|
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934 For the quarterly period ended June 30, 2011.
|
|
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____ to ____.
|
Pennsylvania
|
23-2486815
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
50 South 16th Street, Philadelphia, Pennsylvania
|
19102
|
(Address of principal executive offices)
|
(Zip code)
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]
|
|
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [X ] NO [ ]
|
|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer [ ]
|
Accelerated filer [ ]
|
Non-Accelerated filer [ ]
(Do not check if a smaller reporting company)
|
Smaller reporting company [X]
|
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]
|
|
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.
|
Common Stock, $0.01 per share
|
25,972,897
|
Title of Class
|
Number of Shares Outstanding as of August 8, 2011
|
REPUBLIC FIRST BANCORP, INC. AND SUBSIDIARIES
|
||
TABLE OF CONTENTS
|
||
Part I: Financial Information
|
Page
|
|
Item 1.
|
Financial Statements
|
|
Consolidated balance sheets as of June 30, 2011 (unaudited) and December 31, 2010
|
||
Consolidated statements of operations for the three and six months ended June 30, 2011 and 2010 (unaudited)
|
||
Consolidated statements of cash flows for the six months ended June 30, 2011 and 2010 (unaudited)
|
||
Consolidated statements of changes in shareholders’ equity for the six months ended June 30, 2011 and 2010 (unaudited)
|
||
Notes to consolidated financial statements (unaudited)
|
||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
Item 4.
|
Controls and Procedures
|
|
Part II: Other Information
|
||
Item 1.
|
Legal Proceedings
|
|
Item 1A.
|
Risk Factors
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Item 3.
|
Defaults Upon Senior Securities
|
|
Item 4.
|
(Removed and Reserved)
|
|
Item 5.
|
Other Information
|
|
Item 6.
|
Exhibits
|
|
Signatures
|
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
ASSETS
|
||||||||
Cash and due from banks
|
$
|
10,164
|
$
|
6,146
|
||||
Interest bearing deposits with banks
|
12,011
|
29,620
|
||||||
Federal funds sold
|
1.457
|
99
|
||||||
Cash and cash equivalents
|
23,632
|
35,865
|
||||||
Investment securities available for sale, at fair value
|
162,222
|
143,439
|
||||||
Investment securities held to maturity, at amortized cost (fair value of $146 and $157, respectively)
|
139
|
147
|
||||||
Restricted stock, at cost
|
5,881
|
6,501
|
||||||
Loans held for sale
|
5,827
|
—
|
||||||
Loans receivable (net of allowance for loan losses of $15,108 and $11,444, respectively)
|
624,280
|
608,911
|
||||||
Premises and equipment, net
|
24,342
|
25,496
|
||||||
Other real estate owned, net
|
13,109
|
15,237
|
||||||
Accrued interest receivable
|
3,129
|
3,119
|
||||||
Bank owned life insurance
|
12,621
|
12,555
|
||||||
Other assets
|
25,710
|
24,827
|
||||||
Total Assets
|
$
|
900,892
|
$
|
876,097
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Demand – non-interest bearing
|
$
|
113,641
|
$
|
128,578
|
||||
Demand – interest bearing
|
97,149
|
66,283
|
||||||
Money market and savings
|
321,971
|
329,742
|
||||||
Time Deposits
|
250,341
|
233,127
|
||||||
Total Deposits
|
783,102
|
757,730
|
||||||
Accrued interest payable
|
1,431
|
953
|
||||||
Other liabilities
|
6,718
|
6,792
|
||||||
Subordinated debt
|
22,476
|
22,476
|
||||||
Total Liabilities
|
813,727
|
787,951
|
||||||
Shareholders’ Equity
|
||||||||
Preferred stock, par value $0.01 per share: 10,000,000 shares authorized; no shares issued as of June 30, 2011 and December 31, 2010
|
—
|
—
|
||||||
Common stock, par value $0.01 per share: 50,000,000 shares authorized; shares issued 26,501,742 as of June 30, 2011 and December 31, 2010
|
265
|
265
|
||||||
Additional paid in capital
|
106,192
|
106,024
|
||||||
Accumulated deficit
|
(16,128
|
)
|
(13,140
|
)
|
||||
(3,099
|
)
|
(3,099
|
)
|
|||||
Stock held by deferred compensation plan
|
(809
|
)
|
(809
|
)
|
||||
Accumulated other comprehensive income (loss)
|
744
|
(1,095
|
)
|
|||||
Total Shareholders’ Equity
|
87,165
|
88,146
|
||||||
Total Liabilities and Shareholders’ Equity
|
$
|
900,892
|
$
|
876,097
|
||||
For the Three Months Ended
|
For the Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Interest income:
|
||||||||||||||||
Interest and fees on taxable loans
|
$
|
8,306
|
$
|
8,675
|
$
|
16,449
|
$
|
17,434
|
||||||||
Interest and fees on tax-exempt loans
|
81
|
-
|
149
|
-
|
||||||||||||
Interest and dividends on taxable investment securities
|
1,122
|
1,435
|
2,118
|
2,977
|
||||||||||||
Interest and dividends on tax-exempt investment securities
|
114
|
108
|
227
|
222
|
||||||||||||
Interest on federal funds sold and other interest-earning assets
|
34
|
16
|
48
|
36
|
||||||||||||
Total interest income
|
9,657
|
10,234
|
18,991
|
20,669
|
||||||||||||
Interest expense:
|
||||||||||||||||
Demand- interest bearing
|
168
|
125
|
266
|
207
|
||||||||||||
Money market and savings
|
860
|
912
|
1,659
|
1,962
|
||||||||||||
Time deposits
|
825
|
1,239
|
1,546
|
2,644
|
||||||||||||
Other borrowings
|
278
|
447
|
574
|
936
|
||||||||||||
Total interest expense
|
2,131
|
2,723
|
4,045
|
5,749
|
||||||||||||
Net interest income
|
7,526
|
7,511
|
14,946
|
14,920
|
||||||||||||
Provision for loan losses
|
1,500
|
10,750
|
5,050
|
16,250
|
||||||||||||
Net interest income (loss) after provision for loan losses
|
6,026
|
(3,239
|
)
|
9,896
|
(1,330
|
)
|
||||||||||
Non-interest income:
|
||||||||||||||||
Loan advisory and servicing fees
|
119
|
96
|
156
|
153
|
||||||||||||
Gain on sales of SBA loans
|
1,657
|
-
|
2,354
|
-
|
||||||||||||
Service fees on deposit accounts
|
201
|
251
|
370
|
533
|
||||||||||||
Other-than-temporary impairment losses
|
(4
|
)
|
355
|
(4
|
)
|
(710
|
)
|
|||||||||
Portion recognized in other comprehensive income (before taxes)
|
2
|
(578
|
)
|
2
|
338
|
|||||||||||
Net impairment loss on investment securities
|
(2
|
)
|
(223
|
)
|
(2
|
)
|
(372
|
)
|
||||||||
Gain on sale of other real estate owned
|
-
|
46
|
-
|
246
|
||||||||||||
Bank owned life insurance income
|
36
|
51
|
66
|
102
|
||||||||||||
Other non-interest income
|
65
|
33
|
259
|
67
|
||||||||||||
Total non-interest income
|
2,076
|
254
|
3,203
|
729
|
||||||||||||
Non-interest expenses:
|
||||||||||||||||
Salaries and employee benefits
|
3,807
|
2,988
|
7,145
|
5,918
|
||||||||||||
Occupancy
|
789
|
975
|
1,644
|
2,496
|
||||||||||||
Depreciation and amortization
|
533
|
486
|
1,061
|
968
|
||||||||||||
Legal
|
579
|
418
|
874
|
953
|
||||||||||||
Other real estate owned
|
65
|
412
|
1,424
|
952
|
||||||||||||
Advertising
|
85
|
30
|
190
|
95
|
||||||||||||
Data processing
|
271
|
235
|
518
|
453
|
||||||||||||
Insurance
|
220
|
373
|
437
|
535
|
||||||||||||
Professional fees
|
454
|
379
|
888
|
890
|
||||||||||||
Regulatory assessments and costs
|
560
|
562
|
1,043
|
1,073
|
||||||||||||
Taxes, other
|
232
|
217
|
445
|
443
|
||||||||||||
Other operating expenses
|
1,416
|
878
|
2,334
|
1,582
|
||||||||||||
Total non-interest expense
|
9,011
|
7,953
|
18,003
|
16,358
|
||||||||||||
Loss before benefit for income taxes
|
(909
|
)
|
(10,938
|
)
|
(4,904
|
)
|
(16,959
|
)
|
||||||||
Benefit for income taxes
|
(429
|
)
|
(3,883
|
)
|
(1,916
|
)
|
(6,042
|
)
|
||||||||
Net loss
|
$
|
(480
|
)
|
$
|
(7,055
|
)
|
$
|
(2,988
|
)
|
$
|
(10,917
|
)
|
||||
Net loss per share:
|
||||||||||||||||
Basic
|
$
|
(0.02
|
)
|
$
|
(0.60
|
)
|
$
|
(0.12
|
)
|
$
|
(0.98
|
)
|
||||
Diluted
|
$
|
(0.02
|
)
|
$
|
(0.60
|
)
|
$
|
(0.12
|
)
|
$
|
(0.98
|
)
|
Six Months Ended
June 30,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(2,988
|
)
|
$
|
(10,917
|
)
|
||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
||||||||
Provision for loan losses
|
5,050
|
16,250
|
||||||
Writedown of other real estate owned
|
1,118
|
885
|
||||||
Gain on sale of other real estate owned
|
-
|
(246
|
)
|
|||||
Depreciation and amortization
|
1,061
|
968
|
||||||
Share based compensation
|
168
|
120
|
||||||
Impairment charges on investment securities
|
2
|
372
|
||||||
Amortization of premiums/(discounts) on investment securities
|
45
|
27
|
||||||
Proceeds from sales of SBA loans
|
25,895
|
-
|
||||||
SBA loans originated for sale
|
(29,368
|
)
|
-
|
|||||
Gains on sales of SBA loans originated for sale
|
(2,354
|
)
|
-
|
|||||
Increase in value of bank owned life insurance
|
(66
|
)
|
(102
|
)
|
||||
Increase in accrued interest receivable and other assets
|
(1,456
|
)
|
(4,145
|
)
|
||||
Increase in accrued interest payable and other liabilities
|
404
|
698
|
||||||
Net cash (used in) provided by operating activities
|
(2,489
|
)
|
3,910
|
|||||
Cash flows from investing activities:
|
||||||||
Purchase of investment securities available for sale
|
(24,886
|
)
|
-
|
|||||
Proceeds from the maturity or call of securities available for sale
|
8,924
|
13,384
|
||||||
Proceeds from the maturity or call of securities held to maturity
|
8
|
9
|
||||||
Proceeds from redemption of FHLB stock
|
620
|
-
|
||||||
Net (increase) decrease in loans
|
(20,419
|
)
|
5,252
|
|||||
Net proceeds from sale of other real estate owned
|
1,010
|
2,988
|
||||||
Premises and equipment expenditures
|
(373
|
)
|
(239
|
)
|
||||
Net cash (used in) provided by investing activities
|
(35,116
|
)
|
21,394
|
|||||
Cash flows from financing activities:
|
||||||||
Net proceeds from stock offering
|
-
|
28,100
|
||||||
Net stock purchases for deferred compensation plans
|
-
|
(100
|
)
|
|||||
Net increase (decrease) in demand, money market and savings deposits
|
8,158
|
(12,045
|
)
|
|||||
Net increase (decrease) in time deposits
|
17,214
|
(65,638
|
)
|
|||||
Net decrease in other borrowings
|
-
|
(25,000
|
)
|
|||||
Net increase in short term borrowings
|
-
|
9,149
|
||||||
Net cash provided by (used in) financing activities
|
25,372
|
(65,534
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(12,233
|
)
|
(40,230
|
)
|
||||
Cash and cash equivalents, beginning of year
|
35,865
|
55,618
|
||||||
Cash and cash equivalents, end of year
|
$
|
23,632
|
$
|
15,388
|
||||
Supplemental disclosures:
|
||||||||
Interest paid
|
$
|
3,567
|
$
|
5,428
|
||||
Non-cash transfers from loans to other real estate owned
|
-
|
663
|
||||||
Common
Stock
|
Additional
Paid in
Capital
|
Accumulated Deficit
|
Treasury
Stock
|
Stock Held by Deferred Compensation Plan
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||
BALANCE, JANUARY 1, 2011
|
$ | 265 | $ | 106,024 | $ | (13,140 | ) | $ | (3,099 | ) | $ | (809 | ) | $ | (1,095 | ) | $ | 88,146 | ||||||||||
Net loss
|
(2,988 | ) | (2,988 | ) | ||||||||||||||||||||||||
Other comprehensive gain, net of tax:
|
||||||||||||||||||||||||||||
Unrealized gain on securities (pre-tax $2,868)
|
1,838 | 1,838 | ||||||||||||||||||||||||||
Reclassification adjustment for impairment charge (pre-tax $2)
|
1 | 1 | ||||||||||||||||||||||||||
1,839 | ||||||||||||||||||||||||||||
Total comprehensive loss
|
(1,149 | ) | ||||||||||||||||||||||||||
Stock based compensation
|
$ | 168 | 168 | |||||||||||||||||||||||||
BALANCE, JUNE 30, 2011
|
$ | 265 | $ | 106,192 | $ | (16,128 | ) | $ | (3,099 | ) | $ | (809 | ) | $ | 744 | $ | 87,165 | |||||||||||
Common
Stock
|
Additional
Paid in
Capital
|
Accumulated Deficit
|
Treasury
Stock
|
Stock Held by Deferred Compensation Plan
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||
BALANCE, JANUARY 1, 2010
|
$
|
111
|
$
|
77,086
|
$
|
(2,450
|
)
|
$
|
(3,099
|
)
|
$
|
(709
|
)
|
$
|
(675
|
)
|
$
|
70,264
|
||||||||||
Net loss
|
(10,917
|
)
|
(10,917
|
)
|
||||||||||||||||||||||||
Other comprehensive gain, net of tax:
|
||||||||||||||||||||||||||||
Unrealized gain on securities (pre-tax $1,648)
|
1,056
|
1,056
|
||||||||||||||||||||||||||
Reclassification adjustment for impairment charge (pre-tax $372)
|
238
|
238
|
||||||||||||||||||||||||||
1,294
|
||||||||||||||||||||||||||||
Total comprehensive loss
|
(9,623
|
)
|
||||||||||||||||||||||||||
Shares issued under common stock offering (15,000,000 shares)
|
150
|
27,950
|
28,100
|
|||||||||||||||||||||||||
Stock based compensation
|
-
|
120
|
120
|
|||||||||||||||||||||||||
Stock purchases for deferred compensation plan (24,489 shares)
|
(100
|
)
|
(100
|
)
|
||||||||||||||||||||||||
BALANCE, JUNE 30, 2010
|
$
|
261
|
$
|
105,156
|
$
|
(13,367
|
)
|
$
|
(3,099
|
)
|
$
|
(809
|
)
|
$
|
619
|
$
|
88,761
|
|||||||||||
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Basic and diluted earnings per share:
|
||||||||||||||||
Net loss
|
$
|
(480
|
)
|
$
|
(7,055
|
)
|
$
|
(2,988
|
)
|
$
|
(10,917
|
)
|
||||
Weighted average shares outstanding
|
25,973
|
11,707
|
25,973
|
11,142
|
||||||||||||
Net loss per share – basic and diluted
|
$
|
(0.02
|
)
|
$
|
(0.60
|
)
|
$
|
(0.12
|
)
|
$
|
(0.98
|
)
|
June 30, 2011
|
||||||||||||||||
Investment Securities Available for Sale
|
||||||||||||||||
(Dollars in thousands)
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair
Value
|
||||||||||||
Mortgage-backed securities/CMOs
|
$ | 140,791 | $ | 4,641 | $ | - | $ | 145,432 | ||||||||
Municipal securities
|
10,725 | 105 | (824 | ) | 10,006 | |||||||||||
Corporate bonds
|
3,000 | - | - | 3,000 | ||||||||||||
Pooled Trust Preferred Securities
|
6,415 | - | (2,750 | ) | 3,665 | |||||||||||
Other securities
|
131 | 2 | (14 | ) | 119 | |||||||||||
Total
|
$ | 161,062 | $ | 4,748 | $ | (3,588 | ) | $ | 162,222 | |||||||
June 30, 2011
|
||||||||||||||||
Investment Securities Held to Maturity
|
||||||||||||||||
(Dollars in thousands)
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair
Value
|
||||||||||||
U.S. Government agencies
|
$ | 2 | $ | - | $ | - | $ | 2 | ||||||||
Other securities
|
137 | 7 | - | 144 | ||||||||||||
Total
|
$ | 139 | $ | 7 | $ | - | $ | 146 | ||||||||
December 31, 2010
|
||||||||||||||||
Investment Securities Available for Sale
|
||||||||||||||||
(Dollars in thousands)
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair
Value
|
||||||||||||
Mortgage-backed securities/CMOs
|
$ | 125,011 | $ | 2,784 | $ | (133 | ) | $ | 127,662 | |||||||
Municipal securities
|
10,589 | 36 | (1,415 | ) | 9,210 | |||||||||||
Corporate bonds
|
3,000 | - | - | 3,000 | ||||||||||||
Pooled Trust Preferred Securities
|
6,417 | - | (2,967 | ) | 3,450 | |||||||||||
Other securities
|
131 | 2 | (16 | ) | 117 | |||||||||||
Total
|
$ | 145,148 | $ | 2,822 | $ | (4,531 | ) | $ | 143,439 | |||||||
December 31, 2010
|
||||||||||||||||
Investment Securities Held to Maturity
|
||||||||||||||||
(Dollars in thousands)
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair
Value
|
||||||||||||
U.S. Government agencies
|
$ | 2 | $ | - | $ | - | $ | 2 | ||||||||
Other securities
|
145 | 10 | - | 155 | ||||||||||||
Total
|
$ | 147 | $ | 10 | $ | - | $ | 157 | ||||||||
June 30, 2011
|
||||||||||||||||
Available for Sale
|
Held to Maturity
|
|||||||||||||||
(Dollars in thousands)
|
Amortized Cost
|
Estimated Fair Value
|
Amortized Cost
|
Estimated Fair Value
|
||||||||||||
Due in 1 year or less
|
$ | - | $ | - | $ | - | $ | - | ||||||||
After 1 year to 5 years
|
10 | 10 | 117 | 124 | ||||||||||||
After 5 years to 10 years
|
417 | 448 | 2 | 2 | ||||||||||||
After 10 years
|
160,635 | 161,764 | - | - | ||||||||||||
No stated maturity
|
- | - | 20 | 20 | ||||||||||||
Total
|
$ | 161,062 | $ | 162,222 | $ | 139 | $ | 146 |
At June 30, 2011
|
||||||||||||||||||||||||
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||
(Dollars in thousands)
|
Fair
Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
Municipal securities
|
$ | 3,238 | $ | 106 | $ | 3,996 | $ | 718 | $ | 7,234 | $ | 824 | ||||||||||||
Trust Preferred Securities
|
- | - | 3,665 | 2,750 | 3,665 | 2,750 | ||||||||||||||||||
Other securities
|
- | - | 76 | 14 | 76 | 14 | ||||||||||||||||||
Total
|
$ | 3,238 | $ | 106 | $ | 7,737 | $ | 3,482 | $ | 10,975 | $ | 3,588 |
At December 31, 2010
|
||||||||||||||||||||||||
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||
(Dollars in thousands)
|
Fair
Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
Mortgage-backed securities/CMOs
|
$ | 17,599 | $ | 133 | $ | 31 | $ | - | $ | 17,630 | $ | 133 | ||||||||||||
Municipal securities
|
5,288 | 398 | 3,599 | 1,017 | 8,887 | 1,415 | ||||||||||||||||||
Trust Preferred Securities
|
- | - | 3,450 | 2,967 | 3,450 | 2,967 | ||||||||||||||||||
Other securities
|
- | - | 74 | 16 | 74 | 16 | ||||||||||||||||||
Total
|
$ | 22,887 | $ | 531 | $ | 7,154 | $ | 4,000 | $ | 30,041 | $ | 4,531 |
(Dollars in thousands)
|
June 30,
2011
|
December 31, 2010
|
||||||
Commercial real estate
|
$ | 388,081 | $ | 374,935 | ||||
Construction and land development
|
67,576 | 73,795 | ||||||
Commercial and industrial
|
81,783 | 78,428 | ||||||
Owner occupied real estate
|
81,799 | 70,833 | ||||||
Consumer and other
|
16,358 | 17,808 | ||||||
Residential mortgage
|
4,221 | 5,026 | ||||||
Total loans receivable
|
639,818 | 620,825 | ||||||
Deferred costs (fees)
|
(430 | ) | (470 | ) | ||||
Allowance for loan losses
|
(15,108 | ) | (11,444 | ) | ||||
Net loans receivable
|
$ | 624,280 | $ | 608,911 | ||||
(Dollars in thousands)
|
June 30,
2011
|
December 31, 2010
|
||||||
Impaired loans without a valuation allowance
|
$ | 39,937 | $ | 72,908 | ||||
Impaired loans with a valuation allowance
|
35,361 | 14,206 | ||||||
Total impaired loans
|
$ | 75,298 | $ | 87,114 | ||||
Valuation allowance related to impaired loans
|
$ | 6,044 | $ | 2,786 | ||||
Total nonaccrual loans
|
37,591 | 39,992 | ||||||
Total loans past-due ninety days or more and still accruing
|
1,338 | - |
At June 30, 2011
|
||||||||||||||||||||
(Dollars in thousands)
|
Recorded Investment
|
Unpaid Principal Balance
|
Related Allowance
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial real estate
|
$ | 21,117 | $ | 22,519 | $ | - | $ | 32,347 | $ | 591 | ||||||||||
Construction and land development
|
14,779 | 26,033 | - | 16,849 | 99 | |||||||||||||||
Commercial and industrial
|
1,958 | 1,958 | - | 3,468 | 53 | |||||||||||||||
Owner occupied real estate
|
1,306 | 1,306 | - | 1,847 | 19 | |||||||||||||||
Consumer and other
|
777 | 1,001 | - | 694 | - | |||||||||||||||
Total
|
$ | 39,937 | $ | 52,817 | $ | - | $ | 55,205 | $ | 762 | ||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial real estate
|
$ | 20,308 | $ | 24,662 | $ | 3,079 | $ | 12,376 | $ | 252 | ||||||||||
Construction and land development
|
8,243 | 9,740 | 1,104 | 7,175 | 21 | |||||||||||||||
Commercial and industrial
|
5,000 | 6,509 | 1,528 | 3,698 | 11 | |||||||||||||||
Owner occupied real estate
|
1,810 | 1,810 | 333 | 2,882 | 64 | |||||||||||||||
Total
|
$ | 35,361 | $ | 42,721 | $ | 6,044 | $ | 26,131 | $ | 348 | ||||||||||
Total:
|
||||||||||||||||||||
Commercial real estate
|
$ | 41,425 | $ | 47,181 | $ | 3,079 | $ | 44,723 | $ | 843 | ||||||||||
Construction and land development
|
23,022 | 35,773 | 1,104 | 24,024 | 120 | |||||||||||||||
Commercial and industrial
|
6,958 | 8,467 | 1,528 | 7,166 | 64 | |||||||||||||||
Owner occupied real estate
|
3,116 | 3,116 | 333 | 4,729 | 83 | |||||||||||||||
Consumer and other
|
777 | 1,001 | - | 694 | - | |||||||||||||||
Total
|
$ | 75,298 | $ | 95,538 | $ | 6,044 | $ | 81,336 | $ | 1,110 | ||||||||||
At December 31, 2010
|
||||||||||||||||||||
(Dollars in thousands)
|
Recorded Investment
|
Unpaid Principal Balance
|
Related Allowance
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial real estate
|
$ | 40,840 | $ | 46,119 | $ | - | $ | 43,144 | $ | 1,341 | ||||||||||
Construction and land development
|
22,802 | 35,042 | - | 32,061 | 291 | |||||||||||||||
Commercial and industrial
|
6,482 | 7,992 | - | 7,040 | 160 | |||||||||||||||
Owner occupied real estate
|
2,278 | 2,278 | - | 2,370 | 132 | |||||||||||||||
Consumer and other
|
506 | 684 | - | 536 | 6 | |||||||||||||||
Total
|
$ | 72,908 | $ | 92,115 | $ | - | $ | 85,151 | $ | 1,930 | ||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial real estate
|
$ | 7,683 | $ | 7,872 | $ | 1,937 | $ | 7,882 | $ | 422 | ||||||||||
Construction and land development
|
2,289 | 2,440 | 45 | 2,602 | 23 | |||||||||||||||
Commercial and industrial
|
798 | 798 | 287 | 809 | 26 | |||||||||||||||
Owner occupied real estate
|
3,436 | 3,436 | 517 | 3,832 | 267 | |||||||||||||||
Total
|
$ | 14,206 | $ | 14,546 | $ | 2,786 | $ | 15,125 | $ | 738 | ||||||||||
Total:
|
||||||||||||||||||||
Commercial real estate
|
$ | 48,523 | $ | 53,991 | $ | 1,937 | $ | 51,026 | $ | 1,763 | ||||||||||
Construction and land development
|
25,091 | 37,482 | 45 | 34,663 | 314 | |||||||||||||||
Commercial and industrial
|
7,280 | 8,790 | 287 | 7,849 | 186 | |||||||||||||||
Owner occupied real estate
|
5,714 | 5,714 | 517 | 6,202 | 399 | |||||||||||||||
Consumer and other
|
506 | 684 | - | 536 | 6 | |||||||||||||||
Total
|
$ | 87,114 | $ | 106,661 | $ | 2,786 | $ | 100,276 | $ | 2,668 | ||||||||||
(Dollars in thousands)
|
June 30,
2011
|
December 31,
2010
|
||||||
Balance at beginning of year
|
$ | 11,444 | $ | 12,841 | ||||
Provision for loan losses
|
5,050 | 16,600 | ||||||
Recoveries of loans previously charged off
|
49 | 1,171 | ||||||
Loan charge-offs
|
(1,435 | ) | (19,168 | ) | ||||
Balance at end of year
|
$ | 15,108 | $ | 11,444 | ||||
At June 30, 2011
|
||||||||||||||||||||||||||||||||
Allowance for Credit Losses
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial Real Estate
|
Construction and Land Development
|
Commercial and Industrial
|
Owner Occupied Real Estate
|
Consumer and Other
|
Residential Mortgage
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Three Months Ended
June 30, 2011:
|
||||||||||||||||||||||||||||||||
Beginning balance:
|
$ | 7,407 | $ | 1,595 | $ | 2,769 | $ | 1,645 | $ | 121 | $ | 32 | $ | 881 | $ | 14,450 | ||||||||||||||||
Charge-offs
|
(512 | ) | (370 | ) | - | - | - | - | - | (882 | ) | |||||||||||||||||||||
Recoveries
|
- | 2 | - | - | 38 | - | - | 40 | ||||||||||||||||||||||||
Provisions
|
1,751 | 592 | (40 | ) | (49 | ) | (35 | ) | 1 | (720 | ) | 1,500 | ||||||||||||||||||||
Ending balance
|
$ | 8,646 | $ | 1,819 | $ | 2,729 | $ | 1,596 | $ | 124 | $ | 33 | $ | 161 | $ | 15,108 | ||||||||||||||||
Six Months Ended
June 30, 2011:
|
||||||||||||||||||||||||||||||||
Beginning balance:
|
$ | 7,243 | $ | 837 | $ | 1,443 | $ | 1,575 | $ | 130 | $ | 41 | $ | 175 | $ | 11,444 | ||||||||||||||||
Charge-offs
|
(1,034 | ) | (370 | ) | - | - | (31 | ) | - | - | (1,435 | ) | ||||||||||||||||||||
Recoveries
|
9 | 2 | - | - | 38 | - | - | 49 | ||||||||||||||||||||||||
Provisions
|
2,428 | 1,350 | 1,286 | 21 | (13 | ) | (8 | ) | (14 | ) | 5,050 | |||||||||||||||||||||
Ending balance
|
$ | 8,646 | $ | 1,819 | $ | 2,729 | $ | 1,596 | $ | 124 | $ | 33 | $ | 161 | $ | 15,108 | ||||||||||||||||
Ending balance: individually evaluated for impairment
|
$ | 3,079 | $ | 1,104 | $ | 1,528 | $ | 333 | $ | - | $ | - | $ | - | $ | 6,044 | ||||||||||||||||
Ending balance: collectively evaluated for impairment
|
$ | 5,567 | $ | 715 | $ | 1,201 | $ | 1,263 | $ | 124 | $ | 33 | $ | 161 | $ | 9,064 | ||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
At December 31, 2010
|
||||||||||||||||||||||||||||||||
Allowance for Credit Losses
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial Real Estate
|
Construction and Land Development
|
Commercial and Industrial
|
Owner Occupied Real Estate
|
Consumer and Other
|
Residential Mortgage
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Ending balance
|
$ | 7,243 | $ | 837 | $ | 1,443 | $ | 1,575 | $ | 130 | $ | 41 | $ | 175 | $ | 11,444 | ||||||||||||||||
Ending balance: individually evaluated for impairment
|
$ | 1,937 | $ | 45 | $ | 287 | $ | 517 | $ | - | $ | - | $ | - | $ | 2,786 | ||||||||||||||||
Ending balance: collectively evaluated for impairment
|
$ | 5,306 | $ | 792 | $ | 1,156 | $ | 1,058 | $ | 130 | $ | 41 | $ | 175 | $ | 8,658 | ||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
At June 30, 2011
|
||||||||||||||||||||||||||||||||
Loans Receivable
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial Real Estate
|
Construction and Land Development
|
Commercial and Industrial
|
Owner Occupied Real Estate
|
Consumer and Other
|
Residential Mortgage
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Ending balance
|
$ | 388,081 | $ | 67,576 | $ | 81,783 | $ | 81,799 | $ | 16,358 | $ | 4,221 | $ | - | $ | 639,818 | ||||||||||||||||
Ending balance: individually evaluated for impairment
|
$ | 41,425 | $ | 23,022 | $ | 6,958 | $ | 3,116 | $ | 777 | $ | - | $ | - | $ | 75,298 | ||||||||||||||||
Ending balance: collectively evaluated for impairment
|
$ | 346,656 | $ | 44,554 | $ | 74,825 | $ | 78,683 | $ | 15,581 | $ | 4,221 | $ | - | $ | 564,520 | ||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
At December 31, 2010
|
||||||||||||||||||||||||||||||||
Loans Receivable
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial Real Estate
|
Construction and Land Development
|
Commercial and Industrial
|
Owner Occupied Real Estate
|
Consumer and Other
|
Residential Mortgage
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Ending balance
|
$ | 374,935 | $ | 73,795 | $ | 78,428 | $ | 70,833 | $ | 17,808 | $ | 5,026 | $ | - | $ | 620,825 | ||||||||||||||||
Ending balance: individually evaluated for impairment
|
$ | 48,523 | $ | 25,091 | $ | 7,280 | $ | 5,714 | $ | 506 | $ | - | $ | - | $ | 87,114 | ||||||||||||||||
Ending balance: collectively evaluated for impairment
|
$ | 326,412 | $ | 48,704 | $ | 71,148 | $ | 65,119 | $ | 17,302 | $ | 5,026 | $ | - | $ | 533,711 | ||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
At June 30, 2011
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
30-59
Days Past Due
|
60-89
Days Past Due
|
Greater than 90 Days
|
Total
Past Due
|
Current
|
Total
Loans Receivable
|
Loans Receivable > 90 Days and Accruing
|
|||||||||||||||||||||
Commercial real estate
|
$ | - | $ | 8,556 | $ | 17,808 | $ | 26,364 | $ | 361,717 | $ | 388,081 | $ | 1,338 | ||||||||||||||
Construction and land development
|
- | - | 18,214 | 18,214 | 49,362 | 67,576 | - | |||||||||||||||||||||
Commercial and industrial
|
- | - | 1,342 | 1,342 | 80,441 | 81,783 | - | |||||||||||||||||||||
Owner occupied real estate
|
- | 1,239 | 788 | 2,027 | 79,772 | 81,799 | - | |||||||||||||||||||||
Consumer and other
|
- | 12 | 777 | 789 | 15,569 | 16,358 | - | |||||||||||||||||||||
Residential mortgage
|
- | - | - | - | 4,221 | 4,221 | - | |||||||||||||||||||||
Total
|
$ | - | $ | 9,807 | $ | 38,929 | $ | 48,736 | $ | 591,082 | $ | 639,818 | $ | 1,338 | ||||||||||||||
At December 31, 2010
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
30-59
Days Past Due
|
60-89
Days Past Due
|
Greater than 90 Days
|
Total
Past Due
|
Current
|
Total
Loans Receivable
|
Loans Receivable > 90 Days and Accruing
|
|||||||||||||||||||||
Commercial real estate
|
$ | 1,249 | $ | 12,155 | $ | 14,955 | $ | 28,359 | $ | 346,576 | $ | 374,935 | $ | - | ||||||||||||||
Construction and land development
|
- | 3,006 | 18,970 | 21,976 | 51,819 | 73,795 | - | |||||||||||||||||||||
Commercial and industrial
|
251 | - | 4,500 | 4,751 | 73,677 | 78,428 | - | |||||||||||||||||||||
Owner occupied real estate
|
- | 2,179 | 1,061 | 3,240 | 67,593 | 70,833 | - | |||||||||||||||||||||
Consumer and other
|
164 | 198 | 461 | 823 | 16,985 | 17,808 | - | |||||||||||||||||||||
Residential mortgage
|
- | - | - | - | 5,026 | 5,026 | - | |||||||||||||||||||||
Total
|
$ | 1,664 | $ | 17,538 | $ | 39,947 | $ | 59,149 | $ | 561,676 | $ | 620,825 | $ | - | ||||||||||||||
At June 30, 2011
|
||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Special Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Commercial real estate
|
$ | 316,690 | $ | 14,852 | $ | 56,539 | $ | - | $ | 388,081 | ||||||||||
Construction and land development
|
39,490 | - | 28,086 | - | 67,576 | |||||||||||||||
Commercial and industrial
|
75,909 | 1,857 | 4,017 | - | 81,783 | |||||||||||||||
Owner occupied real estate
|
77,569 | 287 | 3,943 | - | 81,799 | |||||||||||||||
Consumer and other
|
15,256 | - | 1,102 | - | 16,358 | |||||||||||||||
Residential mortgage
|
4,221 | - | - | - | 4,221 | |||||||||||||||
Total
|
$ | 529,135 | $ | 16,996 | $ | 93,687 | $ | - | $ | 639,818 | ||||||||||
At December 31, 2010
|
||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Special Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Commercial real estate
|
$ | 299,916 | $ | 18,531 | $ | 56,488 | $ | - | $ | 374,935 | ||||||||||
Construction and land development
|
36,775 | - | 37,020 | - | 73,795 | |||||||||||||||
Commercial and industrial
|
65,361 | 2,794 | 10,273 | - | 78,428 | |||||||||||||||
Owner occupied real estate
|
60,849 | 3,923 | 6,061 | - | 70,833 | |||||||||||||||
Consumer and other
|
16,977 | - | 831 | - | 17,808 | |||||||||||||||
Residential mortgage
|
5,026 | - | - | - | 5,026 | |||||||||||||||
Total
|
$ | 484,904 | $ | 25,248 | $ | 110,673 | $ | - | $ | 620,825 | ||||||||||
(Dollars in thousands)
|
June 30,
2011
|
December 31, 2010
|
||||||
Commercial real estate
|
$ | 16,470 | $ | 14,955 | ||||
Construction and land development
|
18,214 | 18,970 | ||||||
Commercial and industrial
|
1,342 | 4,500 | ||||||
Owner occupied real estate
|
788 | 1,061 | ||||||
Consumer and other
|
777 | 506 | ||||||
Residential mortgage
|
- | - | ||||||
Total
|
$ | 37,591 | $ | 39,992 | ||||
Level 1:
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
Level 2:
|
Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
|
Level 3:
|
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
|
At June 30, 2011
|
||||||||||||||||
(Dollars in thousands)
|
Total Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||||||
Mortgage Backed Securities/CMOs
|
$ | 145,432 | $ | - | $ | 145,432 | $ | - | ||||||||
Municipal securities
|
10,006 | - | 10,006 | - | ||||||||||||
Corporate bonds
|
3,000 | - | - | 3,000 | ||||||||||||
Pooled Trust Preferred Securities
|
3,665 | - | - | 3,665 | ||||||||||||
Other securities
|
119 | - | 119 | - | ||||||||||||
SBA servicing asset
|
517 | - | - | 517 | ||||||||||||
Total fair value
|
$ | 162,739 | $ | - | $ | 155,557 | $ | 7,182 | ||||||||
At December 31, 2010
|
||||||||||||||||
(Dollars in thousands)
|
Total Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||||||
Mortgage Backed Securities/CMOs
|
$ | 127,662 | $ | - | $ | 127,662 | $ | - | ||||||||
Municipal securities
|
9,210 | - | 9,210 | - | ||||||||||||
Corporate bonds
|
3,000 | - | - | 3,000 | ||||||||||||
Pooled Trust Preferred Securities
|
3,450 | - | - | 3,450 | ||||||||||||
Other securities
|
117 | - | 117 | - | ||||||||||||
Total fair value
|
$ | 143,439 | $ | - | $ | 136,989 | $ | 6,450 | ||||||||
(Dollars in thousands)
|
At June 30, 2011
|
|||||||||||||||
Corporate Bonds
|
Pooled Trust Preferred Securities
|
SBA Servicing Asset
|
Total
|
|||||||||||||
Beginning Balance, January 1, 2011
|
$ | 3,000 | $ | 3,450 | $ | - | $ | 6,450 | ||||||||
Transfers into Level 3
|
- | - | 517 | 517 | ||||||||||||
Unrealized gains/(losses)
|
- | 217 | - | 217 | ||||||||||||
Impairment charges on Level 3 securities
|
- | (2 | ) | - | (2 | ) | ||||||||||
Ending Balance, June 30, 2011
|
$ | 3,000 | $ | 3,665 | $ | 517 | $ | 7,182 | ||||||||
(Dollars in thousands)
|
At December 31, 2011
|
|||||||||||||||
Corporate Bonds
|
Pooled Trust Preferred Securities
|
SBA Servicing Asset
|
Total
|
|||||||||||||
Beginning Balance, January 1, 2010
|
$ | - | $ | 3,926 | $ | - | $ | 3,926 | ||||||||
Transfers into Level 3
|
3,000 | - | - | 3,000 | ||||||||||||
Unrealized gains/(losses)
|
- | (104 | ) | - | (104 | ) | ||||||||||
Impairment charges on Level 3 securities
|
- | (372 | ) | - | (372 | ) | ||||||||||
Ending Balance, December 31, 2010
|
$ | 3,000 | $ | 3,450 | $ | - | $ | 6,450 | ||||||||
At June 30, 2011
|
||||||||||||||||
Total Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
|||||||||||||
Impaired loans
|
$ | 29,317 | $ | - | $ | - | $ | 29,317 | ||||||||
Other real estate owned
|
13,109 | - | - | 13,109 | ||||||||||||
Total fair value
|
$ | 42,426 | $ | - | $ | - | $ | 42,426 | ||||||||
At December 31, 2010
|
||||||||||||||||
Total Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
|||||||||||||
Impaired loans
|
$ | 11,420 | $ | - | $ | - | $ | 11,420 | ||||||||
Other real estate owned
|
15,237 | - | - | 15,237 | ||||||||||||
Total fair value
|
$ | 26,657 | $ | - | $ | - | $ | 26,657 | ||||||||
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
(Dollars in thousands)
|
Carrying Amount
|
Fair
Value
|
Carrying Amount
|
Fair
Value
|
||||||||||||
Balance Sheet Data
|
||||||||||||||||
Financial assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 23,632 | $ | 23,632 | $ | 35,865 | $ | 35,865 | ||||||||
Investment securities available for sale
|
162,222 | 162,222 | 143,439 | 143,439 | ||||||||||||
Investment securities held to maturity
|
139 | 146 | 147 | 157 | ||||||||||||
Restricted stock
|
5,881 | 5,881 | 6,501 | 6,501 | ||||||||||||
Loans held for sale
|
5,827 | 6,170 | - | - | ||||||||||||
Loans receivable, net
|
624,280 | 626,454 | 608,911 | 611,813 | ||||||||||||
Accrued interest receivable
|
3,129 | 3,129 | 3,119 | 3,119 | ||||||||||||
Financial liabilities:
|
||||||||||||||||
Deposits
|
||||||||||||||||
Demand, savings and money market
|
$ | 532,761 | $ | 532,761 | $ | 524,603 | $ | 524,603 | ||||||||
Time
|
250,341 | 251,886 | 233,127 | 234,417 | ||||||||||||
Subordinated debt
|
22,476 | 18,613 | 22,476 | 17,728 | ||||||||||||
FHLB advances
|
- | - | - | - | ||||||||||||
Accrued interest payable
|
1,431 | 1,431 | 953 | 953 | ||||||||||||
Off-Balance Sheet Data
|
||||||||||||||||
Commitments to extend credit
|
- | - | - | - | ||||||||||||
Standby letters-of-credit
|
- | - | - | - |
For the Three Months Ended
June 30, 2011
|
For the Three Months Ended
June 30, 2010
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Average Balance
|
Interest
Income/Expense
|
Yield/
Rate(1)
|
Average Balance
|
Interest
Income/Expense
|
Yield/
Rate(1)
|
||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Federal funds sold and other interest-earning assets
|
$ | 51,808 | $ | 34 | 0.26 | % | $ | 23,751 | $ | 16 | 0.27 | % | ||||||||||||
Investment securities and restricted stock
|
160,764 | 1,297 | 3.23 | % | 183,421 | 1,602 | 3.49 | % | ||||||||||||||||
Loans receivable
|
636,128 | 8,430 | 5.32 | % | 679,889 | 8,675 | 5.12 | % | ||||||||||||||||
Total interest-earning assets
|
848,700 | 9,761 | 4.61 | % | 887,061 | 10,293 | 4.65 | % | ||||||||||||||||
Other assets
|
71,967 | 69,564 | ||||||||||||||||||||||
Total assets
|
$ | 920,667 | $ | 956,625 | ||||||||||||||||||||
Interest-earning liabilities:
|
||||||||||||||||||||||||
Demand – non-interest bearing
|
$ | 101,395 | $ | 118,223 | ||||||||||||||||||||
Demand – interest bearing
|
98,435 | $ | 168 | 0.68 | % | 63,277 | $ | 125 | 0.79 | % | ||||||||||||||
Money market & savings
|
339,603 | 860 | 1.02 | % | 321,689 | 912 | 1.14 | % | ||||||||||||||||
Time deposits
|
264,070 | 825 | 1.25 | % | 329,699 | 1,239 | 1.51 | % | ||||||||||||||||
Total deposits
|
803,503 | 1,853 | 0.92 | % | 832,888 | 2,276 | 1.10 | % | ||||||||||||||||
Total interest-bearing deposits
|
702,108 | 1,853 | 1.06 | % | 714,665 | 2,276 | 1.28 | % | ||||||||||||||||
Other borrowings
|
22,478 | 278 | 4.96 | % | 46,507 | 447 | 3.86 | % | ||||||||||||||||
Total interest-bearing liabilities
|
724,586 | 2,131 | 1.18 | % | 761,172 | 2,723 | 1.43 | % | ||||||||||||||||
Total deposits and other borrowings
|
825,981 | 2,131 | 1.03 | % | 879,395 | 2,723 | 1.24 | % | ||||||||||||||||
Non interest-bearing other liabilities
|
7,683 | 5,681 | ||||||||||||||||||||||
Shareholders’ equity
|
87,003 | 71,549 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$ | 920,667 | $ | 956,625 | ||||||||||||||||||||
Net interest income (2)
|
$ | 7,630 | $ | 7,570 | ||||||||||||||||||||
Net interest spread
|
3.43 | % | 3.22 | % | ||||||||||||||||||||
Net interest margin (2)
|
3.61 | % | 3.42 | % |
For the Three Months Ended
June 30, 2011 vs. 2010
|
For the Six Months Ended
June 30, 2011 vs. 2010
|
|||||||||||||||||||||||
Changes due to:
|
Changes due to:
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Average
Volume
|
Average
Rate
|
Total
Change
|
Average
Volume
|
Average
Rate
|
Total
Change
|
||||||||||||||||||
Interest earned:
|
||||||||||||||||||||||||
Federal funds sold and other interest-earning assets
|
$ | 18 | $ | - | $ | 18 | $ | 15 | $ | (3 | ) | $ | 12 | |||||||||||
Securities
|
(182 | ) | (123 | ) | (305 | ) | (503 | ) | (348 | ) | (851 | ) | ||||||||||||
Loans
|
(580 | ) | 335 | (245 | ) | (1,287 | ) | 531 | (756 | ) | ||||||||||||||
Total interest-earning assets
|
$ | (744 | ) | $ | 212 | $ | (532 | ) | $ | (1,775 | ) | $ | 180 | $ | (1,595 | ) | ||||||||
Interest expense:
|
||||||||||||||||||||||||
Deposits
|
||||||||||||||||||||||||
Interest-bearing demand deposits
|
$ | (60 | ) | $ | 17 | $ | (43 | ) | $ | (81 | ) | $ | 22 | $ | (59 | ) | ||||||||
Money market and savings
|
(45 | ) | 97 | 52 | (51 | ) | 354 | 303 | ||||||||||||||||
Time deposits
|
205 | 209 | 414 | 566 | 532 | 1,098 | ||||||||||||||||||
Total deposit interest expense
|
100 | 323 | 423 | 434 | 908 | 1,342 | ||||||||||||||||||
Other borrowings
|
297 | (128 | ) | 169 | 430 | (68 | ) | 362 | ||||||||||||||||
Total interest expense
|
397 | 195 | 592 | 864 | 840 | 1,704 | ||||||||||||||||||
Net interest income
|
$ | (347 | ) | $ | 407 | $ | 60 | $ | (911 | ) | $ | 1,020 | $ | 109 | ||||||||||
Actual
|
For Capital Adequacy Purposes
|
To be well capitalized under regulatory capital guidelines
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
At June 30, 2011:
|
||||||||||||||||||||||||
Total risk based capital
|
||||||||||||||||||||||||
Republic
|
104,169 | 13.81 | % | 60,324 | 8.00 | % | 75,405 | 10.00 | % | |||||||||||||||
Company
|
106,483 | 14.07 | % | 60,542 | 8.00 | % | - | - | ||||||||||||||||
Tier one risk based capital
|
||||||||||||||||||||||||
Republic
|
94,778 | 12.57 | % | 30,162 | 4.00 | % | 45,243 | 6.00 | % | |||||||||||||||
Company
|
97,058 | 12.83 | % | 30,271 | 4.00 | % | - | - | ||||||||||||||||
Tier one leveraged capital
|
||||||||||||||||||||||||
Republic
|
94,778 | 10.44 | % | 36,327 | 4.00 | % | 45,409 | 5.00 | % | |||||||||||||||
Company
|
97,058 | 10.67 | % | 36,380 | 4.00 | % | - | - | ||||||||||||||||
At December 31, 2010:
|
||||||||||||||||||||||||
Total risk based capital
|
||||||||||||||||||||||||
Republic
|
97,570 | 13.51 | % | 57,775 | 8.00 | % | 72,218 | 10.00 | % | |||||||||||||||
Company
|
108,222 | 14.93 | % | 57,977 | 8.00 | % | - | - | ||||||||||||||||
Tier one risk based capital
|
||||||||||||||||||||||||
Republic
|
88,513 | 12.26 | % | 28,887 | 4.00 | % | 43,331 | 6.00 | % | |||||||||||||||
Company
|
99,134 | 13.68 | % | 28,988 | 4.00 | % | - | - | ||||||||||||||||
Tier one leveraged capital
|
||||||||||||||||||||||||
Republic
|
88,513 | 9.85 | % | 35,957 | 4.00 | % | 44,946 | 5.00 | % | |||||||||||||||
Company
|
99,134 | 11.01 | % | 36,013 | 4.00 | % | - | - |
(Dollars in thousands)
|
June 30,
2011
|
December 31, 2010
|
||||||
Loans accruing, but past due 90 days or more
|
1,338 | $ | - | |||||
Non-accrual loans
|
37,591 | 39,992 | ||||||
Total non-performing loans(1)
|
38,929 | 39,992 | ||||||
Other real estate owned
|
13,109 | 15,237 | ||||||
Total non-performing assets(1)
|
52,038 | $ | 55,229 | |||||
Non-performing loans as a percentage of total loans, net of unearned income(1)
|
6.09 | % | 6.45 | % | ||||
Non-performing assets as a percentage of total assets
|
5.78 | % | 6.30 | % |
(Dollars in thousands)
|
For the six months ended June 30,
2011
|
For the twelve months ended December 31,
2010
|
For the six months ended June 30,
2010
|
|||||||||
Balance at beginning of period
|
$ | 11,444 | $ | 12,841 | $ | 12,841 | ||||||
Charge-offs:
|
||||||||||||
Commercial
|
1,404 | 19,126 | 19,036 | |||||||||
Consumer
|
31 | 42 | 42 | |||||||||
Total charge-offs
|
1,435 | 19,168 | 19,078 | |||||||||
Recoveries:
|
||||||||||||
Commercial
|
11 | 1,168 | 263 | |||||||||
Consumer
|
38 | 3 | - | |||||||||
Total recoveries
|
49 | 1,171 | 263 | |||||||||
Net charge-offs
|
1,386 | 17,997 | 18,815 | |||||||||
Provision for loan losses
|
5,050 | 16,600 | 16,250 | |||||||||
Balance at end of period
|
$ | 15,108 | $ | 11,444 | $ | 10,276 | ||||||
Average loans outstanding(1)
|
$ | 632,994 | $ | 659,882 | $ | 681,857 | ||||||
As a percent of average loans:(1)
|
||||||||||||
Net charge-offs
|
0.44 | % | 2.73 | % | 5.56 | % | ||||||
Provision for loan losses
|
1.61 | % | 2.52 | % | 4.81 | % | ||||||
Allowance for loan losses
|
2.39 | % | 1.73 | % | 1.51 | % | ||||||
Allowance for loan losses to:
|
||||||||||||
Total loans, net of unearned income
|
2.36 | % | 1.84 | % | 1.54 | % | ||||||
Total non-performing loans
|
38.81 | % | 28.62 | % | 19.83 | % |
Exhibit
Number
|
Description
|
Location
|
||
31.1
|
Rule 13a-14(a)/15d-14(a) Certification of Chairman and Chief Executive Officer of Republic First Bancorp, Inc.
|
|||
31.2
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Republic First Bancorp, Inc.
|
|||
32.1
|
Section 1350 Certification of Harry D. Madonna
|
|||
32.2
|
Section 1350 Certification of Frank A. Cavallaro
|
REPUBLIC FIRST BANCORP, INC.
|
||
Date: August 9, 2011
|
By:
|
/s/ Harry D. Madonna
|
Harry D. Madonna
|
||
Chairman, President and Chief Executive Officer
(principal executive officer)
|
||
Date: August 9, 2011
|
By:
|
/s/ Frank A. Cavallaro
|
Frank A. Cavallaro
|
||
Senior Vice President and Chief Financial Officer
(principal financial and accounting officer)
|
||
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 of Republic First Bancorp, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d-15(f)) for the registrant and 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 officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal 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.
|
Date: August 9, 2011
|
/s/ Harry D. Madonna
|
||
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 of Republic First Bancorp, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d-15(f)) for the registrant and 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 officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal 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.
|
Date: August 9, 2011
|
/s/ Frank A. Cavallaro
|
||
Senior Vice-President and Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
Date: August 9, 2011
|
/s/ Harry D. Madonna
|
|
Chairman, President and Chief Executive Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
Date: August 9, 2011
|
/s/ Frank A. Cavallaro
|
|
Senior Vice President and Chief Financial Officer
|
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2011
|
Dec. 31, 2010
|
|
Consolidated Balance Sheets | Â | Â |
Investments securities held to maturity at fair value | $ 146 | $ 157 |
Allowance for loan losses | $ 15,108 | $ 11,444 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common stock par value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Issued | 26,501,742 | 26,501,742 |
Treasury Stock, Shares | 416,303 | 416,303 |
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Aug. 08, 2011
|
|
Document and Entity Information | Â | Â |
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Period Focus | Q2 | Â |
Document Fiscal Year Focus | 2011 | Â |
Entity Registrant Name | REPUBLIC FIRST BANCORP INC | Â |
Entity Central Index Key | 0000834285 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Entity Common Stock, Shares Outstanding | Â | 25,972,897 |
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Comprehensive Income / (Loss)
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Comprehensive Income / (Loss) | Â |
Comprehensive Income / (Loss) | Note 5: Comprehensive Income / (Loss)
Total comprehensive income (loss), which for the Company included net income (loss) and changes in unrealized gains and losses on the Company's available for sale securities, was $669,000 income and a $4.5 million loss for the three months ended June 30, 2011 and 2010, respectively. For the six months ended June 30, 2011 and 2010, total comprehensive loss was $1.1 million and $9.6 million, respectively. |
Basis of Presentation
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Basis of Presentation | Â |
Basis of Presentation |
Note 1: Basis of Presentation
Republic First Bancorp, Inc. (the "Company") is a corporation incorporated under the laws of the Commonwealth of Pennsylvania and a registered bank holding company. The Company offers a variety of retail and commercial banking services to individuals and businesses throughout the Greater Philadelphia and Southern New Jersey area through its wholly-owned subsidiary, Republic First Bank ("Republic" or "the Bank") which does business under the name Republic Bank. The Company also has three unconsolidated subsidiaries, which are statutory trusts established by the Company in connection with its sponsorship of three separate issuances of trust preferred securities.
The Company and Republic encounter vigorous competition for market share in the geographic areas they serve from bank holding companies, national, regional and other community banks, thrift institutions, credit unions and other non-bank financial organizations, such as mutual fund companies, insurance companies and brokerage companies.
The Company and Republic are subject to regulations of certain state and federal agencies. These regulatory agencies periodically examine the Company and Republic for adherence to laws and regulations. As a consequence, the cost of doing business may be affected.
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Republic. The Company follows accounting standards set by the Financial Accounting Standards Board ("FASB"). The FASB sets accounting principles generally accepted in the United States of America ("U.S. GAAP") that are followed to ensure consistent reporting of financial condition, results of operations, and cash flows.
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to United States Securities and Exchange Commission ("SEC") Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for financial statements for a complete fiscal year. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. All significant inter-company accounts and transactions have been eliminated in the consolidated financial statements. The Company has evaluated subsequent events through the date of issuance of the financial data included herein. |
Loans Receivable and Allowance for Loan Losses
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Jun. 30, 2011
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Loans Receivable and Allowance for Loan Losses | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable and Allowance for Loan Losses | Note 7: Loans Receivable and Allowance for Loan Losses
The following table sets forth the Company's gross loans by major categories as of June 30, 2011 and December 31, 2010:
A loan is considered impaired, in accordance with ASC 310, Receivables, when based on current information and events, it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans, but also include internally classified accruing loans. As of June 30, 2011 and December 31, 2010, management did not identify any troubled debt restructurings in the loan portfolio.
The following table presents the Company's impaired loans at June 30, 2011 and December 31, 2010:
Impaired loans with a valuation allowance increased from $14.2 million at December 31, 2010 to $35.4 million at June 30, 2011. The increase was primarily due to valuation allowances which were recorded during the six month period ending June 30, 2011 for impaired loans which previously did not have a valuation allowance as of December 31, 2010. The valuation allowances recorded for these impaired loans were primarily driven by updated appraisals of collateral received during the six month period ending June 30, 2011. Management determined that these valuation allowances did not have to be immediately charged off during this time period. Total impaired loans decreased by $11.8 million to $75.3 million at June 30, 2011 compared to $87.1 million at December 31, 2010. This decrease was mainly driven by upgrades to loans previously categorized as impaired as a result of improved financial performance and strength of the borrowers. The valuation allowance related to impaired loans increased from $2.8 million at December 31, 2010 to $6.0 million at June 30, 2011.
As of June 30, 2011 and December 31, 2010, the average recorded investment in impaired loans was approximately $81.3 million and $100.3 million, respectively. The Company earned $1.1 million and $2.7 million of interest income on impaired loans (internally classified as accruing loans) for the six months ended June 30, 2011 and the year ended December 31, 2010, respectively. The Company recognized interest income on a cash basis on impaired loans of $1.2 million and $2.9 million during the six months ended June 30, 2011 and the year ended December 31, 2010, respectively. There were no commitments to extend credit to any borrowers with impaired loans as of the end of the periods presented herein.
The following table summarizes information in regards to impaired loans by loan portfolio class as of June 30, 2011 and December 31, 2010:
16
As of June 30, 2011 and December 31, 2010, there were loans of approximately $37.6 million and $40.0 million, respectively, which were classified as non-accrual. If these loans were performing under their original contractual rate, interest income on such loans would have increased approximately $1.2 million and $2.4 million, for the six months ended June 30, 2011 and the year ended December 31, 2010, respectively. There were loans of approximately $1.3 million past due 90 days and accruing interest at June 30, 2011. There were no loans past due 90 days and accruing interest at December 31, 2010.
The following is an analysis of the changes in the allowance for loan losses for the six months ended June 30, 2011 and year ended December 31, 2010:
The following provides the ending balances of the allowance for credit losses and loan receivables by loan portfolio class as of June 30, 2011 and December 31, 2010:
The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of June 30, 2011 and December 31, 2010:
The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of June 30, 2011 and December 31, 2010:
The following table shows non-accrual loans by class as of June 30, 2011 and December 31, 2010:
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Fair Value of Financial Instruments
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Jun. 30, 2011
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Fair Value of Financial Instruments | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Note 8: Fair Value of Financial Instruments
Management uses its best judgment in estimating the fair value of the Company's financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective year-ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each year-end.
The Company follows the guidance issued under ASC 820-10, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value under GAAP, and identifies required disclosures on fair value measurements.
ASC 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820-10 are as follows:
An asset's or liability's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2011 and December 31, 2010 were as follows:
The following table presents a reconciliation of the securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2011 and the year ended December 31, 2010:
For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2011 and December 31, 2010 were as follows (dollars in thousands):
The recorded investment in impaired loans with a valuation allowance totaled $35.4 million at June 30, 2011 and $14.2 million at December 31, 2010. The amounts of related valuation allowances were $6.0 million and $2.8 million, respectively, at June 30, 2011 and December 31, 2010.
The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company's assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company's financial instruments at June 30, 2011 and December 31, 2010:
Cash and Cash Equivalents (Carried at Cost)
The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets' fair values.
Investment Securities
The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted prices.
The types of instruments valued based on matrix pricing in active markets include all of the Company's U.S. government and agency securities and municipal obligations. Such instruments are generally classified within Level 2 of the fair value hierarchy. As required by ASC 820-10, the Company does not adjust the matrix pricing for such instruments.
For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). In the absence of such evidence, management's best estimate is used. Management's best estimate consists of both internal and external support on certain Level 3 investments. Internal cash flow models using a present value formula that includes assumptions market participants would use along with indicative exit pricing obtained from broker/dealers (where available) were used to support fair values of certain Level 3 investments.
Subsequent to inception, management only changes level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows. The Level 3 investment securities classified as available for sale are primarily comprised of various issues of bank pooled trust preferred securities and a corporate bond.
Bank pooled trust preferred consists of the debt instruments of various banks, diversified by the number of participants in the security as well as geographically. The securities are performing according to terms, however the secondary market for such securities has become inactive, and such securities are therefore classified as Level 3 securities. The fair value analysis does not reflect or represent the actual terms or prices at which any party could purchase the securities. There is currently no secondary market for the securities and there can be no assurance that any secondary market for the securities will develop.
A third party pricing service was used in the development of the fair market valuation. The calculations used to determine fair value are based on the attributes of the bank pooled trust preferred securities, the financial condition of the issuers of the bank pooled trust preferred securities, and market based assumptions. The INTEX CDO Deal Model Library was utilized to obtain information regarding the attributes of each security and its specific collateral as of June 30, 2011 and December 31, 2010. Financial information on the issuers was also obtained from Bloomberg, the FDIC and the Office of Thrift Supervision and SNL Financial. Both published and unpublished industry sources were utilized in estimating fair value. Such information includes loan prepayment speed assumptions, discount rates, default rates, and loss severity percentages. For more information on these assumptions, refer to the Company's most recent 10-K. Due to the current state of the global capital and financial markets, the fair market valuation is subject to greater uncertainty that would otherwise exist.
Fair market valuation for each security was determined based on discounted cash flow analyses. ASC 820-10 provides guidance on the discount rates to be used when a market is not active. The discount rate should take into account the time value of money, price for bearing the uncertainty in the cash flows and other case specific factors that would be considered by market participants, including a liquidity adjustment. The discount rate used is a LIBOR 3-month forward-looking curve plus a range of 406 to 998 basis points. In addition, the cash flows are primarily dependent on the estimated speeds at which the bank pooled trust preferred securities are expected to prepay, the estimated rates at which the bank pooled trust preferred securities are expected to defer payments, the estimated rates at which the bank pooled trust preferred securities are expected to default, and the severity of the losses on securities which default. 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.
Also included in Level 3 investment securities classified as available for sale is a single-issue corporate bond transferred from Level 2 in 2010 since the bond is not actively traded. Impairment would depend on the repayment ability of the single underlying institution, which is supported by a detailed quarterly review of the institution's financial statements. The institution is a "well capitalized" institution under banking regulations.
Loans Receivable, including Loans Held for Sale (Carried at Cost)
The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.
Other Real Estate Owned (Carried at Lower of Cost or Market)
These assets are carried at the lower of cost or market. At June 30, 2011, these assets were carried at current market value.
Restricted Stock (Carried at Cost)
The carrying amount of restricted stock approximates fair value, and considers the limited marketability of such securities.
Accrued Interest Receivable and Payable (Carried at Cost)
The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.
Deposit Liabilities (Carried at Cost)
The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.
FHLB Advances (Carried at Cost)
Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.
Subordinated Debt (Carried at Cost)
Fair values of subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity.
Off-Balance Sheet Financial Instruments (Disclosed at Notional amounts)
Fair values for the Company's off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties' credit standing.
The estimated fair values of the Company's financial instruments were as follows at June 30, 2011 and December 31, 2010:
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Investment Securities | Note 6: Investment Securities
A summary of the amortized cost and market value of securities available for sale and securities held to maturity at June 30, 2011 and December 31, 2010 is as follows:
The maturity distribution of the amortized cost and estimated market value of investment securities by contractual maturity at June 30, 2011 is as follows:
Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without prepayment penalties.
As of June 30, 2011 and December 31, 2010, the mortgage backed securities and collateralized mortgage obligations included in the investment securities portfolio consist solely of securities issued by U.S. government sponsored agencies. There were no private label mortgage securities held in the investment securities portfolio as of those dates. The Company does not hold any mortgage-backed securities that are rated "Alt-A" or "Subprime" as of June 30, 2011 and December 31, 2010. In addition, the Company does not hold any private issued CMO's as of June 30, 2011 and December 31, 2010.
In instances when a determination is made that an OTTI exists with respect to a debt security but the investor does not intend to sell the debt security and it is more likely than not that the investor will not be required to sell the debt security prior to its anticipated recovery, FASB Accounting Standards Codification ("ASC") 320-10, Investments – Debt and Equity Securities, changes the presentation and amount of the OTTI recognized in the income statement. The OTTI is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total OTTI related to all other factors. The amount of the total OTTI related to other factors is recognized in other comprehensive income. The adoption of updated guidance under ASC 320-10 had an impact on the amount reported in the consolidated financial statements as impairment charges (credit losses) on bank pooled trust preferred securities for the three and six months ended June 30, 2011 in the amount of $2,000 for both periods. The Company realized gross losses due to impairment charges on pooled trust preferred securities of $223,000 and $372,000 for the three and six months ended June 30, 2010, respectively.
The following table shows the fair value and gross unrealized losses associated with the investment portfolio, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
The impairment of the investment portfolio totaled $3.6 million with a total fair value of $11.0 million at June 30, 2011. The unrealized loss for the Bank's pooled trust preferred securities was due to the secondary market for such securities becoming inactive and is considered temporary at June 30, 2011.
The unrealized loss on the remaining securities is due to changes in market value resulting from changes in market interest rates and is also considered temporary. At June 30, 2011, the investment portfolio included twenty-five municipal securities with a total market value of $10.0 million. The securities are reviewed quarterly for impairment. Research on each issuer is completed to ensure the financial stability of the municipal entity. The largest geographic concentration was in California where thirteen municipal securities had a market value of $5.0 million. There were no defaults by any Moody's rated state or local government during the three months ended June 30, 2011. As of June 30, 2011, management found no evidence of OTTI on any of the municipal securities held in the investment securities portfolio. |
Consolidated Statements of Changes in Shareholders' Equity (USD $)
In Thousands |
Common Stock [Member]
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Additional Paid-in Capital [Member]
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Accumulated Deficit [Member]
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Treasury Stock [Member]
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Stock Held by Deffered Compensation Plan [Member]
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Accumulated Other Comprehensive Income (Loss) [Member]
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Total
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Balance at Dec. 31, 2009 | $ 111 | $ 77,086 | $ (2,450) | $ (3,099) | $ (709) | $ (675) | $ 70,264 |
Net loss | Â | Â | (10,917) | Â | Â | Â | (10,917) |
Other comprehensive gain, net of tax: | Â | Â | Â | Â | Â | Â | Â |
Unrealized gain on securities | Â | Â | Â | Â | Â | 1,056 | 1,056 |
Reclassification adjustment for impairment charge | Â | Â | Â | Â | Â | 238 | 238 |
Total other comprehensive gain, net of tax | Â | Â | Â | Â | Â | Â | 1,294 |
Total comprehensive loss | Â | Â | Â | Â | Â | Â | (9,623) |
Shares issued under common stock offering (15,000,000 shares) | 150 | 27,950 | Â | Â | Â | Â | 28,100 |
Stock based compensation | Â | 120 | Â | Â | Â | Â | 120 |
Stock purchases for deferred compensation plan (24,489 shares) | Â | Â | Â | Â | (100) | Â | (100) |
Balance at Jun. 30, 2010 | 261 | 105,156 | (13,367) | (3,099) | (809) | 619 | 88,761 |
Balance at Dec. 31, 2010 | 265 | 106,024 | (13,140) | (3,099) | (809) | (1,095) | 88,146 |
Net loss | Â | Â | (2,988) | Â | Â | Â | (2,988) |
Other comprehensive gain, net of tax: | Â | Â | Â | Â | Â | Â | Â |
Unrealized gain on securities | Â | Â | Â | Â | Â | 1,838 | 1,838 |
Reclassification adjustment for impairment charge | Â | Â | Â | Â | Â | 1 | 1 |
Total other comprehensive gain, net of tax | Â | Â | Â | Â | Â | Â | 1,839 |
Total comprehensive loss | Â | Â | Â | Â | Â | Â | (1,149) |
Stock based compensation | Â | 168 | Â | Â | Â | Â | 168 |
Stock purchases for deferred compensation plan (24,489 shares) | Â | Â | Â | Â | Â | Â | 0 |
Balance at Jun. 30, 2011 | $ 265 | $ 106,192 | $ (16,128) | $ (3,099) | $ (809) | $ 744 | $ 87,165 |
Summary of Significant Accounting Policies
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Jun. 30, 2011
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Summary Of Significant Accounting Policies |
Note 2: Summary of Significant Accounting Policies
Risks and Uncertainties
The earnings of the Company depend primarily on the earnings of Republic. The earnings of Republic are dependent primarily upon the level of net interest income, which is the difference between interest earned on its interest-earning assets, such as loans and investments, and the interest paid on its interest-bearing liabilities, such as deposits and borrowings. Accordingly, the Company's results of operations are subject to risks and uncertainties surrounding Republic's exposure to changes in the interest rate environment.
Prepayments on residential real estate mortgage and other fixed rate loans and mortgage-backed securities vary significantly, and may cause significant fluctuations in interest margins.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant estimates are made by management in determining the allowance for loan losses, carrying values of other real estate owned, assessment of other than temporary impairment ("OTTI") of investment securities, impairment of restricted stock and the realization of deferred income tax assets. Consideration is given to a variety of factors in establishing these estimates.
In estimating the allowance for loan losses, management considers current economic conditions, diversification of the loan portfolio, delinquency statistics, results of internal loan reviews, borrowers' perceived financial and managerial strengths, the adequacy of underlying collateral, if collateral dependent, or present value of future cash flows, and other relevant factors. Because the allowance for loan losses and carrying value of other real estate owned are dependent, to a great extent, on the general economy and other conditions that may be beyond the Company's and Republic's control, the estimates of the allowance for loan losses and the carrying values of other real estate owned could differ materially in the near term.
In estimating OTTI of investment securities, securities are evaluated on at least a quarterly basis, and more frequently when market conditions warrant such an evaluation, to determine whether a decline in their value is other than temporary. To determine whether a loss in value is other than temporary, management utilizes criteria such as the reasons underlying the decline, the magnitude and duration of the decline, the intent to hold the security and the likelihood of the Company not being required to sell the security prior to an anticipated recovery in the fair value. The term "other than temporary" is not intended to indicate that the decline is permanent, but indicates that the prospect for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of investment. Once a decline in value is determined to be other than temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.
In estimating impairment of restricted stock, management's determination of whether these investments are impaired is based on the assessment of the ultimate recoverability of the cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of the cost is influenced by criteria such as (1) the significance of the decline in net assets of the Federal Home Loan Bank of Pittsburgh ("FHLB") and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on institutions and accordingly, on the customer base of the FHLB.
In evaluating the Company's ability to recover deferred tax assets, management considers all available positive and negative evidence, including the Company's past operating results and the Company's forecast of future taxable income. In determining future taxable income, management makes assumptions for the amount of taxable income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require management to make judgments about the Company's future taxable income and are consistent with the plans and estimates management uses to manage the Company's business. Any reduction in estimated future taxable income may require the Company to record a valuation allowance against its deferred tax assets. An increase in the valuation allowance would result in additional income tax expense in the period and could have a significant impact on the Company's future earnings.
Stock-Based Compensation
The Company maintains the Amendment and Restatement No. 3 of the Stock Option Plan and Restricted Stock Plan of Republic First Bancorp, Inc. ("Plan"), under which the Company may grant options, restricted stock or stock appreciation rights to the Company's employees, directors, and certain consultants. Under the terms of the Plan, 1.5 million shares of common stock, plus an annual increase equal to the number of shares needed to restore the maximum number of shares that may be available for grant under the Plan to 1.5 million shares, are available for such grants. As of June 30, 2011, the only grants under the Plan have been option grants. The Plan provides that the exercise price of each option granted equals the market price of the Company's stock on the date of the grant. Any option granted vests within one to five years and has a maximum term of ten years.
The Company utilizes a Black-Scholes option pricing model to determine the fair market value of stock options. In 2011, the following assumptions were utilized: a dividend yield of 0%; expected volatility of 49.11%; a risk-free interest rate of 2.84%; and an expected life of 7.0 years. In 2010, the following assumptions were utilized: a dividend yield of 0%; expected volatility of 33.67% to 37.37%; a risk-free interest rate of 2.06% to 3.46%; and an expected life of 7.0 years. A dividend yield of 0% is utilized, because cash dividends have never been paid. The expected life reflects a combination of a 3 to 4 year "all or nothing" vesting period, the maximum ten-year term and review of historical behavior. The volatility was based on Bloomberg's seven-year volatility calculation for "FRBK" stock. The risk-free interest rate is based on the seven year Treasury bond. During the six months ended June 30, 2011, 53,500 options vested. No options vested during the six months ended June 30, 2010. Expense is recognized ratably over the period required to vest. There were 445,350 unvested options at January 1, 2011 with a fair value of $1,158,861 with $531,757 of that amount remaining to be recognized as expense. At June 30, 2011, there were 562,700 unvested options with a fair value of $1,235,096 with $640,857 of that amount remaining to be recognized as expense. At that date, the intrinsic value of the 823,354 options outstanding was $2,490, while the intrinsic value of the 260,654 exercisable (vested) options was $0.
Compensation expense of $83,000 and $168,000 was recognized during the three and six months ended June 30, 2011, respectively. Compensation expense of $78,000 and $120,000 was recognized during the three and six months ended June 30, 2010, respectively. For each of these periods, a 35% assumed tax benefit for the Plan was utilized in making the calculations.
Earnings per Share
Earnings per share ("EPS") consists of two separate components: basic EPS and diluted EPS. Basic EPS is computed by dividing net income (loss) by the weighted average number of common shares outstanding for each period presented. Diluted EPS is calculated by dividing net income (loss) by the weighted average number of common shares outstanding plus dilutive common stock equivalents ("CSEs"). CSEs consist of dilutive stock options granted through the Company's Plan and convertible securities related trust preferred securities issued in 2008. In the diluted EPS computation, the after tax interest expense on the trust preferred securities issuance is added back to the net income. For the three and six months ended June 30, 2011 and 2010, the effect of CSEs and the related add back of after tax interest expense was considered anti-dilutive and therefore was not included in the EPS calculation. For the three and six months ended June 30, 2011 and 2010, the Company did not include stock options in calculating diluted EPS due to a net loss from operations.
The calculation of EPS for the three and six months ended June 30, 2011 and 2010 is as follows (in thousands, except per share amounts):
Recent Accounting Pronouncements
ASU 2011-05
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which amends FASB ASC Topic 220, Comprehensive Income. The FASB has issued this ASU to facilitate the continued alignment of U.S. GAAP with International Accounting Standards.
The Update prohibits the presentation of the components of comprehensive income in the statement of stockholders' equity. Reporting entities are allowed to present either: a statement of comprehensive income, which reports both net income and other comprehensive income; or separate statements of net income and other comprehensive income. Under previous GAAP, all three presentations were acceptable. Regardless of the presentation selected, the Company is required to present all reclassifications between other comprehensive and net income on the face of the new statement or statements.
The effective date of ASU 2011-05 differs for public and nonpublic companies. For public companies, the Update is effective for fiscal years and interim periods beginning after December 31, 2011. For nonpublic entities, the provisions are effective for fiscal years ending after December 31, 2012, and for interim and annual periods thereafter. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.
ASU 2011-04
In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The FASB has issued this ASU to amend ASC Topic 820, Fair Value Measurements, in order to bring U.S. GAAP for fair value measurements in line with International Accounting Standards.
The Update clarifies existing guidance for items such as: the application of the highest and best use concept to non-financial assets and liabilities; the application of fair value measurement to financial instruments classified in a reporting entity's stockholders' equity; and disclosure requirements regarding quantitative information about unobservable inputs used in the fair value measurements of level 3 assets.
The Update also creates an exception to Topic 820 for entities, which carry financial instruments within a portfolio or group, under which the entity is now permitted to base the price used for fair valuation upon a price that would be received to sell the net asset position or transfer a net liability position in an orderly transaction. The Update also allows for the application of premiums and discounts in a fair value measurement if the financial instrument is categorized in level 2 or 3 of the fair value hierarchy.
Lastly, the ASU contains new disclosure requirements regarding fair value amounts categorized as level 3 in the fair value hierarchy such as: disclosure of the valuation process used; effects of and relationships between unobservable inputs; usage of nonfinancial assets for purposes other than their highest and best use when that is the basis of the disclosed fair value; and categorization by level of items disclosed at fair value, but not measured at fair value for financial statement purposes.
The effective date of ASU 2011-04 differs for public and nonpublic companies. For public companies, the Update is effective for interim and annual periods beginning after December 15, 2011. For nonpublic entities, the Update is effective for annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.
ASU 2011-02
In April 2011, the FASB issued Accounting Standards Update ("ASU") 2011-02, Receivables (Topic 310): A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The FASB has issued this ASU to clarify the accounting principles applied to loan modifications, as defined by FASB ASC Subtopic 310-40, Receivables – Troubled Debt Restructurings by Creditors.
The ASU clarifies guidance on a creditor's evaluation of whether or not a concession has been granted, with an emphasis on evaluating all aspects of the modification rather than focus on specific criteria, such as the effective interest rate test, to determine a concession. The ASU goes on to provide guidance on specific types of modifications such as changes in the interest rate of the borrowing, and insignificant delays in payments, as well as guidance on the creditor's evaluation of whether or not a debtor is experiencing financial difficulties.
The effective date of ASU 2011-02 differs for public and nonpublic companies. For public companies, the amendments in the ASU are effective for the first interim or annual periods beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption.
The entity should also disclose information required by ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, which had previously been deferred by ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20, for interim and annual periods beginning on or after June 15, 2011. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements.
ASU 2010-20
In July 2010, the FASB issued ASU 2010-20, Receivables (Topic 310): Disclosure about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The FASB believes that this guidance will help investors assess the credit risk of a company's receivables portfolio and the adequacy of its allowance for credit losses held against the portfolios by expanding credit risk disclosures.
This ASU requires more information about the credit quality of financing receivables in the disclosures to financial statements, such as aging information and credit quality indicators. Both new and existing disclosures must be disaggregated by portfolio segment or class. This disaggregation of information is based on how a company develops its allowance for credit losses and how it manages its credit exposure.
The amendments in this ASU apply to all public and nonpublic entities with financing receivables. Financing receivables include loans and trade accounts receivable. However, short-term trade accounts receivable, receivables measured at fair value or lower of cost or fair value, and debt securities are exempt from these disclosure amendments.
The effective date of ASU 2010-20 differs for public and nonpublic companies. For public companies, the amendments that require disclosures as of the end of a reporting period are effective for periods ending on or after December 15, 2010. The amendments that require disclosures about activity that occurs during a reporting period are effective for periods beginning on or after December 15, 2010. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements. |
Legal Proceedings
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6 Months Ended |
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Jun. 30, 2011
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Legal Proceedings | Â |
Legal Proceedings | Note 3: Legal Proceedings
The Company and Republic are from time to time parties (plaintiff or defendant) to lawsuits in the normal course of business. While any litigation involves an element of uncertainty, management, after reviewing pending actions with its legal counsel, is of the opinion that the liability of the Company and Republic, if any, resulting from such actions will not have a material effect on the financial condition or results of operations of the Company and Republic. |
Segment Reporting
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6 Months Ended |
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Jun. 30, 2011
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Segment Reporting | Â |
Segment Reporting | Note 4: Segment Reporting
The Company has one reportable segment: community banking. The community bank segment primarily encompasses the commercial loan and deposit activities of Republic, as well as consumer loan products in the area surrounding its branches. |
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) (USD $)
In Thousands, except Share data |
6 Months Ended | |
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Jun. 30, 2011
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Jun. 30, 2010
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Consolidated Statements of Changes in Shareholders' Equity | Â | Â |
Unrealized gain (loss) on securities, pre-tax | $ 2,868 | $ 1,648 |
Reclassification adjustment for impairment charge, pre-tax | $ 2 | $ 372 |
Shares issued under common offering, shares | Â | 15,000,000 |
Shares purchased for deferred compensation plan, shares | Â | 24,489 |