (19,228 | ) | ||||
Proceeds from sales of mortgage loans
|
19,683 | 19,516 | ||||||
Net decrease in trading securities
|
0 | 1,045 | ||||||
Decrease in accrued interest receivable and other assets
|
888 | 3,543 | ||||||
Increase (decrease) in accrued interest payable and other liabilities
|
1,280 | (238 | ) | |||||
Net Cash Provided by Operating Activities
|
27,302 | 27,021 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds from maturity of held-to-maturity securities
|
0 | 300 | ||||||
Proceeds from sales of available-for-sale securities
|
16,696 | 51,528 | ||||||
Proceeds from calls and maturities of available-for-sale securities
|
79,813 | 137,313 | ||||||
Purchase of available-for-sale securities
|
(108,327 | ) | (219,143 | ) | ||||
Redemption of Federal Home Loan Bank of Pittsburgh stock
|
1,164 | 0 | ||||||
Net decrease (increase) in loans
|
22,150 | (5,615 | ) | |||||
Proceeds from bank-owned life insurance
|
1,442 | 1,442 | ||||||
Purchase of premises and equipment
|
(666 | ) | (595 | ) | ||||
Proceeds from disposition of premises and equipment
|
3,060 | 100 | ||||||
Purchase of investment in limited liability entity
|
(200 | ) | 0 | |||||
Return of principal on limited liability entity investments
|
93 | 49 | ||||||
Proceeds from sale of foreclosed assets
|
640 | 1,100 | ||||||
Net Cash Provided by (Used in) Investing Activities
|
15,865 | (33,521 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net (decrease) increase in deposits
|
(8,632 | ) | 56,711 | |||||
Net increase (decrease) in short-term borrowings
|
821 | (20,827 | ) | |||||
Repayments of long-term borrowings
|
(20,471 | ) | (37,453 | ) | ||||
Redemption of US Treasury preferred stock and warrant
|
0 | (26,840 | ) | |||||
Purchase of treasury stock
|
(983 | ) | 0 | |||||
Sale of treasury stock
|
16 | 0 | ||||||
Tax benefit from compensation plans
|
48 | 29 | ||||||
US Treasury preferred dividends paid
|
0 | (952 | ) | |||||
Common dividends paid
|
(4,513 | ) | (3,008 | ) | ||||
Net Cash Used in Financing Activities
|
(33,714 | ) | (32,340 | ) | ||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
9,453 | (38,840 | ) | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
46,301 | 92,065 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 55,754 | $ | 53,225 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Assets acquired through foreclosure of real estate loans
|
$ | 1,691 | $ | 644 | ||||
Interest paid
|
$ | 10,817 | $ | 15,280 | ||||
Income taxes paid (refunded)
|
$ | 2,300 | $ | (3,781 | ) |
Nine Months Ended September 30, 2011 and 2010
|
||||||||||||||||||||||||||||
(In Thousands Except Per Share Data)
|
Accum. Other
|
|||||||||||||||||||||||||||
(Unaudited)
|
Preferred
|
Common
|
Paid-in
|
Retained
|
Comprehensive
|
Treasury
|
||||||||||||||||||||||
Stock
|
Stock
|
Capital
|
Earnings
|
Income (Loss)
|
Stock
|
Total
|
||||||||||||||||||||||
Nine Months Ended September 30, 2011:
|
||||||||||||||||||||||||||||
Balance, December 31, 2010
|
$ | 0 | $ | 12,408 | $ | 66,648 | $ | 65,920 | $ | (1,601 | ) | $ | (4,431 | ) | $ | 138,944 | ||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
17,227 | 17,227 | ||||||||||||||||||||||||||
Unrealized gain on securities, net of reclassification and tax
|
10,138 | 10,138 | ||||||||||||||||||||||||||
Other comprehensive loss related to defined benefit plans
|
(53 | ) | (53 | ) | ||||||||||||||||||||||||
Total comprehensive income
|
27,312 | |||||||||||||||||||||||||||
Cash dividends declared on common stock, $.42 per share
|
(5,110 | ) | (5,110 | ) | ||||||||||||||||||||||||
Shares issued for dividend reinvestment plan
|
39 | 558 | 597 | |||||||||||||||||||||||||
Treasury stock purchased
|
(983 | ) | (983 | ) | ||||||||||||||||||||||||
Shares issued from treasury related to exercise of stock options
|
(3 | ) | 19 | 16 | ||||||||||||||||||||||||
Restricted stock granted
|
(272 | ) | 272 | 0 | ||||||||||||||||||||||||
Forfeiture of restricted stock
|
5 | (5 | ) | 0 | ||||||||||||||||||||||||
Stock-based compensation expense
|
386 | 386 | ||||||||||||||||||||||||||
Tax benefit from employee benefit plan
|
48 | 48 | ||||||||||||||||||||||||||
Balance, September 30, 2011
|
$ | 0 | $ | 12,447 | $ | 67,322 | $ | 78,085 | $ | 8,484 | $ | (5,128 | ) | $ | 161,210 | |||||||||||||
Nine Months Ended September 30, 2010:
|
||||||||||||||||||||||||||||
Balance, December 31, 2009
|
$ | 25,749 | $ | 12,374 | $ | 66,726 | $ | 53,027 | $ | (891 | ) | $ | (4,575 | ) | $ | 152,410 | ||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
14,171 | 14,171 | ||||||||||||||||||||||||||
Unrealized gain on securities, net of reclassification and tax
|
4,915 | 4,915 | ||||||||||||||||||||||||||
Other comprehensive income related to defined benefit plans
|
138 | 138 | ||||||||||||||||||||||||||
Total comprehensive income
|
19,224 | |||||||||||||||||||||||||||
Accretion of discount associated with U.S. Treasury preferred stock
|
691 | (691 | ) | 0 | ||||||||||||||||||||||||
Cash dividends on U.S. Treasury preferred stock
|
(783 | ) | (783 | ) | ||||||||||||||||||||||||
Redemption of U.S. Treasury preferred stock
|
(26,440 | ) | (26,440 | ) | ||||||||||||||||||||||||
Redemption of U.S. Treasury warrant
|
(400 | ) | (400 | ) | ||||||||||||||||||||||||
Cash dividends declared on common stock, $.27 per share
|
(3,273 | ) | (3,273 | ) | ||||||||||||||||||||||||
Shares issued for dividend reinvestment plan
|
23 | 242 | 265 | |||||||||||||||||||||||||
Restricted stock granted
|
(159 | ) | 159 | 0 | ||||||||||||||||||||||||
Forfeiture of restricted stock
|
15 | (15 | ) | 0 | ||||||||||||||||||||||||
Stock-based compensation expense
|
50 | 50 | ||||||||||||||||||||||||||
Tax benefit from employee benefit plan
|
29 | 29 | ||||||||||||||||||||||||||
Balance, September 30, 2010
|
$ | 0 | $ | 12,397 | $ | 66,474 | $ | 62,480 | $ | 4,162 | $ | (4,431 | ) | $ | 141,082 |
Net Income
|
Weighted-
|
|||||||||||
Available
|
Average
|
Earnings
|
||||||||||
to Common
|
Common
|
Per
|
||||||||||
Shareholders
|
Shares
|
Share
|
||||||||||
Nine Months Ended September 30, 2011
|
||||||||||||
Earnings per common share – basic
|
$ | 17,227,000 | 12,167,563 | $ | 1.42 | |||||||
Dilutive effect of potential common stock arising from stock options:
|
||||||||||||
Exercise of outstanding stock options
|
92,786 | |||||||||||
Hypothetical share repurchase at $15.57
|
(89,738 | ) | ||||||||||
Earnings per common share – diluted
|
$ | 17,227,000 | 12,170,611 | $ | 1.42 | |||||||
Nine Months Ended September 30, 2010
|
||||||||||||
Earnings per common share – basic and diluted
|
$ | 12,697,000 | 12,125,142 | $ | 1.05 | |||||||
Quarter Ended September 30, 2011
|
||||||||||||
Earnings per common share – basic
|
$ | 5,989,000 | 12,150,910 | $ | 0.49 | |||||||
Dilutive effect of potential common stock arising from stock options:
|
||||||||||||
Exercise of outstanding stock options
|
91,843 | |||||||||||
Hypothetical share repurchase at $15.56
|
(88,892 | ) | ||||||||||
Earnings per common share – diluted
|
$ | 5,989,000 | 12,153,861 | $ | 0.49 | |||||||
Quarter Ended September 30, 2010
|
||||||||||||
Earnings per common share – basic and diluted
|
$ | 4,135,000 | 12,136,516 | $ | 0.34 |
(In Thousands)
|
3 Months Ended
|
9 Months Ended
|
||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net income
|
$ | 5,989 | $ | 4,864 | $ | 17,227 | $ | 14,171 | ||||||||
Unrealized gains on available-for-sale securities:
|
||||||||||||||||
Unrealized holding gains on available-for-sale securities
|
5,310 | 4,467 | 17,384 | 8,191 | ||||||||||||
Reclassification adjustment for gains realized in income
|
(26 | ) | (388 | ) | (2,028 | ) | (765 | ) | ||||||||
Other comprehensive gain before income tax
|
5,284 | 4,079 | 15,356 | 7,426 | ||||||||||||
Income tax related to other comprehensive gain
|
1,796 | 1,370 | 5,218 | 2,511 | ||||||||||||
Other comprehensive gain on available-for-sale securities
|
3,488 | 2,709 | 10,138 | 4,915 | ||||||||||||
Unfunded pension and postretirement obligations:
|
||||||||||||||||
Change in items from defined benefit plans included in accumulated other comprehensive income
|
0 | 16 | (122 | ) | 168 | |||||||||||
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost
|
14 | 13 | 41 | 40 | ||||||||||||
Other comprehensive gain (loss) before income tax
|
14 | 29 | (81 | ) | 208 | |||||||||||
Income tax related to other comprehensive gain (loss)
|
4 | 9 | (28 | ) | 70 | |||||||||||
Other comprehensive gain (loss) on unfunded retirement obligations
|
10 | 20 | (53 | ) | 138 | |||||||||||
Net other comprehensive gain
|
3,498 | 2,729 | 10,085 | 5,053 | ||||||||||||
Total comprehensive income
|
$ | 9,487 | $ | 7,593 | $ | 27,312 | $ | 19,224 |
September 30, 2011
|
||||||||||||||||
Market Values Based on:
|
||||||||||||||||
Quoted Prices
|
Other
|
|||||||||||||||
in Active
|
Observable
|
Unobservable
|
Total
|
|||||||||||||
Markets
|
Inputs
|
Inputs
|
Fair
|
|||||||||||||
(In Thousands)
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Value
|
||||||||||||
AVAILABLE-FOR-SALE SECURITIES:
|
||||||||||||||||
Obligations of U.S. Government agencies
|
$ | 0 | $ | 34,250 | $ | 0 | $ | 34,250 | ||||||||
Obligations of states and political subdivisions:
|
||||||||||||||||
Tax-exempt
|
0 | 132,545 | 0 | 132,545 | ||||||||||||
Taxable
|
0 | 13,354 | 0 | 13,354 | ||||||||||||
Mortgage-backed securities
|
0 | 121,967 | 0 | 121,967 | ||||||||||||
Collateralized mortgage obligations, Issued by U.S. Government agencies
|
0 | 146,002 | 0 | 146,002 | ||||||||||||
Corporate bonds
|
0 | 1,001 | 0 | 1,001 | ||||||||||||
Trust preferred securities issued by individual institutions
|
0 | 8,181 | 0 | 8,181 | ||||||||||||
Collateralized debt obligations:
|
||||||||||||||||
Pooled trust preferred securities - senior tranches
|
0 | 0 | 7,103 | 7,103 | ||||||||||||
Other collateralized debt obligations
|
0 | 660 | 0 | 660 | ||||||||||||
Total debt securities
|
0 | 457,960 | 7,103 | 465,063 | ||||||||||||
Marketable equity securities
|
7,050 | 0 | 0 | 7,050 | ||||||||||||
Total available-for-sale securities
|
7,050 | 457,960 | 7,103 | 472,113 | ||||||||||||
Servicing rights
|
0 | 0 | 346 | 346 | ||||||||||||
Total assets measured at fair value on a recurring basis
|
$ | 7,050 | $ | 457,960 | $ | 7,449 | $ | 472,459 |
December 31, 2010
|
||||||||||||||||
Market Values Based on:
|
||||||||||||||||
Quoted Prices
|
Other
|
|||||||||||||||
in Active
|
Observable
|
Unobservable
|
Total
|
|||||||||||||
Markets
|
Inputs
|
Inputs
|
Fair
|
|||||||||||||
(In Thousands)
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Value
|
||||||||||||
AVAILABLE-FOR-SALE SECURITIES:
|
||||||||||||||||
Obligations of U.S. Government agencies
|
$ | 0 | $ | 44,247 | $ | 0 | $ | 44,247 | ||||||||
Obligations of states and political subdivisions:
|
||||||||||||||||
Tax-exempt
|
4,574 | 115,301 | 0 | 119,875 | ||||||||||||
Taxable
|
1,125 | 6,542 | 0 | 7,667 | ||||||||||||
Mortgage-backed securities
|
0 | 118,386 | 0 | 118,386 | ||||||||||||
Collateralized mortgage obligations, Issued by U.S. Government agencies
|
9,117 | 121,709 | 0 | 130,826 | ||||||||||||
Corporate bonds
|
0 | 1,027 | 0 | 1,027 | ||||||||||||
Trust preferred securities issued by individual institutions
|
0 | 7,838 | 0 | 7,838 | ||||||||||||
Collateralized debt obligations:
|
||||||||||||||||
Pooled trust preferred securities - senior tranches
|
0 | 0 | 7,400 | 7,400 | ||||||||||||
Other collateralized debt obligations
|
0 | 681 | 0 | 681 | ||||||||||||
Total debt securities
|
14,816 | 415,731 | 7,400 | 437,947 | ||||||||||||
Marketable equity securities
|
6,009 | 0 | 0 | 6,009 | ||||||||||||
Total available-for-sale securities
|
20,825 | 415,731 | 7,400 | 443,956 | ||||||||||||
Servicing rights
|
0 | 0 | 204 | 204 | ||||||||||||
Total assets measured at fair value on a recurring basis
|
$ | 20,825 | $ | 415,731 | $ | 7,604 | $ | 444,160 |
3 Months Ended
|
Fiscal Year To Date
|
|||||||||||||||
Sept. 30,
|
Sept. 30,
|
9 Months Ended Sept. 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(Current)
|
(Prior Year)
|
(Current)
|
(Prior Year)
|
|||||||||||||
Balance, beginning of period
|
$ | 7,207 | $ | 8,240 | $ | 7,400 | $ | 9,114 | ||||||||
Accretion and amortization, net
|
0 | (20 | ) | (34 | ) | (235 | ) | |||||||||
Proceeds from sales and calls
|
(24 | ) | (284 | ) | (2,109 | ) | (808 | ) | ||||||||
Realized gains, net
|
24 | 284 | 99 | 284 | ||||||||||||
Unrealized losses included in earnings
|
0 | 0 | 0 | (423 | ) | |||||||||||
Unrealized (losses) gains included in other comprehensive income
|
(104 | ) | 20 | 1,747 | 308 | |||||||||||
Balance, end of period
|
$ | 7,103 | $ | 8,240 | $ | 7,103 | $ | 8,240 |
(In Thousands)
|
September 30, 2011
|
December 31, 2010
|
||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Amount
|
Value
|
Amount
|
Value
|
|||||||||||||
Financial assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 55,754 | $ | 55,754 | $ | 46,301 | $ | 46,301 | ||||||||
Available-for-sale securities
|
472,113 | 472,113 | 443,956 | 443,956 | ||||||||||||
Restricted equity securities
|
7,123 | 7,123 | 8,286 | 8,286 | ||||||||||||
Loans held for sale
|
1,218 | 1,218 | 5,247 | 5,249 | ||||||||||||
Loans, net
|
697,702 | 703,299 | 721,304 | 728,744 | ||||||||||||
Accrued interest receivable
|
5,144 | 5,144 | 4,960 | 4,960 | ||||||||||||
Servicing rights
|
346 | 346 | 204 | 204 | ||||||||||||
Financial liabilities:
|
||||||||||||||||
Deposits
|
995,730 | 1,000,179 | 1,004,348 | 1,012,247 | ||||||||||||
Short-term borrowings
|
19,234 | 18,965 | 18,413 | 18,240 | ||||||||||||
Long-term borrowings
|
128,024 | 147,369 | 148,495 | 171,877 | ||||||||||||
Accrued interest payable
|
351 | 351 | 430 | 430 |
September 30, 2011
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Unrealized
|
Unrealized
|
|||||||||||||||
Amortized
|
Holding
|
Holding
|
Fair
|
|||||||||||||
(In Thousands)
|
Cost
|
Gains
|
Losses
|
Value
|
||||||||||||
Obligations of U.S. Government agencies
|
$ | 33,459 | $ | 791 | $ | 0 | $ | 34,250 | ||||||||
Obligations of states and political subdivisions:
|
||||||||||||||||
Tax-exempt
|
130,537 | 3,782 | (1,774 | ) | 132,545 | |||||||||||
Taxable
|
13,080 | 282 | (8 | ) | 13,354 | |||||||||||
Mortgage-backed securities
|
116,314 | 5,653 | 0 | 121,967 | ||||||||||||
Collateralized mortgage obligations, Issued by U.S. Government agencies
|
143,275 | 2,774 | (47 | ) | 146,002 | |||||||||||
Corporate bonds
|
1,000 | 1 | 0 | 1,001 | ||||||||||||
Trust preferred securities issued by individual institutions
|
7,015 | 1,211 | (45 | ) | 8,181 | |||||||||||
Collateralized debt obligations:
|
||||||||||||||||
Pooled trust preferred securities - senior tranches
|
7,914 | 0 | (811 | ) | 7,103 | |||||||||||
Other collateralized debt obligations
|
660 | 0 | 0 | 660 | ||||||||||||
Total debt securities
|
453,254 | 14,494 | (2,685 | ) | 465,063 | |||||||||||
Marketable equity securities
|
5,548 | 1,698 | (196 | ) | 7,050 | |||||||||||
Total
|
$ | 458,802 | $ | 16,192 | $ | (2,881 | ) | $ | 472,113 |
December 31, 2010
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Unrealized
|
Unrealized
|
|||||||||||||||
Amortized
|
Holding
|
Holding
|
Fair
|
|||||||||||||
(In Thousands)
|
Cost
|
Gains
|
Losses
|
Value
|
||||||||||||
Obligations of U.S. Government agencies
|
$ | 44,005 | $ | 270 | $ | (28 | ) | $ | 44,247 | |||||||
Obligations of states and political subdivisions:
|
||||||||||||||||
Tax-exempt
|
127,210 | 546 | (7,882 | ) | 119,874 | |||||||||||
Taxable
|
7,808 | 1 | (141 | ) | 7,668 | |||||||||||
Mortgage-backed securities
|
113,176 | 5,381 | (171 | ) | 118,386 | |||||||||||
Collateralized mortgage obligations, Issued by U.S. Government agencies
|
131,040 | 869 | (1,083 | ) | 130,826 | |||||||||||
Corporate bonds
|
1,000 | 27 | 0 | 1,027 | ||||||||||||
Trust preferred securities issued by individual institutions
|
6,535 | 1,694 | (391 | ) | 7,838 | |||||||||||
Collateralized debt obligations:
|
||||||||||||||||
Pooled trust preferred securities - senior tranches
|
9,957 | 0 | (2,557 | ) | 7,400 | |||||||||||
Other collateralized debt obligations
|
681 | 0 | 0 | 681 | ||||||||||||
Total debt securities
|
441,412 | 8,788 | (12,253 | ) | 437,947 | |||||||||||
Marketable equity securities
|
4,589 | 1,496 | (76 | ) | 6,009 | |||||||||||
Total
|
$ | 446,001 | $ | 10,284 | $ | (12,329 | ) | $ | 443,956 |
September 30, 2011
|
Less Than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||||||||
(In Thousands)
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
Obligations of states and political subdivisions:
|
||||||||||||||||||||||||
Tax-exempt
|
$ | 9,055 | $ | (702 | ) | $ | 24,904 | $ | (1,072 | ) | $ | 33,959 | $ | (1,774 | ) | |||||||||
Taxable
|
699 | (8 | ) | 0 | 0 | 699 | (8 | ) | ||||||||||||||||
Collateralized mortgage obligations, Issued by U.S. Government agencies
|
8,399 | (45 | ) | 5,316 | (2 | ) | 13,715 | (47 | ) | |||||||||||||||
Trust preferred securities issued by individual institutions
|
0 | 0 | 955 | (45 | ) | 955 | (45 | ) | ||||||||||||||||
Collateralized debt obligations:
|
||||||||||||||||||||||||
Pooled trust preferred securities - senior tranches
|
0 | 0 | 7,103 | (811 | ) | 7,103 | (811 | ) | ||||||||||||||||
Total debt securities
|
18,153 | (755 | ) | 38,278 | (1,930 | ) | 56,431 | (2,685 | ) | |||||||||||||||
Marketable equity securities
|
1,413 | (137 | ) | 96 | (59 | ) | 1,509 | (196 | ) | |||||||||||||||
Total temporarily impaired available-for-sale securities
|
$ | 19,566 | $ | (892 | ) | $ | 38,374 | $ | (1,989 | ) | $ | 57,940 | $ | (2,881 | ) |
December 31, 2010
|
Less Than 12 Months
|
12 Months or More | Total | |||||||||||||||||||||
(In Thousands)
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
Obligations of U.S. Government agencies
|
$ | 10,230 | $ | (28 | ) | $ | 0 | $ | 0 | $ | 10,230 | $ | (28 | ) | ||||||||||
Obligations of states and political subdivisions:
|
||||||||||||||||||||||||
Tax-exempt
|
53,119 | (2,533 | ) | 28,622 | (5,349 | ) | 81,741 | (7,882 | ) | |||||||||||||||
Taxable
|
6,542 | (141 | ) | 0 | 0 | 6,542 | (141 | ) | ||||||||||||||||
Mortgage-backed securities
|
13,141 | (171 | ) | 0 | 0 | 13,141 | (171 | ) | ||||||||||||||||
Collateralized mortgage obligations, Issued by U.S. Government agencies
|
56,257 | (1,083 | ) | 0 | 0 | 56,257 | (1,083 | ) | ||||||||||||||||
Trust preferred securities issued by individual institutions
|
0 | 0 | 5,825 | (391 | ) | 5,825 | (391 | ) | ||||||||||||||||
Collateralized debt obligations:
|
||||||||||||||||||||||||
Pooled trust preferred securities - senior tranches
|
0 | 0 | 7,400 | (2,557 | ) | 7,400 | (2,557 | ) | ||||||||||||||||
Total debt securities
|
139,289 | (3,956 | ) | 41,847 | (8,297 | ) | 181,136 | (12,253 | ) | |||||||||||||||
Marketable equity securities
|
710 | (76 | ) | 0 | 0 | 710 | (76 | ) | ||||||||||||||||
Total temporarily impaired available-for-sale securities
|
$ | 139,999 | $ | (4,032 | ) | $ | 41,847 | $ | (8,297 | ) | $ | 181,846 | $ | (12,329 | ) |
(In Thousands)
|
3 Months Ended
|
9 months ended
|
||||||||||||||
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Gross realized gains
|
$ | 26 | $ | 388 | $ | 2,035 | $ | 1,206 | ||||||||
Gross realized losses
|
0 | 0 | (7 | ) | (441 | ) | ||||||||||
Net realized gains
|
$ | 26 | $ | 388 | $ | 2,028 | $ | 765 | ||||||||
Income tax provision related to net realized gains
|
$ | 9 | $ | 132 | $ | 690 | $ | 260 |
Amortized
|
Fair
|
|||||||
(In Thousands)
|
Cost
|
Value
|
||||||
Due in one year or less
|
$ | 5,211 | $ | 6,413 | ||||
Due after one year through five years
|
51,569 | 52,662 | ||||||
Due after five years through ten years
|
91,689 | 93,683 | ||||||
Due after ten years
|
304,785 | 312,305 | ||||||
Total
|
$ | 453,254 | $ | 465,063 |
(In Thousands)
|
3 Months Ended
|
9 Months Ended
|
||||||||||||||
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Trust preferred securities issued by individual institutions
|
$ | 0 | $ | 0 | $ | 0 | $ | (320 | ) | |||||||
Pooled trust preferred securities - mezzanine tranches
|
0 | 0 | 0 | (103 | ) | |||||||||||
Marketable equity securities (bank stocks)
|
0 | 0 | 0 | (10 | ) | |||||||||||
Net impairment losses recognized in earnings
|
$ | 0 | $ | 0 | $ | 0 | $ | (433 | ) |
(In Thousands)
|
Moody's/
|
||||||||||||||||||
Cumulative
|
S&P/
|
||||||||||||||||||
Unrealized
|
Realized
|
Fitch
|
|||||||||||||||||
Amortized
|
Fair
|
Gain
|
Credit
|
Credit
|
|||||||||||||||
Name of Issuer
|
Issuer's Parent Company
|
Cost
|
Value
|
(Loss)
|
Losses
|
Ratings
|
|||||||||||||
Astoria Capital Trust I
|
Astoria Financial Corporation
|
$ | 5,197 | $ | 5,219 | $ | 22 | $ | 0 |
Baa3/BB-/BB-
|
|||||||||
Carolina First Mortgage Loan Trust
|
The Toronto-Dominion Bank
|
$ | 818 | $ | 2,007 | 1,189 | (1,769 | ) |
NR
|
||||||||||
Patriot Capital Trust I
|
Susquehanna Bancshares, Inc.
|
$ | 1,000 | $ | 955 | (45 | ) | 0 |
NR
|
||||||||||
Total
|
$ | 7,015 | $ | 8,181 | $ | 1,166 | $ | (1,769 | ) |
Amortized
|
Fair
|
Unrealized
|
Cumulative
|
|||||||||||||
Description
|
Cost
|
Value
|
Gain
|
OTTI
|
||||||||||||
U.S. Capital Funding II, Ltd. (B-1)
|
$ | 0 | $ | 0 | $ | 0 | $ | (1,992 | ) | |||||||
U.S. Capital Funding II, Ltd. (B-2)
|
0 | 0 | 0 | (2,973 | ) | |||||||||||
ALESCO Preferred Funding IX, Ltd.
|
0 | 0 | 0 | (2,988 | ) | |||||||||||
Total
|
$ | 0 | $ | 0 | $ | 0 | $ | (7,953 | ) |
MMCAPS Funding I, Ltd. - Senior Tranche
|
||||
Number of Banks Currently Performing
|
17 | |||
Moody's/Fitch Credit Ratings
|
A3/BBB
|
(1) | ||
Actual Deferrals and Defaults as % of Outstanding Collateral
|
31.0 | % | ||
Expected Additional Net Deferrals and Defaults as % of Performing Collateral
|
14.7 | % | ||
Excess Subordination as % of Performing Collateral
|
30.2 | % |
(In Thousands)
|
3 Months Ended
|
9 Months Ended
|
||||||||||||||
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Balance of credit losses on debt securities for which a portion of OTTI was recognized in other comprehensive income, beginning of period
|
$ | 0 | $ | 0 | $ | 0 | $ | (10,695 | ) | |||||||
Reduction for securities losses realized during the period
|
0 | 0 | 0 | 10,798 | ||||||||||||
Additional credit loss for which an OTTI was previously recognized when the Corporation does not intend to sell the security and it is not more likely than not the Corporation will be required to sell the security before recovery of its amortized cost basis
|
0 | 0 | 0 | (103 | ) | |||||||||||
Balance of credit losses on debt securities for which a portion of OTTI was recognized in other comprehensive income, end of period
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 |
Summary of Loans by Type
|
||||||||||||||||
(In Thousands)
|
Sept. 30,
|
% of
|
Dec. 31,
|
% of
|
||||||||||||
2011
|
Total
|
2010
|
Total
|
|||||||||||||
Residential mortgage:
|
||||||||||||||||
Residential mortgage loans - first liens
|
$ | 334,551 | 47.39 | % | $ | 333,012 | 45.59 | % | ||||||||
Residential mortgage loans - junior liens
|
29,748 | 4.21 | % | 31,590 | 4.32 | % | ||||||||||
Home equity lines of credit
|
29,667 | 4.20 | % | 26,853 | 3.68 | % | ||||||||||
1-4 Family residential construction
|
9,762 | 1.38 | % | 14,379 | 1.97 | % | ||||||||||
Total residential mortgage
|
403,728 | 57.20 | % | 405,834 | 55.56 | % | ||||||||||
Commercial:
|
||||||||||||||||
Commercial loans secured by real estate
|
149,853 | 21.23 | % | 167,094 | 22.88 | % | ||||||||||
Commercial and industrial
|
55,792 | 7.90 | % | 59,005 | 8.08 | % | ||||||||||
Political subdivisions
|
36,403 | 5.16 | % | 36,480 | 4.99 | % | ||||||||||
Commercial construction and land
|
26,552 | 3.76 | % | 24,004 | 3.29 | % | ||||||||||
Loans secured by farmland
|
10,470 | 1.48 | % | 11,353 | 1.55 | % | ||||||||||
Multi-family (5 or more) residential
|
6,782 | 0.96 | % | 7,781 | 1.07 | % | ||||||||||
Agricultural loans
|
2,819 | 0.40 | % | 3,472 | 0.48 | % | ||||||||||
Other commercial loans
|
561 | 0.08 | % | 392 | 0.05 | % | ||||||||||
Total commercial
|
289,232 | 40.97 | % | 309,581 | 42.38 | % | ||||||||||
Consumer
|
12,919 | 1.83 | % | 14,996 | 2.05 | % | ||||||||||
Total
|
705,879 | 100.00 | % | 730,411 | 100.00 | % | ||||||||||
Less: allowance for loan losses
|
(8,177 | ) | (9,107 | ) | ||||||||||||
Loans, net
|
$ | 697,702 | $ | 721,304 |
December 31,
|
Sept. 30,
|
|||||||||||||||||||
(In Thousands)
|
2010
Balance
|
Charge-offs
|
Recoveries
|
Provision
(Credit)
|
2011
Balance
|
|||||||||||||||
Allowance for Loan Losses:
|
||||||||||||||||||||
Residential mortgage:
|
||||||||||||||||||||
Residential mortgage loans - first liens
|
$ | 2,745 | $ | (49 | ) | $ | 0 | $ | 367 | $ | 3,063 | |||||||||
Residential mortgage loans - junior liens
|
334 | (51 | ) | 0 | (6 | ) | 277 | |||||||||||||
Home equity lines of credit
|
218 | 0 | 0 | 13 | 231 | |||||||||||||||
1-4 Family residential construction
|
208 | 0 | 0 | (130 | ) | 78 | ||||||||||||||
Total residential mortgage
|
3,505 | (100 | ) | 0 | 244 | 3,649 | ||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial loans secured by real estate
|
3,314 | (535 | ) | 1 | (336 | ) | 2,444 | |||||||||||||
Commercial and industrial
|
862 | (216 | ) | 177 | 51 | 874 | ||||||||||||||
Political subdivisions
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Commercial construction and land
|
590 | 0 | 0 | (295 | ) | 295 | ||||||||||||||
Loans secured by farmland
|
139 | 0 | 0 | (17 | ) | 122 | ||||||||||||||
Multi-family (5 or more) residential
|
63 | 0 | 0 | 5 | 68 | |||||||||||||||
Agricultural loans
|
32 | 0 | 0 | (7 | ) | 25 | ||||||||||||||
Other commercial loans
|
0 | 0 | 0 | 5 | 5 | |||||||||||||||
Total commercial
|
5,000 | (751 | ) | 178 | (594 | ) | 3,833 | |||||||||||||
Consumer
|
289 | (116 | ) | 57 | (3 | ) | 227 | |||||||||||||
Unallocated
|
313 | 155 | 468 | |||||||||||||||||
Total Allowance for Loan Losses
|
$ | 9,107 | $ | (967 | ) | $ | 235 | $ | (198 | ) | $ | 8,177 |
June 30,
|
Sept. 30,
|
|||||||||||||||||||
(In Thousands)
|
2011
Balance
|
Charge-offs
|
Recoveries
|
Provision
(Credit)
|
2011
Balance
|
|||||||||||||||
Allowance for Loan Losses:
|
||||||||||||||||||||
Residential mortgage:
|
||||||||||||||||||||
Residential mortgage loans - first liens
|
$ | 3,050 | $ | (21 | ) | $ | 0 | $ | 34 | $ | 3,063 | |||||||||
Residential mortgage loans - junior liens
|
293 | 0 | 0 | (16 | ) | 277 | ||||||||||||||
Home equity lines of credit
|
220 | 0 | 0 | 11 | 231 | |||||||||||||||
1-4 Family residential construction
|
67 | 0 | 0 | 11 | 78 | |||||||||||||||
Total residential mortgage
|
3,630 | (21 | ) | 0 | 40 | 3,649 | ||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial loans secured by real estate
|
2,502 | 0 | 1 | (59 | ) | 2,444 | ||||||||||||||
Commercial and industrial
|
908 | (17 | ) | 0 | (17 | ) | 874 | |||||||||||||
Political subdivisions
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
Commercial construction and land
|
281 | 0 | 0 | 14 | 295 | |||||||||||||||
Loans secured by farmland
|
134 | 0 | 0 | (12 | ) | 122 | ||||||||||||||
Multi-family (5 or more) residential
|
75 | 0 | 0 | (7 | ) | 68 | ||||||||||||||
Agricultural loans
|
29 | 0 | 0 | (4 | ) | 25 | ||||||||||||||
Other commercial loans
|
5 | 0 | 0 | 0 | 5 | |||||||||||||||
Total commercial
|
3,934 | (17 | ) | 1 | (85 | ) | 3,833 | |||||||||||||
Consumer
|
275 | (32 | ) | 14 | (30 | ) | 227 | |||||||||||||
Unallocated
|
430 | 38 | 468 | |||||||||||||||||
Total Allowance for Loan Losses
|
$ | 8,269 | $ | (70 | ) | $ | 15 | $ | (37 | ) | $ | 8,177 |
September 30, 2011:
|
||||||||||||||||||||
(In Thousands)
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Residential mortgage:
|
||||||||||||||||||||
Residential mortgage loans - first liens
|
$ | 318,937 | $ | 2,870 | $ | 12,537 | $ | 207 | $ | 334,551 | ||||||||||
Residential mortgage loans - junior liens
|
28,196 | 610 | 935 | 7 | 29,748 | |||||||||||||||
Home equity lines of credit
|
29,081 | 243 | 343 | 0 | 29,667 | |||||||||||||||
1-4 Family residential construction
|
9,762 | 0 | 0 | 0 | 9,762 | |||||||||||||||
Total residential mortgage
|
385,976 | 3,723 | 13,815 | 214 | 403,728 | |||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial loans secured by real estate
|
135,979 | 7,655 | 5,048 | 1,171 | 149,853 | |||||||||||||||
Commercial and industrial
|
44,335 | 6,820 | 4,396 | 241 | 55,792 | |||||||||||||||
Political subdivisions
|
36,403 | 0 | 0 | 0 | 36,403 | |||||||||||||||
Commercial construction and land
|
24,696 | 213 | 1,643 | 0 | 26,552 | |||||||||||||||
Loans secured by farmland
|
7,520 | 1,891 | 1,021 | 38 | 10,470 | |||||||||||||||
Multi-family (5 or more) residential
|
6,393 | 374 | 15 | 0 | 6,782 | |||||||||||||||
Agricultural loans
|
2,581 | 194 | 44 | 0 | 2,819 | |||||||||||||||
Other commercial loans
|
561 | 561 | ||||||||||||||||||
Total commercial
|
258,468 | 17,147 | 12,167 | 1,450 | 289,232 | |||||||||||||||
Consumer
|
12,590 | 23 | 305 | 1 | 12,919 | |||||||||||||||
Totals
|
$ | 657,034 | $ | 20,893 | $ | 26,287 | $ | 1,665 | $ | 705,879 |
December 31, 2010:
|
||||||||||||||||||||
(In Thousands)
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Residential mortgage:
|
||||||||||||||||||||
Residential mortgage loans - first liens
|
$ | 318,813 | $ | 2,197 | $ | 11,778 | $ | 224 | $ | 333,012 | ||||||||||
Residential mortgage loans - junior liens
|
30,072 | 551 | 959 | 8 | 31,590 | |||||||||||||||
Home equity lines of credit
|
26,569 | 32 | 252 | 0 | 26,853 | |||||||||||||||
1-4 Family residential construction
|
13,582 | 0 | 797 | 0 | 14,379 | |||||||||||||||
Total residential mortgage
|
389,036 | 2,780 | 13,786 | 232 | 405,834 | |||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial loans secured by real estate
|
152,157 | 6,671 | 6,472 | 1,794 | 167,094 | |||||||||||||||
Commercial and industrial
|
45,779 | 8,235 | 4,533 | 458 | 59,005 | |||||||||||||||
Political subdivisions
|
36,480 | 0 | 0 | 70 | 36,480 | |||||||||||||||
Commercial construction and land
|
22,430 | 314 | 1,260 | 0 | 24,004 | |||||||||||||||
Loans secured by farmland
|
8,877 | 1,248 | 1,188 | 40 | 11,353 | |||||||||||||||
Multi-family (5 or more) residential
|
7,781 | 0 | 0 | 0 | 7,781 | |||||||||||||||
Agricultural loans
|
3,219 | 209 | 44 | 0 | 3,472 | |||||||||||||||
Other commercial loans
|
260 | 132 | 0 | 0 | 392 | |||||||||||||||
Total commercial
|
276,983 | 16,809 | 13,497 | 2,292 | 309,581 | |||||||||||||||
Consumer
|
14,696 | 33 | 265 | 2 | 14,996 | |||||||||||||||
Totals
|
$ | 680,715 | $ | 19,622 | $ | 27,548 | $ | 2,526 | $ | 730,411 |
September 30, 2011
|
Individually
|
Collectively
|
||||||||||
(In Thousands)
|
Evaluated
|
Evaluated
|
Totals
|
|||||||||
Loans:
|
||||||||||||
Residential mortgage:
|
||||||||||||
Residential mortgage loans - first liens
|
$ | 1,960 | $ | 332,591 | $ | 334,551 | ||||||
Residential mortgage loans - junior liens
|
137 | 29,611 | 29,748 | |||||||||
Home equity lines of credit
|
93 | 29,574 | 29,667 | |||||||||
1-4 Family residential construction
|
0 | 9,762 | 9,762 | |||||||||
Total residential mortgage
|
2,190 | 401,538 | 403,728 | |||||||||
Commercial:
|
||||||||||||
Commercial loans secured by real estate
|
2,544 | 147,309 | 149,853 | |||||||||
Commercial and industrial
|
751 | 55,041 | 55,792 | |||||||||
Political subdivisions
|
0 | 36,403 | 36,403 | |||||||||
Commercial construction and land
|
1,266 | 25,286 | 26,552 | |||||||||
Loans secured by farmland
|
928 | 9,542 | 10,470 | |||||||||
Multi-family (5 or more) residential
|
15 | 6,767 | 6,782 | |||||||||
Agricultural loans
|
40 | 2,779 | 2,819 | |||||||||
Other commercial loans
|
0 | 561 | 561 | |||||||||
Total commercial
|
5,544 | 283,688 | 289,232 | |||||||||
Consumer
|
51 | 12,868 | 12,919 | |||||||||
Total Loans
|
$ | 7,785 | $ | 698,094 | $ | 705,879 |
September 30, 2011
|
Individually
|
Collectively
|
||||||||||
(In Thousands)
|
Evaluated
|
Evaluated
|
Totals
|
|||||||||
Allowance for Loan Losses:
|
||||||||||||
Residential mortgage:
|
||||||||||||
Residential mortgage loans - first liens
|
$ | 436 | $ | 2,627 | $ | 3,063 | ||||||
Residential mortgage loans - junior liens
|
11 | 266 | 277 | |||||||||
Home equity lines of credit
|
0 | 231 | 231 | |||||||||
1-4 Family residential construction
|
0 | 78 | 78 | |||||||||
Total residential mortgage
|
447 | 3,202 | 3,649 | |||||||||
Commercial:
|
||||||||||||
Commercial loans secured by real estate
|
691 | 1,753 | 2,444 | |||||||||
Commercial and industrial
|
301 | 573 | 874 | |||||||||
Political subdivisions
|
0 | 0 | 0 | |||||||||
Commercial construction and land
|
65 | 230 | 295 | |||||||||
Loans secured by farmland
|
35 | 87 | 122 | |||||||||
Multi-family (5 or more) residential
|
0 | 68 | 68 | |||||||||
Agricultural loans
|
0 | 25 | 25 | |||||||||
Other commercial loans
|
0 | 5 | 5 | |||||||||
Total commercial
|
1,092 | 2,741 | 3,833 | |||||||||
Consumer
|
24 | 203 | 227 | |||||||||
Unallocated
|
468 | |||||||||||
Total Allowance for Loan Losses
|
$ | 1,563 | $ | 6,146 | $ | 8,177 |
December 31, 2010
|
Individually
|
Collectively
|
||||||||||
(In Thousands)
|
Evaluated
|
Evaluated
|
Totals
|
|||||||||
Loans:
|
||||||||||||
Residential mortgage:
|
||||||||||||
Residential mortgage loans - first liens
|
$ | 442 | $ | 332,570 | $ | 333,012 | ||||||
Residential mortgage loans - junior liens
|
239 | 31,351 | 31,590 | |||||||||
Home equity lines of credit
|
0 | 26,853 | 26,853 | |||||||||
1-4 Family residential construction
|
994 | 13,385 | 14,379 | |||||||||
Total residential mortgage
|
1,675 | 404,159 | 405,834 | |||||||||
Commercial:
|
||||||||||||
Commercial loans secured by real estate
|
3,818 | 163,276 | 167,094 | |||||||||
Commercial and industrial
|
931 | 58,074 | 59,005 | |||||||||
Political subdivisions
|
0 | 36,480 | 36,480 | |||||||||
Commercial construction and land
|
1,197 | 22,807 | 24,004 | |||||||||
Loans secured by farmland
|
931 | 10,422 | 11,353 | |||||||||
Multi-family (5 or more) residential
|
0 | 7,781 | 7,781 | |||||||||
Agricultural loans
|
39 | 3,433 | 3,472 | |||||||||
Other commercial loans
|
0 | 392 | 392 | |||||||||
Total commercial
|
6,916 | 302,665 | 309,581 | |||||||||
Consumer
|
57 | 14,939 | 14,996 | |||||||||
Total Loans
|
$ | 8,648 | $ | 721,763 | $ | 730,411 |
December 31, 2010
|
Individually
|
Collectively
|
||||||||||
(In Thousands)
|
Evaluated
|
Evaluated
|
Totals
|
|||||||||
Allowance for Loan Losses:
|
||||||||||||
Residential mortgage:
|
||||||||||||
Residential mortgage loans - first liens
|
$ | 98 | $ | 2,647 | $ | 2,745 | ||||||
Residential mortgage loans - junior liens
|
80 | 254 | 334 | |||||||||
Home equity lines of credit
|
0 | 218 | 218 | |||||||||
1-4 Family residential construction
|
100 | 108 | 208 | |||||||||
Total residential mortgage
|
278 | 3,227 | 3,505 | |||||||||
Commercial:
|
||||||||||||
Commercial loans secured by real estate
|
1,335 | 1,979 | 3,314 | |||||||||
Commercial and industrial
|
202 | 660 | 862 | |||||||||
Political subdivisions
|
0 | 0 | 0 | |||||||||
Commercial construction and land
|
380 | 210 | 590 | |||||||||
Loans secured by farmland
|
36 | 103 | 139 | |||||||||
Multi-family (5 or more) residential
|
0 | 63 | 63 | |||||||||
Agricultural loans
|
0 | 32 | 32 | |||||||||
Other commercial loans
|
0 | 0 | 0 | |||||||||
Total commercial
|
1,953 | 3,047 | 5,000 | |||||||||
Consumer
|
57 | 232 | 289 | |||||||||
Unallocated
|
313 | |||||||||||
Total Allowance for Loan Losses
|
$ | 2,288 | $ | 6,506 | $ | 9,107 |
As of
|
As of
|
|||||||
(In Thousands)
|
Sept 30
|
Dec. 31
|
||||||
2011
|
2010
|
|||||||
Impaired loans with a valuation allowance
|
$ | 3,978 | $ | 5,457 | ||||
Impaired loans without a valuation allowance
|
3,807 | 3,191 | ||||||
Total impaired loans
|
$ | 7,785 | $ | 8,648 | ||||
Valuation allowance related to impaired loans
|
$ | 1,563 | $ | 2,288 |
September 30, 2011
|
December 31, 2010
|
|||||||||||||||
Past Due
|
Past Due
|
|||||||||||||||
(In Thousands)
|
90+ Days and
|
90+ Days and
|
||||||||||||||
Accruing
|
Nonaccrual
|
Accruing
|
Nonaccrual
|
|||||||||||||
Residential mortgage:
|
||||||||||||||||
Residential mortgage loans - first liens
|
$ | 662 | $ | 3,254 | $ | 571 | $ | 3,301 | ||||||||
Residential mortgage loans - junior liens
|
75 | 68 | 0 | 218 | ||||||||||||
1-4 Family residential construction
|
0 | 0 | 0 | 797 | ||||||||||||
Total residential mortgage
|
737 | 3,322 | 571 | 4,316 | ||||||||||||
Commercial:
|
||||||||||||||||
Commercial loans secured by real estate
|
105 | 2,063 | 60 | 3,666 | ||||||||||||
Commercial and industrial
|
8 | 528 | 0 | 611 | ||||||||||||
Commercial construction and land
|
139 | 978 | 0 | 1,197 | ||||||||||||
Loans secured by farmland
|
0 | 928 | 90 | 932 | ||||||||||||
Agricultural loans
|
54 | 40 | 0 | 40 | ||||||||||||
Total commercial
|
306 | 4,537 | 150 | 6,446 | ||||||||||||
Consumer
|
12 | 31 | 6 | 47 | ||||||||||||
Totals
|
$ | 1,055 | $ | 7,890 | $ | 727 | $ | 10,809 |
As of September 30, 2011
|
||||||||||||||||
Current &
|
||||||||||||||||
(In Thousands)
|
Past Due
|
Past Due
|
Past Due
|
|||||||||||||
Less than
|
30-89
|
90+
|
||||||||||||||
30 Days
|
Days
|
Days
|
Total
|
|||||||||||||
Residential mortgage:
|
||||||||||||||||
Residential mortgage loans - first liens
|
$ | 328,693 | $ | 3,977 | $ | 1,881 | $ | 334,551 | ||||||||
Residential mortgage loans - junior liens
|
29,414 | 249 | 85 | 29,748 | ||||||||||||
Home equity lines of credit
|
29,667 | 0 | 0 | 29,667 | ||||||||||||
1-4 Family residential construction
|
9,762 | 0 | 0 | 9,762 | ||||||||||||
Total residential mortgage
|
397,536 | 4,226 | 1,966 | 403,728 | ||||||||||||
Commercial:
|
||||||||||||||||
Commercial loans secured by real estate
|
147,579 | 766 | 1,508 | 149,853 | ||||||||||||
Commercial and industrial
|
55,292 | 321 | 179 | 55,792 | ||||||||||||
Political subdivisions
|
36,403 | 0 | 0 | 36,403 | ||||||||||||
Commercial construction and land
|
26,093 | 320 | 139 | 26,552 | ||||||||||||
Loans secured by farmland
|
9,542 | 38 | 890 | 10,470 | ||||||||||||
Multi-family (5 or more) residential
|
6,773 | 9 | 0 | 6,782 | ||||||||||||
Agricultural loans
|
2,725 | 0 | 94 | 2,819 | ||||||||||||
Other commercial loans
|
561 | 0 | 0 | 561 | ||||||||||||
Total commercial
|
284,968 | 1,454 | 2,810 | 289,232 | ||||||||||||
Consumer
|
12,767 | 140 | 12 | 12,919 | ||||||||||||
Totals
|
$ | 695,271 | $ | 5,820 | $ | 4,788 | $ | 705,879 |
As of December 31, 2010
|
||||||||||||||||
Current &
|
||||||||||||||||
(In Thousands)
|
Past Due
|
Past Due
|
Past Due
|
|||||||||||||
Less than
|
30-89
|
90+
|
||||||||||||||
30 Days
|
Days
|
Days
|
Total
|
|||||||||||||
Residential mortgage:
|
||||||||||||||||
Residential mortgage loans - first liens
|
$ | 325,567 | $ | 5,132 | $ | 2,313 | $ | 333,012 | ||||||||
Residential mortgage loans - junior liens
|
30,997 | 436 | 157 | 31,590 | ||||||||||||
Home equity lines of credit
|
26,744 | 109 | 0 | 26,853 | ||||||||||||
1-4 Family residential construction
|
14,379 | 0 | 0 | 14,379 | ||||||||||||
Total residential mortgage
|
397,687 | 5,677 | 2,470 | 405,834 | ||||||||||||
Commercial:
|
||||||||||||||||
Commercial loans secured by real estate
|
163,343 | 940 | 2,811 | 167,094 | ||||||||||||
Commercial and industrial
|
58,474 | 319 | 212 | 59,005 | ||||||||||||
Political subdivisions
|
36,480 | 0 | 0 | 36,480 | ||||||||||||
Commercial construction and land
|
23,674 | 330 | 0 | 24,004 | ||||||||||||
Loans secured by farmland
|
10,294 | 77 | 982 | 11,353 | ||||||||||||
Multi-family (5 or more) residential
|
7,769 | 12 | 0 | 7,781 | ||||||||||||
Agricultural loans
|
3,422 | 10 | 40 | 3,472 | ||||||||||||
Other commercial loans
|
77 | 315 | 0 | 392 | ||||||||||||
Total commercial
|
303,533 | 2,003 | 4,045 | 309,581 | ||||||||||||
Consumer
|
14,686 | 289 | 21 | 14,996 | ||||||||||||
Totals
|
$ | 715,906 | $ | 7,969 | $ | 6,536 | $ | 730,411 |
Current &
|
||||||||||||||||
(In Thousands)
|
Past Due
|
Past Due
|
Past Due
|
|||||||||||||
Less than
|
30-89
|
90+
|
||||||||||||||
30 Days
|
Days
|
Days
|
Total
|
|||||||||||||
September 30, 2011 Nonaccrual Totals
|
$ | 3,479 | $ | 678 | $ | 3,733 | $ | 7,890 | ||||||||
December 31, 2010 Nonaccrual Totals
|
$ | 4,156 | $ | 844 | $ | 5,809 | $ | 10,809 |
Current &
|
||||||||||||||||||||
(In Thousands)
|
Past Due
|
Past Due
|
Past Due
|
|||||||||||||||||
Less than
|
30-89
|
90+
|
||||||||||||||||||
30 Days
|
Days
|
Days
|
Nonaccrual
|
Total
|
||||||||||||||||
September 30, 2011 Totals
|
$ | 1,072 | $ | 0 | $ | 147 | $ | 2,727 | $ | 3,946 | ||||||||||
December 31, 2010 Totals
|
$ | 645 | $ | 0 | $ | 0 | $ | 0 | $ | 645 |
3 Months Ended September 30, 2011
|
Pre-
|
Post-
|
||||||||||
(Balances in Thousands)
|
Modification
|
Modification
|
||||||||||
Number
|
Outstanding
|
Outstanding
|
||||||||||
Of
|
Recorded
|
Recorded
|
||||||||||
Contracts
|
Investment
|
Investment
|
||||||||||
Commercial, | ||||||||||||
Commercial loans secured by real estate
|
6 | $ | 925 | $ | 925 |
9 Months Ended September 30, 2011
|
Pre-
|
Post-
|
||||||||||
(Balances in Thousands)
|
Modification
|
Modification
|
||||||||||
Number
|
Outstanding
|
Outstanding
|
||||||||||
Of
|
Recorded
|
Recorded
|
||||||||||
Contracts
|
Investment
|
Investment
|
||||||||||
Residential mortgage, | ||||||||||||
Home equity lines of credit
|
1 | $ | 93 | $ | 93 | |||||||
Commercial:
|
||||||||||||
Commercial loans secured by real estate
|
11 | 1,941 | 1,941 | |||||||||
Commercial and industrial
|
3 | 14 | 14 | |||||||||
Commercial construction and land
|
5 | 1,238 | 1,238 | |||||||||
Multi-family (5 or more) residential
|
1 | 15 | 15 |
3 Months Ended September 30, 2011
|
||||||||
(Balances in Thousands)
|
||||||||
Number
|
||||||||
Of
|
Recorded
|
|||||||
Contracts
|
Investment
|
|||||||
Residential mortgage,
|
||||||||
Home equity lines of credit
|
1 | $ | 93 | |||||
Commercial,
|
||||||||
Commercial construction and land
|
1 | 139 |
9 Months Ended September 30, 2011
|
||||||||
(Balances in Thousands)
|
||||||||
Number
|
||||||||
Of
|
Recorded
|
|||||||
Contracts
|
Investment
|
|||||||
Residential mortgage,
|
||||||||
Home equity lines of credit
|
1 | $ | 93 | |||||
Commercial:
|
||||||||
Commercial loans secured by real estate
|
2 | 207 | ||||||
Commercial construction and land
|
1 | 139 |
Defined Benefit Plans
|
||||||||||||||||
(In Thousands)
|
Pension
|
Postretirement
|
||||||||||||||
Nine Months Ended
|
Nine Months Ended
|
|||||||||||||||
Sept. 30,
|
Sept. 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Service cost
|
$ | 0 | $ | 0 | $ | 62 | $ | 51 | ||||||||
Interest cost
|
55 | 50 | 69 | 67 | ||||||||||||
Expected return on plan assets
|
(54 | ) | (50 | ) | 0 | 0 | ||||||||||
Amortization of transition (asset) obligation
|
0 | 0 | 27 | 27 | ||||||||||||
Amortization of prior service cost
|
0 | 0 | 11 | 11 | ||||||||||||
Recognized net actuarial loss
|
3 | 2 | 0 | 0 | ||||||||||||
Net periodic benefit cost
|
$ | 4 | $ | 2 | $ | 169 | $ | 156 |
Defined Benefit Plans
|
||||||||||||||||
(In Thousands)
|
Pension
|
Postretirement
|
||||||||||||||
Three Months Ended
|
Three Months Ended
|
|||||||||||||||
Sept. 30,
|
Sept. 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Service cost
|
$ | 0 | $ | 0 | $ | 20 | $ | 17 | ||||||||
Interest cost
|
18 | 16 | 23 | 22 | ||||||||||||
Expected return on plan assets
|
(18 | ) | (17 | ) | 0 | 0 | ||||||||||
Amortization of transition (asset) obligation
|
0 | 0 | 9 | 9 | ||||||||||||
Amortization of prior service cost
|
0 | 0 | 4 | 4 | ||||||||||||
Recognized net actuarial loss
|
1 | 0 | 0 | 0 | ||||||||||||
Net periodic benefit cost
|
$ | 1 | $ | (1 | ) | $ | 56 | $ | 52 |
2011
|
2010
|
|||||||
Fair value of each option granted
|
$ | 4.26 |
Not applicable (N/A)
|
|||||
Volatility
|
37 | % | N/A | |||||
Expected option lives
|
8 Years
|
N/A | ||||||
Risk-free interest rate
|
3.10 | % | N/A | |||||
Dividend yield
|
3.86 | % | N/A |
(In Thousands)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Stock options
|
$ | 0 | $ | 0 | $ | 279 | $ | 0 | ||||||||
Restricted stock
|
35 | 18 | 107 | 50 | ||||||||||||
Total
|
$ | 35 | $ | 18 | $ | 386 | $ | 50 |
September 30,
|
December 31,
|
|||||||
(In Thousands)
|
2011
|
2010
|
||||||
Deferred tax assets:
|
||||||||
Unrealized holding losses on securities
|
$ | 0 | $ | 695 | ||||
Defined benefit plans - ASC 835
|
161 | 134 | ||||||
Net realized losses on securities
|
3,362 | 5,755 | ||||||
Allowance for loan losses
|
2,862 | 3,186 | ||||||
Credit for alternative minimum tax paid
|
5,195 | 3,287 | ||||||
Net operating loss carryforwards
|
44 | 2,794 | ||||||
General business credit carryforwards
|
853 | 815 | ||||||
Other deferred tax assets
|
1,601 | 1,347 | ||||||
Total deferred tax assets
|
14,078 | 18,013 | ||||||
Deferred tax liabilities:
|
||||||||
Unrealized holding gains on securities
|
4,523 | 0 | ||||||
Bank premises and equipment
|
1,398 | 1,649 | ||||||
Core deposit intangibles
|
84 | 114 | ||||||
Other deferred tax liabilities
|
146 | 196 | ||||||
Total deferred tax liabilities
|
6,151 | 1,959 | ||||||
Deferred tax asset, net
|
$ | 7,927 | $ | 16,054 |
Three Months Ended
|
Fiscal Year To Date
|
|||||||||||||||
(All amounts in thousands)
|
September 30,
|
Nine Months Ended Sept. 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(Current)
|
(Prior Year)
|
(Current)
|
(Prior Year)
|
|||||||||||||
Income before income tax provision
|
$ | 8,219 | $ | 6,535 | $ | 23,650 | $ | 18,560 | ||||||||
Income tax provision
|
2,230 | 1,671 | 6,423 | 4,389 | ||||||||||||
Effective tax rate
|
27.13 | % | 25.57 | % | 27.16 | % | 23.65 | % |
·
|
changes in monetary and fiscal policies of the Federal Reserve Board and the U. S. Government, particularly related to changes in interest rates
|
·
|
changes in general economic conditions
|
·
|
legislative or regulatory changes
|
·
|
downturn in demand for loan, deposit and other financial services in the Corporation’s market area
|
·
|
increased competition from other banks and non-bank providers of financial services
|
·
|
technological changes and increased technology-related costs
|
·
|
changes in accounting principles, or the application of generally accepted accounting principles.
|
|
·
|
In the third quarter 2011, net interest income was $394,000 higher than in the second quarter 2011, and $1,353,000 higher than in the third quarter 2010. Year-to-date net interest income through September 30, 2011 was $3,627,000 (11.4%) higher than the total for the first nine months of 2010. The improvement in net interest income in 2011 has resulted from several factors, including ongoing reductions in cost of funds, reduction in outstanding borrowings and lower balances maintained in overnight investment with the Federal Reserve and other banks. Net interest income includes accretion of $229,000 in the third quarter 2011, $160,000 in the second quarter and $500,000 in the first nine months of 2011, from the offset of a previous write-down on a security.
|
|
·
|
The provision for loan losses was a credit (reduction in expense) of $37,000, as compared to a provision of $31,000 in the second quarter 2011 and a provision of $189,000 in the third quarter 2010. For the first nine months of 2011, the credit for loan losses was ($198,000), as compared to a provision for loan losses of $472,000 for the first nine months of 2010. The credit for loan losses in the third quarter and first nine months of 2011 resulted, in part, from a reduction in loans outstanding, as the general component of the allowance was reduced. Further, in recent years, C&N has experienced a limited amount of loan-related credit problems, as compared to averages for comparable-sized peer banks, as reflected in the low total loan loss provision recognized in 2010 and 2011.
|
|
·
|
Noninterest revenue was $3,999,000 in the third quarter 2011, up from $3,673,000 in the second quarter 2011 and $3,562,000 in the third quarter 2010. In the third quarter 2011, noninterest revenue included net gains from sales of premises and equipment of $324,000, including a gain of $329,000 from sale of the banking facility at 130 Court Street, Williamsport, PA. The Corporation has entered into a leasing arrangement to continue to utilize a portion of the facility and continues to provide retail, trust and commercial banking services at the location. The Corporation expects to realize a reduction in annual expense of approximately $150,000 (pre-tax) as a result of the new arrangement. For the nine months ended September 30, 2011, noninterest revenue totaled $10,227,000, down from $10,370,000 in the first nine months of 2010. Total noninterest revenue included net gains from sales of premises and equipment of $324,000 in 2011 and $445,000 in 2010. Also, in the first quarter 2011 the Corporation recorded an impairment loss of $948,000 related to an investment in a real estate limited partnership. Excluding gains from sales of premises and equipment and the impairment loss, noninterest revenue for the first nine months of 2011 totaled $10,851,000, or 9.3% higher than the corresponding 2010 amount. In the first nine months of 2011, revenues have increased significantly over the corresponding period of 2010 from brokerage services, interchange fees on debit card transactions, origination and sale of mortgage loans, service charges on deposit accounts and other operating income.
|
|
·
|
Gains from available-for-sale securities totaled $26,000 in the third quarter 2011, down from $163,000 in the second quarter 2011 and $388,000 in the third quarter 2010. For the first nine months of 2011, gains from available-for-sale securities were $2,028,000, considerably higher than the total gains of $765,000 for the first nine months of 2010. In the first quarter 2011, C&N realized gains of $1,510,000 from two pooled trust-preferred securities that had been written off in prior periods.
|
|
·
|
Total noninterest expense was $8,052,000 in the third quarter 2011, up from $7,794,000 in the second quarter 2011 and down slightly from $8,082,000 in the third quarter 2010. The increase in noninterest expense in the third quarter 2011 as compared to the immediate prior quarter resulted mainly from increases in loan collection expense of $151,000, professional fees (mainly related to implementation of loan-related software) of $55,000 and charitable donations of $51,000. Noninterest expense for the third quarter 2011 as compared to the third quarter 2010 included the benefit of a decrease in FDIC assessments of $208,000. In the nine months ended September 30, 2011, total noninterest expense of $24,109,000 was 1.4% higher than in the first nine months of 2010. Total salaries and wages for the first nine months of 2011 were $690,000 higher than in 2010, including an increase in total employee stock-based compensation of $302,000 and an increase of $94,000 in estimated incentive compensation. Pensions and employee benefits expense was $442,000 higher in the first nine months of 2011 than in the corresponding period of 2010, including higher estimated self-insured employee health insurance expense. Furniture and equipment expense was $175,000 lower in the first nine months of 2011 as compared to the same period in 2010, as depreciation expense was lower due to some computer-related hardware and software becoming fully depreciated. FDIC assessments were $513,000 lower in the first nine months of 2011 than in the first nine months of 2010. Other operating expense was $219,000 lower in the first nine months of 2011 than in the corresponding period of 2010, including reductions in public company-related expenses, collection expense, other real estate expenses and office supplies.
|
|
·
|
The provision for income taxes totaled $2,230,000 or 27.1% of pre-tax income in the third quarter 2011, up from $1,671,000 or 25.6% of pre-tax income in the third quarter 2010. For the nine months ended September 30, 2011, the provision for income taxes was $6,423,000 or 27.2% of pre-tax income, up from $4,389,000 or 23.6% of pre-tax income in the first nine months of 2010. The provision for income tax in the second quarter 2010 included a benefit (reduction in expense) of $225,000 resulting from a reduction in a valuation reserve.
|
|
·
|
In the third quarter 2010, C&N redeemed preferred stock that had previously been issued, and has had no preferred stock outstanding and no corresponding dividend costs in 2011. In 2010, earnings available for common shareholders were impacted by dividends paid on preferred stock, including $729,000 in the third quarter 2010 and $1,474,000 for the first nine months of 2010.
|
TABLE I - QUARTERLY FINANCIAL DATA
|
||||||||||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||||||
Sept. 30,
|
June 30,
|
Mar. 31,
|
Dec 31,
|
Sept. 30,
|
June 30,
|
Mar. 31,
|
||||||||||||||||||||||
2011
|
2011
|
2011
|
2010
|
2010
|
2010
|
2010
|
||||||||||||||||||||||
Interest income
|
$ | 15,317 | $ | 15,443 | $ | 15,298 | $ | 15,500 | $ | 15,495 | $ | 15,386 | $ | 15,733 | ||||||||||||||
Interest expense
|
3,108 | 3,628 | 4,016 | 4,310 | 4,639 | 5,036 | 5,260 | |||||||||||||||||||||
Net interest income
|
12,209 | 11,815 | 11,282 | 11,190 | 10,856 | 10,350 | 10,473 | |||||||||||||||||||||
(Credit) provision for loan losses
|
(37 | ) | 31 | (192 | ) | 719 | 189 | 76 | 207 | |||||||||||||||||||
Net Interest income after (credit) provision for loan losses
|
12,246 | 11,784 | 11,474 | 10,471 | 10,667 | 10,274 | 10,266 | |||||||||||||||||||||
Other income
|
3,999 | 3,673 | 2,555 | 3,468 | 3,562 | 3,260 | 3,548 | |||||||||||||||||||||
Net gains on available-for-sale securities
|
26 | 163 | 1,839 | 64 | 388 | 319 | 58 | |||||||||||||||||||||
Other expenses
|
8,052 | 7,794 | 8,263 | 7,708 | 8,082 | 7,703 | 7,997 | |||||||||||||||||||||
Income before income tax provision
|
8,219 | 7,826 | 7,605 | 6,295 | 6,535 | 6,150 | 5,875 | |||||||||||||||||||||
Income tax provision
|
2,230 | 2,129 | 2,064 | 1,411 | 1,671 | 1,281 | 1,437 | |||||||||||||||||||||
Net income
|
5,989 | 5,697 | 5,541 | 4,884 | 4,864 | 4,869 | 4,438 | |||||||||||||||||||||
US Treasury preferred dividends
|
0 | 0 | 0 | 0 | 729 | 372 | 373 | |||||||||||||||||||||
Net income available to common shareholders
|
$ | 5,989 | $ | 5,697 | $ | 5,541 | $ | 4,884 | $ | 4,135 | $ | 4,497 | $ | 4,065 | ||||||||||||||
Net income per common share – basic
|
$ | 0.49 | $ | 0.47 | $ | 0.46 | $ | 0.40 | $ | 0.34 | $ | 0.37 | $ | 0.34 | ||||||||||||||
Net income per common share – diluted
|
$ | 0.49 | $ | 0.47 | $ | 0.45 | $ | 0.40 | $ | 0.34 | $ | 0.37 | $ | 0.34 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||
Sept. 30,
|
Increase/
|
Sept. 30,
|
Increase/
|
|||||||||||||||||||||
(In Thousands)
|
2011
|
2010
|
(Decrease)
|
2011
|
2010
|
(Decrease)
|
||||||||||||||||||
INTEREST INCOME
|
||||||||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||
Taxable
|
$ | 2,848 | $ | 2,698 | $ | 150 | $ | 8,513 | $ | 8,617 | $ | (104 | ) | |||||||||||
Tax-exempt
|
1,915 | 1,812 | 103 | 5,741 | 5,309 | 432 | ||||||||||||||||||
Total available-for-sale securities
|
4,763 | 4,510 | 253 | 14,254 | 13,926 | 328 | ||||||||||||||||||
Held-to-maturity securities,
|
||||||||||||||||||||||||
Taxable
|
0 | 0 | 0 | 0 | 2 | (2 | ) | |||||||||||||||||
Trading securities
|
0 | 0 | 0 | 0 | 2 | (2 | ) | |||||||||||||||||
Interest-bearing due from banks
|
13 | 26 | (13 | ) | 45 | 102 | (57 | ) | ||||||||||||||||
Federal funds sold
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Taxable
|
10,799 | 11,153 | (354 | ) | 32,521 | 33,112 | (591 | ) | ||||||||||||||||
Tax-exempt
|
556 | 584 | (28 | ) | 1,667 | 1,764 | (97 | ) | ||||||||||||||||
Total loans
|
11,355 | 11,737 | (382 | ) | 34,188 | 34,876 | (688 | ) | ||||||||||||||||
Total Interest Income
|
16,131 | 16,273 | (142 | ) | 48,487 | 48,908 | (421 | ) | ||||||||||||||||
INTEREST EXPENSE
|
||||||||||||||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||
Interest checking
|
89 | 199 | (110 | ) | 336 | 633 | (297 | ) | ||||||||||||||||
Money market
|
106 | 198 | (92 | ) | 397 | 678 | (281 | ) | ||||||||||||||||
Savings
|
32 | 49 | (17 | ) | 136 | 140 | (4 | ) | ||||||||||||||||
Certificates of deposit
|
970 | 1,211 | (241 | ) | 3,012 | 3,936 | (924 | ) | ||||||||||||||||
Individual Retirement Accounts
|
578 | 1,257 | (679 | ) | 2,727 | 3,739 | (1,012 | ) | ||||||||||||||||
Other time deposits
|
0 | 2 | (2 | ) | 2 | 5 | (3 | ) | ||||||||||||||||
Total interest-bearing deposits
|
1,775 | 2,916 | (1,141 | ) | 6,610 | 9,131 | (2,521 | ) | ||||||||||||||||
Borrowed funds:
|
||||||||||||||||||||||||
Short-term
|
6 | 15 | (9 | ) | 20 | 166 | (146 | ) | ||||||||||||||||
Long-term
|
1,327 | 1,708 | (381 | ) | 4,122 | 5,638 | (1,516 | ) | ||||||||||||||||
Total borrowed funds
|
1,333 | 1,723 | (390 | ) | 4,142 | 5,804 | (1,662 | ) | ||||||||||||||||
Total Interest Expense
|
3,108 | 4,639 | (1,531 | ) | 10,752 | 14,935 | (4,183 | ) | ||||||||||||||||
Net Interest Income
|
$ | 13,023 | $ | 11,634 | $ | 1,389 | $ | 37,735 | $ | 33,973 | $ | 3,762 |
3 Months
|
3 Months
|
9 Months
|
9 Months
|
|||||||||||||||||||||||||||||
Ended
|
Rate of
|
Ended
|
Rate of
|
Ended
|
Rate of
|
Ended
|
Rate of
|
|||||||||||||||||||||||||
9/30/2011
|
Return/
|
9/30/2010
|
Return/
|
9/30/2011
|
Return/
|
9/30/2010
|
Return/
|
|||||||||||||||||||||||||
Average
|
Cost of
|
Average
|
Cost of
|
Average
|
Cost of
|
Average
|
Cost of
|
|||||||||||||||||||||||||
Balance
|
Funds %
|
Balance
|
Funds %
|
Balance
|
Funds %
|
Balance
|
Funds %
|
|||||||||||||||||||||||||
EARNING ASSETS
|
||||||||||||||||||||||||||||||||
Available-for-sale securities, at amortized cost:
|
||||||||||||||||||||||||||||||||
Taxable
|
$ | 333,848 | 3.38 | % | $ | 313,385 | 3.42 | % | $ | 332,105 | 3.43 | % | $ | 314,992 | 3.66 | % | ||||||||||||||||
Tax-exempt
|
127,974 | 5.94 | % | 114,139 | 6.30 | % | 127,669 | 6.01 | % | 110,385 | 6.43 | % | ||||||||||||||||||||
Total available-for-sale securities
|
461,822 | 4.09 | % | 427,524 | 4.19 | % | 459,774 | 4.14 | % | 425,377 | 4.38 | % | ||||||||||||||||||||
Held-to-maturity securities, Taxable
|
0 | 0.00 | % | 0 | 0.00 | % | 0 | 0.00 | % | 51 | 5.27 | % | ||||||||||||||||||||
Trading securities
|
0 | 0.00 | % | 0 | 0.00 | % | 0 | 0.00 | % | 38 | 6.99 | % | ||||||||||||||||||||
Interest-bearing due from banks
|
27,884 | 0.18 | % | 45,661 | 0.23 | % | 29,659 | 0.20 | % | 59,547 | 0.23 | % | ||||||||||||||||||||
Federal funds sold
|
0 | 0.00 | % | 36 | 0.00 | % | 0 | 0.00 | % | 64 | 0.00 | % | ||||||||||||||||||||
Loans:
|
||||||||||||||||||||||||||||||||
Taxable
|
679,875 | 6.30 | % | 690,084 | 6.41 | % | 683,475 | 6.36 | % | 685,669 | 6.46 | % | ||||||||||||||||||||
Tax-exempt
|
34,630 | 6.37 | % | 35,324 | 6.56 | % | 34,835 | 6.40 | % | 35,975 | 6.56 | % | ||||||||||||||||||||
Total loans
|
714,505 | 6.31 | % | 725,408 | 6.42 | % | 718,310 | 6.36 | % | 721,644 | 6.46 | % | ||||||||||||||||||||
Total Earning Assets
|
1,204,211 | 5.31 | % | 1,198,629 | 5.39 | % | 1,207,743 | 5.37 | % | 1,206,721 | 5.42 | % | ||||||||||||||||||||
Cash
|
18,601 | 17,788 | 17,745 | 17,509 | ||||||||||||||||||||||||||||
Unrealized gain/loss on securities
|
10,312 | 4,746 | 5,216 | 1,834 | ||||||||||||||||||||||||||||
Allowance for loan losses
|
(8,372 | ) | (8,586 | ) | (8,834 | ) | (8,507 | ) | ||||||||||||||||||||||||
Bank premises and equipment
|
21,682 | 23,319 | 22,087 | 23,724 | ||||||||||||||||||||||||||||
Intangible Asset - Core Deposit Intangible
|
256 | 396 | 286 | 439 | ||||||||||||||||||||||||||||
Intangible Asset - Goodwill
|
11,942 | 11,942 | 11,942 | 11,942 | ||||||||||||||||||||||||||||
Other assets
|
52,637 | 72,735 | 56,551 | 76,787 | ||||||||||||||||||||||||||||
Total Assets
|
$ | 1,311,269 | $ | 1,320,969 | $ | 1,312,736 | $ | 1,330,449 | ||||||||||||||||||||||||
INTEREST-BEARING LIABILITIES
|
||||||||||||||||||||||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||||||||||
Interest checking
|
$ | 158,849 | 0.22 | % | $ | 153,933 | 0.51 | % | $ | 163,024 | 0.28 | % | $ | 141,928 | 0.60 | % | ||||||||||||||||
Money market
|
206,826 | 0.20 | % | 204,470 | 0.38 | % | 205,856 | 0.26 | % | 201,714 | 0.45 | % | ||||||||||||||||||||
Savings
|
98,434 | 0.13 | % | 79,484 | 0.24 | % | 95,648 | 0.19 | % | 75,624 | 0.25 | % | ||||||||||||||||||||
Certificates of deposit
|
207,822 | 1.85 | % | 222,117 | 2.16 | % | 208,418 | 1.93 | % | 228,419 | 2.30 | % | ||||||||||||||||||||
Individual Retirement Accounts
|
151,910 | 1.51 | % | 163,794 | 3.04 | % | 156,531 | 2.33 | % | 162,702 | 3.07 | % | ||||||||||||||||||||
Other time deposits
|
1,813 | 0.00 | % | 1,839 | 0.43 | % | 1,376 | 0.19 | % | 1,406 | 0.48 | % | ||||||||||||||||||||
Total interest-bearing deposits
|
825,654 | 0.85 | % | 825,637 | 1.40 | % | 830,853 | 1.06 | % | 811,793 | 1.50 | % | ||||||||||||||||||||
Borrowed funds:
|
||||||||||||||||||||||||||||||||
Short-term
|
19,935 | 0.12 | % | 23,328 | 0.26 | % | 18,747 | 0.14 | % | 30,281 | 0.73 | % | ||||||||||||||||||||
Long-term
|
130,980 | 4.02 | % | 166,887 | 4.06 | % | 137,321 | 4.01 | % | 183,517 | 4.11 | % | ||||||||||||||||||||
Total borrowed funds
|
150,915 | 3.50 | % | 190,215 | 3.59 | % | 156,068 | 3.55 | % | 213,798 | 3.63 | % | ||||||||||||||||||||
Total Interest-bearing Liabilities
|
976,569 | 1.26 | % | 1,015,852 | 1.81 | % | 986,921 | 1.46 | % | 1,025,591 | 1.95 | % | ||||||||||||||||||||
Demand deposits
|
170,111 | 150,299 | 169,340 | 144,161 | ||||||||||||||||||||||||||||
Other liabilities
|
7,761 | 8,209 | 7,078 | 7,642 | ||||||||||||||||||||||||||||
Total Liabilities
|
1,154,441 | 1,174,360 | 1,163,339 | 1,177,394 | ||||||||||||||||||||||||||||
Stockholders' equity, excluding other comprehensive income/loss
|
150,332 | 143,738 | 146,248 | 152,153 | ||||||||||||||||||||||||||||
Other comprehensive income/loss
|
6,496 | 2,871 | 3,149 | 902 | ||||||||||||||||||||||||||||
Total Stockholders' Equity
|
156,828 | 146,609 | 149,397 | 153,055 | ||||||||||||||||||||||||||||
Total Liabilities and Stockholders' Equity
|
$ | 1,311,269 | $ | 1,320,969 | $ | 1,312,736 | $ | 1,330,449 | ||||||||||||||||||||||||
Interest Rate Spread
|
4.05 | % | 3.58 | % | 3.91 | % | 3.47 | % | ||||||||||||||||||||||||
Net Interest Income/Earning Assets
|
4.29 | % | 3.85 | % | 4.18 | % | 3.76 | % | ||||||||||||||||||||||||
Total Deposits (Interest-bearing and Demand)
|
$ | 995,765 | $ | 975,936 | $ | 1,000,193 | $ | 955,954 |
(In Thousands)
|
3 Months Ended 9/30/11 vs. 9/30/10
|
9 Months Ended 9/30/11 vs. 9/30/10
|
||||||||||||||||||||||
Change in
|
Change in
|
Total
|
Change in
|
Change in
|
Total
|
|||||||||||||||||||
Volume
|
Rate
|
Change
|
Volume
|
Rate
|
Change
|
|||||||||||||||||||
EARNING ASSETS
|
||||||||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||
Taxable
|
$ | 175 | $ | (25 | ) | $ | 150 | $ | 455 | $ | (559 | ) | $ | (104 | ) | |||||||||
Tax-exempt
|
210 | (107 | ) | 103 | 793 | (361 | ) | 432 | ||||||||||||||||
Total available-for-sale securities
|
385 | (132 | ) | 253 | 1,248 | (920 | ) | 328 | ||||||||||||||||
Held-to-maturity securities, Taxable
|
0 | 0 | 0 | (1 | ) | (1 | ) | (2 | ) | |||||||||||||||
Trading securities
|
0 | 0 | 0 | (1 | ) | (1 | ) | (2 | ) | |||||||||||||||
Interest-bearing due from banks
|
(8 | ) | (5 | ) | (13 | ) | (46 | ) | (11 | ) | (57 | ) | ||||||||||||
Federal funds sold
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Taxable
|
(166 | ) | (188 | ) | (354 | ) | (106 | ) | (485 | ) | (591 | ) | ||||||||||||
Tax-exempt
|
(12 | ) | (16 | ) | (28 | ) | (55 | ) | (42 | ) | (97 | ) | ||||||||||||
Total loans
|
(178 | ) | (204 | ) | (382 | ) | (161 | ) | (527 | ) | (688 | ) | ||||||||||||
Total Interest Income
|
199 | (341 | ) | (142 | ) | 1,039 | (1,460 | ) | (421 | ) | ||||||||||||||
INTEREST-BEARING LIABILITIES
|
||||||||||||||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||
Interest checking
|
3 | (113 | ) | (110 | ) | 83 | (380 | ) | (297 | ) | ||||||||||||||
Money market
|
2 | (94 | ) | (92 | ) | 14 | (295 | ) | (281 | ) | ||||||||||||||
Savings
|
8 | (25 | ) | (17 | ) | 32 | (36 | ) | (4 | ) | ||||||||||||||
Certificates of deposit
|
(73 | ) | (168 | ) | (241 | ) | (325 | ) | (599 | ) | (924 | ) | ||||||||||||
Individual Retirement Accounts
|
(88 | ) | (591 | ) | (679 | ) | (137 | ) | (875 | ) | (1,012 | ) | ||||||||||||
Other time deposits
|
0 | (2 | ) | (2 | ) | 0 | (3 | ) | (3 | ) | ||||||||||||||
Total interest-bearing deposits
|
(148 | ) | (993 | ) | (1,141 | ) | (333 | ) | (2,188 | ) | (2,521 | ) | ||||||||||||
Borrowed funds:
|
||||||||||||||||||||||||
Short-term
|
2 | (11 | ) | (9 | ) | (47 | ) | (99 | ) | (146 | ) | |||||||||||||
Long-term
|
(364 | ) | (17 | ) | (381 | ) | (1,390 | ) | (126 | ) | (1,516 | ) | ||||||||||||
Total borrowed funds
|
(362 | ) | (28 | ) | (390 | ) | (1,437 | ) | (225 | ) | (1,662 | ) | ||||||||||||
Total Interest Expense
|
(510 | ) | (1,021 | ) | (1,531 | ) | (1,770 | ) | (2,413 | ) | (4,183 | ) | ||||||||||||
Net Interest Income
|
$ | 709 | $ | 680 | $ | 1,389 | $ | 2,809 | $ | 953 | $ | 3,762 |
Accretion of
|
||||
Prior OTTI
|
||||
4th Quarter 2010 (Actual)
|
$ | 83 | ||
1st Quarter 2011 (Actual)
|
111 | |||
2nd Quarter 2011 (Actual)
|
160 | |||
3rd Quarter 2011 (Actual)
|
229 | |||
4th Quarter 2011 (Estimated)
|
325 | |||
1st Quarter 2012 (Estimated)
|
457 | |||
2nd Quarter 2012 (Estimated)
|
398 | |||
Total
|
$ | 1,763 |
TABLE V - COMPARISON OF NONINTEREST INCOME
|
||||||||||||||||
(In Thousands)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Service charges on deposit accounts
|
$ | 1,230 | $ | 1,166 | $ | 3,586 | $ | 3,449 | ||||||||
Service charges and fees
|
218 | 191 | 643 | 594 | ||||||||||||
Trust and financial management revenue
|
785 | 876 | 2,608 | 2,605 | ||||||||||||
Brokerage revenue
|
199 | 102 | 551 | 318 | ||||||||||||
Insurance commissions, fees and premiums
|
66 | 65 | 192 | 186 | ||||||||||||
Interchange revenue from debit card transactions
|
490 | 427 | 1,427 | 1,226 | ||||||||||||
Net gains from sales of loans
|
263 | 275 | 677 | 478 | ||||||||||||
Increase in cash surrender value of life insurance
|
127 | 121 | 381 | 352 | ||||||||||||
Net gain (loss) from sale of premises and equipment
|
324 | (4 | ) | 324 | 445 | |||||||||||
Net gain from other real estate
|
51 | 149 | 8 | 113 | ||||||||||||
Impairment loss on limited partnership investment
|
0 | 0 | (948 | ) | 0 | |||||||||||
Other operating income
|
246 | 194 | 778 | 604 | ||||||||||||
Total other operating income, before realized gains on available-for-sale securities, net
|
$ | 3,999 | $ | 3,562 | $ | 10,227 | $ | 10,370 |
|
·
|
In the first quarter 2011, the Corporation reported an impairment loss of $948,000 related to an investment in a real estate limited partnership. This investment had been included in Other Assets in the consolidated balance sheet at December 31, 2010. In addition to the limited partnership investment, the Corporation has a loan receivable from the limited partnership of $1,040,000 at September 30, 2011. Based on updated financial information, management prepared an estimated valuation based on cash flow analysis. That analysis showed the estimated return to the Corporation would be sufficient to repay the loan in full, but would not provide sufficient additional cash flow for return on the limited partnership investment. Accordingly, management made the decision to completely write-off the limited partnership investment in 2011.
|
|
·
|
As described in the Earnings Overview section of Management’s Discussion and Analysis, in the third quarter 2011, the Corporation realized net gains from sales of premises and equipment totaling $324,000, including a gain of $329,000 from sale of the Court Street, Williamsport, PA location. The Corporation has entered into a leasing arrangement to continue to utilize a portion of the facility. The leaseback is for use of approximately 18% of the total building space, for a period of two years with monthly rent of approximately $8,000 per month, plus allocable utilities, property taxes and other building-related expenses identified in the lease. The lease provides the Corporation with an option to renew for an additional two years, for monthly rent of approximately $9,000 per month, plus allocable building-related expenses. The Corporation’s continuing interest in the property is limited to its role as lessee, and the Corporation did not provide financing to the buyer. The Corporation has accounted for the leaseback as an operating lease. In the nine months ended September 30, 2010, net gains from sales of premises and equipment totaled $445,000, including a first quarter gain of $448,000 from the sale of a parcel adjacent to the Court Street, Williamsport location.
|
|
·
|
Net gains from sales of real estate acquired from foreclosures (other real estate) amounted to $8,000 in the first nine months of 2011, down from $113,000 in the first nine months of 2010. There was one transaction with a gain (not adjusted for prior loan charge-off and foregone interest income amounts) of $80,000 in the first nine months of 2010.
|
|
·
|
Brokerage revenue of $551,000 in the first nine months of 2011 was $233,000 higher than in the same period of 2010. The increase in brokerage revenue includes the effects of sales of annuities to customers who had previously held variable-rate Individual Retirement Accounts (deposits) with the Corporation. Changes in variable-rate Individual Retirement Account deposits are discussed in more detail in the Net Interest Income section of Management’s Discussion and Analysis.
|
|
·
|
Interchange revenue from debit card transactions of $1,427,000 in the first nine months of 2011 is $201,000, or 16.4%, higher than in the same period of 2010. The increased level of interchange fees reflects customers’ higher volume of debit card transactions. The Federal Reserve issued a final rule, effective October 1, 2011, which establishes maximum interchange rates that may be paid to large (as defined) financial institutions. The maximum rates established under the rule are approximately 45% lower than the average market rates paid to the Corporation throughout the last several years. Although the rule’s rate constraints do not directly apply to the Corporation (because the Corporation is not considered a large financial institution for this purpose), management believes interchange revenues could be reduced either because of lower volumes or because market conditions may dictate that smaller financial institutions receive rates similar to large financial institutions. Management is monitoring regulatory and market conditions associated with interchange processing, but cannot reasonably estimate the timing or amount of future changes in interchange revenues that may occur.
|
|
·
|
Net gains from the sale of loans increased $199,000 in 2011 compared to 2010. In 2010, management began to sell a significant amount of residential mortgage originations into the secondary market. The increase in net gains from sales of loans is almost entirely associated with the Corporation’s participation in the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago. The increased volume of mortgage loans sold reflects the impact of significant refinancing activity, with a new upsurge starting in the third quarter 2011, triggered by falling long-term market interest rates on mortgages. The recent increase in volume is similar to the surge in refinancing activity the Corporation experienced in the last several months of 2010.
|
|
·
|
Other operating income of $778,000 in the first nine months of 2011 was $174,000 higher than in the first nine months of 2010. In 2011, this category included income of $136,000 from a limited liability equity investment in an entity performing title insurance services throughout Pennsylvania. Comparatively, the Corporation recognized $20,000 of income from investment in this entity in the first nine months of 2010. The Corporation has also experienced increases in revenues from check sales (up $33,000) and merchant services (up $26,000) in the first nine months of 2011 as compared to the same period in 2010.
|
|
·
|
Service charges on deposit accounts of $3,586,000 in the first nine months of 2011 was $137,000 (4%) higher than in the same period of 2010, mainly due to fee pricing changes effective at the beginning of 2011.
|
TABLE VI - COMPARISON OF NONINTEREST EXPENSE
|
||||||||||||||||
(In Thousands)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
Sept. 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Salaries and wages
|
$ | 3,451 | $ | 3,354 | $ | 10,321 | $ | 9,631 | ||||||||
Pensions and other employee benefits
|
1,020 | 980 | 3,344 | 2,902 | ||||||||||||
Occupancy expense, net
|
641 | 654 | 2,038 | 2,004 | ||||||||||||
Furniture and equipment expense
|
498 | 500 | 1,435 | 1,610 | ||||||||||||
FDIC Assessments
|
174 | 382 | 688 | 1,201 | ||||||||||||
Pennsylvania shares tax
|
345 | 305 | 984 | 916 | ||||||||||||
Other operating expense
|
1,923 | 1,907 | 5,299 | 5,518 | ||||||||||||
Total Other Expense
|
$ | 8,052 | $ | 8,082 | $ | 24,109 | $ | 23,782 |
|
·
|
Salaries and wages increased $690,000, or 7.2%. In the first nine months of 2011, salaries and wages expense includes officers’ incentive stock option compensation of $244,000; however, since no stock options were awarded in 2010, there was no officers’ incentive stock option expense incurred in 2010. In addition, salaries and wages expense in 2011 include increases of $90,000 in estimated incentive bonuses and $58,000 in officers’ restricted stock compensation over the comparable 2010 amounts. Excluding performance based stock and bonus compensation incentives, total salaries and wages were 3.4% higher in the first nine months of 2011 as compared to the comparable period in 2010.
|
|
·
|
Pensions and other employee benefits increased $442,000, or 15.2%. Within this category, group health insurance expense was $268,000 higher in 2011. In the first quarter 2010, the Corporation recorded a reduction in group health insurance expense of $215,000 for the difference between actual and estimated claims from the previous year (2009). Payroll taxes and employer contributions expense associated with the Savings & Retirement Plan (a 401(k) plan) and Employee Stock Ownership Plan are higher in the first nine months of 2011 than in the same period of 2010, including higher costs in the first quarter 2011 related to incentive compensation paid in January 2011 based on 2010 performance.
|
|
·
|
Furniture and equipment expense decreased $175,000, or 10.9% in 2011 with the decrease primarily associated with reductions in depreciation for the Corporation’s core banking systems.
|
|
·
|
FDIC Assessments decreased $513,000, or 42.7% in 2011. Effective April 1, 2011, the FDIC’s method of determining assessments to banks has changed, with the new methodology expected to result in higher assessments to larger, more complex or higher-risk institutions, with smaller assessments to many community and small regional banks. The Corporation’s second quarter 2011 and estimated third quarter 2011 FDIC assessments, determined using the new methodology, are substantially lower than the amounts assessed for the prior several quarters. The favorable decline also reflects rate changes attributed to improvements in the Corporation’s risk profile based on financial ratios.
|
|
·
|
Other operating expense decreased $219,000, or 4.0%, in the first nine months of 2011 as compared to the comparable period in 2010. This category includes many different types of expenses, with the most significant differences in amounts between 2011 and 2010 as follows:
|
|
Ø
|
Professional fees and other costs associated with public company requirements, down $136,000, or 51.9%
|
|
Ø
|
Out-of-pocket collection-related expenses, net of reimbursements, down $91,000, or 44.4%
|
|
Ø
|
Office supplies, down $74,000, or 27.2%
|
|
Ø
|
Attorney fees, primarily associated with lending and collection matters, down $71,000, or 32.6%
|
|
Ø
|
Amortization of core deposit intangibles from 2005 and 2007 acquisitions, down $46,000, or 34.8%
|
|
Ø
|
Expenses associated with other real estate properties, down $43,000, or 41.7%
|
|
Ø
|
Operational losses associated with Trust and branch processing, down $40,000, or 66.2%
|
|
Ø
|
Telephone data lines and service, down $39,000, or 9.9%
|
|
Ø
|
Professional and administrative expenses associated with Citizens & Northern Investment Corporation activities, down $37,000, or 85.6%
|
|
Ø
|
Expenses associated with Bucktail Life Insurance Company, up $189,000. In the second quarter 2010, the Corporation recorded a reduction in estimated insurance reserves, which reduced Bucktail-related expenses by $245,000.
|
|
Ø
|
Fees paid related to interchange and ATM processing increased $82,000, or 12.1%
|
|
Ø
|
Software-related subscriptions and updates, up $80,000, or 15.9%
|
|
Ø
|
Charitable donations, up $34,000, mainly due to a $50,000 donation to the Red Cross for victims of flooding that occurred in the Corporation’s market area in September 2011.
|
|
·
|
FDIC Assessments decreased $208,000, or 54.5% in the third quarter 2011 as compared to the third quarter 2010. As described in the nine month analysis above, the FDIC’s method of determining assessments has changed, resulting in lower assessments in 2011.
|
|
·
|
Other operating expense increased $16,000, or 0.8%, in the third quarter 2011 as compared to the third quarter 2010. The most significant differences in individual types of expenses within this category between the third quarters of 2011 and 2010 are as follows:
|
|
Ø
|
Professional fees, mainly associated with lending-related software implementations, up $73,000, or 97.0%
|
|
Ø
|
Software-related subscriptions and updates, up $51,000, or 32.5%
|
|
Ø
|
Charitable donations, up $44,000
|
|
Ø
|
Expenses associated with Bucktail Life Insurance Company, up $34,000
|
|
Ø
|
Fees paid related to interchange and ATM processing increased $24,000, or 10.2%
|
|
Ø
|
Out-of-pocket collection-related expenses, net of reimbursements, down $56,000, or 34.5%
|
|
Ø
|
Attorney fees, primarily associated with loan collection activities, down $43,000, or 47.1%
|
|
Ø
|
Professional fees and other costs associated with public company requirements, down $28,000, or 56.6%
|
|
Ø
|
Telephone data lines and service, down $23,000, or 16.4%
|
|
Ø
|
Public relations expense, down $22,000, or 58.9%
|
|
·
|
In the second quarter 2011 charge-offs totaling $663,000 were recorded related to a commercial relationship for which specific allowances totaling $765,000 had been established at December 31, 2010. After the impact of these charge-offs and re-evaluation of the allowances required, the Corporation had loans outstanding totaling $925,000 with a specific allowance of $450,000 at September 30, 2011 related to this commercial borrower.
|
|
·
|
In the second quarter 2011, a charge-off of $46,000 was recorded for a commercial relationship for which specific allowances totaling $200,000 had been established at December 31, 2010. After the impact of the charge-off, there were no loans outstanding from this borrower, and a balance in foreclosed assets held for sale of $412,000 at September 30, 2011, based on the estimated fair value of real estate that had collateralized the loans.
|
|
·
|
In the first quarter 2011, the Corporation was paid off in full on a commercial loan relationship for which an allowance of $150,000 had been established at December 31, 2010.
|
Nine Months Ended
|
||||||||||||||||||||||||||||
(In Thousands)
|
Sept. 30,
|
Sept. 30,
|
Years Ended December 31,
|
|||||||||||||||||||||||||
2011
|
2010
|
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||||||||
Balance, beginning of year
|
$ | 9,107 | $ | 8,265 | $ | 8,265 | $ | 7,857 | $ | 8,859 | $ | 8,201 | $ | 8,361 | ||||||||||||||
Charge-offs:
|
||||||||||||||||||||||||||||
Residential mortgage
|
(100 | ) | (195 | ) | (340 | ) | (146 | ) | (173 | ) | (149 | ) | (611 | ) | ||||||||||||||
Commercial
|
(751 | ) | (56 | ) | (91 | ) | (39 | ) | (1,607 | ) | (174 | ) | (200 | ) | ||||||||||||||
Consumer
|
(116 | ) | (135 | ) | (188 | ) | (293 | ) | (259 | ) | (221 | ) | (281 | ) | ||||||||||||||
Total charge-offs
|
(967 | ) | (386 | ) | (619 | ) | (478 | ) | (2,039 | ) | (544 | ) | (1,092 | ) | ||||||||||||||
Recoveries:
|
||||||||||||||||||||||||||||
Residential mortgage
|
0 | 53 | 55 | 8 | 19 | 5 | 11 | |||||||||||||||||||||
Commercial
|
178 | 111 | 113 | 77 | 22 | 31 | 159 | |||||||||||||||||||||
Consumer
|
57 | 87 | 102 | 121 | 87 | 50 | 90 | |||||||||||||||||||||
Total recoveries
|
235 | 251 | 270 | 206 | 128 | 86 | 260 | |||||||||||||||||||||
Net charge-offs
|
(732 | ) | (135 | ) | (349 | ) | (272 | ) | (1,911 | ) | (458 | ) | (832 | ) | ||||||||||||||
Allowance for loan losses recorded in acquisition
|
0 | 0 | 0 | 0 | 0 | 587 | 0 | |||||||||||||||||||||
(Credit) provision for loan losses
|
(198 | ) | 472 | 1,191 | 680 | 909 | 529 | 672 | ||||||||||||||||||||
Balance, end of period
|
$ | 8,177 | $ | 8,602 | $ | 9,107 | $ | 8,265 | $ | 7,857 | $ | 8,859 | $ | 8,201 |
(In Thousands)
|
As of
|
|||||||||||||||||||||||
Sept. 30,
|
As of December 31,
|
|||||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
|||||||||||||||||||
ASC 310 - Impaired loans
|
$ | 1,563 | $ | 2,288 | $ | 1,126 | $ | 456 | $ | 2,255 | $ | 1,726 | ||||||||||||
ASC 450 - Collective segments:
|
||||||||||||||||||||||||
Commercial
|
2,741 | 3,047 | 2,677 | 2,654 | 1,870 | 2,372 | ||||||||||||||||||
Residential mortgage
|
3,202 | 3,227 | 3,859 | 3,920 | 4,201 | 3,556 | ||||||||||||||||||
Consumer
|
203 | 232 | 281 | 399 | 533 | 523 | ||||||||||||||||||
Unallocated
|
468 | 313 | 322 | 428 | 0 | 24 | ||||||||||||||||||
Total Allowance
|
$ | 8,177 | $ | 9,107 | $ | 8,265 | $ | 7,857 | $ | 8,859 | $ | 8,201 |
(In Thousands)
|
As of
|
|||||||||||||||||||||||
Sept. 30,
|
As of December 31,
|
|||||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
|||||||||||||||||||
Impaired loans with a valuation allowance
|
$ | 3,978 | $ | 5,457 | $ | 2,690 | $ | 2,230 | $ | 5,361 | $ | 5,337 | ||||||||||||
Impaired loans without a valuation allowance
|
3,807 | 3,191 | 3,257 | 3,435 | 857 | 2,674 | ||||||||||||||||||
Total impaired loans
|
$ | 7,785 | $ | 8,648 | $ | 5,947 | $ | 5,665 | $ | 6,218 | $ | 8,011 | ||||||||||||
Total loans past due 30-89 days and still accruing
|
$ | 5,142 | $ | 7,125 | $ | 9,445 | $ | 9,875 | $ | 10,822 | $ | 8,580 | ||||||||||||
Nonperforming assets:
|
||||||||||||||||||||||||
Total nonaccrual loans
|
$ | 7,890 | $ | 10,809 | $ | 9,092 | $ | 7,200 | $ | 6,955 | $ | 8,506 | ||||||||||||
Total loans past due 90 days or more and still accruing
|
1,055 | 727 | 31 | 1,305 | 1,200 | 1,559 | ||||||||||||||||||
Foreclosed assets held for sale (real estate)
|
1,596 | 537 | 873 | 298 | 258 | 264 | ||||||||||||||||||
Total nonperforming assets
|
$ | 10,541 | $ | 12,073 | $ | 9,996 | $ | 8,803 | $ | 8,413 | $ | 10,329 | ||||||||||||
Total nonperforming assets as a % of assets
|
0.80 | % | 0.92 | % | 0.76 | % | 0.69 | % | 0.66 | % | 0.78 | % | ||||||||||||
Loans subject to troubled debt restructurings (TDRs):
|
||||||||||||||||||||||||
Performing
|
$ | 1,072 | $ | 645 | $ | 0 | $ | 0 | $ | 0 | $ | 111 | ||||||||||||
Nonperforming
|
2,874 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Total TDRs
|
$ | 3,946 | $ | 645 | $ | 0 | $ | 0 | $ | 0 | $ | 111 |
Summary of Loans by Type
|
||||||||||||||||||||||||
(In Thousands)
|
Sept. 30,
|
As of December 31,
|
||||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
|||||||||||||||||||
Residential mortgage:
|
||||||||||||||||||||||||
Residential mortgage loans - first liens
|
$ | 334,551 | $ | 333,012 | $ | 340,268 | $ | 353,909 | $ | 363,467 | $ | 325,107 | ||||||||||||
Residential mortgage loans - junior liens
|
29,748 | 31,590 | 35,734 | 40,657 | 40,392 | 30,074 | ||||||||||||||||||
Home equity lines of credit
|
29,667 | 26,853 | 23,577 | 21,304 | 20,542 | 18,472 | ||||||||||||||||||
1-4 Family residential construction
|
9,762 | 14,379 | 11,452 | 11,262 | 4,742 | 0 | ||||||||||||||||||
Total residential mortgage
|
403,728 | 405,834 | 411,031 | 427,132 | 429,143 | 373,653 | ||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Commercial loans secured by real estate
|
149,853 | 167,094 | 163,483 | 165,979 | 144,742 | 178,260 | ||||||||||||||||||
Commercial and industrial
|
55,792 | 59,005 | 49,753 | 48,295 | 52,241 | 39,135 | ||||||||||||||||||
Political subdivisions
|
36,403 | 36,480 | 37,598 | 38,790 | 33,013 | 32,407 | ||||||||||||||||||
Commercial construction and land
|
26,552 | 24,004 | 15,264 | 13,730 | 17,755 | 10,365 | ||||||||||||||||||
Loans secured by farmland
|
10,470 | 11,353 | 11,856 | 9,140 | 8,287 | 6,968 | ||||||||||||||||||
Multi-family (5 or more) residential
|
6,782 | 7,781 | 8,338 | 8,367 | 9,004 | 6,790 | ||||||||||||||||||
Agricultural loans
|
2,819 | 3,472 | 3,848 | 4,495 | 3,553 | 2,705 | ||||||||||||||||||
Other commercial loans
|
561 | 392 | 638 | 884 | 1,010 | 1,226 | ||||||||||||||||||
Total commercial
|
289,232 | 309,581 | 290,778 | 289,680 | 269,605 | 277,856 | ||||||||||||||||||
Consumer
|
12,919 | 14,996 | 19,202 | 26,732 | 37,193 | 35,992 | ||||||||||||||||||
Total
|
705,879 | 730,411 | 721,011 | 743,544 | 735,941 | 687,501 | ||||||||||||||||||
Less: allowance for loan losses
|
(8,177 | ) | (9,107 | ) | (8,265 | ) | (7,857 | ) | (8,859 | ) | (8,201 | ) | ||||||||||||
Loans, net
|
$ | 697,702 | $ | 721,304 | $ | 712,746 | $ | 735,687 | $ | 727,082 | $ | 679,300 |
Outstanding
|
Available
|
Total Credit
|
||||||||||||||||||||||
(In Thousands)
|
Sept. 30,
|
Dec. 31,
|
Sept. 30,
|
Dec. 31,
|
Sept. 30,
|
Dec. 31,
|
||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||
Federal Home Loan Bank of Pittsburgh
|
$ | 40,524 | $ | 55,995 | $ | 280,578 | $ | 304,584 | $ | 321,102 | $ | 360,579 | ||||||||||||
Federal Reserve Bank Discount Window
|
0 | 0 | 27,121 | 26,274 | 27,121 | 26,274 | ||||||||||||||||||
Other correspondent banks
|
0 | 0 | 25,000 | 25,000 | 25,000 | 25,000 | ||||||||||||||||||
Total credit facilities
|
$ | 40,524 | $ | 55,995 | $ | 332,699 | $ | 355,858 | $ | 373,223 | $ | 411,853 |
Minimum To Be Well
|
||||||||||||||||||||||||
(Dollars in Thousands)
|
Minimum
|
Capitalized Under
|
||||||||||||||||||||||
Capital
|
Prompt Corrective
|
|||||||||||||||||||||||
Actual
|
Requirement
|
Action Provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
September 30, 2011:
|
||||||||||||||||||||||||
Total capital to risk-weighted assets:
|
||||||||||||||||||||||||
Consolidated
|
$ | 144,771 | 20.16 | % | $ | 57,458 | ³8 | % | n/a | n/a | ||||||||||||||
C&N Bank
|
133,186 | 18.74 | % | 56,866 | ³8 | % | $ | 71,083 | ³10 | % | ||||||||||||||
Tier 1 capital to risk-weighted assets:
|
||||||||||||||||||||||||
Consolidated
|
135,918 | 18.92 | % | 28,729 | ³4 | % | n/a | n/a | ||||||||||||||||
C&N Bank
|
124,987 | 17.58 | % | 28,433 | ³4 | % | 42,650 | ³6 | % | |||||||||||||||
Tier 1 capital to average assets:
|
||||||||||||||||||||||||
Consolidated
|
135,918 | 10.54 | % | 51,596 | ³4 | % | n/a | n/a | ||||||||||||||||
C&N Bank
|
124,987 | 9.76 | % | 51,212 | ³4 | % | 64,015 | ³5 | % | |||||||||||||||
December 31, 2010:
|
||||||||||||||||||||||||
Total capital to risk-weighted assets:
|
||||||||||||||||||||||||
Consolidated
|
$ | 128,527 | 17.17 | % | $ | 59,874 | ³8 | % | n/a | n/a | ||||||||||||||
C&N Bank
|
117,576 | 15.85 | % | 59,342 | ³8 | % | $ | 74,177 | ³10 | % | ||||||||||||||
Tier 1 capital to risk-weighted assets:
|
||||||||||||||||||||||||
Consolidated
|
118,781 | 15.87 | % | 29,937 | ³4 | % | n/a | n/a | ||||||||||||||||
C&N Bank
|
108,445 | 14.62 | % | 29,671 | ³4 | % | 44,506 | ³6 | % | |||||||||||||||
Tier 1 capital to average assets:
|
||||||||||||||||||||||||
Consolidated
|
118,781 | 9.20 | % | 51,664 | ³4 | % | n/a | n/a | ||||||||||||||||
C&N Bank
|
108,445 | 8.50 | % | 51,063 | ³4 | % | 63,828 | ³5 | % |
|
·
|
At September 30, 2011, the Corporation had a deferred tax liability of $4,523,000 associated with net unrealized gains on available-for-sale securities. In comparison, at December 31, 2010, there was a deferred tax asset of $695,000 associated with net unrealized losses on available-for-sale securities. Changes in unrealized gains and losses on available-for-sale securities, net of deferred income tax, are excluded from the determination of earnings but are included in Comprehensive Income.
|
|
·
|
The net deferred tax asset balance at September 30, 2011 attributable to realized securities losses was $3,362,000, down from the balance at December 31, 2010 of $5,755,000. As described in Note 5 to the consolidated financial statements, in the first quarter 2011, the Corporation sold a pooled trust-preferred security that had been written off in 2009 and 2010 for financial statement purposes, resulting in a book gain of $1,485,000. The loss for income tax purposes from this transaction is $5,295,000, with the large book/tax difference representing the main reason for the reduction in the deferred tax asset.
|
|
·
|
The Corporation has available an estimated $130,000 capital loss carryforward at September 30, 2011, expiring in 2015. At December 31, 2010, the Corporation had an estimated ordinary loss carryforward of $7,886,000, expiring in 2030, and an estimated capital loss carryforward of $502,000, expiring in 2015. The amount of deferred tax asset from unused loss carryforwards at September 30, 2011 of $44,000 is down from $2,794,000 at December 31, 2010, primarily as a result of estimated taxable income generated in the first nine months of 2011.
|
|
·
|
At September 30, 2011, the deferred tax asset based on the credit for alternative minimum tax (AMT) paid was $5,195,000, up from $3,287,000 at December 31, 2010. The increase in 2011 reflects estimated AMT payable for the first nine months of 2011. Realization of the deferred tax asset for AMT depends on generation of sufficient ordinary taxable income in excess of AMT income in future years, though there is no expiration of the credit for AMT paid under current tax law.
|
July 31, 2011 Data
|
||||||||||||||||||||||
(In Thousands)
|
Period Ending July 31, 2012
|
|||||||||||||||||||||
Basis Point
|
Interest
|
Interest
|
Net Interest
|
NII
|
NII
|
|||||||||||||||||
Change in Rates
|
Income
|
Expense
|
Income (NII)
|
% Change
|
Risk Limit
|
|||||||||||||||||
+400 | $ | 67,469 | $ | 31,623 | $ | 35,846 | -20.3 | % | 25.0 | % | ||||||||||||
+300 | 64,945 | 26,372 | 38,573 | -14.3 | % | 20.0 | % | |||||||||||||||
+200 | 62,327 | 21,568 | 40,759 | -9.4 | % | 15.0 | % | |||||||||||||||
+100 | 59,640 | 16,768 | 42,872 | -4.7 | % | 10.0 | % | |||||||||||||||
0 | 56,961 | 11,969 | 44,992 | 0.0 | % | 0.0 | % | |||||||||||||||
-100 | 53,508 | 9,711 | 43,797 | -2.7 | % | 10.0 | % | |||||||||||||||
-200 | 51,623 | 9,289 | 42,334 | -5.9 | % | 15.0 | % | |||||||||||||||
-300 | 51,078 | 9,285 | 41,793 | -7.1 | % | 20.0 | % | |||||||||||||||
-400 | 50,945 | 9,285 | 41,660 | -7.4 | % | 25.0 | % |
Market Value of Portfolio Equity at July 31, 2011
|
||||||||||||||
Present
|
Present
|
Present
|
||||||||||||
Basis Point
|
Value
|
Value
|
Value
|
|||||||||||
Change in Rates
|
Equity
|
% Change
|
Risk Limit
|
|||||||||||
+400 | $ | 141,369 | -27.3 | % | 50.0 | % | ||||||||
+300 | 155,310 | -20.2 | % | 45.0 | % | |||||||||
+200 | 169,684 | -12.8 | % | 35.0 | % | |||||||||
+100 | 182,133 | -6.4 | % | 25.0 | % | |||||||||
0 | 194,556 | 0.0 | % | 0.0 | % | |||||||||
-100 | 192,956 | -0.8 | % | 25.0 | % | |||||||||
-200 | 201,225 | 3.4 | % | 35.0 | % | |||||||||
-300 | 218,908 | 12.5 | % | 45.0 | % | |||||||||
-400 | 254,557 | 30.8 | % | 50.0 | % |
October 31, 2010 Data
|
||||||||||||||||||||||
(In Thousands)
|
Period Ending October 31, 2011
|
|||||||||||||||||||||
Basis Point
|
Interest
|
Interest
|
Net Interest
|
NII
|
NII
|
|||||||||||||||||
Change in Rates
|
Income
|
Expense
|
Income (NII)
|
% Change
|
Risk Limit
|
|||||||||||||||||
+400 | $ | 68,628 | $ | 32,409 | $ | 36,219 | -15.1 | % | N/A | |||||||||||||
+300 | 66,098 | 27,402 | 38,696 | -9.3 | % | 20.0 | % | |||||||||||||||
+200 | 63,465 | 23,146 | 40,319 | -5.5 | % | 15.0 | % | |||||||||||||||
+100 | 60,661 | 18,891 | 41,770 | -2.1 | % | 10.0 | % | |||||||||||||||
0 | 57,307 | 14,638 | 42,669 | 0.0 | % | 0.0 | % | |||||||||||||||
-100 | 54,005 | 13,794 | 40,211 | -5.8 | % | 10.0 | % | |||||||||||||||
-200 | 51,995 | 13,732 | 38,263 | -10.3 | % | 15.0 | % | |||||||||||||||
-300 | 51,507 | 13,732 | 37,775 | -11.5 | % | 20.0 | % | |||||||||||||||
-400 | 51,418 | 13,732 | 37,686 | -11.7 | % | N/A |
Market Value of Portfolio Equity at October 31, 2010
|
||||||||||||||
Present
|
Present
|
Present
|
||||||||||||
Basis Point
|
Value
|
Value
|
Value
|
|||||||||||
Change in Rates
|
Equity
|
% Change
|
Risk Limit
|
|||||||||||
+400 | $ | 76,087 | -40.0 | % | N/A | |||||||||
+300 | 90,782 | -28.4 | % | 45.0 | % | |||||||||
+200 | 104,337 | -17.7 | % | 35.0 | % | |||||||||
+100 | 116,495 | -8.1 | % | 25.0 | % | |||||||||
0 | 126,789 | 0.0 | % | 0.0 | % | |||||||||
-100 | 135,342 | 6.7 | % | 25.0 | % | |||||||||
-200 | 162,919 | 28.5 | % | 35.0 | % | |||||||||
-300 | 194,064 | 53.1 | % | 45.0 | % | |||||||||
-400 | 233,720 | 84.3 | % | N/A |
TABLE XII - EQUITY SECURITIES RISK
|
||||||||
(In Thousands)
|
||||||||
Sept. 30,
|
Dec. 31,
|
|||||||
2011
|
2010
|
|||||||
Cost
|
$ | 5,548 | $ | 4,589 | ||||
Fair Value
|
7,050 | 6,009 | ||||||
Hypothetical 10% Decline In Market Value
|
(705 | ) | (601 | ) | ||||
Hypothetical 20% Decline In Market Value
|
(1,410 | ) | (1,202 | ) |
Item 1.
|
Legal Proceedings
|
|
The Corporation and C&N Bank are involved in various legal proceedings incidental to their business. Management believes the aggregate liability, if any, resulting from such pending and threatened legal proceedings will not have a material, adverse effect on the Corporation’s financial condition or results of operations.
|
Item 1A.
|
Risk Factors
|
|
There have been no material changes from the risk factors previously disclosed in Item 1A of the Corporation’s Form 10-K filed March 1, 2011.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
On May 19, 2011, the Corporation announced the Corporation’s Board of Directors authorized repurchases of outstanding common stock, up to a total of $1 million, in open market or privately negotiated transactions. At its September 22, 2011 meeting, the Corporation’s Board of Directors authorized repurchases of outstanding common stock in open market or privately negotiated transactions, up to a total of $1 million, as an addition to the stock repurchase program previously announced on May 19, 2011. The Board of Directors’ authorizations provide that: (1) the treasury stock repurchase programs became effective when publicly announced and shall continue thereafter until suspended or terminated by the Board of Directors, in its sole discretion; and (2) all shares of common stock repurchased pursuant to the programs shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plan and its equity compensation program. As of September 30, 2011, the maximum additional value available for purchases under this program was $1,016,669.
|
|
The following table sets forth a summary of the purchases by the Corporation, on the open market, of its equity securities in the third quarter 2011:
|
Period
|
Total
Number of
Shares
Purchased
|
Average Price
Paid per Share
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
|
Maximum Dollar
Value of Shares
that May Yet be
Purchased
Under the Plans
or Programs
|
||||||||||||
August 1 - 31, 2011
|
20,325 | $ | 14.63 | 60,627 | $ | 131,108 | ||||||||||
September 1 - 30, 2011
|
7,783 | $ | 14.70 | 68,410 | $ | 1,016,669 |
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Removed and Reserved
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Not applicable
|
||
liquidation or succession
|
||
3. (i) Articles of Incorporation
|
Incorporated by reference to Exhibit 3.1 of
|
|
the Corporation's Form 8-K filed
|
||
September 21, 2009
|
||
3. (ii) By-laws
|
Incorporated by reference to Exhibit 3.2 of the
|
|
Corporation's Form 8-K filed September 21, 2009
|
||
4. Instruments defining the rights of security holders,
|
||
including indentures
|
Not applicable
|
|
11. Statement re: computation of per share earnings
|
Information concerning the computation of
|
|
earnings per share is provided in Note 2
|
||
to the Consolidated Financial Statements,
|
||
which is included in Part I, Item 1 of Form 10-Q
|
||
15. Letter re: unaudited interim financial information
|
Not applicable
|
|
18. Letter re: change in accounting principles
|
Not applicable
|
|
19. Report furnished to security holders
|
Not applicable
|
|
22. Published report regarding matters submitted to
|
||
vote of security holders
|
Not applicable
|
|
23. Consents of experts and counsel
|
Not applicable
|
|
24. Power of attorney
|
Not applicable
|
|
31. Rule 13a-14(a)/15d-14(a) certifications:
|
||
31.1 Certification of Chief Executive Officer
|
Filed herewith
|
|
31.2 Certification of Chief Financial Officer
|
Filed herewith
|
|
32. Section 1350 certifications
|
Provided herewith
|
|
99. Additional exhibits
|
Not applicable
|
|
100. XBRL-related documents
|
Not applicable
|
101. Interactive Data File
|
Furnished herewith*
|
CITIZENS & NORTHERN CORPORATION
|
|
November 7, 2011
|
By: /s/ Charles H. Updegraff, Jr.
|
Date
|
President and Chief Executive Officer
|
November 7, 2011
|
By: /s/ Mark A. Hughes
|
Date
|
Treasurer and Chief Financial Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Citizens & Northern Corporation;
|
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
November 7, 2011
|
By:
|
/s/ Charles H. Updegraff, Jr.
|
Date
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Citizens & Northern Corporation;
|
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
November 7, 2011
|
By
|
/s/ Mark A. Hughes
|
Date
|
Treasurer and Chief Financial Officer
|
November 7, 2011
|
By:
|
/s/ Charles H. Updegraff, Jr.
|
Date
|
President and Chief Executive Officer
|
|
November 7, 2011
|
By:
|
/s/ Mark A. Hughes
|
Date
|
Treasurer and Chief Financial Officer
|
Consolidated Balance Sheet (parenthetical) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Consolidated Balance Sheet | ||
Preferred Stock, Par value | $ 1,000 | $ 1,000 |
Preferred Stock, Shares Authorized | 30,000 | 30,000 |
Preferred Stock, Liquidation Preference Per Share | $ 1,000 | $ 1,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par Value | $ 1.00 | $ 1.00 |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Shares, Issued | 12,447,219 | 12,408,212 |
Treasury Stock, Shares | 306,589 | 254,614 |
Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 03, 2011 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2011 | |
Entity Registrant Name | CITIZENS & NORTHERN CORP | |
Entity Central Index Key | 0000810958 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 12,138,191 |
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'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Securities | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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SECURITIES | 5. SECURITIES
Amortized cost and fair value of available-for-sale securities at September 30, 2011 and December 31, 2010 are summarized as follows:
The following table presents gross unrealized losses and fair value of available-for-sale securities with unrealized loss positions that are not deemed to be other-than-temporarily impaired, aggregated by length of time that individual securities have been in a continuous unrealized loss position at September 30, 2011 and December 31, 2010:
Gross realized gains and losses from available-for-sale securities (including OTTI losses in gross realized losses) and the related income tax provision were as follows:
The maturities of available-for-sale debt securities at September 30, 2011 are summarized as follows:
Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Corporation intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery.
The Corporation recognized net impairment losses in earnings, as follows:
A summary of information management considered in evaluating debt and equity securities for OTTI at September 30, 2011 is provided below.
Debt Securities
At September 30, 2011, management performed an assessment for possible OTTI of the Corporation's debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Corporation's investment, as well as management's perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of these debt securities, including municipal bonds with no external ratings, at September 30, 2011 to be temporary.
The credit rating agencies have withdrawn their ratings on numerous municipal bonds held by the Corporation. At September 30, 2011, the total amortized cost basis of municipal bonds with no external credit ratings was $25,422,000, with an aggregate unrealized loss of $991,000. At the time of purchase, each of these bonds was considered investment grade and had been rated by at least one credit rating agency. The bonds for which the ratings were removed were almost all insured by an entity that has reported significant financial problems and declines in its regulatory capital ratios, and most of the ratings were removed in the fourth quarter 2009. However, the insurance remains in effect on the bonds, and none of the affected municipal bonds has failed to make a scheduled interest payment.
Included in the total amounts of bonds with no external credit ratings, in the paragraph above, is one municipal bond that had been downgraded from "A" to "BB" (less than investment grade) in the second quarter 2011. The external credit rating agency cited extended delays in the issuer's publication of financial statements as one of the major reasons for the downgrade. In the third quarter 2011, the external credit rating agency removed its rating, again citing the lack of available financial information. At September 30, 2011, the bond had an amortized cost basis of $1,128,000, with an unrealized gain of $91,000.
The following table provides information related to trust preferred securities issued by individual institutions as of September 30, 2011:
NR = not rated.
Management assesses each of the trust preferred securities issued by individual institutions for the possibility of OTTI by reviewing financial information that is publicly available. Neither Astoria Financial Corporation nor Susquehanna Bancshares, Inc. has deferred or defaulted on payments associated with the Corporation's securities.
The Corporation recognized OTTI charges in 2009 and 2010 related to the Carolina First Mortgage Loan Trust security. In the fourth quarter 2010, The Toronto-Dominion Bank acquired The South Financial Group, Inc., the parent company of Carolina First. After the acquisition, The Toronto-Dominion Bank made a payment for the full amount of previously deferred interest and resumed quarterly payments on the security. The Corporation recognized a material change in the expected cash flows in the fourth quarter 2010. The Corporation recorded $229,000 in accretion income during the third quarter 2011 and accretion income totaling $500,000 in the first nine months of 2011. Management expects to record accretion income to offset the previous OTTI charges over the security's remaining life, through May 2012.
Pooled trust-preferred securities are very long-term (usually 30-year maturity) instruments, mainly issued by banks. The Corporation's investments in pooled trust-preferred securities are each made up of companies with geographic and size diversification. Almost all of the Corporation's pooled trust-preferred securities are composed of debt issued by banking companies, with lesser amounts issued by insurance companies. Some of the issuers of trust-preferred securities that are included in the Corporation's pooled investments have elected to defer payment of interest on these obligations (trust-preferred securities typically permit deferral of quarterly interest payments for up to five years), and some issuers have defaulted.
Management evaluated pooled trust-preferred securities for OTTI by estimating the cash flows expected to be received from each security, taking into account estimated levels of deferrals and defaults by the underlying issuers. In determining cash flows, management assumed all issuers currently deferring or in default would make no future payments, and assigned estimated future default levels for the remaining issuers in each security based on financial strength ratings assigned by a national ratings service. Management calculated the present value of each security based on the current book yield, adjusted for future changes in 3-month LIBOR (which is the index rate on the Corporation's adjustable-rate pooled trust-preferred securities) based on the applicable forward curve. Management's estimates of cash flows used to evaluate other-than-temporary impairment of pooled trust-preferred securities were based on sensitive assumptions regarding the timing and amounts of defaults that may occur, and changes in those assumptions could produce different conclusions for each security.
During the first quarter 2011, management sold the Corporation's holding of the mezzanine tranche of MMCAPS Funding I, Ltd. The security was sold for aggregate pretax proceeds of $1,485,000, which was recorded as a gain on the sale of securities in the first quarter.
The following table provides detailed information related to pooled trust preferred securities – mezzanine tranches held as of September 30, 2011:
As of September 30, 2011, the Corporation's investment in a senior tranche security (the senior tranche of MMCAPS Funding I, Ltd.) had an investment grade rating. The senior tranche security, with an amortized cost of $7,914,000, has been subjected to impairment analysis based on estimated cash flows (using the process described above), and management has determined that impairment was temporary as of September 30, 2011. The table that follows provides additional information related to the senior tranche of MMCAPS Funding I, Ltd.:
(1) Ratings information is as of September 30, 2011. Fitch has the senior tranche of MMCAPS Funding I, Ltd. on negative outlook.
In the table above, "Excess Subordination as % of Performing Collateral" (Excess Subordination Ratio) was calculated as follows: (Total face value of performing collateral – Face value of all outstanding note balances not subordinate to our investment)/Total face value of performing collateral.
The Excess Subordination Ratio measures the extent to which there may be tranches within the pooled trust preferred structure available to absorb credit losses before the Corporation's security would be impacted. The positive Excess Subordination Ratio signifies there is some support from subordinate tranches available to absorb losses before the Corporation's investment would be impacted.
The Corporation separates OTTI related to the trust-preferred securities into (a) the amount of the total impairment related to credit loss, which is recognized in the statement of earnings, and (b) the amount of the total impairment related to all other factors, which is recognized in other comprehensive income. The Corporation measures the credit loss component of OTTI based on the difference between: (1) the present value of estimated cash flows, at the book yield in effect prior to recognition of any OTTI, as of the most recent balance sheet date, and (2) the present value of estimated cash flows as of the previous quarter-end balance sheet date based on management's cash flow assumptions at that time.
The Corporation recorded no OTTI losses related to pooled trust-preferred securities in the three-month or nine-month periods ended September 30, 2011. The Corporation recorded no OTTI losses related to pooled trust-preferred securities in the three months ended September 30, 2010. Total OTTI from pooled trust-preferred securities in the nine months ended September 30, 2010 amounted to $51,000, including a pre-tax loss reflected in earnings of $103,000, with a pre-tax other comprehensive gain of $52,000 included in other comprehensive income.
A roll-forward of the credit losses from securities for which a portion of OTTI has been recognized in other comprehensive income is as follows:
The line item labeled "Reduction for securities losses realized during the period" in the table immediately above includes OTTI write-downs associated with securities the Corporation continues to hold, but which have been deemed worthless.
Equity Securities
The Corporation's marketable equity securities at September 30, 2011 and December 31, 2010 consisted exclusively of stocks of banking companies. The Corporation recorded no OTTI losses related to bank stocks in the three-month or nine-month periods ended September 30, 2011. The Corporation recorded no OTTI losses related to bank stocks in the third quarter 2010 but recorded OTTI totaling $10,000 in the first nine months of 2010. Management's decision to record OTTI losses on bank stocks in 2010 was based on a combination of: (1) significant market depreciation in market prices in the first quarter 2009 (with some improvement subsequent to June 30, 2009), and (2) management's intent to sell some of the stocks to generate capital losses, which could be carried back and offset against capital gains generated in previous years to realize tax refunds. At September 30, 2011, management did not intend to sell impaired bank stocks, and based on the intent to hold the securities for the foreseeable future and other factors specific to the securities, has determined that none of the Corporation's bank stock holdings at September 30, 2011 were other than temporarily impaired.
During the three months ended September 30, 2011, the Corporation did not sell any bank stocks and did not realize any gains or losses. Realized gains from sales of bank stocks totaled $91,000 in the nine months ended September 30, 2011 including $89,000 of realized gains from sales of stocks for which OTTI had been previously recognized. Realized gains from sales of bank stocks totaled $93,000 in the three months ended September 30, 2010 including $59,000 of realized gains from sales of stocks for which OTTI had been previously recognized. Realized gains from sales of bank stocks totaled $576,000 in the nine months ended September 30, 2010 including $385,000 of realized gains from sales of stocks for which OTTI had been previously recognized.
C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 12 regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. There is no active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated. C&N Bank's investment in FHLB-Pittsburgh stock, included in Other Assets in the consolidated balance sheet, was $6,992,000 at September 30, 2011 and $8,156,000 at December 31, 2010. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at September 30, 2011 and December 31, 2010. In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.
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Impairment of Limited Partnership Investment | 9 Months Ended |
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Sep. 30, 2011 | |
Impairment of Limited Partnership Investment | |
IMPAIRMENT OF LIMITED PARTNERSHIP INVESTMENT | 10. IMPAIRMENT OF LIMITED PARTNERSHIP INVESTMENT
In the first quarter 2011, the Corporation reported an impairment loss of $948,000 related to an investment in a real estate limited partnership. This investment had been included in Other Assets in the consolidated balance sheet at December 31, 2010. In addition to the limited partnership investment, the Corporation has a loan receivable from the limited partnership of $1,040,000 at September 30, 2011. Based on updated financial information, management prepared an estimated valuation based on cash flow analysis. That analysis showed the estimated return to the Corporation would be sufficient to repay the loan in full, but would not provide sufficient additional cash flow for return on the limited partnership investment. Accordingly, management made the decision to completely write-off the limited partnership investment in the first quarter 2011. |
Basis of Interim Presentation | 9 Months Ended |
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Basis of Interim Presentation | |
BASIS OF INTERIM PRESENTATION | 1. BASIS OF INTERIM PRESENTATION
The consolidated financial information included herein, with the exception of the consolidated balance sheet dated December 31, 2010, is unaudited. Such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations, cash flows and changes in stockholders' equity for the interim periods; however, the information does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP") for a complete set of financial statements. Certain 2010 information has been reclassified for consistency with the 2011 presentation.
Operating results reported for the three-month and nine-month periods ended September 30, 2011 might not be indicative of the results for the year ending December 31, 2011. The Corporation evaluates subsequent events through the date of filing with the Securities and Exchange Commission. |
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DEFINED BENEFIT PLANS | 7. DEFINED BENEFIT PLANS
The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits and life insurance to employees who meet certain age and length of service requirements. This plan contains a cost-sharing feature, which causes participants to pay for all future increases in costs related to benefit coverage. Accordingly, actuarial assumptions related to health care cost trend rates do not significantly affect the liability balance at September 30, 2011 and December 31, 2010, and will not affect the Corporation's future expenses. The Corporation uses a December 31 measurement date for the postretirement plan.
In 2007, the Corporation assumed the Citizens Trust Company Retirement Plan, a defined benefit pension plan for which benefit accruals and participation were frozen in 2002. Information related to the Citizens Trust Company Retirement Plan has been included in the table that follows. The Corporation uses a December 31 measurement date for this plan.
The components of net periodic benefit costs from these defined benefit plans are as follows:
In the first nine months of 2011, the Corporation funded postretirement contributions totaling $44,000, with estimated annual postretirement contributions of $59,000 expected in 2011 for the full year. The Corporation made a contribution to the defined benefit pension plan of $4,000 in the first quarter of 2011. Based upon the related actuarial reports, the Corporation has no required further contributions to the Citizens Trust Company Retirement Plan for the 2011 plan year; however, the Corporation may elect to make discretionary contributions later in 2011.
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Contingencies | 9 Months Ended |
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Sep. 30, 2011 | |
Contingencies | |
CONTINGENCIES | 12. CONTINGENCIES
In the normal course of business, the Corporation may be subject to pending and threatened lawsuits in which claims for monetary damages could be asserted. In management's opinion, the Corporation's financial position and results of operations would not be materially affected by the outcome of such pending legal proceedings. |
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STOCK-BASED COMPENSATION PLANS | 8. STOCK-BASED COMPENSATION PLANS
In January 2011, the Corporation granted options to purchase a total of 93,674 shares of common stock through its Stock Incentive and Independent Directors Stock Incentive Plans. The exercise price for the 2011 awards is $15.06 per share, based on the market price as of the date of grant. In 2010, the Corporation made no awards of stock options. Stock option expense is recognized over the vesting period of each option. The Corporation expects total stock option expense for the year ending December 31, 2011 to be $279,000, which is the amount recognized for the first nine months of 2011.
The Corporation records stock option expense based on estimated fair value calculated using an option valuation model. In calculating the 2011 fair value, the Corporation utilized the Black-Scholes-Merton option-pricing model. The calculated fair value of each option granted, and significant assumptions used in the calculations, are as follows:
In calculating the estimated fair value of 2011 stock option awards, management based its estimates of volatility and dividend yield on the Corporation's experience over the immediately prior period of time consistent with the estimated lives of the options. The risk-free interest rate was based on the published yield of zero-coupon U.S. Treasury strips with an applicable maturity as of the grant dates. The 8-year expected option life was based on management's estimates of the average term for all options issued under both plans. Management assumed a 33% forfeiture rate for options granted under the Stock Incentive Plan, and a 0% forfeiture rate for the Directors Stock Incentive Plan. These estimated forfeiture rates were determined based on the Corporation's historical experience.
In January 2011, the Corporation awarded a total of 15,622 shares of restricted stock under the Stock Incentive and Independent Directors Stock Incentive Plans. Compensation cost related to restricted stock is recognized based on the market price of the stock at the grant date over the vesting period. For restricted stock awards granted under the Stock Incentive Plan, the Corporation must meet an annual targeted return on average equity ("ROAE") performance ratio, as defined, in order for participants to vest. Management has estimated restricted stock expense in the first nine months of 2011 based on an assumption that the ROAE target for 2011 will be met. In the first quarter 2010, the Corporation awarded 9,125 shares of restricted stock to the Chief Executive Officer under the Stock Incentive Plan. This award provides that vesting will occur upon the earliest of (i) the third anniversary of the date of grant, (ii) death or disability or (iii) the occurrence of a change in control of the Corporation.
Total stock-based compensation expense is as follows:
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Loans | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS | 6. LOANS
The loans receivable portfolio is segmented into residential mortgage, commercial and consumer loans. The residential mortgage segment includes the following classes: first and junior lien residential mortgages, home equity lines of credit and residential construction loans. The most significant classes of commercial loans are commercial loans secured by real estate, non-real estate secured commercial and industrial loans, loans to political subdivisions, commercial construction and land loans, and loans secured by farmland.
Loans outstanding at September 30, 2011 and December 31, 2010 are summarized as follows:
The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in the Pennsylvania and New York counties that comprise the market serviced by Citizens & Northern Bank. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors' ability to honor their contracts is dependent on the local economic conditions within the region. There is no concentration of loans to borrowers engaged in similar businesses or activities that exceed 10% of total loans at either September 30, 2011 or December 31, 2010.
The Corporation maintains an allowance for loan losses that represents management's estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In the process of evaluating the loan portfolio, management also considers the Corporation's exposure to losses from unfunded loan commitments. As of September 30, 2011 and December 31, 2010, management determined that no allowance for credit losses related to unfunded loan commitments was required.
Transactions within the allowance for loan losses, summarized by segment and class, for the year to date and the most recent quarter were as follows:
In the evaluation of the loan portfolio, management determines two major components for the allowance for loan losses – (1) a specific component based on an assessment of certain larger relationships, mainly commercial purpose loans, on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics. The general component is assigned to each pool of loans based on both historical net charge-off experience, and an evaluation of certain qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the above methodologies for estimating specific and general losses in the portfolio. In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as "Special Mention," "Substandard," or "Doubtful" on the basis of currently existing facts, conditions and values. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management's close attention, are deemed to be Special Mention. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the "Pass" column in the table below.
The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of September 30, 2011 and December 31, 2010:
The general component of the allowance for loan losses covers pools of loans by loan class including commercial loans not considered individually impaired, as well as smaller balance homogeneous classes of loans, such as residential real estate, home equity lines of credit and other consumer loans. Accordingly, the Corporation generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement. The pools of loans for each loan segment are evaluated for loss exposure based upon three-year average historical net charge-off rates, adjusted for qualitative factors. Qualitative risk factors (described in the following paragraph) are evaluated for the impact on each of the three distinct segments (residential mortgage, commercial and consumer) within the loan portfolio. Each qualitative factor is assigned a value to reflect improving, stable or declining conditions based on management's judgment using relevant information available at the time of the evaluation. Any adjustments to the factors are supported by a narrative documentation of changes in conditions accompanying the allowance for loan loss calculation.
The qualitative factors used in the general component calculations are designed to address credit risk characteristics associated with each segment. The Corporation's credit risk associated with all of the segments is significantly impacted by these factors, which include economic conditions within its market area, the Corporation's lending policies, changes or trends in the portfolio, risk profile, competition, regulatory requirements and other factors. Further, the residential mortgage segment is significantly affected by the values of residential real estate that provide collateral for the loans. The majority of the Corporation's commercial segment loans (approximately 68% at September 30, 2011) is secured by real estate, and accordingly, the Corporation's risk for the commercial segment is significantly affected by commercial real estate values. The consumer segment includes a wide mix of loans for different purposes, primarily secured loans, including loans secured by motor vehicles, manufactured housing and other types of collateral.
Loans are classified as impaired, when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial loans, by the fair value of the collateral (if the loan is collateral dependent), by future cash flows discounted at the loan's effective rate or by the loan's observable market price.
The scope of loans evaluated individually for impairment include all loan relationships greater than $200,000 for which there is at least one extension of credit graded Special Mention, Substandard or Doubtful. Also, all loans classified as troubled debt restructurings (discussed in more detail below) and all loan relationships less than $200,000 in the aggregate, but with an estimated loss of $100,000 or more, are individually evaluated for impairment. Loans that are individually evaluated for impairment, but which are not determined to be impaired, are combined with all remaining loans that are not reviewed on a specific basis, and such loans are included within larger pools of loans based on similar risk and loss characteristics for purposes of determining the general component of the allowance. The loans that have been individually evaluated, but which have not been determined to be impaired, are included in the "Collectively Evaluated" column in the tables summarizing the allowance and associated loan balances as of September 30, 2011 and December 31, 2010.
The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of September 30, 2011 and December 31, 2010:
Summary information related to impaired loans as of September 30, 2011 and December 31, 2010 is as follows:
The average investment in impaired loans was $7,654,000 for the nine months ended September 30, 2011 compared to $6,142,000 for the year 2010. Interest income recognized on impaired loans was $172,000 for the nine months ended September 30, 2011 compared to $204,000 for the year 2010 with all interest recognized on a cash basis.
Loans are placed on nonaccrual status for all classes of loans when, in the opinion of management, collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on loans for which the risk of further loss is greater than remote are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. Also, the amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status.
The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows:
The amounts shown in the table immediately above include loans classified as troubled debt restructurings (described in more detail below), if such loans are past due ninety days or more or nonaccrual.
The table below presents a summary of the contractual aging of loans as of September 30, 2011 and December 31, 2010:
Nonaccrual loans are included in the contractual aging immediately above and on the previous page. A summary of the contractual aging of nonaccrual loans at September 30, 2011 and December 31, 2010 is as follows:
Loans whose terms are modified are classified as Troubled Debt Restructurings (TDRs) if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired. In April 2011, the FASB issued ASU 2011-02, Receivables (Topic 310) - A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The Update provides guidance in evaluating whether a restructuring constitutes a TDR. The Update was effective for the Corporation for the three-month and nine-month periods ended September 30, 2011, with retrospective application to January 1, 2011. As a result of implementing the Update, the Corporation newly identified loans as impaired with a total balance of $1,535,000 at September 30, 2011. Based on the Corporation's analysis, no allowance for loan losses was recorded on those loans at September 30, 2011.
The outstanding balance of loans subject to TDRs, as well as contractual aging information at September 30, 2011 and December 31, 2010 is as follows:
Troubled Debt Restructurings (TDRs)
TDRs that occurred during the three-month and nine-month periods ended September 30, 2011 are as follows:
The TDR in the third quarter 2011 in the table above stems from a forbearance agreement entered into with a commercial customer. The total principal balance of loans included in the forbearance agreement was $1,588,000, of which the Corporation had charged off $663,000 in the second quarter 2011. Under the terms of the forbearance agreement, the Corporation agreed to accept payment of less than the total principal amount of the loans, assuming payment is received by December 1, 2011. The forbearance agreement provides that, if the Corporation does not receive the reduced payment amount per the agreement, the Corporation's agreement to accept less than full principal, interest and fees on the loans would expire.
Other TDRs in the nine-month period ended September 30, 2011 included extensions of terms and maturities at lower than current market rates and acceptance of interest-only payments for extended periods of time.
There were no changes in the allowance for loan losses at September 30, 2011 resulting from the TDRs that occurred in the three-month and nine-month periods ended September 30, 2011.
Defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months are as follows:
The events of default in the table above resulted from the borrowers' failure to make payments due at maturity, based on loan maturity dates that had been extended from their original due dates. At September 30, 2011, the Corporation evaluated loans to the borrowers who defaulted subsequent to restructurings, in determining the specific allowance for loan loss amounts related to the underlying loans. Based on the estimated value of the underlying collateral, net of estimated costs to sell the collateral, the Corporation determined that no allowance for loan losses was required for these loans at September 30, 2011. |
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PER COMMON SHARE DATA | 2. PER COMMON SHARE DATA
Net income per share is based on the weighted-average number of shares of common stock outstanding. The following data show the amounts used in computing basic and diluted net income per share. As shown in the table that follows, diluted earnings per share is computed using weighted average common shares outstanding, plus weighted-average common shares available from the exercise of all dilutive stock options, less the number of shares that could be repurchased with the proceeds of stock option exercises based on the average share price of the Corporation's common stock during the period.
Stock options and a warrant that were anti-dilutive were excluded from net income per share calculations. Weighted-average common shares available from anti-dilutive instruments totaled 224,651 shares in the nine-month period ended September 30, 2011, 424,179 shares in the nine months ended September 30, 2010, 223,463 shares in the third quarter 2011 and 362,738 shares in the third quarter 2010. All instruments for 2010 were anti-dilutive. |
Comprehensive Income | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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COMPREHENSIVE INCOME | 3. COMPREHENSIVE INCOME
Comprehensive income is the total of (1) net income, and (2) all other changes in equity from non-stockholder sources, which are referred to as other comprehensive income. The components of comprehensive income, and the related tax effects, are as follows:
The Corporation recognized other comprehensive income of $52,000 before income tax ($34,000 after income tax) related to available-for-sale debt securities for which a portion of an other-than-temporary impairment (OTTI) loss has been recognized in earnings in the nine months ended September 30, 2010, with no other comprehensive income in the third quarter 2010. |
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