x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
|
EXCHANGE ACT OF 1934
|
|
For the quarterly period ended June 30, 2011
|
|
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
|
EXCHANGE ACT OF 1934
|
|
For the transition period from ___________ to _________
|
Delaware | 57-1001177 |
(State or other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer
Identification No.)
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PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
|
||||||||
June 30, 2011 and December 31, 2010
|
||||||||
June 30,
|
December 31,
|
|||||||
ASSETS
|
2011
|
2010
|
||||||
(Unaudited)
|
(Audited)
|
|||||||
(DOLLARS IN THOUSANDS)
|
||||||||
Cash and due from banks
|
$ | 4,601 | $ | 4,755 | ||||
Interest earning balances with the Federal Reserve
|
4,148 | 5,638 | ||||||
Federal funds sold
|
20,519 | 14,472 | ||||||
Cash and cash equivalents
|
29,268 | 24,865 | ||||||
Investment and mortgage-backed securities-available for sale
|
153,053 | 148,469 | ||||||
Loans, net of unearned fees
|
176,508 | 206,275 | ||||||
Allowance for loan losses (ALL)
|
(6,372 | ) | (7,379 | ) | ||||
Loans, net of ALL
|
170,136 | 198,896 | ||||||
Real estate acquired through foreclosure
|
10,219 | 10,618 | ||||||
Office properties and equipment, net
|
4,912 | 5,101 | ||||||
Federal Home Loan Bank stock, at cost
|
3,445 | 3,526 | ||||||
Federal Reserve Bank stock, at cost
|
667 | 832 | ||||||
Accrued interest receivable
|
1,396 | 1,575 | ||||||
Cash surrender value of life insurance
|
7,770 | 8,623 | ||||||
Other assets
|
6,007 | 6,213 | ||||||
TOTAL ASSETS
|
$ | 386,873 | $ | 408,718 | ||||
LIABILITIES
|
||||||||
Demand and savings deposits
|
$ | 160,694 | $ | 165,985 | ||||
Time deposits
|
134,875 | 147,143 | ||||||
Total deposits
|
295,569 | 313,128 | ||||||
Advances from the Federal Home Loan Bank
|
59,500 | 59,500 | ||||||
Securities sold under agreements to repurchase
|
4,999 | 10,028 | ||||||
Floating rate junior subordinated deferrable interest debentures
|
12,372 | 12,372 | ||||||
Accrued interest payable
|
855 | 663 | ||||||
Other liabilities
|
2,851 | 2,758 | ||||||
TOTAL LIABILITIES
|
376,146 | 398,449 | ||||||
Commitments and contingencies-Note 5
|
||||||||
SHAREHOLDERS' EQUITY
|
||||||||
Serial preferred stock - $0.01 par value
|
||||||||
authorized - 500,000 shares
|
||||||||
issued and outstanding - 9,266 shares
|
||||||||
at June 30, 2011 and December 31, 2010, respectively
|
9,253 | 9,250 | ||||||
Common stock - $0.01 par value,
|
||||||||
authorized - 5,000,000 shares,
|
||||||||
issued and outstanding - 1,790,599 shares at June 30, 2011
|
||||||||
and December 31, 2010, respectively
|
20 | 20 | ||||||
Common stock warrants
|
25 | 25 | ||||||
Additional paid-in capital
|
12,919 | 12,919 | ||||||
Accumulated other comprehensive loss
|
(2,439 | ) | (2,778 | ) | ||||
Retained deficit, substantially restricted
|
(2,751 | ) | (2,867 | ) | ||||
Treasury stock, at cost
|
(6,300 | ) | (6,300 | ) | ||||
TOTAL SHAREHOLDERS' EQUITY
|
10,727 | 10,269 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 386,873 | $ | 408,718 | ||||
See notes to consolidated financial statements.
|
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
|
|
|||||||||||||||
Three and Six Months Ended June 30, 2011 and 2010 (unaudited)
|
||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE) | (DOLLARS IN THOUSANDS EXCEPT PER SHARE) | |||||||||||||||
Interest Income:
|
||||||||||||||||
Loans
|
$ | 2,344 | $ | 2,875 | $ | 4,788 | $ | 5,995 | ||||||||
Deposits and federal funds sold
|
4 | 8 | 14 | 13 | ||||||||||||
Interest and dividends on mortgage-backed securities
|
729 | 218 | 1,361 | 647 | ||||||||||||
Interest and dividends on investment securities
|
633 | 1,010 | 1,149 | 1,985 | ||||||||||||
Total interest income
|
3,710 | 4,111 | 7,312 | 8,640 | ||||||||||||
Interest Expense:
|
||||||||||||||||
Deposit accounts
|
663 | 1,294 | 1,543 | 2,841 | ||||||||||||
Floating rate junior subordinated deferrable interest debentures
|
119 | 120 | 237 | 237 | ||||||||||||
Advances from the FHLB and other borrowings
|
624 | 630 | 1,243 | 1,374 | ||||||||||||
Total interest expense
|
1,406 | 2,044 | 3,023 | 4,452 | ||||||||||||
Net Interest Income
|
2,304 | 2,067 | 4,289 | 4,188 | ||||||||||||
Provision for loan losses
|
-- | 1,187 | -- | 2,083 | ||||||||||||
Net interest income after
|
||||||||||||||||
provision for loan losses
|
2,304 | 880 | 4,289 | 2,105 | ||||||||||||
Non-Interest Income:
|
||||||||||||||||
Fees for financial services
|
649 | 734 | 1,284 | 1,396 | ||||||||||||
Other fees, net
|
11 | 11 | 22 | 34 | ||||||||||||
Other-than-temporary-impairment write-down on securities
|
(191 | ) | (164 | ) | (191 | ) | (467 | ) | ||||||||
Net gain on sale of investments
|
282 | 528 | 278 | 1,205 | ||||||||||||
Total non-interest income
|
751 | 1,109 | 1,393 | 2,168 | ||||||||||||
Non-Interest Expense:
|
||||||||||||||||
Compensation and employee benefits
|
1,044 | 1,060 | 2,107 | 2,182 | ||||||||||||
Occupancy and equipment
|
657 | 604 | 1,288 | 1,203 | ||||||||||||
Deposit insurance premiums
|
179 | 146 | 357 | 290 | ||||||||||||
Professional services
|
174 | 98 | 310 | 198 | ||||||||||||
Advertising and public relations
|
9 | 17 | 20 | 30 | ||||||||||||
OREO and loan operations
|
657 | 165 | 821 | 258 | ||||||||||||
Items processing
|
75 | 83 | 151 | 160 | ||||||||||||
Telephone
|
52 | 51 | 93 | 87 | ||||||||||||
Other
|
193 | 233 | 398 | 388 | ||||||||||||
Total non-interest expense
|
3,040 | 2,457 | 5,545 | 4,796 | ||||||||||||
Net income (loss) before income taxes
|
15 | (468 | ) | 137 | (523 | ) | ||||||||||
Expense (benefit) for income taxes
|
7 | (171 | ) | 18 | (245 | ) | ||||||||||
Net income (loss)
|
8 | (297 | ) | 119 | (278 | ) | ||||||||||
Accretion of preferred stock to redemption value and preferred dividends accumulated | 118 | 117 | 235 | 236 | ||||||||||||
Net loss to common shareholders
|
$ | (110 | ) | $ | (414 | ) | $ | (116 | ) | $ | (514 | ) | ||||
Net loss per common share (basic)
|
$ | (0.06 | ) | $ | (0.23 | ) | $ | (0.06 | ) | $ | (0.29 | ) | ||||
Net loss per common share (diluted)
|
$ | (0.06 | ) | $ | (0.23 | ) | $ | (0.06 | ) | $ | (0.29 | ) | ||||
Weighted average number of common shares outstanding
|
||||||||||||||||
Basic
|
1,790,599 | 1,790,599 | 1,790,599 | 1,790,599 | ||||||||||||
Diluted
|
1,790,599 | 1,790,599 | 1,790,599 | 1,790,599 | ||||||||||||
See notes to consolidated financial statements.
|
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
|
||||||||
Six Months Ended June 30, 2011 and 2010 (unaudited)
|
||||||||
Six Months Ended
|
||||||||
June 30,
|
June 30,
|
|||||||
2011
|
2010
|
|||||||
(IN THOUSANDS)
|
||||||||
OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$ | 119 | $ | (278 | ) | |||
Adjustments to reconcile net income to
|
||||||||
net cash provided by operating activities:
|
||||||||
Provision for loan losses
|
-- | 2,083 | ||||||
Amortization of securities
|
346 | 543 | ||||||
Depreciation expense
|
196 | 235 | ||||||
Recognition of deferred income, net of costs
|
(61 | ) | (105 | ) | ||||
Deferral of fee income, net of costs
|
72 | 80 | ||||||
Other than temporary impairment charge on AFS securities
|
191 | 467 | ||||||
Gain on investment transactions
|
(278 | ) | (1,205 | ) | ||||
Loss on OREO sales
|
51 | -- | ||||||
OREO impairment
|
498 | -- | ||||||
Changes in operating assets and liabilities:
|
||||||||
Decrease in accrued interest receivable
|
179 | 488 | ||||||
Increase in cash surrender value of life insurance
|
(179 | ) | (194 | ) | ||||
(Decrease) increase in other assets
|
23 | (17 | ) | |||||
Increase (decrease) in other liabilities
|
93 | (35 | ) | |||||
Increase (decrease) in accrued interest payable
|
192 | (66 | ) | |||||
Net cash provided by operating activities
|
1,442 | 1,996 | ||||||
INVESTING ACTIVITIES:
|
||||||||
Purchase of investment and mortgage-backed securities:
|
||||||||
Available for sale
|
(33,443 | ) | (106,233 | ) | ||||
Proceeds from sale of investment and mortgage-
|
||||||||
backed securities:
|
||||||||
Available for sale
|
24,098 | 47,806 | ||||||
Held to maturity
|
-- | 3,934 | ||||||
Proceeds from maturity of investment and mortgage-
|
||||||||
backed securities:
|
||||||||
Available for sale
|
36 | 53,529 | ||||||
Principal repayments on mortgage-backed securities:
|
||||||||
Available for sale
|
4,988 | 9,140 | ||||||
Net decrease in loans
|
25,450 | 17,818 | ||||||
Redemption of FHLB/FRB stock
|
246 | -- | ||||||
Proceeds from sales of foreclosed assets, net of costs and improvements
|
3,149 | 439 | ||||||
Purchase of office properties and equipment
|
(7 | ) | (63 | ) | ||||
Net cash provided by investing activities
|
24,517 | 26,370 | ||||||
FINANCING ACTIVITIES:
|
||||||||
Dividends paid on preferred stock
|
-- | (232 | ) | |||||
Proceeds from redemption of life insurance
|
1,032 | -- | ||||||
Decrease in other borrowings
|
(5,029 | ) | (12,414 | ) | ||||
Decrease in deposit accounts
|
(17,559 | ) | (11,881 | ) | ||||
Net cash used by financing activities
|
(21,556 | ) | (24,527 | ) | ||||
NET INCREASE IN CASH
|
||||||||
AND CASH EQUIVALENTS
|
4,403 | 3,839 | ||||||
CASH AND CASH EQUIVALENTS
|
||||||||
AT BEGINNING OF PERIOD
|
24,865 | 15,631 | ||||||
CASH AND CASH EQUIVALENTS
|
||||||||
AT END OF PERIOD
|
$ | 29,268 | $ | 19,470 | ||||
SUPPLEMENTAL DISCLOSURES:
|
||||||||
Cash paid for:
|
||||||||
Income taxes
|
$ | -- | $ | 28 | ||||
Interest
|
2,831 | 4,518 | ||||||
Non-cash transactions:
|
||||||||
Loans foreclosed
|
$ | 3,299 | $ | 559 | ||||
Unrealized gain (loss) on securities available for sale, net of income tax
|
393 | 585 | ||||||
See notes to consolidated financial statements.
|
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
|
||||||||||||||||||||||||||||||||||||||||
SIX MONTHS ENDED JUNE 30, 2011 and 2010 (unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
Additional
Paid-in |
Retained
Earnings, |
Accumulated
Other |
Treasury Stock
|
Total
Shareholders' |
||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Warrants
|
Capital
|
Restricted
|
Income (loss)
|
at Cost
|
Equity
|
|||||||||||||||||||||||||||||||
(Dollars in Thousands, Except Share Data) | ||||||||||||||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2009
|
9,266 | $ | 9,245 | 1,790,599 | $ | 20 | $ | 25 | $ | 12,919 | $ | 11,184 | $ | (972 | ) | $ | (6,300 | ) | $ | 26,121 | ||||||||||||||||||||
Net loss
|
(278 | ) | (278 | ) | ||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax of $86 on
|
||||||||||||||||||||||||||||||||||||||||
unrealized holding gains on securities available for sale
|
||||||||||||||||||||||||||||||||||||||||
arising during period
|
585 | 585 | ||||||||||||||||||||||||||||||||||||||
Less reclassification adjustment for gains and other than
|
||||||||||||||||||||||||||||||||||||||||
temporary impairment charge in net income
|
(458 | ) | (458 | ) | ||||||||||||||||||||||||||||||||||||
Comprehensive loss
|
(151 | ) | ||||||||||||||||||||||||||||||||||||||
Accretion of Preferred Stock to redemption value
|
3 | (3 | ) | -- | ||||||||||||||||||||||||||||||||||||
Preferred stock dividend
|
(232 | ) | (232 | ) | ||||||||||||||||||||||||||||||||||||
BALANCE AT JUNE 30, 2010
|
9,266 | $ | 9,248 | 1,790,599 | $ | 20 | $ | 25 | $ | 12,919 | $ | 10,671 | $ | (845 | ) | $ | (6,300 | ) | $ | 25,738 | ||||||||||||||||||||
BALANCE AT DECEMBER 31, 2010
|
9,266 | $ | 9,250 | 1,790,599 | $ | 20 | $ | 25 | $ | 12,919 | $ | (2,867 | ) | $ | (2,778 | ) | $ | (6,300 | ) | $ | 10,269 | |||||||||||||||||||
Net income
|
119 | 119 | ||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax of $68 on
|
||||||||||||||||||||||||||||||||||||||||
unrealized holding gains on securities available for sale
|
||||||||||||||||||||||||||||||||||||||||
arising during period
|
393 | 393 | ||||||||||||||||||||||||||||||||||||||
Less reclassification adjustment for gains and other than
|
||||||||||||||||||||||||||||||||||||||||
temporary impairment charge in net income
|
(54 | ) | (54 | ) | ||||||||||||||||||||||||||||||||||||
Comprehensive income
|
458 | |||||||||||||||||||||||||||||||||||||||
Accretion of Preferred Stock to redemption value
|
3 | (3 | ) | -- | ||||||||||||||||||||||||||||||||||||
BALANCE AT June 30, 2011
|
9,266 | $ | 9,253 | 1,790,599 | $ | 20 | $ | 25 | $ | 12,919 | $ | (2,751 | ) | $ | (2,439 | ) | $ | (6,300 | ) | $ | 10,727 | |||||||||||||||||||
See notes to consolidated financial statements
|
June 30,
2011
|
December 31,
2010 |
|||||||
Loans receivable for which there is a related allowance for credit losses determined in accordance with ASC 310-10
|
$ | 5,082 | $ | 6,301 | ||||
Other impaired loans
|
13,843 | 12,525 | ||||||
Total impaired loans
|
$ | 18,925 | $ | 18,826 | ||||
Average monthly balance of impaired loans
|
$ | 19,661 | $ | 22,280 | ||||
Specific allowance for credit losses
|
$ | 1,360 | $ | 1,788 |
Non-performing Loans
|
||||||||||||||||||||
For the Periods Ended June 30, 2011 and December 31, 2010
|
||||||||||||||||||||
Unpaid
|
Average
|
|||||||||||||||||||
June 30, 2011
|
Principal
|
Recorded
|
Related
|
Specific
|
Recorded
|
|||||||||||||||
Balance
|
Investment
|
Allowance
|
Allowance
|
Investment
|
||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial
|
||||||||||||||||||||
Commercial Real Estate
|
$ | 4,134 | $ | 4,134 | $ | -- | $ | -- | $ | 4,134 | ||||||||||
Commercial Real Estate
|
||||||||||||||||||||
Construction
|
3,434 | 3,434 | -- | -- | 3,434 | |||||||||||||||
Commercial
|
||||||||||||||||||||
Non Real Estate
|
402 | 402 | -- | -- | 402 | |||||||||||||||
Consumer
|
||||||||||||||||||||
Consumer – other
|
986 | 986 | -- | -- | 986 | |||||||||||||||
Consumer – home equity
|
113 | 113 | -- | -- | 113 | |||||||||||||||
Residential Real Estate
|
||||||||||||||||||||
1-4 family
|
1,568 | 1,568 | -- | -- | 1,568 | |||||||||||||||
|
||||||||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial
|
||||||||||||||||||||
Commercial Real Estate
|
$ | 5,161 | $ | 2,758 | $ | 2,403 | $ | 1,074 | $ | 3,960 | ||||||||||
Commercial Real Estate
|
||||||||||||||||||||
Construction
|
6,315 | 4,058 | 2,257 | 250 | 5,187 | |||||||||||||||
Commercial
|
||||||||||||||||||||
Non Real Estate
|
747 | 470 | 277 | -- | 609 | |||||||||||||||
Consumer
|
||||||||||||||||||||
Consumer – other
|
1,690 | 823 | 867 | 36 | 1,257 | |||||||||||||||
Consumer-home equity
|
74 | 61 | 13 | -- | 68 | |||||||||||||||
Residential Real Estate
|
||||||||||||||||||||
1-4 family
|
121 | 118 | 3 | -- | 120 | |||||||||||||||
Total:
|
$ | 24,745 | $ | 18,925 | $ | 5,820 | $ | 1,360 | $ | 21,838 | ||||||||||
Commercial
|
20,193 | 15,256 | 4,937 | 1,324 | 17,726 | |||||||||||||||
Consumer
|
2,863 | 1,983 | 880 | 36 | 2,424 | |||||||||||||||
Residential
|
1,689 | 1,686 | 3 | -- | 1,688 |
Unpaid
|
Average
|
|||||||||||||||||||
December 31, 2010
|
Principal
|
Recorded
|
Related
|
Specific
|
Recorded
|
|||||||||||||||
|
Balance
|
Investment
|
Allowance
|
Allowance
|
Investment
|
|||||||||||||||
|
(IN THOUSANDS)
|
|||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial
|
||||||||||||||||||||
Commercial Real Estate
|
$ | 3,729 | $ | 3,729 | $ | -- | $ | -- | $ | 3,729 | ||||||||||
Commercial Real Estate
|
||||||||||||||||||||
Construction
|
3,195 | 3,195 | -- | -- | 3,195 | |||||||||||||||
Commercial
|
||||||||||||||||||||
Non Real Estate
|
440 | 440 | -- | -- | 440 | |||||||||||||||
Consumer
|
||||||||||||||||||||
Consumer – other
|
1,167 | 1,167 | -- | -- | 1,167 | |||||||||||||||
Consumer – home equity
|
147 | 147 | -- | -- | 147 | |||||||||||||||
Residential Real Estate
|
||||||||||||||||||||
1-4 family
|
1,148 | 1,148 | -- | -- | 1,148 | |||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial
|
||||||||||||||||||||
Commercial Real Estate
|
$ | 5,005 | $ | 2,174 | $ | 2,831 | $ | 1,502 | $ | 3,590 | ||||||||||
Commercial Real Estate
|
||||||||||||||||||||
Construction
|
8,127 | 5,206 | 2,921 | 250 | 6,667 | |||||||||||||||
Commercial
|
||||||||||||||||||||
Non Real Estate
|
845 | 608 | 237 | -- | 726 | |||||||||||||||
Consumer
|
||||||||||||||||||||
Consumer – other
|
1,355 | 625 | 730 | 36 | 990 | |||||||||||||||
Residential Real Estate
|
||||||||||||||||||||
1-4 family
|
575 | 387 | 189 | -- | 481 | |||||||||||||||
Total:
|
$ | 25,733 | $ | 18,826 | $ | 6,908 | $ | 1,788 | $ | 22,280 | ||||||||||
Commercial
|
21,341 | 15,352 | 5,989 | 1,752 | 18,347 | |||||||||||||||
Consumer
|
2,669 | 1,939 | 730 | 36 | 2,304 | |||||||||||||||
Residential
|
1,723 | 1,535 | 189 | -- | 1,629 |
|
June 30,
|
December 31,
|
||||||
|
2011
|
2010
|
||||||
|
(IN THOUSANDS)
|
|||||||
Commercial
|
||||||||
Commercial real estate
|
$ | 6,892 | $ | 5,904 | ||||
Commercial real estate construction
|
7,492 | 8,401 | ||||||
Commercial real estate other
|
872 | 1,048 | ||||||
Consumer
|
||||||||
Consumer – other
|
1,750 | 1,792 | ||||||
Consumer – automobile
|
59 | -- | ||||||
Consumer – home equity
|
174 | 147 | ||||||
Residential Real Estate
|
||||||||
1-4 family
|
1,686 | 1,534 | ||||||
Total
|
$ | 18,925 | $ | 18,826 |
Commercial
|
||||||||||||||||||||
|
Commercial
|
Real Estate
|
Consumer
|
Residential
|
Total
|
|||||||||||||||
|
(IN THOUSANDS)
|
|||||||||||||||||||
June 30, 2011
|
||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Beginning balance
|
$ | 2,166 | $ | 4,602 | $ | 335 | $ | 276 | $ | 7,379 | ||||||||||
Chargeoffs
|
(295 | ) | (777 | ) | (181 | ) | (11 | ) | (1,264 | ) | ||||||||||
Recoveries
|
33 | 138 | 25 | 61 | 257 | |||||||||||||||
Provisions
|
-- | -- | -- | -- | -- | |||||||||||||||
Ending balance
|
$ | 1,904 | $ | 3,963 | $ | 179 | $ | 326 | $ | 6,372 | ||||||||||
Loans receivable:
|
||||||||||||||||||||
Ending balance - total
|
$ | 37,628 | $ | 84,553 | $ | 40,963 | $ | 13,601 | $ | 176,745 | ||||||||||
Ending balances:
|
||||||||||||||||||||
Individually evaluated
|
||||||||||||||||||||
for impairment
|
$ | 872 | $ | 14,384 | $ | 1,983 | $ | 1,686 | $ | 18,925 | ||||||||||
Collectively evaluated
|
||||||||||||||||||||
for impairment
|
$ | 36,756 | $ | 70,169 | $ | 38,980 | $ | 11,915 | $ | 157,820 | ||||||||||
December 31, 2010
|
||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||
Beginning balance
|
$ | 1,947 | $ | 2,773 | $ | 502 | $ | 357 | $ | 5,579 | ||||||||||
Chargeoffs
|
(976 | ) | (6,044 | ) | (1,423 | ) | (262 | ) | (8,705 | ) | ||||||||||
Recoveries
|
118 | 1,203 | 25 | 69 | 1,415 | |||||||||||||||
Provisions
|
1,077 | 6,670 | 1,231 | 112 | 9,090 | |||||||||||||||
Ending balance
|
$ | 2,166 | $ | 4,602 | $ | 335 | $ | 276 | $ | 7,379 | ||||||||||
Loans receivable:
|
||||||||||||||||||||
Ending balance - total
|
$ | 46,809 | $ | 99,612 | $ | 45,269 | $ | 14,831 | $ | 206,521 | ||||||||||
Ending balances:
|
||||||||||||||||||||
Individually evaluated
|
||||||||||||||||||||
for impairment
|
$ | 1,048 | $ | 14,304 | $ | 1,939 | $ | 1,535 | $ | 18,826 | ||||||||||
Collectively evaluated
|
||||||||||||||||||||
for impairment
|
$ | 45,761 | $ | 85,308 | $ | 43,330 | $ | 13,296 | $ | 187,695 |
|
Commercial
|
Commercial Real
|
||||||||||||||||||||||
|
Commercial-Other
|
Construction
|
Estate
|
|||||||||||||||||||||
June 30,
|
December 31,
|
June 30,
|
December 31,
|
June 30,
|
December 31,
|
|||||||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||||
|
(IN THOUSANDS)
|
|||||||||||||||||||||||
Grade 1 Superior Quality
|
$ | 94 | $ | 4 | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||||||
Grade 2 Good Quality
|
296 | 340 | -- | -- | -- | -- | ||||||||||||||||||
Grade 3 Satisfactory
|
907 | 1,879 | 800 | 1,818 | 5,706 | 7,000 | ||||||||||||||||||
Grade 4 Acceptable
|
9,953 | 14,925 | 7,570 | 7,785 | 60,469 | 72,885 | ||||||||||||||||||
Grade 5 Special Mention
|
2,003 | 2,866 | 2,874 | 1,302 | 10,795 | 8,304 | ||||||||||||||||||
Grade 6 Substandard
|
2,248 | 3,901 | 10,883 | 11,989 | 7,559 | 11,423 | ||||||||||||||||||
Grade 7 Doubtful
|
-- | -- | -- | -- | 24 | -- | ||||||||||||||||||
Total
|
$ | 15,501 | $ | 23,915 | $ | 22,127 | $ | 22,894 | $ | 84,553 | $ | 99,612 |
|
Residential
|
Consumer
|
||||||||||||||
June 30,
|
December 31,
|
June 30,
|
December 31,
|
|||||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
|
(IN THOUSANDS)
|
|||||||||||||||
Grade:
|
||||||||||||||||
Pass
|
$ | 11,871 | $ | 13,282 | $ | 37,952 | $ | 42,273 | ||||||||
Special mention
|
31 | -- | 126 | -- | ||||||||||||
Substandard
|
1,699 | 1,549 | 2,885 | 2,996 | ||||||||||||
Total
|
$ | 13,601 | $ | 14,831 | $ | 40,963 | $ | 45,269 |
|
Consumer
|
Residential real estate
|
||||||||||||||||||||||||||||||
|
Other
|
Automobile
|
Home equity
|
1-4 family
|
||||||||||||||||||||||||||||
June 30,
|
December 31,
|
June 30,
|
December 31,
|
June 30,
|
December 31,
|
June 30,
|
December 31,
|
|||||||||||||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||||||||||
|
(IN THOUSANDS)
|
|||||||||||||||||||||||||||||||
Performing
|
$ | 22,751 | $ | 25,366 | $ | 1,077 | $ | 1,502 | $ | 15,152 | $ | 16,462 | $ | 11,915 | $ | 13,297 | ||||||||||||||||
Nonperforming
|
1,750 | 1,792 | 59 | -- | 174 | 147 | 1,686 | 1,534 | ||||||||||||||||||||||||
Total
|
$ | 24,501 | $ | 27,158 | $ | 1,136 | $ | 1,502 | $ | 15,326 | $ | 16,609 | $ | 13,601 | $ | 14,831 |
Greater
|
||||||||||||||||||||||||
30 – 59 Days
|
60 – 89 Days
|
Than
|
Total Past
|
|
Total Loans
|
|||||||||||||||||||
|
Past Due
|
Past Due
|
90 Days
|
Due
|
Current
|
Receivable
|
||||||||||||||||||
|
(IN THOUSANDS)
|
|||||||||||||||||||||||
June 30, 2011
|
||||||||||||||||||||||||
Commercial non real estate
|
$ | 263 | $ | 49 | $ | 751 | $ | 1,063 | $ | 14,438 | $ | 15,501 | ||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Commercial real estate – other
|
1,863 | 819 | 5,742 | 8,424 | 76,129 | 84,553 | ||||||||||||||||||
Commercial real estate – construction
|
-- | 1,117 | 5,349 | 6,466 | 15,661 | 22,127 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Consumer – other
|
440 | 280 | 1,066 | 1,786 | 22,715 | 24,501 | ||||||||||||||||||
Consumer – automobile
|
78 | -- | -- | 78 | 1,058 | 1,058 | ||||||||||||||||||
Consumer – home equity
|
92 | 18 | 61 | 171 | 15,155 | 15,326 | ||||||||||||||||||
Residential 1-4 family
|
-- | 719 | 631 | 1,350 | 12,251 | 13,601 | ||||||||||||||||||
Total
|
$ | 2,736 | $ | 3,002 | $ | 13,600 | $ | 19,338 | $ | 157,407 | $ | 176,745 | ||||||||||||
December 31, 2010
|
||||||||||||||||||||||||
Commercial non real estate
|
$ | 175 | $ | 221 | $ | 1,089 | $ | 1,485 | $ | 22,430 | $ | 23,915 | ||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Commercial real estate – other
|
466 | 292 | 5,743 | 6,501 | 93,111 | 99,612 | ||||||||||||||||||
Commercial real estate – construction
|
1,202 | 1,591 | 7,246 | 10,039 | 12,855 | 22,894 | ||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Consumer – other
|
718 | 472 | 886 | 2,076 | 25,082 | 27,158 | ||||||||||||||||||
Consumer – automobile
|
66 | 32 | -- | 98 | 1,404 | 1,502 | ||||||||||||||||||
Consumer – home equity | 148 | 94 | 14 | 256 | 16,353 | 16,609 | ||||||||||||||||||
Residential 1-4 family | 1,060 | 656 | 1,119 | 2,835 | 11,996 | 14,831 | ||||||||||||||||||
Total
|
$ | 3,835 | $ | 3,358 | $ | 16,097 | $ | 23,290 | $ | 183,231 | $ | 206,521 |
Loan Commitments:
|
Contract Amount
|
|||
Commitments to fund commercial and construction loans
|
$ | 143,000 | ||
Unused portions of loans and credit lines
|
27,042,000 | |||
Total loan commitments
|
$ | 27,185,000 |
Amount Outstanding at
June 30,
|
|||||||||||||||||
Name
|
2011
|
2010
|
Rate
|
Prepayment
Option Date
|
Maturity
|
Distribution
Payment
Frequency
|
|||||||||||
Provident Community | |||||||||||||||||
Bancshares Capital Trust I
|
$ | 4,000,000 | $ | 4,000,000 | 7.39 | % |
October 1, 2011
|
October 1, 2036
|
Quarterly
|
||||||||
Provident Community | |||||||||||||||||
Bancshares Capital Trust II
|
8,000,000 | 8,000,000 | 1.99 | % |
March 1, 2012
|
March 1, 2037
|
Quarterly
|
||||||||||
Total | $ | 12,000,000 | $ | 12,000,000 |
Level 1
|
Valuation is based upon quoted prices in active markets for identical assets or liabilities.
|
Level 2
|
Valuation is based upon quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
Level 3
|
Valuation is based upon quoted prices for similar assets or liabilities; quoted prices in markets that are not active; and model-based techniques whose value is determined using pricing models, discounted cash flow methodologies and similar techniques.
|
Quoted Prices in | Significant Other | Significant | ||||||||||||||
Active Markets for | Observable | Unobservable | ||||||||||||||
June 30, | Identical Assets | Inputs | Inputs | |||||||||||||
2011
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Investment securities:
|
||||||||||||||||
U.S. Agency obligations
|
$ | 1 | $ | 1 | $ | -- | $ | -- | ||||||||
Government Sponsored Enterprises
|
66,905 | 66,905 | -- | -- | ||||||||||||
Trust Preferred securities
|
4,284 | -- | 2,642 | 1,642 | ||||||||||||
Total investment securities
|
71,190 | 66,906 | 2,642 | 1,642 | ||||||||||||
Mortgage-backed and
related securities
|
81,863 | -- | 81,863 | -- | ||||||||||||
Total
|
$ | 153,053 | $ | 66,906 | $ | 84,505 | $ | 1,642 |
Quoted Prices in | Significant Other | Significant | ||||||||||||||
Active Markets for | Observable | Unobservable | ||||||||||||||
December 31, | Identical Assets | Inputs | Inputs | |||||||||||||
2010
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Investment securities:
|
||||||||||||||||
U.S. Agency obligations
|
$ | 2 | $ | 2 | $ | -- | $ | -- | ||||||||
Government Sponsored Enterprises
|
54,772 | 54,772 | -- | -- | ||||||||||||
Trust Preferred securities
|
4,548 | -- | 2,614 | 1,934 | ||||||||||||
Total investment securities
|
59,322 | 54,774 | 2,614 | 1,934 | ||||||||||||
Mortgage-backed and
related securities
|
89,147 | -- | 89,147 | -- | ||||||||||||
Total
|
$ | 148,469 | $ | 54,774 | $ | 91,761 | $ | 1,934 |
Fair Value Measurements Using Significant | ||||
Unobservable Inputs (Level 3) | ||||
Investment Securities | ||||
Available-for-Sale | ||||
Beginning balance at March 31, 2011
|
$ | 2,050,000 | ||
Transfers into Level 3
|
-- | |||
Total gains/ (losses) included in: | ||||
Net loss
|
(81,000 | ) | ||
Other comprehensive income
|
(127,000 | ) | ||
Purchases, sales, issuances and settlements, net
|
(200,000 | ) | ||
Ending balance at June 30, 2011
|
$ | 1,642,000 | ||
Beginning balance at December 31, 2010
|
$ | 1,934,000 | ||
Transfers into Level 3
|
-- | |||
Total gains/ (losses) included in:
|
||||
Net loss | (93,000 | ) | ||
Other comprehensive income
|
(20,000 | ) | ||
Purchases, sales, issuances and settlements, net
|
(179,000 | ) | ||
Ending balance at June 30, 2011
|
$ | 1,642,000 |
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Impaired loans
|
$ | 17,565,000 | $ | -- | $ | 17,565,000 | $ | -- | ||||||||
Troubled debt restructurings
|
4,618,000 | -- | 4,618,000 | -- | ||||||||||||
Other real estate owned
|
10,219,000 | -- | 10,219,000 | -- | ||||||||||||
Total assets at fair value
|
$ | 32,402,000 | $ | -- | $ | 32,402,000 | $ | -- |
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Impaired loans
|
$ | 17,038,000 | $ | -- | $ | 17,038,000 | $ | -- | ||||||||
Troubled debt restructurings
|
5,667,000 | -- | 5,667,000 | -- | ||||||||||||
Other real estate owned
|
10,618,000 | -- | 10,618,000 | -- | ||||||||||||
Total assets at fair value
|
$ | 33,323,000 | $ | -- | $ | 33,323,000 | $ | -- |
June 30, 2011
|
||||||||
Carrying
Amount |
Fair
Value |
|||||||
Financial assets
|
||||||||
Cash and cash equivalents
|
$ | 29,268 | $ | 29,268 | ||||
Securities available for sale
|
153,053 | 153,053 | ||||||
Federal Home Loan Bank stock, at cost
|
3,445 | 3,445 | ||||||
Federal Reserve Bank stock, at cost
|
667 | 667 | ||||||
Loans, net
|
170,136 | 172,348 | ||||||
Accrued interest receivable
|
1,396 | 1,396 | ||||||
Cash surrender value of life insurance
|
7,770 | 7,770 | ||||||
Financial liabilities
|
||||||||
Deposits
|
$ | 295,569 | $ | 283,096 | ||||
Advances from FHLB
|
59,500 | 60,652 | ||||||
Securities sold under agreements to repurchase
|
4,999 | 4,998 | ||||||
Floating rate junior subordinated deferrable interest debentures
|
12,372 | 12,372 | ||||||
Accrued interest payable
|
855 | 855 | ||||||
Off-balance-sheet assets (liabilities)
|
Notional
Amount |
Fair
Value |
||||||
Commitments to extend credit
|
$ | 27,185 | $ | -- |
December 31, 2010
|
||||||||
Carrying
Amount
|
Fair
Value
|
|||||||
Financial assets
|
||||||||
Cash and cash equivalents
|
$ | 24,865 | $ | 24,865 | ||||
Securities available for sale
|
148,469 | 148,469 | ||||||
Federal Home Loan Bank stock, at cost
|
3,526 | 3,526 | ||||||
Federal Reserve Bank stock, at cost
|
832 | 832 | ||||||
Loans, net
|
198,896 | 198,279 | ||||||
Accrued interest receivable
|
1,575 | 1,575 | ||||||
Cash surrender value of life insurance
|
8,623 | 8,623 | ||||||
Financial liabilities
|
||||||||
Deposits
|
$ | 313,128 | $ | 299,950 | ||||
Advances from FHLB
|
59,500 | 61,357 | ||||||
Securities sold under agreements to repurchase
|
10,028 | 10,027 | ||||||
Floating rate junior subordinated deferrable interest debentures
|
12,372 | 12,372 | ||||||
Accrued interest payable
|
663 | 663 | ||||||
Off-balance-sheet assets (liabilities)
|
Notional
Amount |
Fair
Value |
||||||
Commitments to extend credit
|
$ | 29,575 | $ | -- |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Amortized
Cost
|
Fair
Value
|
Amortized
Cost
|
Fair
Value
|
|||||||||||||
Investment Securities: | ||||||||||||||||
U.S. Agency Obligations
|
$ | 1 | $ | 1 | $ | 2 | $ | 2 | ||||||||
Government Sponsored Enterprises
|
68,176 | 66,905 | 55,881 | 54,772 | ||||||||||||
Trust Preferred Securities
|
6,883 | 4,284 | 7,27 1 | 4,548 | ||||||||||||
Total Investment Securities
|
75,060 | 71,190 | 63,154 | 59,322 | ||||||||||||
Mortgage-Backed Securities: | ||||||||||||||||
Fannie Mae
|
18,618 | 18,650 | 11,307 | 11,458 | ||||||||||||
Ginnie Mae
|
47,253 | 47,402 | 61,617 | 61,312 | ||||||||||||
Freddie Mac
|
15,474 | 15,427 | 16,216 | 15,962 | ||||||||||||
Collateralized Mortgage Obligations
|
399 | 384 | 448 | 415 | ||||||||||||
Total Mortgage-Backed Securities
|
81,744 | 81,863 | 89,588 | 89,147 | ||||||||||||
Total Available for Sale
|
$ | 156,804 | $ | 153,053 | $ | 152,742 | $ | 148,469 |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Available for sale:
|
Fair
Value
|
Percent of
Portfolio
|
Fair
Value
|
Percent of
Portfolio
|
||||||||||||
Investment securities:
|
||||||||||||||||
U.S. Agency obligations
|
$ | 1 | 0.00 | % | $ | 2 | 0.01 | % | ||||||||
Government Sponsored Enterprises
|
66,905 | 43.71 | 54,772 | 36.89 | ||||||||||||
Trust Preferred Securities
|
4,284 | 2.80 | 4,548 | 3.06 | ||||||||||||
Total investment securities
|
71,190 | 46.51 | 59,322 | 39.96 | ||||||||||||
Mortgage-Backed Securities
|
81,863 | 53.49 | 89,147 | 60.04 | ||||||||||||
Total
|
$ | 153,053 | 100.00 | % | $ | 148,469 | 100.00 | % |
As of June 30, 2011
|
||||||||||||||||
Amortized |
Gross Unrealized
|
Fair
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
Investment Securities:
|
||||||||||||||||
U.S. Agency Obligations
|
$ | 1 | $ | – | $ | -- | $ | 1 | ||||||||
Government Sponsored Enterprises
|
68,176 | 27 | (1,298 | ) | 66,905 | |||||||||||
Trust Preferred Securities
|
6,883 | – | (2,599 | ) | 4,284 | |||||||||||
Total Investment Securities
|
75,060 | 27 | (3,897 | ) | 71,190 | |||||||||||
Mortgage-Backed Securities:
|
||||||||||||||||
Fannie Mae
|
18,618 | 199 | (167 | ) | 18,650 | |||||||||||
Ginnie Mae
|
47,253 | 368 | (219 | ) | 47,402 | |||||||||||
Freddie Mac
|
15,474 | 45 | (92 | ) | 15,427 | |||||||||||
Collateralized Mortgage Obligations
|
399 | – | (15 | ) | 384 | |||||||||||
Total Mortgage-Backed Securities
|
81,744 | 612 | (493 | ) | 81,863 | |||||||||||
Total available for sale
|
$ | 156,804 | $ | 639 | $ | (4,390 | ) | $ | 153,053 |
As of December 31, 2010
|
||||||||||||||||
Amortized |
Gross Unrealized
|
Fair | ||||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
Investment Securities:
|
||||||||||||||||
U.S. Agency Obligations
|
$ | 2 | $ | -- | $ | -- | $ | 2 | ||||||||
Government Sponsored Enterprises
|
55,881 | 49 | (1,158 | ) | 54,772 | |||||||||||
Trust Preferred Securities
|
7,271 | -- | (2,723 | ) | 4,548 | |||||||||||
Total Investment Securities
|
63,154 | 49 | (3,881 | ) | 59,322 | |||||||||||
Mortgage-Backed Securities:
|
||||||||||||||||
Fannie Mae
|
11,307 | 270 | (119 | ) | 11,458 | |||||||||||
Ginnie Mae
|
61,617 | 180 | (485 | ) | 61,312 | |||||||||||
Freddie Mac
|
16,216 | 10 | (264 | ) | 15,962 | |||||||||||
Collateralized Mortgage Obligations
|
448 | -- | (33 | ) | 415 | |||||||||||
Total Mortgage-Backed Securities
|
89,588 | 460 | (901 | ) | 89,147 | |||||||||||
Total available for sale
|
$ | 152,742 | $ | 509 | $ | (4,782 | ) | $ | 148,469 |
Available for Sale
|
||||||||
Amortized
Cost |
Fair
Value
|
|||||||
Due in one year or less
|
$ | 1 | $ | 1 | ||||
Due after one year through five years
|
2,053 | 2,032 | ||||||
Due after five years through ten years
|
50,627 | 49,657 | ||||||
Due after ten years
|
104,123 | 101,363 | ||||||
Total investment and mortgage-backed securities
|
$ | 156,804 | $ | 153,053 |
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair
Value |
Unrealized
Losses |
Fair
Value |
Unrealized
Losses |
Fair
Value
|
Unrealized
Losses
|
|||||||||||||||||||
Securities Available
|
||||||||||||||||||||||||
for Sale
|
||||||||||||||||||||||||
Government Sponsored Enterprises
|
$ | 55,378 | $ | 1,298 | $ | – | $ | – | $ | 55,378 | $ | 1,298 | ||||||||||||
Trust Preferred Securities
|
– | – | 4,284 | 2,599 | 4,284 | 2,599 | ||||||||||||||||||
Mortgage-Backed | ||||||||||||||||||||||||
Securities
|
33,688 | 478 | 409 | 15 | 34,097 | 493 | ||||||||||||||||||
Total
|
$ | 89,066 | $ | 1,776 | $ | 4,693 | $ | 2,614 | $ | 93,759 | $ | 4,390 |
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair
Value |
Unrealized
Losses
|
Fair
Value |
Unrealized
Losses |
Fair
Value |
Unrealized
Losses |
|||||||||||||||||||
Securities Available
|
||||||||||||||||||||||||
for Sale
|
||||||||||||||||||||||||
Government Sponsored Enterprises
|
$ | 43,531 | $ | 1,158 | $ | – | $ | – | $ | 43,531 | $ | 1,158 | ||||||||||||
Trust Preferred Securities
|
– | – | 4,548 | 2,723 | 4,548 | 2,723 | ||||||||||||||||||
Mortgage-Backed | ||||||||||||||||||||||||
Securities
|
59,963 | 868 | 444 | 33 | 60,407 | 901 | ||||||||||||||||||
Total
|
$ | 103,494 | $ | 2,026 | $ | 4,992 | $ | 2,756 | $ | 108,486 | $ | 4,782 |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Mortgage loans:
|
||||||||
Fixed-rate residential
|
$ | 8,837 | $ | 9,102 | ||||
Adjustable-rate residential
|
4,153 | 5,064 | ||||||
Commercial real estate
|
84,553 | 99,612 | ||||||
Construction
|
611 | 665 | ||||||
Total mortgage loans
|
98,154 | 114,443 | ||||||
Commercial loans:
|
||||||||
Commercial non-real estate
|
21,354 | 23,137 | ||||||
Commercial lines of credit
|
16,274 | 23,672 | ||||||
Total commercial loans
|
37,628 | 46,809 | ||||||
Consumer loans:
|
||||||||
Home equity
|
15,326 | 16,409 | ||||||
Consumer and installment
|
25,339 | 28,553 | ||||||
Consumer lines of credit
|
298 | 307 | ||||||
Total consumer loans
|
40,963 | 45,269 | ||||||
Total loans
|
176,745 | 206,521 | ||||||
Less:
|
||||||||
Undisbursed portion of interim
|
||||||||
construction loans
|
(143 | ) | (143 | ) | ||||
Unamortized loan discount
|
(251 | ) | (269 | ) | ||||
Allowance for loan losses
|
(6,372 | ) | (7,379 | ) | ||||
Net deferred loan origination costs
|
157 | 166 | ||||||
Total, net
|
$ | 170,136 | $ | 198,896 | ||||
Weighted-average interest rate of loans
|
5.18 | % | 4.97 | % |
June 30, 2011
|
December 31, 2010
|
|||||||
Non-accruing loans which are
contractually past due 90 days
or more:
|
||||||||
Residential real estate | $ | 1,686 | $ | 1,534 | ||||
Commercial
|
15,256 | 15,353 | ||||||
Consumer
|
1,983 | 1,939 | ||||||
Total nonperforming loans
|
18,925 | 18,826 | ||||||
Non-accruing loans past due 90 days
and still accruing interest
|
252 | 125 | ||||||
Troubled debt restructurings
|
4,618 | 5,667 | ||||||
Real estate acquired through
Foreclosure
|
10,219 | 10,618 | ||||||
Total nonperforming assets
|
$ | 34,014 | $ | 35,236 | ||||
Nonperforming loans to total loans, net
|
11. 12 | % | 9.46 | % | ||||
Nonperforming assets to total assets
|
8.79 | % | 8.62 | % | ||||
Allowance for loan losses to total
loans outstanding
|
3.61 | % | 3.58 | % | ||||
Allowance for loan losses to
nonperforming loans
|
33 .67 | % | 39.20 | % | ||||
Allowance for loan losses
|
$ | 6,372 | $ | 7,379 |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Balance at beginning of period
|
$ | 10,618 | $ | 5,917 | ||||
Foreclosures added during the period
|
3,299 | 9,271 | ||||||
Sales of foreclosed property
|
(3,200 | ) | (2,739 | ) | ||||
Provision charged as a write-down
|
(498 | ) | (1,831 | ) | ||||
Balance at the end of period
|
$ | 10,219 | $ | 10,618 |
June 30, 2011 | December 31, 2010 | |||||||||||||||||||||||
Rate | Balance | % | Rate | Balance | % | |||||||||||||||||||
Account Type
|
||||||||||||||||||||||||
NOW accounts:
|
||||||||||||||||||||||||
Commercial non-interest-bearing
|
-- | $ | 21,869 | 7.40 | % | -- | $ | 18,414 | 5.88 | % | ||||||||||||||
Non-commercial
|
0.58 | % | 86,974 | 29.43 | % | 1.60 | % | 98,075 | 31.32 | % | ||||||||||||||
Money market checking accounts
|
0.40 | % | 24,347 | 8.24 | % | 0.53 | % | 21,066 | 6.73 | % | ||||||||||||||
Regular savings
|
0.45 | % | 27,504 | 9.30 | % | 0.84 | % | 28,430 | 9.08 | % | ||||||||||||||
Total demand and savings deposits
|
0.46 | % | 160,694 | 54.37 | % | 1.15 | % | 165,985 | 53.01 | % | ||||||||||||||
Time deposits:
|
||||||||||||||||||||||||
Up to 3.00%
|
131,872 | 44.62 | % | 143,562 | 45.85 | % | ||||||||||||||||||
3.01 %- 4.00% | 56 | 0.02 | % | 206 | 0.07 | % | ||||||||||||||||||
4.01 %- 5.00% | 2,562 | 0.86 | % | 2,800 | 0.89 | % | ||||||||||||||||||
5.01 %- 6.00% | 385 | 0.13 | % | 575 | 0.18 | % | ||||||||||||||||||
Total time deposits
|
1.30 | % | 134,875 | 45.63 | % | 1.55 | % | 147,143 | 46.99 | % | ||||||||||||||
Total deposit accounts
|
0.85 | % | $ | 295,569 | 100.00 | % | 1.34 | % | $ | 313,128 | 100.00 | % | ||||||||||||
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Balance Wtd Avg Rate | Balance |
Wtd Avg Rate
|
Balance |
Wtd Avg Rate
|
||||||||||||
Contractual Maturity:
|
||||||||||||||||
Within one year - adjustable rate | $ | 5,000 | 4.40 | % | $ | -- | -- | % | ||||||||
After one but within three years - adjustable rate
|
17,000 | 4.63 | % | 22,000 | 4.58 | % | ||||||||||
Greater than five years - adjustable rate
|
37,500 | 3.89 | % | 37,500 | 3.89 | % | ||||||||||
Total advances
|
$ | 59,500 | 4.14 | % | $ | 59,500 | 4.14 | % |
Minimum Capital Levels | ||||||||||||||||||||||||
Actual
|
Regulatory Minimum
|
From Consent Order
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
Leverage ratio
|
||||||||||||||||||||||||
Corporation
|
$ | 16,502 | 4.20 | % | $ | 15,698 | 4.00 | % | $ | n/a | n/a | % | ||||||||||||
Bank
|
24,359 | 6.21 | 15,683 | 4.00 | 31,366 | 8.00 | ||||||||||||||||||
Tier 1 capital ratio
|
||||||||||||||||||||||||
Corporation
|
16,502 | 7.43 | 8,886 | 4.00 | n/a | n/a | ||||||||||||||||||
Bank
|
24,359 | 10.98 | 8,871 | 4.00 | n/a | n/a | (1) | |||||||||||||||||
Total risk-based capital ratio
|
||||||||||||||||||||||||
Corporation
|
26,943 | 12.13 | 17,771 | 8.00 | n/a | n/a | ||||||||||||||||||
Bank
|
27,175 | 12.25 | 17,741 | 8.00 | 26,612 | 12.00 |
●
|
Revised its liquidity risk management program, which assesses, on an ongoing basis, the Bank’s current and projected funding needs, and ensures that sufficient funds exist to meet those needs. The plan specifies how the Bank intends to comply with regulatory restrictions which limit the interest rates the Bank can offer to depositors;
|
●
|
Revised its loan policy, and created a commercial real estate concentration management program. The Bank also established a new loan review program to ensure the timely and independent identification of problem loans and modified its existing program for the maintenance of an adequate allowance for loan and lease losses;
|
●
|
Took immediate and continuing action to protect the Bank’s interest in certain assets identified by the OCC or any other bank examiner and developed a criticized assets report covering the entire credit relationship with respect to such assets;
|
●
|
Implemented and adhered to a program for the maintenance of an adequate ALLL that is consistent with OCC requirements; and
|
●
|
Ensured that the Bank has competent management in place on a full-time basis to carry out the Board’s policies and operate the Bank in a safe and sound manner.
|
Average Yields and Rate
|
||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Three Months Ended June 30, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average
Balance
|
Interest |
Average
Yield/Cost(2)
|
Average
Balance
|
Interest
|
Average
Yield/Cost(2)
|
|||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$ | 186,383 | $ | 2,344 | 5.03 | % | $ | 235,433 | $ | 2,875 | 4.88 | % | ||||||||||||
Mortgage-backed securities
|
78,243 | 729 | 3.73 | % | 23,773 | 218 | 3.67 | % | ||||||||||||||||
Investment securities
|
72,221 | 615 | 3.41 | % | 116,011 | 1,010 | 3.48 | % | ||||||||||||||||
Other interest-earning assets
|
23,374 | 22 | 0.38 | % | 19,660 | 8 | 0.14 | % | ||||||||||||||||
Total interest-earning assets
|
360,221 | 3,710 | 4.12 | % | 394,877 | 4,111 | 4.16 | % | ||||||||||||||||
Non-interest-earning assets
|
33,105 | 40,113 | ||||||||||||||||||||||
Total assets
|
$ | 393,326 | $ | 434,990 | ||||||||||||||||||||
Interest-bearing liabilities:
Deposits
|
281,259 | 663 | 0.94 | % | 303,237 | 1,294 | 1.7 1 | % | ||||||||||||||||
Floating rate junior subordinated
deferrable interest debentures
|
12,372 | 119 | 3.83 | % | 12,372 | 120 | 3.85 | % | ||||||||||||||||
FHLB advances and other
|
65,748 | 624 | 3.80 | % | 71,192 | 630 | 3.54 | % | ||||||||||||||||
borrowings
Total interest-bearing liabilities
|
359,379 | 1,406 | 1.56 | % | 386,801 | 2,044 | 2.11 | % | ||||||||||||||||
Non-interest-bearing sources:
Non-interest-bearing deposits
|
20,834 | 19,075 | ||||||||||||||||||||||
Non-interest-bearing liabilities
|
3,402 | 3,071 | ||||||||||||||||||||||
Total liabilities
|
383,615 | 408,947 | ||||||||||||||||||||||
Shareholders’ equity
|
9,711 | 26,043 | ||||||||||||||||||||||
Total liabilities and shareholders’
equity
|
$ | 393,326 | $ | 434,990 | ||||||||||||||||||||
Net interest income
|
$ | 2,305 | $ | 2,067 | ||||||||||||||||||||
Interest rate spread
|
2.56 | % | 2.05 | % | ||||||||||||||||||||
Impact of non-interest-bearing
deposits
|
0.06 | % | 0.04 | % | ||||||||||||||||||||
Net interest margin
|
2.62 | % | 2.09 | % | ||||||||||||||||||||
(1)
|
Average balances of loans include non-accrual loans.
|
(2)
|
Annualized
|
|
Commercial
|
Consumer
|
Residential
|
Total
|
||||||||||||
June 30, 2011
|
||||||||||||||||
Charge-offs
|
$ | 626 | $ | 49 | $ | 11 | $ | 686 | ||||||||
Recoveries
|
(87 | ) | (22 | ) | -- | (109 | ) | |||||||||
Net Charge-offs
|
$ | 539 | $ | 27 | $ | 11 | $ | 577 | ||||||||
|
Commercial
|
Consumer
|
Residential
|
Total
|
||||||||||||
June 30, 2010
|
||||||||||||||||
Charge-offs
|
$ | 1,433 | $ | 307 | $ | 49 | $ | 1,789 | ||||||||
Recoveries
|
(124 | ) | (17 | ) | -- | (141 | ) | |||||||||
Net Charge-offs
|
$ | 1,309 | $ | 290 | $ | 49 | $ | 1,648 |
Average Yields and Rates | ||||||||||||||||||||||||
(dollars in thousands) | Six Months Ended June 30, | |||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average
Balance
|
Interest
|
Average
Yield/Cost(2)
|
Average
Balance
|
Interest
|
Average
Yield/Cost(2)
|
|||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$ | 192,162 | $ | 4,788 | 4.98 | % | $ | 241,696 | $ | 5,995 | 4.96 | % | ||||||||||||
Mortgage-backed securities
|
77,421 | 1,361 | 3.52 | % | 33,756 | 647 | 3.83 | % | ||||||||||||||||
Investment securities
|
65,538 | 1,111 | 3.39 | % | 106,518 | 1,985 | 3.73 | % | ||||||||||||||||
Other interest-earning assets
|
31,122 | 52 | 0.34 | % | 22,468 | 13 | 0.12 | % | ||||||||||||||||
Total interest-earning assets
|
366,243 | 7,312 | 3.99 | % | 404,438 | 8,640 | 4.27 | % | ||||||||||||||||
Non-interest-earning assets
|
34,378 | 40,470 | ||||||||||||||||||||||
Total assets
|
$ | 400,621 | $ | 444,908 | ||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Deposits
|
$ | 287,422 | 1,543 | 1.07 | % | $ | 307,890 | 2,841 | 1.85 | % | ||||||||||||||
Floating rate junior subordinated
deferrable interest debentures
|
12,372 | 237 | 3.83 | % | 12,372 | 237 | 3.83 | % | ||||||||||||||||
FHLB advances and other borrowings
|
67,028 | 1,243 | 3.71 | % | 76,333 | 1,374 | 3.60 | % | ||||||||||||||||
Total interest-bearing liabilities
|
366,822 | 3,023 | 1.65 | % | 396,595 | 4,452 | 2.25 | % | ||||||||||||||||
Non-interest-bearing sources:
|
||||||||||||||||||||||||
Non-interest-bearing deposits
|
20,353 | 18,905 | ||||||||||||||||||||||
Non-interest-bearing liabilities
|
3,448 | 3,149 | ||||||||||||||||||||||
Total liabilities
|
390,623 | 418,649 | ||||||||||||||||||||||
Shareholders’ equity
|
9,998 | 26,259 | ||||||||||||||||||||||
Total liabilities and shareholders’
equity
|
$ | 400,621 | $ | 444,908 | ||||||||||||||||||||
Net interest income
|
$ | 4,289 | $ | 4,188 | ||||||||||||||||||||
Interest rate spread
|
2.34 | % | 2.03 | % | ||||||||||||||||||||
Impact of non-interest-bearing
deposits
|
0.07 | 0.04 | ||||||||||||||||||||||
Net interest margin
|
2.41 | % | 2.07 | % |
(1)
|
Average balances of loans include non-accrual loans.
|
(2)
|
Annualized
|
June 30,
|
June 30,
|
|||||||
2011
|
2010
|
|||||||
Balance at beginning of period
|
$ | 7,379 | $ | 5,579 | ||||
Provision for loan losses
|
-- | 2,083 | ||||||
Charge-offs, net | (1,007 | ) | (2,691 | ) | ||||
Balance at end of period
|
$ | 6,372 | $ | 4,971 |
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 |
Not applicable.
|
Item 4. |
[Removed and Reserved]
|
Item 5. |
Other Information
|
None
|
Item 6. | Exhibits |
31(a) Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
31(b) Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
32(a) Chief Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32(b) Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101 Interactive Data File
|
The following materials from Provident Community Bancshares, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (Loss), (iii) the Consolidated Statements of Cash Flows and (iv) related notes.
|
Date: August 12, 2011
|
By:
|
/s/ Dwight V. Neese | |
Dwight V. Neese, President and | |||
Chief Executive Officer |
Date: August 12, 2011
|
By:
|
/s/ Richard H. Flake | |
Richard H. Flake, Executive Vice President | |||
and Chief Financial Officer | |||
1.
|
I have reviewed this Form 10-Q of Provident Community Bancshares, 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 1 3a-1 5(e) and 1 5d-1 5(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-1 5(f) and 1 5d-1 5(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 account principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of 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 12, 2011
|
/s/ Dwight V. Neese | ||
Dwight V. Neese | |||
President and Chief Executive Officer
|
|||
1.
|
I have reviewed this Form 10-Q of Provident Community Bancshares, 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 1 3a-1 5(e) and 1 5d-1 5(e)) and internal control over financial reporting (as defined in Exchange Act Rules 1 3a-1 5(f) and 1 5d-1 5(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 account principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of 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 12, 2011
|
By:
|
/s/ Richard H. Flake | |
Richard H. Flake
|
|||
Executive Vice President and Chief Financial Officer | |||
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
|
|
/s/ Dwight V. Neese | ||
Dwight V. Neese
|
|||
President and Chief Executive Officer
|
|||
Date: August 12, 2011 |
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
|
|
/s/ Richard H. Flake | ||
Richard H. Flake
|
|||
Executive Vice President and Chief Financial Officer | |||
Date: August 12, 2011 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Serial preferred stock, par value | $ 0.01 | $ 0.01 |
Serial preferred stock, authorized | 500,000 | 500,000 |
Serial preferred stock, shares issued | 9,266 | 9,266 |
Serial preferred stock, shares outstanding | 9,266 | 9,266 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized | 5,000,000 | 5,000,000 |
Common stock, shares issued | 1,790,599 | 1,790,599 |
Common stock, shares outstanding | 1,790,599 | 1,790,599 |
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Aug. 12, 2011
|
|
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Trading Symbol | PCBS | Â |
Entity Registrant Name | PROVIDENT COMMUNITY BANCSHARES, INC. | Â |
Entity Central Index Key | 0000926164 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Entity Common Stock, Shares Outstanding | Â | 1,790,599 |
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Contingencies and loan commitments
|
6 Months Ended | |||||||||||||||||||||||||
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Contingencies and loan commitments | 5.
Contingencies and
loan commitments
In
the ordinary course of business, the Bank enters into financial
instruments with off-balance-sheet risk to meet the financing needs
of its customers. These instruments expose the Bank to credit risk
in excess of the amount recognized on the balance
sheet.
The
Bank’s exposure to credit loss in the event of nonperformance
by the other party to the financial instrument for commitments to
extend credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making
commitments and conditional obligations as it does for
on-balance-sheet instruments. Total credit exposure at June 30,
2011 related to these items is summarized below:
Loan
commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in
the contract. Loan commitments generally have fixed expiration
dates or other termination clauses and may require payment of a
fee. The Bank evaluates each customer’s creditworthiness on a
case-by-case basis. The amount of collateral obtained upon
extension of credit is based on management’s credit
evaluation of the counter party. Collateral held is primarily
residential and commercial property. Total loan commitments
outstanding at June 30, 2011 consisted of fixed and adjustable rate
loans at rates ranging from 4.5% to 6.5%.
Commitments
to fund loans, including credit lines (principally variable rate,
consumer lines secured by real estate and overdraft protection)
totaled approximately $27.2 million at June 30, 2011.
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Presentation of Consolidated Financial Statements
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6 Months Ended |
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Jun. 30, 2011
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Presentation of Consolidated Financial Statements | 1. Presentation
of Consolidated Financial Statements
The
accompanying unaudited consolidated financial statements of
Provident Community Bancshares, Inc. (the
“Corporation”) and Provident Community Bank, N.A. (the
“Bank”) were prepared in accordance with instructions
for Form 10-Q and, therefore, do not include all disclosures
necessary for a complete presentation of consolidated financial
condition, results of operations, and cash flows in conformity with
accounting principles generally accepted in the United States of
America. However, all adjustments which are, in the opinion of
management, necessary for the fair presentation of the interim
consolidated financial statements have been included. All such
adjustments are of a normal and recurring nature. The results of
operations for the six months ended June 30, 2011 are not
necessarily indicative of the results which may be expected for the
entire calendar year or for any other period. This quarterly report
should be read in conjunction with the Corporation’s annual
report on Form 10-K for the year ended December 31, 2010. Certain
amounts in the prior year’s financial statements have been
reclassified to conform to current year
classifications.
Recently Issued Accounting Standards
The
following is a summary of recent authoritative pronouncements that
may affect accounting, reporting, and disclosure of financial
information by the Corporation.
In
July 2010, the Receivables topic of the Accounting Standards
Codification (“ASC”) was amended by Accounting
Standards Update (“ASU”) 2010-20 to require expanded
disclosures related to a company’s allowance for credit
losses and the credit quality of its financing receivables. The
amendments require the allowance disclosures to be provided on a
disaggregated basis. The Corporation is required to
include these disclosures in their interim and annual financial
statements.
Disclosures
about Troubled Debt Restructurings (“TDRs”) required by
ASU 2010-20 were deferred by the Financial Accounting Standards
Board (“FASB”) in ASU 2011-01 issued in January 2011.
In April 2011 the FASB issued ASU 2011-02 to assist creditors with
their determination of when a restructuring is a
TDR. The determination is based on whether the
restructuring constitutes a concession and whether the debtor is
experiencing financial difficulties as both events must be
present.
Disclosures
related to TDRs under ASU 2010-20 will be effective for reporting
periods beginning after June 15, 2011.
Also
in December 2010, the Business Combinations topic of the ASC was
amended to specify that if a public entity presents comparative
financial statements, the entity should disclose revenue and
earnings of the combined entity as though the business combination
that occurred during the current year had occurred as of the
beginning of the comparable prior annual reporting period
only. The amendment also requires that the supplemental
pro forma disclosures include a description of the nature and
amount of any material, nonrecurring pro forma adjustments directly
attributable to the business combination included in the reported
pro forma revenue and earnings. This amendment is
effective for the Corporation for business combinations for which
the acquisition date is on or after January 1, 2011. The
Corporation does not expect the amendment to have any impact on the
financial statements.
In
April 2011, the criteria used to determine effective control of
transferred assets in the Transfers and Servicing topic of the ASC
was amended by ASU 2011-03. The requirement for the
transferor to have the ability to repurchase or redeem the
financial assets on substantially the agreed terms and the
collateral maintenance implementation guidance related to that
criterion were removed from the assessment of effective
control. The other criteria to assess effective control
were not changed. The amendments are effective for the
Corporation beginning January 1, 2012 but are not expected to have
a material effect on the financial statements.
ASU
2011-04 was issued in May 2011 to amend the Fair Value Measurement
topic of the ASC by clarifying the application of existing fair
value measurement and disclosure requirements and by changing
particular principles or requirements for measuring fair value or
for disclosing information about fair value
measurements. The amendments will be effective for the
Corporation beginning January 1, 2012 but are not expected to have
a material effect on the financial statements.
The
Comprehensive Income topic of the ASC was amended in June
2011. The amendment eliminates the option to present
other comprehensive income as a part of the statement of changes in
stockholders’ equity. The amendment requires
consecutive presentation of the statement of net income and other
comprehensive income and requires an entity to present
reclassification adjustments from other comprehensive income to net
income on the face of the financial statements. The
amendments will be applicable to the Corporation on January 1, 2012
and will be applied retrospectively.
Other
accounting standards that have been issued or proposed by the FASB
or other standards-setting bodies are not expected to have a
material impact on the Corporation’s financial position,
results of operations or cash flows.
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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 | 7.
Fair
Value of Financial Instruments
The
Corporation utilizes fair value measurements to record fair value
adjustments to certain assets and liabilities and to determine fair
value disclosures. Effective January 1, 2008, the Corporation
adopted FASB ASC 820-10-50 (“FASB ASC Topic 820”) Fair
Value Measurements which provides a framework for measuring and
disclosing fair value under generally accepted accounting
principles. FASB ASC Topic 820 requires disclosures about
the fair value of assets and liabilities recognized in
the balance sheet in periods subsequent to initial recognition,
whether the measurements are made on a recurring basis (for
example, available-for-sale investment securities) or on
a nonrecurring basis (for example, impaired loans).
Fair
Value Hierarchy
FASB
ASC Topic 820 defines fair value as the exchange price that would
be received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants
on the measurement date. FASB ASC Topic 820 also establishes a fair
value hierarchy which requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when
measuring fair value. The standard describes three levels of inputs
that may be used to measure fair value:
Following
is a description of valuation methodologies used for assets and
liabilities recorded at fair value.
Investment Securities
Available-for-Sale
Available-for-sale
investment securities are recorded at fair value on a recurring
basis. Fair value measurement is based upon quoted prices, if
available. If quoted prices are not available, fair values are
measured using independent pricing models or other model-based
valuation techniques such as the present value of future cash
flows, adjusted for the security’s credit rating, prepayment
assumptions and other factors such as credit loss assumptions.
Level 1 securities include those traded on an active exchange, such
as the New York Stock Exchange and U.S. Treasury securities that
are traded by dealers or brokers in active over-the-counter
markets. Level 2 securities include mortgage-backed securities
issued by government sponsored entities, municipal bonds and
corporate debt securities. Securities classified as Level 3 may
include asset-backed securities in less liquid
markets.
Loans
The
Corporation is predominantly an asset based lender with real estate
serving as collateral on a substantial majority of loans. The
Corporation does not record loans at fair value on a recurring
basis. However, from time to time, a loan is considered impaired
and the related impairment is charged against the allowance or a
specific allowance is established. Loans for which it is probable
that payment of interest and principal will not be made in
accordance with the contractual terms of the loan agreement are
considered impaired. Loans which are deemed to be impaired are
primarily valued at the fair values of the underlying real estate
collateral. Such fair values are obtained using collateral net
liquidation value, market value of similar debt, enterprise value,
and discounted cash flows. Those impaired loans not requiring a
specific allowance represent loans for which the fair value of the
expected repayment or collateral meet or exceed the recorded
investment in such loans. The Corporation considers all non-accrual
loans and troubled debt restructurings to be impaired. Therefore,
at June 30, 2011, loans classified as impaired totaled
$23.5 million. When the fair value of the collateral is based on an
observable market price or a current appraised value, the
Corporation records the impaired loan as nonrecurring Level 2. When
an appraised value is not available or management determines the
fair value of the collateral is further impaired below the
appraised value and there is no observable market price, the
Corporation records the impaired loans as nonrecurring Level
3.
Real
Estate Acquired Through Foreclosure
Other
real estate owned (“OREO”) is adjusted to fair value
upon transfer of the loans to OREO. Subsequently, OREO is carried
at the lower of carrying value or fair value. Fair value is based
upon independent market prices, appraised values of the collateral
or management’s estimation of the value of the collateral.
When the fair value of the collateral is based on an observable
market price or a current appraised value, the Corporation records
the foreclosed asset as nonrecurring Level 2. When an appraised
value is not available or management determines the fair value of
the collateral is further impaired below the appraised value and
there is no observable market price, the Corporation records the
OREO as nonrecurring Level 3.
Assets
and Liabilities Recorded at Fair Value on a Recurring
Basis
The
following tables present the balances of assets measured at fair
value on a recurring basis by level within the hierarchy as of June
30, 2011 and December 31, 2010 (In thousands).
The
following is a reconciliation of the beginning and ending balances
for assets measured at fair value on a recurring basis using
significant unobservable inputs (Level 3) for the period ended June
30, 2011.
Assets
and Liabilities Recorded at Fair Value on a Nonrecurring
Basis
The
Corporation may be required, from time to time, to measure certain
assets at fair value on a nonrecurring basis in accordance with
U.S. generally accepted accounting principles. These include assets
that are measured at the lower of cost or market that were
recognized at fair value below cost at the end of the period and
assumes all non-performing assets have specific reserves or have
been written down to fair value.
Assets
measured at fair value on a nonrecurring basis at June 30, 2011 are
as follows:
Assets
and liabilities measured at fair value on a nonrecurring basis at
December 31, 2010 are as follows:
The
following methods and assumptions were used by the Corporation in
estimating fair values of financial instruments as disclosed
herein:
Cash and cash equivalents - The carrying amounts of cash and
due from banks approximate their fair value.
Securities - Fair values for securities are based on quoted
market prices. The carrying values of restricted equity
securities approximate fair values. If quoted prices
are not available, fair values are measured using independent
pricing models or other model-based valuation techniques such as
the present value of future cash flows, adjusted for the
security’s credit rating, prepayment assumptions and other
factors such as credit loss assumptions.
Loans - The Corporation is predominantly an asset based
lender with real estate serving as collateral on a substantial
majority of loans. The Corporation does not record loans at fair
value on a recurring basis. However, from time to time, a loan is
considered impaired and the related impairment is charged against
the allowance or a specific allowance is established. Loans for
which it is probable that payment of interest and principal will
not be made in accordance with the contractual terms of the loan
agreement are considered impaired. Loans which are deemed to be
impaired are primarily valued at the fair values of the underlying
real estate collateral. Such fair values are obtained using
collateral net liquidation value, market value of similar debt,
enterprise value, and discounted cash flows. Those impaired loans
not requiring a specific allowance represent loans for which the
fair value of the expected repayment or collateral meet or exceed
the recorded investment in such loans. The Corporation considers
all non-accrual loans and troubled debt restructurings to be
impaired.
Cash surrender value of life insurance - The carrying
amounts of cash surrender values of life insurance approximate
their fair value.
Deposit liabilities - The fair values disclosed for demand
deposits are, by definition, equal to the amount payable on demand
at the reporting date (that is, their carrying amounts). The
carrying amounts of variable-rate, fixed-term money-market accounts
and certificates of deposit (CDs) approximate their fair values at
the reporting date. Fair values for fixed-rate CDs are estimated
using a discounted cash flow calculation that applies interest
rates currently being offered on certificates to a schedule of
aggregated expected monthly maturities on time
deposits.
Advances from the FHLB and other borrowings - The fair
values of the Corporation’s borrowings are estimated using
discounted cash flow analysis based on the Corporation’s
current incremental borrowing rates for similar types of borrowing
arrangements.
Securities sold under agreements to repurchase - The fair
values of the Corporation’s repurchase agreements are
estimated using discounted cash flow analysis based on the
Corporation’s current incremental borrowing rates for similar
types of borrowing arrangements.
Accrued interest - The carrying amounts of accrued interest
approximate their fair values.
Floating rate junior subordinated deferrable interest
debentures - The fair values of the Corporation’s
floating rate debentures are estimated using discounted cash flow
analysis based on the Corporation’s current incremental
borrowing rates for similar types of borrowing
arrangements.
Off-balance-sheet instruments - Fair values for
off-balance-sheet lending commitments are based on fees currently
charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the counter parties’
credit standings.
The
estimated fair values of the Corporation’s financial
instruments were as follows at June 30, 2011
(in
thousands):
The
estimated fair values of the Corporation’s financial
instruments were as follows at December 31, 2010
(in
thousands):
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Preferred Stock
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6 Months Ended |
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Jun. 30, 2011
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Preferred Stock | 8.
Preferred
Stock
On
March 13, 2009, as part of the United States Department of the
Treasury’s Capital Purchase Program, the Corporation issued
9,266 shares of Fixed Rate Cumulative Perpetual Preferred Stock,
Series A, $1,000 per share liquidation preference, and a warrant to
purchase up to 178,880 shares of the Corporation’s common
stock for a period of ten years at an exercise price of $7.77 per
share, in exchange for $9.3 million in cash from the United States
Department of the Treasury. The proceeds, net of
issuance costs consisting primarily of legal fees, were allocated
between the preferred stock and the warrant on a pro rata basis,
based upon the estimated market values of the preferred stock and
the warrant. As a result, $25,000 of the proceeds were
allocated to the warrant, which increased additional
paid-in-capital from common stock. The amount allocated
to the warrant is considered a discount on the preferred stock and
will be amortized using the level yield method over a five-year
period through a charge to retained earnings. Such
amortization will not reduce net income, but will reduce income
available for common shares.
The
preferred stock pays cumulative dividends of 5% per year for the
first five years and 9% per year thereafter. The Corporation may
redeem the preferred stock at its liquidation preference plus
accrued and unpaid dividends at any time with prior regulatory
approval. The securities purchase agreement between the
Corporation and the United States Department of the Treasury
limits, for three years, the rate of dividend payments on the
Corporation’s common stock to the amount of its last
quarterly cash dividend before participation in the program of
$0.03 per share unless an increase is approved by the Department of
the Treasury, limits the Corporation’s ability to repurchase
its common stock for three years and subjects the Corporation to
certain executive compensation limitations included in the
Emergency Economic Stabilization Act of 2008, as amended by the
American Recovery and Reinvestment Act of 2009.
Under
the terms of the TARP Preferred Stock, the Corporation is required
to pay on a quarterly basis a dividend rate of 5% per year for the
first five years, after which the dividend rate automatically
increases to 9% per year. Dividend payments may be
deferred, but the dividend is a cumulative dividend and failure to
pay dividends for six dividend periods would trigger board
appointment rights for the holder of the TARP Preferred
Stock.
The
Corporation exercised its right on July 22, 2010 to defer the
regularly scheduled quarterly distribution on its $12.4 million in
subordinated debentures related to its two outstanding trust
preferred security issuances and its regular quarterly cash
dividend on its Fixed Rate Cumulative Perpetual Preferred Stock,
Series A (the “TARP Preferred Stock”) issued to the
U.S. Treasury Department in connection with the Corporation’s
participation in the Treasury’s TARP Capital Purchase
Program.
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Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures
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Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures | 6.
Fixed/Floating Rate
Junior Subordinated Deferrable Interest
Debentures
On
July 18, 2006, Provident Community Bancshares Capital Trust I
(“Capital Trust I”) was formed. The Corporation is the
owner of all of the common securities of Capital Trust I. On July
21, 2006, Capital Trust I issued $4.0 million of fixed/floating
rate capital securities through a pooled trust preferred securities
offering. The proceeds from this issuance, along with the
Corporation’s $124,000 capital contribution for Capital Trust
I’s common securities, were used to acquire $4.1 million
aggregate principal amount of the Corporation’s
fixed/floating rate junior subordinated deferrable interest
debentures due October 1, 2036, which constitute the sole asset of
Capital Trust I. The interest rate on the debentures and the
capital securities is variable and adjustable quarterly at 1.74%
over the three-month LIBOR. The debentures are subject to
redemption at par at the option of the Corporation, subject to
prior regulatory approval, in whole or in part on any interest
payment date after October 1, 2011. The debentures are also subject
to redemption prior to October 1, 2011 at up to 103.7% of par after
the occurrence of certain events.
On
November 28, 2006, Provident Community Bancshares Capital Trust
(“Capital Trust II”) was established. The Corporation
is the owner of all of the common securities of the Trust. On
December 15, 2006, the Trust issued $8.0 million of floating rate
capital securities through a pooled trust preferred securities
offering. The proceeds of Capital Trust II were utilized for the
redemption of Union Financial Bancshares Statutory Trust issued on
December 18, 2001. The proceeds from this issuance, along with the
Corporation’s $248,000 capital contribution for the
Trust’s common securities, were used to acquire $8.2 million
aggregate principal amount of the Corporation’s floating rate
junior subordinated deferrable interest debentures due March 1,
2037, which constitute the sole asset of the Capital Trust II. The
interest rate on the debentures and the capital securities is
variable and adjustable quarterly at 1.74% over the three-month
LIBOR. The debentures are subject to redemption at par at the
option of the Corporation, subject to prior regulatory approval, in
whole or in part on any interest payment date after March 1, 2012.
The debentures are also subject to redemption prior to March 1,
2012 at 103.5% of par after the occurrence of certain
events.
A
summary of the Subordinated Deferrable Interest Debentures issued
and outstanding follows:
The
Corporation exercised its right on July 22, 2010 to defer the
payment of interest on its outstanding subordinated debentures for
an indefinite period (which can be no longer than 20 consecutive
quarterly periods). This and any future deferred
distributions will continue to accrue interest at a current rate of
7.39% for the $4.0 million of trust preferred securities issued in
July 2006 and at a current rate of 1.99% for the $8.0 million of
trust preferred securities issued in December 2006. Distributions
on the trust preferred securities are
cumulative. Therefore, in accordance with generally
accepted accounting principles, the Corporation will continue to
accrue the monthly cost of the trust preferred securities as it has
since issuance.
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Loss Per Common Share
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6 Months Ended |
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Jun. 30, 2011
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Loss Per Common Share | 2.
Loss Per
Common Share
Basic
loss per common share amounts for the three and six months ended
June 30, 2011 and 2010 were computed based on the weighted average
number of common shares outstanding during the period. Diluted loss
per share adjusts for the dilutive effect of outstanding common
stock options and warrants during the periods utilizing
the treasury stock method. There were no common stock equivalents
included in the diluted loss per share calculation for the three
and six months ended June 30, 2011 and 2010 as all outstanding
options were anti-dilutive. Anti-dilutive common stock equivalents
that were excluded in the diluted loss per common share calculation
for the six months ended June 30, 2011 and 2010 were 265,543 and
269,743, respectively.
|
Assets Pledged
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Assets Pledged |
3.
Assets
Pledged
Approximately
$86.3 million and $78.5 million of debt securities at June 30, 2011
and December 31, 2010, respectively, were pledged by the Bank as
collateral to secure deposits of the State of South Carolina, and
Union, Laurens and York counties along with additional borrowings
and repurchase agreements. The Bank pledges as collateral for
Federal Home Loan Bank advances commercial and residential real
estate mortgage loans under a collateral agreement with the Federal
Home Loan Bank whereby the Bank maintains, free of other
encumbrances, qualifying mortgages (as defined) with unpaid
principal balances equal to, when discounted at 75% of the unpaid
principal balances, 100% of total advances. As part of the total
assets pledged, the Bank will also pledge securities to cover
additional advances from the Federal Home Loan Bank that exceed the
qualifying mortgages balance along with security repurchase lines
with various brokerage houses.
|
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