Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 2012
Commission File No. 000-29640
COMMUNITY FIRST BANCORPORATION
(Exact name of registrant as specified in its charter)
|
South Carolina |
|
58-2322486 |
|
(State or other jurisdiction of |
|
(IRS Employer Identification No.) |
|
incorporation or organization) |
|
|
449 HIGHWAY 123 BYPASS
SENECA, SOUTH CAROLINA 29678
(Address of principal executive offices, zip code)
(864) 886-0206
(Registrant’s telephone number, including area 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 o
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
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. (Check one):
|
Large accelerated filer o |
|
Accelerated filer o |
|
|
|
|
|
Non-accelerated filer o |
|
Smaller reporting company x |
|
(Do not check if a smaller reporting company) |
|
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, no par or stated value,4,152,294 Shares Outstanding on May 18, 2012.
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. — Financial Statements
COMMUNITY FIRST BANCORPORATION
Consolidated Balance Sheets
|
|
|
(Unaudited) |
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
|
2012 |
|
2011 |
|
|
|
|
(Dollars in thousands) |
|
|
Assets |
|
|
|
|
|
|
Cash and due from banks |
|
$ |
1,747 |
|
$ |
3,355 |
|
|
Interest bearing deposits due from banks |
|
143,585 |
|
121,555 |
|
|
Cash and cash equivalents |
|
145,332 |
|
124,910 |
|
|
Debt securities available-for-sale |
|
103,388 |
|
124,094 |
|
|
Equity securities available-for-sale |
|
3 |
|
317 |
|
|
Securities held-to-maturity (fair value $4,340 for 2012 and $4,752 for 2011) |
|
4,004 |
|
4,396 |
|
|
Federal Home Loan Bank stock, at cost |
|
1,143 |
|
1,143 |
|
|
Loans |
|
216,278 |
|
224,656 |
|
|
Allowance for loan losses |
|
(4,861 |
) |
(4,359 |
) |
|
Loans - net |
|
211,417 |
|
220,297 |
|
|
Premises and equipment - net |
|
8,938 |
|
8,929 |
|
|
Accrued interest receivable |
|
1,513 |
|
1,879 |
|
|
Bank-owned life insurance |
|
10,104 |
|
10,016 |
|
|
Foreclosed assets |
|
18,548 |
|
18,306 |
|
|
Other assets |
|
2,916 |
|
2,826 |
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
507,306 |
|
$ |
517,113 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
Noninterest bearing |
|
$ |
65,662 |
|
$ |
68,465 |
|
|
Interest bearing |
|
390,634 |
|
395,377 |
|
|
Total deposits |
|
456,296 |
|
463,842 |
|
|
Accrued interest payable |
|
1,056 |
|
1,154 |
|
|
Long-term debt |
|
6,500 |
|
6,500 |
|
|
Other liabilities |
|
2,598 |
|
2,552 |
|
|
Total liabilities |
|
466,450 |
|
474,048 |
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
Preferred stock - Series A - non-voting 5% cumulative - $1,000 per share liquidation preference; 5,000 shares authorized; issued and outstanding - 3,150 shares |
|
3,126 |
|
3,126 |
|
|
Preferred stock - no par value; 9,995,000 shares authorized; None issued and outstanding |
|
— |
|
— |
|
|
Common stock - no par value; 10,000,000 shares authorized; issued and outstanding - 4,152,294 for 2012 and 4,152,334 for 2011 |
|
40,669 |
|
40,669 |
|
|
Additional paid-in capital |
|
748 |
|
748 |
|
|
Retained earnings (Accumulated deficit) |
|
(3,733 |
) |
(3,014 |
) |
|
Accumulated other comprehensive income |
|
46 |
|
1,536 |
|
|
Total shareholders’ equity |
|
40,856 |
|
43,065 |
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
507,306 |
|
$ |
517,113 |
|
See accompanying notes to unaudited consolidated financial statements.
3
Table of Contents
COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Income (Loss)
|
|
|
(Unaudited) |
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
|
|
|
2012 |
|
2011 |
|
|
|
|
(Dollars in thousands,
except per share) |
|
|
Interest income |
|
|
|
|
|
|
Loans, including fees |
|
$ |
3,369 |
|
$ |
3,623 |
|
|
Interest bearing deposits due from banks |
|
68 |
|
28 |
|
|
Securities |
|
|
|
|
|
|
Taxable |
|
752 |
|
1,124 |
|
|
Tax-exempt |
|
176 |
|
177 |
|
|
Other investments |
|
4 |
|
2 |
|
|
Total interest income |
|
4,369 |
|
4,954 |
|
|
Interest expense |
|
|
|
|
|
|
Time deposits $100M and over |
|
399 |
|
562 |
|
|
Other deposits |
|
615 |
|
870 |
|
|
Long-term debt |
|
64 |
|
64 |
|
|
Total interest expense |
|
1,078 |
|
1,496 |
|
|
Net interest income |
|
3,291 |
|
3,458 |
|
|
Provision for loan losses |
|
935 |
|
1,250 |
|
|
Net interest income after provision |
|
2,356 |
|
2,208 |
|
|
Other income |
|
|
|
|
|
|
Service charges on deposit accounts |
|
253 |
|
260 |
|
|
Debit card transaction fees |
|
181 |
|
183 |
|
|
Credit life insurance commissions |
|
— |
|
1 |
|
|
Net gains on sales of securities available-for-sale |
|
1,528 |
|
— |
|
|
Net gains (losses) on sales of foreclosed assets |
|
12 |
|
(29 |
) |
|
Increase in value of bank-owned life insurance |
|
88 |
|
89 |
|
|
Other income |
|
50 |
|
55 |
|
|
Total other income |
|
2,112 |
|
559 |
|
|
Other expenses |
|
|
|
|
|
|
Salaries and employee benefits |
|
1,192 |
|
1,220 |
|
|
Net occupancy expense |
|
160 |
|
139 |
|
|
Furniture and equipment expense |
|
91 |
|
79 |
|
|
Amortization of computer software |
|
175 |
|
97 |
|
|
Expenses of foreclosed assets |
|
1,812 |
|
201 |
|
|
FDIC insurance expense |
|
249 |
|
232 |
|
|
Debit card transaction expenses |
|
39 |
|
116 |
|
|
Other expense |
|
596 |
|
474 |
|
|
Total other expenses |
|
4,314 |
|
2,558 |
|
|
Income before income taxes |
|
154 |
|
209 |
|
|
Income tax expense |
|
834 |
|
34 |
|
|
Net income (loss) |
|
(680 |
) |
175 |
|
|
Deductions for amounts not available to common shareholders: |
|
|
|
|
|
|
Dividends declared or accumulated on preferred stock |
|
(39 |
) |
(39 |
) |
|
Net income (loss) available to common shareholders |
|
$ |
(719 |
) |
$ |
136 |
|
|
|
|
|
|
|
|
|
Per common share* |
|
|
|
|
|
|
Net income (loss) |
|
$ |
(0.17 |
) |
$ |
0.03 |
|
|
Net income (loss), assuming dilution |
|
(0.17 |
) |
0.03 |
|
* Per share information has been retroactively adjusted to reflect a 5% stock dividend effective December 16, 2011.
See accompanying notes to unaudited consolidated financial statements.
4
Table of Contents
COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Comprehensive Income (Loss)
|
|
|
(Unaudited) |
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
|
|
|
2012 |
|
2011 |
|
|
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(680 |
) |
$ |
175 |
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
Unrealized losses on available-for-sale securities arising during the period |
|
(796 |
) |
(242 |
) |
|
Related income tax benefit |
|
286 |
|
87 |
|
|
Less: Reclassification adjustments for net gains included in net income |
|
(1,528 |
) |
— |
|
|
Related income tax benefit |
|
548 |
|
— |
|
|
Other comprehensive loss |
|
(1,490 |
) |
(155 |
) |
|
Comprehensive income (loss) |
|
$ |
(2,170 |
) |
$ |
20 |
|
See accompanying notes to unaudited consolidated financial statements.
5
Table of Contents
COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Retained |
|
Accumulated |
|
|
|
|
|
|
Shares of |
|
|
|
|
|
Additional |
|
Earnings |
|
Other |
|
|
|
|
|
|
Common |
|
Preferred |
|
Common |
|
Paid-in |
|
(Accumulated |
|
Comprehensive |
|
|
|
|
|
|
Stock |
|
Stock |
|
Stock |
|
Capital |
|
Deficit) |
|
Income (Loss) |
|
Total |
|
|
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2011 |
|
3,972,976 |
|
$ |
3,126 |
|
$ |
39,931 |
|
$ |
748 |
|
$ |
1,396 |
|
$ |
111 |
|
$ |
45,312 |
|
|
Net income |
|
— |
|
— |
|
— |
|
— |
|
175 |
|
— |
|
175 |
|
|
Other comprehensive income (loss) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(155 |
) |
(155 |
) |
|
Dividends declared on preferred stock |
|
— |
|
— |
|
— |
|
— |
|
(39 |
) |
— |
|
(39 |
) |
|
Balance, March 31, 2011 |
|
3,972,976 |
|
$ |
3,126 |
|
$ |
39,931 |
|
$ |
748 |
|
$ |
1,532 |
|
$ |
(44 |
) |
$ |
45,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2012 |
|
4,152,334 |
|
$ |
3,126 |
|
$ |
40,669 |
|
$ |
748 |
|
$ |
(3,014 |
) |
$ |
1,536 |
|
$ |
43,065 |
|
|
Net income (loss) |
|
— |
|
— |
|
— |
|
— |
|
(680 |
) |
— |
|
(680 |
) |
|
Other comprehensive income (loss) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(1,490 |
) |
(1,490 |
) |
|
Adjustment of fractional shares issued in conjunction with 2011 stock dividend |
|
(40 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Dividends declared on preferred stock |
|
— |
|
— |
|
— |
|
— |
|
(39 |
) |
— |
|
(39 |
) |
|
Balance, March 31, 2012 |
|
4,152,294 |
|
$ |
3,126 |
|
$ |
40,669 |
|
$ |
748 |
|
$ |
(3,733 |
) |
$ |
46 |
|
$ |
40,856 |
|
See accompanying notes to unaudited consolidated financial statements.
6
Table of Contents
COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Cash Flows
|
|
|
(Unaudited) |
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
|
|
|
2012 |
|
2011 |
|
|
|
|
(Dollars in thousands) |
|
|
Operating activities |
|
|
|
|
|
|
Net income (loss) |
|
$ |
(680 |
) |
$ |
175 |
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities |
|
|
|
|
|
|
Provision for loan losses |
|
935 |
|
1,250 |
|
|
Depreciation |
|
88 |
|
93 |
|
|
Deferred income taxes |
|
314 |
|
(201 |
) |
|
Amortization of net loan fees and costs |
|
(7 |
) |
17 |
|
|
Securities accretion and premium amortization |
|
259 |
|
268 |
|
|
Net gains realized on sales of securities available-for-sale |
|
(1,528 |
) |
— |
|
|
Writedowns of foreclosed assets |
|
1,531 |
|
45 |
|
|
Loss (gain) on sale of foreclosed assets |
|
(12 |
) |
29 |
|
|
Increase in cash surrender value of bank-owned life insurance |
|
(88 |
) |
(89 |
) |
|
Decrease in interest receivable |
|
366 |
|
98 |
|
|
Decrease in interest payable |
|
(98 |
) |
(526 |
) |
|
Decrease in prepaid expenses and other assets |
|
419 |
|
459 |
|
|
Increase in other accrued expenses |
|
46 |
|
243 |
|
|
Net cash provided by operating activities |
|
1,545 |
|
1,861 |
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Purchases of available-for-sale securities |
|
(46,529 |
) |
(23,965 |
) |
|
Maturities, calls and paydowns of securities available-for-sale |
|
24,159 |
|
21,871 |
|
|
Maturities, calls and paydowns of securities held-to-maturity |
|
392 |
|
643 |
|
|
Proceeds of sales of securities available-for-sale |
|
42,335 |
|
— |
|
|
Net decrease in loans made to customers |
|
5,278 |
|
7,502 |
|
|
Purchases of premises and equipment |
|
(97 |
) |
(5 |
) |
|
Additional investment in foreclosed assets, net |
|
(20 |
) |
— |
|
|
Proceeds of sale of foreclosed assets |
|
944 |
|
324 |
|
|
Net cash provided by investing activities |
|
26,462 |
|
6,370 |
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Net (decrease) increase in demand deposits, interest bearing transaction accounts and savings accounts |
|
(7,180 |
) |
6,516 |
|
|
Net decrease in certificates of deposit and other time deposits |
|
(366 |
) |
(17,802 |
) |
|
Decrease in short-term borrowings |
|
— |
|
(5,000 |
) |
|
Cash dividends paid on preferred stock |
|
(39 |
) |
(39 |
) |
|
Net cash used by financing activities |
|
(7,585 |
) |
(16,325 |
) |
|
Increase (decrease) in cash and cash equivalents |
|
20,422 |
|
(8,094 |
) |
|
Cash and cash equivalents, beginning |
|
124,910 |
|
40,882 |
|
|
Cash and cash equivalents, ending |
|
$ |
145,332 |
|
$ |
32,788 |
|
See accompanying notes to unaudited consolidated financial statements.
7
Table of Contents
COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Cash Flows - continued
|
|
|
(Unaudited) |
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
|
|
|
2012 |
|
2011 |
|
|
|
|
(Dollars in thousands) |
|
|
Supplemental Disclosure of Cash Flow Information |
|
|
|
|
|
|
Cash paid during the period for |
|
|
|
|
|
|
Interest |
|
$ |
1,176 |
|
$ |
2,022 |
|
|
Income taxes |
|
— |
|
— |
|
|
Net transfers from loans and other asets to foreclosed assets |
|
2,796 |
|
508 |
|
|
Noncash investing and financing activities: |
|
|
|
|
|
|
Other comprehensive loss |
|
(1,490 |
) |
(155 |
) |
|
|
|
|
|
|
|
|
8
Table of Contents
COMMUNITY FIRST BANCORPORATION
Notes to Unaudited Consolidated Financial Statements
(Dollar amounts in thousands, except per share)
Accounting Policies — A summary of significant accounting policies is included in Community First Bancorporation’s (the “Company,” “our,” “we,” “us,” and similar references) Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission.
Management Opinion — In the opinion of management, the accompanying unaudited consolidated financial statements of Community First Bancorporation reflect all adjustments necessary for a fair presentation of the results of the periods presented. Such adjustments were of a normal, recurring nature.
Investment Securities — The following table presents information about amortized cost, unrealized gains, unrealized losses, and estimated fair values of securities:
|
|
|
March 31, 2012 |
|
December 31, 2011 |
|
|
|
|
|
|
Gross |
|
Gross |
|
|
|
|
|
Gross |
|
Gross |
|
|
|
|
|
|
|
|
Unrealized |
|
Unrealized |
|
Estimated |
|
|
|
Unrealized |
|
Unrealized |
|
Estimated |
|
|
|
|
Amortized |
|
Holding |
|
Holding |
|
Fair |
|
Amortized |
|
Holding |
|
Holding |
|
Fair |
|
|
|
|
Cost |
|
Gains |
|
Losses |
|
Value |
|
Cost |
|
Gains |
|
Losses |
|
Value |
|
|
|
|
(Dollars in thousands) |
|
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities issued by US Government agencies |
|
$ |
653 |
|
$ |
9 |
|
$ |
— |
|
$ |
662 |
|
$ |
1,555 |
|
$ |
65 |
|
$ |
— |
|
$ |
1,620 |
|
|
Government sponsored enterprises (GSEs) |
|
66,895 |
|
84 |
|
423 |
|
66,556 |
|
75,004 |
|
436 |
|
55 |
|
75,385 |
|
|
Mortgage-backed securities issued by GSEs |
|
30,165 |
|
378 |
|
61 |
|
30,482 |
|
26,951 |
|
1,118 |
|
4 |
|
28,065 |
|
|
State, county and municipal |
|
5,603 |
|
97 |
|
12 |
|
5,688 |
|
18,180 |
|
853 |
|
9 |
|
19,024 |
|
|
Total debt securities |
|
103,316 |
|
568 |
|
496 |
|
103,388 |
|
121,690 |
|
2,472 |
|
68 |
|
124,094 |
|
|
Equity securities |
|
2 |
|
1 |
|
— |
|
3 |
|
324 |
|
— |
|
7 |
|
317 |
|
|
Total |
|
$ |
103,318 |
|
$ |
569 |
|
$ |
496 |
|
$ |
103,391 |
|
$ |
122,014 |
|
$ |
2,472 |
|
$ |
75 |
|
$ |
124,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities issued by US Government agencies |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Government sponsored enterprises |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Mortgage-backed securities issued by GSEs |
|
4,004 |
|
336 |
|
— |
|
4,340 |
|
4,396 |
|
356 |
|
— |
|
4,752 |
|
|
State, county and municipal |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total |
|
$ |
4,004 |
|
$ |
336 |
|
$ |
— |
|
$ |
4,340 |
|
$ |
4,396 |
|
$ |
356 |
|
$ |
— |
|
$ |
4,752 |
|
9
Table of Contents
The amortized cost and estimated fair value of debt securities by contractual maturity are shown below:
|
|
|
March 31, 2012 |
|
|
|
|
Amortized |
|
Estimated |
|
|
|
|
Cost |
|
Fair Value |
|
|
|
|
(Dollars in thousands) |
|
|
Non-mortgage backed securities issued by GSEs and by state, county and municipal issuers |
|
|
|
|
|
|
Due within one year |
|
$ |
150 |
|
$ |
150 |
|
|
Due after one through five years |
|
433 |
|
435 |
|
|
Due after five through ten years |
|
48,585 |
|
48,433 |
|
|
Due after ten years |
|
23,330 |
|
23,226 |
|
|
|
|
72,498 |
|
72,244 |
|
|
Mortgage-backed securities issued by: |
|
|
|
|
|
|
US Government agencies |
|
34,169 |
|
34,822 |
|
|
GSEs |
|
653 |
|
662 |
|
|
Total |
|
$ |
107,320 |
|
$ |
107,728 |
|
The estimated fair values and gross unrealized losses of all of the Company’s investment securities whose fair values were less than amortized cost as of March 31, 2012 and December 31, 2011 and which had not been determined to be other-than-temporarily impaired are presented below. The Company evaluates all available-for-sale securities and all held-to-maturity securities for impairment as of each balance sheet date. The securities have been segregated in the table by investment category and the length of time that individual securities have been in a continuous unrealized loss position.
10
Table of Contents
|
|
|
March 31, 2012 |
|
|
|
|
Continuously in Unrealized Loss Position for a Period of |
|
|
|
|
Less than 12 Months |
|
12 Months or more |
|
Total |
|
|
|
|
Estimated
Fair Value |
|
Unrealized
Loss |
|
Estimated
Fair Value |
|
Unrealized
Loss |
|
Estimated
Fair Value |
|
Unrealized
Loss |
|
|
|
|
(Dollars in thousands) |
|
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSEs) |
|
$ |
40,208 |
|
$ |
423 |
|
$ |
— |
|
$ |
— |
|
$ |
40,208 |
|
$ |
423 |
|
|
Mortgage-backed securities issued by GSEs |
|
14,357 |
|
61 |
|
— |
|
— |
|
14,357 |
|
61 |
|
|
State, county and municipal securities |
|
1,055 |
|
12 |
|
— |
|
— |
|
1,055 |
|
12 |
|
|
Equity securities |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Total |
|
$ |
55,620 |
|
$ |
496 |
|
$ |
— |
|
$ |
— |
|
$ |
55,620 |
|
$ |
496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSEs |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Total |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
|
|
December 31, 2011 |
|
|
|
|
Continuously in Unrealized Loss Position for a Period of |
|
|
|
|
Less than 12 Months |
|
12 Months or more |
|
Total |
|
|
|
|
Estimated
Fair Value |
|
Unrealized
Loss |
|
Estimated
Fair Value |
|
Unrealized
Loss |
|
Estimated
Fair Value |
|
Unrealized
Loss |
|
|
|
|
(Dollars in thousands) |
|
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises (GSEs) |
|
$ |
12,623 |
|
$ |
55 |
|
$ |
— |
|
$ |
— |
|
$ |
12,623 |
|
$ |
55 |
|
|
Mortgage-backed securities issued by GSEs |
|
1,946 |
|
4 |
|
— |
|
— |
|
1,946 |
|
4 |
|
|
State, county and municipal securities |
|
— |
|
— |
|
501 |
|
9 |
|
501 |
|
9 |
|
|
Equity securities |
|
315 |
|
7 |
|
— |
|
— |
|
315 |
|
7 |
|
|
Total |
|
$ |
14,884 |
|
$ |
66 |
|
$ |
501 |
|
$ |
9 |
|
$ |
15,385 |
|
$ |
75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSEs |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Total |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
As of March 31, 2012, 39 securities had been continuously in an unrealized loss position for less than 12 months and no securities had been continuously in an unrealized loss position for 12 months or more. We do not consider these investments to be other-than-temporarily impaired because the unrealized losses involve primarily issuances of government-sponsored enterprises and state, county and municipal government issuers. We also believe that the impairments resulted from current credit market conditions. There have been no defaults or failures by any of the issuers to remit periodic interest payments as required, nor are we aware that any such issuer has given notice that it expects it will be unable to make any such future payment according to the terms of its bond agreement. Although we classify a majority of our investment securities as available-for-sale, management has not determined that any specific securities will be disposed of prior to maturity and believes that we have both the ability and the intent to hold those investments until a recovery of fair value, including until maturity. Furthermore, we do not believe that we will be required to sell any such securities prior to recovery of the unrealized losses. Substantially all of the state, county and municipal securities were rated at least “investment grade” by either S&P or Moody’s, or both, as of March 31, 2012.
Our subsidiary bank is a member of the Federal Home Loan Bank of Atlanta (“FHLB”) and, accordingly, is required to own restricted stock in that institution in amounts that may vary from time to time. These securities are identified in a separate category in the Consolidated Balance Sheets. Because of the restrictions imposed, the stock may not be sold to other parties, but is redeemable by the FHLB at the same price as that at which it was acquired by the Company’s
11
Table of Contents
subsidiary. We evaluate this security for impairment based on the probability of ultimate recovery of the acquisition cost. No impairment has been recognized based on this evaluation.
During the first three months of 2012, we sold sixty-seven available-for-sale debt securities and two available-for-sale equity securities for proceeds of $42,335 and realized gains of $1,528. In addition, seventeen securities were called for proceeds of $20,100 and paydowns of mortgage-backed securities totaled $4,451. We purchased twenty-seven debt securities for cash expenditures of $46,529. There were there no transfers of available-for-sale securities to other categories.
Loans — Loans consisted of the following:
|
|
|
March 31, |
|
December 31, |
|
|
|
|
2012 |
|
2011 |
|
|
|
|
(Dollars in thousands) |
|
|
Commercial, financial and industrial |
|
$ |
18,362 |
|
$ |
18,123 |
|
|
Real estate- construction |
|
10,097 |
|
11,706 |
|
|
Real estate - mortgage |
|
169,201 |
|
174,351 |
|
|
Consumer installment |
|
18,618 |
|
20,476 |
|
|
Total |
|
216,278 |
|
224,656 |
|
|
Allowance for loan losses |
|
(4,861 |
) |
(4,359 |
) |
|
Loans - net |
|
$ |
211,417 |
|
$ |
220,297 |
|
The following table provides information about the payment status of loans:
|
|
|
30-59 Days
Past Due |
|
60-89 Days
Past Due |
|
90 Days or
More Past Due |
|
Total Past
Due |
|
Current |
|
Total Loans |
|
|
|
|
(Dollars in thousands) |
|
|
As of March 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
135 |
|
$ |
386 |
|
$ |
220 |
|
$ |
741 |
|
$ |
17,621 |
|
$ |
18,362 |
|
|
Real estate- construction |
|
— |
|
— |
|
1,709 |
|
1,709 |
|
8,388 |
|
10,097 |
|
|
Real estate - mortgage |
|
3,005 |
|
1,008 |
|
5,888 |
|
9,901 |
|
159,300 |
|
169,201 |
|
|
Consumer installment |
|
435 |
|
108 |
|
176 |
|
719 |
|
17,899 |
|
18,618 |
|
|
Total |
|
$ |
3,575 |
|
$ |
1,502 |
|
$ |
7,993 |
|
$ |
13,070 |
|
$ |
203,208 |
|
$ |
216,278 |
|
|
|
|
30-59 Days
Past Due |
|
60-89 Days
Past Due |
|
90 Days or
More Past Due |
|
Total Past
Due |
|
Current |
|
Total Loans |
|
|
|
|
(Dollars in thousands) |
|
|
As of December 31, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
223 |
|
$ |
117 |
|
$ |
265 |
|
$ |
605 |
|
$ |
17,518 |
|
$ |
18,123 |
|
|
Real estate- construction |
|
— |
|
230 |
|
2,594 |
|
2,824 |
|
8,882 |
|
11,706 |
|
|
Real estate - mortgage |
|
1,490 |
|
1,175 |
|
7,387 |
|
10,052 |
|
164,299 |
|
174,351 |
|
|
Consumer installment |
|
458 |
|
119 |
|
109 |
|
686 |
|
19,790 |
|
20,476 |
|
|
Total |
|
$ |
2,171 |
|
$ |
1,641 |
|
$ |
10,355 |
|
$ |
14,167 |
|
$ |
210,489 |
|
$ |
224,656 |
|
Nonaccrual loans totaled $7,993 and $10,342 as of March 31, 2012 and December 31, 2011, respectively. Troubled debt restructurings, not including such loans that are included in nonaccrual loans, totaled $8,075 as of March 31, 2012 and
12
Table of Contents
$6,205 as of December 31, 2011. As of March 31, 2012 and December 31, 2011, we had loans past due 90 days or more and still accruing interest totaling $0 and $13, respectively.
Loans that we grade Management Attention and Special Mention are not believed to represent more than a minimal likelihood of loss. Those grades indicate that a change in the borrowers’ circumstances, or some other event, has occurred such that an elevated level of monitoring is warranted. Such loans are generally evaluated collectively for purposes of estimating the allowance for loan losses. Loans graded Substandard are believed to present a moderate likelihood of loss due the presence of well-defined weakness in the borrowers’ financial condition such as a change in their demonstrated repayment history, the effects of lower collateral values combined with other financial difficulties the borrowers may be experiencing, or deterioration of other indicators of the borrowers’ ability to service the loan as agreed. Loans graded Doubtful are believed to present a high likelihood of loss due to severe deterioration of a borrowers’ financial condition, severe past due status and/or substantial deterioration of collateral value, or other factors. Loans graded Substandard and Doubtful are evaluated individually for impairment. Management updates the loans in its internal risk grading system no less often than monthly. The following table provides information about how we grade loans internally.
|
|
|
Internally Assigned Risk Grade |
|
|
|
|
|
|
Management
Attention |
|
Special Mention |
|
Substandard |
|
Doubtful |
|
Total |
|
|
|
|
(Dollars in thousands) |
|
|
As of March 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
1,381 |
|
$ |
2,423 |
|
$ |
988 |
|
$ |
— |
|
$ |
4,792 |
|
|
Real estate- construction |
|
1,553 |
|
1,542 |
|
4,271 |
|
— |
|
7,366 |
|
|
Real estate - mortgage |
|
12,421 |
|
16,673 |
|
18,779 |
|
— |
|
47,873 |
|
|
Consumer installment |
|
1,034 |
|
662 |
|
839 |
|
— |
|
2,535 |
|
|
|
|
$ |
16,389 |
|
$ |
21,300 |
|
$ |
24,877 |
|
$ |
— |
|
$ |
62,566 |
|
|
|
|
Internally Assigned Risk Grade |
|
|
|
|
|
|
Management
Attention |
|
Special Mention |
|
Substandard |
|
Doubtful |
|
Total |
|
|
|
|
(Dollars in thousands) |
|
|
As of December 31, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
1,182 |
|
$ |
2,023 |
|
$ |
981 |
|
$ |
— |
|
$ |
4,186 |
|
|
Real estate- construction |
|
1,541 |
|
1,457 |
|
5,822 |
|
— |
|
8,820 |
|
|
Real estate - mortgage |
|
10,699 |
|
12,586 |
|
21,425 |
|
— |
|
44,710 |
|
|
Consumer installment |
|
1,335 |
|
860 |
|
697 |
|
— |
|
2,892 |
|
|
|
|
$ |
14,757 |
|
$ |
16,926 |
|
$ |
28,925 |
|
$ |
— |
|
$ |
60,608 |
|
Impaired loans generally are nonaccrual loans, loans that are 90 days or more delinquent as to principal or interest payments, and other loans where, based on current information and events, it is probable that we will be unable to collect principal and interest payments according to the contractual terms of the loan agreements, including loans whose terms have been modified in a troubled debt restructuring. A loan is not considered to be impaired, however, if any periods of delay or shortfalls of amounts expected to be collected are insignificant or if we expect that we will be able to collect all amounts due including interest accrued at the contractual interest rate during the period of delay.
Following is a summary of our impaired loans, by class:
13
Table of Contents
|
|
|
Recorded
Investment |
|
Unpaid
Principal
Balance |
|
Related
Allowance |
|
Year-to-Date
Average
Recorded
Investment |
|
Year-to-Date
Interest Income
Recognized |
|
|
|
|
(Dollars in thousands) |
|
|
As of March 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
927 |
|
$ |
1,100 |
|
$ |
— |
|
$ |
927 |
|
$ |
— |
|
|
Real estate- construction |
|
1,725 |
|
2,070 |
|
— |
|
1,725 |
|
— |
|
|
Real estate - mortgage |
|
11,400 |
|
11,591 |
|
— |
|
11,400 |
|
1 |
|
|
Consumer installment |
|
65 |
|
86 |
|
— |
|
65 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
335 |
|
$ |
335 |
|
$ |
210 |
|
$ |
335 |
|
$ |
— |
|
|
Real estate- construction |
|
633 |
|
797 |
|
64 |
|
633 |
|
— |
|
|
Real estate - mortgage |
|
3,987 |
|
5,752 |
|
490 |
|
3,987 |
|
— |
|
|
Consumer installment |
|
242 |
|
242 |
|
127 |
|
242 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
1,262 |
|
$ |
1,435 |
|
$ |
210 |
|
$ |
1,262 |
|
$ |
— |
|
|
Real estate - construction and mortgage |
|
17,745 |
|
20,210 |
|
554 |
|
17,745 |
|
1 |
|
|
Consumer installment |
|
307 |
|
328 |
|
127 |
|
307 |
|
— |
|
|
Total |
|
$ |
19,314 |
|
$ |
21,973 |
|
$ |
891 |
|
$ |
19,314 |
|
$ |
1 |
|
|
|
|
Recorded
Investment |
|
Unpaid
Principal
Balance |
|
Related
Allowance |
|
Year-to-Date
Average
Recorded
Investment |
|
Year-to-Date
Interest Income
Recognized |
|
|
|
|
(Dollars in thousands) |
|
|
As of December 31, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
178 |
|
$ |
330 |
|
$ |
— |
|
$ |
361 |
|
$ |
15 |
|
|
Real estate- construction |
|
2,664 |
|
3,443 |
|
— |
|
6,216 |
|
42 |
|
|
Real estate - mortgage |
|
9,654 |
|
12,073 |
|
— |
|
10,909 |
|
275 |
|
|
Consumer installment |
|
40 |
|
56 |
|
— |
|
144 |
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
271 |
|
$ |
271 |
|
$ |
120 |
|
$ |
714 |
|
$ |
18 |
|
|
Real estate- construction |
|
764 |
|
764 |
|
134 |
|
1,174 |
|
55 |
|
|
Real estate - mortgage |
|
1,310 |
|
1,755 |
|
270 |
|
1,833 |
|
64 |
|
|
Consumer installment |
|
298 |
|
298 |
|
149 |
|
342 |
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and industrial |
|
$ |
449 |
|
$ |
601 |
|
$ |
120 |
|
$ |
1,075 |
|
$ |
33 |
|
|
Real estate - construction and mortgage |
|
14,392 |
|
18,035 |
|
404 |
|
20,132 |
|
436 |
|
|
Consumer installment |
|
338 |
|
354 |
|
149 |
|
486 |
|
26 |
|
|
Total |
|
$ |
15,179 |
|
$ |
18,990 |
|
$ |
673 |
|
$ |
21,693 |
|
$ |
495 |
|
14
Table of Contents
The following table provides information about how we evaluated loans for impairment, the amount of the allowance for loan losses estimated for loans subjected to each type of evaluation, and the related total amounts, by portfolio segment as of each date indicated:
|
|
|
Secured by |
|
|
|
|
|
|
|
|
Real Estate |
|
Other |
|
Total |
|
|
|
|
(Dollars in thousands) |
|
|
As of March 31, 2012 |
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
2,721 |
|
$ |
2,140 |
|
$ |
4,861 |
|
|
Ending balance - individually evaluated for impairment |
|
$ |
554 |
|
$ |
337 |
|
$ |
891 |
|
|
Ending balance - collectively evaluated for impairment |
|
$ |
2,167 |
|
$ |
1,803 |
|
$ |
3,970 |
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
179,298 |
|
$ |
36,980 |
|
$ |
216,278 |
|
|
Ending balance - individually evaluated for impairment |
|
$ |
17,299 |
|
$ |
1,527 |
|
$ |
18,826 |
|
|
Ending balance - collectively evaluated for impairment |
|
$ |
161,999 |
|
$ |
35,453 |
|
$ |
197,452 |
|
|
|
|
Secured by |
|
|
|
|
|
|
|
|
Real Estate |
|
Other |
|
Total |
|
|
|
|
(Dollars in thousands) |
|
|
As of December 31, 2011 |
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
2,437 |
|
$ |
1,922 |
|
$ |
4,359 |
|
|
Ending balance - individually evaluated for impairment |
|
$ |
404 |
|
$ |
269 |
|
$ |
673 |
|
|
Ending balance - collectively evaluated for impairment |
|
$ |
2,033 |
|
$ |
1,653 |
|
$ |
3,686 |
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
186,057 |
|
$ |
38,599 |
|
$ |
224,656 |
|
|
Ending balance - individually evaluated for impairment |
|
$ |
14,392 |
|
$ |
787 |
|
$ |
15,179 |
|
|
Ending balance - collectively evaluated for impairment |
|
$ |
171,665 |
|
$ |
37,812 |
|
$ |
209,477 |
|
|
Ending balance - Loans acquired with deteriorated credit quality |
|
$ |
1,402 |
|
$ |
58 |
|
$ |
1,460 |
|
15
Table of Contents
The following table presents information about loans that were modified in troubled debt restructurings during the first three months of 2012:
|
|
|
As of March 31, 2012 |
|
|
|
|
Modifications |
|
|
Troubled Debt Restructurings |
|
Number of
Contracts |
|
Pre-
Modification
Outstanding
Recorded
Investment |
|
Post-
Modification
Outstanding
Recorded
Investment |
|
|
Real estate - mortgage |
|
1 |
|
$ |
116 |
|
$ |
116 |
|
|
Consumer installment |
|
2 |
|
16 |
|
14 |
|
|
|
|
|
|
|
|
|
|
|
The following table presents information about loans that were modified in troubled debt restructuring during the twelve months ending March 31, 2012 and subsequently defaulted:
|
|
|
As of March 31, 2012 |
|
|
Troubled Debt Restructurings that
Subsequently Defaulted |
|
Number of
Contracts |
|
Recorded
Investment |
|
|
Real estate - mortgage |
|
1 |
|
$ |
230 |
|
|
|
|
|
|
|
|
During the three months ended March 31, 2012, we continued to experience higher than normal (pre-recession) amounts of net charge-offs, and relatively high levels of past due and nonaccrual loans. These and other measures of credit quality, as well as continuing weakness in real estate prices, relatively low levels of activity in the real estate market and the continuing high unemployment in our market areas, indicate that our loan customers and collateral values remain under stress. Accordingly, we have recorded higher than normal provision and allowance for loan losses to recognize those conditions. We have not changed our accounting policy or the methodology used to estimate the allowance for loan losses since December 31, 2011. The following table provides information about activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2012:
|
|
|
Secured by |
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
Other |
|
Unallocated |
|
Total |
|
|
|
|
(Dollars in thousands) |
|
|
|
|
For the three months ended March 31, 2012 |
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2012 |
|
$ |
2,437 |
|
$ |
880 |
|
$ |
1,042 |
|
$ |
4,359 |
|
|
Provision charged to expense |
|
441 |
|
342 |
|
152 |
|
$ |
935 |
|
|
Recoveries |
|
26 |
|
10 |
|
— |
|
$ |
36 |
|
|
Charge-offs |
|
(296 |
) |
(173 |
) |
— |
|
(469 |
) |
|
Balance at March 31, 2012 |
|
$ |
2,608 |
|
$ |
1,059 |
|
$ |
1,194 |
|
$ |
4,861 |
|
Earnings (Loss) Per Common Share — Basic earnings (loss) per common share is computed by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding. Diluted earnings (loss) per common share is computed by dividing applicable net income (loss) by the weighted average number of common shares outstanding and any dilutive potential common shares and dilutive stock options. It is assumed that all dilutive stock options are exercised at the beginning of each period and that the proceeds are used to purchase shares of the Company’s common stock at the average market price during the period. Per share information for 2011 has been retroactively adjusted to give effect to a 5% stock dividend effective December 16, 2011. Net income (loss) per common share and net income (loss) per common share, assuming dilution, were computed as follows:
16
Table of Contents
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
|
|
|
2012 |
|
2011 |
|
|
|
|
(Dollars in thousands, |
|
|
|
|
except per share amounts) |
|
|
|
|
|
|
|
|
|
Net income (loss) per common share, basic |
|
|
|
|
|
|
Numerator - net income (loss) available to common shareholders |
|
$ |
(719 |
) |
$ |
136 |
|
|
Denominator |
| |