UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC 20549
____________________
FORM 10-Q
(Mark one)
XXX
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QUARTERLY
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the
quarterly period ended March 31, 2012
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TRANSITION REPORT PURSUANT TO
SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from
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_______
to
_______
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Commission
File Number 0-24958
POTOMAC BANCSHARES,
INC.
(Exact
Name of Registrant as Specified in Its Charter)
West
Virginia
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55-0732247
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(State or Other Jurisdiction
of
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(I.R.S.
Employer
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Incorporation or
Organization)
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Identification
No.)
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111 East
Washington Street
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PO Box 906,
Charles Town WV
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25414-0906
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(Address of Principal
Executive Offices)
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(Zip Code)
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Registrant's telephone number,
including area code
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304-725-8431
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Indicate by
check mark whether the registrant: (l) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Indicate by
check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this Chapter)
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).
Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company. See definition of
accelerated filer, large accelerated filer and smaller reporting company
in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated
Filer
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Accelerated
Filer
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Non-Accelerated
Filer
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Smaller Reporting
Company
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XX
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Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).
APPLICABLE
ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
3,390,178 as of May 14,
2012
POTOMAC BANCSHARES, INC. AND
SUBSIDIARY
FORM 10-Q
March 31, 2012
INDEX
PART I.
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FINANCIAL INFORMATION
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PAGE
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Item 1.
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Financial Statements.
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Consolidated Balance Sheets as of March 31, 2012 (Unaudited) and
December 31, 2011 (Audited)
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3
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Consolidated Statements of Operations (Unaudited) for the Three
Months Ended March 31, 2012 and 2011
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4
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Consolidated Statements of Comprehensive Income (Unaudited) for the
Three Months Ended
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March 31, 2012 and
2011
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5
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Consolidated Statements of Changes in Stockholders Equity
(Unaudited) for the Three Months Ended
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March 31, 2012 and
2011
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6
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Consolidated Statements of Cash Flows (Unaudited) for the Three
Months Ended March 31, 2012 and 2011
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7
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Notes to Consolidated Financial Statements (Unaudited)
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8 - 26
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Item 2.
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Managements Discussion and Analysis of Financial Condition and
Results of Operations.
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26 - 31
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Item 4.
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Controls and Procedures.
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32
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Part II.
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OTHER INFORMATION
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Item 1.
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Legal Proceedings.
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32
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Item 2.
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Unregistered Sales of Equity Securities and Use of
Proceeds.
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32
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Item 4.
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Mine Safety Disclosures.
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32
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Item 5.
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Other Information.
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32
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Item 6.
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Exhibits.
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33
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Signatures
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34
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FORWARD-LOOKING
STATEMENTS
The Private Securities Litigation Reform Act of 1995 evidences
Congress determination that the disclosure of forward-looking information is
desirable for investors and encourages such disclosure by providing a safe
harbor for forward-looking statements by corporate management. This Form 10-Q,
including Managements Discussion and Analysis of Financial Condition and
Results of Operations, contains forward-looking statements that involve risk and
uncertainty. Forward-looking statements are easily identified by the use of
words such as could, anticipate, estimate, believe, confident, and
similar words that refer to a future outlook. To comply with the terms of the
safe harbor, the company notes that a variety of factors could cause the
companys actual results and experiences to differ materially from the
anticipated results or other expectations expressed in the companys
forward-looking statements.
The risks and uncertainties that may affect the operations, performance,
development and results of the companys business include, but are not limited
to, the growth of the economy, unemployment, pricing in the real estate market,
interest rate movements, the impact of competitive products, services and
pricing, customer business requirements, the current economic environment posing
significant challenges and affecting our financial condition and results of
operations, the possibility of future FDIC assessments, Congressional
legislation and similar matters (including changes as a result of rules and
regulations adopted under the Dodd-Frank Wall Street Reform and Consumer
Protection Act). The downgrade of U.S. government securities by one of the
credit rating agencies could have a material adverse effect on the companys
operations, earnings and financial condition. We caution readers of this report
not to place undue reliance on forward-looking statements which are subject to
influence by unanticipated future events. Actual results, accordingly, may
differ materially from management expectations.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial
Statements
POTOMAC BANCSHARES, INC. AND
SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
($
in thousands, except per share data)
(Unaudited)
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March 31,
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December 31,
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2012
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2011
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Assets:
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Cash
and due from banks
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$
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1 571
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$
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1 485
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Interest-bearing
deposits in other financial institutions
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26 770
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11 445
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Federal
funds sold
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740
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794
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Securities available
for sale, at fair value
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39 201
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42 331
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Loans
held for sale
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672
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198
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Loans, net of
allowance for loan losses of $4,401 and
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$4,484, respectively
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200 845
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202 761
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Premises and equipment, net
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7 834
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7 923
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Other real estate
owned, net of valuation allowance of
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$2,023 and $2,197, respectively
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6 782
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6 393
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Accrued
interest receivable
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819
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832
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Bank owned life
insurance
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6 990
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6 932
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Federal
Home Loan Bank of Pittsburgh stock
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789
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808
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Other
assets
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5 282
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5 491
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Total Assets
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$
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298 295
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$
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287 393
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Liabilities and
Stockholders Equity:
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Liabilities:
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Deposits
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Noninterest-bearing
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$
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43 313
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$
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37 050
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Interest-bearing
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221 715
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216 067
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Total Deposits
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265 028
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253 117
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Securities sold
under agreements to repurchase
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4 333
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3 415
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Federal
Home Loan Bank advances
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1 221
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1 523
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Accrued interest
payable
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168
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204
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Other
liabilities
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1
680
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3
669
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Total Liabilities
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$
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272 430
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$
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261 928
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Stockholders
Equity:
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Common
stock, $1 per share par value; 5,000,000 shares
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authorized; 3,671,691 shares issued and outstanding
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$
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3 672
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$
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3 672
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Surplus
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3 944
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3 943
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Undivided profits
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22 968
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22 648
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Accumulated other
comprehensive (loss), net
|
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(1 853
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)
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(1 932
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)
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$
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28 731
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$
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28 331
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Less cost of shares acquired for the treasury, 281,513 shares
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2 866
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2 866
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Total Stockholders Equity
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$
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25
865
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$
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25
465
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Total Liabilities and Stockholders Equity
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$
|
298 295
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$
|
287 393
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See Notes to Consolidated Financial
Statements.
3
POTOMAC BANCSHARES, INC. AND
SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
(Unaudited)
|
|
For the Three
Months
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Ended March
31
|
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|
2012
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2011
|
Interest and Dividend
Income:
|
|
|
|
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Interest and fees on loans
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$
|
2 753
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|
$
|
2 993
|
Interest on
securities available for sale - taxable
|
|
|
117
|
|
|
168
|
Interest on securities available for sale - nontaxable
|
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60
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|
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54
|
Interest on federal
funds sold
|
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- -
|
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|
1
|
Other
interest and dividends
|
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|
12
|
|
|
8
|
Total Interest and Dividend Income
|
|
|
2 942
|
|
|
3 224
|
|
|
|
|
|
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Interest
Expense:
|
|
|
|
|
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Interest on deposits
|
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|
450
|
|
|
895
|
Interest on
securities sold under agreements to repurchase
|
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|
3
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|
|
19
|
Federal
Home Loan Bank advances
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6
|
|
|
11
|
Total Interest Expense
|
|
|
459
|
|
|
925
|
|
|
|
|
|
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Net Interest Income
|
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|
2 483
|
|
|
2 299
|
|
|
|
|
|
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Provision for Loan
Losses
|
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|
309
|
|
|
423
|
|
|
|
|
|
|
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Net Interest Income after Provision for Loan Losses
|
|
|
2 174
|
|
|
1 876
|
|
|
|
|
|
|
|
Noninterest
Income:
|
|
|
|
|
|
|
Trust
and financial services
|
|
|
246
|
|
|
221
|
Service charges on
deposit accounts
|
|
|
418
|
|
|
429
|
Visa/MC
fees
|
|
|
198
|
|
|
174
|
Cash surrender value
of life insurance
|
|
|
58
|
|
|
57
|
Other
operating income
|
|
|
118
|
|
|
94
|
Total Noninterest Income
|
|
|
1 038
|
|
|
975
|
|
|
|
|
|
|
|
Noninterest
Expenses:
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
1 220
|
|
|
1 236
|
Net occupancy
expense of premises
|
|
|
156
|
|
|
171
|
Furniture and equipment expenses
|
|
|
242
|
|
|
200
|
Loss on sale of
other real estate
|
|
|
54
|
|
|
27
|
Accounting, audit and compliance
|
|
|
41
|
|
|
40
|
Computer services
and online banking
|
|
|
105
|
|
|
69
|
FDIC
assessment
|
|
|
98
|
|
|
153
|
Other professional
fees
|
|
|
45
|
|
|
31
|
Printing, stationary and supplies
|
|
|
42
|
|
|
41
|
Communications
|
|
|
53
|
|
|
47
|
Foreclosed property expense
|
|
|
134
|
|
|
117
|
Write down of other
real estate
|
|
|
142
|
|
|
- -
|
ATM and
check card expenses
|
|
|
93
|
|
|
71
|
Other operating
expenses
|
|
|
338
|
|
|
349
|
Total Noninterest Expenses
|
|
|
2 763
|
|
|
2 552
|
Income before Income Tax Expense
|
|
|
449
|
|
|
299
|
Income Tax Expense
|
|
|
129
|
|
|
42
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
320
|
|
$
|
257
|
|
|
|
|
|
|
|
Earnings Per Share, basic
and diluted
|
|
$
|
.09
|
|
$
|
.08
|
See Notes to Consolidated Financial
Statements.
4
POTOMAC BANCSHARES, INC. AND
SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
($ in thousands)
(Unaudited)
|
|
For the three
months
|
|
|
Ended March 31
|
|
|
2012
|
|
|
2011
|
Net Income
|
|
$
|
320
|
|
|
$
|
257
|
Other comprehensive income, net of
tax
|
|
|
|
|
|
|
|
Unrealized holding
(losses) gains on securities,
|
|
|
|
|
|
|
|
net of tax of $22 and $61, respectively
|
|
|
(38
|
)
|
|
|
119
|
Deferred tax adjustment
|
|
|
117
|
|
|
|
-
-
|
Other comprehensive
income, net of tax
|
|
|
79
|
|
|
|
119
|
Comprehensive income
|
|
$
|
399
|
|
|
$
|
376
|
See Notes to Consolidated Financial
Statements.
5
POTOMAC BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
($ in thousands, except share and per share
data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
Undivided
|
|
|
Treasury
|
|
|
Comprehensive
|
|
|
|
|
|
|
|
Stock
|
|
Surplus
|
|
Profits
|
|
|
Stock
|
|
|
(Loss)
|
|
|
Total
|
|
Balances, December 31,
2010
|
|
$
|
3 672
|
|
$
|
3 932
|
|
$
|
23 725
|
|
|
$
|
(2 866
|
)
|
|
$
|
(1 687
|
)
|
|
$
|
26 776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
- -
|
|
|
- -
|
|
|
257
|
|
|
|
- -
|
|
|
|
- -
|
|
|
|
257
|
|
Other comprehensive
income
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
|
- -
|
|
|
|
119
|
|
|
|
119
|
|
Stock-based compensation expense
|
|
|
- -
|
|
|
4
|
|
|
- -
|
|
|
|
- -
|
|
|
|
- -
|
|
|
|
4
|
|
Cash dividends ($.01
per share)
|
|
|
- -
|
|
|
- -
|
|
|
(34
|
)
|
|
|
- -
|
|
|
|
- -
|
|
|
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, March 31,
2011
|
|
$
|
3 672
|
|
$
|
3 936
|
|
$
|
23 948
|
|
|
$
|
(2 866
|
)
|
|
$
|
(1 568
|
)
|
|
$
|
27 122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31,
2011
|
|
$
|
3 672
|
|
$
|
3 943
|
|
$
|
22 648
|
|
|
$
|
(2 866
|
)
|
|
$
|
(1 932
|
)
|
|
$
|
25 465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
- -
|
|
|
- -
|
|
|
320
|
|
|
|
- -
|
|
|
|
- -
|
|
|
|
320
|
|
Other
comprehensive income
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
|
- -
|
|
|
|
79
|
|
|
|
79
|
|
Stock-based
compensation expense
|
|
|
- -
|
|
|
1
|
|
|
- -
|
|
|
|
- -
|
|
|
|
- -
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, March 31,
2012
|
|
$
|
3 672
|
|
$
|
3 944
|
|
$
|
22 968
|
|
|
$
|
(2 866
|
)
|
|
$
|
(1 853
|
)
|
|
$
|
25 865
|
|
See Notes to Consolidated Financial
Statements.
6
POTOMAC BANCSHARES, INC. AND
SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
|
|
For the Three Months Ended
|
|
|
|
March
|
|
|
March
|
|
|
|
2012
|
|
|
2011
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
320
|
|
|
$
|
257
|
|
Adjustments to reconcile
net income to net cash (used in) provided by
|
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
|
Provision for loan losses
|
|
|
309
|
|
|
|
423
|
|
Depreciation
|
|
|
110
|
|
|
|
125
|
|
Discount accretion and premium amortization on securities, net
|
|
|
56
|
|
|
|
75
|
|
Write down of other real estate
|
|
|
142
|
|
|
|
- -
|
|
Loss on sale of other real estate
|
|
|
54
|
|
|
|
27
|
|
Stock compensation expense
|
|
|
1
|
|
|
|
4
|
|
Proceeds from sale of loans
|
|
|
626
|
|
|
|
314
|
|
Origination of loans for sale
|
|
|
(1 100
|
)
|
|
|
(238
|
)
|
Change in cash surrender value of
|
|
|
|
|
|
|
|
|
bank owned life insurance
|
|
|
(58
|
)
|
|
|
(57
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease (increase) in accrued interest receivable
|
|
|
13
|
|
|
|
(52
|
)
|
Decrease in other assets
|
|
|
367
|
|
|
|
274
|
|
Decrease in accrued interest payable
|
|
|
(36
|
)
|
|
|
(1
|
)
|
Decrease in other liabilities
|
|
|
(1 989
|
)
|
|
|
(100
|
)
|
Net cash (used in) provided by operating activities
|
|
$
|
(1 185
|
)
|
|
$
|
1 051
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from maturity of securities available for sale
|
|
$
|
- -
|
|
|
$
|
2 000
|
|
Proceeds from call of
securities available for sale
|
|
|
8 000
|
|
|
|
3 000
|
|
Purchase of securities available for sale
|
|
|
(4 986
|
)
|
|
|
(15 000
|
)
|
Net (increase) decrease
in loans
|
|
|
(204
|
)
|
|
|
5 230
|
|
Purchases of premises and equipment
|
|
|
(21
|
)
|
|
|
(12
|
)
|
Proceeds from sale of
other real estate
|
|
|
1 226
|
|
|
|
470
|
|
Net cash provided by (used in) investing activities
|
|
$
|
4
015
|
|
|
$
|
(4 312
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net
increase in noninterest-bearing deposits
|
|
$
|
6 263
|
|
|
$
|
246
|
|
Net increase in
interest-bearing deposits
|
|
|
5 648
|
|
|
|
14 808
|
|
Net
proceeds (repayment) of securities sold under agreements to
repurchase
|
|
|
918
|
|
|
|
(367
|
)
|
Net repayment of Federal
Home Loan Bank advances
|
|
|
(302
|
)
|
|
|
(296
|
)
|
Cash
dividends
|
|
|
-
-
|
|
|
|
(34
|
)
|
Net cash provided by financing activities
|
|
$
|
12 527
|
|
|
$
|
14
357
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
$
|
15 357
|
|
|
$
|
11 096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS
|
|
|
|
|
|
|
|
|
Beginning
|
|
|
13
724
|
|
|
|
12 905
|
|
|
|
|
|
|
|
|
|
|
Ending
|
|
$
|
29 081
|
|
|
$
|
24
001
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Cash
payments for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
495
|
|
|
$
|
926
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULE OF
NON-CASH INVESTING
|
|
|
|
|
|
|
|
|
AND FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Unrealized loss on securities available for sale
|
|
$
|
(60
|
)
|
|
$
|
(180
|
)
|
Loans transferred to
other real estate owned
|
|
$
|
1 812
|
|
|
$
|
914
|
|
Loans
made on sale of other real estate owned
|
|
$
|
419
|
|
|
$
|
20
|
|
See Notes to Consolidated Financial
Statements.
7
POTOMAC BANCSHARES, INC. AND
SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1.
|
In the opinion of management, the accompanying financial
statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial
position as of March 31, 2012 and December 31, 2011, and the results of operations
and
comprehensive income
for the three months ended March 31, 2012 and 2011, and cash flows and statements of changes in
stockholders equity for the three months ended March 31, 2012 and 2011. The statements should be read in conjunction
with Notes to Consolidated Financial Statements included in the Potomac Bancshares, Inc. annual report for the year ended
December 31, 2011. The results of operations for the three month period ended March 31, 2012 are not necessarily indicative
of the results to be expected for the full year.
|
|
|
The consolidated
financial statements of Potomac Bancshares, Inc. (the company) and its
wholly-owned subsidiary, Bank of Charles Town (the bank), include the
accounts of both companies. All material inter-company balances and
transactions have been eliminated in consolidation.
|
|
|
Certain
reclassifications have been made to prior period amounts to conform to the
current year presentation.
|
|
|
In preparing these
financial statements, the company has evaluated events and transactions
for potential recognition or disclosure through the date the financial
statements were issued.
|
|
2.
|
Stock-Based
Compensation
|
|
|
The 2003 Stock
Incentive Plan was approved by stockholders on May 13, 2003, which
authorized up to 183,600 shares of common stock to be used in the granting
of incentive options to employees and directors. On April 24, 2007, the
stockholders approved an additional 250,000 shares of common stock to be
used in the granting of incentive options to employees and directors. This
is the first and only stock incentive plan adopted by the company. Under
the plan, the option price cannot be less than the fair market value of
the stock on the date granted. An options maximum term is ten years from
the date of grant. Employee options granted under the plan are subject to
a five year vesting schedule. Director options immediately
vest.
|
|
|
Incremental
stock-based compensation expense recognized for the three month periods
ending March 31, 2012 and 2011 was $1 thousand and $4 thousand,
respectively.
|
|
|
Stock option
compensation expense is the estimated fair value of options granted
amortized on a straight-line basis over the requisite service period for
each separately vesting portion of the award. Fair value is estimated
using the Black-Scholes option-pricing model. There were no options
granted during the first quarter of 2012 and 2011.
|
|
|
Stock option plan
activity for the three months ended March 31, 2012 is summarized
below:
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
Remaining
|
|
|
|
|
|
|
|
|
|
Average
|
|
Contractual
|
|
Aggregate
|
|
|
|
|
|
|
Exercise
|
|
Life
|
|
Intrinsic
|
|
|
|
Shares
|
|
|
Price
|
|
(in years)
|
|
Value
|
|
Options outstanding,
January 1, 2012
|
|
119 908
|
|
|
$
|
14.76
|
|
|
|
|
|
|
Granted
|
|
- -
|
|
|
|
- -
|
|
|
|
|
|
|
Exercised
|
|
- -
|
|
|
|
- -
|
|
|
|
|
|
|
Canceled or expired
|
|
(8 180
|
)
|
|
|
14.54
|
|
|
|
|
|
|
Options outstanding, March
31, 2012
|
|
111 728
|
|
|
|
14.77
|
|
3
|
|
$
|
- -
|
|
Options exercisable, March 31,
2012
|
|
111 728
|
|
|
|
14.77
|
|
3
|
|
$
|
- -
|
|
The aggregate intrinsic value of a stock
option in the table above represents the total pre-tax intrinsic value
(the amount by which the current market value of the underlying stock
exceeds the exercise price of the option) that would have been received by
the option holders had all option holders exercised their options on March
31, 2012. The aggregate intrinsic values change based on changes in the
market value of the companys stock.
|
|
|
|
As of March 31, 2012 there was
$0 of total unrecognized compensation expense related to nonvested stock
options.
|
8
3.
|
Securities
|
|
|
The amortized cost and
fair value of securities available for sale as of March 31, 2012 and
December 31, 2011 (in thousands) are as follows:
|
|
|
|
March 31, 2012
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
|
Fair
|
|
|
Cost
|
|
Gains
|
|
(Losses)
|
|
|
Value
|
Obligations of U.S.
Government
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sponsored
agencies
|
|
$
|
31 409
|
|
$
|
278
|
|
$
|
(29
|
)
|
|
$
|
31 658
|
State and municipal obligations
|
|
|
6 446
|
|
|
245
|
|
|
- -
|
|
|
|
6 691
|
Equity
securities
|
|
|
1 099
|
|
|
- -
|
|
|
(247
|
)
|
|
|
852
|
|
|
$
|
38 954
|
|
$
|
523
|
|
$
|
(276
|
)
|
|
$
|
39 201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
Unrealized
|
|
Unrealized
|
|
|
Fair
|
|
|
Cost
|
|
Gains
|
|
(Losses)
|
|
|
Value
|
Obligations of U.S.
Government
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sponsored
agencies
|
|
$
|
34 475
|
|
$
|
357
|
|
$
|
(9
|
)
|
|
$
|
34 823
|
State and municipal obligations
|
|
|
6 450
|
|
|
265
|
|
|
- -
|
|
|
|
6 715
|
Equity
securities
|
|
|
1 099
|
|
|
- -
|
|
|
(306
|
)
|
|
|
793
|
|
|
$
|
42 024
|
|
$
|
622
|
|
$
|
(315
|
)
|
|
$
|
42 331
|
|
The primary purpose of
the investment portfolio is to generate income and meet liquidity needs of
the company through readily saleable financial instruments. The portfolio
is made up of fixed rate bonds, whose prices move inversely with rates. At
the end of any accounting period, the investment portfolio has unrealized
gains and losses. The company monitors the portfolio, which is subject to
liquidity needs, market rate changes and credit risk changes, to see if
adjustments are needed. The primary concern in a loss situation is the
credit quality of the business behind the instrument.
There are five debt securities
in the consolidated portfolio that has a loss at March 31, 2012. The
primary cause of the temporary impairments in the companys investments in
debt securities was fluctuations in interest rates. Because the company
intends to hold these investments in debt securities to maturity and it is
more likely than not that the company will not be required to sell these
investments before a recovery of unrealized losses, the company does not
consider these investments to be other-than-temporarily impaired at March
31, 2012 and no impairment has been recognized.
|
|
|
There are three equity
security investments in the companys portfolio with losses at March 31,
2012. The company considers these investments to be temporarily impaired
at March 31, 2012 and is recognizing no impairment. These are community
bank stock related holdings that the company has the ability and intent to
hold until recovery.
|
|
|
|
U.S. Government
sponsored agencies include the Federal National Mortgage Association and
the Federal Home Loan Mortgage Corporation debt securities with a fair
value of $19.3 million as of March 31, 2012 and $25.3 million as of
December 31, 2011.
|
|
|
|
The following table
summarizes the fair value and gross unrealized losses for securities
aggregated by investment category and length of time that individual
securities have been in a continuous gross unrealized loss position as of
March 31, 2012 and December 31, 2011 (in thousands).
|
|
|
March 31, 2012
|
|
|
|
Less than 12 months
|
|
|
More than 12 months
|
|
|
Total
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
Fair Value
|
|
Losses
|
|
|
Fair Value
|
|
Losses
|
|
|
Fair Value
|
|
Losses
|
|
Obligations of U.S.
Government
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sponsored
agencies
|
|
$
|
7 957
|
|
$
|
(29
|
)
|
|
$
|
- -
|
|
$
|
- -
|
|
|
$
|
7 957
|
|
$
|
(29
|
)
|
Equity securities
|
|
|
-
-
|
|
|
-
-
|
|
|
|
852
|
|
|
(247
|
)
|
|
|
852
|
|
|
(247
|
)
|
Total
|
|
$
|
7 957
|
|
$
|
(29
|
)
|
|
$
|
852
|
|
$
|
(247
|
)
|
|
$
|
8 809
|
|
$
|
(276
|
)
|
9
3.
|
Securities
(Continued)
|
|
|
|
|
December 31, 2011
|
|
|
|
Less than 12 months
|
|
|
More than 12 months
|
|
|
Total
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
Fair Value
|
|
Losses
|
|
|
Fair Value
|
|
Losses
|
|
|
Fair Value
|
|
Losses
|
|
Obligations of U.S.
Government
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sponsored
agencies
|
|
$
|
5 023
|
|
$
|
(9
|
)
|
|
$
|
- -
|
|
$
|
- -
|
|
|
$
|
5 023
|
|
$
|
(9
|
)
|
Equity securities
|
|
|
-
-
|
|
|
-
-
|
|
|
|
793
|
|
|
(306
|
)
|
|
|
793
|
|
|
(306
|
)
|
Total
|
|
$
|
5 023
|
|
$
|
(9
|
)
|
|
$
|
793
|
|
$
|
(306
|
)
|
|
$
|
5 816
|
|
$
|
(315
|
)
|
|
The companys investment in
Federal Home Loan Bank (FHLB) stock totaled $789 thousand at March 31,
2012. FHLB stock is generally viewed as a long-term investment and as a
restricted investment security, which is carried at cost, because there is
no market for the stock, other than the FHLBs or member institutions.
Therefore, when evaluating FHLB stock for impairment, its value is based
on the ultimate recoverability of the par value rather than by recognizing
temporary declines in value. The company does not consider this investment
to be other-than-temporarily impaired at March 31, 2012 and no impairment
has been recognized. FHLB stock is shown as a separate line item on the
balance sheet and is not a part of the available for sale securities
portfolio.
|
|
|
At March 31, 2012 and December
31, 2011, securities with carrying values of approximately $12.7 million
and $12.8 million, respectively, were pledged to secure public deposits,
securities sold under agreements to repurchase, other borrowings, and for
other purposes as required or permitted by law.
|
|
4.
|
Loans
|
|
|
The loan portfolio, stated at
face amount, is composed of the following:
|
|
|
March 31,
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
|
|
(in
thousands)
|
Commercial non real
estate
|
|
|
|
|
|
|
Commercial and
industrial
|
|
$
|
7 618
|
|
$
|
8 361
|
Commercial real
estate
|
|
|
|
|
|
|
Owner
occupied
|
|
|
60 758
|
|
|
61 086
|
Non-owner
occupied
|
|
|
17 274
|
|
|
15 796
|
Construction
|
|
|
|
|
|
|
Residential
|
|
|
2 306
|
|
|
2 492
|
Commercial
|
|
|
13 843
|
|
|
16 687
|
Real Estate
|
|
|
|
|
|
|
Farmland
|
|
|
561
|
|
|
598
|
Residential
|
|
|
|
|
|
|
Revolving open
end
|
|
|
4 628
|
|
|
5 015
|
1 to 4 family
first liens
|
|
|
81 969
|
|
|
80 311
|
1
to 4 family junior liens
|
|
|
7 189
|
|
|
7 530
|
5 or more
family
|
|
|
3 065
|
|
|
3 088
|
Consumer loans
|
|
|
|
|
|
|
Titled
vehicles
|
|
|
2 488
|
|
|
2 650
|
Deposit
accounts
|
|
|
584
|
|
|
617
|
All other consumer
loans
|
|
|
2 884
|
|
|
2 898
|
All other loans
|
|
|
79
|
|
|
116
|
Total
loans
|
|
|
205 246
|
|
|
207 245
|
Less:
allowance for loan losses
|
|
|
4
401
|
|
|
4
484
|
|
|
|
$
|
200 845
|
|
$
|
202 761
|
10
4.
|
Loans
(Continued)
|
|
|
The FHLB of Pittsburgh
has a blanket lien on all the companys loans except those loans
specifically pledged to the Federal Reserve and removed from the FHLB
lien. Currently, the FHLB lien is securing an advance to the company in
the amount of $1.2 million and letters of credit issued on behalf of a
customer of the company in the amount of $11 million.
|
|
5.
|
Allowance for Loan
Losses
|
|
|
The following is a
summary of transactions (in thousands) in the allowance for loan
losses:
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2011
|
|
Balance at beginning of
period
|
|
$
|
4 484
|
|
|
$
|
5 012
|
|
|
$
|
5 012
|
|
|
Provision charged
to operating expense
|
|
|
309
|
|
|
|
3 343
|
|
|
|
423
|
|
Recoveries added to
the allowance
|
|
|
66
|
|
|
|
183
|
|
|
|
52
|
|
Loan losses charged
to the allowance
|
|
|
(458
|
)
|
|
|
(4 054
|
)
|
|
|
(642
|
)
|
|
Balance at end of
period
|
|
$
|
4 401
|
|
|
$
|
4 484
|
|
|
$
|
4 845
|
|
Allowance for Loan Losses By
Segment
March 31, 2012
(in thousands)
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
Commercial
|
|
|
Real
Estate
|
|
|
Construction
|
|
|
Consumer
|
|
|
Residential
|
|
Other
|
|
Unallocated
|
|
Total
|
|
Beginning balance
|
|
$
|
17
|
|
|
$
|
156
|
|
|
$
|
882
|
|
|
$
|
506
|
|
|
$
|
84
|
|
|
$
|
2 839
|
|
|
$
|
- -
|
|
$
|
- -
|
|
$
|
4 484
|
|
Charge-offs
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
(354
|
)
|
|
|
(54
|
)
|
|
|
(50
|
)
|
|
|
-
-
|
|
|
-
-
|
|
|
(458
|
)
|
Recoveries
|
|
|
- -
|
|
|
|
6
|
|
|
|
2
|
|
|
|
2
|
|
|
|
54
|
|
|
|
2
|
|
|
|
- -
|
|
|
- -
|
|
|
66
|
|
Provision
|
|
|
(1
|
)
|
|
|
(6
|
)
|
|
|
(44
|
)
|
|
|
325
|
|
|
|
(19
|
)
|
|
|
54
|
|
|
|
- -
|
|
|
- -
|
|
|
309
|
|
|
Ending balance
|
|
$
|
16
|
|
|
$
|
156
|
|
|
$
|
840
|
|
|
$
|
479
|
|
|
$
|
65
|
|
|
$
|
2 845
|
|
|
$
|
- -
|
|
$
|
- -
|
|
$
|
4 401
|
|
|
Individually evaluated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment
|
|
$
|
- -
|
|
|
$
|
159
|
|
|
$
|
100
|
|
|
$
|
125
|
|
|
$
|
33
|
|
|
$
|
510
|
|
|
$
|
- -
|
|
$
|
- -
|
|
$
|
927
|
|
Collectively evaluated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment
|
|
|
16
|
|
|
|
(3
|
)
|
|
|
740
|
|
|
|
354
|
|
|
|
32
|
|
|
|
2 335
|
|
|
|
- -
|
|
|
- -
|
|
|
3 474
|
|
|
|
$
|
16
|
|
|
$
|
156
|
|
|
$
|
840
|
|
|
$
|
479
|
|
|
$
|
65
|
|
|
$
|
2 845
|
|
|
$
|
- -
|
|
$
|
- -
|
|
$
|
4 401
|
|
|
Financing receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
561
|
|
|
$
|
7 618
|
|
|
$
|
78 032
|
|
|
$
|
16 149
|
|
|
$
|
5 956
|
|
|
$
|
96 851
|
|
|
$
|
79
|
|
$
|
- -
|
|
$
|
205 246
|
|
|
Ending balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment
|
|
$
|
-
-
|
|
|
$
|
159
|
|
|
$
|
6
698
|
|
|
$
|
3
705
|
|
|
$
|
101
|
|
|
$
|
6
485
|
|
|
$
|
-
-
|
|
$
|
-
-
|
|
$
|
17
148
|
|
Collectively evaluated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for impairment
|
|
|
561
|
|
|
|
7 459
|
|
|
|
71 334
|
|
|
|
12 444
|
|
|
|
5 855
|
|
|
|
90 366
|
|
|
79
|
|
|
- -
|
|
|
188 098
|
|
Total
|
|
$
|
561
|
|
|
$
|
7 618
|
|
|
$
|
78 032
|
|
|
$
|
16 149
|
|
|
$
|
5 956
|
|
|
$
|
96 851
|
|
|
$
|
79
|
|
$
|
- -
|
|
$
|
205 246
|
|
11
5.
|
Allowance for Loan Losses
(Continued)
|
|
|
Allowance for Loan Losses By
Segment
December 31, 2011
(in thousands)
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
Commercial
|
|
|
Real
Estate
|
|
|
Construction
|
|
|
Consumer
|
|
|
Residential
|
|
|
Other
|
|
|
Unallocated
|
|
|
Total
|
|
Beginning
balance
|
|
$
|
166
|
|
|
$
|
239
|
|
|
$
|
859
|
|
|
$
|
2 022
|
|
|
$
|
20
|
|
|
$
|
1 691
|
|
|
$
|
1
|
|
|
$
|
14
|
|
|
$
|
5 012
|
|
Charge-offs
|
|
|
- -
|
|
|
|
(20
|
)
|
|
|
(653
|
)
|
|
|
(1 673
|
)
|
|
|
(172
|
)
|
|
|
(1 536
|
)
|
|
|
- -
|
|
|
|
- -
|
|
|
|
(4 054
|
)
|
Recoveries
|
|
|
- -
|
|
|
|
30
|
|
|
|
6
|
|
|
|
5
|
|
|
|
131
|
|
|
|
11
|
|
|
|
- -
|
|
|
|
- -
|
|
|
|
183
|
|
Provision
|
|
|
(149
|
)
|
|
|
(93
|
)
|
|
|
670
|
|
|
|
152
|
|
|
|
105
|
|
|
|
2
673
|
|
|
|
(1
|
)
|
|
|
(14
|
)
|
|
|
3
343
|
|
|
Ending balance
|
|
$
|
17
|
|
|
$
|
156
|
|
|
$
|
882
|
|
|
$
|
506
|
|
|
$
|
84
|
|
|
$
|
2 839
|
|
|
$
|
- -
|
|
|
$
|
- -
|
|
|
$
|
4 484
|
|
|
Individually
evaluated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for
impairment
|
|
$
|
- -
|
|
|
$
|
161
|
|
|
$
|
122
|
|
|
$
|
102
|
|
|
$
|
39
|
|
|
$
|
349
|
|
|
$
|
- -
|
|
|
$
|
- -
|
|
|
$
|
773
|
|
Collectively evaluated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for
impairment
|
|
|
17
|
|
|
|
(5
|
)
|
|
|
760
|
|
|
|
404
|
|
|
|
45
|
|
|
|
2
490
|
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
3
711
|
|
|
|
$
|
17
|
|
|
$
|
156
|
|
|
$
|
882
|
|
|
$
|
506
|
|
|
$
|
84
|
|
|
$
|
2 839
|
|
|
$
|
- -
|
|
|
$
|
- -
|
|
|
$
|
4 484
|
|
|
Financing receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
598
|
|
|
$
|
8 361
|
|
|
$
|
76 882
|
|
|
$
|
19 179
|
|
|
$
|
6 165
|
|
|
$
|
95 944
|
|
|
$
|
116
|
|
|
$
|
- -
|
|
|
$
|
207 245
|
|
|
Ending balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for
impairment
|
|
$
|
- -
|
|
|
$
|
161
|
|
|
$
|
6 995
|
|
|
$
|
5 250
|
|
|
$
|
109
|
|
|
$
|
5 662
|
|
|
$
|
- -
|
|
|
$
|
- -
|
|
|
$
|
18 177
|
|
Collectively
evaluated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for
impairment
|
|
|
598
|
|
|
|
8 200
|
|
|
|
69 887
|
|
|
|
13 929
|
|
|
|
6 056
|
|
|
|
90 282
|
|
|
|
116
|
|
|
|
- -
|
|
|
|
189 068
|
|
Total
|
|
$
|
598
|
|
|
$
|
8
361
|
|
|
$
|
76 882
|
|
|
$
|
19
179
|
|
|
$
|
6
165
|
|
|
$
|
95
944
|
|
|
$
|
116
|
|
|
$
|
-
-
|
|
|
$
|
207 245
|
|
Credit Quality Information By
Class
March 31, 2012
(in thousands)
|
|
|
|
|
Special
|
|
Sub-
|
|
|
|
|
|
|
Internal Risk Rating Grades
|
|
|
Pass
|
|
Mention
|
|
Standard
|
|
Doubtful
|
|
Loss
|
Commercial non real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
$
|
5 566
|
|
$
|
1 893
|
|
$
|
159
|
|
$
|
- -
|
|
$
|
- -
|
Commercial real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner
occupied
|
|
|
39 066
|
|
|
12 405
|
|
|
9 287
|
|
|
- -
|
|
|
- -
|
Non-owner
occupied
|
|
|
16 085
|
|
|
608
|
|
|
581
|
|
|
- -
|
|
|
- -
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
2 077
|
|
|
- -
|
|
|
229
|
|
|
- -
|
|
|
- -
|
Commercial
|
|
|
8 668
|
|
|
1 861
|
|
|
3 220
|
|
|
94
|
|
|
- -
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
561
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titled
vehicles
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
Deposit
accounts
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
All
other
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving open
end
|
|
|
N/A
|
|
|
1 269
|
|
|
285
|
|
|
N/A
|
|
|
N/A
|
1-4 family
first liens
|
|
|
N/A
|
|
|
1 630
|
|
|
3 214
|
|
|
58
|
|
|
- -
|
1-4 family
junior liens
|
|
|
N/A
|
|
|
- -
|
|
|
265
|
|
|
- -
|
|
|
- -
|
5 or more
family
|
|
|
N/A
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
Totals
|
|
$
|
72 023
|
|
$
|
19 666
|
|
$
|
17 240
|
|
$
|
152
|
|
$
|
- -
|
|
As a matter of practice, we do
not risk rate consumer or residential mortgage loans. Any of these loans
listed in the risk rating table above are associated with commercial loans
that have been risk rated as per our policy. When a loan is designated as
a loss, the loss portion is charged off, and if applicable the remaining
balance classified as substandard.
|
|
|
12
5.
|
Allowance for Loan Losses
(Continued)
|
|
|
Credit Quality Information By
Class
March 31, 2012
(in thousands)
Non Risk Rated Loans
|
|
|
Performing
|
|
Nonperforming
|
Consumer non real estate
|
|
|
|
|
|
|
Titled
vehicles
|
|
$
|
2 484
|
|
$
|
4
|
Deposit
accounts
|
|
|
584
|
|
|
- -
|
All other
|
|
|
2 882
|
|
|
2
|
Residential
|
|
|
|
|
|
|
Revolving open
end
|
|
|
3 059
|
|
|
15
|
1-4 family first
liens
|
|
|
75 859
|
|
|
1 208
|
1-4 Family junior
liens
|
|
|
6 924
|
|
|
- -
|
5 or more
family
|
|
|
3 065
|
|
|
- -
|
All other
|
|
|
79
|
|
|
-
-
|
Totals
|
|
$
|
94 936
|
|
$
|
1 229
|
Credit Quality Information By
Class
December 31, 2011
(in thousands)
|
|
|
|
|
Special
|
|
Sub-
|
|
|
|
|
|
|
Internal Risk Rating Grades
|
|
|
Pass
|
|
Mention
|
|
Standard
|
|
Doubtful
|
|
Loss
|
Commercial non real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
$
|
8 094
|
|
$
|
105
|
|
$
|
162
|
|
$
|
- -
|
|
$
|
- -
|
Commercial real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner
occupied
|
|
|
39 405
|
|
|
12 768
|
|
|
8 817
|
|
|
96
|
|
|
- -
|
Non-owner
occupied
|
|
|
14 824
|
|
|
333
|
|
|
583
|
|
|
56
|
|
|
- -
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
1 986
|
|
|
- -
|
|
|
506
|
|
|
- -
|
|
|
- -
|
Commercial
|
|
|
10 077
|
|
|
2 123
|
|
|
4 397
|
|
|
90
|
|
|
- -
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
598
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titled
vehicles
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
Deposit
accounts
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
All other
|
|
|
N/A
|
|
|
25
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving open
end
|
|
|
N/A
|
|
|
1 276
|
|
|
224
|
|
|
N/A
|
|
|
N/A
|
1-4 family first
liens
|
|
|
N/A
|
|
|
2 894
|
|
|
2 351
|
|
|
N/A
|
|
|
N/A
|
1-4 family junior
liens
|
|
|
N/A
|
|
|
172
|
|
|
94
|
|
|
N/A
|
|
|
N/A
|
5 or more
family
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
Totals
|
|
$
|
74 984
|
|
$
|
19 696
|
|
$
|
17
134
|
|
$
|
242
|
|
$
|
-
-
|
Credit Quality Information By
Class
December 31, 2011
(in thousands)
Non Risk Rated Loans
|
|
|
Performing
|
|
Nonperforming
|
Consumer non real estate
|
|
|
|
|
|
|
Titled
vehicles
|
|
$
|
2 645
|
|
$
|
5
|
Deposit
accounts
|
|
|
617
|
|
|
- -
|
All other
|
|
|
2 870
|
|
|
3
|
Residential
|
|
|
|
|
|
|
Revolving open
end
|
|
|
3 498
|
|
|
17
|
1-4 family first
liens
|
|
|
74 227
|
|
|
839
|
1-4 Family junior
liens
|
|
|
7 264
|
|
|
- -
|
5 or more
family
|
|
|
3 088
|
|
|
- -
|
All other
|
|
|
116
|
|
|
-
-
|
Totals
|
|
$
|
94 325
|
|
$
|
864
|
13
5.
|
Allowance for Loan Losses
(Continued)
|
|
|
Impaired Loans By Class
March
31, 2012
(in thousands)
With no related
allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
Interest
|
|
|
Unpaid
|
|
Recorded
|
|
Related
|
|
Recorded
|
|
Income
|
|
|
Principal
|
|
Investment
|
|
Allowance
|
|
Investment
|
|
Recognized
|
Commercial non real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
$
|
- -
|
|
$
|
- -
|
|
$
|
N/A
|
|
$
|
48
|
|
$
|
- -
|
Commercial real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner
occupied
|
|
|
4 291
|
|
|
4 089
|
|
|
N/A
|
|
|
3 734
|
|
|
39
|
Non-owner
occupied
|
|
|
584
|
|
|
582
|
|
|
N/A
|
|
|
233
|
|
|
9
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
110
|
|
|
110
|
|
|
N/A
|
|
|
584
|
|
|
1
|
Commercial
|
|
|
3 175
|
|
|
2 810
|
|
|
N/A
|
|
|
3 389
|
|
|
4
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
- -
|
|
|
- -
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving open
end
|
|
|
285
|
|
|
285
|
|
|
N/A
|
|
|
217
|
|
|
5
|
1 to 4 family
first liens
|
|
|
516
|
|
|
438
|
|
|
N/A
|
|
|
1 096
|
|
|
3
|
1
to 4 family junior liens
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
142
|
|
|
- -
|
5 or more
family
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
- -
|
|
|
- -
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titled
vehicles
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
4
|
|
|
- -
|
Deposit
accounts
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
- -
|
|
|
- -
|
All other
consumer
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
- -
|
|
|
- -
|
All other
|
|
|
-
-
|
|
|
-
-
|
|
|
N/A
|
|
|
-
-
|
|
|
-
-
|
|
|
$
|
8 961
|
|
$
|
8 314
|
|
$
|
N/A
|
|
$
|
9 447
|
|
$
|
61
|
|
With an allowance
recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
Interest
|
|
|
Unpaid
|
|
Recorded
|
|
Related
|
|
Recorded
|
|
Income
|
|
|
Principal
|
|
Investment
|
|
Allowance
|
|
Investment
|
|
Recognized
|
Commercial non real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
$
|
162
|
|
$
|
159
|
|
$
|
159
|
|
$
|
164
|
|
$
|
1
|
Commercial real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner
occupied
|
|
|
2 042
|
|
|
2 027
|
|
|
100
|
|
|
4 177
|
|
|
30
|
Non-owner
occupied
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
162
|
|
|
- -
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
121
|
|
|
119
|
|
|
29
|
|
|
450
|
|
|
- -
|
Commercial
|
|
|
669
|
|
|
666
|
|
|
96
|
|
|
1 596
|
|
|
11
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving open
end
|
|
|
1 272
|
|
|
1 269
|
|
|
33
|
|
|
585
|
|
|
16
|
1 to 4 family
first liens
|
|
|
3 612
|
|
|
3 584
|
|
|
435
|
|
|
2 780
|
|
|
33
|
1
to 4 family junior liens
|
|
|
915
|
|
|
909
|
|
|
42
|
|
|
480
|
|
|
18
|
5 or more
family
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titled
vehicles
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
Deposit
accounts
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
All other
consumer
|
|
|
102
|
|
|
101
|
|
|
33
|
|
|
57
|
|
|
2
|
All other
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
$
|
8 895
|
|
$
|
8 834
|
|
$
|
927
|
|
$
|
10 451
|
|
$
|
111
|
|
Totals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial non real estate
|
|
$
|
162
|
|
$
|
159
|
|
$
|
159
|
|
$
|
212
|
|
$
|
1
|
Commercial real
estate
|
|
|
6 917
|
|
|
6 698
|
|
|
100
|
|
|
8 306
|
|
|
78
|
Construction
|
|
|
4 075
|
|
|
3 705
|
|
|
125
|
|
|
6 019
|
|
|
16
|
Real estate
farmland
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
Residential
|
|
|
6 600
|
|
|
6 485
|
|
|
510
|
|
|
5 300
|
|
|
75
|
Consumer
|
|
|
102
|
|
|
101
|
|
|
33
|
|
|
61
|
|
|
2
|
All other
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
$
|
17 856
|
|
$
|
17 148
|
|
$
|
927
|
|
$
|
19 898
|
|
$
|
172
|
14
5.
|
Allowance for Loan Losses
(Continued)
|
|
|
Impaired Loans By Class
December
31, 2011
(in thousands)
With no related allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
Interest
|
|
|
Unpaid
|
|
Recorded
|
|
Related
|
|
Recorded
|
|
Income
|
|
|
Principal
|
|
Investment
|
|
Allowance
|
|
Investment
|
|
Recognized
|
Commercial non real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
$
|
- -
|
|
$
|
- -
|
|
$
|
N/A
|
|
$
|
67
|
|
$
|
- -
|
Commercial real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner
occupied
|
|
|
4 622
|
|
|
4 440
|
|
|
N/A
|
|
|
3 752
|
|
|
217
|
Non-owner
occupied
|
|
|
587
|
|
|
583
|
|
|
N/A
|
|
|
132
|
|
|
11
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
512
|
|
|
506
|
|
|
N/A
|
|
|
799
|
|
|
14
|
Commercial
|
|
|
4 106
|
|
|
3 976
|
|
|
N/A
|
|
|
3 353
|
|
|
168
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
- -
|
|
|
- -
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving open
end
|
|
|
225
|
|
|
224
|
|
|
N/A
|
|
|
160
|
|
|
15
|
1 to 4 family
first liens
|
|
|
948
|
|
|
870
|
|
|
N/A
|
|
|
1 257
|
|
|
26
|
1
to 4 family junior liens
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
177
|
|
|
- -
|
5 or more
family
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
- -
|
|
|
- -
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titled
vehicles
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
- -
|
|
|
- -
|
Deposit
accounts
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
- -
|
|
|
- -
|
All other
consumer
|
|
|
- -
|
|
|
- -
|
|
|
N/A
|
|
|
4
|
|
|
- -
|
All other
|
|
|
-
-
|
|
|
-
-
|
|
|
N/A
|
|
|
-
-
|
|
|
-
-
|
|
|
$
|
11 000
|
|
$
|
10 599
|
|
$
|
N/A
|
|
$
|
9 701
|
|
$
|
451
|
|
With an allowance
recorded
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
Interest
|
|
|
Unpaid
|
|
Recorded
|
|
Related
|
|
Recorded
|
|
Income
|
|
|
Principal
|
|
Investment
|
|
Allowance
|
|
Investment
|
|
Recognized
|
Commercial non real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
$
|
163
|
|
$
|
161
|
|
$
|
161
|
|
$
|
187
|
|
$
|
8
|
Commercial real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner
occupied
|
|
|
1 989
|
|
|
1 972
|
|
|
122
|
|
|
4 800
|
|
|
93
|
Non-owner
occupied
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
163
|
|
|
- -
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
979
|
|
|
- -
|
Commercial
|
|
|
771
|
|
|
768
|
|
|
102
|
|
|
2 443
|
|
|
30
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
108
|
|
|
- -
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving open
end
|
|
|
1 277
|
|
|
1 274
|
|
|
31
|
|
|
331
|
|
|
65
|
1 to 4 family
first liens
|
|
|
2 550
|
|
|
2 540
|
|
|
299
|
|
|
2 342
|
|
|
102
|
1
to 4 family junior liens
|
|
|
758
|
|
|
754
|
|
|
19
|
|
|
311
|
|
|
28
|
5 or more
family
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titled
vehicles
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
Deposit
accounts
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
All other
consumer
|
|
|
109
|
|
|
109
|
|
|
39
|
|
|
37
|
|
|
3
|
All other
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
$
|
7 617
|
|
$
|
7 578
|
|
$
|
773
|
|
$
|
11 701
|
|
$
|
329
|
|
Totals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial non real estate
|
|
$
|
163
|
|
$
|
161
|
|
$
|
161
|
|
$
|
254
|
|
$
|
8
|
Commercial real
estate
|
|
|
7 198
|
|
|
6 995
|
|
|
122
|
|
|
8 847
|
|
|
321
|
Construction
|
|
|
5 389
|
|
|
5 250
|
|
|
102
|
|
|
7 574
|
|
|
212
|
Real estate
farmland
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
108
|
|
|
- -
|
Residential
|
|
|
5 758
|
|
|
5 662
|
|
|
349
|
|
|
4 578
|
|
|
236
|
Consumer
|
|
|
109
|
|
|
109
|
|
|
39
|
|
|
41
|
|
|
3
|
All other
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
$
|
18 617
|
|
$
|
18 177
|
|
$
|
773
|
|
$
|
21 402
|
|
$
|
780
|
15
5.
|
Allowance for Loan Losses
(Continued)
|
|
|
Modifications
(in thousands except number of contracts)
For the Three Months
Ended
March 31, 2012
|
|
|
|
|
Pre-
|
|
Post-
|
|
|
|
|
|
Modification
|
|
Modification
|
|
|
|
Number
|
|
Outstanding
|
|
Outstanding
|
|
|
|
Of
|
|
Recorded
|
|
Recorded
|
|
|
|
Contracts
|
|
Investment
|
|
Investment
|
|
Troubled Debt Restructurings
|
|
|
|
|
|
|
|
|
|
|
|
Commercial non real estate
|
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
-
-
|
|
$
|
-
-
|
|
$
|
-
-
|
|
Commercial real estate
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
Non owner
occupied
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
Construction
|
|
|
|
|
|
|
|
|
|
Residential
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
Commercial
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
Residential
|
|
|
|
|
|
|
|
|
|
Revolving open end 1 to 4
family
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
1
to 4 family first liens
|
|
1
|
|
|
227
|
|
|
226
|
|
1 to 4 family junior
liens
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
5
or more family
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
Titled vehicles
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
Deposit
accounts
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
All other
consumer
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
All
other
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
|
Totals
|
|
1
|
|
$
|
227
|
|
$
|
226
|
For the Three Months
Ended March 31,2012
|
|
|
Number
|
|
Outstanding
|
|
|
|
Of
|
|
Recorded
|
|
|
|
Contracts
|
|
Investment
|
|
Troubled Debt
Restructurings
|
|
|
|
|
|
|
That Subsequently
Defaulted
|
|
|
|
|
|
|
|
|
Commercial non real
estate
|
|
|
|
|
|
|
Commercial and
industrial
|
|
- -
|
|
$
|
- -
|
|
Commercial real
estate
|
|
|
|
|
|
|
Owner
occupied
|
|
- -
|
|
|
- -
|
|
Non owner
occupied
|
|
- -
|
|
|
- -
|
|
Construction
|
|
|
|
|
|
|
Residential
|
|
- -
|
|
|
- -
|
|
Commercial
|
|
- -
|
|
|
- -
|
|
Real Estate
|
|
|
|
|
|
|
Farmland
|
|
- -
|
|
|
- -
|
|
Residential
|
|
|
|
|
|
|
Revolving open
end 1 to 4 family
|
|
- -
|
|
|
- -
|
|
1 to 4 family
first liens
|
|
5
|
|
|
715
|
|
1
to 4 family junior liens
|
|
3
|
|
|
110
|
|
5 or more
family
|
|
- -
|
|
|
- -
|
|
Consumer
|
|
|
|
|
|
|
Titled
vehicles
|
|
- -
|
|
|
- -
|
|
Deposit
accounts
|
|
- -
|
|
|
- -
|
|
All other
consumer
|
|
- -
|
|
|
- -
|
|
All other
|
|
-
-
|
|
|
-
-
|
|
Totals
|
|
8
|
|
$
|
825
|
|
Total Troubled Debt
Restructurings as of March 31, 2012 were $12.0 million.
|
|
|
16
5.
|
Allowance for Loan Losses
(Continued)
|
|
|
Nonaccrual and Past Due Loans By
Class
March 31, 2012
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90 Days
|
|
|
|
|
|
30-59
|
|
60-89
|
|
90 Days
|
|
|
|
|
|
|
|
|
|
|
Past Due
|
|
|
|
|
|
Days
|
|
Days
|
|
or more
|
|
Total
|
|
|
|
|
Total
|
|
Still
|
|
Non-
|
|
|
Past
Due
|
|
Past
Due
|
|
Past
Due
|
|
Past
Due
|
|
Current
|
|
Loans
|
|
Accruing
|
|
Accrual
|
Commercial non real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
$
|
79
|
|
$
|
- -
|
|
$
|
- -
|
|
$
|
79
|
|
$
|
7 539
|
|
$
|
7 618
|
|
$
|
- -
|
|
$
|
91
|
Commercial real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner
occupied
|
|
|
224
|
|
|
- -
|
|
|
1 244
|
|
|
1 468
|
|
|
59 290
|
|
|
60 758
|
|
|
- -
|
|
|
1 333
|
Non
owner occupied
|
|
|
- -
|
|
|
330
|
|
|
179
|
|
|
509
|
|
|
16 765
|
|
|
17 274
|
|
|
- -
|
|
|
179
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
2 306
|
|
|
2 306
|
|
|
- -
|
|
|
119
|
Commercial
|
|
|
480
|
|
|
231
|
|
|
2 216
|
|
|
2 927
|
|
|
10 916
|
|
|
13 843
|
|
|
- -
|
|
|
2 566
|
Real Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
561
|
|
|
561
|
|
|
- -
|
|
|
- -
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving open end
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
4 628
|
|
|
4 628
|
|
|
- -
|
|
|
16
|
1 to 4
family first liens
|
|
|
301
|
|
|
217
|
|
|
522
|
|
|
1 040
|
|
|
80 929
|
|
|
81 969
|
|
|
- -
|
|
|
1 998
|
1 to 4
family junior liens
|
|
|
167
|
|
|
172
|
|
|
- -
|
|
|
339
|
|
|
6 850
|
|
|
7 189
|
|
|
- -
|
|
|
- -
|
5 or
more family
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
3 065
|
|
|
3 065
|
|
|
- -
|
|
|
- -
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titled
vehicles
|
|
|
5
|
|
|
- -
|
|
|
- -
|
|
|
5
|
|
|
2 483
|
|
|
2 488
|
|
|
- -
|
|
|
4
|
Deposit
accounts
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
584
|
|
|
584
|
|
|
- -
|
|
|
- -
|
All
other consumer
|
|
|
3
|
|
|
- -
|
|
|
2
|
|
|
5
|
|
|
2 879
|
|
|
2 884
|
|
|
- -
|
|
|
2
|
All other
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
79
|
|
|
79
|
|
|
- -
|
|
|
- -
|
Totals
|
|
$
|
1 259
|
|
$
|
950
|
|
$
|
4 163
|
|
$
|
6 372
|
|
$
|
198 874
|
|
$
|
205 246
|
|
$
|
- -
|
|
$
|
6 308
|
|
Percentage to Total Loans
|
|
|
.61%
|
|
|
0.46%
|
|
|
2.03%
|
|
|
3.10%
|
|
|
96.90%
|
|
|
|
|
|
0.00%
|
|
|
3.07%
|
|
Included in the 30
or more days past due loans are non-accrual loans in the amount of $4.9
million. The remaining $1.4 million are in current status.
|
Nonaccrual and Past Due Loans By
Class
December 31, 2011
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90 Days
|
|
|
|
|
|
30-59
|
|
60-89
|
|
90 Days
|
|
|
|
|
|
|
|
|
|
|
Past Due
|
|
|
|
|
|
Days
|
|
Days
|
|
or more
|
|
Total
|
|
|
|
|
Total
|
|
Still
|
|
Non-
|
|
|
Past Due
|
|
Past
Due
|
|
Past Due
|
|
Past Due
|
|
Current
|
|
Loans
|
|
Accruing
|
|
Accrual
|
Commercial non real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
$
|
- -
|
|
$
|
6
|
|
$
|
- -
|
|
$
|
6
|
|
$
|
8 355
|
|
$
|
8 361
|
|
$
|
- -
|
|
$
|
93
|
Commercial real
estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner
occupied
|
|
|
2 376
|
|
|
996
|
|
|
344
|
|
|
3 716
|
|
|
57 370
|
|
|
61 086
|
|
|
- -
|
|
|
1 339
|
Non owner
occupied
|
|
|
- -
|
|
|
- -
|
|
|
179
|
|
|
179
|
|
|
15 617
|
|
|
15 796
|
|
|
- -
|
|
|
179
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
- -
|
|
|
- -
|
|
|
385
|
|
|
385
|
|
|
2 107
|
|
|
2 492
|
|
|
- -
|
|
|
506
|
Commercial
|
|
|
19
|
|
|
44
|
|
|
1 602
|
|
|
1 665
|
|
|
15 022
|
|
|
16 687
|
|
|
143
|
|
|
3 693
|
Real Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farmland
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
598
|
|
|
598
|
|
|
- -
|
|
|
- -
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving open end
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
5 015
|
|
|
5 015
|
|
|
- -
|
|
|
17
|
1 to 4 family first
liens
|
|
|
1 386
|
|
|
139
|
|
|
360
|
|
|
1 885
|
|
|
78 426
|
|
|
80 311
|
|
|
61
|
|
|
1 408
|
1 to 4
family junior liens
|
|
|
176
|
|
|
- -
|
|
|
- -
|
|
|
176
|
|
|
7 354
|
|
|
7 530
|
|
|
- -
|
|
|
- -
|
5 or more
family
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
3 088
|
|
|
3 088
|
|
|
- -
|
|
|
- -
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Titled
vehicles
|
|
|
1
|
|
|
15
|
|
|
- -
|
|
|
16
|
|
|
2 634
|
|
|
2 650
|
|
|
- -
|
|
|
5
|
Deposit
accounts
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
- -
|
|
|
617
|
|
|
617
|
|
|
- -
|
|
|
- -
|
All other
consumer
|
|
|
8
|
|
|
4
|
|
|
3
|
|
|
15
|
|
|
2 883
|
|
|
2 898
|
|
|
- -
|
|
|
3
|
All other
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
-
-
|
|
|
116
|
|
|
116
|
|
|
-
-
|
|
|
-
-
|
Totals
|
|
$
|
3
966
|
|
$
|
1
204
|
|
$
|
2
873
|
|
$
|
8 043
|
|
$
|
199
202
|
|
$
|
207
245
|
|
$
|
204
|
|
$
|
7 243
|
|
Percentage to Total
Loans
|
|
|
1.91%
|
|
|
0.58%
|
|
|
1.39%
|
|
|
3.88%
|
|
|
96.12%
|
|
|
|
|
|
.10%
|
|
|
3.49%
|
17
5.
|
Allowance for Loan Losses
(Continued)
|
|
|
|
Included in the 30 or more days past
due loans are non-accrual loans in the amount of $3.7 million. The
remaining non-accrual loans of $3.5 million are in current status.
The past due policy of the bank is
to report all classes of loans past due in the following categories:
-
30 to 59 days past due (principal or
interest)
-
60 to 89 days past due (principal or
interest)
-
90 days or more past due (principal or
interest)
-
Nonaccrual status.
|
6.
|
Employee Benefit
Plans
|
|
|
Components of net periodic
benefit cost for the pension and postretirement benefit plans are shown
below:
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement Benefits
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
(in thousands)
|
|
(in thousands)
|
|
Components of Net Periodic Benefit
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
-
-
|
|
|
$
|
-
-
|
|
|
$
|
1
|
|
$
|
3
|
|
Interest cost
|
|
|
102
|
|
|
|
100
|
|
|
|
3
|
|
|
9
|
|
Expected return on plan
assets
|
|
|
(119
|
)
|
|
|
(119
|
)
|
|
|
-
-
|
|
|
-
-
|
|
Recognized net actuarial loss
|
|
|
- -
|
|
|
|
38
|
|
|
|
- -
|
|
|
- -
|
|
Amortization of net obligation
at transition
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
|
5
|
|
Amortization of prior service cost
|
|
|
- -
|
|
|
|
- -
|
|
|
|
- -
|
|
|
- -
|
|
Amortization of net
loss
|
|
|
53
|
|
|
|
- -
|
|
|
|
- -
|
|
|
- -
|
|
|
|
Net periodic benefit cost
|
|
$
|
36
|
|
|
$
|
19
|
|
|
$
|
4
|
|
$
|
17
|
|
Employer
Contribution
|
|
|
The
company anticipates the 2012 contribution for the pension plan will
approximate $2 million and has made this payment as of March 31, 2012. The
company has made payments of $4 thousand for the other postretirement
benefit plans for the first three months of 2012 and anticipates remaining
payments for 2012 to total $13 thousand.
The companys defined benefit
pension plan was frozen as of October 31, 2009. Benefits of all existing
participants stopped accruing and no new participants could be admitted to
the plan after that date.
The company sponsors an unfunded
postretirement life insurance plan covering certain retirees with 25 years
of service who are over the age of 60 and an unfunded health care plan for
certain retirees that met certain eligibility requirements. These plans
are not available to future
retirees.
|
18
7.
|
Weighted Average Number of Shares
Outstanding and Earnings Per Share
|
|
|
|
The following shows the weighted
average number of shares used in computing earnings per share and the
effect on weighted average number of shares of diluted potential common
stock. Potential diluted common stock had no effect on March 31, 2012 and
March 31, 2011 earnings per share.
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
March 31, 2012
|
|
March 31, 2011
|
|
|
Average Shares
|
|
Per Share Amount
|
|
Average Shares
|
|
Per Share Amount
|
Basic earnings per
share
|
|
3 390 178
|
|
$
|
.09
|
|
3 390 178
|
|
$
|
.08
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
- -
|
|
|
|
|
- -
|
|
|
|
|
Diluted earnings per
share
|
|
3 390 178
|
|
$
|
.09
|
|
3 390 178
|
|
$
|
.08
|
|
For the quarter ended March 31,
2012, stock options representing 111,728 average shares, and for the
quarter ended March 31, 2011, stock options representing 120,974 average
shares were not included in the calculation of earnings per share as their
effect would have been anti-dilutive.
|
|
8.
|
Recent Accounting
Pronouncements
|
|
|
|
In April 2011, the FASB issued
ASU 2011-03, Transfers and Servicing (Topic 860) Reconsideration of
Effective Control for Repurchase Agreements. The amendments in this ASU
remove from the assessment of effective control (1) the criterion
requiring the transferor to have the ability to repurchase or redeem the
financial assets on substantially the agreed terms, even in the event of
default by the transferee and (2) the collateral maintenance
implementation guidance related to that criterion. The amendments in this
ASU are effective for the first interim or annual period beginning on or
after December 15, 2011. The guidance should be applied prospectively to
transactions or modifications of existing transactions that occur on or
after the effective date. Early adoption is not permitted. The adoption of
the new guidance did not have a material impact on the companys
consolidated financial statements.
|
|
|
In May 2011, the FASB issued ASU
2011-04, Fair Value Measurement (Topic 820) Amendments to Achieve
Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and
IFRSs. This ASU is the result of joint efforts by the FASB and
International Accounting Standards Board (IASB) to develop a single,
converged fair value framework on how (not when) to measure fair value and
what disclosures to provide about fair value measurements. The ASU is
largely consistent with existing fair value measurement principles in U.S.
GAAP (Topic 820), with many of the amendments made to eliminate
unnecessary wording differences between U.S. GAAP and International
Financial Reporting Standards (IFRS). The amendments are effective for
interim and annual periods beginning after December 15, 2011 with
prospective application. Early application is not permitted. The company
has included the required disclosures in its consolidated financial
statements.
|
|
|
In June 2011, the FASB issued ASU
2011-05, Comprehensive Income (Topic 220) Presentation of Comprehensive
Income. The objective of this ASU is to improve the comparability,
consistency and transparency of financial reporting and to increase the
prominence of items reported in other comprehensive income by eliminating
the option to present components of other comprehensive income as part of
the statement of changes in stockholders equity. The amendments require
that all non-owner changes in stockholders equity be presented either in
a single continuous statement of comprehensive income or in two separate
but consecutive statements. The single statement of comprehensive income
should include the components of net income, a total for net income, the
components of other comprehensive income, a total for other comprehensive
income, and a total for comprehensive income. In the two-statement
approach, the first statement should present total net income and its
components followed consecutively by a second statement that should
present all the components of other comprehensive income, a total for
other comprehensive income, and a total for comprehensive income. The
amendments do not change the items that must be reported in other
comprehensive income, the option for an entity to present components of
other comprehensive income either net of related tax effects or before
related tax effects, or the calculation or reporting of earnings per
share. The amendments in this ASU should be applied retrospectively. The
amendments are effective for fiscal years and interim periods within those
years beginning after December 15, 2011. Early adoption is permitted
because compliance with the amendments is already permitted. The
amendments do not require transition disclosures. The company has included
the required disclosures in its consolidated financial
statements.
|
19
8.
|
Recent Accounting Pronouncements
(continued)
|
|
|
|
In December 2011, the FASB issued
ASU 2011-11, Balance Sheet (Topic 210) Disclosures about Offsetting
Assets and Liabilities. This ASU requires entities to disclose both gross
information and net information about both instruments and transactions
eligible for offset in the balance sheet and instruments and transactions
subject to an agreement similar to a master netting arrangement. An entity
is required to apply the amendments for annual reporting periods beginning
on or after January 1, 2013, and interim periods within those annual
periods. An entity should provide the disclosures required by those
amendments retrospectively for all comparative periods presented. The
company does not expect the adoption of ASU 2011- 11 to have a material
impact on its consolidated financial statements.
|
|
|
In December 2011, the FASB issued
ASU 2011-12, Comprehensive Income (Topic 220) Deferral of the Effective
Date for Amendments to the Presentation of Reclassifications of Items Out
of Accumulated Other Comprehensive Income in Accounting Standards Update
No. 2011-05. The amendments are being made to allow the Board time to
re-deliberate whether to present on the face of the financial statements
the effects of reclassifications out of accumulated other comprehensive
income on the components of net income and other comprehensive income for
all periods presented. While the Board is considering the operational
concerns about the presentation requirements for reclassification
adjustments and the needs of financial statement users for additional
information about reclassification adjustments, entities should continue
to report reclassifications out of accumulated other comprehensive income
consistent with the presentation requirements in effect before ASU
2011-05. All other requirements in ASU 2011-05 are not affected by ASU
2011-12, including the requirement to report comprehensive income either
in a single continuous financial statement or in two separate but
consecutive financial statements. Public entities should apply these
requirements for fiscal years, and interim periods within those years,
beginning after December 15, 2011. The company has included the required
disclosures in its consolidated financial statements.
|
|
9.
|
Fair Value
Measurements
|
|
|
Determination of Fair
Value
|
|
|
The company uses fair value
measurements to record fair value adjustments for certain assets and to
determine fair value disclosures. In accordance with the Fair Value
Measurements and Disclosures topic of FASB ASC, the fair value of a
financial instrument is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Fair value is best determined based
upon quoted market prices. However, in many instances, there are no quoted
market prices for the companys various financial instruments. In cases
where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. Accordingly, the
fair value estimates may not be realized in an immediate settlement of the
instrument.
|
|
|
The fair value guidance provides
a consistent definition of fair value, which focuses on exit price in an
orderly transaction (that is, not a forced liquidation or distressed sale)
between market participants at the measurement date under current market
conditions. If there has been a significant decrease in the volume and
level of activity for the asset or liability, a change in valuation
technique or the use of multiple valuation techniques may be appropriate.
In such instances, determining the price at which willing market
participants would transact at the measurement date under current market
conditions depends on the facts and circumstances and requires the use of
significant judgment. The fair value is a reasonable point within the
range that is most representative of fair value under current market
conditions.
|
|
|
Fair Value Hierarchy
|
|
|
In accordance with this guidance,
the company groups its financial assets and financial liabilities
generally measured 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.
|
|
|
Level 1Valuation is based on
quoted prices in active markets for identical assets or liabilities that
the reporting entity has the ability to access at the measurement date.
Level 1 assets and liabilities generally include debt and equity
securities that are traded in an active exchange market. Valuations are
obtained from readily available pricing sources for market transactions
involving identical assets or liabilities.
|
|
|
Level 2Valuation is based on
inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly. The
valuation may be based on quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for
substantially the full term of the asset or
liability.
|
20
9.
|
Fair Value Measurements
(Continued)
|
|
|
|
Level 3Valuation is based on
unobservable inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities. Level
3 assets and liabilities include financial instruments whose value is
determined using pricing models, discounted cash flow methodologies, or
similar techniques, as well as instruments for which determination of fair
value requires significant management judgment or estimation.
|
|
|
A financial instruments
categorization within the valuation hierarchy is based upon the lowest
level of input that is significant to the fair value
measurement.
|
|
|
The following methods and
assumptions were used by the company in estimating fair value disclosures
for financial instruments:
|
|
|
Cash and Short-Term
Investments
|
|
|
The carrying amounts of cash and
short-term instruments approximate fair values based on the short-term
nature of the assets.
|
|
|
Securities
|
|
|
Securities available for sale are
recorded at fair value on a recurring basis. Fair value measurement is
based upon quoted market prices, when available (Level 1). If quoted
market prices are not available, fair values are measured utilizing
independent valuation techniques of identical or similar securities for
which significant assumptions are derived primarily from or corroborated
by observable market data. Third party vendors compile prices from various
sources and may determine the fair value of identical or similar
securities by using pricing models that consider observable market data
(Level 2). Certain of the equity securities with inactive markets utilize
Level 3 which may include judgment or estimation.
|
|
|
Loans
|
|
|
For variable rate loans that
reprice frequently and with no significant change in credit risk, fair
values are based on carrying values. Fair values for other loans were
estimated using discounted cash flow analyses, using interest rates
currently being offered.
|
|
|
Loans held for sale
|
|
|
The fair value of loans held for
sale is based on outstanding commitments from investors.
|
|
|
FHLB Stock
|
|
|
The carrying amounts of FHLB
stock approximate fair value based on redemption provisions of the
FHLB.
|
|
|
Bank Owned Life Insurance
(BOLI)
|
|
|
The carrying amounts of BOLI
approximate fair value.
|
|
|
Deposit Liabilities
|
|
|
The fair value of demand
deposits, savings accounts, and certain money market deposits is the
amount payable on demand at the reporting date. The fair value of
fixed-maturity fixed rate certificates of deposit is estimated using the
rates currently offered for deposits of similar remaining
maturities.
|
|
|
Short-Term
Borrowings
|
|
|
The carrying amounts of
borrowings under repurchase agreements and federal funds purchased
approximate fair value.
|
|
|
FHLB Advances
|
|
|
The fair values of the companys
FHLB advances are estimated using discounted cash flow analysis based on
the companys incremental borrowing rates for similar types of borrowing
arrangements.
|
21
9.
|
Fair Value Measurements (Continued)
|
|
|
|
Accrued Interest
|
|
|
The carrying amounts of accrued interest approximate
fair value.
|
|
|
Off-Balance Sheet Financial Instruments
|
|
|
At March 31, 2012 and December 31, 2011, the fair value
of loan commitments and standby-letters of credit was immaterial.
Therefore, they have not been included in the following
table.
|
|
|
The carrying amounts and estimated fair values of the
companys financial instruments are as follows (in
thousands):
|
|
|
|
|
|
|
|
Fair Value Measurements at March 31, 2012
using
|
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Active
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
Other
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Identical
|
|
Observable
|
|
Unobservable
|
|
|
|
|
|
|
|
|
|
Assets
|
|
Inputs
|
|
Inputs
|
|
|
|
|
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Balance
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
29 081
|
|
$
|
29 081
|
|
$
|
-
|
|
$
|
-
|
|
$
|
29 081
|
|
Securities available for
sale
|
|
|
39 201
|
|
|
-
|
|
|
38 537
|
|
|
664
|
|
|
39 201
|
|
Loans, net
|
|
|
200 845
|
|
|
-
|
|
|
197 710
|
|
|
5 593
|
|
|
203 303
|
|
Loans held for
sale
|
|
|
672
|
|
|
-
|
|
|
672
|
|
|
-
|
|
|
672
|
|
FHLB Stock
|
|
|
789
|
|
|
-
|
|
|
789
|
|
|
-
|
|
|
789
|
|
BOLI
|
|
|
6 990
|
|
|
-
|
|
|
6 990
|
|
|
-
|
|
|
6 990
|
|
Accrued interest receivable
|
|
|
819
|
|
|
-
|
|
|
819
|
|
|
-
|
|
|
819
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
265 028
|
|
$
|
-
|
|
$
|
266 209
|
|
$
|
-
|
|
$
|
266 209
|
|
Securities sold
under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agreement to
repurchase
|
|
|
4 333
|
|
|
-
|
|
|
4 333
|
|
|
-
|
|
|
4,333
|
|
FHLB advances
|
|
|
1 221
|
|
|
-
|
|
|
1 228
|
|
|
-
|
|
|
1 228
|
|
Accrued interest
payable
|
|
|
168
|
|
|
-
|
|
|
168
|
|
|
-
|
|
|
168
|
22
9.
|
Fair Value Measurements (Continued)
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2011
using
|
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Active
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
Other
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Identical
|
|
Observable
|
|
Unobservable
|
|
|
|
|
|
|
|
|
|
Assets
|
|
Inputs
|
|
Inputs
|
|
|
|
|
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Balance
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13 724
|
|
$
|
13 724
|
|
$
|
-
|
|
$
|
-
|
|
$
|
13 724
|
|
Securities available for
sale
|
|
|
42 331
|
|
|
-
|
|
|
41 687
|
|
|
644
|
|
|
42 331
|
|
Loans, net
|
|
|
202 761
|
|
|
-
|
|
|
196
240
|
|
|
6 497
|
|
|
202 737
|
|
Loans held for
sale
|
|
|
198
|
|
|
-
|
|
|
198
|
|
|
-
|
|
|
198
|
|
FHLB Stock
|
|
|
808
|
|
|
-
|
|
|
808
|
|
|
-
|
|
|
808
|
|
BOLI
|
|
|
6 932
|
|
|
-
|
|
|
6 932
|
|
|
-
|
|
|
6 932
|
|
Accrued interest receivable
|
|
|
832
|
|
|
-
|
|
|
832
|
|
|
-
|
|
|
832
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
253 117
|
|
$
|
-
|
|
$
|
253 885
|
|
$
|
-
|
|
$
|
253 885
|
|
Securities sold
under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agreement to
repurchase
|
|
|
3 415
|
|
|
-
|
|
|
3 415
|
|
|
-
|
|
|
3 415
|
|
FHLB advances
|
|
|
1 523
|
|
|
-
|
|
|
1 534
|
|
|
-
|
|
|
1 534
|
|
Accrued interest
payable
|
|
|
204
|
|
|
-
|
|
|
204
|
|
|
-
|
|
|
204
|
|
Assets and Liabilities Measured at Fair
Value on a Recurring Basis
|
|
|
|
The following table presents the balances
(in thousands) of financial assets measured at fair value on a recurring
basis as of March 31, 2012 and December 31,
2011:
|
|
|
|
|
|
Fair Value Measurements at March 31, 2012
Using
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
|
|
in Active
|
|
Significant
|
|
|
|
|
|
|
|
|
Markets for
|
|
Other
|
|
Significant
|
|
|
Balance as of
|
|
Identical
|
|
Observable
|
|
Unobservable
|
|
|
March 31
|
|
Assets
|
|
Inputs
|
|
Inputs
|
Description
|
|
|
2012
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
Available for sale debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government
sponsored
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
|
$
|
31 658
|
|
$
|
- -
|
|
$
|
31 658
|
|
$
|
- -
|
State and municipal
securities
|
|
|
6 691
|
|
|
- -
|
|
|
6 691
|
|
|
- -
|
|
Total available for sale debt securities
|
|
|
38 349
|
|
|
- -
|
|
|
38 349
|
|
|
- -
|
|
Available for sale equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial services
industry
|
|
|
852
|
|
|
-
-
|
|
|
188
|
|
|
664
|
|
Total available for sale securities
|
|
$
|
39 201
|
|
$
|
- -
|
|
$
|
38 537
|
|
$
|
664
|
23
9.
|
Fair Value Measurements (Continued)
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2011
Using
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
|
|
in Active
|
|
Significant
|
|
|
|
|
|
|
|
|
Markets for
|
|
Other
|
|
Significant
|
|
|
Balance as of
|
|
Identical
|
|
Observable
|
|
Unobservable
|
|
|
December 31
|
|
Assets
|
|
Inputs
|
|
Inputs
|
Description
|
|
|
2011
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
Available for sale debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government
sponsored
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
|
$
|
34 823
|
|
$
|
- -
|
|
$
|
34 823
|
|
$
|
- -
|
State and municipal
securities
|
|
|
6 715
|
|
|
- -
|
|
|
6 715
|
|
|
- -
|
|
Total available for sale debt securities
|
|
|
41 538
|
|
|
- -
|
|
|
41 538
|
|
|
- -
|
|
Available for sale equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial services
industry
|
|
|
793
|
|
|
-
-
|
|
|
149
|
|
|
644
|
|
Total available for sale securities
|
|
$
|
42 331
|
|
$
|
- -
|
|
$
|
41 687
|
|
$
|
644
|
|
Assets Measured at Fair Value on a Recurring
Basis Using Significant Unobservable Inputs (Level 3) (in
thousands)
|
|
|
Quantitative information about Level 3 Fair
Value Measurement for March 31, 2012
|
|
|
Fair
|
|
|
|
|
|
Range
|
|
|
Value
|
|
Valuation Technique(s)
|
|
Unobservable Input
|
|
(Weighted Average)
|
Asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale equity securities
|
|
|
|
|
|
|
|
Financial services
industry
|
|
$
|
664
|
|
Discounted Market
Price
|
|
Lack of
marketability
|
|
10% - 30%
(20%)
|
|
|
|
|
|
to approximate book value
|
|
|
|
|
|
|
|
Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for Sale Equity Securities
|
|
Beginning Balance January 1, 2012
|
|
$
|
644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers
into Level 3
|
|
|
- -
|
|
|
|
|
|
|
|
|
|
|
Transfers out
of Level 3
|
|
|
- -
|
|
|
|
|
|
|
|
|
|
|
Total
gains (unrealized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
included
in other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive
income
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
Balance March 31, 2012
|
|
$
|
664
|
|
|
|
|
|
|
|
|
|
24
9.
|
Fair Value Measurements (Continued)
|
|
|
|
Assets and Liabilities Measured at Fair Value on a
Nonrecurring Basis
|
|
|
Certain assets are measured at fair value on a
nonrecurring basis in accordance with generally accepted accounting
principles. Adjustments to the fair value of these assets usually result
from the application of lower-of-cost-or-market accounting or write-downs
of individual assets.
|
|
|
The following describes the valuation techniques used by
the company to measure certain assets recorded at fair value on a
nonrecurring basis in the financial statements:
|
|
|
Loans held for sale
:
Loans held for sale are carried at the lower of cost or
market value. These loans currently consist of one-to-four family
residential loans originated for sale in the secondary market. Fair value
is based on the price secondary markets are currently offering for similar
loans using observable market data which is not materially different than
cost due to the short duration between origination and sale (Level 2). As
such, the company records any fair value adjustments on a nonrecurring
basis. No nonrecurring fair value adjustments were recorded on loans held
for sale during the periods ended March 31, 2012 and December 31, 2011.
Gains and losses on the sale of loans are recorded within other operating
income on the consolidated statements of operations.
|
|
|
Impaired Loans
:
Loans are generally designated as impaired when, in the
judgment of management based on current information and events, it is
probable that some amounts due according to the contractual terms of the
loan agreement may not be collected. The measurement of loss associated
with impaired loans can be based on either the observable market price of
the loan or the fair value of the collateral. Fair value is measured based
on the value of the collateral securing the loans. Collateral may be in
the form of real estate or business assets including equipment, inventory,
and accounts receivable. The vast majority of the collateral is real
estate. The value of real estate collateral is determined utilizing an
income or market valuation approach based on an appraisal conducted by an
independent, licensed appraiser outside of the company using observable
market data (Level 2). However, if the collateral is a house or building
in the process of construction or if an appraisal of the real estate
property is over two years old, then the fair value is considered (Level
3). The value of business equipment is based upon an outside appraisal if
deemed significant, or the net book value on the applicable business
financial statements if not considered significant using observable market
data. Likewise, values for inventory and accounts receivable are based on
financial statement balances or aging reports (Level 3). Impaired loans
allocated to the Allowance for Loan Losses are measured at fair value on a
nonrecurring basis. Any fair value adjustments are recorded in the period
incurred as provision for loan losses on the consolidated statements of
operations.
|
|
|
Other Real Estate Owned:
Certain assets such as other real estate owned (OREO) are measured
at fair value less cost to sell. The value of real estate collateral is
determined by internal evaluation or an appraisal outside of the company
or a comparative market analysis (Level 2). However, if the collateral is
a house or building in the process of construction or if an appraisal of
the real estate property is over two years old, or property is in the
process of being appraised then the fair value is considered Level
3.
|
|
|
The following table summarizes the companys financial
assets that were measured at fair value (in thousands) on a nonrecurring
basis as of March 31, 2012 and December 31, 2011.
|
|
|
|
|
|
|
|
Carrying Value at March 31,
2012
|
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
In Active
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
Other
|
|
Significant
|
|
|
|
|
|
|
Identical
|
|
Observable
|
|
Unobservable
|
|
|
|
Balance as of
|
|
Assets
|
|
Input
|
|
Input
|
|
Description
|
|
|
March 31, 2012
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Held For
Sale
|
|
$
|
672
|
|
$
|
- -
|
|
$
|
672
|
|
$
|
--
|
|
Impaired loans with
a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
valuation allowance
|
|
|
7 907
|
|
|
- -
|
|
|
2 314
|
|
|
5 593
|
|
|
|
OREO
|
|
|
6 782
|
|
|
- -
|
|
|
6 381
|
|
|
401
|
25
|
|
|
|
|
|
Carrying Value at December 31,
2011
|
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
In Active
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
Other
|
|
Significant
|
|
|
|
|
|
|
Identical
|
|
Observable
|
|
Unobservable
|
|
|
|
Balance as of
|
|
Assets
|
|
Input
|
|
Input
|
|
Description
|
|
|
December 31, 2011
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Held For
Sale
|
|
$
|
198
|
|
$
|
- -
|
|
$
|
198
|
|
$
|
- -
|
|
Impaired loans with
a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
valuation allowance
|
|
|
6 805
|
|
|
- -
|
|
|
308
|
|
|
6 497
|
|
|
|
OREO
|
|
|
6 393
|
|
|
- -
|
|
|
4 365
|
|
|
2
028
|
|
|
Quantitative
information about Level 3 Fair Value Measurement for March 31,
2012
|
|
|
Fair
|
|
|
|
|
|
Range
|
|
|
Value
(000s)
|
|
Valuation
Technique(s)
|
|
Unobservable
Input
|
|
(Weighted
Average)
|
Asset
|
|
|
|
|
|
|
|
|
|
|
Impaired loans with a
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
$
|
5 593
|
|
Appraisal and income
or
|
|
Market discount
|
|
0
%
- 100%
(10%)
|
|
|
|
|
|
market valuation
|
|
|
|
|
|
OREO
|
|
|
401
|
|
Appraisal, internal evaluation or
|
|
Market discount
|
|
0
%
- 5% (5%)
|
|
|
|
|
|
market analysis
|
|
|
|
|
|
|
|
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
|
|
|
|
($ in
thousands)
|
|
|
|
|
|
|
|
Impaired
Loans
|
|
|
Other Real Estate
Owned
|
|
|
|
Beginning Balance January 1, 2012
|
|
$
|
6
497
|
|
|
|
2
028
|
|
|
|
|
|
|
|
Transfers into Level
3
|
|
|
645
|
|
|
|
- -
|
|
|
|
Transfers out of Level
3
|
|
|
(1 521
|
)
|
|
|
(1 223
|
)
|
|
|
Realized and unrealized gains
and (losses)
|
|
|
|
|
|
|
|
|
|
|
included in earnings
|
|
|
25
|
|
|
|
(44
|
)
|
|
|
Settlements
|
|
|
(53
|
)
|
|
|
(360
|
)
|
|
|
|
|
|
|
Ending Balance March 31, 2012
|
|
$
|
5 593
|
|
|
$
|
401
|
|
|
Item 2.
Managements Discussion and
Analysis of Financial Condition and Results of Operations
|
|
|
|
CRITICAL ACCOUNTING POLICIES
|
|
|
|
General
|
|
|
|
The companys financial statements are
prepared in accordance with U. S. generally accepted accounting
principles. The financial information contained within our 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 either when earning income, recognizing an expense, recovering an
asset or relieving a liability. We use historical loss factors as one
factor in determining the inherent loss that may be present in our loan
portfolio. Actual losses could differ significantly from the historical
factors that we use. In addition, U. S. generally accepted accounting
principles may change from one previously acceptable method to another
method. Although the economics of our transactions would be the same, the
timing of events that would impact our transactions could
change.
|
26
|
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is an
estimate of the losses that may be sustained in our loan portfolio. The
allowance is based on two basic principles of accounting: (1) losses be
accrued when they are probable of occurring and are capable of estimation
and (2) losses be accrued based on the differences between the margin
value of collateral and the loan balance.
The allowance consists of specific
and general components. The specific component relates to loans (other
than consumer and residential mortgage loans) that are classified as
substandard. For such loans that are also classified as impaired, an
allowance is established when the discounted cash flows or collateral
value or observable market price of the impaired loan is lower than the
carrying value of that loan. The general component covers non-classified
loans and is based on historical loss experience adjusted for
environmental factors such as economic, concentration and growth trends.
The bank uses a twelve month rolling average period for use in calculating the historical loss factor.
FINANCIAL OVERVIEW
The first quarter of 2012 has
provided
positive results with net income of $320 thousand, up almost 25% over the same period in 2011.
The bank has produced two
consecutive quarters of income despite the challenging economic
environment. There has been significant positive movement in the
unemployment rate in our local market over the past twelve
months. We
are seeing loan growth in the residential real
estate portfolio.
In addition to those items outside
management control, the actions taken in the past year are creating
improvement in economic performance. Interest expense as a result of
decreases in deposit rates, are a significant reason for our ability to
produce a profit. Management has aggressively marketed our inventory of
other real estate. However, the inventory is still higher than what we
would prefer. Management is hopeful
that sales
of other real estate will continue at a moderate
pace.
Total assets have increased $10.9
million or 3.8% from the December 31, 2011 total of $287.4 million to
$298.3 million at March 31, 2012. Net loans have decreased approximately
$1.9 million from the December 31, 2011 total of $202.8 million to $200.9
million at March 31, 2012 due
to
the pay down of existing loans, loan
charge-offs and the transfer of loans to OREO. Other real estate, net of
valuation allowance, has increased $389 thousand. With the decrease in
loans
and increase in deposits
excess funds have been invested in securities, and overnight funds
at the Federal Reserve.
Total deposits have increased $11.9
million or 4.7% at March 31, 2012 compared to December 31, 2011.
Interest-bearing deposits have increased 2.6% during the first quarter of
2012, with non-interest bearing deposits increasing 16.9%. Other
liabilities have decreased approximately $2 million dollars. The decrease
is primarily due to a $2 million
contribution
to the pension plan.
The Tier 1 capital to average assets
ratio (leverage capital ratio) is
8.70%
at March 31, 2012 compared to 8.56% at
December 31, 2011. This capital ratio is within the regulatory guidelines
for well capitalized.
|
27
The following table is an analysis of the
companys allowance for loan losses with amounts shown in thousands.
Management monitors the loan portfolio on a
continual basis with procedures that allow for problem loans and potentially
problem loans to be highlighted and watched. Written reports are prepared on a
monthly basis for all loans including commercial loans graded below a certain
level for management review and are reported to the Board of Directors on a
quarterly basis. In addition, a subcommittee of the board of directors meets
monthly to review all classified assets. Based on experience, these loan
policies and the banks grading and review system, management believes the loan
loss allowance is adequate.
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
2012
|
|
2011
|
|
2011
|
Balance at beginning of
period
|
$
|
4 484
|
|
$
|
5 012
|
|
$
|
5 012
|
Charge-offs:
|
|
|
|
|
|
|
|
|
Commercial, financial
and agricultural
|
|
- -
|
|
|
20
|
|
|
- -
|
Real
estate construction
|
|
354
|
|
|
1 673
|
|
|
57
|
Real estate
mortgage
|
|
50
|
|
|
2 189
|
|
|
540
|
Consumer
|
|
54
|
|
|
172
|
|
|
45
|
Total charge-offs
|
|
458
|
|
|
4 054
|
|
|
642
|
Recoveries:
|
|
|
|
|
|
|
|
|
Commercial, financial
and agricultural
|
|
6
|
|
|
30
|
|
|
5
|
Real
estate construction
|
|
2
|
|
|
5
|
|
|
5
|
Real estate
mortgage
|
|
4
|
|
|
17
|
|
|
9
|
Consumer
|
|
54
|
|
|
131
|
|
|
33
|
Total recoveries
|
|
66
|
|
|
183
|
|
|
52
|
Net charge-offs
|
|
392
|
|
|
3 871
|
|
|
590
|
Provision charged to
operations
|
|
309
|
|
|
3 343
|
|
|
423
|
Balance at end of period
|
$
|
4 401
|
|
$
|
4 484
|
|
$
|
4 845
|
|
Ratio of net charge-offs
(annualized) during the period
|
|
|
|
|
|
|
|
|
to average loans
outstanding during the period
|
0.76%
|
|
1.84%
|
|
1.09%
|
Loans are placed on nonaccrual status when the loan officer or collections officer who is supervising a particular loan determines that it is no longer prudent for a loan to continue to accrue interest, the loan is to be placed on nonaccrual status.
Generally it is the policy of this
bank to stop accruing interest when principal or interest is greater than 90 days past due based upon the loans contractual
terms, unless the loan is well secured and in the process of collection. Furthermore, should the bank become aware of events which
have occurred or are expected to occur which causes doubt as to the full collectability
of
principal or interest in the future, even though the loan is currently less
than 90 days past due, the loan is considered for nonaccrual status.
In order to justify the continuation of the accrual of interest on a loan which is greater than 90 days past due, the loan must be well secured and in the process of collection. The majority of the current non-accrual loans as shown in the chart below are in the process of collection. Following is a table showing the risk elements in the loan portfolio with amounts in thousands.
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
2012
|
|
2011
|
|
2011
|
Nonperforming
Assets
|
|
|
|
|
|
|
|
|
Nonaccrual loans (1)
|
$
|
6 308
|
|
$
|
7 243
|
|
$
|
2 674
|
Foreclosed
properties
|
|
6 782
|
|
|
6 393
|
|
|
6 980
|
Total nonperforming assets
|
$
|
13 090
|
|
$
|
13 636
|
|
$
|
9 654
|
|
|
|
|
|
|
|
|
|
|
Performing troubled debt
restructures (2)
|
$
|
8 655
|
|
$
|
9 078
|
|
$
|
- -
|
|
Loans past due 90 days
accruing interest
|
$
|
0
|
|
$
|
204
|
|
$
|
276
|
Allowance for loan losses to period end
loans
|
|
2.14%
|
|
|
2.16%
|
|
|
2.28%
|
Nonperforming assets to
period end loans and
|
|
|
|
|
|
|
|
|
foreclosed properties,
net
|
|
6.17%
|
|
|
6.38%
|
|
|
4.40%
|
|
Performing troubled debt
restructures to period end loans
|
|
4.22%
|
|
|
4.38%
|
|
|
- -%
|
(1) Currently there are 7 TDRs in non-performing assets with a
balance of $3.4 million.
(2) Within this amount is 1 TDR with a balance totaling $35 thousand 30 or more days past due.
28
The
details of the income statements for the three month period ended March 31, 2012 and 2011 are highlighted below.
Ø
Year to
date net income in 2012 is $320 thousand compared to net income of $257 thousand
in 2011. The loan portfolio has decreased as the result of foreclosures and
normal run off. Deposits have increased slightly. However, the increase in
volume has been offset by significant decreases in rates paid on deposit
accounts. Decline in property values have further affected the net income as
other real estate write downs have been charged against income. In addition net
losses on the sale of other real estate doubled in the first quarter of
2012
compared to net losses in the same period in
2011
.
Ø
Interest
income has decreased to $2.9 million at March 31, 2012 from $3.2 million at
March 31, 2011. The reduction is primarily due to a decrease of approximately
$240 thousand in the loan portfolio. This coupled with historically low interest
rates has created the slight reduction in interest income.
Ø
Total
interest expense has decreased 50.4% in 2012 compared to 2011. Interest on
deposits has decreased 49.7% during the first quarter of 2012 when compared with
the first quarter of 2011.
Ø
Provision for loan loss has decreased 27% when compared to the March 31, 2011
quarter
.
Ø
Net
interest margin at March 31, 2012 is
3.80%
. This is an increase from the net
interest margin of 3.56% at December 31, 2011 and 3.44% at March 31, 2011.
During the first three months of 2012, the overall average rate on loans
decreased to
5.36%
at March 31, 2012 compared to 5.53% at December 31, 2011 and
5.64% for the quarter ending March 31, 2011. The overall average rate being paid
on deposits decreased to .83% from 1.21% at December 31, 2011 and from 1.53% at
March 31, 2011.
Noninterest income increased 6.5% for the
three months ended March 31, 2012 compared to March 31, 2011 and decreased 18%
for the three months ended March 31, 2012 compared to the three months ended
December 31, 2011. Some significant income items are listed here.
Ø
Trust
income increased 11.3% when compared to the March 31, 2011 quarter and increased
13.36% when compared to the December 31, 2011 quarter. The increase, in both
cases, are due to new customer volume as rates have remained relatively steady.
Ø
Visa and
MasterCard fees have increased 13.8% on a year to date basis compared to the
same period in
2011
. The increase is due to an overall increase in consumer
spending and the likelihood that consumers continue to get more comfortable with
using credit/debit cards versus cash.
Ø
The primary cause of the decrease in non-interest income compared to the December quarter was the termination of an other post-retirement benefit plan in the fourth quarter of 2011.
Year to date total noninterest expense
increased about 8.27% for the three months ended March 31, 2012 compared to the
same period in
2011
. The quarterly result was an increase of 4% over the
December 31, 2011 quarter. Excluding expenses and losses related to foreclosed
properties non-interest expense
increased
by
1.04% when
compared to
the March 31, 2011
quarter, and decreased 1.82% when compared to the December 31, 2011 quarter.
Some details of
the remaining accounts are listed below.
Ø
Equipment
expense increased 21% over the March 31, 2011 quarter. The increase is a
combination of increases in expenses related to our banking software and the
expense of new computers purchased.
Ø
Computer
services and online banking expense increased 52.2% over the first quarter 2011
results. The increase is due to increases in costs related to the banks core
software and additional online banking expenses related to new resources
provided to customers.
29
Ø
Loss on
sale of other real estate increased 100% in the first quarter of 2012 as
compared to the first quarter of 2011. The increase is primarily due to the
housing market slump lowering values in our market area coupled with a moderate
amount of foreclosed properties remaining in the market.
Ø
The FDIC
assessment expense has
decreased
36% from the March 31, 2011 quarterly total.
The decrease is due to the change in the base rate of the calculation. The rate
is now calculated on average assets as opposed to total deposits.
Ø
Other
professional fees have increased 45.2% over the March 2011
quarter. The
primary reason for the
increase is one time professional fees related to the design of new materials
explaining the changes in the deposit accounts and fees related to updating
materials for the
banks
new tag line.
Ø
Foreclosed property expense has increased 14.5% in 2012 compared to 2011.
The increase in expense is due to new inventory being added to other real estate
and ongoing costs of existing inventory not yet sold.
Ø
Write
down of other real estate has increased significantly during the first quarter
of 201
2
compared to both the December 31, 2011 and March 31,
2011
quarters. The
increase is due to the continual drop in property values. The write downs were
executed based on new appraisals.
Ø
ATM and
check card expenses have increased 31% in the first three months of 2012
compared to the same time period in 2011. The increase is due to a significant
increase in the number of transactions as well as a slight increase in per
transaction fees.
LIQUIDITY
Liquidity is a measure of the Banks
ability to respond to sudden changes in funding needs or funding sources.
Examples of sudden changes could involve a sudden increase in loan demand, a
funding need, or it might involve a large decrease in deposited funds, a funding
source. The role of cash management is to manage assets and liabilities so that
the Bank can respond to such fluctuations in sources and uses of cash.
Management spends much of its time assessing our liquidity position.
Management is informed of the liquidity
information via reports and committee discussion. The
President
is provided a
weekly dashboard report of our liquidity information. The Asset/Liability
Committee reviews and discusses our liquidity position on a quarterly basis. The
committee has set a benchmark minimum liquidity ratio of 15%.
Public funds are required to have
collateral pledged against their balances above the FDIC insurance limits.
Generally the bank has pledged securities or obtained letters of credit from the
Federal Home Loan Bank of Pittsburgh to cover public funds. Two additional
strategies to cover these funds are now being used. In the case of public funds
in the form of CDs, the bank is utilizing the CDARS network to insure their
funds. We are also using the Insured Cash Sweep (ICS) product to secure public
funds. Both of the programs provide complete coverage through FDIC insurance.
Most importantly, the securities that had been pledged against the public funds
can be used as a source of cash if the need would arise. The securities are
effectively converted from a non liquid asset to a liquid asset.
Liquid assets of the company include cash
and due from banks, securities purchased under agreements to resell, federal
funds sold, securities available for sale, and loans and investments maturing
within one year. The companys statement of cash flows details this liquidity
since January 1, 2012.
Operating Activities.
The companys net income usually provides cash from the banks operating
activities. The net income figure is adjusted for certain noncash transactions
such as depreciation expense that reduces net income but does not require a cash
outlay. During 2012, the net
income
as adjusted has used cash of $1.2 million.
Interest income earned on loans and investment securities is the companys major
income source.
Investing Activities.
Customer core deposits and company noncore
funding provide the funds used to invest in loans and investment securities. In
addition, the principal portion of loan payments, loan payoffs and maturity of
investment securities provide cash flow. Purchases of bank premises and
equipment are an investing activity. We have taken advantage of our noncore
funding capabilities since deposit growth is not always sufficient. The net
amount of cash provided by investing activities in 2012 is $4.0 million.
30
Financing Activities.
Customer core deposits and company noncore funding provide the financing
for the investing activities as stated above. If the company has an excess of
funds on any given day, the bank will sell these funds to make additional
interest income to fund activities. Likewise, if the company has a shortage of
funds on any given day it will purchase funds and pay interest for the use of
these funds. Financing activities also include payment of dividends to
shareholders, purchase of shares of the companys common stock for the treasury
and repayment of any noncore funding. The net amount of cash provided by
financing activities in 2012 is $12.5 million.
At March 31, 2012, cash and due from
banks, interest-bearing deposits in financial institutions, securities purchased
under agreements to resell, federal funds sold and loans and securities maturing
within one year were $47.2 million.
Noncore funding capabilities, including
borrowing, provide additional liquidity. The subsidiary bank maintains a federal
funds line with one financial institution and is a member of the Federal Home
Loan Bank of Pittsburgh. In July 2009 the subsidiary bank secured a credit line
with the Federal Reserve discount window. At March 31, 2012, the subsidiary bank
has total credit available through these institutions of approximately $89.2
million.
ANALYSIS OF CAPITAL
The adequacy of the companys capital is reviewed by management on an
ongoing basis in terms of the size, composition, and quality of the companys
asset and liability levels, and consistency with regulatory requirements and
industry standards. Management seeks to maintain a capital structure that will
assure an adequate level of capital to support anticipated asset growth and
absorb potential losses.
The Federal Reserve, the
Comptroller of the Currency and the Federal Deposit Insurance Corporation have
adopted capital guidelines to supplement the existing definitions of capital for
regulatory purposes and to establish minimum capital standards. Specifically,
the guidelines categorize assets and off-balance sheet items into four
risk-weighted categories. The minimum ratio of qualifying total capital to
risk-weighted assets is 8.0%, of which at least 4.0% must be Tier 1 capital,
composed of common equity, retained earnings and a limited amount of perpetual
preferred stock, less certain goodwill items. All capital ratios are within the
regulatory guidelines for a
well-capitalized
institution as noted below.
|
March 31, 2012 (000s)
|
|
|
|
|
|
|
|
|
Minimum
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
Actual
|
|
|
|
|
Requirement
|
|
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
Total capital to risk
weighted assets
|
$
|
27 910
|
|
13.46%
|
|
|
|
$
|
16 583
|
|
|
8.00%
|
Tier 1 capital to risk weighted
assets
|
$
|
25 297
|
|
12.20%
|
|
|
|
$
|
8 291
|
|
|
4.00%
|
Tier 1 capital to average
assets
|
$
|
25 297
|
|
8.70%
|
|
|
|
$
|
11 625
|
|
|
4.00%
|
|
|
|
December 31, 2011 (000s)
|
|
|
|
|
|
|
|
|
Minimum
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
Actual
|
|
|
|
|
Requirement
|
|
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
Total capital to risk
weighted assets
|
$
|
27 487
|
|
13.10%
|
|
|
|
$
|
16 782
|
|
|
8.00%
|
Tier 1 capital to risk weighted
assets
|
$
|
24 842
|
|
11.84%
|
|
|
|
$
|
8 391
|
|
|
4.00%
|
Tier 1 capital to average
assets
|
$
|
24 842
|
|
8.56%
|
|
|
|
$
|
11 602
|
|
|
4.00%
|
31
Item 4. Controls and Procedures
Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we have evaluated
the effectiveness of the design and operation of our disclosure controls and
procedures as of the date of this quarterly report. Based on that evaluation,
our principal executive officer and principal financial officer have concluded
that these controls and procedures are effective. There were no significant
changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
Disclosure
controls and procedures are our controls and other procedures that are designed
to ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is accumulated and communicated to our
management, including our principal executive officer and principal financial
officer, as appropriate, to allow timely decisions regarding required
disclosure.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There are no
material legal proceedings to which the Registrant or its subsidiary, directors
or officers is a party or by which they, or any of them, are threatened. All
legal proceedings presently pending or threatened against Potomac Bancshares,
Inc. and its subsidiary involve routine litigation incidental to the business of
the company or the subsidiary and are either not material in respect to the
amount in controversy or fully covered by insurance.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds.
ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
(c) Total Number
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
|
|
(a) Total
|
|
|
|
Purchased as
|
|
(d) Maximum Number
|
|
|
Number of
|
|
(b) Average
|
|
Part of Publicly
|
|
of Shares that May
|
|
|
Shares
|
|
Price Paid
|
|
Announced
|
|
Yet be Purchased
|
Period
|
|
Purchased
|
|
Per Share
|
|
Programs
|
|
Under the Program
|
January 1
through
|
|
|
|
|
|
|
|
|
January 31
|
|
NONE
|
|
- -
|
|
283 553
|
|
83 617
|
February 1 through
|
|
|
|
|
|
|
|
|
February 2
9
|
|
NONE
|
|
- -
|
|
283 553
|
|
83 617
|
March 1 through
|
|
|
|
|
|
|
|
|
March 31
|
|
NONE
|
|
- -
|
|
283 553
|
|
83 617
|
On February 12,
2002, the companys Board of Directors originally authorized the repurchase
program. The program authorized the repurchase of up to 10% of the companys
stock over the next twelve months. The stock may be purchased in the open market
and/or in privately negotiated transactions as management and the board of
directors determine prudent. The program has been extended on annual basis at
Potomacs reorganization meeting.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information
|
(b)
|
|
There have been no changes to the
procedures by which security holders may recommend nominees to the
registrants board of directors since the registrant last provided
disclosure in response to Item 7(d)(2)(ii)(G) of Schedule
14A.
|
|
|
32
Item 6. Exhibits
|
31.1
|
|
Certification Under
Exchange Act Rule 13a-14, Chief Executive Officer (and Section 302 of
Sarbanes-Oxley Act of 2002)
|
|
|
|
|
|
31.2
|
|
Certification Under
Exchange Act Rule 13a-14, Chief Financial Officer (and Section 302 of
Sarbanes-Oxley Act of 2002)
|
|
|
|
|
|
32
|
|
Certification Pursuant to
18 U.S.C. Section 1350, Chief Executive Officer and Chief Financial
Officer (pursuant to Section 906 of Sarbanes-Oxley Act of
2002)
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
**
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension
Schema. **
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension
Calculation Linkbase. **
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension
Label Linkbase. **
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension
Presentation Linkbase. **
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Definition
Linkbase. **
|
|
|
|
|
|
**
|
|
Furnished, not filed,
herewith
|
33
SIGNATURES
In accordance with the requirements of the
Exchange Act, the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
|
POTOMAC BANCSHARES, INC.
|
|
Date:
May
15
,
2012
|
|
/s/
Robert F. Baronner, Jr.
|
|
|
Robert F. Baronner, Jr.
|
|
|
President & CEO
|
|
Date:
May
15
,
2012
|
|
/s/
Dean Cognetti
|
|
|
Dean Cognetti
|
|
|
Sr. Vice President and Chief Financial
Officer
|
34
Grafico Azioni Potomac Bancshares (PK) (USOTC:PTBS)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Potomac Bancshares (PK) (USOTC:PTBS)
Storico
Da Lug 2023 a Lug 2024