West Virginia
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55-0672148
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(State or other jurisdiction of
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(IRS Employer
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incorporation or organization)
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Identification No.)
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300 North Main Street
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Moorefield, West Virginia
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26836
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(Address of principal executive offices)
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(Zip Code)
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Yes þ
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No o
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Yes þ
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No o
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Yes o
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No þ
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Page
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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||
Consolidated balance sheets
September 30, 2013 (unaudited), December 31, 2012,
and September 30, 2012 (unaudited)
|
4
|
||
Consolidated statements of income
for the three and nine months ended
September 30, 2013 and 2012 (unaudited)
|
5
|
||
Consolidated statements of comprehensive
income for the three and nine months ended
September 30, 2013 and 2012 (unaudited)
|
6
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||
Consolidated statements of shareholders’ equity
for the nine months ended
September 30, 2013 and 2012 (unaudited)
|
7
|
||
Consolidated statements of cash flows
for the nine months ended
September 30, 2013 and 2012 (unaudited)
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8-9
|
||
Notes to consolidated financial statements (unaudited)
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10-46
|
||
Item 2.
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Management's Discussion and Analysis of Financial Condition
and Results of Operations
|
47-65
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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64
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Item 4.
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Controls and Procedures
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66
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Page
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PART II.
|
OTHER INFORMATION
|
||
Item 1.
|
Legal Proceedings
|
67 | |
Item 1A.
|
Risk Factors
|
67 | |
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
None | |
Item 3.
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Defaults upon Senior Securities
|
None | |
Item 4.
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Mine Safety Disclosures
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None | |
Item 5.
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Other Information
|
None | |
Item 6.
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Exhibits
|
67 | |
SIGNATURES
|
68 | ||
EXHIBIT INDEX
|
69 |
September 30,
|
December 31,
|
September 30,
|
|||||||
2013
|
2012
|
2012
|
|||||||
Dollars in thousands
|
(unaudited)
|
(*) |
(unaudited)
|
||||||
ASSETS
|
|||||||||
Cash and due from banks
|
$ | 4,571 | $ | 3,833 | $ | 3,752 | |||
Interest bearing deposits with other banks
|
11,532 | 10,969 | 13,441 | ||||||
Cash and cash equivalents
|
16,103 | 14,802 | 17,193 | ||||||
Securities available for sale
|
291,258 | 281,539 | 291,992 | ||||||
Other investments
|
8,004 | 14,658 | 16,100 | ||||||
Loans held for sale
|
602 | 226 | 213 | ||||||
Loans, net
|
939,169 | 937,168 | 940,933 | ||||||
Property held for sale
|
45,303 | 56,172 | 56,033 | ||||||
Premises and equipment, net
|
20,780 | 21,129 | 21,264 | ||||||
Accrued interest receivable
|
5,364 | 5,621 | 5,352 | ||||||
Intangible assets
|
8,036 | 8,300 | 8,387 | ||||||
Cash surrender value of life insurance policies
|
35,257 | 29,553 | 30,065 | ||||||
Other assets
|
17,911 | 17,936 | 16,554 | ||||||
Total assets
|
$ | 1,387,787 | $ | 1,387,104 | $ | 1,404,086 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|||||||||
Liabilities
|
|||||||||
Deposits
|
|||||||||
Non interest bearing
|
$ | 99,109 | $ | 100,592 | $ | 96,764 | |||
Interest bearing
|
917,626 | 926,533 | 930,543 | ||||||
Total deposits
|
1,016,735 | 1,027,125 | 1,027,307 | ||||||
Short-term borrowings
|
54,163 | 3,958 | 20,957 | ||||||
Long-term borrowings
|
163,540 | 203,268 | 203,744 | ||||||
Subordinated debentures
|
16,800 | 16,800 | 16,800 | ||||||
Subordinated debentures owed to unconsolidated subsidiary trusts
|
19,589 | 19,589 | 19,589 | ||||||
Other liabilities
|
8,155 | 7,809 | 8,361 | ||||||
Total liabilities
|
1,278,982 | 1,278,549 | 1,296,758 | ||||||
Commitments and Contingencies
|
|||||||||
Shareholders' Equity
|
|||||||||
Preferred stock and related surplus - authorized 250,000 shares;
|
|||||||||
Series 2009, 8% Non-cumulative convertible preferred stock,
|
|||||||||
par value $1.00; issued 3,710 shares
|
3,519 | 3,519 | 3,519 | ||||||
Series 2011, 8% Non-cumulative convertible preferred stock,
|
|||||||||
par value $1.00; issued 2013 - 11,938, 2012 - 12,000 shares
|
5,776 | 5,807 | 5,807 | ||||||
Common stock and related surplus - authorized 20,000,000 shares;
|
|||||||||
$2.50 par value; issued and outstanding 2013 - 7,448,422 and
|
|||||||||
2012 - 7,425,472 shares
|
24,632 | 24,520 | 24,520 | ||||||
Retained earnings
|
74,541 | 69,841 | 67,929 | ||||||
Accumulated other comprehensive income
|
337 | 4,868 | 5,553 | ||||||
Total shareholders' equity
|
108,805 | 108,555 | 107,328 | ||||||
Total liabilities and shareholders' equity
|
$ | 1,387,787 | $ | 1,387,104 | $ | 1,404,086 | |||
(*) - December 31, 2012 financial information has been extracted from audited consolidated financial statements
|
|||||||||
See Notes to Consolidated Financial Statements
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||
Dollars in thousands, except per share amounts
|
2013
|
2012
|
2013
|
2012
|
||||||||
Interest income
|
||||||||||||
Interest and fees on loans
|
||||||||||||
Taxable
|
$ | 12,469 | $ | 13,572 | $ | 38,037 | $ | 41,812 | ||||
Tax-exempt
|
63 | 76 | 197 | 243 | ||||||||
Interest and dividends on securities
|
||||||||||||
Taxable
|
896 | 1,340 | 2,852 | 4,593 | ||||||||
Tax-exempt
|
616 | 594 | 1,832 | 1,986 | ||||||||
Interest on interest bearing deposits with other banks
|
1 | 7 | 4 | 30 | ||||||||
Total interest income
|
14,045 | 15,589 | 42,922 | 48,664 | ||||||||
Interest expense
|
||||||||||||
Interest on deposits
|
2,487 | 3,067 | 8,074 | 10,140 | ||||||||
Interest on short-term borrowings
|
24 | 8 | 50 | 25 | ||||||||
Interest on long-term borrowings and subordinated debentures
|
1,996 | 2,579 | 5,997 | 8,575 | ||||||||
Total interest expense
|
4,507 | 5,654 | 14,121 | 18,740 | ||||||||
Net interest income
|
9,538 | 9,935 | 28,801 | 29,924 | ||||||||
Provision for loan losses
|
1,000 | 2,000 | 3,500 | 6,002 | ||||||||
Net interest income after provision for loan losses
|
8,538 | 7,935 | 25,301 | 23,922 | ||||||||
Other income
|
||||||||||||
Insurance commissions
|
1,057 | 1,052 | 3,373 | 3,352 | ||||||||
Service fees related to deposit accounts
|
1,106 | 1,074 | 3,202 | 3,163 | ||||||||
Realized securities gains
|
132 | 760 | 116 | 2,245 | ||||||||
Other
|
606 | 514 | 1,741 | 1,649 | ||||||||
Total other-than-temporary impairment loss on securities
|
(38 | ) | (233 | ) | (155 | ) | (1,115) | |||||
Portion of loss recognized in other comprehensive income
|
- | 194 | 37 | 740 | ||||||||
Net impairment loss recognized in earnings
|
(38 | ) | (39 | ) | (118 | ) | (375) | |||||
Total other income
|
2,863 | 3,361 | 8,314 | 10,034 | ||||||||
Other expense
|
||||||||||||
Salaries, commissions, and employee benefits
|
4,050 | 3,940 | 12,155 | 11,733 | ||||||||
Net occupancy expense
|
454 | 476 | 1,387 | 1,445 | ||||||||
Equipment expense
|
578 | 573 | 1,724 | 1,777 | ||||||||
Professional fees
|
263 | 292 | 885 | 872 | ||||||||
Amortization of intangibles
|
88 | 88 | 263 | 263 | ||||||||
FDIC premiums
|
503 | 510 | 1,558 | 1,532 | ||||||||
Foreclosed properties expense
|
262 | 356 | 836 | 935 | ||||||||
(Gain) loss on sale of foreclosed properties
|
(17 | ) | (16 | ) | 546 | 583 | ||||||
Write-down of foreclosed properties
|
654 | 2,571 | 3,078 | 6,114 | ||||||||
Other
|
1,396 | 1,237 | 3,900 | 3,749 | ||||||||
Total other expense
|
8,231 | 10,027 | 26,332 | 29,003 | ||||||||
Income before income taxes
|
3,170 | 1,269 | 7,283 | 4,953 | ||||||||
Income tax expense
|
898 | 272 | 2,001 | 1,345 | ||||||||
Net Income
|
2,272 | 997 | 5,282 | 3,608 | ||||||||
Dividends on preferred shares
|
194 | 194 | 582 | 583 | ||||||||
Net Income applicable to common shares
|
$ | 2,078 | $ | 803 | $ | 4,700 | $ | 3,025 | ||||
Basic earnings per common share
|
$ | 0.28 | $ | 0.11 | $ | 0.63 | $ | 0.41 | ||||
Diluted earnings per common share
|
$ | 0.24 | $ | 0.10 | $ | 0.55 | $ | 0.38 | ||||
See Notes to Consolidated Financial Statements
|
For the Three Months Ended
|
|||||
September 30,
|
|||||
Dollars in thousands
|
2013
|
2012
|
|||
Net income
|
$ | 2,272 | $ | 997 | |
Other comprehensive income (loss):
|
|||||
Net unrealized (loss) on cashflow hedge of ($117), net of deferred
|
|||||
taxes of $43
|
(74 | ) | - | ||
Non-credit related other-than-temporary impairment on
|
|||||
available for sale debt securities - 2013 - $0, net of deferred
|
|||||
taxes of $0; 2012 - $194, net of deferred taxes of $74
|
- | (120) | |||
Net unrealized gain (loss) on available for sale debt securities of:
|
|||||
2013 - ($681) net of deferred taxes of $252 and reclassification adjustment
|
|||||
for net realized gains included in net income of $132; 2012 - $1,513, net of
|
|||||
deferred taxes of $575 and reclassification adjustment for net realized
|
|||||
gains included in net income of $760
|
(429 | ) | 938 | ||
Total comprehensive income
|
$ | 1,769 | $ | 1,815 |
For the Nine Months Ended
|
|||||
September 30,
|
|||||
Dollars in thousands
|
2013
|
2012
|
|||
Net income
|
$ | 5,282 | $ | 3,608 | |
Other comprehensive income (loss):
|
|||||
Net unrealized (loss) on cashflow hedge of ($117), net of deferred
|
(74 | ) | - | ||
taxes of $43
|
|||||
Non-credit related other-than-temporary impairment on
|
|||||
available for sale debt securities - 2013 - $37, net of deferred
|
|||||
taxes of $14; 2012 - $740, net of deferred taxes of $281
|
(23 | ) | (459) | ||
Net unrealized gain (loss) on available for sale debt securities of:
|
|||||
2013 - ($7,038) net of deferred taxes of $2,604 and reclassification adjustment
|
|||||
for net realized gains included in net income of $116; 2012 - $3,539, net of
|
|||||
deferred taxes of $1,345 and reclassification adjustment for net realized
|
|||||
gains included in net income of $2,245
|
(4,434 | ) | 2,194 | ||
Total comprehensive income
|
$ | 751 | $ | 5,343 |
Series 2009
|
Series 2011
|
Accumulated
|
|||||||||||||||
Preferred
|
Preferred
|
Common
|
Other
|
Total
|
|||||||||||||
Stock and
|
Stock and
|
Stock and
|
Compre-
|
Share-
|
|||||||||||||
Related
|
Related
|
Related
|
Retained
|
hensive
|
holders'
|
||||||||||||
Dollars in thousands, except per share amounts
|
Surplus
|
Surplus
|
Surplus
|
Earnings
|
Income
|
Equity
|
|||||||||||
Balance, December 31, 2012
|
$ | 3,519 | $ | 5,807 | $ | 24,520 | $ | 69,841 | $ | 4,868 | $ | 108,555 | |||||
Nine Months Ended September 30, 2013
|
|||||||||||||||||
Comprehensive income:
|
|||||||||||||||||
Net income
|
- | - | - | 5,282 | - | 5,282 | |||||||||||
Other comprehensive income (loss)
|
(4,531 | ) | (4,531) | ||||||||||||||
Total comprehensive income (loss)
|
751 | ||||||||||||||||
Exercise of stock options
|
- | - | 80 | - | - | 80 | |||||||||||
Stock compensation expense
|
- | - | 1 | - | - | 1 | |||||||||||
Series 2009 Preferred Stock cash dividends
|
|||||||||||||||||
declared ($60.00 per share)
|
- | - | - | (223 | ) | - | (223) | ||||||||||
Series 2011 Preferred Stock cash dividends
|
|||||||||||||||||
declared ($30.00 per share)
|
- | - | - | (359 | ) | - | (359) | ||||||||||
Conversion of Series 2011 Preferred Stock to Common Stock
|
- | (31 | ) | 31 | - | ||||||||||||
Balance, September 30, 2013
|
$ | 3,519 | $ | 5,776 | $ | 24,632 | $ | 74,541 | $ | 337 | $ | 108,805 | |||||
Balance, December 31, 2011
|
$ | 3,519 | $ | 5,807 | $ | 24,518 | $ | 64,904 | $ | 3,818 | $ | 102,566 | |||||
Nine Months Ended September 30, 2012
|
|||||||||||||||||
Comprehensive income:
|
|||||||||||||||||
Net income
|
- | - | - | 3,608 | - | 3,608 | |||||||||||
Other comprehensive income
|
1,735 | 1,735 | |||||||||||||||
Total comprehensive income
|
5,343 | ||||||||||||||||
Stock compensation expense
|
- | - | 2 | - | - | 2 | |||||||||||
Series 2009 Preferred Stock cash dividends
|
|||||||||||||||||
declared ($60.00 per share)
|
- | - | - | (223 | ) | - | (223) | ||||||||||
Series 2011 Preferred Stock cash dividends
|
|||||||||||||||||
declared ($30.00 per share)
|
- | - | - | (360 | ) | - | (360) | ||||||||||
Balance, September 30, 2012
|
$ | 3,519 | $ | 5,807 | $ | 24,520 | $ | 67,929 | $ | 5,553 | $ | 107,328 | |||||
See Notes to Consolidated Financial Statements
|
Nine Months Ended
|
||||||
September 30,
|
September 30,
|
|||||
Dollars in thousands
|
2013
|
2012
|
||||
Cash Flows from Operating Activities
|
||||||
Net income
|
$ | 5,282 | $ | 3,608 | ||
Adjustments to reconcile net earnings to net cash
|
||||||
provided by operating activities:
|
||||||
Depreciation
|
878 | 989 | ||||
Provision for loan losses
|
3,500 | 6,002 | ||||
Stock compensation expense
|
1 | 2 | ||||
Deferred income tax expense (benefit)
|
1,248 | (1,172) | ||||
Loans originated for sale
|
(7,963 | ) | (5,463) | |||
Proceeds from loans sold
|
7,587 | 5,251 | ||||
Securities gains
|
(116 | ) | (2,245) | |||
Other-than-temporary impairment of securities
|
118 | 375 | ||||
Loss on disposal of assets
|
535 | 583 | ||||
Write down of foreclosed properties
|
3,078 | 6,114 | ||||
Amortization of securities premiums (accretion of discounts), net
|
4,698 | 3,181 | ||||
Amortization of goodwill and purchase accounting
|
||||||
adjustments, net
|
272 | 272 | ||||
Decrease in accrued interest receivable
|
257 | 431 | ||||
Increase in cash surrender value of bank owned life insurance
|
(704 | ) | (781) | |||
(Increase) decrease in other assets
|
2,354 | (971) | ||||
Decrease in other liabilities
|
(748 | ) | (140) | |||
Net cash provided by operating activities
|
20,277 | 16,036 | ||||
Cash Flows from Investing Activities
|
||||||
Proceeds from maturities and calls of securities available for sale
|
1,258 | 4,056 | ||||
Proceeds from sales of securities available for sale
|
41,188 | 64,567 | ||||
Principal payments received on securities available for sale
|
50,650 | 47,584 | ||||
Purchases of securities available for sale
|
(111,443 | ) | (120,114) | |||
Purchases of other investments
|
(2,541 | ) | - | |||
Redemption of Federal Home Loan Bank Stock
|
5,922 | 3,048 | ||||
Net principal payments received from (loans made to) customers
|
(8,371 | ) | 13,736 | |||
Purchases of premises and equipment
|
(528 | ) | (170) | |||
Proceeds from disposal of premises and equipment
|
11 | - | ||||
Proceeds from sales of other repossessed assets & property held for sale
|
10,339 | 6,998 | ||||
Purchase of life insurance contracts
|
(5,000 | ) | - | |||
Net cash provided by investing activities
|
(18,515 | ) | 19,705 | |||
Cash Flows from Financing Activities
|
||||||
Net increase in demand deposit, NOW and
|
||||||
savings accounts
|
9,759 | 15,662 | ||||
Net decrease in time deposits
|
(20,149 | ) | (4,856) | |||
Net increase in short-term borrowings
|
50,205 | 5,002 | ||||
Proceeds from long-term borrowings
|
3,454 | - | ||||
Repayment of long-term borrowings
|
(43,228 | ) | (66,510) | |||
Exercise of stock options
|
80 | - | ||||
Dividends paid on preferred stock
|
(582 | ) | (537) | |||
Net cash (used in) financing activities
|
(461 | ) | (51,239) | |||
Increase (decrease) in cash and cash equivalents
|
1,301 | (15,498) | ||||
Cash and cash equivalents:
|
||||||
Beginning
|
14,802 | 32,691 | ||||
Ending
|
$ | 16,103 | $ | 17,193 | ||
(Continued)
|
||||||
See Notes to Consolidated Financial Statements
|
Nine Months Ended
|
|||||||
September 30,
|
September 30,
|
||||||
Dollars in thousands
|
2013
|
2012
|
|||||
Supplemental Disclosures of Cash Flow Information
|
|||||||
Cash payments for:
|
|||||||
Interest
|
$ | 14,526 | $ | 19,335 | |||
Income taxes
|
$ | 1,098 | $ | 1,834 | |||
Supplemental Schedule of Noncash Investing and Financing Activities
|
|||||||
Other assets acquired in settlement of loans
|
$ | 2,871 | $ | 5,266 | |||
See Notes to Consolidated Financial Statements
|
|
Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
|
|
Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.
|
|
Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
|
Balance at
|
Fair Value Measurements Using:
|
||||||||||
Dollars in thousands
|
September 30, 2013
|
Level 1
|
Level 2
|
Level 3
|
|||||||
Available for sale securities
|
|||||||||||
U.S. Government sponsored agencies
|
$ | 28,430 | $ | - | $ | 28,430 | $ | - | |||
Mortgage backed securities:
|
|||||||||||
Government sponsored agencies
|
150,787 | - | 150,787 | - | |||||||
Nongovernment sponsored entities
|
13,440 | - | 13,440 | - | |||||||
State and political subdivisions
|
15,011 | - | 15,011 | - | |||||||
Corporate debt securities
|
3,950 | - | 3,950 | - | |||||||
Other equity securities
|
77 | - | 77 | - | |||||||
Tax-exempt state and political subdivisions
|
79,563 | - | 79,563 | - | |||||||
Tax-exempt mortgage-backed securities
|
- | - | - | - | |||||||
Total available for sale securities
|
$ | 291,258 | $ | - | $ | 291,258 | $ | - | |||
Derivative financial instrument
|
|||||||||||
Interest rate swap
|
$ | (117 | ) | $ | - | $ | (117 | ) | $ | - |
Balance at
|
Fair Value Measurements Using:
|
||||||||||
Dollars in thousands
|
December 31, 2012
|
Level 1
|
Level 2
|
Level 3
|
|||||||
Available for sale securities
|
|||||||||||
U.S. Government sponsored agencies
|
$ | 29,020 | $ | - | $ | 29,020 | $ | - | |||
Mortgage backed securities:
|
|||||||||||
Government sponsored agencies
|
136,570 | - | 136,570 | - | |||||||
Nongovernment sponsored agencies
|
15,745 | - | 15,745 | - | |||||||
State and political subdivisions
|
12,169 | - | 12,169 | - | |||||||
Corporate debt securities
|
1,950 | - | 1,950 | - | |||||||
Other equity securities
|
77 | - | 77 | - | |||||||
Tax-exempt state and political subdivisions
|
83,270 | - | 83,270 | - | |||||||
Tax-exempt mortgage backed securities
|
2,738 | - | 2,738 | - | |||||||
Total available for sale securities
|
$ | 281,539 | $ | - | $ | 281,539 | $ | - |
Total at
|
Fair Value Measurements Using:
|
||||||||||
Dollars in thousands
|
September 30, 2013
|
Level 1
|
Level 2
|
Level 3
|
|||||||
Residential mortgage loans held for sale
|
$ | 602 | $ | - | $ | 602 | $ | - | |||
Impaired loans
|
|||||||||||
Commercial
|
$ | 5,456 | $ | - | $ | 3,731 | $ | 1,725 | |||
Commercial real estate
|
17,109 | - | 3,998 | 13,111 | |||||||
Construction and development
|
24,128 | - | 21,629 | 2,499 | |||||||
Residential real estate
|
22,632 | - | 17,341 | 5,291 | |||||||
Consumer
|
40 | - | - | 40 | |||||||
Total impaired loans
|
$ | 69,365 | $ | - | $ | 46,699 | $ | 22,666 | |||
OREO
|
|||||||||||
Commercial
|
$ | - | $ | - | $ | - | $ | - | |||
Commercial real estate
|
9,961 | - | 9,961 | - | |||||||
Construction and development
|
31,747 | - | 31,747 | - | |||||||
Residential real estate
|
3,595 | - | 3,595 | - | |||||||
Consumer
|
- | - | - | - | |||||||
Total OREO
|
$ | 45,303 | $ | - | $ | 45,303 | $ | - |
Total at
|
Fair Value Measurements Using:
|
||||||||||
Dollars in thousands
|
December 31, 2012
|
Level 1
|
Level 2
|
Level 3
|
|||||||
Residential mortgage loans held for sale
|
$ | 226 | $ | - | $ | 226 | $ | - | |||
Impaired loans
|
|||||||||||
Commercial
|
$ | 10,856 | $ | - | $ | 5,013 | $ | 5,843 | |||
Commercial real estate
|
25,435 | - | 16,331 | 9,104 | |||||||
Construction and development
|
27,352 | - | 24,578 | 2,774 | |||||||
Residential real estate
|
24,442 | - | 21,625 | 2,817 | |||||||
Consumer
|
50 | - | - | 50 | |||||||
Total impaired loans
|
$ | 88,135 | $ | - | $ | 67,547 | $ | 20,588 | |||
OREO
|
|||||||||||
Commercial
|
$ | - | $ | - | $ | - | $ | - | |||
Commercial real estate
|
11,835 | - | 11,047 | 788 | |||||||
Construction and development
|
40,671 | - | 35,978 | 4,693 | |||||||
Residential real estate
|
3,666 | - | 3,666 | - | |||||||
Consumer
|
- | - | - | - | |||||||
Total OREO
|
$ | 56,172 | $ | - | $ | 50,691 | $ | 5,481 |
September 30, 2013
|
December 31, 2012
|
||||||||||||
Estimated
|
Estimated
|
||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
||||||||||
Dollars in thousands
|
Value
|
Value
|
Value
|
Value
|
|||||||||
Financial assets
|
|||||||||||||
Cash and cash equivalents
|
$ | 16,103 | $ | 16,103 | $ | 14,802 | $ | 14,802 | |||||
Securities available for sale
|
291,258 | 291,258 | 281,539 | 281,539 | |||||||||
Other investments
|
8,004 | 8,004 | 14,658 | 14,658 | |||||||||
Loans held for sale
|
602 | 602 | 226 | 226 | |||||||||
Loans, net
|
939,169 | 965,070 | 937,168 | 965,454 | |||||||||
Accrued interest receivable
|
5,364 | 5,364 | 5,621 | 5,621 | |||||||||
$ | 1,260,500 | $ | 1,286,401 | $ | 1,254,014 | $ | 1,282,300 | ||||||
Financial liabilities
|
|||||||||||||
Deposits
|
$ | 1,016,735 | $ | 1,045,084 | $ | 1,027,125 | $ | 1,064,957 | |||||
Short-term borrowings
|
54,163 | 54,163 | 3,958 | 3,958 | |||||||||
Long-term borrowings
|
163,540 | 175,237 | 203,268 | 220,175 | |||||||||
Subordinated debentures
|
16,800 | 16,800 | 16,800 | 16,800 | |||||||||
Subordinated debentures owed to
|
|||||||||||||
unconsolidated subsidiary trusts
|
19,589 | 19,589 | 19,589 | 19,589 | |||||||||
Accrued interest payable
|
1,473 | 1,473 | 1,877 | 1,877 | |||||||||
Derivative financial liabilities
|
117 | 117 | - | - | |||||||||
$ | 1,272,417 | $ | 1,312,463 | $ | 1,272,617 | $ | 1,327,356 |
For the Three Months Ended September 30,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
Common
|
Common
|
|||||||||||||||
Dollars in thousands,
|
Income
|
Shares
|
Per
|
Income
|
Shares
|
Per
|
||||||||||
except per share amounts
|
(Numerator)
|
(Denominator)
|
Share
|
(Numerator)
|
(Denominator)
|
Share
|
||||||||||
Net income
|
$ | 2,272 | $ | 997 | ||||||||||||
Less preferred stock dividends
|
(194 | ) | (194 | ) | ||||||||||||
Basic EPS
|
$ | 2,078 | 7,443,865 | $ | 0.28 | $ | 803 | 7,425,472 | $ | 0.11 | ||||||
Effect of dilutive securities:
|
||||||||||||||||
Stock options
|
- | 7,819 | - | 1,261 | ||||||||||||
Series 2011 convertible
|
||||||||||||||||
preferred stock
|
120 | 1,495,728 | 120 | 1,500,000 | ||||||||||||
Series 2009 convertible
|
||||||||||||||||
preferred stock
|
74 | 674,545 | 74 | 674,545 | ||||||||||||
Diluted EPS
|
$ | 2,272 | 9,621,957 | $ | 0.24 | $ | 997 | 9,601,278 | $ | 0.10 |
For the Nine Months Ended September 30,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
Common
|
Common
|
|||||||||||||||
Dollars in thousands,
|
Income
|
Shares
|
Per
|
Income
|
Shares
|
Per
|
||||||||||
except per share amounts
|
(Numerator)
|
(Denominator)
|
Share
|
(Numerator)
|
(Denominator)
|
Share
|
||||||||||
Net income
|
$ | 5,282 | $ | 3,608 | ||||||||||||
Less preferred stock dividends
|
(582 | ) | (583 | ) | ||||||||||||
Basic EPS
|
$ | 4,700 | 7,438,216 | $ | 0.63 | $ | 3,025 | 7,425,472 | $ | 0.41 | ||||||
Effect of dilutive securities:
|
||||||||||||||||
Stock options
|
- | 7,316 | - | 1,081 | ||||||||||||
Series 2011 convertible
|
||||||||||||||||
preferred stock
|
359 | 1,498,251 | 360 | 1,500,000 | ||||||||||||
Series 2009 convertible
|
||||||||||||||||
preferred stock
|
223 | 674,545 | 223 | 674,545 | ||||||||||||
Diluted EPS
|
$ | 5,282 | 9,618,328 | $ | 0.55 | $ | 3,608 | 9,601,098 | $ | 0.38 |
September 30, 2013
|
|||||||||||
Amortized
|
Unrealized
|
Estimated
|
|||||||||
Dollars in thousands
|
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||
Available for Sale
|
|||||||||||
Taxable debt securities:
|
|||||||||||
U. S. Government agencies
|
|||||||||||
and corporations
|
$ | 27,740 | $ | 757 | $ | 67 | $ | 28,430 | |||
Residential mortgage-backed securities:
|
|||||||||||
Government-sponsored agencies
|
149,569 | 2,444 | 1,226 | 150,787 | |||||||
Nongovernment-sponsored agencies
|
13,134 | 315 | 9 | 13,440 | |||||||
State and political subdivisions:
|
|||||||||||
General obligations
|
9,064 | - | 383 | 8,681 | |||||||
Water and sewer revenues
|
3,234 | 1 | 91 | 3,144 | |||||||
Other revenues
|
3,298 | - | 112 | 3,186 | |||||||
Corporate debt securities
|
3,970 | 25 | 45 | 3,950 | |||||||
Total taxable debt securities
|
210,009 | 3,542 | 1,933 | 211,618 | |||||||
Tax-exempt debt securities:
|
|||||||||||
State and political subdivisions:
|
|||||||||||
General obligations
|
49,569 | 1,048 | 1,112 | 49,505 | |||||||
Water and sewer revenues
|
10,132 | 89 | 290 | 9,931 | |||||||
Lease revenues
|
8,869 | 1 | 441 | 8,429 | |||||||
Lottery/casino revenues
|
4,457 | 68 | 166 | 4,359 | |||||||
Other revenues
|
7,490 | 61 | 212 | 7,339 | |||||||
Total tax-exempt debt securities
|
80,517 | 1,267 | 2,221 | 79,563 | |||||||
Equity securities
|
77 | - | - | 77 | |||||||
Total available for sale securities
|
$ | 290,603 | $ | 4,809 | $ | 4,154 | $ | 291,258 |
December 31, 2012
|
|||||||||||
Amortized
|
Unrealized
|
Estimated
|
|||||||||
Dollars in thousands
|
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||
Available for Sale
|
|||||||||||
Taxable debt securities
|
|||||||||||
U. S. Government agencies
|
|||||||||||
and corporations
|
$ | 28,128 | $ | 892 | $ | - | $ | 29,020 | |||
Residential mortgage-backed securities:
|
|||||||||||
Government-sponsored agencies
|
133,812 | 3,250 | 492 | 136,570 | |||||||
Nongovernment-sponsored entities
|
15,380 | 509 | 144 | 15,745 | |||||||
State and political subdivisions:
|
|||||||||||
General obligations
|
8,847 | 58 | 57 | 8,848 | |||||||
Water and sewer revenues
|
1,920 | - | 32 | 1,888 | |||||||
Other revenues
|
1,420 | 13 | - | 1,433 | |||||||
Corporate debt securities
|
1,959 | 29 | 38 | 1,950 | |||||||
Total taxable debt securities
|
191,466 | 4,751 | 763 | 195,454 | |||||||
Tax-exempt debt securities
|
|||||||||||
State and political subdivisions:
|
|||||||||||
General obligations
|
54,948 | 3,259 | 145 | 58,062 | |||||||
Water and sewer revenues
|
5,773 | 171 | 47 | 5,897 | |||||||
Lease revenues
|
6,910 | 159 | 13 | 7,056 | |||||||
Lottery/casino revenues
|
4,500 | 305 | 9 | 4,796 | |||||||
Other revenues
|
7,272 | 210 | 23 | 7,459 | |||||||
Residential mortgage-backed securities:
|
|||||||||||
Government-sponsored agencies
|
2,738 | - | - | 2,738 | |||||||
Total tax-exempt debt securities
|
82,141 | 4,104 | 237 | 86,008 | |||||||
Equity securities
|
77 | - | - | 77 | |||||||
Total available for sale securities
|
$ | 273,684 | $ | 8,855 | $ | 1,000 | $ | 281,539 |
September 30, 2012
|
|||||||||||
Amortized
|
Unrealized
|
Estimated
|
|||||||||
Dollars in thousands
|
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||
Available for Sale
|
|||||||||||
Taxable debt securities:
|
|||||||||||
U. S. Government agencies
|
|||||||||||
and corporations
|
$ | 25,857 | $ | 1,009 | $ | 4 | $ | 26,862 | |||
Residential mortgage-backed securities:
|
|||||||||||
Government-sponsored agencies
|
150,233 | 3,741 | 453 | 153,521 | |||||||
Nongovernment-sponsored agencies
|
21,199 | 712 | 290 | 21,621 | |||||||
State and political subdivisions
|
10,176 | 57 | 56 | 10,177 | |||||||
Corporate debt securities
|
1,955 | 29 | 74 | 1,910 | |||||||
Total taxable debt securities
|
209,420 | 5,548 | 877 | 214,091 | |||||||
Tax-exempt debt securities:
|
|||||||||||
State and political subdivisions
|
70,678 | 4,358 | 70 | 74,966 | |||||||
Residential mortgage-backed securities:
|
|||||||||||
Government-sponsored agencies
|
2,858 | - | - | 2,858 | |||||||
Total tax-exempt debt securities
|
73,536 | 4,358 | 70 | 77,824 | |||||||
Equity securities
|
77 | - | - | 77 | |||||||
Total available for sale securities
|
$ | 283,033 | $ | 9,906 | $ | 947 | $ | 291,992 |
September 30, 2013
|
|||||||||||
Amortized
|
Unrealized
|
Estimated
|
|||||||||
Dollars in thousands
|
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||
West Virginia
|
$ | 14,286 | $ | 97 | $ | 267 | $ | 14,116 | |||
Illinois
|
10,435 | 59 | 535 | 9,959 | |||||||
California
|
8,102 | 107 | 241 | 7,968 | |||||||
Texas
|
7,155 | 234 | 178 | 7,211 | |||||||
Washington
|
4,409 | 110 | 80 | 4,439 |
Available for Sale
|
||||||
Amortized
|
Estimated
|
|||||
Dollars in thousands
|
Cost
|
Fair Value
|
||||
Due in one year or less
|
$ | 68,076 | $ | 68,631 | ||
Due from one to five years
|
88,188 | 89,189 | ||||
Due from five to ten years
|
33,174 | 33,187 | ||||
Due after ten years
|
101,088 | 100,174 | ||||
Equity securities
|
77 | 77 | ||||
$ | 290,603 | $ | 291,258 |
Calls and
|
Principal
|
|||||||||||||||
Dollars in thousands
|
Sales
|
Maturities
|
Payments
|
Gains
|
Losses
|
|||||||||||
Securities available for sale
|
$ | 41,188 | $ | 1,258 | $ | 50,650 | $ | 362 | $ | 246 |
Three Months Ended
|
Nine Months Ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
In thousands
|
2013
|
2012
|
2013
|
2012
|
|||||||||
Total other-than-temporary impairment losses
|
$ | (38 | ) | $ | (233 | ) | $ | (155 | ) | $ | (1,115) | ||
Portion of loss recognized in
|
|||||||||||||
other comprehensive income
|
- | 194 | 37 | 740 | |||||||||
Net impairment losses recognized in earnings
|
$ | (38 | ) | $ | (39 | ) | $ | (118 | ) | $ | (375) |
Three Months Ended
|
Nine Months Ended
|
||||||
September 30, 2013
|
September 30, 2013
|
||||||
In thousands
|
Total
|
Total
|
|||||
Beginning Balance
|
$ | 2,984 | $ | 2,904 | |||
Additions for the credit component on debt securities in which
|
|||||||
other-than-temporary impairment was not previously recognized
|
38 | 118 | |||||
Securities sold during the period
|
- | - | |||||
Ending Balance
|
$ | 3,022 | $ | 3,022 |
September 30, 2013
|
||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||
Estimated
|
Unrealized
|
Estimated
|
Unrealized
|
Estimated
|
Unrealized
|
|||||||||||||
Dollars in thousands
|
Fair Value
|
Loss
|
Fair Value
|
Loss
|
Fair Value
|
Loss
|
||||||||||||
Temporarily impaired securities
|
||||||||||||||||||
Taxable debt securities
|
||||||||||||||||||
U. S. Government agencies
|
||||||||||||||||||
and corporations
|
$ | 7,770 | $ | (67 | ) | $ | - | $ | - | $ | 7,770 | $ | (67) | |||||
Residential mortgage-backed securities:
|
||||||||||||||||||
Government-sponsored agencies
|
48,957 | (1,011 | ) | 11,754 | (215 | ) | 60,711 | (1,226) | ||||||||||
Nongovernment-sponsored entities
|
355 | (1 | ) | 858 | (8 | ) | 1,213 | (9) | ||||||||||
State and political subdivisions:
|
||||||||||||||||||
General obligations
|
5,806 | (316 | ) | 876 | (67 | ) | 6,682 | (383) | ||||||||||
Water and sewer revenues
|
634 | (35 | ) | 1,175 | (56 | ) | 1,809 | (91) | ||||||||||
Other revenues
|
3,185 | (112 | ) | - | - | 3,185 | (112) | |||||||||||
Corporate debt securities
|
2,954 | (45 | ) | - | - | 2,954 | (45) | |||||||||||
Tax-exempt debt securities
|
||||||||||||||||||
State and political subdivisions:
|
||||||||||||||||||
General obligations
|
21,134 | (1,112 | ) | - | - | 21,134 | (1,112) | |||||||||||
Water and sewer revenues
|
6,505 | (290 | ) | - | - | 6,505 | (290) | |||||||||||
Lease revenues
|
7,522 | (424 | ) | 366 | (17 | ) | 7,888 | (441) | ||||||||||
Lottery/casino revenues
|
3,292 | (166 | ) | - | - | 3,292 | (166) | |||||||||||
Other revenues
|
5,407 | (212 | ) | - | - | 5,407 | (212) | |||||||||||
Total temporarily impaired securities
|
113,521 | (3,791 | ) | 15,029 | (363 | ) | 128,550 | (4,154) | ||||||||||
Other-than-temporarily impaired securities
|
||||||||||||||||||
Taxable debt securities
|
||||||||||||||||||
Residential mortgage-backed securities:
|
||||||||||||||||||
Nongovernment-sponsored entities
|
- | - | - | - | - | - | ||||||||||||
Total other-than-temporarily
|
||||||||||||||||||
impaired securities
|
- | - | - | - | - | - | ||||||||||||
Total
|
$ | 113,521 | $ | (3,791 | ) | $ | 15,029 | $ | (363 | ) | $ | 128,550 | $ | (4,154) |
December 31, 2012
|
||||||||||||||||||
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||
Estimated
|
Unrealized
|
Estimated
|
Unrealized
|
Estimated
|
Unrealized
|
|||||||||||||
Dollars in thousands
|
Fair Value
|
Loss
|
Fair Value
|
Loss
|
Fair Value
|
Loss
|
||||||||||||
Temporarily impaired securities
|
||||||||||||||||||
Taxable debt securities
|
||||||||||||||||||
U. S. Government agencies
|
||||||||||||||||||
and corporations
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
Residential mortgage-backed securities:
|
||||||||||||||||||
Government-sponsored agencies
|
36,498 | (414 | ) | 8,997 | (78 | ) | 45,495 | (492) | ||||||||||
Nongovernment-sponsored entities
|
- | (4 | ) | 1,478 | (14 | ) | 1,478 | (18) | ||||||||||
State and political subdivisions:
|
||||||||||||||||||
General obligations
|
2,526 | (57 | ) | - | - | 2,526 | (57) | |||||||||||
Water and sewer revenues
|
1,240 | (28 | ) | 387 | (4 | ) | 1,627 | (32) | ||||||||||
Other revenues
|
- | - | - | - | - | - | ||||||||||||
Corporate debt securities
|
- | - | 962 | (38 | ) | 962 | (38) | |||||||||||
Tax-exempt debt securities
|
||||||||||||||||||
State and political subdivisions:
|
||||||||||||||||||
General obligations
|
11,926 | (145 | ) | - | - | 11,926 | (145) | |||||||||||
Water and sewer revenues
|
2,534 | (47 | ) | - | - | 2,534 | (47) | |||||||||||
Lease revenues
|
1,013 | (13 | ) | - | - | 1,013 | (13) | |||||||||||
Lottery/casino revenues
|
1,777 | (9 | ) | - | - | 1,777 | (9) | |||||||||||
Other revenues
|
2,684 | (23 | ) | - | - | 2,684 | (23) | |||||||||||
Other equity securties
|
- | - | - | - | - | - | ||||||||||||
Total temporarily impaired securities
|
60,198 | (740 | ) | 11,824 | (134 | ) | 72,022 | (874) | ||||||||||
Other-than-temporarily impaired securities
|
||||||||||||||||||
Taxable debt securities
|
||||||||||||||||||
Residential mortgage-backed securities:
|
||||||||||||||||||
Nongovernment-sponsored entities
|
265 | (6 | ) | 593 | (120 | ) | 858 | (126) | ||||||||||
Total other-than-temporarily
|
||||||||||||||||||
impaired securities
|
265 | (6 | ) | 593 | (120 | ) | 858 | (126) | ||||||||||
Total
|
$ | 60,463 | $ | (746 | ) | $ | 12,417 | $ | (254 | ) | $ | 72,880 | $ | (1,000) |
NOTE 6. LOANS
|
September 30,
|
December 31,
|
September 30,
|
|||||||
Dollars in thousands
|
2013
|
2012
|
2012
|
||||||
Commercial
|
$ | 83,844 | $ | 85,829 | $ | 88,997 | |||
Commercial real estate
|
|||||||||
Owner-occupied
|
151,260 | 154,252 | 150,090 | ||||||
Non-owner occupied
|
279,412 | 276,082 | 279,132 | ||||||
Construction and development
|
|||||||||
Land and land development
|
73,089 | 79,335 | 82,857 | ||||||
Construction
|
12,323 | 3,772 | 2,087 | ||||||
Residential real estate
|
|||||||||
Non-jumbo
|
215,058 | 216,714 | 215,584 | ||||||
Jumbo
|
59,701 | 61,567 | 62,748 | ||||||
Home equity
|
53,674 | 53,263 | 53,455 | ||||||
Consumer
|
20,472 | 20,586 | 21,290 | ||||||
Other
|
3,375 | 3,701 | 2,513 | ||||||
Total loans, net of unearned fees
|
952,208 | 955,101 | 958,753 | ||||||
Less allowance for loan losses
|
13,039 | 17,933 | 17,820 | ||||||
Loans, net
|
$ | 939,169 | $ | 937,168 | $ | 940,933 |
At September 30, 2013
|
|||||||||||||||||
Recorded
|
|||||||||||||||||
Investment
|
|||||||||||||||||
Past Due
|
> 90 days
|
||||||||||||||||
Dollars in thousands
|
30-59 days
|
60-89 days
|
> 90 days
|
Total
|
Current
|
and Accruing
|
|||||||||||
Commercial
|
$ | 10 | $ | 111 | $ | 1,583 | $ | 1,704 | $ | 82,140 | $ | - | |||||
Commercial real estate
|
|||||||||||||||||
Owner-occupied
|
846 | 229 | 432 | 1,507 | 149,753 | - | |||||||||||
Non-owner occupied
|
587 | 244 | - | 831 | 278,581 | - | |||||||||||
Construction and development
|
|||||||||||||||||
Land and land development
|
154 | - | 8,669 | 8,823 | 64,266 | - | |||||||||||
Construction
|
- | - | 38 | 38 | 12,285 | - | |||||||||||
Residential mortgage
|
|||||||||||||||||
Non-jumbo
|
3,467 | 2,031 | 2,225 | 7,723 | 207,335 | - | |||||||||||
Jumbo
|
- | - | 9,000 | 9,000 | 50,701 | - | |||||||||||
Home equity
|
214 | 49 | 24 | 287 | 53,387 | - | |||||||||||
Consumer
|
197 | 77 | 91 | 365 | 20,107 | - | |||||||||||
Other
|
50 | - | - | 50 | 3,325 | - | |||||||||||
Total
|
$ | 5,525 | $ | 2,741 | $ | 22,062 | $ | 30,328 | $ | 921,880 | $ | - |
At December 31, 2012
|
|||||||||||||||||
Recorded
|
|||||||||||||||||
Investment
|
|||||||||||||||||
Past Due
|
> 90 days
|
||||||||||||||||
Dollars in thousands
|
30-59 days
|
60-89 days
|
> 90 days
|
Total
|
Current
|
and Accruing
|
|||||||||||
Commercial
|
$ | 225 | $ | 5 | $ | 2,294 | $ | 2,524 | $ | 83,305 | $ | - | |||||
Commercial real estate
|
|||||||||||||||||
Owner-occupied
|
57 | - | 1,023 | 1,080 | 153,172 | - | |||||||||||
Non-owner occupied
|
182 | 193 | 908 | 1,283 | 274,799 | - | |||||||||||
Construction and development
|
|||||||||||||||||
Land and land development
|
- | - | 11,795 | 11,795 | 67,540 | - | |||||||||||
Construction
|
- | - | 153 | 153 | 3,619 | - | |||||||||||
Residential mortgage
|
|||||||||||||||||
Non-jumbo
|
3,344 | 2,616 | 2,797 | 8,757 | 207,957 | - | |||||||||||
Jumbo
|
- | - | 12,564 | 12,565 | 49,002 | - | |||||||||||
Home equity
|
337 | 448 | 179 | 964 | 52,299 | - | |||||||||||
Consumer
|
255 | 79 | 48 | 382 | 20,204 | - | |||||||||||
Other
|
- | - | - | - | 3,701 | - | |||||||||||
Total
|
$ | 4,400 | $ | 3,341 | $ | 31,761 | $ | 39,503 | $ | 915,598 | $ | - |
At September 30, 2012
|
|||||||||||||||||
Recorded
|
|||||||||||||||||
Investment
|
|||||||||||||||||
Past Due
|
> 90 days
|
||||||||||||||||
Dollars in thousands
|
30-59 days
|
60-89 days
|
> 90 days
|
Total
|
Current
|
and Accruing
|
|||||||||||
Commercial
|
$ | 273 | $ | 634 | $ | 1,594 | $ | 2,501 | $ | 86,496 | $ | - | |||||
Commercial real estate
|
|||||||||||||||||
Owner-occupied
|
216 | 581 | 400 | 1,197 | 148,893 | - | |||||||||||
Non-owner occupied
|
513 | - | 1,882 | 2,395 | 276,737 | - | |||||||||||
Construction and development
|
|||||||||||||||||
Land and land development
|
17 | 39 | 13,412 | 13,468 | 69,389 | - | |||||||||||
Construction
|
50 | - | 153 | 203 | 1,884 | - | |||||||||||
Residential mortgage
|
|||||||||||||||||
Non-jumbo
|
2,681 | 2,029 | 2,544 | 7,254 | 208,330 | - | |||||||||||
Jumbo
|
- | - | 15,273 | 15,273 | 47,475 | - | |||||||||||
Home equity
|
280 | 5 | 149 | 434 | 53,021 | - | |||||||||||
Consumer
|
319 | 36 | 46 | 401 | 20,889 | - | |||||||||||
Other
|
- | - | - | - | 2,513 | - | |||||||||||
Total
|
$ | 4,349 | $ | 3,324 | $ | 35,453 | $ | 43,126 | $ | 915,627 | $ | - |
Dollars in thousands
|
9/30/2013
|
12/31/2012
|
9/30/2012
|
||||||
Commercial
|
$ | 2,557 | $ | 5,002 | $ | 5,343 | |||
Commercial real estate
|
|||||||||
Owner-occupied
|
3,795 | 1,524 | 921 | ||||||
Non-owner occupied
|
- | 1,032 | 1,882 | ||||||
Construction and development
|
|||||||||
Land & land development
|
12,851 | 13,487 | 16,558 | ||||||
Construction
|
38 | 154 | 203 | ||||||
Residential mortgage
|
|||||||||
Non-jumbo
|
3,119 | 3,518 | 3,122 | ||||||
Jumbo
|
9,000 | 12,564 | 15,272 | ||||||
Home equity
|
266 | 440 | 415 | ||||||
Consumer
|
145 | 55 | 87 | ||||||
Other
|
- | - | - | ||||||
Total
|
$ | 31,771 | $ | 37,776 | $ | 43,803 |
§
|
Loans which we risk-rate (consisting of loan relationships having aggregate balances in excess of $2.0 million, or loans exceeding $500,000 and exhibiting credit weakness) through our normal loan review procedures and which, based on current information and events, it is probable that we will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement. Risk-rated loans with insignificant delays or insignificant short falls in the amount of payments expected to be collected are not considered to be impaired.
|
§
|
Loans that have been modified in a troubled debt restructuring.
|
Method Used to Measure Impairment of Impaired Loans
|
||||||||||
Dollars in thousands
|
||||||||||
Loan Category
|
9/30/2013
|
12/31/2012
|
9/30/2012
|
Method used to measure impairment
|
||||||
Commerical
|
$ | 5,997 | $ | 10,776 | $ | 12,411 |
Fair value of collateral
|
|||
160 | 165 | - |
Discounted cash flow
|
|||||||
Commerical real estate
|
||||||||||
Owner-occupied
|
9,054 | 14,028 | 13,248 |
Fair value of collateral
|
||||||
2,497 | 2,686 | 2,698 |
Discounted cash flow
|
|||||||
Non-owner occupied
|
5,884 | 9,468 | 12,057 |
Fair value of collateral
|
||||||
Construction and development
|
||||||||||
Land & land development
|
24,870 | 29,307 | 30,482 |
Fair value of collateral
|
||||||
649 | 656 | 656 |
Discounted cash flow
|
|||||||
Residential mortgage
|
||||||||||
Non-jumbo
|
5,133 | 5,626 | 5,461 |
Fair value of collateral
|
||||||
884 | 692 | 959 |
Discounted cash flow
|
|||||||
Jumbo
|
17,786 | 21,543 | 23,094 |
Fair value of collateral
|
||||||
Home equity
|
213 | 219 | 219 |
Fair value of collateral
|
||||||
Consumer
|
52 | 66 | 42 |
Fair value of collateral
|
||||||
Total
|
$ | 73,179 | $ | 95,232 | $ | 101,327 |
September 30, 2013
|
||||||||||||||
Average
|
Interest Income
|
|||||||||||||
Recorded
|
Unpaid
|
Related
|
Impaired
|
Recognized
|
||||||||||
Dollars in thousands
|
Investment
|
Principal Balance
|
Allowance
|
Balance
|
while impaired
|
|||||||||
Without a related allowance
|
||||||||||||||
Commercial
|
$ | 4,254 | $ | 4,268 | $ | - | $ | 5,632 | $ | 334 | ||||
Commercial real estate
|
||||||||||||||
Owner-occupied
|
7,609 | 7,613 | - | 8,839 | 293 | |||||||||
Non-owner occupied
|
5,368 | 5,370 | - | 5,800 | 289 | |||||||||
Construction and development
|
||||||||||||||
Land & land development
|
20,923 | 20,921 | - | 20,331 | 404 | |||||||||
Construction
|
- | - | - | - | - | |||||||||
Residential real estate
|
||||||||||||||
Non-jumbo
|
2,888 | 2,895 | - | 2,930 | 171 | |||||||||
Jumbo
|
7,876 | 7,882 | - | 8,168 | 419 | |||||||||
Home equity
|
186 | 186 | - | 186 | 11 | |||||||||
Consumer
|
28 | 28 | - | 32 | 2 | |||||||||
Total without a related allowance
|
$ | 49,132 | $ | 49,163 | $ | - | $ | 51,918 | $ | 1,923 | ||||
With a related allowance
|
||||||||||||||
Commercial
|
$ | 1,891 | $ | 1,889 | $ | 702 | $ | 2,537 | $ | - | ||||
Commercial real estate
|
||||||||||||||
Owner-occupied
|
3,938 | 3,938 | 216 | 3,956 | 138 | |||||||||
Non-owner occupied
|
514 | 514 | 110 | 516 | 28 | |||||||||
Construction and development
|
||||||||||||||
Land & land development
|
4,597 | 4,598 | 1,390 | 3,992 | 121 | |||||||||
Construction
|
- | - | - | - | - | |||||||||
Residential real estate
|
||||||||||||||
Non-jumbo
|
3,119 | 3,122 | 316 | 2,843 | 130 | |||||||||
Jumbo
|
9,904 | 9,904 | 1,040 | 10,152 | 45 | |||||||||
Home equity
|
27 | 27 | 27 | 27 | - | |||||||||
Consumer
|
24 | 24 | 13 | 25 | 1 | |||||||||
Total with a related allowance
|
$ | 24,014 | $ | 24,016 | $ | 3,814 | $ | 24,048 | $ | 463 | ||||
Total
|
||||||||||||||
Commercial
|
$ | 49,094 | $ | 49,111 | $ | 2,418 | $ | 51,603 | $ | 1,607 | ||||
Residential real estate
|
24,000 | 24,016 | 1,383 | 24,306 | 776 | |||||||||
Consumer
|
52 | 52 | 13 | 57 | 3 | |||||||||
Total
|
$ | 73,146 | $ | 73,179 | $ | 3,814 | $ | 75,966 | $ | 2,386 |
December 31, 2012
|
||||||||||||||
Average
|
Interest Income
|
|||||||||||||
Recorded
|
Unpaid
|
Related
|
Impaired
|
Recognized
|
||||||||||
Dollars in thousands
|
Investment
|
Principal Balance
|
Allowance
|
Balance
|
while impaired
|
|||||||||
Without a related allowance
|
||||||||||||||
Commercial
|
$ | 10,518 | $ | 10,537 | $ | - | $ | 3,131 | $ | 134 | ||||
Commercial real estate
|
||||||||||||||
Owner-occupied
|
9,992 | 9,996 | - | 8,528 | 368 | |||||||||
Non-owner occupied
|
6,143 | 6,145 | - | 6,056 | 304 | |||||||||
Construction and development
|
||||||||||||||
Land & land development
|
11,596 | 11,596 | - | 11,093 | 367 | |||||||||
Construction
|
- | - | - | - | - | |||||||||
Residential real estate
|
||||||||||||||
Non-jumbo
|
3,497 | 3,505 | - | 3,040 | 125 | |||||||||
Jumbo
|
7,347 | 7,349 | - | 5,399 | 272 | |||||||||
Home equity
|
191 | 191 | - | 191 | 11 | |||||||||
Consumer
|
38 | 38 | - | 32 | 1 | |||||||||
Total without a related allowance
|
$ | 49,322 | $ | 49,357 | $ | - | $ | 37,470 | $ | 1,582 | ||||
With a related allowance
|
||||||||||||||
Commercial
|
$ | 404 | $ | 404 | $ | 85 | $ | 515 | $ | 6 | ||||
Commercial real estate
|
||||||||||||||
Owner-occupied
|
6,719 | 6,718 | 461 | 4,442 | 187 | |||||||||
Non-owner occupied
|
3,321 | 3,323 | 286 | 3,341 | 115 | |||||||||
Construction and development
|
||||||||||||||
Land & land development
|
18,367 | 18,367 | 2,611 | 17,633 | 344 | |||||||||
Construction
|
- | - | - | - | - | |||||||||
Residential real estate
|
||||||||||||||
Non-jumbo
|
2,812 | 2,813 | 394 | 2,378 | 77 | |||||||||
Jumbo
|
14,189 | 14,194 | 3,216 | 13,585 | 59 | |||||||||
Home equity
|
28 | 28 | 28 | 29 | - | |||||||||
Consumer
|
28 | 28 | 16 | 2 | - | |||||||||
Total with a related allowance
|
$ | 45,868 | $ | 45,875 | $ | 7,097 | $ | 41,925 | $ | 788 | ||||
Total
|
||||||||||||||
Commercial
|
$ | 67,060 | $ | 67,086 | $ | 3,443 | $ | 54,739 | $ | 1,825 | ||||
Residential real estate
|
28,064 | 28,080 | 3,638 | 24,622 | 544 | |||||||||
Consumer
|
66 | 66 | 16 | 34 | 1 | |||||||||
Total
|
$ | 95,190 | $ | 95,232 | $ | 7,097 | $ | 79,395 | $ | 2,370 |
September 30, 2012
|
||||||||||||||
Average
|
Interest Income
|
|||||||||||||
Recorded
|
Unpaid
|
Related
|
Impaired
|
Recognized
|
||||||||||
Dollars in thousands
|
Investment
|
Principal Balance
|
Allowance
|
Balance
|
while impaired
|
|||||||||
Without a related allowance
|
||||||||||||||
Commercial
|
$ | 12,059 | $ | 12,075 | $ | - | $ | 3,148 | $ | 54 | ||||
Commercial real estate
|
||||||||||||||
Owner-occupied
|
11,370 | 11,373 | - | 8,058 | 346 | |||||||||
Non-owner occupied
|
8,537 | 8,540 | - | 6,349 | 304 | |||||||||
Construction and development
|
||||||||||||||
Land & land development
|
15,624 | 15,624 | - | 14,060 | 524 | |||||||||
Construction
|
- | - | - | - | - | |||||||||
Residential real estate
|
||||||||||||||
Non-jumbo
|
3,987 | 3,996 | - | 3,545 | 135 | |||||||||
Jumbo
|
8,902 | 8,905 | - | 6,497 | 257 | |||||||||
Home equity
|
191 | 191 | - | 192 | 12 | |||||||||
Consumer
|
39 | 38 | - | 30 | 1 | |||||||||
Total without a related allowance
|
$ | 60,709 | $ | 60,742 | $ | - | $ | 41,879 | $ | 1,633 | ||||
With a related allowance
|
||||||||||||||
Commercial
|
$ | 336 | $ | 336 | $ | 86 | $ | 299 | $ | 6 | ||||
Commercial real estate
|
||||||||||||||
Owner-occupied
|
4,573 | 4,573 | 241 | 4,409 | 209 | |||||||||
Non-owner occupied
|
3,516 | 3,517 | 475 | 3,361 | 115 | |||||||||
Construction and development
|
||||||||||||||
Land & land development
|
15,514 | 15,514 | 2,762 | 15,026 | 182 | |||||||||
Construction
|
- | - | - | - | - | |||||||||
Residential real estate
|
||||||||||||||
Non-jumbo
|
2,422 | 2,424 | 502 | 1,787 | 101 | |||||||||
Jumbo
|
14,183 | 14,189 | 3,211 | 13,193 | 32 | |||||||||
Home equity
|
28 | 28 | 28 | 29 | - | |||||||||
Consumer
|
4 | 4 | 4 | 1 | - | |||||||||
Total with a related allowance
|
$ | 40,576 | $ | 40,585 | $ | 7,309 | $ | 38,105 | $ | 645 | ||||
Total
|
||||||||||||||
Commercial
|
$ | 71,529 | $ | 71,552 | $ | 3,564 | $ | 54,710 | $ | 1,740 | ||||
Residential real estate
|
29,713 | 29,733 | 3,741 | 25,243 | 537 | |||||||||
Consumer
|
43 | 42 | 4 | 31 | 1 | |||||||||
Total
|
$ | 101,285 | $ | 101,327 | $ | 7,309 | $ | 79,984 | $ | 2,278 |
For the Three Months Ended
|
For the Three Months Ended
|
|||||||||||||||
September 30, 2013
|
September 30, 2012
|
|||||||||||||||
Pre-modification
|
Post-modification
|
Pre-modification
|
Post-modification
|
|||||||||||||
Number of
|
Recorded
|
Recorded
|
Number of
|
Recorded
|
Recorded
|
|||||||||||
Dollars in thousands
|
Modifications
|
Investment
|
Investment
|
Modifications
|
Investment
|
Investment
|
||||||||||
Commercial
|
- | $ | - | $ | - | - | $ | - | $ | - | ||||||
Commercial real estate
|
||||||||||||||||
Owner-occupied
|
- | - | - | - | - | - | ||||||||||
Non-owner occupied
|
- | - | - | 1 | 1,929 | 1,929 | ||||||||||
Construction and development
|
||||||||||||||||
Land & land development
|
- | - | - | 2 | 1,927 | 1,927 | ||||||||||
Construction
|
- | - | - | - | - | - | ||||||||||
Residential real estate
|
||||||||||||||||
Non-jumbo
|
2 | 487 | 487 | 3 | 688 | 688 | ||||||||||
Jumbo
|
- | - | - | - | - | - | ||||||||||
Home equity
|
- | - | - | - | - | - | ||||||||||
Consumer
|
- | - | - | - | - | - | ||||||||||
Total
|
2 | $ | 487 | $ | 487 | 6 | $ | 4,544 | $ | 4,544 |
For the Nine Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
September 30, 2013
|
September 30, 2012
|
|||||||||||||||
Pre-modification
|
Post-modification
|
Pre-modification
|
Post-modification
|
|||||||||||||
Number of
|
Recorded
|
Recorded
|
Number of
|
Recorded
|
Recorded
|
|||||||||||
Dollars in thousands
|
Modifications
|
Investment
|
Investment
|
Modifications
|
Investment
|
Investment
|
||||||||||
Commercial
|
1 | $ | 23 | $ | 23 | 3 | $ | 1,109 | $ | 1,117 | ||||||
Commercial real estate
|
||||||||||||||||
Owner-occupied
|
- | - | - | - | - | - | ||||||||||
Non-owner occupied
|
- | - | - | 3 | 4,063 | 3,685 | ||||||||||
Construction and development
|
||||||||||||||||
Land & land development
|
1 | 49 | 50 | 3 | 3,715 | 2,927 | ||||||||||
Construction
|
- | - | - | - | - | - | ||||||||||
Residential real estate
|
||||||||||||||||
Non-jumbo
|
4 | 728 | 514 | 7 | 1,245 | 1,256 | ||||||||||
Jumbo
|
- | - | - | 3 | 2,301 | 2,701 | ||||||||||
Home equity
|
- | - | - | - | - | - | ||||||||||
Consumer
|
- | - | - | 2 | 42 | 42 | ||||||||||
Total
|
6 | $ | 800 | $ | 587 | 21 | $ | 12,475 | $ | 11,728 |
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||
September 30, 2013
|
September 30, 2013
|
|||||||||
Number
|
Recorded
|
Number
|
Recorded
|
|||||||
of
|
Investment
|
of
|
Investment
|
|||||||
Dollars in thousands
|
Defaults
|
at Default Date
|
Defaults
|
at Default Date
|
||||||
Commercial
|
- | $ | - | - | $ | - | ||||
Commercial real estate
|
||||||||||
Owner-occupied
|
- | - | - | - | ||||||
Non-owner occupied
|
- | - | - | - | ||||||
Construction and development
|
||||||||||
Land & land development
|
- | - | 2 | 1,676 | ||||||
Construction
|
- | - | - | - | ||||||
Residential real estate
|
||||||||||
Non-jumbo
|
1 | 239 | 3 | 760 | ||||||
Jumbo
|
- | - | - | - | ||||||
Home equity
|
- | - | - | - | ||||||
Consumer
|
2 | 22 | 2 | 24 | ||||||
Total
|
3 | $ | 261 | 7 | $ | 2,460 |
For the Three Months Ended September 30, 2013
|
||||||||||||||||||||||||||||||||||
Construction & Land Development
|
||||||||||||||||||||||||||||||||||
Land &
|
Commercial Real Estate
|
Residential Real Estate
|
||||||||||||||||||||||||||||||||
Land
|
Non-
|
|||||||||||||||||||||||||||||||||
Develop-
|
Construc-
|
Commer-
|
Owner
|
Owner
|
Non-
|
Home
|
Con-
|
|||||||||||||||||||||||||||
Dollars in thousands
|
ment
|
tion
|
cial
|
Occupied
|
Occupied
|
jumbo
|
Jumbo
|
Equity
|
sumer
|
Other
|
Total
|
|||||||||||||||||||||||
Troubled debt restructurings
|
||||||||||||||||||||||||||||||||||
Balance June 30, 2013
|
$ | 8,549 | $ | - | $ | 3,735 | $ | 9,986 | $ | 5,367 | $ | 5,018 | $ | 15,349 | $ | - | $ | 62 | $ | - | $ | 48,066 | ||||||||||||
Additions
|
- | - | - | - | - | 487 | - | - | - | - | 487 | |||||||||||||||||||||||
Charge-offs
|
- | - | - | - | - | - | (113 | ) | - | - | - | (113) | ||||||||||||||||||||||
Net (paydowns) advances
|
(3,007 | ) | - | (1,441 | ) | (211 | ) | (31 | ) | (28 | ) | 84 | - | (10 | ) | - | (4,644) | |||||||||||||||||
Transfer into OREO
|
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||
Refinance out of TDR status
|
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||
Balance September 30, 2013
|
$ | 5,542 | $ | - | $ | 2,294 | $ | 9,775 | $ | 5,336 | $ | 5,477 | $ | 15,320 | $ | - | $ | 52 | $ | - | $ | 43,796 | ||||||||||||
Allowance related to
|
||||||||||||||||||||||||||||||||||
troubled debt restructurings
|
$ | 22 | $ | - | $ | 131 | $ | 216 | $ | 110 | $ | 302 | $ | 1,040 | $ | - | $ | 13 | $ | - | $ | 1,834 |
For the Nine Months Ended September 30, 2013
|
||||||||||||||||||||||||||||||||||
Construction & Land Development
|
||||||||||||||||||||||||||||||||||
Land &
|
Commercial Real Estate
|
Residential Real Estate
|
||||||||||||||||||||||||||||||||
Land
|
Non-
|
|||||||||||||||||||||||||||||||||
Develop-
|
Construc-
|
Commer-
|
Owner
|
Owner
|
Non-
|
Home
|
Con-
|
|||||||||||||||||||||||||||
Dollars in thousands
|
ment
|
tion
|
cial
|
Occupied
|
Occupied
|
jumbo
|
Jumbo
|
Equity
|
sumer
|
Other
|
Total
|
|||||||||||||||||||||||
Troubled debt restructurings
|
||||||||||||||||||||||||||||||||||
Balance December 31, 2012
|
$ | 9,570 | $ | - | $ | 4,981 | $ | 10,692 | $ | 7,331 | $ | 5,089 | $ | 19,000 | $ | - | $ | 65 | $ | - | $ | 56,728 | ||||||||||||
Additions
|
49 | - | 23 | - | - | 728 | - | - | - | - | 800 | |||||||||||||||||||||||
Charge-offs
|
(888 | ) | - | (33 | ) | (63 | ) | - | (9 | ) | (3,678 | ) | - | - | - | (4,671) | ||||||||||||||||||
Net paydowns
|
(3,189 | ) | - | (2,677 | ) | (336 | ) | (104 | ) | (331 | ) | (2 | ) | - | (13 | ) | - | (6,652) | ||||||||||||||||
Transfer into OREO
|
- | - | - | (518 | ) | - | - | - | - | - | - | (518) | ||||||||||||||||||||||
Refinance out of TDR status
|
- | - | - | - | (1,891 | ) | - | - | - | - | - | (1,891) | ||||||||||||||||||||||
Balance September 30, 2013
|
$ | 5,542 | $ | - | $ | 2,294 | $ | 9,775 | $ | 5,336 | $ | 5,477 | $ | 15,320 | $ | - | $ | 52 | $ | - | $ | 43,796 | ||||||||||||
Allowance related to
|
||||||||||||||||||||||||||||||||||
troubled debt restructurings
|
$ | 22 | $ | - | $ | 131 | $ | 216 | $ | 110 | $ | 302 | $ | 1,040 | $ | - | $ | 13 | $ | - | $ | 1,834 |
Loan Risk Profile by Internal Risk Rating
|
|||||||||||||||||||||||||||||||||
Construction and Development
|
Commercial Real Estate
|
||||||||||||||||||||||||||||||||
Land and land development
|
Construction
|
Commercial
|
Owner Occupied
|
Non-Owner Occupied
|
|||||||||||||||||||||||||||||
Dollars in thousands
|
9/30/2013
|
12/31/2012
|
9/30/2013
|
12/31/2012
|
9/30/2013
|
12/31/2012
|
9/30/2013
|
12/31/2012
|
9/30/2013
|
12/31/2012
|
|||||||||||||||||||||||
Pass
|
$ | 43,400 | $ | 43,572 | $ | 12,285 | $ | 3,619 | $ | 75,968 | $ | 73,425 | $ | 145,349 | $ | 139,176 | $ | 268,002 | $ | 262,132 | |||||||||||||
OLEM (Special Mention)
|
5,603 | 7,349 | - | - | 1,501 | 1,260 | 1,422 | 1,034 | 11,141 | 11,477 | |||||||||||||||||||||||
Substandard
|
23,977 | 28,414 | 38 | 153 | 5,264 | 11,144 | 4,489 | 14,042 | 269 | 2,473 | |||||||||||||||||||||||
Doubtful
|
109 | - | - | - | 1,111 | - | - | - | - | - | |||||||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||
Total
|
$ | 73,089 | $ | 79,335 | $ | 12,323 | $ | 3,772 | $ | 83,844 | $ | 85,829 | $ | 151,260 | $ | 154,252 | $ | 279,412 | $ | 276,082 |
Performing
|
Nonperforming
|
|||||||||||||||||
Dollars in thousands
|
9/30/2013
|
12/31/2012
|
9/30/2012
|
9/30/2013
|
12/31/2012
|
9/30/2012
|
||||||||||||
Residential real estate
|
||||||||||||||||||
Non-jumbo
|
$ | 211,939 | $ | 213,196 | $ | 212,529 | $ | 3,119 | $ | 3,518 | $ | 3,055 | ||||||
Jumbo
|
50,701 | 49,003 | 47,476 | 9,000 | 12,564 | 15,272 | ||||||||||||
Home Equity
|
53,408 | 52,823 | 53,040 | 266 | 440 | 415 | ||||||||||||
Consumer
|
20,327 | 20,531 | 21,202 | 145 | 55 | 88 | ||||||||||||
Other
|
3,375 | 3,701 | 2,513 | - | - | - | ||||||||||||
Total
|
$ | 339,750 | $ | 339,254 | $ | 336,760 | $ | 12,530 | $ | 16,577 | $ | 18,830 |
NOTE 7. ALLOWANCE FOR LOAN LOSSES
|
Nine Months Ended
|
Year Ended
|
|||||||
September 30,
|
December 31,
|
|||||||
Dollars in thousands
|
2013
|
2012
|
2012
|
|||||
Balance, beginning of year
|
$ | 17,933 | $ | 17,712 | $ | 17,712 | ||
Losses:
|
||||||||
Commercial
|
205 | 355 | 1,273 | |||||
Commercial real estate
|
||||||||
Owner occupied
|
1,067 | 636 | 636 | |||||
Non-owner occupied
|
9 | 436 | 806 | |||||
Construction and development
|
||||||||
Land and land development
|
3,560 | 2,319 | 3,390 | |||||
Construction
|
- | 367 | 367 | |||||
Residential real estate
|
||||||||
Non-jumbo
|
494 | 1,257 | 1,372 | |||||
Jumbo
|
3,739 | 737 | 737 | |||||
Home equity
|
77 | 5 | 5 | |||||
Consumer
|
55 | 91 | 136 | |||||
Other
|
84 | 69 | 95 | |||||
Total
|
9,290 | 6,272 | 8,817 | |||||
Recoveries:
|
||||||||
Commercial
|
7 | 7 | 13 | |||||
Commercial real estate
|
||||||||
Owner occupied
|
2 | 24 | 33 | |||||
Non-owner occupied
|
633 | 20 | 31 | |||||
Construction and development
|
||||||||
Land and land development
|
13 | 16 | 61 | |||||
Construction
|
- | - | - | |||||
Real estate - mortgage
|
||||||||
Non-jumbo
|
106 | 51 | 81 | |||||
Jumbo
|
4 | 85 | 86 | |||||
Home equity
|
4 | 60 | 61 | |||||
Consumer
|
53 | 53 | 95 | |||||
Other
|
74 | 62 | 77 | |||||
Total
|
896 | 378 | 538 | |||||
Net losses
|
8,394 | 5,894 | 8,279 | |||||
Provision for loan losses
|
3,500 | 6,002 | 8,500 | |||||
Balance, end of year
|
$ | 13,039 | $ | 17,820 | $ | 17,933 |
For the Nine Months Ended September 30, 2013
|
||||||||||||||||||||||||||||||||||
Construction & Land Development
|
||||||||||||||||||||||||||||||||||
Land &
|
Commercial Real Estate
|
Residential Real Estate
|
||||||||||||||||||||||||||||||||
Land
|
Non-
|
|||||||||||||||||||||||||||||||||
Develop-
|
Construc-
|
Commer-
|
Owner
|
Owner
|
Non-
|
Home
|
Con-
|
|||||||||||||||||||||||||||
Dollars in thousands
|
ment
|
tion
|
cial
|
Occupied
|
Occupied
|
jumbo
|
Jumbo
|
Equity
|
sumer
|
Other
|
Total
|
|||||||||||||||||||||||
Allowance for loan losses
|
||||||||||||||||||||||||||||||||||
Beginning balance
|
$ | 5,220 | $ | 138 | $ | 782 | $ | 1,387 | $ | 3,269 | $ | 2,617 | $ | 3,942 | $ | 425 | $ | 132 | $ | 21 | $ | 17,933 | ||||||||||||
Charge-offs
|
3,560 | - | 205 | 1,067 | 9 | 494 | 3,739 | 77 | 55 | 84 | 9,290 | |||||||||||||||||||||||
Recoveries
|
13 | - | 7 | 2 | 633 | 106 | 4 | 4 | 53 | 74 | 896 | |||||||||||||||||||||||
Provision
|
2,780 | 95 | 888 | 1,071 | (3,716 | ) | (66 | ) | 2,636 | (162 | ) | (43 | ) | 17 | 3,500 | |||||||||||||||||||
Ending balance
|
$ | 4,453 | $ | 233 | $ | 1,472 | $ | 1,393 | $ | 177 | $ | 2,163 | $ | 2,843 | $ | 190 | $ | 87 | $ | 28 | $ | 13,039 | ||||||||||||
Allowance related to:
|
||||||||||||||||||||||||||||||||||
Loans individually
|
||||||||||||||||||||||||||||||||||
evaluated for impairment
|
$ | 1,390 | $ | - | $ | 702 | $ | 216 | $ | 110 | $ | 316 | $ | 1,040 | $ | 27 | $ | 13 | $ | - | $ | 3,814 | ||||||||||||
Loans collectively
|
||||||||||||||||||||||||||||||||||
evaluated for impairment
|
3,063 | 233 | 770 | 1,177 | 67 | 1,847 | 1,803 | 163 | 74 | 28 | 9,225 | |||||||||||||||||||||||
Loans acquired with
|
||||||||||||||||||||||||||||||||||
deteriorated credit quality
|
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||
Total
|
$ | 4,453 | $ | 233 | $ | 1,472 | $ | 1,393 | $ | 177 | $ | 2,163 | $ | 2,843 | $ | 190 | $ | 87 | $ | 28 | $ | 13,039 | ||||||||||||
Loans
|
||||||||||||||||||||||||||||||||||
Loans individually
|
||||||||||||||||||||||||||||||||||
evaluated for impairment
|
$ | 25,519 | $ | - | $ | 6,157 | $ | 11,551 | $ | 5,884 | $ | 6,017 | $ | 17,786 | $ | 213 | $ | 52 | $ | - | $ | 73,179 | ||||||||||||
Loans collectively
|
||||||||||||||||||||||||||||||||||
evaluated for impairment
|
47,570 | 12,323 | 77,687 | 139,709 | 273,528 | 209,041 | 41,915 | 53,461 | 20,420 | 3,375 | $ | 879,029 | ||||||||||||||||||||||
Loans acquired with
|
||||||||||||||||||||||||||||||||||
deteriorated credit quality
|
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||
Total
|
$ | 73,089 | $ | 12,323 | $ | 83,844 | $ | 151,260 | $ | 279,412 | $ | 215,058 | $ | 59,701 | $ | 53,674 | $ | 20,472 | $ | 3,375 | $ | 952,208 |
Goodwill Activity
|
|||||||||
Community
|
Insurance
|
||||||||
Dollars in thousands
|
Banking
|
Services
|
Total
|
||||||
Balance, January 1, 2013
|
$ | 1,488 | $ | 4,710 | $ | 6,198 | |||
Acquired goodwill, net
|
- | - | - | ||||||
Balance, September 30, 2013
|
$ | 1,488 | $ | 4,710 | $ | 6,198 |
Other Intangible Assets
|
|||||||||||||||||||
September 30, 2013
|
December 31, 2012
|
||||||||||||||||||
Community
|
Insurance
|
Community
|
Insurance
|
||||||||||||||||
Dollars in thousands
|
Banking
|
Services
|
Total
|
Banking
|
Services
|
Total
|
|||||||||||||
Unidentifiable intangible assets
|
|||||||||||||||||||
Gross carrying amount
|
$ | 2,267 | $ | - | $ | 2,267 | $ | 2,267 | $ | - | $ | 2,267 | |||||||
Less: accumulated amortization
|
2,179 | - | 2,179 | 2,065 | - | 2,065 | |||||||||||||
Net carrying amount
|
$ | 88 | $ | - | $ | 88 | $ | 202 | $ | - | $ | 202 | |||||||
Identifiable intangible assets
|
|||||||||||||||||||
Gross carrying amount
|
$ | - | $ | 3,000 | $ | 3,000 | $ | - | $ | 3,000 | $ | 3,000 | |||||||
Less: accumulated amortization
|
- | 1,250 | 1,250 | - | 1,100 | 1,100 | |||||||||||||
Net carrying amount
|
$ | - | $ | 1,750 | $ | 1,750 | $ | - | $ | 1,900 | $ | 1,900 |
September 30,
|
December 31,
|
September 30,
|
|||||||||
Dollars in thousands
|
2013
|
2012
|
2012
|
||||||||
Demand deposits, interest bearing
|
$ | 186,702 | $ | 175,706 | $ | 177,236 | |||||
Savings deposits
|
193,285 | 193,039 | 197,610 | ||||||||
Time deposits
|
537,639 | 557,788 | 555,697 | ||||||||
Total
|
$ | 917,626 | $ | 926,533 | $ | 930,543 |
Dollars in thousands
|
||
Three month period ending December 31, 2013
|
$ | 78,769 |
Year ending December 31, 2014
|
174,501 | |
Year ending December 31, 2015
|
71,003 | |
Year ending December 31, 2016
|
84,033 | |
Year ending December 31, 2017
|
30,169 | |
Thereafter
|
99,164 | |
$ | 537,639 |
Dollars in thousands
|
Amount
|
Percent
|
||
Three months or less
|
$ | 53,212 | 13.6% | |
Three through six months
|
23,785 | 6.1% | ||
Six through twelve months
|
82,135 | 21.0% | ||
Over twelve months
|
232,620 | 59.3% | ||
Total
|
$ | 391,752 | 100.0% |
Nine Months Ended September 30, 2013
|
|||||||
Federal Funds
|
|||||||
Short-term
|
Purchased
|
||||||
FHLB
|
and Lines
|
||||||
Dollars in thousands
|
Advances
|
of Credit
|
|||||
Balance at September 30
|
$ | 45,200 | $ | 8,963 | |||
Average balance outstanding for the period
|
22,834 | 2,745 | |||||
Maximum balance outstanding at
|
|||||||
any month end during period
|
45,200 | 8,963 | |||||
Weighted average interest rate for the period
|
0.27 | % | 0.25% | ||||
Weighted average interest rate for balances
|
|||||||
outstanding at September 30
|
0.26 | % | 0.25% |
Year Ended December 31, 2012
|
|||||||
Federal Funds
|
|||||||
Short-term
|
Purchased
|
||||||
FHLB
|
and Lines
|
||||||
Dollars in thousands
|
Advances
|
of Credit
|
|||||
Balance at December 31
|
$ | 3,000 | $ | 958 | |||
Average balance outstanding for the year
|
12,291 | 957 | |||||
Maximum balance outstanding at
|
|||||||
any month end
|
20,000 | 958 | |||||
Weighted average interest rate for the year
|
0.24 | % | 0.25% | ||||
Weighted average interest rate for balances
|
|||||||
outstanding at December 31
|
0.25 | % | 0.25% |
Nine Months Ended September 30, 2012
|
|||||||
Federal Funds
|
|||||||
Short-term
|
Purchased
|
||||||
FHLB
|
and Lines
|
||||||
Dollars in thousands
|
Advances
|
of Credit
|
|||||
Balance at September 30
|
$ | 20,000 | $ | 957 | |||
Average balance outstanding for the period
|
13,294 | 956 | |||||
Maximum balance outstanding at
|
|||||||
any month end during period
|
20,000 | 957 | |||||
Weighted average interest rate for the period
|
0.23 | % | 0.25% | ||||
Weighted average interest rate for balances
|
|||||||
outstanding at September 30
|
0.26 | % | 0.25% |
Balance at
|
|||||||||
Balance at September 30,
|
December 31,
|
||||||||
Dollars in thousands
|
2013
|
2012
|
2012
|
||||||
Long-term FHLB advances
|
$ | 82,624 | $ | 122,718 | $ | 122,693 | |||
Long-term reverse repurchase agreements
|
72,000 | 72,000 | 72,000 | ||||||
Term loans
|
8,916 | 9,026 | 8,575 | ||||||
Total
|
$ | 163,540 | $ | 203,744 | $ | 203,268 |
Subordinated
|
|||||||||
debentures owed
|
|||||||||
Long-term
|
Subordinated
|
to unconsolidated
|
|||||||
Dollars in thousands
|
borrowings
|
debentures
|
subsidiary trusts
|
||||||
Year Ending December 31,
|
2013
|
$ | 24 | $ | - | $ | - | ||
2014
|
82,527 | - | - | ||||||
2015
|
1,909 | 10,000 | - | ||||||
2016
|
28,911 | - | - | ||||||
2017
|
918 | - | - | ||||||
Thereafter
|
49,251 | 6,800 | 19,589 | ||||||
$ | 163,540 | $ | 16,800 | $ | 19,589 |
For the Nine Months Ended September 30,
|
||||||||||||
2013
|
2012
|
|||||||||||
Weighted-
|
Weighted-
|
|||||||||||
Average
|
Average
|
|||||||||||
Exercise
|
Exercise
|
|||||||||||
Options
|
Price
|
Options
|
Price
|
|||||||||
Outstanding, January 1
|
249,700 | $ | 18.98 | 317,180 | $ | 18.17 | ||||||
Granted
|
- | - | - | - | ||||||||
Exercised
|
(15,200 | ) | 5.27 | - | - | |||||||
Forfeited
|
(1,750 | ) | 19.69 | - | - | |||||||
Expired
|
(39,700 | ) | 23.41 | (22,800 | ) | 5.12 | ||||||
Outstanding, September 30
|
193,050 | $ | 19.14 | 294,380 | $ | 19.18 |
Options Outstanding
|
Options Exercisable
|
||||||||||||||||||||
Wted. Avg.
|
Aggregate
|
Aggregate
|
|||||||||||||||||||
Remaining
|
Intrinsic
|
Intrinsic
|
|||||||||||||||||||
Range of
|
# of
|
Contractual
|
Value
|
# of
|
Value
|
||||||||||||||||
exercise price
|
shares
|
WAEP
|
Life (yrs)
|
(in thousands)
|
shares
|
WAEP
|
(in thousands)
|
||||||||||||||
$ | 2.54 - $6.00 | 19,550 | $ | 4.86 | 3.50 | $ | 74 | 17,550 | $ | 5.13 | $ | 62 | |||||||||
6.01 - 10.00 | 28,200 | 9.14 | 2.89 | 7 | 27,600 | 9.20 | 6 | ||||||||||||||
10.01 - 17.50 | 2,300 | 17.43 | 0.42 | - | 2,300 | 17.43 | - | ||||||||||||||
17.51 - 20.00 | 38,500 | 17.80 | 3.25 | - | 38,500 | 17.80 | - | ||||||||||||||
20.01 - 25.93 | 104,500 | 25.04 | 2.99 | - | 104,500 | 25.04 | - | ||||||||||||||
193,050 | 19.14 | $ | 81 | 190,450 | 19.35 | $ | 68 |
September 30,
|
|||
Dollars in thousands
|
2013
|
||
Commitments to extend credit:
|
|||
Revolving home equity and
|
|||
credit card lines
|
$ | 49,535 | |
Construction loans
|
32,534 | ||
Other loans
|
42,196 | ||
Standby letters of credit
|
1,759 | ||
Total
|
$ | 126,024 |
To be Well Capitalized
|
|||||||||||||||||
Minimum Required
|
under Prompt Corrective
|
||||||||||||||||
Actual
|
Regulatory Capital
|
Action Provisions
|
|||||||||||||||
Dollars in thousands
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||
As of September 30, 2013
|
|||||||||||||||||
Total Capital (to risk weighted assets)
|
|||||||||||||||||
Summit
|
$ | 143,494 | 14.5 | % | $ | 79,423 | 8.0 | % | $ | 99,279 | 10.0% | ||||||
Summit Community
|
154,155 | 15.5 | % | 79,497 | 8.0 | % | 99,371 | 10.0% | |||||||||
Tier I Capital (to risk weighted assets)
|
|||||||||||||||||
Summit
|
120,221 | 12.1 | % | 39,712 | 4.0 | % | 59,567 | 6.0% | |||||||||
Summit Community
|
141,682 | 14.3 | % | 39,748 | 4.0 | % | 59,623 | 6.0% | |||||||||
Tier I Capital (to average assets)
|
|||||||||||||||||
Summit
|
120,221 | 8.9 | % | 54,291 | 4.0 | % | 67,863 | 5.0% | |||||||||
Summit Community
|
141,682 | 10.4 | % | 54,336 | 4.0 | % | 67,920 | 5.0% | |||||||||
As of December 31, 2012
|
|||||||||||||||||
Total Capital (to risk weighted assets)
|
|||||||||||||||||
Summit
|
138,593 | 14.0 | % | 79,391 | 8.0 | % | 99,238 | 10.0% | |||||||||
Summit Community
|
148,803 | 15.0 | % | 79,484 | 8.0 | % | 99,354 | 10.0% | |||||||||
Tier I Capital (to risk weighted assets)
|
|||||||||||||||||
Summit
|
115,221 | 11.6 | % | 39,695 | 4.0 | % | 59,543 | 6.0% | |||||||||
Summit Community
|
136,231 | 13.7 | % | 39,742 | 4.0 | % | 59,613 | 6.0% | |||||||||
Tier I Capital (to average assets)
|
|||||||||||||||||
Summit
|
115,221 | 8.3 | % | 55,591 | 4.0 | % | 69,489 | 5.0% | |||||||||
Summit Community
|
136,231 | 9.8 | % | 55,581 | 4.0 | % | 69,476 | 5.0% |
§
|
Summit suspending all cash dividends on its common stock until further notice. Dividends on all preferred stock, as well as interest payments on subordinated notes underlying Summit’s trust preferred securities, continue to be permissible; and,
|
§
|
Summit not incurring any additional debt, other than trade payables, without the prior written consent of the principal banking regulators.
|
§
|
maintaining a Board committee which monitors and promotes compliance with the provisions of the Bank MOU;
|
§
|
providing the Bank’s regulatory authorities with updated reports of criticized assets and/or formal workout plans for all nonperforming borrower relationships with an aggregate outstanding balance exceeding $1 million;
|
§
|
developing and submitting to regulatory authorities a written plan to reduce the Bank’s risk exposure in each adversely classified credit relationship in excess of $1 million and all OREO;
|
§
|
establishing procedures to report all loans with balances exceeding $500,000 that have credit weaknesses or that fall outside of the Bank’s policy;
|
§
|
annually reviewing the organizational structure and operations of the Bank’s loan department;
|
§
|
maintaining an adequate allowance for loan and lease losses through charges to current operating income;
|
§
|
reviewing overall liquidity objectives and developing and submitting to regulatory authorities plans and procedures aimed to improve liquidity and reduce reliance on volatile liabilities;
|
§
|
preparing comprehensive budgets and earnings forecasts for the Bank and submitting reports comparing actual performance to the budget plan;
|
§
|
maintaining a minimum Tier 1 Leverage Capital ratio of at least 8% and a Total Risk-based Capital ratio of at least 11%;
|
§
|
not paying any cash dividends without the prior written consent of the banking regulators; and,
|
§
|
providing quarterly progress reports to the Bank’s regulatory authorities detailing steps taken to comply with the Bank MOU.
|
Nine Months Ended September 30, 2013
|
|||||||||||||||||||
Community
|
Insurance
|
||||||||||||||||||
Dollars in thousands
|
Banking
|
Services
|
Parent
|
Eliminations
|
Total
|
||||||||||||||
Net interest income
|
$ | 30,237 | $ | - | $ | (1,436 | ) | $ | - | $ | 28,801 | ||||||||
Provision for loan losses
|
3,500 | - | - | - | 3,500 | ||||||||||||||
Net interest income after provision for loan losses
|
26,737 | - | (1,436 | ) | - | 25,301 | |||||||||||||
Other income
|
4,857 | 3,457 | 815 | (815 | ) | 8,314 | |||||||||||||
Other expenses
|
22,723 | 3,266 | 1,158 | (815 | ) | 26,332 | |||||||||||||
Income (loss) before income taxes
|
8,871 | 191 | (1,779 | ) | - | 7,283 | |||||||||||||
Income tax expense (benefit)
|
2,534 | 79 | (612 | ) | - | 2,001 | |||||||||||||
Net income (loss)
|
6,337 | 112 | (1,167 | ) | - | 5,282 | |||||||||||||
Dividends on preferred shares
|
- | - | 582 | - | 582 | ||||||||||||||
Net income (loss) applicable to common shares
|
$ | 6,337 | $ | 112 | $ | (1,749 | ) | $ | - | $ | 4,700 | ||||||||
Intersegment revenue (expense)
|
$ | (734 | ) | $ | (81 | ) | $ | 815 | $ | - | $ | - | |||||||
Average assets
|
$ | 1,431,835 | $ | 6,329 | $ | 155,522 | $ | (213,202 | ) | $ | 1,380,484 |
Nine Months Ended September 30, 2012
|
|||||||||||||||||||
Community
|
Insurance
|
||||||||||||||||||
Dollars in thousands
|
Banking
|
Services
|
Parent
|
Eliminations
|
Total
|
||||||||||||||
Net interest income
|
$ | 31,264 | $ | - | $ | (1,340 | ) | $ | - | $ | 29,924 | ||||||||
Provision for loan losses
|
6,002 | - | - | - | 6,002 | ||||||||||||||
Net interest income after provision for loan losses
|
25,262 | - | (1,340 | ) | - | 23,922 | |||||||||||||
Other income
|
6,681 | 3,371 | 765 | (783 | ) | 10,034 | |||||||||||||
Other expenses
|
25,583 | 2,980 | 1,223 | (783 | ) | 29,003 | |||||||||||||
Income (loss) before income taxes
|
6,360 | 391 | (1,798 | ) | - | 4,953 | |||||||||||||
Income tax expense (benefit)
|
1,772 | 156 | (583 | ) | - | 1,345 | |||||||||||||
Net income (loss)
|
4,588 | 235 | (1,215 | ) | - | 3,608 | |||||||||||||
Dividends on preferred shares
|
- | - | 583 | - | 583 | ||||||||||||||
Net income (loss) applicable to common shares
|
$ | 4,588 | $ | 235 | $ | (1,798 | ) | $ | - | $ | 3,025 | ||||||||
Intersegment revenue (expense)
|
$ | (706 | ) | $ | (77 | ) | $ | 783 | $ | - | $ | - | |||||||
Average assets
|
$ | 1,486,808 | $ | 6,495 | $ | 154,011 | $ | (218,207 | ) | $ | 1,429,107 |
Three Months Ended September 30, 2013
|
|||||||||||||||||||
Community
|
Insurance
|
||||||||||||||||||
Dollars in thousands
|
Banking
|
Services
|
Parent
|
Eliminations
|
Total
|
||||||||||||||
Net interest income
|
$ | 10,025 | $ | - | $ | (487 | ) | $ | - | $ | 9,538 | ||||||||
Provision for loan losses
|
1,000 | - | - | - | 1,000 | ||||||||||||||
Net interest income after provision for loan losses
|
9,025 | - | (487 | ) | - | 8,538 | |||||||||||||
Other income
|
1,758 | 1,105 | 272 | (272 | ) | 2,863 | |||||||||||||
Other expenses
|
7,060 | 1,078 | 365 | (272 | ) | 8,231 | |||||||||||||
Income (loss) before income taxes
|
3,723 | 27 | (580 | ) | - | 3,170 | |||||||||||||
Income tax expense (benefit)
|
1,087 | 12 | (201 | ) | - | 898 | |||||||||||||
Net income (loss)
|
2,636 | 15 | (379 | ) | - | 2,272 | |||||||||||||
Dividends on preferred shares
|
- | - | 194 | - | 194 | ||||||||||||||
Net income (loss) applicable to common shares
|
$ | 2,636 | $ | 15 | $ | (573 | ) | $ | - | $ | 2,078 | ||||||||
Intersegment revenue (expense)
|
$ | (251 | ) | $ | (21 | ) | $ | 272 | $ | - | $ | - | |||||||
Average assets
|
$ | 1,409,870 | $ | 6,377 | $ | 153,596 | $ | (205,332 | ) | $ | 1,364,511 |
Three Months Ended September 30, 2012
|
|||||||||||||||||||
Community
|
Insurance
|
||||||||||||||||||
Dollars in thousands
|
Banking
|
Services
|
Parent
|
Eliminations
|
Total
|
||||||||||||||
Net interest income
|
$ | 10,381 | $ | - | $ | (446 | ) | $ | - | $ | 9,935 | ||||||||
Provision for loan losses
|
2,000 | - | - | - | 2,000 | ||||||||||||||
Net interest income after provision for loan losses
|
8,381 | - | (446 | ) | - | 7,935 | |||||||||||||
Other income
|
2,312 | 1,049 | 261 | (261 | ) | 3,361 | |||||||||||||
Other expenses
|
8,904 | 1,023 | 361 | (261 | ) | 10,027 | |||||||||||||
Income (loss) before income taxes
|
1,789 | 26 | (546 | ) | - | 1,269 | |||||||||||||
Income tax expense (benefit)
|
430 | 10 | (168 | ) | - | 272 | |||||||||||||
Net income (loss)
|
1,359 | 16 | (378 | ) | - | 997 | |||||||||||||
Dividends on preferred shares
|
- | - | 194 | - | 194 | ||||||||||||||
Net income (loss) applicable to common shares
|
$ | 1,359 | $ | 16 | $ | (572 | ) | $ | - | $ | 803 | ||||||||
Intersegment revenue (expense)
|
$ | (235 | ) | $ | (26 | ) | $ | 261 | $ | - | $ | - | |||||||
Average assets
|
$ | 1,473,356 | $ | 6,579 | $ | 155,168 | $ | (220,005 | ) | $ | 1,415,098 |
September 30, 2013
|
|||||||||||
Derivative
|
Net Ineffective
|
||||||||||
Notional
|
Fair Value
|
Hedge Gains
|
|||||||||
Dollars in thousands
|
Amount
|
Asset
|
Liability
|
(Losses)
|
|||||||
CASH FLOW HEDGES
|
|||||||||||
Pay-fixed/receive-variable interest rate swaps
|
|||||||||||
Long term borrowings
|
$ | 40,000 | $ | - | $ | 117 | $ | - | |||
$ | 40,000 | $ | - | $ | 117 | $ | - |
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||
Dollars in thousands
|
2013
|
2012
|
2013
|
2012
|
|||||||||
Community banking
|
$ | 2,636 | $ | 1,359 | $ | 6,337 | $ | 4,588 | |||||
Insurance
|
15 | 16 | 112 | 235 | |||||||||
Parent
|
(573 | ) | (572 | ) | (1,749 | ) | (1,798) | ||||||
Consolidated net income
|
$ | 2,078 | $ | 803 | $ | 4,700 | $ | 3,025 |
Table I - Average Balance Sheet and Net Interest Income Analysis
|
||||||||||||||||
Dollars in thousands
|
||||||||||||||||
For the Nine Months Ended
|
||||||||||||||||
September 30, 2013
|
September 30, 2012
|
|||||||||||||||
Average
|
Earnings/
|
Yield/
|
Average
|
Earnings/
|
Yield/
|
|||||||||||
Balance
|
Expense
|
Rate
|
Balance
|
Expense
|
Rate
|
|||||||||||
Interest earning assets
|
||||||||||||||||
Loans, net of unearned income (1)
|
||||||||||||||||
Taxable
|
$ | 948,870 | $ | 38,038 | 5.36 | % | $ | 965,227 | $ | 41,811 | 5.79% | |||||
Tax-exempt (2)
|
5,560 | 298 | 7.17 | % | 6,776 | 368 | 7.25% | |||||||||
Securities
|
||||||||||||||||
Taxable
|
220,669 | 2,851 | 1.73 | % | 235,885 | 4,592 | 2.60% | |||||||||
Tax-exempt (2)
|
76,021 | 2,776 | 4.88 | % | 70,753 | 3,009 | 5.68% | |||||||||
Federal funds sold and interest
|
||||||||||||||||
bearing deposits with other banks
|
7,706 | 4 | 0.07 | % | 22,737 | 31 | 0.18% | |||||||||
Total interest earning assets
|
1,258,826 | 43,967 | 4.67 | % | 1,301,378 | 49,811 | 5.11% | |||||||||
Noninterest earning assets
|
||||||||||||||||
Cash & due from banks
|
4,430 | 4,195 | ||||||||||||||
Premises and equipment
|
21,006 | 21,684 | ||||||||||||||
Other assets
|
111,948 | 120,041 | ||||||||||||||
Allowance for loan losses
|
(15,726 | ) | (18,191 | ) | ||||||||||||
Total assets
|
$ | 1,380,484 | $ | 1,429,107 | ||||||||||||
Interest bearing liabilities
|
||||||||||||||||
Interest bearing demand deposits
|
$ | 178,911 | $ | 193 | 0.14 | % | $ | 167,843 | $ | 247 | 0.20% | |||||
Savings deposits
|
195,907 | 875 | 0.60 | % | 206,953 | 1,054 | 0.68% | |||||||||
Time deposits
|
566,172 | 7,007 | 1.65 | % | 545,121 | 8,839 | 2.17% | |||||||||
Short-term borrowings
|
25,579 | 50 | 0.26 | % | 14,250 | 25 | 0.23% | |||||||||
Long-term borrowings
|
||||||||||||||||
and capital trust securities
|
203,019 | 5,997 | 3.95 | % | 288,305 | 8,575 | 3.97% | |||||||||
Total interest bearing liabilities
|
1,169,588 | 14,122 | 1.61 | % | 1,222,472 | 18,740 | 2.05% | |||||||||
Noninterest bearing liabilities
|
||||||||||||||||
and shareholders' equity
|
||||||||||||||||
Demand deposits
|
94,139 | 92,362 | ||||||||||||||
Other liabilities
|
7,698 | 8,273 | ||||||||||||||
Total liabilities
|
1,271,425 | 1,323,107 | ||||||||||||||
Shareholders' equity - preferred
|
9,319 | 9,326 | ||||||||||||||
Shareholders' equity - common
|
99,740 | 96,674 | ||||||||||||||
Total liabilities and
|
||||||||||||||||
shareholders' equity
|
$ | 1,380,484 | $ | 1,429,107 | ||||||||||||
Net interest earnings
|
$ | 29,845 | $ | 31,071 | ||||||||||||
Net yield on interest earning assets
|
3.17 | % | 3.19% | |||||||||||||
(1) For purposes of this table, nonaccrual loans are included in average loan balances.
|
||||||||||||||||
(2) - Interest income on tax-exempt securities and loans has been adjusted assuming an effective tax rate of 34% for all periods presented.
|
||||||||||||||||
The tax equivalent adjustment resulted in an increase in interest income of $1,045,000 and $1,147,000 for the periods ended
|
||||||||||||||||
September 30, 2013 and September 30, 2012, respectively.
|
Table II - Changes in Interest Margin Attributable to Rate and Volume
|
|||||||||
For the Nine Months Ended
|
|||||||||
September 30, 2013 versus September 30, 2012
|
|||||||||
Increase (Decrease) Due to Change in:
|
|||||||||
Dollars in thousands
|
Volume
|
Rate
|
Net
|
||||||
Interest earned on:
|
|||||||||
Loans
|
|||||||||
Taxable
|
$ | (705 | ) | $ | (3,068 | ) | $ | (3,773) | |
Tax-exempt
|
(66 | ) | (4 | ) | (70) | ||||
Securities
|
|||||||||
Taxable
|
(281 | ) | (1,460 | ) | (1,741) | ||||
Tax-exempt
|
212 | (445 | ) | (233) | |||||
Federal funds sold and interest
|
|||||||||
bearing deposits with other banks
|
(13 | ) | (14 | ) | (27) | ||||
Total interest earned on
|
|||||||||
interest earning assets
|
(853 | ) | (4,991 | ) | (5,844) | ||||
Interest paid on:
|
|||||||||
Interest bearing demand
|
|||||||||
deposits
|
15 | (69 | ) | (54) | |||||
Savings deposits
|
(54 | ) | (125 | ) | (179) | ||||
Time deposits
|
329 | (2,161 | ) | (1,832) | |||||
Short-term borrowings
|
22 | 3 | 25 | ||||||
Long-term borrowings and capital
|
|||||||||
trust securities
|
(2,527 | ) | (51 | ) | (2,578) | ||||
Total interest paid on
|
|||||||||
interest bearing liabilities
|
(2,215 | ) | (2,403 | ) | (4,618) | ||||
Net interest income
|
$ | 1,362 | $ | (2,588 | ) | $ | (1,226) |
Table III - Noninterest Income
|
||||||||||||
For the Quarter Ended
|
For the Nine Months Ended
|
|||||||||||
September 30,
|
September 30,
|
|||||||||||
Dollars in thousands
|
2013
|
2012
|
2013
|
2012
|
||||||||
Insurance commissions
|
$ | 1,057 | $ | 1,052 | $ | 3,373 | $ | 3,352 | ||||
Service fees related to deposit accounts
|
1,106 | 1,074 | 3,202 | 3,163 | ||||||||
Realized securities gains (losses)
|
132 | 760 | 116 | 2,245 | ||||||||
Other-than-temporary impairment of securities
|
(38 | ) | (39 | ) | (118 | ) | (375) | |||||
Bank owned life insurance income
|
229 | 257 | 703 | 781 | ||||||||
Other
|
377 | 257 | 1,038 | 868 | ||||||||
Total
|
$ | 2,863 | $ | 3,361 | $ | 8,314 | $ | 10,034 |
Table IV - Noninterest Expense
|
||||||||||||||||||||||||
For the Quarter Ended September 30,
|
For the Nine Months Ended September 30,
|
|||||||||||||||||||||||
Change
|
Change
|
|||||||||||||||||||||||
Dollars in thousands
|
2013
|
$ | % | 2012 | 2013 | $ | % | 2012 | ||||||||||||||||
Salaries, commissions, and employee benefits
|
$ | 4,050 | $ | 110 | 2.8 | % | $ | 3,940 | $ | 12,155 | $ | 422 | 3.6 | % | $ | 11,733 | ||||||||
Net occupancy expense
|
454 | (22 | ) | -4.6 | % | 476 | 1,387 | (58 | ) | -4.0 | % | 1,445 | ||||||||||||
Equipment expense
|
578 | 5 | 0.9 | % | 573 | 1,724 | (53 | ) | -3.0 | % | 1,777 | |||||||||||||
Professional fees
|
263 | (29 | ) | -9.9 | % | 292 | 885 | 13 | 1.5 | % | 872 | |||||||||||||
Amortization of intangibles
|
88 | - | 0.0 | % | 88 | 263 | - | 0.0 | % | 263 | ||||||||||||||
FDIC premiums
|
503 | (7 | ) | -1.4 | % | 510 | 1,558 | 26 | 1.7 | % | 1,532 | |||||||||||||
Foreclosed properties expense
|
262 | (94 | ) | -26.4 | % | 356 | 836 | (99 | ) | -10.6 | % | 935 | ||||||||||||
(Gain) loss on sale of foreclosed properties
|
(17 | ) | (1 | ) | 6.3 | % | (16 | ) | 546 | (37 | ) | -6.3 | % | 583 | ||||||||||
Write-down of foreclosed properties
|
654 | (1,917 | ) | -74.6 | % | 2,571 | 3,078 | (3,036 | ) | -49.7 | % | 6,114 | ||||||||||||
Other
|
1,396 | 159 | 12.9 | % | 1,237 | 3,900 | 151 | 4.0 | % | 3,749 | ||||||||||||||
Total
|
$ | 8,231 | $ | (1,796 | ) | -17.9 | % | $ | 10,027 | $ | 26,332 | $ | (2,671 | ) | -9.2 | % | $ | 29,003 |
Table V - Summary of Non-Performing Assets
|
|||||||||||
September 30,
|
December 31,
|
||||||||||
Dollars in thousands
|
2013
|
2012
|
2012
|
||||||||
Accruing loans past due 90 days or more
|
$ | - | $ | - | $ | - | |||||
Nonaccrual loans
|
|||||||||||
Commercial
|
2,557 | 5,343 | 5,002 | ||||||||
Commercial real estate
|
3,795 | 2,803 | 2,556 | ||||||||
Commercial construction and development
|
3,761 | 428 | - | ||||||||
Residential construction and development
|
9,128 | 16,333 | 13,641 | ||||||||
Residential real estate
|
12,385 | 18,809 | 16,522 | ||||||||
Consumer
|
145 | 88 | 55 | ||||||||
Total nonaccrual loans
|
31,771 | 43,804 | 37,776 | ||||||||
Foreclosed properties
|
|||||||||||
Commercial real estate
|
9,961 | 11,802 | 11,835 | ||||||||
Commercial construction and development
|
11,161 | 17,683 | 17,597 | ||||||||
Residential construction and development
|
20,585 | 23,769 | 23,074 | ||||||||
Residential real estate
|
3,596 | 2,779 | 3,666 | ||||||||
Total foreclosed properties
|
45,303 | 56,033 | 56,172 | ||||||||
Repossessed assets
|
- | - | 6 | ||||||||
Total nonperforming assets
|
$ | 77,074 | $ | 99,837 | $ | 93,954 | |||||
Total nonperforming loans as a
|
|||||||||||
percentage of total loans
|
3.34 | % | 4.57 | % | 3.96% | ||||||
Total nonperforming assets as a
|
|||||||||||
percentage of total assets
|
5.55 | % | 7.11 | % | 6.77% | ||||||
Allowance for loan losses as a
|
|||||||||||
percentage of nonperforming loans
|
41.04 | % | 40.68 | % | 47.47% | ||||||
Allowance for loan losses as a
|
|||||||||||
percentage of period end loans
|
1.37 | % | 1.86 | % | 1.88% |
Table VI - Foreclosed Property Activity
|
For the Three Months Ended
|
For the Nine Months Ended
|
||||||||||
September 30,
|
September 30,
|
|||||||||||
Dollars in thousands
|
2013
|
2012
|
2013
|
2012
|
||||||||
Beginning balance
|
$ | 47,257 | $ | 60,068 | $ | 56,172 | $ | 63,938 | ||||
Acquisitions
|
60 | 241 | 2,858 | 5,262 | ||||||||
Improvements
|
90 | 155 | 197 | 677 | ||||||||
Disposals
|
(1,449 | ) | (1,860 | ) | (10,846 | ) | (7,309) | |||||
Writedowns to fair value
|
(655 | ) | (2,571 | ) | (3,078 | ) | (6,114) | |||||
Reclassification of covered loans
|
- | - | - | (421) | ||||||||
Balance Sept 30
|
$ | 45,303 | $ | 56,033 | $ | 45,303 | $ | 56,033 |
Table IX - Significant Nonperforming Loan Relationships
|
|||||||||||||||
September 30, 2013
|
|||||||||||||||
Dollars in thousands
|
|||||||||||||||
Location
|
Underlying Collateral
|
Loan Origination Date
|
Loan Nonaccrual Date
|
Loan Balance
|
Method Used to Measure Impairment
|
Most Recent Appraised Value
|
Amount Allocated to Allowance for Loan Losses
|
Amount Previously Charged-off
|
|||||||
Eastern Panhandle WV
|
Commercial development & commercial real estate
|
Aug. 2006 & Apr. 2007
|
Aug. 2013
|
$ | 5,240 |
Collateral Value
|
$ | 8,179 | (1) | $ | - | $ | - | ||
Shenandoah Valley VA
|
Commerical real estate
|
Dec. 2009
|
Aug. 2013
|
$ | 1,442 |
Collateral value
|
$ | 1,400 | (1) | $ | 182 | $ | - | ||
Northern VA
|
Single family residence
|
Aug. 2007, Oct. 2007 & Sept. 2008
|
Dec. 2011
|
$ | 9,000 |
Collateral value
|
$ | 10,000 | (1) | $ | 1,000 | $ | 3,565 | ||
Eastern Panhandle WV
|
Residential development & undeveloped acreage
|
Mar. 2008 & June 2008
|
Jun. 2011
|
$ | 5,936 |
Collateral value
|
$ | 6,713 | (1) | $ | - | $ | 2,477 | ||
Southcentral WV
|
UCC Business Assets & Residential Subdivision
|
Feb. 2003, Mar. 2008 & Apr. 2008
|
May 2011 & Jul. 2011
|
$ | 1,220 |
Collateral value
|
$ | 1,620 | (2) | $ | 571 | $ | - | ||
(1) - Values are based upon recent external appraisal.
|
|||||||||||||||
(2) - Value is based upon current appraisal on the real estate and most recent estimate on business assets.
|
|||||||||||||||
Table VIII - Summary of Significant Changes in Financial Position
|
||||||||||||
Balance
|
Balance
|
|||||||||||
December 31,
|
Increase (Decrease)
|
September 30,
|
||||||||||
Dollars in thousands
|
2012
|
Amount
|
Percentage
|
2013
|
||||||||
Assets
|
||||||||||||
Securities available for sale
|
$ | 281,539 | 9,719 | 3.5 | % | $ | 291,258 | |||||
Loans, net of unearned interest
|
937,168 | 2,001 | 0.2 | % | 939,169 | |||||||
Liabilities
|
||||||||||||
Deposits
|
$ | 1,027,125 | $ | (10,390 | ) | -1.0 | % | $ | 1,016,735 | |||
Short-term borrowings
|
3,958 | 50,205 | 1268.4 | % | 54,163 | |||||||
Long-term borrowings
|
203,268 | (39,728 | ) | -19.5 | % | 163,540 | ||||||
Subordinated debentures
|
16,800 | - | 0.0 | % | 16,800 | |||||||
Subordinated debentures owed to
|
||||||||||||
unconsolidated subsidiary trusts
|
19,589 | - | 0.0 | % | 19,589 |
·
|
Would have limited amounts of maturing brokered deposits to replace in the short-term, as we have limited our brokered deposits maturing in any one quarter to no more than $50 million.
|
·
|
Presently has $560 million in available sources of liquid funds which could be drawn upon to fund maturing brokered deposits until Summit Community had restored its capital to well capitalized status.
|
·
|
Would first seek to restore its capital to well capitalized status through capital contributions from Summit, its parent holding company.
|
·
|
Would generally have no more than $100 million in brokered deposits maturing in any one year time frame, which is well within its presently available sources of liquid funds, if in the event Summit does not have the capital resources to restore Summit Community’s capital to well capitalized status. One year would give Summit Community ample time to raise alternative funds either through retail deposits or the sale of assets, and obtain capital resources to restore it to well capitalized status.
|
·
|
Would severely curtail lending and other growth activities until such time as access to this line could be restored, thus eliminating the need for net new advances, and
|
·
|
Would still have available current liquid funding sources secured by unemcumbered loans and securities totaling $275 million aside from its FHLB line, which would result in a funding source of approximately $233 million.
|
·
|
Presently has $560 million in available sources of liquid funds which could be drawn upon immediately to fund any “net run off” of deposits from this activity.
|
·
|
Would severely curtail lending and other growth activities so as to preserve the availability of as much contingency funds as possible.
|
·
|
Would begin offering its own competitive deposit program when deemed prudent so as to restore the retail deposits lost to the competition.
|
·
|
The Bank achieving and maintaining a minimum Tier 1 leverage capital ratio of at least 8% and a total risk-based capital ratio of at least 11%;
|
·
|
The Bank providing 30 days prior notice of any declaration of intent to pay cash dividends to provide the Bank’s regulatory authorities an opportunity to object;
|
·
|
Summit suspending all cash dividends on its common stock until further notice. Dividends on all preferred stock, as well as interest payments on subordinated notes underlying Summit’s trust preferred securities, continue to be permissible; and,
|
·
|
Summit not incurring any additional debt, other than trade payables, without the prior written consent of the principal banking regulators.
|
·
|
maintaining a Board committee which monitors and promotes compliance with the provisions of the Bank MOU;
|
·
|
providing the Bank’s regulatory authorities with updated reports of criticized assets and/or formal workout plans for all nonperforming borrower relationships with an aggregate outstanding balance exceeding $1 million;
|
·
|
developing and submitting to regulatory authorities a written plan to reduce the Bank’s risk exposure in each adversely classified credit relationship in excess of $1 million and all OREO;
|
·
|
establishing procedures to report all loans with balances exceeding $500,000 that have credit weaknesses or that fall outside of the Bank’s policy;
|
·
|
annually reviewing the organizational structure and operations of the Bank’s loan department;
|
·
|
maintaining an adequate allowance for loan and lease losses through charges to current operating income;
|
·
|
reviewing overall liquidity objectives and developing and submitting to regulatory authorities plans and procedures aimed to improve liquidity and reduce reliance on volatile liabilities;
|
·
|
preparing comprehensive budgets and earnings forecasts for the Bank and submitting reports comparing actual performance to the budget plan;
|
·
|
maintaining a minimum Tier 1 Leverage Capital ratio of at least 8% and a Total Risk-based Capital ratio of at least 11%;
|
·
|
not paying any cash dividends without the prior written consent of the banking regulators; and,
|
·
|
providing quarterly progress reports to the Bank’s regulatory authorities detailing steps taken to comply with the Bank MOU.
|
Table IX - Contractual Cash Obligations
|
Long
|
Capital
|
|||||||
Term
|
Trust
|
Operating
|
|||||||
Dollars in thousands
|
Debt
|
Securities
|
Leases
|
||||||
2013
|
$ | 24 | $ | - | $ | 61 | |||
2014
|
82,527 | - | 204 | ||||||
2015
|
11,909 | - | 38 | ||||||
2016
|
28,911 | - | - | ||||||
2017
|
918 | - | - | ||||||
Thereafter
|
56,051 | 19,589 | - | ||||||
Total
|
$ | 180,340 | $ | 19,589 | $ | 303 |
Table X - Off-Balance Sheet Arrangements
|
September 30,
|
||
Dollars in thousands
|
2013
|
||
Commitments to extend credit:
|
|||
Revolving home equity and
|
|||
credit card lines
|
$ | 49,535 | |
Construction loans
|
32,534 | ||
Other loans
|
42,196 | ||
Standby letters of credit
|
1,759 | ||
Total
|
$ | 126,024 |
Change in
|
Estimated % Change in Net
|
||
Interest Rates
|
Interest Income Over:
|
||
(basis points)
|
0-12 Months
|
13-24 Months
|
|
Down 100 (1)
|
-0.61 | % | 1.55% |
Up 200 (1)
|
-4.51 | % | -4.91% |
Up 400 (2)
|
-3.72 | % | -9.91% |
(1) assumes a parallel shift in the yield curve
|
|||
(2) assumes 400 bp increase over 24 months
|
Exhibit 3.i | Amended and Restated Articles of Incorporation of Summit Financial Group, Inc. |
Exhibit 3.ii | Articles of Amendment 2009 |
Exhibit 3.iii | Articles of Amendment 2011 |
Exhibit 3.iv | Amended and Restated By-Laws of Summit Financial Group, Inc. |
Exhibit 11
|
Statement re: Computation of Earnings per Share – Information contained in Note 4 to the Consolidated Financial Statements on page 15 of this Quarterly Report is incorporated herein by reference.
|
Exhibit 31.1
|
Sarbanes-Oxley Act Section 302 Certification of Chief Executive Officer
|
Exhibit 31.2
|
Sarbanes-Oxley Act Section 302 Certification of Chief Financial Officer
|
Exhibit 32.1
|
Sarbanes-Oxley Act Section 906 Certification of Chief Executive Officer
|
Exhibit 32.2
|
Sarbanes-Oxley Act Section 906 Certification of Chief Financial Officer |
Exhibit 101 | Interactive Data File (XBRL) |
SUMMIT FINANCIAL GROUP, INC.
|
|||
(registrant)
|
|||
By:
|
/s/ H. Charles Maddy, III
|
||
H. Charles Maddy, III,
|
|||
President and Chief Executive Officer
|
|||
By:
|
/s/ Robert S. Tissue
|
||
Robert S. Tissue,
|
|||
Senior Vice President and Chief Financial Officer
|
|||
By:
|
/s/ Julie R. Cook
|
||
Julie R. Cook,
|
|||
Vice President and Chief Accounting Officer
|
|||
Date: November 12, 2013
|
Exhibit No.
|
Description
|
Page
Number
|
(3)
|
Articles of Incorporation and By-laws:
|
|
(i) Amended and Restated Articles of Incorporation of Summit Financial Group, Inc.
|
(a)
|
|
(ii) Articles of Amendment 2009
|
(b)
|
|
(iii) Articles of Amendment 2011
|
(c)
|
|
(iv) Amended and Restated By-laws of Summit Financial Group, Inc.
|
(d)
|
|
11
|
Statement re: Computation of Earnings per Share
|
16
|
31.1
|
Sarbanes-Oxley Act Section 302 Certification of Chief Executive Officer
|
|
31.2
|
Sarbanes-Oxley Act Section 302 Certification of Chief Financial Officer
|
|
32.1*
|
Sarbanes-Oxley Act Section 906 Certification of Chief Executive Officer
|
|
32.2*
|
Sarbanes-Oxley Act Section 906 Certification of Chief Financial Officer
|
|
101**
|
Interactive data file (XBRL)
|
|
** As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
|
(a)
|
Incorporated by reference to Exhibit 3.i of Summit Financial Group, Inc.’s filing on Form 10-Q dated March 31, 2006.
|
(b)
|
Incorporated by reference to Exhibit 3.1 of Summit Financial Group, Inc.’s filing on Form 8-K dated September 30, 2009.
|
(c)
|
Incorporated by reference to Exhibit 3.1 of Summit Financial Group, Inc.’s filing on Form 8-K dated November 3, 2011.
|
(d)
|
Incorporated by reference to Exhibit 3.2 of Summit Financial Group, Inc.’s filing on Form 10-Q dated June 30, 2006.
|