Notes to Unaudited Consolidated Financial Statements
1. NATURE OF BANKING ACITIVIES AND SIGNIFICANT ACCOUNTING POLICIES
Organization
Community Bankers Trust Corporation (the Company) is a bank holding company that was incorporated under Delaware law on April 6, 2005. The Company is headquartered in Glen Allen, Virginia
and is the holding company for Essex Bank (the Bank), a Virginia state bank with 24 full-service offices in Virginia, Maryland and Georgia. The Bank also operates one loan production office.
The Bank engages in a general commercial banking business and provides a wide range of financial services primarily to individuals and
small businesses, including individual and commercial demand and time deposit accounts, commercial and industrial loans, consumer and small business loans, real estate and mortgage loans, investment services, on-line and mobile banking products, and
safe deposit box facilities. Thirteen offices are located in Virginia, from the Chesapeake Bay to just west of Richmond, seven are located in Maryland along the Baltimore-Washington corridor and four are located in the Atlanta, Georgia metropolitan
market.
Financial Statements
The consolidated statements presented include accounts of the Company and the Bank, its wholly-owned subsidiary. All material intercompany balances and transactions have been eliminated. The statements
should be read in conjunction with the Companys consolidated financial statements and the accompanying notes to consolidated financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31,
2011. The accounting and reporting policies of the Company conform to generally accepted accounting principles (GAAP) and to the general practices within the banking industry. The interim financial statements have not been audited; however, in the
opinion of management, all adjustments, consisting of normal accruals, were made that are necessary to present fairly the financial position of the Company as of September 30, 2012, changes in stockholders equity and cash flows for the
nine months ended September 30, 2012, and the results of operations for the three and nine months ended September 30, 2012. Results for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2012.
The financial information contained within the
statements is, to a significant extent, financial information that is based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained when either
earning income, recognizing an expense, recovering an asset or relieving a liability. The Company uses historical loss factors as one factor in determining the inherent loss that may be present in its loan portfolio. Actual losses could differ
significantly from the historical factors that the Company uses. In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of the Companys transactions would be the same, the timing of
events that would impact its transactions could change.
Certain reclassifications have been made to prior period balances to
conform to the current period presentation.
In preparing these financial statements, the Company has evaluated subsequent
events and transactions for potential recognition or disclosure through the date the financial statements were issued.
Recent
Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) No. 2011-04,
Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.
This ASU represents the converged guidance of the FASB and the
International Accounting Standards Board (the Boards) on fair value measurement. The collective efforts of the Boards have provided common requirements for measuring fair value and for disclosing information about fair value measurements, including
a consistent meaning of the term fair value for both U.S. GAAP and IFRS (International Financial Reporting Standards) regulations. The Boards have concluded the common requirements will result in greater comparability of fair value
measurements presented and disclosed in financial statements prepared in
8
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
accordance with U.S. GAAP and IFRS. The amendments are effective during interim and
annual periods beginning after December 15, 2011 and are to be applied prospectively. The Company adopted this guidance with no material impact on its consolidated financial statements.
In June 2011, the FASB issued ASU No. 2011-05,
Comprehensive Income
(Topic 220): Presentation of Comprehensive Income.
The ASU eliminates the option to present other comprehensive income as a part of the statement of changes in stockholders equity and requires consecutive presentation of the statement of
net income and other comprehensive income. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and are to be applied retrospectively. In December 2011, the topic was further
amended to defer the effective date of presenting reclassification adjustments from other comprehensive income to net income on the face of the financial statements. Companies should continue to report reclassifications out of accumulated other
comprehensive income consistent with the presentation requirements in effect prior to this ASU while FASB redeliberates future requirements. The Company adopted this guidance, except for the deferred items above, with no material impact on its
consolidated financial statements. The Company does not expect the adoption of the deferred items to have a material impact on its consolidated financial statements.
In June 2012, the FASB issued ASU 2012-06,
Business Combinations (Topic 805): Subsequent Accounting for an
Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution.
The objective of this ASU is to address the diversity in practice about how to interpret the terms on the same
basis and contractual limitations when subsequently measuring an indemnification asset recognized in a government-assisted (Federal Deposit Insurance Corporation or National Credit Union Administration) acquisition of a financial institution that
includes a loss-sharing agreement (indemnification agreement).
When a reporting entity recognizes an indemnification asset
(in accordance with Subtopic 805-20) as a result of a government-assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs (as a result of a change in
cash flows expected to be collected on the assets subject to indemnification), the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to
indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (i.e., the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). The
amendments are effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Early adoption is permitted. The Companys accounting policy for its indemnification asset conforms to the guidance
above; therefore, no changes are necessary for adoption.
9
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
2. SECURITIES
Amortized costs and fair values of securities available for sale and held to maturity at
September 30, 2012 and December 31, 2011 were as follows
(
dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
|
|
|
Gross Unrealized
|
|
|
|
|
|
|
Amortized
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
Securities Available for Sale
|
|
|
|
|
U.S. Treasury issue and other U.S. Govt agencies
|
|
$
|
111,523
|
|
|
$
|
234
|
|
|
$
|
(858
|
)
|
|
$
|
110,899
|
|
U.S. Govt sponsored agencies
|
|
|
501
|
|
|
|
8
|
|
|
|
|
|
|
|
509
|
|
State, county and municipal
|
|
|
100,847
|
|
|
|
5,253
|
|
|
|
(363
|
)
|
|
|
105,737
|
|
Corporate and other bonds
|
|
|
6,536
|
|
|
|
81
|
|
|
|
(9
|
)
|
|
|
6,608
|
|
Mortgage backed U.S. Govt agencies
|
|
|
16,888
|
|
|
|
400
|
|
|
|
(51
|
)
|
|
|
17,237
|
|
Mortgage backed U.S. Govt sponsored agencies
|
|
|
15,422
|
|
|
|
115
|
|
|
|
(133
|
)
|
|
|
15,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Securities Available for Sale
|
|
$
|
251,717
|
|
|
$
|
6,091
|
|
|
$
|
(1,414
|
)
|
|
$
|
256,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
State, county and municipal
|
|
$
|
11,832
|
|
|
$
|
1,222
|
|
|
$
|
|
|
|
$
|
13,054
|
|
Mortgage backed U.S. Govt agencies
|
|
|
10,099
|
|
|
|
721
|
|
|
|
|
|
|
|
10,820
|
|
Mortgage backed U.S. Govt sponsored agencies
|
|
|
26,758
|
|
|
|
1,381
|
|
|
|
|
|
|
|
28,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Securities Held to Maturity
|
|
$
|
48,689
|
|
|
$
|
3,324
|
|
|
$
|
|
|
|
$
|
52,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
Gross Unrealized
|
|
|
|
|
|
|
Amortized
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
Securities Available for Sale
|
|
|
|
|
U.S. Treasury issue and other U.S. Govt agencies
|
|
$
|
7,255
|
|
|
$
|
159
|
|
|
$
|
|
|
|
$
|
7,414
|
|
U.S. Govt sponsored agencies
|
|
|
1,005
|
|
|
|
28
|
|
|
|
|
|
|
|
1,033
|
|
State, county and municipal
|
|
|
58,183
|
|
|
|
3,867
|
|
|
|
(7
|
)
|
|
|
62,043
|
|
Corporate and other bonds
|
|
|
4,801
|
|
|
|
1
|
|
|
|
(171
|
)
|
|
|
4,631
|
|
Mortgage backed U.S. Govt agencies
|
|
|
73,616
|
|
|
|
734
|
|
|
|
(257
|
)
|
|
|
74,093
|
|
Mortgage backed U.S. Govt sponsored agencies
|
|
|
82,966
|
|
|
|
778
|
|
|
|
(194
|
)
|
|
|
83,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Securities Available for Sale
|
|
$
|
227,826
|
|
|
$
|
5,567
|
|
|
$
|
(629
|
)
|
|
$
|
232,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
State, county and municipal
|
|
$
|
12,168
|
|
|
$
|
1,311
|
|
|
$
|
|
|
|
$
|
13,479
|
|
Mortgage backed U.S. Govt agencies
|
|
|
12,743
|
|
|
|
822
|
|
|
|
|
|
|
|
13,565
|
|
Mortgage backed U.S. Govt sponsored agencies
|
|
|
39,511
|
|
|
|
2,030
|
|
|
|
|
|
|
|
41,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Securities Held to Maturity
|
|
$
|
64,422
|
|
|
$
|
4,163
|
|
|
$
|
|
|
|
$
|
68,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
The amortized cost and fair value of securities at
September 30, 2012 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without any penalties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to Maturity
|
|
|
Available for Sale
|
|
(dollars in thousands)
|
|
Amortized
Cost
|
|
|
Fair Value
|
|
|
Amortized
Cost
|
|
|
Fair Value
|
|
Due in one year or less
|
|
$
|
3,588
|
|
|
$
|
3,625
|
|
|
$
|
5,454
|
|
|
$
|
5,424
|
|
Due after one year through five years
|
|
|
38,843
|
|
|
|
41,281
|
|
|
|
42,554
|
|
|
|
43,030
|
|
Due after five years through ten years
|
|
|
6,258
|
|
|
|
7,107
|
|
|
|
121,187
|
|
|
|
125,589
|
|
Due after ten years
|
|
|
|
|
|
|
|
|
|
|
82,522
|
|
|
|
82,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities
|
|
$
|
48,689
|
|
|
$
|
52,013
|
|
|
$
|
251,717
|
|
|
$
|
256,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains and losses on the sale of securities are recorded on the settlement date and are determined using the specific
identification method.
Gross realized gains and losses on sales and other than temporary impairments (OTTI) of securities available for sale during the periods were as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
Gross realized gains
|
|
$
|
1,337
|
|
|
$
|
1,791
|
|
|
$
|
2,062
|
|
|
$
|
2,645
|
|
Gross realized losses
|
|
|
(157
|
)
|
|
|
(66
|
)
|
|
|
(708
|
)
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net securities gains
|
|
$
|
1,180
|
|
|
$
|
1,725
|
|
|
$
|
1,354
|
|
|
$
|
2,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In estimating OTTI losses, management considers the length of time and the extent to which the fair value has been less
than cost, the financial condition and short-term prospects for the issuer, and the intent and ability of management to hold its investment for a period of time to allow a recovery in fair value. There were no investments held that had impairment
losses other than temporary in nature for the three and nine months ended September 30, 2012 and 2011.
11
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
The fair value and gross unrealized losses for securities, segregated
by the length of time that individual securities have been in a continuous gross unrealized loss position, at September 30, 2012 and December 31, 2011 were as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
Less than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
U.S. Treasury issue and other U.S. Govt agencies
|
|
$
|
78,539
|
|
|
$
|
(858
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
78,539
|
|
|
$
|
(858
|
)
|
U.S. Govt sponsored agencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State, county and municipal
|
|
|
23,615
|
|
|
|
(363
|
)
|
|
|
|
|
|
|
|
|
|
|
23,615
|
|
|
|
(363
|
)
|
Corporate and other bonds
|
|
|
1,484
|
|
|
|
(8
|
)
|
|
|
501
|
|
|
|
(1
|
)
|
|
|
1,985
|
|
|
|
(9
|
)
|
Mortgage backed U.S. Govt agencies
|
|
|
3,420
|
|
|
|
(49
|
)
|
|
|
701
|
|
|
|
(2
|
)
|
|
|
4,121
|
|
|
|
(51
|
)
|
Mortgage backed U.S. Govt sponsored agencies
|
|
|
12,051
|
|
|
|
(133
|
)
|
|
|
|
|
|
|
|
|
|
|
12,051
|
|
|
|
(133
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
119,109
|
|
|
$
|
(1,411
|
)
|
|
$
|
1,202
|
|
|
$
|
(3
|
)
|
|
$
|
120,311
|
|
|
$
|
(1,414
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
Less than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
U.S. Treasury issue and other U.S. Govt agencies
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
U.S. Govt sponsored agencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State, county and municipal
|
|
|
1,242
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
1,242
|
|
|
|
(7
|
)
|
Corporate and other bonds
|
|
|
4,380
|
|
|
|
(171
|
)
|
|
|
|
|
|
|
|
|
|
|
4,380
|
|
|
|
(171
|
)
|
Mortgage backed U.S. Govt agencies
|
|
|
38,324
|
|
|
|
(257
|
)
|
|
|
|
|
|
|
|
|
|
|
38,324
|
|
|
|
(257
|
)
|
Mortgage backed U.S. Govt sponsored agencies
|
|
|
25,435
|
|
|
|
(194
|
)
|
|
|
|
|
|
|
|
|
|
|
25,435
|
|
|
|
(194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
69,381
|
|
|
$
|
(629
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
69,381
|
|
|
$
|
(629
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The unrealized losses in the investment portfolio at September 30, 2012 and December 31, 2011 are generally a
result of market fluctuations that occur daily. The unrealized losses are from 75 securities at September 30, 2012. Of those, 72 are investment grade, U.S. government agency guarantees, or the full faith and credit of local municipalities
throughout the United States. Investment grade corporate obligations comprise the remaining three securities with unrealized losses at September 30, 2012. The Company considers the reason for impairment, length of impairment and ability to hold
until the full value is recovered in determining if the impairment is temporary in nature. Based on this analysis, the Company has determined these impairments to be temporary in nature. The Company does not intend to sell and it is more likely than
not that the Company will not be required to sell these securities until they recover in value.
Market prices are affected by
conditions beyond the control of the Company. Investment decisions are made by the management group of the Company and reflect the overall liquidity and strategic asset/liability objectives of the Company. Management analyzes the securities
portfolio frequently and manages the portfolio to provide an overall positive impact to the Companys income statement and balance sheet.
Securities with amortized costs of $80.5 million and $34.1 million at September 30, 2012 and December 31, 2011, respectively, were pledged to secure deposits and for other purposes required or
permitted by law. At each of September 30, 2012 and December 31, 2011, there were no securities purchased from a single issuer, other than U.S. Treasury issue and other U.S. Government agencies, that comprised more than 10% of the
consolidated shareholders equity.
12
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
3. LOANS NOT COVERED BY FDIC SHARED LOSS AGREEMENT (NON-COVERED LOANS)
The Companys non-covered loans at September 30,
2012 and December 31, 2011 were comprised of the following (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
|
Amount
|
|
|
% of Non-Covered
Loans
|
|
|
Amount
|
|
|
% of Non-Covered
Loans
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
131,192
|
|
|
|
23.44
|
%
|
|
$
|
127,200
|
|
|
|
23.34
|
%
|
Commercial
|
|
|
241,692
|
|
|
|
43.18
|
|
|
|
220,471
|
|
|
|
40.46
|
|
Construction and land development
|
|
|
64,304
|
|
|
|
11.49
|
|
|
|
75,691
|
|
|
|
13.89
|
|
Second mortgages
|
|
|
7,569
|
|
|
|
1.35
|
|
|
|
8,129
|
|
|
|
1.49
|
|
Multifamily
|
|
|
22,018
|
|
|
|
3.93
|
|
|
|
19,746
|
|
|
|
3.62
|
|
Agriculture
|
|
|
10,527
|
|
|
|
1.88
|
|
|
|
11,444
|
|
|
|
2.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
477,302
|
|
|
|
85.27
|
|
|
|
462,681
|
|
|
|
84.90
|
|
Commercial loans
|
|
|
73,415
|
|
|
|
13.12
|
|
|
|
72,149
|
|
|
|
13.24
|
|
Consumer installment loans
|
|
|
7,442
|
|
|
|
1.33
|
|
|
|
8,461
|
|
|
|
1.55
|
|
All other loans
|
|
|
1,565
|
|
|
|
0.28
|
|
|
|
1,659
|
|
|
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loans
|
|
|
559,724
|
|
|
|
100.00
|
%
|
|
|
544,950
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less unearned income on loans
|
|
|
(192
|
)
|
|
|
|
|
|
|
(232
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-covered loans, net of unearned income
|
|
$
|
559,532
|
|
|
|
|
|
|
$
|
544,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company held $42.0 million and $36.5 million in balances of loans guaranteed by the United States Department of
Agriculture (USDA), which are included in various categories in the table above, at September 30, 2012 and December 31, 2011, respectively. As these loans are 100% guaranteed by the USDA, no loan loss provision is required. These loan
balances included an unamortized purchase premium of $3.7 million and $3.6 million at September 30, 2012 and December 31, 2011, respectively. Unamortized purchase premium is recognized as an adjustment of the related loan yield using the
interest method.
At September 30, 2012 and December 31, 2011, the Companys allowance for credit
losses was comprised of the following: (i) specific valuation allowances calculated in accordance with FASB ASC 310,
Receivables
,
(ii) general valuation allowances calculated in accordance with FASB ASC 450,
Contingencies
, based on economic conditions and other qualitative risk factors, and
(iii) historical valuation allowances calculated using historical loan loss experience. Management identified loans subject to impairment in accordance with ASC 310.
At September 30, 2012 and December 31, 2011, a portion of the construction and land development loans
presented above contained interest reserve provisions. The Company follows standard industry practice to include interest reserves and capitalized interest in a construction loan. This practice recognizes interest as an additional cost of the
project and, as a result, requires the borrower to put additional equity into the project. In order to monitor the project throughout its life to make sure the property is moving along as planned to ensure appropriateness of continuing to capitalize
interest, the Company coordinates an independent property inspection in connection with each disbursement of loan funds. Until completion, there is generally no cash flow from which to make the interest payment. The Company does not advance
additional interest reserves to keep a loan from becoming nonperforming.
There were no significant amounts of interest
reserves recognized as interest income on construction loans with interest reserves for the three and nine months ended September 30, 2012 and 2011. Nonperforming construction loans with interest reserves were $4.8 million at September 30,
2012 and December 31, 2011.
Interest income on nonaccrual loans, if recognized, is recorded using the cash basis method
of accounting. There were no significant amounts recognized during either of the three and nine months ended September 30, 2012 and 2011. For the three months ended September 30, 2012 and 2011, estimated interest income of $473,000 and
$836,000, respectively, would have been recorded if all such loans had been accruing interest according to their original contractual terms. For the nine months ended September 30, 2012 and 2011, estimated interest income of $1.2 million and
$2.3 million, respectively, would have been recorded if all such loans had been accruing interest according to their original contractual terms.
13
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
The following table summarizes information related to impaired loans as of
September 30, 2012 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded
Investment
(1)
|
|
|
Unpaid Principal
Balance
(2)
|
|
|
Related Allowance
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
4,703
|
|
|
$
|
5,438
|
|
|
$
|
819
|
|
Commercial
|
|
|
2,168
|
|
|
|
2,266
|
|
|
|
323
|
|
Construction and land development
|
|
|
10,028
|
|
|
|
12,117
|
|
|
|
1,683
|
|
Second mortgages
|
|
|
171
|
|
|
|
176
|
|
|
|
27
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
54
|
|
|
|
345
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
17,124
|
|
|
|
20,342
|
|
|
|
2,861
|
|
Commercial loans
|
|
|
631
|
|
|
|
698
|
|
|
|
92
|
|
Consumer installment loans
|
|
|
125
|
|
|
|
138
|
|
|
|
13
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal impaired loans with valuation allowance
|
|
|
17,880
|
|
|
|
21,178
|
|
|
|
2,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
1,678
|
|
|
|
1,716
|
|
|
|
|
|
Commercial
|
|
|
6,749
|
|
|
|
7,182
|
|
|
|
|
|
Construction and land development
|
|
|
465
|
|
|
|
508
|
|
|
|
|
|
Second mortgages
|
|
|
|
|
|
|
|
|
|
|
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
8,892
|
|
|
|
9,406
|
|
|
|
|
|
Commercial loans
|
|
|
71
|
|
|
|
76
|
|
|
|
|
|
Consumer installment loans
|
|
|
10
|
|
|
|
10
|
|
|
|
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal impaired loans without valuation
|
|
|
8,973
|
|
|
|
9,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
6,381
|
|
|
|
7,154
|
|
|
|
819
|
|
Commercial
|
|
|
8,917
|
|
|
|
9,448
|
|
|
|
323
|
|
Construction and land development
|
|
|
10,493
|
|
|
|
12,625
|
|
|
|
1,683
|
|
Second mortgages
|
|
|
171
|
|
|
|
176
|
|
|
|
27
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
54
|
|
|
|
345
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
26,016
|
|
|
|
29,748
|
|
|
|
2,861
|
|
Commercial loans
|
|
|
702
|
|
|
|
774
|
|
|
|
92
|
|
Consumer installment loans
|
|
|
135
|
|
|
|
148
|
|
|
|
13
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
26,853
|
|
|
$
|
30,670
|
|
|
$
|
2,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The amount of the investment in a loan, which is not net of a valuation allowance, but which does reflect any direct write-down of the investment
|
(2)
|
The contractual amount due, which reflects paydowns applied in accordance with loan documents, but which does not reflect any direct write-downs
|
14
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
The following table summarizes information related to impaired loans as of
December 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded
Investment
(1)
|
|
|
Unpaid Principal
Balance
(2)
|
|
|
Related
Allowance
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
3,432
|
|
|
$
|
3,497
|
|
|
$
|
1,000
|
|
Commercial
|
|
|
6,240
|
|
|
|
6,362
|
|
|
|
713
|
|
Construction and land development
|
|
|
3,541
|
|
|
|
6,611
|
|
|
|
653
|
|
Second mortgages
|
|
|
143
|
|
|
|
156
|
|
|
|
80
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
13,356
|
|
|
|
16,626
|
|
|
|
2,446
|
|
Commercial loans
|
|
|
868
|
|
|
|
874
|
|
|
|
306
|
|
Consumer installment loans
|
|
|
70
|
|
|
|
71
|
|
|
|
13
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal impaired loans with valuation
allowance
|
|
|
14,294
|
|
|
|
17,571
|
|
|
|
2,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
3,083
|
|
|
|
3,565
|
|
|
|
|
|
Commercial
|
|
|
7,972
|
|
|
|
8,454
|
|
|
|
|
|
Construction and land development
|
|
|
9,471
|
|
|
|
12,894
|
|
|
|
|
|
Second mortgages
|
|
|
59
|
|
|
|
59
|
|
|
|
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
53
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
20,638
|
|
|
|
25,025
|
|
|
|
|
|
Commercial loans
|
|
|
209
|
|
|
|
593
|
|
|
|
|
|
Consumer installment loans
|
|
|
17
|
|
|
|
17
|
|
|
|
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal impaired loans without valuation
|
|
|
20,864
|
|
|
|
25,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
6,515
|
|
|
|
7,062
|
|
|
|
1,000
|
|
Commercial
|
|
|
14,212
|
|
|
|
14,816
|
|
|
|
713
|
|
Construction and land development
|
|
|
13,012
|
|
|
|
19,505
|
|
|
|
653
|
|
Second mortgages
|
|
|
202
|
|
|
|
215
|
|
|
|
80
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
53
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
33,994
|
|
|
|
41,651
|
|
|
|
2,446
|
|
Commercial loans
|
|
|
1,077
|
|
|
|
1,467
|
|
|
|
306
|
|
Consumer installment loans
|
|
|
87
|
|
|
|
88
|
|
|
|
13
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
35,158
|
|
|
$
|
43,206
|
|
|
$
|
2,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The amount of the investment in a loan, which is not net of a valuation allowance, but which does reflect any direct write-down of the investment
|
(2)
|
The contractual amount due, which reflects paydowns applied in accordance with loan documents, but which does not reflect any direct write-downs
|
15
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
The following table summarizes the average recorded investment of impaired loans for the
three and nine months ended September 30, 2012 and September 30, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
|
Average
Recorded
Investment
|
|
|
Average
Recorded
Investment
|
|
|
Average
Recorded
Investment
|
|
|
Average
Recorded
Investment
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
4,570
|
|
|
$
|
3,660
|
|
|
$
|
4,240
|
|
|
$
|
4,552
|
|
Commercial
|
|
|
3,581
|
|
|
|
3,406
|
|
|
|
4,871
|
|
|
|
4,586
|
|
Construction and land development
|
|
|
8,428
|
|
|
|
3,574
|
|
|
|
5,566
|
|
|
|
6,924
|
|
Second mortgages
|
|
|
117
|
|
|
|
155
|
|
|
|
153
|
|
|
|
185
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
27
|
|
|
|
53
|
|
|
|
14
|
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
16,723
|
|
|
|
10,848
|
|
|
|
14,844
|
|
|
|
16,346
|
|
Commercial loans
|
|
|
434
|
|
|
|
1,192
|
|
|
|
579
|
|
|
|
1,466
|
|
Consumer installment loans
|
|
|
150
|
|
|
|
78
|
|
|
|
130
|
|
|
|
74
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal impaired loans with valuation allowance
|
|
|
17,307
|
|
|
|
12,118
|
|
|
|
15,553
|
|
|
|
17,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
2,273
|
|
|
|
4,201
|
|
|
|
2,588
|
|
|
|
4,733
|
|
Commercial
|
|
|
6,050
|
|
|
|
9,023
|
|
|
|
6,806
|
|
|
|
7,125
|
|
Construction and land development
|
|
|
1,786
|
|
|
|
19,550
|
|
|
|
5,440
|
|
|
|
16,504
|
|
Second mortgages
|
|
|
39
|
|
|
|
40
|
|
|
|
34
|
|
|
|
93
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
27
|
|
|
|
|
|
|
|
40
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
10,175
|
|
|
|
32,814
|
|
|
|
14,908
|
|
|
|
28,468
|
|
Commercial loans
|
|
|
265
|
|
|
|
329
|
|
|
|
259
|
|
|
|
395
|
|
Consumer installment loans
|
|
|
10
|
|
|
|
10
|
|
|
|
20
|
|
|
|
31
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal impaired loans without valuation
|
|
|
10,450
|
|
|
|
33,153
|
|
|
|
15,187
|
|
|
|
28,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
6,843
|
|
|
|
7,861
|
|
|
|
6,828
|
|
|
|
9,285
|
|
Commercial
|
|
|
9,631
|
|
|
|
12,429
|
|
|
|
11,677
|
|
|
|
11,711
|
|
Construction and land development
|
|
|
10,214
|
|
|
|
23,124
|
|
|
|
11,006
|
|
|
|
23,428
|
|
Second mortgages
|
|
|
156
|
|
|
|
195
|
|
|
|
187
|
|
|
|
278
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
54
|
|
|
|
53
|
|
|
|
54
|
|
|
|
112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
26,898
|
|
|
|
43,662
|
|
|
|
29,752
|
|
|
|
44,814
|
|
Commercial loans
|
|
|
699
|
|
|
|
1,521
|
|
|
|
838
|
|
|
|
1,861
|
|
Consumer installment loans
|
|
|
160
|
|
|
|
88
|
|
|
|
150
|
|
|
|
105
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
27,757
|
|
|
$
|
45,271
|
|
|
$
|
30,740
|
|
|
$
|
46,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The majority of impaired loans are also nonaccruing, for which no interest income was recognized during each of the
three and nine months ended September 30, 2012 and 2011. No significant amounts of interest income were recognized on accruing impaired loans for each of the three and nine months ended September 30, 2012 and 2011.
16
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
The following table presents non-covered nonaccruals by loan
category as of September 30, 2012 and December 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
5,474
|
|
|
$
|
5,320
|
|
Commercial
|
|
|
8,916
|
|
|
|
9,187
|
|
Construction and land development
|
|
|
10,318
|
|
|
|
12,718
|
|
Second mortgages
|
|
|
140
|
|
|
|
189
|
|
Multifamily
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
54
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
24,902
|
|
|
|
27,467
|
|
Commercial loans
|
|
|
703
|
|
|
|
1,003
|
|
Consumer installment loans
|
|
|
125
|
|
|
|
72
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
25,730
|
|
|
$
|
28,542
|
|
|
|
|
|
|
|
|
|
|
Troubled debt restructures, some substandard, and doubtful loans still accruing interest are loans that management
expects to ultimately collect all principal and interest due, but not under the terms of the original contract.
A reconciliation of impaired loans to nonaccrual loans at September 30, 2012 and December 31, 2011, is set forth in the table below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
Nonaccruals
|
|
$
|
25,730
|
|
|
$
|
28,542
|
|
Trouble debt restructure and still accruing
|
|
|
851
|
|
|
|
5,946
|
|
Substandard and still accruing
|
|
|
272
|
|
|
|
546
|
|
Doubtful and still accruing
|
|
|
|
|
|
|
124
|
|
|
|
|
|
|
|
|
|
|
Total impaired
|
|
$
|
26,853
|
|
|
$
|
35,158
|
|
|
|
|
|
|
|
|
|
|
The following tables present an age analysis of past due status of non-covered
loans by category as of September 30, 2012 and December 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
30-89
Days
Past
Due
|
|
|
Greater
than 90
Days
Past Due
|
|
|
Total
Past
Due
|
|
|
Current
|
|
|
Total
Loans
|
|
|
Recorded
Investment
> 90 Days
Past Due
and
Accruing
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
1,200
|
|
|
$
|
5,474
|
|
|
$
|
6,674
|
|
|
$
|
124,518
|
|
|
$
|
131,192
|
|
|
$
|
|
|
Commercial
|
|
|
55
|
|
|
|
8,916
|
|
|
|
8,971
|
|
|
|
232,721
|
|
|
|
241,692
|
|
|
|
|
|
Construction and land development
|
|
|
350
|
|
|
|
10,355
|
|
|
|
10,705
|
|
|
|
53,599
|
|
|
|
64,304
|
|
|
|
37
|
|
Second mortgages
|
|
|
19
|
|
|
|
188
|
|
|
|
207
|
|
|
|
7,362
|
|
|
|
7,569
|
|
|
|
48
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,018
|
|
|
|
22,018
|
|
|
|
|
|
Agriculture
|
|
|
|
|
|
|
54
|
|
|
|
54
|
|
|
|
10,473
|
|
|
|
10,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
1,624
|
|
|
|
24,987
|
|
|
|
26,611
|
|
|
|
450,691
|
|
|
|
477,302
|
|
|
|
85
|
|
Commercial loans
|
|
|
8
|
|
|
|
703
|
|
|
|
711
|
|
|
|
72,704
|
|
|
|
73,415
|
|
|
|
|
|
Consumer installment loans
|
|
|
51
|
|
|
|
125
|
|
|
|
176
|
|
|
|
7,266
|
|
|
|
7,442
|
|
|
|
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,565
|
|
|
|
1,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
1,683
|
|
|
$
|
25,815
|
|
|
$
|
27,498
|
|
|
$
|
532,226
|
|
|
$
|
559,724
|
|
|
$
|
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
30-89
Days
Past
Due
|
|
|
Greater
than 90
Days
Past Due
|
|
|
Total
Past
Due
|
|
|
Current
|
|
|
Total
Loans
|
|
|
Recorded
Investment
> 90 Days
Past Due
and
Accruing
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
1,743
|
|
|
$
|
5,320
|
|
|
$
|
7,063
|
|
|
$
|
120,137
|
|
|
$
|
127,200
|
|
|
$
|
|
|
Commercial
|
|
|
1,085
|
|
|
|
11,192
|
|
|
|
12,277
|
|
|
|
208,194
|
|
|
|
220,471
|
|
|
|
2,005
|
|
Construction and land development
|
|
|
2,924
|
|
|
|
12,718
|
|
|
|
15,642
|
|
|
|
60,049
|
|
|
|
75,691
|
|
|
|
|
|
Second mortgages
|
|
|
709
|
|
|
|
189
|
|
|
|
898
|
|
|
|
7,231
|
|
|
|
8,129
|
|
|
|
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,746
|
|
|
|
19,746
|
|
|
|
|
|
Agriculture
|
|
|
|
|
|
|
53
|
|
|
|
53
|
|
|
|
11,391
|
|
|
|
11,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
6,461
|
|
|
|
29,472
|
|
|
|
35,933
|
|
|
|
426,748
|
|
|
|
462,681
|
|
|
|
2,005
|
|
Commercial loans
|
|
|
87
|
|
|
|
1003
|
|
|
|
1,090
|
|
|
|
71,059
|
|
|
|
72,149
|
|
|
|
|
|
Consumer installment loans
|
|
|
93
|
|
|
|
72
|
|
|
|
165
|
|
|
|
8,296
|
|
|
|
8,461
|
|
|
|
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,659
|
|
|
|
1,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
6,641
|
|
|
$
|
30,547
|
|
|
$
|
37,188
|
|
|
$
|
507,762
|
|
|
$
|
544,950
|
|
|
$
|
2,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activity in the allowance for loan losses on non-covered
loans for the nine months ended September 30, 2012 and the year ended December 31, 2011 was comprised of the following (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
Provision
Allocation
|
|
|
Charge
offs
|
|
|
Recoveries
|
|
|
September 30, 2012
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
3,451
|
|
|
$
|
2,095
|
|
|
$
|
(1,451
|
)
|
|
$
|
3
|
|
|
$
|
4,098
|
|
Commercial
|
|
|
3,048
|
|
|
|
403
|
|
|
|
(639
|
)
|
|
|
68
|
|
|
|
2,880
|
|
Construction and land development
|
|
|
5,729
|
|
|
|
(1,744
|
)
|
|
|
(923
|
)
|
|
|
1,628
|
|
|
|
4,690
|
|
Second mortgages
|
|
|
296
|
|
|
|
(91
|
)
|
|
|
0
|
|
|
|
56
|
|
|
|
261
|
|
Multifamily
|
|
|
224
|
|
|
|
48
|
|
|
|
0
|
|
|
|
|
|
|
|
272
|
|
Agriculture
|
|
|
25
|
|
|
|
19
|
|
|
|
0
|
|
|
|
0
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
12,773
|
|
|
|
730
|
|
|
|
(3,013
|
)
|
|
|
1,755
|
|
|
|
12,245
|
|
Commercial loans
|
|
|
1,810
|
|
|
|
216
|
|
|
|
(396
|
)
|
|
|
182
|
|
|
|
1,812
|
|
Consumer installment loans
|
|
|
241
|
|
|
|
50
|
|
|
|
(114
|
)
|
|
|
54
|
|
|
|
231
|
|
All other loans
|
|
|
11
|
|
|
|
4
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
14,835
|
|
|
$
|
1,000
|
|
|
$
|
(3,523
|
)
|
|
$
|
1,991
|
|
|
$
|
14,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
Provision
Allocation
|
|
|
Charge offs
|
|
|
Recoveries
|
|
|
December 31, 2011
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
6,262
|
|
|
$
|
(998
|
)
|
|
$
|
(1,831
|
)
|
|
$
|
18
|
|
|
$
|
3,451
|
|
Commercial
|
|
|
5,287
|
|
|
|
563
|
|
|
|
(2,856
|
)
|
|
|
54
|
|
|
|
3,048
|
|
Construction and land development
|
|
|
10,039
|
|
|
|
(288
|
)
|
|
|
(4,123
|
)
|
|
|
101
|
|
|
|
5,729
|
|
Second mortgages
|
|
|
406
|
|
|
|
(32
|
)
|
|
|
(81
|
)
|
|
|
3
|
|
|
|
296
|
|
Multifamily
|
|
|
260
|
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
224
|
|
Agriculture
|
|
|
266
|
|
|
|
(241
|
)
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
22,520
|
|
|
|
(1,032
|
)
|
|
|
(8,891
|
)
|
|
|
176
|
|
|
|
12,773
|
|
Commercial loans
|
|
|
2,691
|
|
|
|
2,527
|
|
|
|
(3,615
|
)
|
|
|
207
|
|
|
|
1,810
|
|
Consumer installment loans
|
|
|
257
|
|
|
|
67
|
|
|
|
(288
|
)
|
|
|
205
|
|
|
|
241
|
|
All other loans
|
|
|
75
|
|
|
|
(64
|
)
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
25,543
|
|
|
$
|
1,498
|
|
|
$
|
(12,794
|
)
|
|
$
|
588
|
|
|
$
|
14,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables present information on the non-covered loans
evaluated for impairment in the allowance for loan losses as of September 30, 2012 and December 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
Allowance for Loan Losses
|
|
|
Recorded Investment in Loans
|
|
|
|
Individually
Evaluated for
Impairment
(1)
|
|
|
Collectively
Evaluated for
Impairment
|
|
|
Total
|
|
|
Individually
Evaluated for
Impairment
(1)
|
|
|
Collectively
Evaluated for
Impairment
|
|
|
Total
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
917
|
|
|
$
|
3,181
|
|
|
$
|
4,098
|
|
|
$
|
9,747
|
|
|
$
|
121,445
|
|
|
$
|
131,192
|
|
Commercial
|
|
|
438
|
|
|
|
2,442
|
|
|
|
2,880
|
|
|
|
16,383
|
|
|
|
225,309
|
|
|
|
241,692
|
|
Construction and land development
|
|
|
2,189
|
|
|
|
2,501
|
|
|
|
4,690
|
|
|
|
15,806
|
|
|
|
48,498
|
|
|
|
64,304
|
|
Second mortgages
|
|
|
39
|
|
|
|
222
|
|
|
|
261
|
|
|
|
282
|
|
|
|
7,287
|
|
|
|
7,569
|
|
Multifamily
|
|
|
|
|
|
|
272
|
|
|
|
272
|
|
|
|
|
|
|
|
22,018
|
|
|
|
22,018
|
|
Agriculture
|
|
|
8
|
|
|
|
36
|
|
|
|
44
|
|
|
|
55
|
|
|
|
10,472
|
|
|
|
10,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
3,591
|
|
|
|
8,654
|
|
|
|
12,245
|
|
|
|
42,273
|
|
|
|
435,029
|
|
|
|
477,302
|
|
Commercial loans
|
|
|
104
|
|
|
|
1,708
|
|
|
|
1,812
|
|
|
|
971
|
|
|
|
72,444
|
|
|
|
73,415
|
|
Consumer installment loans
|
|
|
14
|
|
|
|
217
|
|
|
|
231
|
|
|
|
142
|
|
|
|
7,300
|
|
|
|
7,442
|
|
All other loans
|
|
|
|
|
|
|
15
|
|
|
|
15
|
|
|
|
|
|
|
|
1,565
|
|
|
|
1,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
3,709
|
|
|
$
|
10,594
|
|
|
$
|
14,303
|
|
|
$
|
43,386
|
|
|
$
|
516,338
|
|
|
$
|
559,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
Allowance for Loan Losses
|
|
|
Recorded Investment in Loans
|
|
|
|
Individually
Evaluated for
Impairment
(1)
|
|
|
Collectively
Evaluated for
Impairment
|
|
|
Total
|
|
|
Individually
Evaluated for
Impairment
(1)
|
|
|
Collectively
Evaluated for
Impairment
|
|
|
Total
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
1,088
|
|
|
$
|
2,363
|
|
|
$
|
3,451
|
|
|
$
|
8,921
|
|
|
$
|
118,279
|
|
|
$
|
127,200
|
|
Commercial
|
|
|
829
|
|
|
|
2,219
|
|
|
|
3,048
|
|
|
|
20,780
|
|
|
|
199,691
|
|
|
|
220,471
|
|
Construction and land development
|
|
|
1,792
|
|
|
|
3,937
|
|
|
|
5,729
|
|
|
|
22,538
|
|
|
|
53,153
|
|
|
|
75,691
|
|
Second mortgages
|
|
|
105
|
|
|
|
191
|
|
|
|
296
|
|
|
|
418
|
|
|
|
7,711
|
|
|
|
8,129
|
|
Multifamily
|
|
|
|
|
|
|
224
|
|
|
|
224
|
|
|
|
|
|
|
|
19,746
|
|
|
|
19,746
|
|
Agriculture
|
|
|
2
|
|
|
|
23
|
|
|
|
25
|
|
|
|
330
|
|
|
|
11,114
|
|
|
|
11,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
3,816
|
|
|
|
8,957
|
|
|
|
12,773
|
|
|
|
52,987
|
|
|
|
409,694
|
|
|
|
462,681
|
|
Commercial loans
|
|
|
308
|
|
|
|
1,502
|
|
|
|
1,810
|
|
|
|
1,250
|
|
|
|
70,899
|
|
|
|
72,149
|
|
Consumer installment loans
|
|
|
32
|
|
|
|
209
|
|
|
|
241
|
|
|
|
348
|
|
|
|
8,113
|
|
|
|
8,461
|
|
All other loans
|
|
|
1
|
|
|
|
10
|
|
|
|
11
|
|
|
|
127
|
|
|
|
1,532
|
|
|
|
1,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
4,157
|
|
|
$
|
10,678
|
|
|
$
|
14,835
|
|
|
$
|
54,712
|
|
|
$
|
490,238
|
|
|
$
|
544,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The category Individually Evaluated for Impairment includes loans individually evaluated for impairment and determined not to be impaired.
These loans total $16.5 million and $19.6 million at September 30, 2012 and December 31, 2011, respectively. The allowance for loans losses allocated to these loans is $743,000 and $1.4 million at September 30, 2012 and
December 31, 2011, respectively.
|
Non-covered loans are monitored for credit quality on a recurring basis. These credit quality indicators are defined as
follows:
Pass
- A pass loan is not adversely classified, as it does not display any of the characteristics for adverse
classification. This category includes purchased loans that are 100% guaranteed by U.S. Government agencies of $42.0 million and $36.5 million at September 30, 2012 and December 31, 2011, respectively.
Special Mention
- A special mention loan has potential weaknesses that deserve managements close attention. If left uncorrected, such
potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention loans are not adversely classified and do not warrant adverse classification.
Substandard
- A substandard loan is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral
pledged, if any. Loans classified as substandard generally have a well defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility of loss if the deficiencies are not
corrected.
Doubtful
- A doubtful loan has all the weaknesses inherent in a loan classified as substandard with the added
characteristics that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values.
20
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
The following tables present the composition of non-covered loans
by credit quality indicator at September 30, 2012 and December 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
Pass
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Total
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
113,504
|
|
|
$
|
8,235
|
|
|
$
|
9,453
|
|
|
$
|
|
|
|
$
|
131,192
|
|
Commercial
|
|
|
203,939
|
|
|
|
21,372
|
|
|
|
16,381
|
|
|
|
|
|
|
|
241,692
|
|
Construction and land development
|
|
|
37,663
|
|
|
|
10,835
|
|
|
|
15,806
|
|
|
|
|
|
|
|
64,304
|
|
Second mortgages
|
|
|
6,890
|
|
|
|
397
|
|
|
|
282
|
|
|
|
|
|
|
|
7,569
|
|
Multifamily
|
|
|
20,841
|
|
|
|
1,177
|
|
|
|
|
|
|
|
|
|
|
|
22,018
|
|
Agriculture
|
|
|
10,473
|
|
|
|
|
|
|
|
54
|
|
|
|
|
|
|
|
10,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
393,310
|
|
|
|
42,016
|
|
|
|
41,976
|
|
|
|
|
|
|
|
477,302
|
|
Commercial loans
|
|
|
71,254
|
|
|
|
1,189
|
|
|
|
972
|
|
|
|
|
|
|
|
73,415
|
|
Consumer installment loans
|
|
|
7,083
|
|
|
|
217
|
|
|
|
142
|
|
|
|
|
|
|
|
7,442
|
|
All other loans
|
|
|
1,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
473,212
|
|
|
$
|
43,422
|
|
|
$
|
43,090
|
|
|
$
|
|
|
|
$
|
559,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
Pass
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Total
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
107,926
|
|
|
$
|
10,519
|
|
|
$
|
8,688
|
|
|
$
|
67
|
|
|
$
|
127,200
|
|
Commercial
|
|
|
162,744
|
|
|
|
39,506
|
|
|
|
18,221
|
|
|
|
|
|
|
|
220,471
|
|
Construction and land development
|
|
|
34,391
|
|
|
|
18,876
|
|
|
|
22,424
|
|
|
|
|
|
|
|
75,691
|
|
Second mortgages
|
|
|
7,135
|
|
|
|
576
|
|
|
|
418
|
|
|
|
|
|
|
|
8,129
|
|
Multifamily
|
|
|
16,199
|
|
|
|
3,547
|
|
|
|
|
|
|
|
|
|
|
|
19,746
|
|
Agriculture
|
|
|
10,897
|
|
|
|
494
|
|
|
|
53
|
|
|
|
|
|
|
|
11,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
339,292
|
|
|
|
73,518
|
|
|
|
49,804
|
|
|
|
67
|
|
|
|
462,681
|
|
Commercial loans
|
|
|
68,511
|
|
|
|
1,983
|
|
|
|
1,597
|
|
|
|
58
|
|
|
|
72,149
|
|
Consumer installment loans
|
|
|
7,878
|
|
|
|
235
|
|
|
|
343
|
|
|
|
5
|
|
|
|
8,461
|
|
All other loans
|
|
|
1,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
417,340
|
|
|
$
|
75,736
|
|
|
$
|
51,744
|
|
|
$
|
130
|
|
|
$
|
544,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
In accordance with ASU 2011-02, the Company assesses all loan modifications to determine
whether they are considered troubled debt restructurings (TDRs) under the guidance. During the three months ended September 30, 2012, the Company modified two loans that were considered to be TDRs. The Company extended the terms for one of
these loans and lowered the interest rate for one of these loans.
The following table presents information relating to loans modified as TDRs during the three months ended September 30, 2012 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2012
|
|
|
|
Number
of
Contracts
|
|
|
Pre-Modification Outstanding
Recorded Investment
|
|
|
Post-Modification Outstanding
Recorded Investment
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
1
|
|
|
$
|
294
|
|
|
$
|
294
|
|
Commercial
|
|
|
1
|
|
|
|
2,979
|
|
|
|
2,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
2
|
|
|
|
3,273
|
|
|
|
3,071
|
|
Total loans
|
|
|
2
|
|
|
$
|
3,273
|
|
|
$
|
3,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the nine months ended September 30, 2012, the Company modified seven loans that were considered to be TDRs.
The Company extended the terms for three of these loans and lowered the interest rate for six of these loans.
The following table presents information relating to loans modified as TDRs during the nine months ended September 30, 2012 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2012
|
|
|
|
Number
of
Contracts
|
|
|
Pre-Modification Outstanding
Recorded Investment
|
|
|
Post-Modification Outstanding
Recorded Investment
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
3
|
|
|
$
|
765
|
|
|
$
|
765
|
|
Commercial
|
|
|
2
|
|
|
|
4,150
|
|
|
|
3,948
|
|
Construction and land development
|
|
|
1
|
|
|
|
675
|
|
|
|
675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
6
|
|
|
|
5,590
|
|
|
|
5,388
|
|
Commercial loans
|
|
|
1
|
|
|
|
74
|
|
|
|
74
|
|
Total loans
|
|
|
7
|
|
|
$
|
5,664
|
|
|
$
|
5,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No loans were modified during the three months ended September 30, 2011. During the nine months ended
September 30, 2011, the Company modified six loans that were considered to be TDRs. The Company extended the terms for five of these loans and lowered the interest rates for six of these loans.
The following table presents information relating to loans modified as TDRs during the nine months ended September 30, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2011
|
|
|
|
Number
of
Contracts
|
|
|
Pre-Modification Outstanding
Recorded Investment
|
|
|
Post-Modification Outstanding
Recorded Investment
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
3
|
|
|
$
|
722
|
|
|
$
|
679
|
|
Commercial
|
|
|
2
|
|
|
|
5,518
|
|
|
|
4,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
5
|
|
|
|
6,240
|
|
|
|
4,811
|
|
Commercial loans
|
|
|
1
|
|
|
|
560
|
|
|
|
531
|
|
Total loans
|
|
|
6
|
|
|
$
|
6,800
|
|
|
$
|
5,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
A loan is considered to be in default if it is 90 days or more past due. There were two
TDRs that resulted in default during each of the three and nine months ended September 30, 2012 that had been restructured during the previous 12 months.
The following table presents information relating to TDRs that resulted in default during the three and nine months ended September 30, 2012 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three and nine months ended September 30, 2012
|
|
|
|
Number
of
Contracts
|
|
|
Recorded Investment
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
Construction and land development
|
|
|
1
|
|
|
$
|
668
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
1
|
|
|
|
668
|
|
Commercial loans
|
|
|
1
|
|
|
|
74
|
|
Total loans
|
|
|
2
|
|
|
$
|
742
|
|
|
|
|
|
|
|
|
|
|
There was one TDR that resulted in default during the three months ended September 30, 2011 that had
been restructured during the previous 12 months. This commercial real estate loan had a recorded investment of $1.4 million at September 30, 2011.
There were four TDRs that resulted in default during the nine months ended September 30, 2011 that had been restructured during the previous 12 months. The following table presents information
relating to TDRs that resulted in default during the nine months ended September 30, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2011
|
|
|
|
Number
of
Contracts
|
|
|
Recorded Investment
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
|
2
|
|
|
$
|
406
|
|
Commercial
|
|
|
1
|
|
|
|
1,416
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
3
|
|
|
|
1,822
|
|
Commercial loans
|
|
|
1
|
|
|
|
525
|
|
Total loans
|
|
|
4
|
|
|
$
|
2,347
|
|
|
|
|
|
|
|
|
|
|
In the determination of the allowance for loan losses, management considers TDRs and subsequent defaults in these
restructures by reviewing for impairment in accordance with ASC 310-10-35,
Receivables,
Subsequent Measurement
.
At September 30, 2012, the Company had 1-4 family mortgages in the amount of $157.4 million pledged as collateral to the Federal Home Loan Bank for a total borrowing capacity of $101.4 million.
4. LOANS COVERED BY FDIC SHARED LOSS AGREEMENT (COVERED LOANS)
On January 30, 2009, the Company entered into a Purchase and Assumption Agreement with the Federal Deposit
Insurance Corporation (FDIC) to assume all of the deposits and certain other liabilities and acquire substantially all assets of Suburban Federal Savings Bank (SFSB).
The Company is applying the provisions of FASB ASC 310-30,
Loans and Debt Securities Acquired with Deteriorated Credit Quality
, to all loans
acquired in the SFSB transaction (the covered loans).
Of the total $198.3 million in loans acquired, $49.1 million met the criteria of ASC 310-30. These loans, consisting mainly of construction loans, were deemed impaired at the acquisition date. The remaining $149.1 million of
loans acquired, comprised mainly of residential 1-4 family, were analogized to meet the criteria of ASC 310-30. Analysis of this portfolio revealed that SFSB utilized weak underwriting and documentation standards, which led the Company to believe
that significant losses were probable given the economic environment at the time.
23
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
As of September 30, 2012 and December 31, 2011, the outstanding contractual
balance of the covered loans was $143.5 million and $160.0 million, respectively.
The carrying amount, by loan type, as of these dates is as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
|
Amount
|
|
|
% of
Covered
Loans
|
|
|
Amount
|
|
|
% of
Covered
Loans
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
78,133
|
|
|
|
87.67
|
%
|
|
$
|
84,734
|
|
|
|
86.85
|
%
|
Commercial
|
|
|
2,030
|
|
|
|
2.28
|
|
|
|
2,170
|
|
|
|
2.22
|
|
Construction and land development
|
|
|
3,328
|
|
|
|
3.73
|
|
|
|
4,260
|
|
|
|
4.38
|
|
Second mortgages
|
|
|
5,148
|
|
|
|
5.78
|
|
|
|
5,894
|
|
|
|
6.04
|
|
Multifamily
|
|
|
308
|
|
|
|
0.35
|
|
|
|
316
|
|
|
|
0.32
|
|
Agriculture
|
|
|
172
|
|
|
|
0.18
|
|
|
|
179
|
|
|
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
89,119
|
|
|
|
99.99
|
|
|
|
97,553
|
|
|
|
99.99
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer installment loans
|
|
|
2
|
|
|
|
0.01
|
|
|
|
8
|
|
|
|
0.01
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total covered loans
|
|
$
|
89,121
|
|
|
|
100.00
|
%
|
|
$
|
97,561
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Activity in the allowance for loan losses on
covered loans for the nine months ended September 30, 2012 and the year ended December 31, 2011 was comprised of the following (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
Provision
Allocation
|
|
|
Charge
offs
|
|
|
Recoveries
|
|
|
September 30, 2012
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
473
|
|
|
$
|
(274
|
)
|
|
$
|
(12
|
)
|
|
$
|
9
|
|
|
$
|
196
|
|
Commercial
|
|
|
303
|
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
|
|
|
260
|
|
Construction and land development
|
|
|
|
|
|
|
4
|
|
|
|
(22
|
)
|
|
|
18
|
|
|
|
|
|
Second mortgages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multifamily
|
|
|
|
|
|
|
63
|
|
|
|
(315
|
)
|
|
|
252
|
|
|
|
|
|
Agriculture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
776
|
|
|
|
(250
|
)
|
|
|
(349
|
)
|
|
|
279
|
|
|
|
456
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer installment loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total covered loans
|
|
$
|
776
|
|
|
$
|
(250
|
)
|
|
$
|
(349
|
)
|
|
$
|
279
|
|
|
$
|
456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
Provision
Allocation
|
|
|
Charge
offs
|
|
|
Recoveries
|
|
|
December 31, 2011
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
526
|
|
|
$
|
|
|
|
$
|
(53
|
)
|
|
$
|
|
|
|
$
|
473
|
|
Commercial
|
|
|
303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
303
|
|
Construction and land development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second mortgages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
829
|
|
|
|
|
|
|
|
(53
|
)
|
|
|
|
|
|
|
776
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer installment loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total covered loans
|
|
$
|
829
|
|
|
$
|
|
|
|
$
|
(53
|
)
|
|
$
|
|
|
|
$
|
776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents information on
the covered loans collectively evaluated for impairment in the allowance for loan losses at September 30, 2012 and December 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
|
|
Allowance for
loan losses
|
|
|
Recorded
investment
in loans
|
|
|
Allowance for
loan losses
|
|
|
Recorded
investment
in loans
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
196
|
|
|
$
|
78,133
|
|
|
$
|
473
|
|
|
$
|
84,734
|
|
Commercial
|
|
|
260
|
|
|
|
2,030
|
|
|
|
303
|
|
|
|
2,170
|
|
Construction and land development
|
|
|
|
|
|
|
3,328
|
|
|
|
|
|
|
|
4,260
|
|
Second mortgages
|
|
|
|
|
|
|
5,148
|
|
|
|
|
|
|
|
5,894
|
|
Multifamily
|
|
|
|
|
|
|
308
|
|
|
|
|
|
|
|
316
|
|
Agriculture
|
|
|
|
|
|
|
172
|
|
|
|
|
|
|
|
179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
456
|
|
|
|
89,119
|
|
|
|
776
|
|
|
|
97,553
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer installment loans
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
8
|
|
All other loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total covered loans
|
|
$
|
456
|
|
|
$
|
89,121
|
|
|
$
|
776
|
|
|
$
|
97,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The change in the accretable yield balance for
the nine months ended September 30, 2012 and the year ended December 31, 2011 is as follows (dollars in thousands):
|
|
|
|
|
Balance, January 1, 2011
|
|
$
|
75,718
|
|
Accretion
|
|
|
(17,525
|
)
|
Reclassification to Non-accretable Yield
|
|
|
(1,883
|
)
|
|
|
|
|
|
Balance, December 31, 2011
|
|
|
56,310
|
|
Accretion
|
|
|
(11,211
|
)
|
Reclassification from Non-accretable Yield
|
|
|
10,069
|
|
|
|
|
|
|
Balance, September 30, 2012
|
|
$
|
55,168
|
|
|
|
|
|
|
The covered loans are not classified as nonperforming assets as of September 30, 2012, as the loans are accounted
for on a pooled basis, and interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, is being recognized on all purchased loans.
25
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
5. FDIC AGREEMENTS AND FDIC INDEMNIFICATION ASSET
On January 30, 2009, the Company entered into a Purchase and Assumption Agreement with the FDIC to assume all of
the deposits and certain other liabilities and acquire substantially all assets of SFSB. Under the shared loss agreements that are part of that agreement, the FDIC will reimburse the Bank for 80% of losses arising from covered loans and
foreclosed real estate assets, on the first $118 million in losses on such covered loans and foreclosed real estate assets, and for 95% of losses on covered loans and foreclosed real estate assets thereafter. Under the shared loss agreements, a
loss on a covered loan or foreclosed real estate is defined generally as a realized loss incurred through a permitted disposition, foreclosure, short-sale or restructuring of the covered loan or foreclosed real estate. The reimbursements
for losses on single family one-to-four residential mortgage loans are to be made quarterly through January 2014, and the reimbursements for losses on other covered assets are to be made quarterly through January 2019. Prior to the third quarter of
2011, reimbursements for losses on single family one-to-four mortgage loans were made monthly. The shared loss agreements provide for indemnification from the first dollar of losses without any threshold requirement. The reimbursable losses from the
FDIC are based on the book value of the relevant loan as determined by the FDIC at the date of the transaction, January 30, 2009. New loans made after that date are not covered by the shared loss agreements. The fair value of the shared loss
agreements is detailed below.
The Company is accounting for the shared loss agreements as an indemnification asset
pursuant to the guidance in FASB ASC 805,
Business Combinations
.
The FDIC indemnification asset is required to be measured in the same manner as the asset or liability to which it relates. The FDIC indemnification asset is measured separately from the covered loans and other real estate owned
assets (OREO) because it is not contractually embedded in the covered loan and other real estate owned assets and is not transferable should the Company choose to dispose of them. Fair value was estimated using projected cash flows available for
loss sharing based on the credit adjustments estimated for each loan pool and other real estate owned and the loss sharing percentages outlined in the shared loss agreements with the FDIC. These cash flows were discounted to reflect the uncertainty
of the timing and receipt of the loss sharing reimbursement from the FDIC.
Because the acquired loans are subject to shared
loss agreements and a corresponding indemnification asset exists to represent the value of expected payments from the FDIC, increases and decreases in loan accretable yield due to changing loss expectations will also have an impact to the valuation
of the FDIC indemnification asset. Improvement in loss expectations will typically increase loan accretable yield and decrease the value of the FDIC indemnification asset and, in some instances, result in an amortizable premium on the FDIC
indemnification asset. Increases in loss expectations will typically be recognized as impairment in the current period through allowance for loan losses, resulting in additional noninterest income for the amount of the increase in the FDIC
indemnification asset.
In addition to the premium amortization, the balance of the FDIC indemnification asset is affected by
expected payments from the FDIC. Under the terms of the shared loss agreements, the FDIC will reimburse the Company for loss events incurred related to the covered loan portfolio. These events include such things as future writedowns due to
decreases in the fair market value of OREO, net loan charge offs and recoveries, and net gains and losses on OREO sales.
26
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
The following table presents the balances of the FDIC indemnification
asset at September 30, 2012 and December 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anticipated
Expected
Losses
|
|
|
Estimated
Loss
Sharing
Value
|
|
|
Amortizable
Premium
(Discount)
at Present
Value
|
|
|
FDIC
Indemnification
Asset
Total
|
|
January 1, 2011
|
|
|
46,250
|
|
|
|
37,000
|
|
|
|
21,369
|
|
|
|
58,369
|
|
Increases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Writedown of OREO property to FMV
|
|
|
1,902
|
|
|
|
1,522
|
|
|
|
|
|
|
|
1,522
|
|
Decreases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amortization of premium
|
|
|
|
|
|
|
|
|
|
|
(10,364
|
)
|
|
|
(10,364
|
)
|
Reclassifications to FDIC receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loan charge offs and recoveries
|
|
|
(3,319
|
)
|
|
|
(2,655
|
)
|
|
|
|
|
|
|
(2,655
|
)
|
OREO sales
|
|
|
(2,764
|
)
|
|
|
(2,211
|
)
|
|
|
|
|
|
|
(2,211
|
)
|
Reimbursements requested from FDIC
|
|
|
(2,525
|
)
|
|
|
(2,020
|
)
|
|
|
|
|
|
|
(2,020
|
)
|
Reforecasted Change in Anticipated Expected Losses
|
|
|
(10,831
|
)
|
|
|
(8,665
|
)
|
|
|
8,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
$
|
28,713
|
|
|
$
|
22,971
|
|
|
$
|
19,670
|
|
|
$
|
42,641
|
|
Increases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Writedown of OREO property to FMV
|
|
|
535
|
|
|
|
428
|
|
|
|
|
|
|
|
428
|
|
Decreases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amortization of premium
|
|
|
|
|
|
|
|
|
|
|
(5,444
|
)
|
|
|
(5,444
|
)
|
Reclassifications to FDIC receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loan charge offs and recoveries
|
|
|
(975
|
)
|
|
|
(780
|
)
|
|
|
|
|
|
|
(780
|
)
|
OREO sales
|
|
|
(540
|
)
|
|
|
(432
|
)
|
|
|
|
|
|
|
(432
|
)
|
Reimbursements requested from FDIC
|
|
|
(277
|
)
|
|
|
(222
|
)
|
|
|
|
|
|
|
(222
|
)
|
Reforecasted Change in Anticipated Expected Losses
|
|
|
(3,902
|
)
|
|
|
(3,122
|
)
|
|
|
3,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
$
|
23,554
|
|
|
$
|
18,843
|
|
|
$
|
17,348
|
|
|
$
|
36,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6. OTHER INTANGIBLES
Core deposit intangible assets are amortized over the period
of expected benefit, ranging from 2.6 to 9 years. Core deposit intangibles are recognized, amortized and evaluated for impairment as required by FASB ASC 350,
Intangibles
.
As a result of the mergers with TransCommunity Financial Corporation (TFC), and BOE Financial Services of Virginia, Inc. (BOE) on May 31, 2008, the Company recorded $15.0 million in core deposit intangible assets. Core
deposit intangibles resulting from the Georgia and Maryland transactions, in 2008 and 2009, respectively, equaled $3.2 million and $2.2 million, respectively, and will be amortized over approximately 9 years.
Other intangible assets are presented in the following table (dollars
in thousands):
|
|
|
|
|
|
|
Core Deposit
Intangibles
|
|
Balance, January 1, 2011
|
|
$
|
14,819
|
|
Amortization
|
|
|
(2,261
|
)
|
|
|
|
|
|
Balance, December 31, 2011
|
|
|
12,558
|
|
Amortization
|
|
|
(1,695
|
)
|
|
|
|
|
|
Balance, September 30, 2012
|
|
$
|
10,863
|
|
|
|
|
|
|
27
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
7. DEPOSITS
The following table provides interest-bearing deposit information, by type,
as of September 30, 2012 and December 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
December 31, 2011
|
|
NOW
|
|
$
|
117,120
|
|
|
$
|
128,758
|
|
MMDA
|
|
|
113,288
|
|
|
|
115,397
|
|
Savings
|
|
|
76,499
|
|
|
|
69,872
|
|
Time deposits less than $100,000
|
|
|
292,374
|
|
|
|
326,383
|
|
Time deposits $100,000 and over
|
|
|
263,087
|
|
|
|
228,128
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing deposits
|
|
$
|
862,368
|
|
|
$
|
868,538
|
|
|
|
|
|
|
|
|
|
|
8. ACCUMULATED OTHER COMPREHENSIVE INCOME
The following tables present activity in accumulated
other comprehensive income for the three and nine months ended September 30, 2012 and 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2012
|
|
|
|
Unrealized
Gain/(Loss) on
Securities
|
|
|
Defined Benefit
Pension Plan
|
|
|
Total Other
Comprehensive
Income (Loss)
|
|
Beginning balance
|
|
$
|
3,839
|
|
|
$
|
(1,038
|
)
|
|
$
|
2,801
|
|
Current period other comprehensive income loss
|
|
|
(753
|
)
|
|
|
|
|
|
|
(753
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
3,086
|
|
|
$
|
(1,038
|
)
|
|
$
|
2,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2011
|
|
|
|
Unrealized
Gain/(Loss) on
Securities
|
|
|
Defined Benefit
Pension Plan
|
|
|
Total Other
Comprehensive
Income (Loss)
|
|
Beginning balance
|
|
$
|
2,296
|
|
|
$
|
|
|
|
$
|
2,296
|
|
Current period other comprehensive income
|
|
|
227
|
|
|
|
|
|
|
|
227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
2,523
|
|
|
$
|
|
|
|
$
|
2,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2012
|
|
|
|
Unrealized
Gain/(Loss) on
Securities
|
|
|
Defined Benefit
Pension Plan
|
|
|
Total Other
Comprehensive
Income (Loss)
|
|
Beginning balance
|
|
$
|
3,257
|
|
|
$
|
(1,038
|
)
|
|
$
|
2,219
|
|
Current period other comprehensive income loss
|
|
|
(171
|
)
|
|
|
|
|
|
|
(171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
3,086
|
|
|
$
|
(1,038
|
)
|
|
$
|
2,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2011
|
|
|
|
Unrealized
Gain/Loss on
Securities
|
|
|
Defined Benefit
Pension Plan
|
|
|
Total Other
Comprehensive
Income
|
|
Beginning balance
|
|
$
|
(145
|
)
|
|
$
|
|
|
|
$
|
(145
|
)
|
Current period other comprehensive income
|
|
|
2,668
|
|
|
|
|
|
|
|
2,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
2,523
|
|
|
$
|
|
|
|
$
|
2,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. FAIR VALUES OF ASSETS AND LIABILITIES
FASB ASC 820,
Fair Value Measurements and Disclosures,
defines fair value as the exchange price that would be
received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 requires that valuation techniques
maximize the use of observable inputs and minimize the use of unobservable inputs and also establishes a fair value hierarchy that prioritizes the valuation inputs into three broad levels. The Company groups assets and liabilities at fair value in
three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:
|
|
|
Level 1Valuation is based upon quoted prices for identical instruments traded in active markets.
|
|
|
|
Level 2Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in
markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
|
Level 3Valuation is determined using model-based techniques with significant assumptions not observable in the market. These unobservable
assumptions reflect the Companys own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of third party pricing services, option pricing models, discounted cash
flow models and similar techniques.
|
FASB ASC 825,
Financial Instruments
, allows an entity the
irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.
The Company has not made any material ASC 825 elections as of September 30, 2012.
Assets and Liabilities
Recorded at Fair Value on a Recurring Basis
The Company utilizes fair value measurements to record adjustments to
certain assets to determine fair value disclosures. Securities available for sale and loans held for sale are recorded at fair value on a recurring basis.
The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis (dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Investment securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury issue and other U.S. Govt agencies
|
|
$
|
110,899
|
|
|
$
|
105,743
|
|
|
$
|
5,156
|
|
|
$
|
|
|
U.S. Govt sponsored agencies
|
|
|
509
|
|
|
|
|
|
|
|
509
|
|
|
|
|
|
State, county, and municipal
|
|
|
105,738
|
|
|
|
657
|
|
|
|
105,081
|
|
|
|
|
|
Corporate and other bonds
|
|
|
6,608
|
|
|
|
264
|
|
|
|
6,344
|
|
|
|
|
|
Mortgage backed U.S. Govt agencies
|
|
|
17,236
|
|
|
|
|
|
|
|
17,236
|
|
|
|
|
|
Mortgage backed U.S. Govt sponsored agencies
|
|
|
15,404
|
|
|
|
|
|
|
|
15,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment securities available for sale
|
|
|
256,394
|
|
|
|
106,664
|
|
|
|
149,730
|
|
|
|
|
|
Loans held for resale
|
|
|
1,736
|
|
|
|
|
|
|
|
1,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
258,130
|
|
|
$
|
106,664
|
|
|
$
|
151,466
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities at fair value
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Investment securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury issue and other U.S. Govt agencies
|
|
$
|
7,414
|
|
|
$
|
2,099
|
|
|
$
|
5,315
|
|
|
$
|
|
|
U.S. Govt sponsored agencies
|
|
|
1,033
|
|
|
|
|
|
|
|
1,033
|
|
|
|
|
|
State, county and municipal
|
|
|
62,043
|
|
|
|
1,821
|
|
|
|
60,222
|
|
|
|
|
|
Corporate and other bonds
|
|
|
4,631
|
|
|
|
|
|
|
|
4,631
|
|
|
|
|
|
Mortgage backed U.S. Govt agencies
|
|
|
74,093
|
|
|
|
|
|
|
|
74,093
|
|
|
|
|
|
Mortgage backed U.S. Govt sponsored agencies
|
|
|
83,550
|
|
|
|
|
|
|
|
83,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment securities available for sale
|
|
|
232,764
|
|
|
|
3,920
|
|
|
|
228,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for resale
|
|
|
580
|
|
|
|
|
|
|
|
580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
233,344
|
|
|
$
|
3,920
|
|
|
$
|
229,424
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities at fair value
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale
Investment securities available for sale are recorded at fair value each reporting period. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values
are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the securitys credit rating, prepayment assumptions and other factors such as credit loss
assumptions.
The Company utilizes a third party vendor to provide fair value data for purposes of determining the fair value
of its available for sale securities portfolio. The third party vendor uses a reputable pricing company for security market data. The third party vendor has controls and edits in place for month-to-month market checks and zero pricing, and a
Statement on Standards for Attestation Engagements No. 16 report is obtained from the third party vendor on an annual basis. The Company makes no adjustments to the pricing service data received for its securities available for sale.
Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities
that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities
classified as Level 3 include asset-backed securities in less liquid markets.
Loans held for resale
The carrying amounts of loans held for resale approximate fair value.
30
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The Company is also required to measure and recognize certain other financial assets at fair value on a nonrecurring basis on the
consolidated balance sheet.
For assets measured at fair value on a nonrecurring basis in 2012 and still held on the consolidated balance sheet at September 30, 2012, the following table provides the fair
value measures by level of valuation assumptions used for those assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Impaired loans, non-covered
|
|
$
|
17,358
|
|
|
$
|
|
|
|
$
|
2,394
|
|
|
$
|
14,964
|
|
Other real estate owned (OREO), non-covered
|
|
|
11,896
|
|
|
|
|
|
|
|
|
|
|
|
11,896
|
|
Other real estate owned (OREO), covered
|
|
|
2,943
|
|
|
|
|
|
|
|
106
|
|
|
|
2,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
32,197
|
|
|
$
|
|
|
|
$
|
2,500
|
|
|
$
|
29,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities at fair value
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Impaired loans, non-covered
|
|
$
|
22,082
|
|
|
$
|
308
|
|
|
$
|
8,857
|
|
|
$
|
12,917
|
|
Other real estate owned (OREO), non-covered
|
|
|
10,252
|
|
|
|
|
|
|
|
|
|
|
|
10,252
|
|
Other real estate owned (OREO), covered
|
|
|
5,764
|
|
|
|
|
|
|
|
533
|
|
|
|
5,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
38,098
|
|
|
$
|
308
|
|
|
$
|
9,390
|
|
|
$
|
28,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities at fair value
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans, non-covered
Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as
individually impaired, management measures the impairment in accordance with FASB ASC 310,
Receivables
. The fair value of impaired loans is estimated using one of several methods, including collateral value and discounted cash flows. Those
impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceeds the recorded investments in such loans. At September 30, 2012 and December 31, 2011, a majority of total
impaired loans were evaluated based on the fair value of the collateral. The Company frequently obtains appraisals prepared by external professional appraisers for classified loans greater than $250,000 when the most recent appraisal is greater than
12 months old. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan within Level 2.
The Company may also identify collateral deterioration based on current market sales data, including price and absorption, as well as input from real estate sales professionals and developers, county or
city tax assessments, market data and on-site inspections by Company personnel. Internally prepared estimates generally result from current market data and actual sales data related to the Companys collateral or where the collateral is
located. When management determines that the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3. In instances where an
appraisal received subsequent to an internally prepared estimate reflects a higher collateral value, management does not revise the carrying amount. Impaired loans can also be evaluated for impairment using the present value of expected future cash
flows discounted at the loans effective interest rate. The measurement of impaired loans using future cash flows discounted at the loans effective interest rate rather than the market rate of interest rate is not a fair value measurement
and is therefore excluded from fair value disclosure requirements. Reviews of classified loans are performed by management on a quarterly basis.
Other real estate owned, covered and non-covered
Other real estate
owned (OREO) assets are adjusted to fair value less estimated selling costs upon transfer of the related loans to OREO property. Subsequent to the transfer, valuations are periodically performed by management and the assets are carried at the lower
of carrying value or fair value less estimated selling costs. Fair value is based upon independent market prices, appraised values of the collateral or managements estimation of the value of the collateral. When the fair value of the
collateral is based on an observable market price or a current appraised value,
31
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
the Company records the foreclosed asset within Level 2. When an appraised value is not available or management determines that the fair value of the collateral is further impaired below the
appraised value due to such things as absorption rates and market conditions, the Company records the foreclosed asset within Level 3 of the fair value hierarchy.
Fair Value of Financial Instruments
FASB ASC 825,
Financial
Instruments
, requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or nonrecurring basis.
FASB ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
The following reflects the fair value of financial instruments, whether or not recognized on the consolidated balance sheet,
at fair value measures by level of valuation assumptions used for those assets.
This table excludes financial instruments for which the carrying value approximates fair value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
(dollars in thousands)
|
|
Carrying Value
|
|
|
Estimated
Fair
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity
|
|
$
|
48,689
|
|
|
$
|
52,013
|
|
|
$
|
|
|
|
$
|
52,013
|
|
|
$
|
|
|
Loans, non-covered
|
|
|
545,229
|
|
|
|
549,978
|
|
|
|
|
|
|
|
549,978
|
|
|
|
|
|
Loans, covered
|
|
|
88,665
|
|
|
|
100,464
|
|
|
|
|
|
|
|
|
|
|
|
100,464
|
|
FDIC indemnification asset
|
|
|
36,191
|
|
|
|
18,575
|
|
|
|
|
|
|
|
|
|
|
|
18,575
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits
|
|
|
862,368
|
|
|
|
844,501
|
|
|
|
|
|
|
|
844,501
|
|
|
|
|
|
Borrowings
|
|
|
54,124
|
|
|
|
54,847
|
|
|
|
|
|
|
|
54,847
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
(dollars in thousands)
|
|
Carrying Value
|
|
|
Estimated
Fair
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity
|
|
$
|
64,422
|
|
|
$
|
68,585
|
|
|
$
|
|
|
|
$
|
68,585
|
|
|
$
|
|
|
Loans, non-covered
|
|
|
529,883
|
|
|
|
522,960
|
|
|
|
|
|
|
|
522,960
|
|
|
|
|
|
Loans, covered
|
|
|
96,785
|
|
|
|
99,008
|
|
|
|
|
|
|
|
|
|
|
|
99,008
|
|
FDIC indemnification asset
|
|
|
42,641
|
|
|
|
22,892
|
|
|
|
|
|
|
|
|
|
|
|
22,892
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits
|
|
|
868,538
|
|
|
|
870,909
|
|
|
|
|
|
|
|
870,909
|
|
|
|
|
|
Borrowings
|
|
|
41,124
|
|
|
|
45,002
|
|
|
|
|
|
|
|
45,002
|
|
|
|
|
|
The following methods were used to estimate the fair value of all other financial instruments recognized in the
accompanying balance sheets at amounts other than fair value as of September 30, 2012. The Company applied the provisions of ASC 820 to the fair value measurements of financial instruments not recognized on the consolidated balance sheet at
fair value. The provisions requiring the Company to maximize the use of observable inputs and to measure fair value using a notion of exit price were factored into the Companys selection of inputs into its established valuation techniques.
Financial Assets
Cash and cash equivalents
The carrying amounts of cash and due from banks, interest-bearing bank deposits, and federal funds sold approximate fair value.
32
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
Securities held for investment
For securities held for investment, fair values are based on quoted market prices or dealer quotes.
Restricted securities
The carrying value of restricted securities approximates their fair value based on the redemption provisions of the respective issuer.
Loans held for resale
The carrying amounts of loans held for resale
approximate fair value.
Loans not covered by FDIC shared loss agreement (non-covered loans)
For certain homogeneous categories of loans, such as some residential mortgages and other consumer loans, fair value is estimated using
the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
Loans covered by FDIC shared loss
agreement (covered loans)
Fair values for covered loans are based on a discounted cash flow methodology that considers
various factors including the type of loan and related collateral, classification status, term of loan and whether or not the loans are amortizing. Loans were pooled together according to similar characteristics and were treated in the aggregate
when applying various valuation techniques. The discount rates used for loans are based on the rates used at acquisition (which were based on market rates for new originations of comparable loans) adjusted for any material changes in interest rates
since acquisition. Increases in cash flow expectations since acquisition resulted in estimated fair value being higher than carrying value. The increase in cash flows is also reflected in a transfer from unaccretable yield to accretable yield as
disclosed in Note 4.
FDIC indemnification asset
Loss sharing assets are measured separately from the related covered assets as they are not contractually embedded in the covered assets and are not transferable with the assets should the Company choose
to dispose of them. Fair value is estimated using projected cash flows related to the obligations under the shared loss agreements based on the expected reimbursements for losses and the applicable loss sharing percentages. These expected
reimbursements do not include reimbursable amounts related to future covered expenditures. These cash flows were discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC. A reduction in loss
expectations has resulted in the estimated fair value of the FDIC indemnification asset being lower than its carrying value. This creates a premium that is amortized over the life of the asset and is reflected in Note 5.
Accrued interest receivable
The carrying amounts of accrued interest receivable approximate fair value.
Financial
Liabilities
Noninterest-bearing deposits
The carrying amount of noninterest-bearing deposits approximates fair value.
33
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
Interest-bearing deposits
The fair value of NOW accounts, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date.
The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.
Long-term borrowings
The fair values of the Companys
long-term borrowings, such as FHLB advances, are estimated using discounted cash flow analyses based on the Companys current incremental borrowing rates for similar types of borrowing arrangements.
Accrued interest payable
The carrying amounts of accrued interest payable approximate fair value.
Off-balance sheet
financial instruments
The fair value of commitments to extend credit is estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of
interest rates and the committed rates. The fair value of stand-by letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at
the reporting date. The Companys off-balance sheet commitments are funded at current market rates at the date they are drawn upon. It is managements opinion that the fair value of these commitments would approximate their carrying value,
if drawn upon.
The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of
its normal operations. As a result, the fair values of the Companys financial instruments will change when interest rate levels change, and that change may be either favorable or unfavorable. Management attempts to match maturities of assets
and liabilities to the extent believed necessary to minimize interest rate risk. However, borrowers with fixed rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment.
Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and
liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Companys overall interest rate risk.
34
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
10. EARNINGS PER SHARE
Basic earnings per share (EPS) is computed by dividing net income or loss available to common stockholders
by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, including the effect of all potentially dilutive common shares
outstanding attributable to stock instruments.
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars and shares in thousands, except per share data)
|
|
Net
Income (Loss)
(Numerator)
|
|
|
Weighted
Average
Shares
(Denominator)
|
|
|
Per Common Share
Amount
|
|
For the three months ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued
|
|
|
|
|
|
|
21,644
|
|
|
|
|
|
Unissued vested restricted stock
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$
|
1,533
|
|
|
|
21,651
|
|
|
$
|
0.07
|
|
Effect of dilutive stock awards
|
|
|
|
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
1,533
|
|
|
|
21,743
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$
|
1,150
|
|
|
|
21,628
|
|
|
$
|
0.05
|
|
Effect of dilutive stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
1,150
|
|
|
|
21,628
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued
|
|
|
|
|
|
|
21,633
|
|
|
|
|
|
Unissued vested restricted stock
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$
|
3,181
|
|
|
|
21,640
|
|
|
$
|
0.15
|
|
Effect of dilutive stock awards
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
3,181
|
|
|
|
21,691
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$
|
(70
|
)
|
|
|
21,544
|
|
|
$
|
(0.00
|
)
|
Effect of dilutive stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
(70
|
)
|
|
|
21,544
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluded from the computation of diluted earnings per share were 1.3 million and 1.1 million common shares
issuable under awards, options or warrants, during the three and nine months ended September 30, 2012 and 2011 respectively, because their inclusion would be anti-dilutive.
In December 2008, the Company issued 17,680 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A to the United States
Department of Treasury in connection with the Companys participation in the Treasurys TARP Capital Purchase Program. Cumulative dividends on the Series A Preferred Stock are payable at 5% per annum through December 19,
2013, and at a rate of 9% per annum thereafter. The Company may defer dividend payments, but the dividend is a cumulative dividend that accrues for payment in the future. Deferred dividends also accrue interest at the same rate as the dividend.
The failure to pay dividends for six dividend periods triggers the right for the holder of the Series A Preferred Stock to appoint two directors to the Companys board.
As of September 30, 2012, the Company is current in its payment of dividends, each in the amount of $221,000, with respect to the Series A Preferred Stock.
35
COMMUNITY BANKERS TRUST CORPORATION
Notes to Unaudited Consolidated Financial Statements
11. DEFINED BENEFIT PLAN
On May 31, 2008, the Company adopted the Bank of Essex noncontributory defined benefit pension plan for all
full-time pre-merger Bank employees over 21 years of age. Benefits are generally based upon years of service and the employees compensation. The Company funds pension costs in accordance with the funding provisions of the Employee
Retirement Income Security Act. The Company has frozen the plan benefits for all participants effective December 31, 2010, resulting in a curtailment gain included in pension expense of $210,000 in 2010.
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
(dollars in thousands)
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
Service cost
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Interest cost
|
|
|
62
|
|
|
|
65
|
|
|
|
187
|
|
|
|
195
|
|
Expected return on plan assets
|
|
|
(102
|
)
|
|
|
(75
|
)
|
|
|
(306
|
)
|
|
|
(225
|
)
|
Recognized net actuarial (gain) loss
|
|
|
16
|
|
|
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
(24
|
)
|
|
$
|
(10
|
)
|
|
$
|
(70
|
)
|
|
$
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2012, employer contributions totalled $2.0 million for the plan year. The Company is considering
terminating the pension plan in the future. No determination has been made and the Company has not determined the financial impact of the termination of the plan.
12. CONTINGENCIES
See the Annual Report on Form 10-K for the period ended December 31, 2011 for information with respect to
transaction-based bonus awards that the Company approved for the Companys then chief strategic officer in the first quarter of 2010 and paid in the first and second quarters of 2010. There have been no developments to the issues disclosed in
the 2010 Form 10-K and, as of November 14, 2012, these issues remain open.
36