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ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013.
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO
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CALIFORNIA
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91-2112732
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2126 Inyo Street, Fresno, California
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93721
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Small reporting company
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PART I:
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PART II:
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PART III:
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PART IV:
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▪
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Loan Documentation – All loan documentation is prepared by a centralized loan servicing department or by legal counsel based on the terms contained in the approved Credit Authorizations. The documentation, upon completion, is reviewed by a third party (Bank employee) in the loan servicing department prior to forwarding to the relationship managers, who then review the documents to ensure that they have been correctly prepared in accordance with the credit approval before execution by the borrowers.
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Purchased Participations – The Bank independently underwrites, using the Bank’s same guidelines for direct originations, and reviews the loan documentation of participation loans originated by other lenders for acceptability.
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Verification of Information – The Bank, principally a commercial business lender, has not and does not make any “No Doc” or “Stated Income” loans. In the underwriting of a commercial loan request, the Bank performs an enterprise analysis of the financial information for trends, verifies major assets and liabilities, and obtains Dun and Bradstreet Credit reports on the entities and credit bureau reports on the principals of the entity. Regarding construction lending, the analysis has been enhanced to investigate and analyze real estate projects being financed by other lenders.
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The Company is not dependent on any individual customer, entity, or group of related entities for deposits nor have a significant percentage of loans to borrowers.
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Unsecured - Whether unsecured or secured, guarantees are usually obtained from the principals or from 3
rd
party guarantors if necessary for additional financial support. Unsecured loans totaled $46,982,000 and $53,361,000 at
December 31, 2013 and 2012
, respectively.
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Historic policy on renewals - The renewal or extension of existing performing lines of credit or loans has not been changed; the credits are re-underwritten for the renewal period. The restructure of lines of credit or loans may occur based on the occurrence of pre-determined event or time, as part of the original underwriting. The renewal or restructuring of criticized credits has changed since the March 2010 FRB Agreement. The restructure or renewal is certified to the Board of Directors that the renewal is necessary to improve and protect the Bank’s ultimate interest in
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Additional Loans to nonaccrual borrowers. – The Bank as a general rule does not make additional loans to borrowers that are past due in principal or interest more than 90-days. However, in selected and limited instances as part of the workout or restructure of non-performing assets, to effect repayment, additional secured advances may be made.
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Lending Limits – The Bank approves revolving lines of credit or loans for each borrower with terms and limits. Consideration is given for the aggregate direct borrowing exposure of the borrower, as well as, their indirect liability, plus the indirect liability of any guarantor. Overall, the Bank has established normal “House” lending limits at 50% of the Legal Lending Limit. The Legal Lending Limit is calculated for unsecured loans at 15% of total regulatory capital, and for secured loans at 25% of total regulatory capital. The Board of Directors must approve any borrowing relationship that exceeds the House Lending Limit.
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Rank
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Share
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Fresno County
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9th
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3.64%
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Madera County
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10th
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4.83%
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Kern County
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14th
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1.09%
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Total of Fresno, Madera, Kern Counties
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12th
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2.79%
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Santa Clara County
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44th
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0.03%
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Requirement to be:
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December 31, 2013
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Adequately
Capitalized
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Well
Capitalized
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Company
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Bank
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Tier 1 leverage capital ratio
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4.0%
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5.0%
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11.19%
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11.43%
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Tier 1 risk-based capital ratio
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4.0%
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6.0%
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15.93%
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16.15%
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Total risk-based capital ratio
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8.0%
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10.0%
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11.19%
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11.43%
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▪
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a membership stock requirement with an initial cap of $25 million (100% of “membership asset value” as defined), or
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▪
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an activity based stock requirement (based on percentage of outstanding advances).
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•
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Strengthen board oversight of the Bank’s management and operations by the Bank submitting a written plan to the Federal Reserve Bank to address and include (i) the actions that the board will take to improve the Bank’s conditions and maintain effect control over, and supervision of the Bank’s major operations and activities, (ii) the responsibility of the board to monitor management’s adherence to approved policies and procedures, and applicable laws and regulations; and (iii) a description of the information and reports that are regularly reviewed by the board in its oversight of the operations and management of the Bank;
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Strengthen credit risk management practices of the Bank by the Bank submitting a written plan to the Federal Reserve Bank to address and include (i) the responsibility of the board of directors to establish appropriate risk tolerance guidelines and risk limits; (ii) timely and accurate identification and quantification of credit risk within the loan portfolio; (iii) strategies to minimize credit losses and reduce the level of problem assets; (iv) procedures for the on-going review of the investment portfolio to evaluate other-than temporary-impairment (“OTTI”) and accurate accounting for OTTI; (v) stress testing of commercial real estate loan and portfolio segments; and (vi) measures to reduce the amount of other real estate owned;
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Strengthen asset quality at the Bank by (i) not extending, renewing, or restructuring any credit to or for the benefit of any borrower, including any related interest of the borrower, whose loans or other extensions of credit were criticized in the Report of Examination or in any subsequent report of examination, without appropriate underwriting analysis, documentation, board or committee approval and certification that the board or committee reasonably believes that the
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Improve management of the Bank’s allowance for loan losses by (i) eliminating from its books, by charge-off or collection, all assets or portions of assets classified “loss” in the Report of Examination that have not been previously collected in full or charged off within 10 days of the Agreement, and within 30 days from the receipt of any federal or state report of examination, charge off all assets classified “loss” unless otherwise approved in writing by the Federal Reserve Bank, (ii) maintain a sound process for determining, documenting, and recording an adequate allowance for loan and lease losses (“ALLL”) in accordance with regulatory reporting instructions and relevant supervisory guidance, and (iii) within 60 days of the date of the Agreement, submitting to the Federal Reserve Bank an acceptable written program for the maintenance of an adequate ALLL, including provision for a review of the ALLL by the board on at least a quarterly calendar basis and remedying any deficiency found in the ALLL in the quarter it is discovered, and the board maintaining written documentation of its review of the ALLL;
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Maintain sufficient capital at the Company and Bank by submitting to the Federal Reserve Bank an acceptable written plan to maintain sufficient capital at the Company, on a consolidated basis, and the Company and the Bank shall jointly submit to the Reserve Bank an acceptable written plan to maintain sufficient capital at the Bank, as a separate legal entity on a stand-alone basis that (i) complies with the applicable bank and bank holding company capital maintenance regulations and regulatory guidelines and that also considers the adequacy of the Bank’s capital, (ii) takes into account the volume of classified credits, concentrations of credit, ALLL, current and projected asset growth, and projected retained earnings, the source and timing of additional funds to fulfill the Company’s and the Bank’s future capital requirements, and a provision to notify the Federal Reserve Bank when either entity falls below the capital ratios in the accepted plan;
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Submit a revised business plan and budget to the Federal Reserve Bank for 2010 and subsequent calendar years that the Bank is subject to the Agreement to improve the Bank’s earnings and overall condition, which plan at a minimum provides a realistic and comprehensive budget for the remainder of calendar year 2010, and description of the operating assumptions that form the basis for, and adequately support, major projected income, expense, and balance sheet components;
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Not make certain distributions, dividends, and payments, specifically that (i) the Company and Bank agreeing not to declare or pay any dividends without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors (“Director”), (ii) the Company not taking any other form of payment representing a reduction in capital from the Bank without the prior written approval of the Federal Reserve Bank, and (iii) the Company and its nonbank subsidiaries not making any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Federal Reserve Bank and the Director;
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Not incur debt or redeem stock, specifically, that except with the prior written approval of the Federal Reserve Bank, the Company each agree not to incur, increase, or guarantee any debt or purchase or redeem any shares of its stock;
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Correct violations of the laws by (i) the Bank immediately taking all necessary steps to correct all violations of law and regulation cited in the Report of Examination, (ii) the board of the Bank taking the necessary steps to ensure the Bank’s future compliance with all applicable laws and regulations, (iii) complying with the notice provisions of Section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of Governors of the Federal Reserve System (12 C.F.R. §§ 225.71
et seq)
prior to appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position, and (iv) complying with the restrictions on indemnification and severance payments of Section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the FDIC’s regulations (12 C.F.R. Part 359);
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Comply with the Agreement by (i) appointing a compliance committee of the Bank (“Compliance Committee”) within 10 days of the date of the Agreement to monitor and coordinate the Bank’s compliance with the provisions of the Agreement, which Compliance Committee is composed of a majority of outside directors who are not executive officers or principal shareholders of the Bank and which is to meet at least monthly and report its findings to the board of directors of the Bank, and (ii) the Company and Bank within 30 days after the end of each calendar quarter following the date of the Agreement submitting to the Federal Reserve Bank written progress reports detailing the form and manner of all actions taken to secure compliance with the Agreement and the results of such actions.
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Develop and adopt a capital plan to maintain a ratio of tangible shareholders’ equity to total tangible assets equal to or greater than 9% and include in such capital plan a capital contingency plan for raising additional capital in the event of various contingencies;
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Maintain a ratio of tangible shareholders’ equity to total tangible assets equal to or greater than 9%
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Provide progress reports within 30 days after the end of each calendar quarter following the effective date of the MOU to the California Department of Business Oversight detailing the form and manner of all actions taken to secure compliance with the MOU and Agreement and the results of such actions.
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Within 180 days from the effective date of the MOU, reduce the assets classified "Substandard" to not more than 45% of total capital.
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Within 270 days from the effective date of the MOU, reduce the assets classified "Substandard" to not more than 40% of total capital.
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Not establish any new branches or other offices without the prior written consent of the Commissioner of the California Department of Business Oversight;
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▪
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a bank’s or bank holding company’s executive officers, directors and principal shareholders (
i.e.
, in most cases, those persons who own, control or have power to vote more than 10% of any class of voting securities),
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▪
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any company controlled by any such executive officer, director or shareholder, or
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▪
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any political or campaign committee controlled by such executive officer, director or principal shareholder.
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Balanced Risk-Taking: Incentive compensation arrangements should balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risks;
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Compatibility with Effective Controls and Risk-Management: A banking organization’s risk-management processes and internal controls should reinforce and support the development and maintenance of balanced incentive compensation arrangements;
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Strong Corporate Governance: Banking organizations should have strong and effective corporate governance to help ensure sound compensation practices, including active and effective oversight by the board of directors.
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•
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$375 million for temporarily eliminating fees on SBA-backed loans and raising SBA's guarantee percentage on some loans to 90 percent.
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•
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$255 million for a new loan program to help small businesses meet existing debt payments.
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•
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$30 million for expanding SBA’s Microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders
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Closing Prices
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Volume
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Quarter
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High
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Low
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|||||
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4th Quarter 2013
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$
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5.73
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$
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4.19
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322,000
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3rd Quarter 2013
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$
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4.40
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$
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3.95
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313,100
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2nd Quarter 2013
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$
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4.53
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$
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3.96
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306,600
|
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1st Quarter 2013
|
$
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4.53
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$
|
2.50
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767,000
|
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4th Quarter 2012
|
$
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3.10
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$
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2.46
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340,700
|
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3rd Quarter 2012
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$
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2.82
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$
|
2.23
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291,100
|
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2nd Quarter 2012
|
$
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2.54
|
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$
|
1.95
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225,300
|
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1st Quarter 2012
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$
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2.67
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$
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1.73
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201,800
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Plan Category
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Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(column a)
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Weighted-average
exercise price of
outstanding options,
warrants and rights
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Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
|
||||
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Equity compensation plans approved by security holders
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193,082
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$
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10.57
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429,276
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Equity compensation plans not approved by security holders
|
N/A
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N/A
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N/A
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Total
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193,082
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$
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10.57
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429,276
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▪
|
Asset quality continued to deteriorate as adversely classified assets increased over four consecutive target and full-scope examinations conducted from 2006 through the June 2009 exam. The dollar volume of adversely classified assets increased by 16.7% during the six months prior to the exam to $142.1 million at the June 2009 examination.
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▪
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Below investment grade investment securities classified substandard at the previous examination totaling $9.1 million increased to $17.1 million at the June 2010 examination, representing 18.6% of tier 1 capital and reserves as of March 31, 2009. The classified investment securities are comprised of three private-label residential mortgage backed securities that are below investment grade as graded by a national rating agency, were divided between $16.9 million in substandard and $163,000 in loss. The portion listed as loss represented the amount identified as other-than-temporary-impairment (OTTI) and had been recognized as loss as of March 31, 2009.
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▪
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During the June 2009 examination, it was the opinion of the Federal Reserve Bank that the Bank's methodology related to the allowance for loan and leases losses was flawed, leading the Federal Reserve Bank to conclude that additional provisions were required to raise reserves to an appropriate level. In addition, weaknesses in the ALLL policy were identified and needed to be addressed, which included improvements in documentation related to identification and analysis of loans under SFAS No. 114 and SFAS No. 5, and more detailed justification for the qualitative factors used in the ALLL process. During the six months ended June 30, 2010, several large lending relationships to developers in the San Joaquin Valley deteriorated significantly, requiring an additional $1.8 million in ALLL. In addition, during that period, the Bank experienced increases in other problem loans or potentially problem loans including nonaccrual loans and special mention loans, and real estate valuations continued to decline. Regulators required an increase in the reserves as calculated by the Federal Reserve Bank using a model they call the “Atlanta Model.” The Atlanta Model calculated an estimated range of allowance for loan losses using a blend of national, regional, and local peer bank data. The reserve calculated by the Bank for June 30, 2009 under GAAP included additions to ALLL required for increases in adversely classified and special mention loans experienced during the first half of 2009, and although at the lower range of ALLL as estimated by the Federal Reserve, corresponded favorably with the Federal Reserves’ “Atlanta Model”. The reserve adjustment required for the second quarter of 2009 totaled $6.8 million bringing the ALLL level to $15.8 million (including reserve for unfunded commitments) at June 30, 2009. The ALLL findings of the Federal Reserve Bank included recommendations to better align actual practices with the regulatory governing policy as well as to provide a more specific framework for analyzing, determining, and supporting the factors used in the ALLL methodology.
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▪
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Earnings performance declined as of June 30, 2009, due in large part to the additional $6.8 million provision recorded for the second quarter ($8.2 million year-to-date) resulting in a net loss for the Company of $4.8 million for the six months ended June 30, 2009. Earnings for the period were also adversely impacted by: a goodwill impairment loss of $3.0 million (pre-tax and net); year-to-date pre-tax impairment losses of $403,000 on the real estate mortgage-backed securities; year-to-date pre-tax operating expenses and impairment losses of $1.3 million related to other real estate owned through foreclosure.
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▪
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Although the Bank’s Tier 1 leverage capital, Tier 1 risk-based capital, and total risk-based capital ratios remained above regulatory Prompt Corrective Action guidelines of adequately capitalized banks at 10.8%, 11.3%, and 12.6%, respectively, at June 30, 2009, the Federal Reserve concluded that capital levels were less than adequate to support the Bank's high risk profile resulting primarily from the continued decline in asset quality. At the June 2009 examination adversely classified assets were in excess of 150.0% of Tier 1 capital and reserves.
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▪
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The Bank's liquidity position had tightened since the last examination and was considered marginal at the June 2009 examination. The Bank's tight liquidity position was the result of low levels of liquid assets, high percentage of investment securities pledged against borrowing lines, and higher levels of wholesale borrowings including $64.0 million borrowed from the Federal Home Loan Bank line and $71.3 million borrowed from the Federal Reserve Bank discount window. Brokered deposits total $99.3 million, 19.4% of total deposits at June 30, 2009, and compared unfavorably with the peer group at 6.3%.
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▪
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The Federal Reserve concluded in the June 2009 examination that oversight by the Board of Directors and senior management was not adequate given the escalating risk profile of the Bank's activities. Although the severe economic downturn was a significant factor in the decline in asset quality, the Board of Directors and senior management were deemed responsible for implementing a business strategy which allowed concentrations in higher-risk speculative residential construction lending. The Board of Directors and senior management had taken measures to maintain asset quality, capital, earnings, and liquidity, but had had not responded in a timely manner to the rapidly changing real estate conditions. As of March 31, 2009, the concentration in construction and land development loans represented high levels in relation to equity capital and reserves, although the exposures were declining over the prior few years. For example, management increased the ALLL in the second quarter of 2009, ordered new appraisals on property remargined collateral on loans, and was seeking sources for new equity capital. In addition, several transactions to reduce or restructure problem assets were in process. However, these actions had not resulted in material tangible improvements in the overall condition of the Bank as of the June 2009 examination. In addition, the June 2009 examination identified nine technical violations of Regulation Y Subpart B that deal with the failure to obtain the prescribed appraisals or evaluations on loan extensions or renewals. These violations of law were subsequently remedied.
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▪
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The June 2009 examination indicated that risk management practices needed improvement. Management information systems needed to be redesigned and implemented to more accurately measure fundamental exposures, such as the ongoing credit risk posed by the residential construction and land development loan portfolio and the emerging liquidity risks. The Bank needed to continue its efforts to address and reduce the increasing volume of problem assets. While the loan grading process showed improvement over the prior several examinations, the ALLL methodology was identified as flawed in the June 2009 examination. While the Board of Directors and management made some progress to address the findings of the June 2009 examination, management needed to make further progress on improving several key areas to identify, measure, monitor, and control the exposures presented by credit, liquidity, market, operational, reputation, and legal risks.
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•
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Plan to Strengthen Board Oversight
– Includes actions that the Board of Directors will take to improve the Bank’s condition, and maintain effective control and supervision over the Bank’s operations including credit risk management, liquidity, and earnings. Also includes the Board’s responsibility to monitor adherence to policies and procedures and
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•
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Plan to Strengthen Credit Risk Management Practices
– Includes the responsibility of Board to establish appropriate risk tolerance guidelines and limits, timely and accurate identification and quantification of credit risk, strategies to minimize credit losses and reduce the level of problem assets, procedures for the ongoing review of the investment portfolio to evaluate other-than-temporary-impairment, stress testing for commercial real estate loans and portfolio segments, and measures to reduce the levels of other real estate owned.
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•
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Plan to Improve Adversely Classified Assets
– Includes specific plans and strategies to improve the Bank’s asset position through repayment, amortization, liquidation, additional collateral, or other means on each loan, relationship, or other asset in excess of $1.5 million including OREO, that are past due more than 90 days as of the date of the written agreement.
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•
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Plan for Maintenance of Adequate Allowance for Loan Losses
– Includes policies and procedures to ensure adherence to the Bank’s revised ALLL methodology, provides for periodic reviews of the methodology as appropriate, and provides for review of ALLL by the Board at least quarterly.
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•
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Capital Plan
– Includes guidelines and trigger points to ensure sufficient capital is maintained at the Bank and the Company, and that capital ratios are maintained at a level deemed appropriate under regulatory guidelines given the level of classified assets, concentrations of credit, ALLL, current and projected growth, and projected retained earnings. Also contains contingency strategies to obtain additional capital as required to fulfill future capital requirements.
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•
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Plan to Improve Liquidity Position
– Includes measures to enhance the monitoring, measurement, and reporting of the Bank’s liquidity to the Board, a timetable to reduce the Bank’s reliance on brokered deposits and other wholesale funding, and specific liquidity targets and parameters to meet contractual obligations and unanticipated demands.
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•
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Contingency Funding Plan
– Includes adverse scenario planning, and identifies and quantifies available sources of liquidity for each scenario.
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•
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Earnings Plan and Budget
– Includes a revised business plan for the remainder of 2010, including operating assumptions that support for projected income, expense, and balance sheet components.
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•
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Develop and adopt a capital plan to maintain a ratio of tangible shareholders’ equity to total tangible assets equal to or greater than 9% and include in such capital plan a capital contingency plan for raising additional capital in the event of various contingencies;
|
|
•
|
Maintain a ratio of tangible shareholders’ equity to total tangible assets equal to or greater than 9%
|
|
•
|
Maintain an adequate allowance for loan losses and remedy any deficiency in the allowance for loan losses in the calendar quarter in which it is discovered; and
|
|
•
|
Not establish any new branches or other offices without the prior written consent of the Commissioner of the California Department of Business Oversight
|
|
•
|
Provide progress reports within 30 days after the end of each calendar quarter following the effective date of the MOU to the California Department of Business Oversight detailing the form and manner of all actions taken to secure compliance with the MOU and Agreement and the results of such actions.
|
|
•
|
Within 180 days from the effective date of the MOU, reduce the assets classified "Substandard" to not more than 45% of total capital.
|
|
•
|
Within 270 days from the effective date of the MOU, reduce the assets classified "Substandard" to not more than 40% of total capital.
|
|
|
YTD Average
12/31/13
|
|
YTD Average
12/31/12
|
||
|
Loans
|
70.75
|
%
|
|
74.20
|
%
|
|
Investment securities available for sale
|
5.45
|
%
|
|
7.30
|
%
|
|
Interest-bearing deposits in other banks
|
0.27
|
%
|
|
0.35
|
%
|
|
Interest-bearing deposits in FRB
|
23.53
|
%
|
|
18.15
|
%
|
|
Total earning assets
|
100.00
|
%
|
|
100.00
|
%
|
|
|
|
|
|
||
|
NOW accounts
|
15.56
|
%
|
|
14.44
|
%
|
|
Money market accounts
|
41.96
|
%
|
|
37.39
|
%
|
|
Savings accounts
|
12.40
|
%
|
|
11.99
|
%
|
|
Time deposits
|
27.00
|
%
|
|
33.44
|
%
|
|
Other borrowings
|
0.00
|
%
|
|
—
|
%
|
|
Subordinated debentures
|
3.08
|
%
|
|
2.74
|
%
|
|
Total interest-bearing liabilities
|
100.00
|
%
|
|
100.00
|
%
|
|
(In thousands)
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||
|
Provision for credit losses during period
|
$
|
(1,098
|
)
|
|
$
|
1,019
|
|
|
$
|
13,602
|
|
|
Allowance as % of nonperforming loans
|
60.70
|
%
|
|
50.92
|
%
|
|
45.52
|
%
|
|||
|
Nonperforming loans as % total loans
|
4.58
|
%
|
|
5.78
|
%
|
|
7.34
|
%
|
|||
|
Restructured loans as % total loans
|
2.29
|
%
|
|
4.19
|
%
|
|
4.74
|
%
|
|||
|
(In thousands except per share data and ratios)
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||
|
Selected Financial Ratios:
|
|
|
|
|
|
|||||
|
Return on average assets
|
1.13
|
%
|
0.97
|
%
|
(1.64
|
)%
|
(0.63
|
)%
|
(0.62
|
)%
|
|
Return on average shareholders' equity
|
10.09
|
%
|
9.23
|
%
|
(15.86
|
)%
|
(5.67
|
)%
|
(5.77
|
)%
|
|
Average shareholders' equity to average assets
|
11.20
|
%
|
10.55
|
%
|
10.36
|
%
|
11.06
|
%
|
10.71
|
%
|
|
Dividend payout ratio
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
|
|
|
|
2013
|
|
|
|
|
|
2012
|
|
|
||||||||||
|
|
Average Balance
|
|
Interest
|
|
Yield/Rate
|
|
Average Balance
|
|
Interest
|
|
Yield/Rate
|
||||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
||||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Loans and leases (1)
|
$
|
392,340
|
|
|
$
|
21,979
|
|
|
5.60
|
%
|
|
$
|
389,377
|
|
|
$
|
23,184
|
|
|
5.95
|
%
|
|
Investment Securities – taxable
|
30,208
|
|
|
703
|
|
|
2.33
|
%
|
|
38,322
|
|
|
1,720
|
|
|
4.49
|
%
|
||||
|
Interest-bearing deposits in other banks
|
1,511
|
|
|
8
|
|
|
0.53
|
%
|
|
1,854
|
|
|
23
|
|
|
1.24
|
%
|
||||
|
Interest-bearing deposits in FRB
|
130,481
|
|
|
312
|
|
|
0.24
|
%
|
|
95,238
|
|
|
224
|
|
|
0.24
|
%
|
||||
|
Total interest-earning assets
|
554,540
|
|
|
$
|
23,002
|
|
|
4.15
|
%
|
|
524,791
|
|
|
$
|
25,151
|
|
|
4.79
|
%
|
||
|
Allowance for credit losses
|
(11,299
|
)
|
|
|
|
|
|
|
|
(12,257
|
)
|
|
|
|
|
|
|
||||
|
Noninterest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash and due from banks
|
22,417
|
|
|
|
|
|
|
|
|
23,290
|
|
|
|
|
|
|
|
||||
|
Premises and equipment, net
|
12,082
|
|
|
|
|
|
|
|
|
12,617
|
|
|
|
|
|
|
|
||||
|
Accrued interest receivable
|
1,278
|
|
|
|
|
|
|
|
|
1,512
|
|
|
|
|
|
|
|
||||
|
Other real estate owned
|
18,932
|
|
|
|
|
|
|
|
|
24,454
|
|
|
|
|
|
|
|
||||
|
Other assets
|
45,431
|
|
|
|
|
|
|
|
|
48,601
|
|
|
|
|
|
|
|
||||
|
Total average assets
|
$
|
643,381
|
|
|
|
|
|
|
|
|
$
|
623,008
|
|
|
|
|
|
|
|
||
|
Liabilities and Shareholders' Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
NOW accounts
|
$
|
53,731
|
|
|
$
|
60
|
|
|
0.11
|
%
|
|
$
|
49,358
|
|
|
$
|
68
|
|
|
0.14
|
%
|
|
Money market accounts
|
144,920
|
|
|
615
|
|
|
0.42
|
%
|
|
127,784
|
|
|
775
|
|
|
0.61
|
%
|
||||
|
Savings accounts
|
42,837
|
|
|
84
|
|
|
0.20
|
%
|
|
40,986
|
|
|
98
|
|
|
0.24
|
%
|
||||
|
Time deposits
|
93,236
|
|
|
571
|
|
|
0.61
|
%
|
|
114,286
|
|
|
850
|
|
|
0.74
|
%
|
||||
|
Other borrowings
|
—
|
|
|
—
|
|
|
0.00
|
%
|
|
—
|
|
|
—
|
|
|
0.00
|
%
|
||||
|
Junior subordinated debentures
|
10,640
|
|
|
281
|
|
|
2.64
|
%
|
|
9,385
|
|
|
270
|
|
|
2.88
|
%
|
||||
|
Total interest-bearing liabilities
|
345,364
|
|
|
$
|
1,611
|
|
|
0.47
|
%
|
|
341,799
|
|
|
$
|
2,061
|
|
|
0.60
|
%
|
||
|
Noninterest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Noninterest-bearing checking
|
220,003
|
|
|
|
|
|
|
|
|
210,003
|
|
|
|
|
|
|
|
||||
|
Accrued interest payable
|
95
|
|
|
|
|
|
|
|
|
127
|
|
|
|
|
|
|
|
||||
|
Other liabilities
|
5,888
|
|
|
|
|
|
|
|
|
5,324
|
|
|
|
|
|
|
|
||||
|
Total Liabilities
|
571,350
|
|
|
|
|
|
|
|
|
557,253
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total shareholders' equity
|
72,031
|
|
|
|
|
|
|
|
|
65,755
|
|
|
|
|
|
|
|
||||
|
Total average liabilities and shareholders' equity
|
$
|
643,381
|
|
|
|
|
|
|
|
|
$
|
623,008
|
|
|
|
|
|
|
|
||
|
Interest income as a percentage of average earning assets
|
|
|
|
|
|
|
4.15
|
%
|
|
|
|
|
|
|
|
4.79
|
%
|
||||
|
Interest expense as a percentage of average earning assets
|
|
|
|
|
|
|
0.29
|
%
|
|
|
|
|
|
|
|
0.39
|
%
|
||||
|
Net interest margin
|
|
|
|
|
|
|
3.86
|
%
|
|
|
|
|
|
|
|
4.40
|
%
|
||||
|
|
2013 compared to 2012
|
|
2012 compared to 2011
|
||||||||||||||||||
|
(In thousands)
|
Total
|
|
Rate
|
|
Volume
|
|
Total
|
|
Rate
|
|
Volume
|
||||||||||
|
Increase (decrease) in interest income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Loans
|
$
|
(1,205
|
)
|
|
$
|
(1,380
|
)
|
|
175
|
|
|
$
|
(2,389
|
)
|
|
$
|
(268
|
)
|
|
(2,121
|
)
|
|
Investment securities
|
(1,017
|
)
|
|
(706
|
)
|
|
(311
|
)
|
|
(421
|
)
|
|
54
|
|
|
(475
|
)
|
||||
|
Interest-bearing deposits in other banks
|
(15
|
)
|
|
(14
|
)
|
|
(1
|
)
|
|
(16
|
)
|
|
(11
|
)
|
|
(5
|
)
|
||||
|
Interest-bearing deposits in FRB
|
88
|
|
|
2
|
|
|
86
|
|
|
38
|
|
|
2
|
|
|
36
|
|
||||
|
Total interest income
|
(2,149
|
)
|
|
(2,098
|
)
|
|
(51
|
)
|
|
(2,788
|
)
|
|
(223
|
)
|
|
(2,565
|
)
|
||||
|
Increase (decrease) in interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest-bearing demand accounts
|
(168
|
)
|
|
(262
|
)
|
|
94
|
|
|
(257
|
)
|
|
(294
|
)
|
|
37
|
|
||||
|
Savings accounts
|
(14
|
)
|
|
(18
|
)
|
|
4
|
|
|
(35
|
)
|
|
(41
|
)
|
|
6
|
|
||||
|
Time deposits
|
(279
|
)
|
|
(137
|
)
|
|
(142
|
)
|
|
(537
|
)
|
|
(160
|
)
|
|
(377
|
)
|
||||
|
Other borrowings
|
—
|
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
|
(51
|
)
|
|
(50
|
)
|
||||
|
Subordinated debentures
|
11
|
|
|
(23
|
)
|
|
34
|
|
|
27
|
|
|
41
|
|
|
(14
|
)
|
||||
|
Total interest expense
|
(450
|
)
|
|
(440
|
)
|
|
(10
|
)
|
|
(903
|
)
|
|
(505
|
)
|
|
(398
|
)
|
||||
|
Increase (decrease) in net interest income
|
$
|
(1,699
|
)
|
|
$
|
(1,658
|
)
|
|
(41
|
)
|
|
$
|
(1,885
|
)
|
|
$
|
282
|
|
|
(2,167
|
)
|
|
(In thousands)
|
2013
|
|
2012
|
|
Amount of
Change |
|
Percent
Change |
|||||||
|
Customer service fees
|
$
|
3,456
|
|
|
$
|
3,583
|
|
|
$
|
(127
|
)
|
|
(3.54
|
)%
|
|
Increase in cash surrender value of BOLI
|
556
|
|
|
564
|
|
|
(8
|
)
|
|
(1.42
|
)%
|
|||
|
Loss on disposition of securities
|
—
|
|
|
(195
|
)
|
|
195
|
|
|
(100.00
|
)%
|
|||
|
Impairment loss on investment securities
|
—
|
|
|
(284
|
)
|
|
284
|
|
|
(100.00
|
)%
|
|||
|
Loss on fair value option of financial liabilities
|
(776
|
)
|
|
(774
|
)
|
|
(2
|
)
|
|
0.26
|
%
|
|||
|
Gain on other investments
|
—
|
|
|
1,739
|
|
|
(1,739
|
)
|
|
(100.00
|
)%
|
|||
|
Other
|
732
|
|
|
843
|
|
|
(111
|
)
|
|
(13.17
|
)%
|
|||
|
Total
|
$
|
3,968
|
|
|
$
|
5,476
|
|
|
$
|
(1,508
|
)
|
|
(27.54
|
)%
|
|
|
2013
|
|
2012
|
||||||||
|
(Dollars in thousands)
|
Amount
|
% of
Average
Earning Assets
|
|
Amount
|
% of
Average
Earning Assets
|
||||||
|
Salaries and employee benefits
|
$
|
9,214
|
|
1.66
|
%
|
|
$
|
9,082
|
|
1.73
|
%
|
|
Occupancy expense
|
3,678
|
|
0.66
|
%
|
|
3,548
|
|
0.68
|
%
|
||
|
Data processing
|
185
|
|
0.03
|
%
|
|
77
|
|
0.01
|
%
|
||
|
Professional fees
|
1,275
|
|
0.23
|
%
|
|
1,707
|
|
0.33
|
%
|
||
|
FDIC/DFI assessments
|
1,150
|
|
0.21
|
%
|
|
1,409
|
|
0.27
|
%
|
||
|
Directors fees
|
232
|
|
0.04
|
%
|
|
256
|
|
0.05
|
%
|
||
|
Amortization of intangibles
|
187
|
|
0.03
|
%
|
|
304
|
|
0.06
|
%
|
||
|
Correspondent bank service charges
|
287
|
|
0.05
|
%
|
|
313
|
|
0.06
|
%
|
||
|
Loss on CA Tax Credit Partnership
|
253
|
|
0.05
|
%
|
|
39
|
|
0.01
|
%
|
||
|
OREO expense
|
271
|
|
0.05
|
%
|
|
934
|
|
0.18
|
%
|
||
|
Other
|
2,351
|
|
0.42
|
%
|
|
2,276
|
|
0.43
|
%
|
||
|
Total
|
$
|
19,083
|
|
3.44
|
%
|
|
$
|
19,945
|
|
3.80
|
%
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010 (1)
|
|
2009 (1)
|
||||||||||||||||||||
|
(In thousands)
|
Dollar Amount
|
% of Loans
|
|
Dollar Amount
|
% of Loans
|
|
Dollar Amount
|
% of Loans
|
|
Dollar Amount
|
% of Loans
|
|
Dollar Amount
|
% of Loans
|
|||||||||||||||
|
Commercial and Industrial
|
$
|
70,686
|
|
17.9
|
%
|
|
$
|
72,117
|
|
18.0
|
%
|
|
$
|
99,060
|
|
24.2
|
%
|
|
$
|
159,224
|
|
36.0
|
%
|
|
$
|
167,930
|
|
33.0
|
%
|
|
Real estate mortgage
|
197,365
|
|
49.9
|
%
|
|
189,934
|
|
47.5
|
%
|
|
182,131
|
|
44.6
|
%
|
|
157,781
|
|
35.7
|
%
|
|
165,629
|
|
32.6
|
%
|
|||||
|
RE construction & development
|
87,004
|
|
22.0
|
%
|
|
90,941
|
|
22.7
|
%
|
|
70,877
|
|
17.3
|
%
|
|
65,182
|
|
14.8
|
%
|
|
105,220
|
|
20.7
|
%
|
|||||
|
Agricultural
|
30,932
|
|
7.8
|
%
|
|
36,169
|
|
9.0
|
%
|
|
45,483
|
|
11.1
|
%
|
|
46,308
|
|
10.5
|
%
|
|
50,897
|
|
10.0
|
%
|
|||||
|
Installment/other
|
9,330
|
|
2.4
|
%
|
|
10,884
|
|
2.7
|
%
|
|
11,115
|
|
2.8
|
%
|
|
12,891
|
|
2.9
|
%
|
|
18,191
|
|
3.6
|
%
|
|||||
|
Lease financing
|
—
|
|
—
|
%
|
|
12
|
|
0.1
|
%
|
|
49
|
|
—
|
%
|
|
305
|
|
0.1
|
%
|
|
706
|
|
0.1
|
%
|
|||||
|
Total Loans
|
$
|
395,317
|
|
100.0
|
%
|
|
$
|
400,057
|
|
100.0
|
%
|
|
$
|
408,715
|
|
100.0
|
%
|
|
$
|
441,691
|
|
100.0
|
%
|
|
$
|
508,573
|
|
100.0
|
%
|
|
(In thousands)
|
Due in one year or less
|
|
Due after one year through five years
|
|
Due after five years
|
|
Total
|
||||||||
|
Commercial and agricultural
|
$
|
37,160
|
|
|
$
|
50,812
|
|
|
$
|
13,646
|
|
|
$
|
101,618
|
|
|
Real estate construction & development
|
55,450
|
|
|
31,554
|
|
|
—
|
|
|
87,004
|
|
||||
|
Real estate – mortgage
|
29,946
|
|
|
97,301
|
|
|
70,118
|
|
|
197,365
|
|
||||
|
All other loans
|
3,734
|
|
|
4,140
|
|
|
1,456
|
|
|
9,330
|
|
||||
|
Total Loans
|
$
|
126,290
|
|
|
$
|
183,807
|
|
|
$
|
85,220
|
|
|
$
|
395,317
|
|
|
|
Due in one
|
|
Due after one
Year through
|
|
Due after
|
|
|
||||||||
|
(In thousands)
|
year or less
|
|
Five years
|
|
Five years
|
|
Total
|
||||||||
|
Accruing loans:
|
|
|
|
|
|
|
|
||||||||
|
Fixed rate loans
|
$
|
41,283
|
|
|
$
|
142,786
|
|
|
$
|
38,795
|
|
|
$
|
222,864
|
|
|
Floating rate loans
|
76,766
|
|
|
38,539
|
|
|
44,807
|
|
|
160,112
|
|
||||
|
Total accruing loans
|
118,049
|
|
|
181,325
|
|
|
83,602
|
|
|
382,976
|
|
||||
|
Nonaccrual loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Fixed rate loans
|
8,241
|
|
|
2,482
|
|
|
1,618
|
|
|
12,341
|
|
||||
|
Floating rate loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Total nonaccrual loans
|
8,241
|
|
|
2,482
|
|
|
1,618
|
|
|
12,341
|
|
||||
|
Total Loans
|
$
|
126,290
|
|
|
$
|
183,807
|
|
|
$
|
85,220
|
|
|
$
|
395,317
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||||||||||||
|
(In thousands)
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Value (Carrying Amount)
|
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Value (Carrying Amount)
|
||||||||||||||||
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
U.S. Government agencies
|
$
|
14,060
|
|
$
|
441
|
|
$
|
—
|
|
$
|
14,501
|
|
|
$
|
6,113
|
|
$
|
487
|
|
$
|
—
|
|
$
|
6,600
|
|
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
25,029
|
|
434
|
|
(78
|
)
|
25,385
|
|
|
20,586
|
|
697
|
|
—
|
|
21,283
|
|
||||||||
|
Mutual Funds
|
4,000
|
|
—
|
|
(270
|
)
|
3,730
|
|
|
4,000
|
|
—
|
|
(39
|
)
|
3,961
|
|
||||||||
|
Total available-for-sale
|
$
|
43,089
|
|
$
|
875
|
|
$
|
(348
|
)
|
$
|
43,616
|
|
|
$
|
30,699
|
|
$
|
1,184
|
|
$
|
(39
|
)
|
$
|
31,844
|
|
|
|
One year or less
|
After one year to five years
|
After five years to ten years
|
After ten years
|
Total
|
||||||||||||||||||||
|
(Dollars in thousands)
|
Amount
|
Yield (1)
|
Amount
|
Yield (1)
|
Amount
|
Yield (1)
|
Amount
|
Yield (1)
|
Amount
|
Yield (1)
|
|||||||||||||||
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
U.S. Government agencies
|
$
|
—
|
|
—
|
%
|
$
|
74
|
|
5.48
|
%
|
$
|
—
|
|
—
|
%
|
$
|
14,427
|
|
3.07
|
%
|
$
|
14,501
|
|
3.18
|
%
|
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
14
|
|
4.38
|
%
|
16,303
|
|
1.30
|
%
|
7,697
|
|
2.52
|
%
|
1,371
|
|
4.95
|
%
|
25,385
|
|
1.90
|
%
|
|||||
|
Mutual Funds
|
3,730
|
|
2.41
|
%
|
—
|
|
—
|
%
|
—
|
|
—
|
%
|
—
|
|
—
|
%
|
3,730
|
|
2.41
|
%
|
|||||
|
Total estimated fair value
|
$
|
3,744
|
|
2.41
|
%
|
$
|
16,377
|
|
1.32
|
%
|
$
|
7,697
|
|
2.52
|
%
|
$
|
15,798
|
|
3.23
|
%
|
$
|
43,616
|
|
2.36
|
%
|
|
(1) Weighted average yields are not computed on a tax equivalent basis
|
|||||||||||||||||||||||||
|
|
December 31,
|
Change during Year
|
|||||||||||||
|
(In thousands)
|
2013
|
2012
|
2011
|
2013
|
2012
|
||||||||||
|
Noninterest-bearing deposits
|
$
|
214,317
|
|
$
|
217,014
|
|
$
|
224,907
|
|
$
|
(2,697
|
)
|
$
|
(7,893
|
)
|
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
NOW and money market accounts
|
198,928
|
|
203,771
|
|
165,937
|
|
(4,843
|
)
|
37,834
|
|
|||||
|
Savings accounts
|
45,758
|
|
43,117
|
|
40,099
|
|
2,641
|
|
3,018
|
|
|||||
|
Time deposits:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Under $100,000
|
28,825
|
|
32,532
|
|
53,271
|
|
(3,707
|
)
|
(20,739
|
)
|
|||||
|
$100,000 and over
|
54,661
|
|
66,853
|
|
90,213
|
|
(12,192
|
)
|
(23,360
|
)
|
|||||
|
Total interest-bearing deposits
|
328,172
|
|
346,273
|
|
349,520
|
|
(18,101
|
)
|
(3,247
|
)
|
|||||
|
Total deposits
|
$
|
542,489
|
|
$
|
563,287
|
|
$
|
574,427
|
|
$
|
(20,798
|
)
|
$
|
(11,140
|
)
|
|
|
2013
|
2012
|
2011
|
||||||||||||
|
(Dollars in thousands)
|
Average Balance
|
Rate %
|
Average Balance
|
Rate %
|
Average Balance
|
Rate %
|
|||||||||
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|||||||||
|
Checking accounts
|
$
|
198,651
|
|
0.34
|
%
|
$
|
177,142
|
|
0.48
|
%
|
$
|
171,137
|
|
0.64
|
%
|
|
Savings
|
42,837
|
|
0.20
|
%
|
40,986
|
|
0.24
|
%
|
39,174
|
|
0.34
|
%
|
|||
|
Time deposits (1)
|
93,236
|
|
0.61
|
%
|
114,286
|
|
0.74
|
%
|
162,910
|
|
0.85
|
%
|
|||
|
Noninterest-bearing deposits
|
220,003
|
|
|
|
210,003
|
|
|
|
179,239
|
|
|
|
|||
|
•
|
Plan to Strengthen Credit Risk Management Practices
– Includes the responsibility of the Board to establish appropriate risk tolerance guidelines and limits, timely and accurate identification and quantification of credit risk, strategies to minimize credit losses and reduce the level of problem assets, procedures for the ongoing review of the investment
|
|
•
|
Plan to Improve Adversely Classified Assets
– Includes specific plans and strategies to improve the Bank’s asset position through repayment, amortization, liquidation, additional collateral, or other means on each loan, relationship, or other asset in excess of $1.5 million including OREO, that are past due more than 90 days as of the date of the written agreement.
|
|
•
|
Plan for Maintenance of Adequate Allowance for Loan Losses
– Includes policies and procedures to ensure adherence to the Bank’s revised ALLL methodology, provides for periodic reviews of the methodology as appropriate, and provides for review of ALLL by the Board at least quarterly.
|
|
Loan Segments for Loan Loss Reserve Analysis
|
Loan Balances at December 31,
|
||||||||||||||
|
(Dollars in thousands)
|
2013
|
2012
|
2011
|
2010 (1)
|
2009 (1)
|
||||||||||
|
Commercial and Business Loans
|
$
|
68,460
|
|
$
|
69,780
|
|
$
|
96,076
|
|
$
|
154,624
|
|
$
|
161,292
|
|
|
Government Program Loans
|
2,226
|
|
2,337
|
|
2,984
|
|
4,600
|
|
6,638
|
|
|||||
|
Total Commercial and Industrial
|
70,686
|
|
72,117
|
|
99,060
|
|
159,224
|
|
167,930
|
|
|||||
|
Commercial Real Estate Term Loans
|
143,919
|
|
133,599
|
|
140,590
|
|
131,632
|
|
117,010
|
|
|||||
|
Single Family Residential Loans
|
52,036
|
|
55,016
|
|
39,682
|
|
23,764
|
|
45,828
|
|
|||||
|
Home Improvement/Home Equity Loans
|
1,410
|
|
1,319
|
|
1,859
|
|
2,385
|
|
2,791
|
|
|||||
|
Total Real Estate Mortgage
|
197,365
|
|
189,934
|
|
182,131
|
|
157,781
|
|
165,629
|
|
|||||
|
RE Construction and Development Loans
|
87,004
|
|
90,941
|
|
70,877
|
|
65,182
|
|
105,220
|
|
|||||
|
Agricultural Loans
|
30,932
|
|
36,169
|
|
45,483
|
|
46,308
|
|
50,897
|
|
|||||
|
Consumer Loans
|
9,330
|
|
10,639
|
|
10,907
|
|
12,462
|
|
17,939
|
|
|||||
|
Overdraft protection Lines
|
—
|
|
90
|
|
85
|
|
74
|
|
73
|
|
|||||
|
Overdrafts
|
—
|
|
155
|
|
124
|
|
355
|
|
179
|
|
|||||
|
Total Installment/other
|
9,330
|
|
10,884
|
|
11,116
|
|
12,891
|
|
18,191
|
|
|||||
|
Commercial Lease Financing
|
—
|
|
12
|
|
49
|
|
305
|
|
706
|
|
|||||
|
Total Loans
|
$
|
395,317
|
|
$
|
400,057
|
|
$
|
408,716
|
|
$
|
441,691
|
|
$
|
508,573
|
|
|
•
|
Levels of, and trends in delinquencies and nonaccrual loans;
|
|
•
|
Trends in volumes and term of loans;
|
|
•
|
Effects of any changes in lending policies and procedures including those for underwriting, collection, charge-off, and recovery;
|
|
•
|
Experience, ability, and depth of lending management and staff;
|
|
•
|
National and local economic trends and conditions and;
|
|
•
|
Concentrations of credit that might affect loss experience across one or more components of the portfolio, including high-balance loan concentrations and participations.
|
|
(In thousands)
|
December 31, 2013
|
December 31, 2012
|
December 31, 2011
|
||||||
|
Specific allowance – impaired loans
|
$
|
762
|
|
$
|
658
|
|
$
|
1,254
|
|
|
Formula allowance – classified loans not impaired
|
3,205
|
|
2,871
|
|
4,049
|
|
|||
|
Formula allowance – special mention loans
|
31
|
|
113
|
|
450
|
|
|||
|
Total allowance for special mention and classified loans
|
3,998
|
|
3,642
|
|
5,753
|
|
|||
|
Formula allowance for pass loans
|
6,595
|
|
2,719
|
|
7,654
|
|
|||
|
Unallocated allowance
|
395
|
|
5,423
|
|
241
|
|
|||
|
Total allowance
|
10,988
|
|
11,784
|
|
13,648
|
|
|||
|
Impaired loans
|
18,132
|
|
21,931
|
|
31,882
|
|
|||
|
Classified loans not considered impaired
|
20,233
|
|
13,105
|
|
12,120
|
|
|||
|
Total classified loans
|
38,365
|
|
35,036
|
|
44,002
|
|
|||
|
Special mention loans not considered impaired
|
1,825
|
|
2,057
|
|
11,603
|
|
|||
|
(Dollars in thousands)
|
December 31, 2013
|
December 31, 2012
|
December 31, 2011
|
||||||
|
Allowance for loan losses - period end
|
$
|
10,988
|
|
$
|
11,784
|
|
$
|
13,648
|
|
|
Net loans (recovered) charged off during period
|
(302
|
)
|
2,883
|
|
16,474
|
|
|||
|
LLR Provision during period
|
(1,098
|
)
|
1,019
|
|
13,602
|
|
|||
|
Loans outstanding at period-end
|
395,317
|
|
400,057
|
|
408,714
|
|
|||
|
ALLL as % of loans at period-end
|
2.78
|
%
|
2.95
|
%
|
3.34
|
%
|
|||
|
Nonaccrual loans
|
12,341
|
|
13,425
|
|
18,098
|
|
|||
|
Restructured Loans
|
5,761
|
|
9,716
|
|
11,885
|
|
|||
|
Total nonperforming loans
|
18,102
|
|
23,141
|
|
29,983
|
|
|||
|
ALLL as % of nonperforming loans
|
60.70
|
%
|
50.92
|
%
|
45.52
|
%
|
|||
|
Impaired loans
|
18,132
|
|
21,931
|
|
31,882
|
|
|||
|
Classified loans not considered impaired
|
20,233
|
|
13,105
|
|
12,120
|
|
|||
|
Total classified loans
|
$
|
38,365
|
|
$
|
35,036
|
|
$
|
44,002
|
|
|
ALLL as % of classified loans
|
28.64
|
%
|
33.63
|
%
|
31.02
|
%
|
|||
|
|
Balance
|
|
Allowance
|
|
Balance
|
|
Allowance
|
|
Balance
|
|
Allowance
|
||||||||||||
|
(In thousands)
|
December 31, 2013
|
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2011
|
||||||||||||
|
Commercial and industrial
|
$
|
677
|
|
|
$
|
9
|
|
|
$
|
1,431
|
|
|
$
|
37
|
|
|
$
|
6,639
|
|
|
$
|
112
|
|
|
Real estate – mortgage
|
15,573
|
|
|
753
|
|
|
18,457
|
|
|
621
|
|
|
11,827
|
|
|
690
|
|
||||||
|
Real estate construction and development
|
1,789
|
|
|
—
|
|
|
1,730
|
|
|
—
|
|
|
11,432
|
|
|
71
|
|
||||||
|
Agricultural
|
45
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
1,853
|
|
|
381
|
|
||||||
|
Installment/other
|
48
|
|
|
—
|
|
|
121
|
|
|
—
|
|
|
130
|
|
|
—
|
|
||||||
|
Lease financing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Total impaired loans
|
$
|
18,132
|
|
|
$
|
762
|
|
|
$
|
21,931
|
|
|
$
|
658
|
|
|
$
|
31,881
|
|
|
$
|
1,254
|
|
|
|
Total TDRs
|
Nonaccrual TDRs
|
Accruing TDRs
|
||||||
|
(In thousands
)
|
December 31, 2013
|
December 31, 2013
|
December 31, 2013
|
||||||
|
Commercial and industrial
|
$
|
675
|
|
$
|
—
|
|
$
|
675
|
|
|
Real estate - mortgage:
|
|
|
|
|
|
|
|||
|
Commercial real estate
|
1,468
|
|
1,468
|
|
—
|
|
|||
|
Residential mortgages
|
5,273
|
|
1,583
|
|
3,690
|
|
|||
|
Home equity loans
|
—
|
|
—
|
|
—
|
|
|||
|
Total real estate mortgage
|
6,741
|
|
3,051
|
|
3,690
|
|
|||
|
RE construction & development
|
1,551
|
|
247
|
|
1,304
|
|
|||
|
Agricultural
|
44
|
|
—
|
|
44
|
|
|||
|
Installment/other
|
48
|
|
—
|
|
48
|
|
|||
|
Lease financing
|
—
|
|
—
|
|
—
|
|
|||
|
Total Troubled Debt Restructurings
|
$
|
9,059
|
|
$
|
3,298
|
|
$
|
5,761
|
|
|
|
Total TDRs
|
Nonaccrual TDRs
|
Accruing TDRs
|
||||||
|
(In thousands
)
|
December 31, 2012
|
December 31, 2012
|
December 31, 2012
|
||||||
|
Commercial and industrial
|
$
|
990
|
|
$
|
740
|
|
$
|
250
|
|
|
Real estate - mortgage:
|
|
|
|
|
|
|
|||
|
Commercial real estate
|
5,395
|
|
2,763
|
|
2,632
|
|
|||
|
Residential mortgages
|
7,289
|
|
1,745
|
|
5,544
|
|
|||
|
Home equity loans
|
10
|
|
10
|
|
—
|
|
|||
|
Total real estate mortgage
|
12,694
|
|
4,518
|
|
8,176
|
|
|||
|
RE construction & development
|
2,860
|
|
1,730
|
|
1,130
|
|
|||
|
Agricultural
|
191
|
|
136
|
|
55
|
|
|||
|
Installment/other
|
38
|
|
19
|
|
19
|
|
|||
|
Lease financing
|
—
|
|
—
|
|
—
|
|
|||
|
Total Troubled Debt Restructurings
|
$
|
16,773
|
|
$
|
7,143
|
|
$
|
9,630
|
|
|
(In thousands)
|
December 31, 2013
|
December 31, 2012
|
||||
|
Commercial and industrial
|
$
|
590
|
|
$
|
1,867
|
|
|
Real estate - mortgage:
|
|
|
|
|
||
|
Commercial real estate
|
—
|
|
—
|
|
||
|
Residential mortgages
|
1,204
|
|
909
|
|
||
|
Home equity loans
|
32
|
|
—
|
|
||
|
Total real estate mortgage
|
1,236
|
|
909
|
|
||
|
RE construction & development
|
—
|
|
141
|
|
||
|
Agricultural
|
—
|
|
—
|
|
||
|
Installment/other
|
—
|
|
49
|
|
||
|
Lease financing
|
—
|
|
—
|
|
||
|
Total Special Mention Loans
|
$
|
1,826
|
|
$
|
2,966
|
|
|
|
December 31,
|
||||||||||||||
|
(Dollars in thousands)
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||
|
Total loans outstanding at end of period before deducting allowances for credit losses
|
$
|
395,013
|
|
$
|
400,033
|
|
$
|
408,715
|
|
$
|
441,691
|
|
$
|
508,573
|
|
|
Average net loans outstanding during period
|
392,340
|
|
389,377
|
|
424,961
|
|
490,421
|
|
534,830
|
|
|||||
|
Balance of allowance at beginning of period
|
11,784
|
|
13,648
|
|
16,520
|
|
15,016
|
|
11,529
|
|
|||||
|
Loans charged off:
|
|
|
|
|
|
|
|
|
|||||||
|
Real estate
|
(635
|
)
|
(630
|
)
|
(7,224
|
)
|
(8,119
|
)
|
(4,245
|
)
|
|||||
|
Commercial, Industrial & Agricultural
|
(678
|
)
|
(3,397
|
)
|
(9,340
|
)
|
(2,878
|
)
|
(5,648
|
)
|
|||||
|
Commercial lease financing
|
—
|
|
—
|
|
(110
|
)
|
(81
|
)
|
(122
|
)
|
|||||
|
Installment and other
|
(273
|
)
|
(251
|
)
|
(620
|
)
|
(858
|
)
|
(130
|
)
|
|||||
|
Total loans charged off
|
(1,586
|
)
|
(4,278
|
)
|
(17,294
|
)
|
(11,936
|
)
|
(10,145
|
)
|
|||||
|
Recoveries of loans previously charged off:
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Real estate
|
1,538
|
|
698
|
|
159
|
|
10
|
|
1
|
|
|||||
|
Commercial and industrial & agricultural
|
279
|
|
648
|
|
650
|
|
940
|
|
245
|
|
|||||
|
Lease financing
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||
|
Installment and other
|
71
|
|
49
|
|
11
|
|
15
|
|
10
|
|
|||||
|
Total loan recoveries
|
1,888
|
|
1,395
|
|
820
|
|
965
|
|
257
|
|
|||||
|
Net loans (charged off) recovered
|
302
|
|
(2,883
|
)
|
(16,474
|
)
|
(10,971
|
)
|
(9,888
|
)
|
|||||
|
Provision charged to operating expense
|
(1,098
|
)
|
1,019
|
|
13,602
|
|
12,475
|
|
13,375
|
|
|||||
|
Balance of allowance for credit losses at end of period
|
$
|
10,988
|
|
$
|
11,784
|
|
$
|
13,648
|
|
$
|
16,520
|
|
$
|
15,016
|
|
|
Net loan (recoveries) charge-offs to total average loans
|
(0.08
|
)%
|
0.74
|
%
|
3.88
|
%
|
2.24
|
%
|
1.85
|
%
|
|||||
|
Net loan (recoveries) charge-offs to loans at end of period
|
(0.08
|
)%
|
0.72
|
%
|
4.03
|
%
|
2.48
|
%
|
1.94
|
%
|
|||||
|
Allowance for credit losses to total loans at end of period
|
2.78
|
%
|
2.95
|
%
|
3.34
|
%
|
3.74
|
%
|
2.95
|
%
|
|||||
|
Net loan (recoveries) charge-offs to allowance for credit losses
|
(2.75
|
)%
|
24.47
|
%
|
120.71
|
%
|
66.41
|
%
|
65.85
|
%
|
|||||
|
Net loan charge-offs to provision for credit losses
|
27.50
|
%
|
282.92
|
%
|
121.11
|
%
|
87.94
|
%
|
73.93
|
%
|
|||||
|
Description
|
Loss
|
Recoveries
|
Provision
|
Balance
|
||||||||
|
Balance Forward
|
|
|
|
11,784
|
|
|||||||
|
1st quarter - 2013
|
416
|
|
44
|
|
(9
|
)
|
11,403
|
|
||||
|
2nd quarter - 2013
|
312
|
|
27
|
|
39
|
|
11,157
|
|
||||
|
3rd quarter - 2013
|
474
|
|
1,019
|
|
(1,150
|
)
|
10,552
|
|
||||
|
4th quarter - 2013
|
384
|
|
798
|
|
22
|
|
10,988
|
|
||||
|
Total YTD - 2013
|
$
|
1,586
|
|
$
|
1,888
|
|
$
|
(1,098
|
)
|
$
|
10,988
|
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||||||||||||
|
(Dollars in thousands)
|
Allowance
for Credit Losses
|
% of Loans
|
|
Allowance
for Credit Losses |
% of Loans
|
|
Allowance
for Credit Losses |
% of Loans
|
|
Allowance
for Credit Losses |
% of Loans
|
|
Allowance
for Credit Losses |
% of Loans
|
|||||||||||||||
|
Commercial and industrial
|
$
|
2,340
|
|
17.88
|
%
|
|
$
|
1,614
|
|
18.0
|
%
|
|
$
|
4,782
|
|
40.7
|
%
|
|
$
|
8,209
|
|
36.0
|
%
|
|
$
|
7,125
|
|
33.0
|
%
|
|
Real estate – mortgage
|
1,862
|
|
49.93
|
%
|
|
1,292
|
|
47.6
|
%
|
|
2,070
|
|
35.4
|
%
|
|
1,620
|
|
35.7
|
%
|
|
1,426
|
|
32.6
|
%
|
|||||
|
RE construction and development
|
5,533
|
|
22.01
|
%
|
|
2,814
|
|
22.7
|
%
|
|
5,634
|
|
12.3
|
%
|
|
5,763
|
|
14.8
|
%
|
|
5,561
|
|
20.7
|
%
|
|||||
|
Agricultural
|
583
|
|
7.82
|
%
|
|
352
|
|
9.0
|
%
|
|
803
|
|
8.8
|
%
|
|
850
|
|
10.5
|
%
|
|
334
|
|
10.0
|
%
|
|||||
|
Installment/other
|
275
|
|
2.36
|
%
|
|
288
|
|
2.7
|
%
|
|
117
|
|
2.8
|
%
|
|
49
|
|
2.9
|
%
|
|
535
|
|
3.6
|
%
|
|||||
|
Lease financing
|
—
|
|
—
|
%
|
|
1
|
|
—
|
%
|
|
1
|
|
—
|
%
|
|
3
|
|
0.1
|
%
|
|
35
|
|
0.1
|
%
|
|||||
|
Not allocated
|
395
|
|
—
|
%
|
|
5,423
|
|
—
|
%
|
|
241
|
|
—
|
%
|
|
26
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|||||
|
|
$
|
10,988
|
|
100.0
|
%
|
|
$
|
11,784
|
|
100.0
|
%
|
|
$
|
13,648
|
|
100.0
|
%
|
|
$
|
16,520
|
|
100.0
|
%
|
|
$
|
15,016
|
|
100.0
|
%
|
|
|
December 31,
|
||||||||||||||
|
(In thousands)
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||
|
Formula allowance
|
$
|
9,831
|
|
$
|
5,703
|
|
$
|
12,153
|
|
$
|
5,168
|
|
$
|
7,043
|
|
|
Specific allowance
|
762
|
|
658
|
|
1,254
|
|
11,326
|
|
7,973
|
|
|||||
|
Unallocated allowance
|
395
|
|
5,423
|
|
241
|
|
26
|
|
—
|
|
|||||
|
Total allowance
|
$
|
10,988
|
|
$
|
11,784
|
|
$
|
13,648
|
|
$
|
16,520
|
|
$
|
15,016
|
|
|
|
December 31,
|
||||||||||||||
|
(Dollars in thousands, except footnote)
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||
|
Nonaccrual loans (1)
|
$
|
12,341
|
|
$
|
13,425
|
|
$
|
18,098
|
|
$
|
34,394
|
|
$
|
34,757
|
|
|
Restructured loans
|
5,761
|
|
9,716
|
|
11,885
|
|
12,554
|
|
16,026
|
|
|||||
|
Total non-performing loans
|
18,102
|
|
23,141
|
|
29,983
|
|
46,948
|
|
50,783
|
|
|||||
|
Other real estate owned
|
13,946
|
|
23,932
|
|
27,091
|
|
35,580
|
|
36,217
|
|
|||||
|
Total non-performing assets
|
$
|
32,048
|
|
$
|
47,073
|
|
$
|
57,074
|
|
$
|
82,528
|
|
$
|
87,000
|
|
|
Loans, past due 90 days or more, still accruing
|
—
|
|
—
|
|
74
|
|
547
|
|
486
|
|
|||||
|
Non-performing loans to total gross loans
|
4.58
|
%
|
5.78
|
%
|
7.34
|
%
|
10.63
|
%
|
9.99
|
%
|
|||||
|
Non-performing assets to total gross loans
|
8.11
|
%
|
11.77
|
%
|
14.96
|
%
|
20.63
|
%
|
21.75
|
%
|
|||||
|
Allowance for loan losses to nonperforming loans
|
60.70
|
%
|
50.92
|
%
|
45.52
|
%
|
35.19
|
%
|
29.57
|
%
|
|||||
|
|
|
Balance
|
|
Change from
|
||||||||||||||||
|
(In thousands)
|
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31,
2011
|
|
December 31, 2012
|
|
December 31,
2011
|
||||||||||
|
Commercial and industrial
|
|
$
|
—
|
|
|
$
|
1,181
|
|
|
$
|
5,080
|
|
|
$
|
(1,181
|
)
|
|
$
|
(5,080
|
)
|
|
Real estate - mortgage
|
|
11,873
|
|
|
10,259
|
|
|
3,961
|
|
|
1,614
|
|
|
7,912
|
|
|||||
|
Real estate - construction
|
|
468
|
|
|
1,730
|
|
|
9,014
|
|
|
(1,262
|
)
|
|
(8,546
|
)
|
|||||
|
Agricultural
|
|
—
|
|
|
136
|
|
|
—
|
|
|
(136
|
)
|
|
—
|
|
|||||
|
Installment/other
|
|
—
|
|
|
119
|
|
|
43
|
|
|
(119
|
)
|
|
(43
|
)
|
|||||
|
Lease financing
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Total Nonaccrual Loans
|
|
$
|
12,341
|
|
|
$
|
13,425
|
|
|
$
|
18,098
|
|
|
$
|
(1,084
|
)
|
|
$
|
(5,757
|
)
|
|
|
Balance
|
||
|
December 31, 2013
|
$
|
135,212
|
|
|
December 31, 2012
|
$
|
141,627
|
|
|
December 31, 2011
|
$
|
124,184
|
|
|
1)
|
Local core deposits are the Company’s primary funding source. The Company must expand its efforts to attract these deposits through service-related and competitive pricing tactics. Other liquidity funding sources should only be consider if local core deposits are not attractive because of maturity or pricing.
|
|
2)
|
Unsecured Federal Funds lines with correspondent banks may be used to fund short-term peaks in loan demand or deposit run-off. Currently, unsecured borrowing lines with correspondents are limited and may not be reliable for long periods of time or in times of economic stress.
|
|
3)
|
Other funding sources such as secured credit lines with the Federal Home Loan Bank or the Federal Reserve may be used for longer periods. The Company collateralized these available lines with a combination of investment securities and pledged loans. The Company has utilized specific loan pledging with both the FHLB and the Federal Reserve to better ensure the continued availability of those lines of credit.
|
|
4)
|
The Company presently has a Discount Window facility available from the Federal Reserve Bank of San Francisco collateralized with loans as discussed above. At
December 31, 2013
, the Company had available credit of
$254,761,000
from the Federal Reserve based upon the loans pledged at that date. The Federal Reserve will monitor use of the Discount Window closely given the current status of the Company and the economy as a whole and. In addition, this credit facility may not be competitively priced under normal economic conditions. As such, the Company does not expect to use this facility except in times of crises, but does consider this to be a key contingency funding source.
|
|
5)
|
As long as the Bank remains “Well Capitalized” the Company may rely on brokered deposits when core deposit rates are higher in the marketplace or maturity structures are not desirable. The Company’s current policy limit for brokered deposits is 25% of total deposits. The Company may also utilize other wholesale deposit sources such as memberships that advertise the Bank’s time deposit rates to other subscribers, typically banks and credit unions. The Company’s current policy limit on other wholesale deposits is 10% of total deposits.
|
|
6)
|
The Bank may sell whole loans or participations in loans to provide additional liquidity. During economic downturns or other crises events, these funding sources may be difficult to achieve in a short period of time or at a reasonable price. As such, this strategy is better used as a long-term asset/liability management tool to effectively balance assets and liabilities to reduce liquidity risk.
|
|
7)
|
The Company currently has Bank Owned Life Insurance (BOLI) policies issued by highly rated insurance companies which may be sold to increase liquidity.
|
|
8)
|
The Company owns certain real estate including its administration building and several of its branches. These may be sold and vacated or leased back from the purchaser after sale to provide additional liquidity if needed. The sales process may require substantial time to complete, and may have an adverse impact on earnings depending on market rates and other factors at the time of sale.
|
|
9)
|
Investments near maturity may be sold to meet temporary funding needs but may need to be replaced to maintain liquidity ratios within acceptable limits. At the current time much of the investment portfolio is pledged to secure public deposits and borrowing lines. As wholesale funding dependence is reduced, the available liquidity in the investment portfolio will increase. The Company seeks to maintain an investment-grade securities portfolio to ensure quality collateral for pledging against borrowing lines of credit as well as to provide liquidity in times of needs.
|
|
•
|
Strengthen board oversight of the Bank’s management and operations by the Bank submitting a written plan to the Federal Reserve Bank to address and include (i) the actions that the board will take to improve the Bank’s conditions and maintain effective control over, and supervision of, the Bank’s major operations and activities, (ii) the responsibility of the board to monitor management’s adherence to approved policies and procedures, and applicable laws and regulations; and (iii) a description of the information and reports that are regularly reviewed by the board in its oversight of the operations and management of the Bank;
|
|
•
|
Strengthen credit risk management practices of the Bank by the Bank submitting a written plan to the Federal Reserve Bank to address and include (i) the responsibility of the Board of Directors to establish appropriate risk tolerance guidelines and risk limits; (ii) timely and accurate identification and quantification of credit risk within the loan portfolio; (iii) strategies to minimize credit losses and reduce the level of problem assets; (iv) procedures for the on-going review of the investment portfolio to evaluate other-than temporary-impairment (“OTTI”) and accurate accounting for OTTI; (v) stress testing of commercial real estate loan and portfolio segments; and (vi) measures to reduce the amount of other real estate owned;
|
|
•
|
Strengthen asset quality at the Bank by (i) not extending, renewing, or restructuring any credit to or for the benefit of any borrower, including any related interest of the borrower, whose loans or other extensions of credit were criticized in the Report of Examination or in any subsequent report of examination, without appropriate underwriting analysis, documentation, board or committee approval and certification that the board or committee reasonably believes that the extension of credit will not impair the Bank’s interest in obtaining repayment of the already outstanding credit and that the extension of credit or renewal will be repaid according to its terms, (ii) submitting to the Federal Reserve Bank an acceptable written plan designed to improve the Bank’s position through repayment, amortization, liquidation, additional collateral, or other means on each loan or other asset in excess of $1.5 million including other real estate owned that is past due as to principal or interest more than 90 days, on the Bank’s problem loan list, or was adversely classified in the Report of Examination or subsequent report of examination;
|
|
•
|
Improve management of the Bank’s allowance for loan losses by (i) eliminating from its books, by charge-off or collection, all assets or portions of assets classified “loss” in the Report of Examination that have not been previously collected in full or charged off within 10 days of the Agreement, and, within 30 days from the receipt of any federal or state report of examination, charge off all assets classified “loss” unless otherwise approved in writing by the Federal
|
|
•
|
Maintain sufficient capital at the Company and Bank by submitting to the Federal Reserve Bank an acceptable written plan to maintain sufficient capital at the Company, on a consolidated basis, and the Company and the Bank shall jointly submit to the Reserve Bank an acceptable written plan to maintain sufficient capital at the Bank, as a separate legal entity on a stand-alone basis that (i) complies with the applicable bank and bank holding company capital maintenance regulations and regulatory guidelines and that also considers the adequacy of the Bank’s capital, (ii) takes into account the volume of classified credits, concentrations of credit, ALLL, current and projected asset growth, and projected retained earnings, the source and timing of additional funds to fulfill the Company’s and the Bank’s future capital requirements, and a provision to notify the Federal Reserve Bank when either entity falls below the capital ratios in the accepted plan;.
|
|
•
|
Submit a revised business plan and budget to the Federal Reserve Bank for 2010 and subsequent calendar years that the Bank is subject to the Agreement to improve the Bank’s earnings and overall condition, which plan at a minimum provides a realistic and comprehensive budget for the remainder of calendar year 2010, and description of the operating assumptions that form the basis for, and adequately support, major projected income, expense, and balance sheet components;
|
|
•
|
Not make certain distributions, dividends, and payments, specifically that (i) the Company and Bank agreeing not to declare or pay any dividends without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors (“Director”), (ii) the Company not taking any other form of payment representing a reduction in capital from the Bank without the prior written approval of the Federal Reserve Bank, and (iii) the Company and its nonbank subsidiaries not making any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Federal Reserve Bank and the Director;
|
|
•
|
Not incur debt or redeem stock, without the prior written approval of the Federal Reserve Bank. The Company agrees not to incur, increase, or guarantee any debt or purchase or redeem any shares of its stock;
|
|
•
|
Correct violations of the laws by (i) the Bank immediately taking all necessary steps to correct all violations of law and regulation cited in the Report of Examination, (ii) the board of the Bank taking the necessary steps to ensure the Bank’s future compliance with all applicable laws and regulations, (iii) complying with the notice provisions of Section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of Governors of the Federal Reserve System (12 C.F.R. §§ 225.71
et seq)
prior to appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position, and (iv) complying with the restrictions on indemnification and severance payments of Section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the FDIC’s regulations (12 C.F.R. Part 359);
|
|
•
|
Comply with the Agreement by (i) appointing a compliance committee of the Bank (“Compliance Committee”) within 10 days of the date of the Agreement to monitor and coordinate the Bank’s compliance with the provisions of the Agreement, which Compliance Committee is composed of a majority of outside directors who are not executive officers or principal shareholders of the Bank and which is to meet at least monthly and report its findings to the board of directors of the Bank, and (ii) the Company and Bank within 30 days after the end of each calendar quarter following the date of the Agreement submitting to the Federal Reserve Bank written progress reports detailing the form and manner of all actions taken to secure compliance with the Agreement and the results of such actions.
|
|
•
|
Develop and adopt a capital plan to maintain a ratio of tangible shareholders’ equity to total tangible assets equal to or greater than 9% and include in such capital plan a capital contingency plan for raising additional capital in the event of various contingencies;
|
|
•
|
Maintain a ratio of tangible shareholders’ equity to total tangible assets equal to or greater than 9%
|
|
•
|
Maintain an adequate allowance for loan losses and remedy any deficiency in the allowance for loan losses in the calendar quarter in which it is discovered; and
|
|
•
|
Not establish any new branches or other offices without the prior written consent of the Commissioner of the California Department of Business Oversight
|
|
•
|
Provide progress reports within 30 days after the end of each calendar quarter following the effective date of the MOU to the California Department of Business Oversight detailing the form and manner of all actions taken to secure compliance with the MOU and Agreement and the results of such actions.
|
|
•
|
Within 180 days from the effective date of the MOU, reduce the assets classified "Substandard" to not more than 45% of total capital.
|
|
•
|
Within 270 days from the effective date of the MOU, reduce the assets classified "Substandard" to not more than 40% of total capital.
|
|
|
Company
|
|
Bank
|
|
|
|
To Be Well Capitalized under Prompt Corrective
|
||||
|
|
Actual
Capital Ratios
|
|
Actual
Capital Ratios
|
|
Minimum
Capital Ratios
|
|
Action
Provisions
|
||||
|
Total risk-based capital ratio
|
17.20
|
%
|
|
17.41
|
%
|
|
10.00
|
%
|
|
10.00
|
%
|
|
Tier 1 capital to risk-weighted assets
|
15.93
|
%
|
|
16.15
|
%
|
|
9.00
|
%
|
|
6.00
|
%
|
|
Leverage ratio
|
11.19
|
%
|
|
11.43
|
%
|
|
9.00
|
%
|
|
5.00
|
%
|
|
(In thousands except shares)
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Assets
|
|
|
|
||||
|
Cash and due from banks
|
$
|
20,193
|
|
|
$
|
27,481
|
|
|
Cash and due from FRB
|
115,019
|
|
|
114,146
|
|
||
|
Cash and cash equivalents
|
135,212
|
|
|
141,627
|
|
||
|
Interest-bearing deposits in other banks
|
1,515
|
|
|
1,507
|
|
||
|
Investment securities available for sale (at fair value)
|
43,616
|
|
|
31,844
|
|
||
|
Loans and leases
|
395,317
|
|
|
400,057
|
|
||
|
Unearned fees
|
(304
|
)
|
|
(24
|
)
|
||
|
Allowance for credit losses
|
(10,988
|
)
|
|
(11,784
|
)
|
||
|
Net loans and leases
|
384,025
|
|
|
388,249
|
|
||
|
Accrued interest receivable
|
1,644
|
|
|
1,694
|
|
||
|
Premises and equipment - net
|
12,122
|
|
|
12,262
|
|
||
|
Other real estate owned
|
13,946
|
|
|
23,932
|
|
||
|
Intangible assets
|
62
|
|
|
249
|
|
||
|
Goodwill
|
4,488
|
|
|
4,488
|
|
||
|
Cash surrender value of life insurance
|
17,203
|
|
|
16,681
|
|
||
|
Investment in limited partnerships
|
4,534
|
|
|
4,312
|
|
||
|
Deferred income taxes
|
11,630
|
|
|
9,724
|
|
||
|
Other assets
|
5,932
|
|
|
12,308
|
|
||
|
Total assets
|
$
|
635,929
|
|
|
$
|
648,877
|
|
|
Liabilities & Shareholders' Equity
|
|
|
|
|
|
||
|
Liabilities
|
|
|
|
|
|
||
|
Deposits
|
|
|
|
|
|
||
|
Noninterest bearing
|
$
|
214,317
|
|
|
$
|
217,014
|
|
|
Interest bearing
|
328,172
|
|
|
346,273
|
|
||
|
Total deposits
|
542,489
|
|
|
563,287
|
|
||
|
Accrued interest payable
|
44
|
|
|
71
|
|
||
|
Accounts payable and other liabilities
|
5,728
|
|
|
6,010
|
|
||
|
Junior subordinated debt (at fair value)
|
11,125
|
|
|
10,068
|
|
||
|
Total liabilities
|
559,386
|
|
|
579,436
|
|
||
|
Commitments and Contingencies
|
|
|
|
|
|
||
|
Shareholders' Equity
|
|
|
|
|
|
||
|
Common stock, no par value 20,000,000 shares authorized, 14,799,888 issued and outstanding at December 31, 2013, and 14,217,303 at December 31, 2012
|
45,778
|
|
|
43,173
|
|
||
|
Retained earnings
|
30,884
|
|
|
26,179
|
|
||
|
Accumulated other comprehensive income (loss)
|
(119
|
)
|
|
89
|
|
||
|
Total shareholders' equity
|
76,543
|
|
|
69,441
|
|
||
|
Total liabilities and shareholders' equity
|
$
|
635,929
|
|
|
$
|
648,877
|
|
|
(In thousands except shares and EPS)
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Interest Income
|
|
|
|
||||
|
Loans, including fees
|
$
|
21,979
|
|
|
$
|
23,184
|
|
|
Investment securities - AFS – taxable
|
703
|
|
|
1,720
|
|
||
|
Interest on deposits in Federal Reserve Bank
|
312
|
|
|
224
|
|
||
|
Interest on deposits in other banks
|
8
|
|
|
23
|
|
||
|
Total interest income
|
23,002
|
|
|
25,151
|
|
||
|
Interest Expense
|
|
|
|
|
|
||
|
Interest on deposits
|
1,330
|
|
|
1,791
|
|
||
|
Interest on other borrowed funds
|
281
|
|
|
270
|
|
||
|
Total interest expense
|
1,611
|
|
|
2,061
|
|
||
|
|
|
|
|
|
|
||
|
Net Interest Income Before Provision for Credit Losses
|
21,391
|
|
|
23,090
|
|
||
|
(Benefit) Provision for Credit Losses
|
(1,098
|
)
|
|
1,019
|
|
||
|
Net Interest Income
|
22,489
|
|
|
22,071
|
|
||
|
Noninterest Income
|
|
|
|
|
|
||
|
Customer service fees
|
3,456
|
|
|
3,583
|
|
||
|
Increase in cash surrender value of bank owned life insurance
|
556
|
|
|
564
|
|
||
|
Impairment loss on investment securities, other than-temporary loss
|
—
|
|
|
(284
|
)
|
||
|
Loss on fair value of financial liability
|
(776
|
)
|
|
(774
|
)
|
||
|
Loss on sale of securities
|
—
|
|
|
(195
|
)
|
||
|
Gain on sale of other investment
|
—
|
|
|
1,739
|
|
||
|
Other
|
732
|
|
|
843
|
|
||
|
Total noninterest income
|
3,968
|
|
|
5,476
|
|
||
|
Noninterest Expense
|
|
|
|
|
|
||
|
Salaries and employee benefits
|
9,214
|
|
|
9,082
|
|
||
|
Occupancy expense
|
3,678
|
|
|
3,548
|
|
||
|
Data processing
|
185
|
|
|
77
|
|
||
|
Professional fees
|
1,275
|
|
|
1,707
|
|
||
|
Regulatory assessments
|
1,150
|
|
|
1,409
|
|
||
|
Director fees
|
232
|
|
|
256
|
|
||
|
Amortization of intangibles
|
187
|
|
|
304
|
|
||
|
Correspondent bank service charges
|
287
|
|
|
313
|
|
||
|
Loss in equity of limited partnership
|
253
|
|
|
39
|
|
||
|
Net cost on operation of OREO
|
271
|
|
|
934
|
|
||
|
Other
|
2,351
|
|
|
2,276
|
|
||
|
Total noninterest expense
|
19,083
|
|
|
19,945
|
|
||
|
Income Before Provision for Taxes on Income
|
7,374
|
|
|
7,602
|
|
||
|
Provision for Taxes on Income
|
105
|
|
|
1,533
|
|
||
|
Net Income
|
$
|
7,269
|
|
|
$
|
6,069
|
|
|
Net Income per common share
|
|
|
|
|
|
||
|
Basic
|
$
|
0.49
|
|
|
$
|
0.41
|
|
|
Diluted
|
$
|
0.49
|
|
|
$
|
0.41
|
|
|
Shares on which net income per common share were based
|
|
|
|
|
|
||
|
Basic
|
14,798,135
|
|
|
14,789,001
|
|
||
|
Diluted
|
14,799,037
|
|
|
14,789,001
|
|
||
|
|
Year Ended December 31,
|
||||||
|
(In thousands)
|
2013
|
|
2012
|
||||
|
Net Income
|
$
|
7,269
|
|
|
$
|
6,069
|
|
|
|
|
|
|
||||
|
Unrealized holdings gains (losses) on securities
|
(617
|
)
|
|
1,420
|
|
||
|
Reclassification adjustment for net losses included in net income
|
—
|
|
|
195
|
|
||
|
Unrealized gains (losses) on unrecognized post retirement costs
|
275
|
|
|
(338
|
)
|
||
|
Other comprehensive (loss) income, before tax
|
(342
|
)
|
|
1,277
|
|
||
|
Tax benefit (expense) related to securities
|
247
|
|
|
(615
|
)
|
||
|
Tax (expense) benefit related to unrecognized post retirement costs
|
(113
|
)
|
|
136
|
|
||
|
Total other comprehensive (loss) income
|
(208
|
)
|
|
798
|
|
||
|
Comprehensive income
|
$
|
7,061
|
|
|
$
|
6,867
|
|
|
|
Common stock
|
|
|
|
|
|
|
|||||||||||
|
(In thousands except shares)
|
Number of Shares
|
|
Amount
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income
|
|
Total
|
|||||||||
|
Balance January 1, 2012
|
13,531,832
|
|
|
$
|
41,435
|
|
|
$
|
21,447
|
|
|
$
|
(709
|
)
|
|
$
|
62,173
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
798
|
|
|
798
|
|
||||
|
Common stock dividends
|
550,710
|
|
|
1,337
|
|
|
(1,337
|
)
|
|
|
|
|
0
|
|
||||
|
Common stock issuance
|
134,761
|
|
|
383
|
|
|
|
|
|
|
|
383
|
|
|||||
|
Stock-based compensation expense
|
|
|
|
18
|
|
|
|
|
|
|
|
|
18
|
|
||||
|
Net Income
|
|
|
|
|
|
|
6,069
|
|
|
|
|
|
6,069
|
|
||||
|
Balance December 31, 2012
|
14,217,303
|
|
|
$
|
43,173
|
|
|
$
|
26,179
|
|
|
$
|
89
|
|
|
$
|
69,441
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(208
|
)
|
|
(208
|
)
|
||||
|
Common stock dividends
|
577,383
|
|
|
2,564
|
|
|
(2,564
|
)
|
|
|
|
|
0
|
|
||||
|
Stock options exercised
|
5,202
|
|
|
12
|
|
|
|
|
|
|
|
|
12
|
|
||||
|
Stock-based compensation expense
|
|
|
|
29
|
|
|
|
|
|
|
|
|
29
|
|
||||
|
Net Income
|
|
|
|
|
|
|
7,269
|
|
|
|
|
|
7,269
|
|
||||
|
Balance December 31, 2013
|
14,799,888
|
|
|
$
|
45,778
|
|
|
$
|
30,884
|
|
|
$
|
(119
|
)
|
|
$
|
76,543
|
|
|
(In thousands)
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Cash Flows From Operating Activities:
|
|
|
|
||||
|
Net Income
|
$
|
7,269
|
|
|
$
|
6,069
|
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
||
|
(Benefit) provision for credit losses
|
(1,098
|
)
|
|
1,019
|
|
||
|
Depreciation and amortization
|
1,287
|
|
|
1,544
|
|
||
|
Amortization of investment securities
|
52
|
|
|
33
|
|
||
|
Accretion of investment securities
|
(60
|
)
|
|
(169
|
)
|
||
|
Loss on disposition of securities
|
—
|
|
|
195
|
|
||
|
Decrease in accrued interest receivable
|
50
|
|
|
252
|
|
||
|
Decrease in accrued interest payable
|
(27
|
)
|
|
(40
|
)
|
||
|
Increase (decrease) in unearned fees
|
280
|
|
|
(545
|
)
|
||
|
Increase (decrease) in income taxes payable
|
5,557
|
|
|
386
|
|
||
|
Stock-based compensation expense
|
29
|
|
|
18
|
|
||
|
Provision (benefits) for deferred income taxes
|
(1,773
|
)
|
|
1,230
|
|
||
|
(Decrease) increase in accounts payable and accrued liabilities
|
265
|
|
|
476
|
|
||
|
(Gain) loss on other investments
|
—
|
|
|
(1,807
|
)
|
||
|
Gain on sale of other real estate owned
|
(1,346
|
)
|
|
(278
|
)
|
||
|
Impairment loss on other real estate owned
|
214
|
|
|
463
|
|
||
|
Impairment loss on investment securities
|
—
|
|
|
284
|
|
||
|
Loss on fair value option of financial liability
|
776
|
|
|
774
|
|
||
|
Increase in surrender value of life insurance
|
(589
|
)
|
|
(564
|
)
|
||
|
Loss in limited partnership interest
|
253
|
|
|
39
|
|
||
|
Amortization of intangibles
|
187
|
|
|
304
|
|
||
|
Net (decrease) increase in other assets
|
577
|
|
|
28
|
|
||
|
Net cash provided by operating activities
|
11,903
|
|
|
9,711
|
|
||
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
||
|
Net (increase) decrease in interest-bearing deposits with banks
|
(8
|
)
|
|
680
|
|
||
|
Redemption of correspondent bank stock
|
433
|
|
|
693
|
|
||
|
Maturities and calls on available-for-sale securities
|
3,600
|
|
|
10,070
|
|
||
|
Principal payments on available-for-sale securities
|
4,452
|
|
|
—
|
|
||
|
Purchases of available-for-sale securities
|
(20,433
|
)
|
|
(11,022
|
)
|
||
|
Proceeds from sales of available-for-sale securities
|
—
|
|
|
8,837
|
|
||
|
Net decrease in loans
|
6,933
|
|
|
3,847
|
|
||
|
Cash proceeds from sales of other real estate owned
|
9,202
|
|
|
4,902
|
|
||
|
Cash proceeds from sale of other investment
|
—
|
|
|
2,174
|
|
||
|
Cash proceeds from sales of premises and equipment
|
—
|
|
|
36
|
|
||
|
Capital expenditures for premises and equipment
|
(1,147
|
)
|
|
(853
|
)
|
||
|
Investment in limited partnership
|
(564
|
)
|
|
(787
|
)
|
||
|
Net cash provided by (used in) investing activities
|
2,468
|
|
|
18,577
|
|
||
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
||
|
Net increase (decrease) in demand deposit and savings accounts
|
(4,899
|
)
|
|
32,960
|
|
||
|
Net decrease in certificates of deposit
|
(15,899
|
)
|
|
(44,100
|
)
|
||
|
Proceeds from exercise of stock options
|
12
|
|
|
—
|
|
||
|
Cash proceeds from the issuance of common stock
|
—
|
|
|
295
|
|
||
|
Net cash (used in) financing activities
|
(20,786
|
)
|
|
(10,845
|
)
|
||
|
Net (decrease) increase in cash and cash equivalents
|
(6,415
|
)
|
|
17,443
|
|
||
|
Cash and cash equivalents at beginning of year
|
141,627
|
|
|
124,184
|
|
||
|
Cash and cash equivalents at end of year
|
$
|
135,212
|
|
|
$
|
141,627
|
|
|
1.
|
Organization and Summary of Significant Accounting and Reporting Policies
|
|
a.
|
Cash and cash equivalents
– Cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold and repurchase agreements. At times throughout the year, balances can exceed FDIC insurance limits. Generally, federal funds sold and repurchase agreements are sold for one-day periods. The Bank did not have any repurchase agreements during
2013
or
2012
, or at
December 31, 2013 and 2012
. All cash and cash equivalents have maturities when purchased of three months or less.
|
|
b.
|
Securities
- Debt and equity securities classified as available for sale are reported at fair value, with unrealized gains and losses excluded from net income and reported, net of tax, as a separate component of comprehensive income and shareholders’ equity. Debt securities classified as held to maturity are carried at amortized cost. Gains and losses on disposition are reported using the specific identification method for the adjusted basis of the securities sold. Premiums and discounts are recognized in interest income using the interest method over the period to maturity.
|
|
c.
|
Loans
- Interest income on loans is credited to income as earned and is calculated by using the simple interest method on the daily balance of the principal amounts outstanding. Loans are placed on non-accrual status when principal or interest is past due for
90
days and/or when management believes the collection of amounts due is doubtful. For loans placed on nonaccrual status, the accrued and unpaid interest receivable may be reversed at management's discretion based upon management's assessment of collectibility, and interest is thereafter credited to principal to the extent necessary to eliminate doubt as to the collectibility of the net carrying amount of the loan.
|
|
d.
|
Allowance for Credit Losses and
Reserve for Unfunded Loan Commitments
- The allowance for credit losses is maintained to provide for losses that can reasonably be anticipated. The allowance is based on ongoing quarterly assessments of the probable losses inherent in the loan portfolio, and to a lesser extent, unfunded loan commitments. The reserve for unfunded loan commitments is a liability on the Company’s consolidated financial statements and is included in other liabilities. The liability is computed using a methodology similar to that used to determine the allowance for credit losses, modified to take into account the probability of a drawdown on the commitment.
|
|
e.
|
Premises and Equipment
- Premises and equipment are carried at cost less accumulated depreciation. Depreciation expense is computed principally on the straight-line method over the estimated useful lives of the assets. Estimated useful lives are as follows:
|
|
Buildings
|
31 years
|
Furniture and equipment
|
3-7 Years
|
|
f.
|
Other Real Estate Owned
- Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and are initially recorded at fair value of the property, less estimated costs to sell. The excess, if any, of the loan amount over the fair value is charged to the allowance for credit losses. Subsequent declines in the fair value of other real estate owned, along with related revenue and expenses from operations, are charged to noninterest expense.
|
|
g.
|
Intangible Assets and Goodwill
- Intangible assets are comprised of core deposit intangibles, other specific identifiable intangibles, and goodwill acquired in branch acquisitions where the consideration given exceeded the fair value of the net assets acquired. Intangible assets and goodwill are reviewed at least annually for impairment. Core deposit intangibles of
$62,000
and
$249,000
(net of accumulated amortization and impairment losses of
$6,934,000
and
$6,747,000
) at
December 31, 2013 and 2012
, respectively, are amortized over the estimated useful lives of the existing deposit bases (average of
7
years) using a method which approximates the interest method. During
2013
and
2012
, the Company recognized
$0
impairment losses on the core deposit intangible related to the deposits purchased in the Legacy merger consummated during February 2007.
|
|
Year
|
Amortization
expense
|
||
|
2014
|
62
|
|
|
|
Total
|
$
|
62
|
|
|
h.
|
Income Taxes
- Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities using the liability method, and are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled.
|
|
i.
|
Net Income per Share
- Basic income (loss) per common share is computed based on the weighted average number of common shares outstanding. Diluted income (loss) per share includes the effect of stock options and other potentially dilutive securities using the treasury stock method to the extent they have a dilutive impact. Net income (loss) per share has been retroactively adjusted for all stock dividends declared.
|
|
j.
|
Cash Flow Reporting
- For purposes of reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing amounts due from banks, federal funds sold and securities purchased under agreements to resell. Federal funds and securities purchased under agreements to resell are generally sold for one-day periods.
|
|
k.
|
Transfers of Financial Assets
- Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
|
|
l.
|
Advertising Costs
- The Company expenses marketing costs as they are incurred. Advertising expense was
$92,000
and
$86,000
for the years ended
December 31, 2013 and 2012
, respectively.
|
|
m.
|
Stock Based Compensation -
The Company has a stock-based employee compensation plan, which is described more fully in Note 10. The Company accounts for all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant-date fair value of the award. The fair value is amortized over the requisite service period (generally the vesting period). Included in salaries and employee benefits for the years ended
December 31, 2013 and 2012
is
$29,000
, and
$18,000
, respectively, of share-based compensation. The related tax benefit, recorded in the provision for income taxes, was not significant. All share data contained within the financial statements has been retroactively restated for stock based transactions (i.e. stock splits and stock dividends.)
|
|
n.
|
Federal Home Loan Bank stock and Federal Reserve Stock
-
As a member of the Federal Home Loan Bank (FHLB), the Company is required to maintain an investment in capital stock of the FHLB. In addition, as a member of the Federal Reserve Bank (FRB), the Company is required to maintain an investment in capital stock of the FRB. The investments in both the FHLB and the FRB are carried at cost, which approximates their fair value, in the accompanying consolidated balance sheets under other assets and are subject to certain redemption requirements by the FHLB and FRB. Stock redemptions are at the discretion of the FHLB and FRB.
|
|
o.
|
Comprehensive Income
- Comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes items recorded directly to equity, such as unrealized gains and losses on securities available-for-sale, unrecognized costs of salary continuation defined benefit plans. Comprehensive income is presented in the consolidated statement of Comprehensive Income.
|
|
p.
|
Segment Reporting
- The Company's operations are solely in the financial services industry and include providing to its customers traditional banking and other financial services. The Company operates primarily in the San Joaquin Valley region of California. Management makes operating decisions and assesses performance based on an ongoing review of the Company's consolidated financial results. Therefore, the Company has a single operating segment for financial reporting purposes.
|
|
q.
|
New Accounting Standards:
|
|
r.
|
Reclassifications
- Certain reclassifications have been made to the
2012
financial statements to conform to the classifications used in
2013
. During 2012, the Company reviewed and revised the definition of the reporting segments within its loan portfolio to ensure proper uniformity of risk among such segments and has made specific reclassifications to the 2012 segments as reported for consistency. However, any amounts reported for years prior to 2012 were not subject to this reclassification. None of the reclassifications had an impact on equity or net income.
|
|
2.
|
Investment Securities
|
|
(In thousands)
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value (Carrying Amount)
|
||||||||
|
December 31, 2013
|
|
|
|
||||||||||||
|
Securities available for sale:
|
|
|
|
||||||||||||
|
U.S. Government agencies
|
$
|
14,060
|
|
|
$
|
441
|
|
|
—
|
|
|
$
|
14,501
|
|
|
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
25,029
|
|
|
434
|
|
|
(78
|
)
|
|
25,385
|
|
||||
|
Mutual Funds
|
4,000
|
|
|
—
|
|
|
(270
|
)
|
|
3,730
|
|
||||
|
Total securities available for sale
|
$
|
43,089
|
|
|
$
|
875
|
|
|
$
|
(348
|
)
|
|
$
|
43,616
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
U.S. Government agencies
|
$
|
6,113
|
|
|
$
|
487
|
|
|
$
|
—
|
|
|
$
|
6,600
|
|
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
20,586
|
|
|
697
|
|
|
—
|
|
|
21,283
|
|
||||
|
Mutual Funds
|
4,000
|
|
|
—
|
|
|
(39
|
)
|
|
3,961
|
|
||||
|
Total securities available for sale
|
$
|
30,699
|
|
|
$
|
1,184
|
|
|
$
|
(39
|
)
|
|
$
|
31,844
|
|
|
|
December 31, 2013
|
||||||
|
|
Amortized Cost
|
|
Fair Value (Carrying Amount)
|
||||
|
(In thousands)
|
|||||||
|
Due in one year or less
|
$
|
4,000
|
|
|
$
|
3,730
|
|
|
Due after one year through five years
|
69
|
|
|
74
|
|
||
|
Due after five years through ten years
|
—
|
|
|
—
|
|
||
|
Due after ten years
|
13,991
|
|
|
14,426
|
|
||
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
25,029
|
|
|
25,386
|
|
||
|
|
$
|
43,089
|
|
|
$
|
43,616
|
|
|
|
Less than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
|
(In thousands)
|
Fair Value (Carrying Amount)
|
|
Unrealized Losses
|
|
Fair Value (Carrying Amount)
|
|
Unrealized Losses
|
|
Fair Value (Carrying Amount)
|
|
Unrealized Losses
|
||||||||||||
|
December 31, 2013
|
|
|
|
|
|
||||||||||||||||||
|
Securities available for sale:
|
|
|
|
|
|
||||||||||||||||||
|
U.S. Government agencies
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
11,069
|
|
|
(78
|
)
|
|
—
|
|
|
—
|
|
|
11,069
|
|
|
(78
|
)
|
||||||
|
Mutual Funds
|
—
|
|
|
—
|
|
|
3,730
|
|
|
(270
|
)
|
|
3,730
|
|
|
(270
|
)
|
||||||
|
Total impaired securities
|
$
|
11,069
|
|
|
$
|
(78
|
)
|
|
$
|
3,730
|
|
|
$
|
(270
|
)
|
|
$
|
14,799
|
|
|
$
|
(348
|
)
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
U.S. Government agencies
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Mutual Funds
|
3,961
|
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
3,961
|
|
|
(39
|
)
|
||||||
|
Total impaired securities
|
$
|
3,961
|
|
|
$
|
(39
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,961
|
|
|
$
|
(39
|
)
|
|
Iin thousands)
|
December 31, 2013
|
|
December 31, 2012
|
|||||
|
Commercial and Business loans
|
$
|
68,460
|
|
|
$
|
69,780
|
|
|
|
Government program loans
|
2,226
|
|
|
2,337
|
|
|||
|
Total Commercial and Industrial
|
70,686
|
|
|
72,117
|
|
|||
|
Real estate – mortgage:
|
|
|
|
|
|
|||
|
Commercial real estate
|
143,919
|
|
|
133,599
|
|
|||
|
Residential mortgages
|
52,036
|
|
|
55,016
|
|
|||
|
Home Improvement and Home Equity loans
|
1,410
|
|
|
1,319
|
|
|||
|
Total Real Estate Mortgage
|
197,365
|
|
|
189,934
|
|
|||
|
RE Construction and Development
|
87,004
|
|
|
90,941
|
|
|||
|
Agricultural Loans
|
30,932
|
|
|
36,169
|
|
|||
|
Installment
|
9,330
|
|
|
10,884
|
|
|||
|
Commercial lease financing
|
—
|
|
|
12
|
|
|||
|
Total Loans
|
$
|
395,317
|
|
|
$
|
400,057
|
|
|
|
•
|
Commercial real estate mortgage loans comprise the largest segment of this loan category and are available on all types of income producing and commercial properties, including: office buildings, shopping centers; apartments and motels; owner occupied buildings; manufacturing facilities and more. Commercial real estate mortgage loans can also be used to refinance existing debt. Although real estate associated with the business is the primary collateral for commercial real estate mortgage loans, the underlying real estate is not the source of repayment. Commercial real estate loans are made under the premise that the loan will be repaid from the borrower's business operations, rental income associated with the real property, or personal assets.
|
|
•
|
Residential mortgage loans are provided to individuals to finance or refinance single-family residences. Residential mortgages are not a primary business line offered by the Company, and are generally of a shorter term than conventional mortgages, with maturities ranging from
three
to
fifteen
years on average.
|
|
•
|
Home Equity loans comprise a relatively small portion of total real estate mortgage loans, and are offered to borrowers for the purpose of home improvements, although the proceeds may be used for other purposes. Home equity loans are generally secured by junior trust deeds, but may be secured by 1
st
trust deeds.
|
|
|
December 31,
|
|||||
|
(In thousands)
|
2013
|
2012
|
||||
|
Aggregate amount outstanding, beginning of year
|
3,330
|
|
3,244
|
|
||
|
New loans or advances during year
|
1,098
|
|
2,043
|
|
||
|
Repayments during year
|
(1,512
|
)
|
(1,957
|
)
|
||
|
Aggregate amount outstanding, end of year
|
$
|
2,916
|
|
$
|
3,330
|
|
|
Loan commitments
|
$
|
3,930
|
|
$
|
2,916
|
|
|
December 31, 2013
|
Loans
30-60 Days Past Due
|
|
Loans
61-89 Days Past Due
|
|
Loans
90 or More
Days Past Due
|
|
Total Past Due Loans
|
|
Current Loans
|
|
Total Loans
|
|
Accruing
Loans 90 or
More Days Past Due
|
||||||||||||||
|
Commercial and Business Loans
|
$
|
—
|
|
|
$
|
94
|
|
|
$
|
—
|
|
|
$
|
94
|
|
|
$
|
68,366
|
|
|
$
|
68,460
|
|
|
$
|
—
|
|
|
Government Program Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,226
|
|
|
2,226
|
|
|
—
|
|
|||||||
|
Total Commercial and Industrial
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
|
70,592
|
|
|
70,686
|
|
|
—
|
|
|||||||
|
Commercial Real Estate Loans
|
1,991
|
|
|
—
|
|
|
6,866
|
|
|
8,857
|
|
|
135,062
|
|
|
143,919
|
|
|
—
|
|
|||||||
|
Residential Mortgages
|
—
|
|
|
614
|
|
|
359
|
|
|
973
|
|
|
51,063
|
|
|
52,036
|
|
|
—
|
|
|||||||
|
Home Improvement and Home Equity Loans
|
96
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|
1,314
|
|
|
1,410
|
|
|
—
|
|
|||||||
|
Total Real Estate Mortgage
|
2,087
|
|
|
614
|
|
|
7,225
|
|
|
9,926
|
|
|
187,439
|
|
|
197,365
|
|
|
—
|
|
|||||||
|
RE Construction and Development Loans
|
—
|
|
|
—
|
|
|
220
|
|
|
220
|
|
|
86,784
|
|
|
87,004
|
|
|
—
|
|
|||||||
|
Agricultural Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,932
|
|
|
30,932
|
|
|
—
|
|
|||||||
|
Consumer Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,086
|
|
|
9,086
|
|
|
—
|
|
|||||||
|
Overdraft protection Lines
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|
87
|
|
|
—
|
|
|||||||
|
Overdrafts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
157
|
|
|
157
|
|
|
—
|
|
|||||||
|
Total Installment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,330
|
|
|
9,330
|
|
|
—
|
|
|||||||
|
Commercial Lease Financing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Total Loans
|
$
|
2,087
|
|
|
$
|
708
|
|
|
$
|
7,445
|
|
|
$
|
10,240
|
|
|
$
|
385,077
|
|
|
$
|
395,317
|
|
|
$
|
—
|
|
|
December 31, 2012
|
Loans
30-60 Days Past Due
|
|
Loans
61-89 Days Past Due
|
|
Loans
90 or More
Days Past Due
|
|
Total Past Due Loans
|
|
Current Loans
|
|
Total Loans
|
|
Accruing
Loans 90 or
More Days Past Due
|
||||||||||||||
|
Commercial and Business Loans
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
256
|
|
|
$
|
321
|
|
|
$
|
69,459
|
|
|
$
|
69,780
|
|
|
$
|
—
|
|
|
Government Program Loans
|
88
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
2,249
|
|
|
2,337
|
|
|
—
|
|
|||||||
|
Total Commercial and Industrial
|
153
|
|
|
—
|
|
|
256
|
|
|
409
|
|
|
71,708
|
|
|
72,117
|
|
|
—
|
|
|||||||
|
Commercial Real Estate Loans
|
3,152
|
|
|
2,130
|
|
|
5,328
|
|
|
10,610
|
|
|
122,989
|
|
|
133,599
|
|
|
—
|
|
|||||||
|
Residential Mortgages
|
333
|
|
|
322
|
|
|
437
|
|
|
1,092
|
|
|
53,924
|
|
|
55,016
|
|
|
—
|
|
|||||||
|
Home Improvement and Home Equity Loans
|
119
|
|
|
140
|
|
|
—
|
|
|
259
|
|
|
1,060
|
|
|
1,319
|
|
|
—
|
|
|||||||
|
Total Real Estate Mortgage
|
3,604
|
|
|
2,592
|
|
|
5,765
|
|
|
11,961
|
|
|
177,973
|
|
|
189,934
|
|
|
—
|
|
|||||||
|
RE Construction and Development Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,941
|
|
|
90,941
|
|
|
—
|
|
|||||||
|
Agricultural Loans
|
—
|
|
|
136
|
|
|
—
|
|
|
136
|
|
|
36,033
|
|
|
36,169
|
|
|
—
|
|
|||||||
|
Consumer Loans
|
305
|
|
|
34
|
|
|
—
|
|
|
339
|
|
|
10,300
|
|
|
10,639
|
|
|
—
|
|
|||||||
|
Overdraft protection Lines
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90
|
|
|
90
|
|
|
—
|
|
|||||||
|
Overdrafts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
155
|
|
|
155
|
|
|
—
|
|
|||||||
|
Total Installment
|
305
|
|
|
34
|
|
|
—
|
|
|
339
|
|
|
10,545
|
|
|
10,884
|
|
|
—
|
|
|||||||
|
Commercial Lease Financing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
|
—
|
|
|||||||
|
Total Loans
|
$
|
4,062
|
|
|
$
|
2,762
|
|
|
$
|
6,021
|
|
|
$
|
12,845
|
|
|
$
|
387,212
|
|
|
$
|
400,057
|
|
|
$
|
—
|
|
|
-
|
When there is doubt regarding the full repayment of interest and principal.
|
|
-
|
When principal and/or interest on the loan has been in default for a period of
90
-days or more, unless the asset is both well secured and in the process of collection that will result in repayment in the near future.
|
|
-
|
When the loan is identified as having loss elements and/or is risk rated "8" Doubtful.
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Commercial and Business Loans
|
$
|
—
|
|
|
$
|
1,093
|
|
|
Government Program Loans
|
—
|
|
|
88
|
|
||
|
Total Commercial and Industrial
|
—
|
|
|
1,181
|
|
||
|
Commercial Real Estate Loans
|
10,188
|
|
|
8,415
|
|
||
|
Residential Mortgages
|
1,685
|
|
|
1,834
|
|
||
|
Home Improvement and Home Equity Loans
|
—
|
|
|
10
|
|
||
|
Total Real Estate Mortgage
|
11,873
|
|
|
10,259
|
|
||
|
|
|
|
|
||||
|
RE Construction and Development Loans
|
468
|
|
|
1,730
|
|
||
|
Agricultural Loans
|
—
|
|
|
136
|
|
||
|
|
|
|
|
||||
|
Consumer Loans
|
—
|
|
|
119
|
|
||
|
Total Installment
|
—
|
|
|
119
|
|
||
|
Commercial Lease Financing
|
—
|
|
|
—
|
|
||
|
Total Loans
|
$
|
12,341
|
|
|
$
|
13,425
|
|
|
-
|
For loans secured by collateral including real estate and equipment, the fair value of the collateral less selling costs will determine the carrying value of the loan. The difference between the recorded investment in the loan and the fair value, less selling costs, determines the amount of impairment. The Company uses the measurement method based on fair value of collateral when the loan is collateral dependent and foreclosure is probable.
|
|
-
|
The discounted cash flow method of measuring the impairment of a loan is used for unsecured loans or for loans secured by collateral where the fair value cannot be easily determined. Under this method, the Company assesses both the amount and timing of cash flows expected from impaired loans. The estimated cash flows are discounted using the loan's effective interest rate. T he difference between the amount of the loan on the Bank's books and the discounted cash flow amounts determines the amount of impairment to be provided. This method is used for most of the Company’s troubled debt restructurings or other impaired loans where some payment stream is being collected.
|
|
-
|
The observable market price method of measuring the impairment of a loan is only used by the Company when the sale of loans or a loan is in process.
|
|
December 31, 2013
|
Unpaid
Contractual
Principal Balance
|
|
Recorded
Investment
With No Allowance
|
|
Recorded
Investment
With Allowance
|
|
Total
Recorded Investment
|
|
Related Allowance
|
|
Average
Recorded Investment
|
|
Interest Recognized
|
||||||||||||||
|
Commercial and Business Loans
|
$
|
675
|
|
|
$
|
275
|
|
|
$
|
402
|
|
|
$
|
677
|
|
|
$
|
9
|
|
|
$
|
831
|
|
|
$
|
52
|
|
|
Government Program Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|||||||
|
Total Commercial and Industrial
|
675
|
|
|
275
|
|
|
402
|
|
|
677
|
|
|
9
|
|
|
866
|
|
|
52
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Commercial Real Estate Loans
|
10,188
|
|
|
8,721
|
|
|
1,468
|
|
|
10,189
|
|
|
415
|
|
|
10,671
|
|
|
232
|
|
|||||||
|
Residential Mortgages
|
5,375
|
|
|
1,794
|
|
|
3,590
|
|
|
5,384
|
|
|
338
|
|
|
6,139
|
|
|
211
|
|
|||||||
|
Home Improvement and Home Equity Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|||||||
|
Total Real Estate Mortgage
|
15,563
|
|
|
10,515
|
|
|
5,058
|
|
|
15,573
|
|
|
753
|
|
|
16,823
|
|
|
443
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
RE Construction and Development Loans
|
1,772
|
|
|
1,789
|
|
|
—
|
|
|
1,789
|
|
|
—
|
|
|
2,266
|
|
|
60
|
|
|||||||
|
Agricultural Loans
|
44
|
|
|
45
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
84
|
|
|
10
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Consumer Loans
|
48
|
|
|
48
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
72
|
|
|
4
|
|
|||||||
|
Total Installment
|
48
|
|
|
48
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
72
|
|
|
4
|
|
|||||||
|
Total Impaired Loans
|
$
|
18,102
|
|
|
$
|
12,672
|
|
|
$
|
5,460
|
|
|
$
|
18,132
|
|
|
$
|
762
|
|
|
$
|
20,111
|
|
|
$
|
569
|
|
|
December 31, 2012
|
Unpaid
Contractual
Principal Balance
|
|
Recorded
Investment
With No Allowance
|
|
Recorded
Investment
With Allowance
|
|
Total
Recorded Investment
|
|
Related Allowance
|
|
Average
Recorded Investment
|
|
Interest Recognized
|
||||||||||||||
|
Commercial and Business Loans
|
$
|
1,488
|
|
|
$
|
767
|
|
|
$
|
576
|
|
|
$
|
1,343
|
|
|
$
|
37
|
|
|
$
|
5,468
|
|
|
$
|
26
|
|
|
Government Program Loans
|
109
|
|
|
88
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|
147
|
|
|
—
|
|
|||||||
|
Total Commercial and Industrial
|
1,597
|
|
|
855
|
|
|
576
|
|
|
1,431
|
|
|
37
|
|
|
5,615
|
|
|
26
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Commercial Real Estate Loans
|
11,393
|
|
|
6,818
|
|
|
4,237
|
|
|
11,055
|
|
|
436
|
|
|
8,498
|
|
|
135
|
|
|||||||
|
Residential Mortgages
|
7,461
|
|
|
3,726
|
|
|
3,666
|
|
|
7,392
|
|
|
185
|
|
|
4,416
|
|
|
251
|
|
|||||||
|
Home Improvement and Home Equity Loans
|
10
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|||||||
|
Total Real Estate Mortgage
|
18,864
|
|
|
10,554
|
|
|
7,903
|
|
|
18,457
|
|
|
621
|
|
|
12,935
|
|
|
386
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
RE Construction and Development Loans
|
1,730
|
|
|
1,730
|
|
|
—
|
|
|
1,730
|
|
|
—
|
|
|
7,298
|
|
|
—
|
|
|||||||
|
Agricultural Loans
|
504
|
|
|
192
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
991
|
|
|
50
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Consumer Loans
|
139
|
|
|
121
|
|
|
—
|
|
|
121
|
|
|
—
|
|
|
200
|
|
|
6
|
|
|||||||
|
Total Installment
|
139
|
|
|
121
|
|
|
—
|
|
|
121
|
|
|
—
|
|
|
200
|
|
|
6
|
|
|||||||
|
Total Impaired Loans
|
$
|
22,834
|
|
|
$
|
13,452
|
|
|
$
|
8,479
|
|
|
$
|
21,931
|
|
|
$
|
658
|
|
|
$
|
27,039
|
|
|
$
|
468
|
|
|
◦
|
The reduction (absolute or contingent) of the stated interest rate.
|
|
◦
|
The extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk.
|
|
◦
|
The reduction (absolute or contingent) of the face amount or maturity amount of debt as stated in the instrument or agreement.
|
|
◦
|
The reduction (absolute or contingent) of accrued interest.
|
|
|
Year Ended December 31, 2013
|
||||||||||||||||
|
|
Number of
Contracts
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
Number of Contracts in Default
|
|
Recorded Investment on Defaulted TDRs
|
||||||||
|
Troubled Debt Restructurings
|
|
|
|
|
|
|
|
|
|
||||||||
|
Commercial and Business Loans
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Government Program Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Commercial Real Estate Term Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
106
|
|
|||
|
Single Family Residential Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Home Improvement and Home Equity Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
RE Construction and Development Loans
|
41
|
|
|
1,034
|
|
|
1,304
|
|
|
—
|
|
|
—
|
|
|||
|
Agricultural Loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Consumer Loans
|
1
|
|
|
48
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|||
|
Overdraft protection Lines
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Commercial Lease Financing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Total Loans
|
42
|
|
|
$
|
1,082
|
|
|
$
|
1,352
|
|
|
1
|
|
|
$
|
106
|
|
|
|
Year Ended December 31, 2012
|
||||||||||||||||
|
|
Number of
Contracts
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
Number of Contracts in Default
|
|
Recorded Investment on Defaulted TDRs
|
||||||||
|
Troubled Debt Restructurings
|
|
|
|
|
|
|
|
|
|
||||||||
|
Commercial and Business Loans
|
3
|
|
|
$
|
320
|
|
|
$
|
303
|
|
|
—
|
|
|
$
|
—
|
|
|
Government Program Loans
|
1
|
|
|
103
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|||
|
Commercial Real Estate Term Loans
|
4
|
|
|
2,535
|
|
|
2,506
|
|
|
—
|
|
|
—
|
|
|||
|
Single Family Residential Loans
|
2
|
|
|
324
|
|
|
323
|
|
|
—
|
|
|
—
|
|
|||
|
Home Improvement and Home Equity Loans
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
RE Construction and Development Loans
|
14
|
|
|
1,130
|
|
|
1,130
|
|
|
—
|
|
|
—
|
|
|||
|
Agricultural Loans
|
2
|
|
|
192
|
|
|
191
|
|
|
—
|
|
|
—
|
|
|||
|
Consumer Loans
|
1
|
|
|
20
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|||
|
Overdraft protection Lines
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Commercial Lease Financing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Total Loans
|
28
|
|
|
$
|
4,624
|
|
|
$
|
4,560
|
|
|
—
|
|
|
$
|
—
|
|
|
Year Ended December 31, 2013
|
Commercial and Industrial
|
|
Commercial Real Estate
|
|
Residential Mortgages
|
|
Home Equity
|
|
RE Construction Development
|
|
Agricultural
|
|
Installment
& Other
|
|
Lease Financing
|
|
Total
|
||||||||||||||||||
|
Beginning balance
|
$
|
990
|
|
|
$
|
5,395
|
|
|
$
|
7,289
|
|
|
$
|
10
|
|
|
$
|
2,860
|
|
|
$
|
191
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
16,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Defaults
|
—
|
|
|
(106
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(106
|
)
|
|||||||||
|
Additions
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
4,399
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
4,491
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Principal reductions
|
(315
|
)
|
|
(3,821
|
)
|
|
(2,016
|
)
|
|
(54
|
)
|
|
(5,708
|
)
|
|
(147
|
)
|
|
(38
|
)
|
|
—
|
|
|
(12,099
|
)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Ending balance
|
$
|
675
|
|
|
$
|
1,468
|
|
|
$
|
5,273
|
|
|
$
|
—
|
|
|
$
|
1,551
|
|
|
$
|
44
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
9,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Allowance for loan loss
|
$
|
9
|
|
|
$
|
415
|
|
|
$
|
338
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
762
|
|
|
Year Ended December 31, 2012
|
Commercial and Industrial
|
|
Commercial Real Estate
|
|
Residential Mortgages
|
|
Home Equity
|
|
RE Construction Development
|
|
Agricultural
|
|
Installment
& Other
|
|
Lease Financing
|
|
Total
|
||||||||||||||||||
|
Beginning balance
|
$
|
1,507
|
|
|
$
|
5,174
|
|
|
$
|
7,689
|
|
|
$
|
36
|
|
|
$
|
4,550
|
|
|
$
|
60
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
19,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Defaults
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
|
Additions
|
391
|
|
|
2,506
|
|
|
323
|
|
|
—
|
|
|
1,130
|
|
|
191
|
|
|
19
|
|
|
—
|
|
|
4,560
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Principal reductions
|
(908
|
)
|
|
(2,285
|
)
|
|
(723
|
)
|
|
(26
|
)
|
|
(2,820
|
)
|
|
(60
|
)
|
|
(15
|
)
|
|
—
|
|
|
(6,837
|
)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Ending balance
|
$
|
990
|
|
|
$
|
5,395
|
|
|
$
|
7,289
|
|
|
$
|
10
|
|
|
$
|
2,860
|
|
|
$
|
191
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
16,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Allowance for loan loss
|
$
|
152
|
|
|
$
|
325
|
|
|
$
|
128
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
611
|
|
|
-
|
Grades 1 and 2
– These grades include loans which are given to high quality borrowers with high credit quality and sound financial strength. Key financial ratios are generally above industry averages and the borrower’s strong earnings history or net worth. These may be secured by deposit accounts or high-grade investment securities.
|
|
-
|
Grade 3
– This grade includes loans to borrowers with solid credit quality with minimal risk. The borrower’s balance sheet and financial ratios are generally in line with industry averages, and the borrower has historically demonstrated the ability to manage economic adversity. Real estate and asset-based loans assigned this risk rating must have characteristics, which place them well above the minimum underwriting requirements for those departments. Asset-based borrowers assigned this rating must exhibit extremely favorable leverage and cash flow characteristics, and consistently demonstrate a high level of unused borrowing capacity.
|
|
-
|
Grades 4 and 5 – These include “pass” grade loans to borrowers of acceptable credit quality and risk. The borrower’s balance sheet and financial ratios may be below industry averages, but above the lowest industry quartile. Leverage is above and liquidity is below industry averages. Inadequacies evident in financial performance and/or management sufficiency are offset by readily available features of support, such as adequate collateral, or good guarantors having the liquid assets and/or cash flow capacity to repay the debt. The borrower may have recognized a loss over
three
or
four
years, however recent earnings trends, while perhaps somewhat cyclical, are improving and cash flows are adequate to cover debt service and fixed obligations. Real estate and asset-borrowers fully comply with all underwriting standards and are performing according to projections would be assigned this rating. These also include grade 5 loans which are “leveraged” or on management’s “watch list.” While still considered pass loans (loans given a grade 5), the borrower’s financial condition, cash flow or operations evidence more than average risk and short term weaknesses, these loans warrant a higher than average level of monitoring, supervision and attention from the
|
|
-
|
Grade 6
– This grade includes “special mention” loans which are loans that are currently protected but are potentially weak. This generally is an interim grade classification and should usually be upgraded to an Acceptable rating or downgraded to Substandard within a reasonable time period. Weaknesses in special mention loans may, if not checked or corrected, weaken the asset or inadequately protect the Company’s credit position at some future date. Special mention loans are often loans with weaknesses inherent from the loan origination, loan servicing, and perhaps some technical deficiencies. The main theme in special mention credits is the distinct probability that the classification will deteriorate to a more adverse class if the noted deficiencies are not addressed by the loan officer or loan management.
|
|
-
|
Grade 7
– This grade includes “substandard” loans which are inadequately supported by the current sound net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that may impair the regular liquidation of the debt. Substandard loans exhibit a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Substandard loans also include impaired loans.
|
|
-
|
Grade 8
- This grade includes “doubtful” loans which exhibit the same characteristics as the Substandard loans with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include a proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans.
|
|
-
|
Grade 9
- This grade includes loans classified “loss” which are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off the asset even though partial recovery may be achieved in the future.
|
|
|
Commercial and Industrial
|
|
Commercial RE
|
|
RE Construction and Development
|
|
Agricultural
|
|
Total
|
||||||||||
|
December 31, 2013
|
|
|
|
|
|||||||||||||||
|
(In thousands)
|
|
|
|
|
|||||||||||||||
|
Grades 1and 2
|
$
|
355
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
70
|
|
|
$
|
425
|
|
|
Grade 3
|
44
|
|
|
5,287
|
|
|
816
|
|
|
—
|
|
|
6,147
|
|
|||||
|
Grades 4 and 5 – pass
|
69,070
|
|
|
127,189
|
|
|
66,048
|
|
|
30,862
|
|
|
293,169
|
|
|||||
|
Grade 6 – special mention
|
590
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
590
|
|
|||||
|
Grade 7 – substandard
|
627
|
|
|
11,443
|
|
|
20,140
|
|
|
—
|
|
|
32,210
|
|
|||||
|
Grade 8 – doubtful
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Total
|
$
|
70,686
|
|
|
$
|
143,919
|
|
|
$
|
87,004
|
|
|
$
|
30,932
|
|
|
$
|
332,541
|
|
|
|
Commercial and Industrial
|
|
Commercial RE
|
|
RE Construction and Development
|
|
Agricultural
|
|
Total
|
||||||||||
|
December 31, 2012
|
|
|
|
|
|||||||||||||||
|
(In thousands)
|
|
|
|
|
|||||||||||||||
|
Grades 1and 2
|
$
|
825
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
885
|
|
|
Grade 3
|
2,071
|
|
|
5,947
|
|
|
856
|
|
|
—
|
|
|
8,874
|
|
|||||
|
Grades 4 and 5 – pass
|
66,098
|
|
|
116,606
|
|
|
75,191
|
|
|
35,973
|
|
|
293,868
|
|
|||||
|
Grade 6 – special mention
|
1,867
|
|
|
—
|
|
|
141
|
|
|
—
|
|
|
2,008
|
|
|||||
|
Grade 7 – substandard
|
1,256
|
|
|
11,046
|
|
|
14,753
|
|
|
136
|
|
|
27,191
|
|
|||||
|
Grade 8 – doubtful
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Total
|
$
|
72,117
|
|
|
$
|
133,599
|
|
|
$
|
90,941
|
|
|
$
|
36,169
|
|
|
$
|
332,826
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||||||||||||||||||
|
|
Residential Mortgages
|
|
Home
Improvement and Home Equity
|
|
Installment
|
|
Total
|
|
Residential Mortgages
|
|
Home
Improvement and Home Equity
|
|
Installment
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Not graded
|
$
|
29,063
|
|
|
$
|
1,378
|
|
|
$
|
7,862
|
|
|
$
|
38,303
|
|
|
$
|
30,727
|
|
|
$
|
1,309
|
|
|
$
|
9,221
|
|
|
$
|
41,257
|
|
|
Pass
|
19,320
|
|
|
—
|
|
|
1,468
|
|
|
20,788
|
|
|
20,572
|
|
|
—
|
|
|
1,422
|
|
|
21,994
|
|
||||||||
|
Special Mention
|
1,204
|
|
|
32
|
|
|
—
|
|
|
1,236
|
|
|
909
|
|
|
—
|
|
|
49
|
|
|
958
|
|
||||||||
|
Substandard
|
2,449
|
|
|
—
|
|
|
—
|
|
|
2,449
|
|
|
2,808
|
|
|
10
|
|
|
192
|
|
|
3,010
|
|
||||||||
|
Total
|
$
|
52,036
|
|
|
$
|
1,410
|
|
|
$
|
9,330
|
|
|
$
|
62,776
|
|
|
$
|
55,016
|
|
|
$
|
1,319
|
|
|
$
|
10,884
|
|
|
$
|
67,219
|
|
|
December 31, 2013
|
Commercial and Industrial
|
|
Real Estate Mortgage
|
|
RE Construction Development
|
|
Agricultural
|
|
Installment & Other
|
|
Commercial Lease Financing
|
|
Unallocated
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Beginning balance
|
$
|
1,614
|
|
|
$
|
1,292
|
|
|
$
|
2,814
|
|
|
$
|
352
|
|
|
$
|
288
|
|
|
$
|
1
|
|
|
$
|
5,423
|
|
|
$
|
11,784
|
|
|
Provision for credit losses
|
1,134
|
|
|
1,101
|
|
|
1,285
|
|
|
222
|
|
|
160
|
|
|
(1
|
)
|
|
(4,999
|
)
|
|
(1,098
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Charge-offs
|
(542
|
)
|
|
(540
|
)
|
|
(95
|
)
|
|
(136
|
)
|
|
(244
|
)
|
|
—
|
|
|
(29
|
)
|
|
(1,586
|
)
|
||||||||
|
Recoveries
|
134
|
|
|
9
|
|
|
1,529
|
|
|
145
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
1,888
|
|
||||||||
|
Net charge-offs
|
(408
|
)
|
|
(531
|
)
|
|
1,434
|
|
|
9
|
|
|
(173
|
)
|
|
—
|
|
|
(29
|
)
|
|
302
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Ending balance
|
$
|
2,340
|
|
|
$
|
1,862
|
|
|
$
|
5,533
|
|
|
$
|
583
|
|
|
$
|
275
|
|
|
$
|
—
|
|
|
$
|
395
|
|
|
$
|
10,988
|
|
|
Period-end amount allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Loans individually evaluated for impairment
|
9
|
|
|
753
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
762
|
|
||||||||
|
Loans collectively evaluated for impairment
|
2,331
|
|
|
1,109
|
|
|
5,533
|
|
|
583
|
|
|
275
|
|
|
—
|
|
|
395
|
|
|
10,226
|
|
||||||||
|
Ending balance
|
$
|
2,340
|
|
|
$
|
1,862
|
|
|
$
|
5,533
|
|
|
$
|
583
|
|
|
$
|
275
|
|
|
$
|
—
|
|
|
$
|
395
|
|
|
$
|
10,988
|
|
|
December 31, 2012
|
Commercial and Industrial
|
|
Real Estate Mortgage
|
|
RE Construction Development
|
|
Agricultural
|
|
Installment & Other
|
|
Commercial Lease Financing
|
|
Unallocated
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Beginning balance
|
$
|
4,782
|
|
|
$
|
2,070
|
|
|
$
|
5,634
|
|
|
$
|
803
|
|
|
$
|
117
|
|
|
$
|
1
|
|
|
$
|
241
|
|
|
$
|
13,648
|
|
|
Provision for credit losses
|
(2,730
|
)
|
|
(235
|
)
|
|
(3,431
|
)
|
|
1,860
|
|
|
384
|
|
|
(11
|
)
|
|
5,182
|
|
|
1,019
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Charge-offs
|
(1,080
|
)
|
|
(620
|
)
|
|
(10
|
)
|
|
(2,317
|
)
|
|
(251
|
)
|
|
—
|
|
|
—
|
|
|
(4,278
|
)
|
||||||||
|
Recoveries
|
642
|
|
|
77
|
|
|
621
|
|
|
6
|
|
|
38
|
|
|
11
|
|
|
—
|
|
|
1,395
|
|
||||||||
|
Net charge-offs
|
(438
|
)
|
|
(543
|
)
|
|
611
|
|
|
(2,311
|
)
|
|
(213
|
)
|
|
11
|
|
|
—
|
|
|
(2,883
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Ending balance
|
$
|
1,614
|
|
|
$
|
1,292
|
|
|
$
|
2,814
|
|
|
$
|
352
|
|
|
$
|
288
|
|
|
$
|
1
|
|
|
$
|
5,423
|
|
|
$
|
11,784
|
|
|
Period-end amount allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Loans individually evaluated for impairment
|
37
|
|
|
621
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
658
|
|
||||||||
|
Loans collectively evaluated for impairment
|
1,577
|
|
|
671
|
|
|
2,814
|
|
|
352
|
|
|
288
|
|
|
1
|
|
|
5,423
|
|
|
11,126
|
|
||||||||
|
Ending balance
|
$
|
1,614
|
|
|
$
|
1,292
|
|
|
$
|
2,814
|
|
|
$
|
352
|
|
|
$
|
288
|
|
|
$
|
1
|
|
|
$
|
5,423
|
|
|
$
|
11,784
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||||||||||
|
|
Loans
Individually Evaluated for Impairment |
|
Loans
Collectively Evaluated for Impairment |
|
Total Loans
|
|
Loans
Individually
Evaluated for Impairment
|
|
Loans
Collectively
Evaluated for Impairment
|
|
Total Loans
|
||||||||||||
|
(In thousands)
|
|
|
|
|
|
||||||||||||||||||
|
Commercial and Business Loans
|
$
|
677
|
|
|
$
|
67,783
|
|
|
$
|
68,460
|
|
|
$
|
1,343
|
|
|
$
|
68,437
|
|
|
$
|
69,780
|
|
|
Government Program Loans
|
—
|
|
|
2,226
|
|
|
2,226
|
|
|
88
|
|
|
2,249
|
|
|
2,337
|
|
||||||
|
Total Commercial and Industrial
|
677
|
|
|
70,009
|
|
|
70,686
|
|
|
1,431
|
|
|
70,686
|
|
|
72,117
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial Real Estate Loans
|
10,189
|
|
|
133,730
|
|
|
143,919
|
|
|
11,055
|
|
|
122,544
|
|
|
133,599
|
|
||||||
|
Residential Mortgage Loans
|
5,384
|
|
|
46,652
|
|
|
52,036
|
|
|
7,392
|
|
|
47,624
|
|
|
55,016
|
|
||||||
|
Home Improvement and Home Equity Loans
|
—
|
|
|
1,410
|
|
|
1,410
|
|
|
10
|
|
|
1,309
|
|
|
1,319
|
|
||||||
|
Total Real Estate Mortgage
|
15,573
|
|
|
181,792
|
|
|
197,365
|
|
|
18,457
|
|
|
171,477
|
|
|
189,934
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
RE Construction and Development Loans
|
1,789
|
|
|
85,215
|
|
|
87,004
|
|
|
1,730
|
|
|
89,211
|
|
|
90,941
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Agricultural Loans
|
45
|
|
|
30,887
|
|
|
30,932
|
|
|
192
|
|
|
35,977
|
|
|
36,169
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Installment Loans
|
48
|
|
|
9,282
|
|
|
9,330
|
|
|
121
|
|
|
10,763
|
|
|
10,884
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial Lease Financing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total Loans
|
$
|
18,132
|
|
|
$
|
377,185
|
|
|
$
|
395,317
|
|
|
$
|
21,931
|
|
|
$
|
378,126
|
|
|
$
|
400,057
|
|
|
4.
|
Premises and Equipment
|
|
(In thousands)
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Land
|
$
|
968
|
|
|
$
|
968
|
|
|
Buildings and improvements
|
14,613
|
|
|
14,573
|
|
||
|
Furniture and equipment
|
11,077
|
|
|
9,956
|
|
||
|
|
26,658
|
|
|
25,497
|
|
||
|
Less accumulated depreciation and amortization
|
(14,536
|
)
|
|
(13,235
|
)
|
||
|
Total premises and equipment
|
$
|
12,122
|
|
|
$
|
12,262
|
|
|
5.
|
Investment in Limited Partnership
|
|
6.
|
Deposits
|
|
(In thousands)
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Noninterest-bearing deposits
|
$
|
214,317
|
|
|
$
|
217,014
|
|
|
Interest-bearing deposits:
|
|
|
|
|
|
||
|
NOW and money market accounts
|
198,928
|
|
|
203,771
|
|
||
|
Savings accounts
|
45,758
|
|
|
43,117
|
|
||
|
Time deposits:
|
|
|
|
|
|
||
|
Under $100,000
|
28,825
|
|
|
32,532
|
|
||
|
$100,000 and over
|
54,661
|
|
|
66,853
|
|
||
|
Total interest-bearing deposits
|
328,172
|
|
|
346,273
|
|
||
|
Total deposits
|
$
|
542,489
|
|
|
$
|
563,287
|
|
|
(In thousands)
|
December 31, 2013
|
||
|
One year or less
|
$
|
68,343
|
|
|
More than one year, but less than or equal to two years
|
10,554
|
|
|
|
More than two years, but less than or equal to three years
|
2,019
|
|
|
|
More than three years, but less than or equal to four years
|
2,198
|
|
|
|
More than four years, but less than or equal to five years
|
358
|
|
|
|
More than five years
|
14
|
|
|
|
|
$
|
83,486
|
|
|
7.
|
Short-term Borrowings/Other Borrowings
|
|
8.
|
|
|
9.
|
Taxes on Income
|
|
|
December 31,
|
||||||
|
(In thousands)
|
2013
|
|
2012
|
||||
|
Deferred tax assets:
|
|
|
|
||||
|
Credit losses not currently deductible
|
$
|
4,927
|
|
|
$
|
4,391
|
|
|
Deferred compensation
|
1,920
|
|
|
1,912
|
|
||
|
Net operating losses
|
9,074
|
|
|
7,773
|
|
||
|
Depreciation
|
231
|
|
|
518
|
|
||
|
Accrued reserves
|
63
|
|
|
194
|
|
||
|
Write-down on other real estate owned
|
(97
|
)
|
|
3,283
|
|
||
|
Capitalized OREO expenses
|
1,079
|
|
|
793
|
|
||
|
Other
|
2,555
|
|
|
1,908
|
|
||
|
Total deferred tax assets
|
19,752
|
|
|
20,772
|
|
||
|
Deferred tax liabilities:
|
|
|
|
|
|
||
|
State Tax
|
(2,640
|
)
|
|
(1,889
|
)
|
||
|
FHLB dividend
|
(53
|
)
|
|
(103
|
)
|
||
|
Loss on limited partnership investment
|
(1,808
|
)
|
|
(1,695
|
)
|
||
|
Unrealized gain on AFS
|
(211
|
)
|
|
(458
|
)
|
||
|
Deferred gain SFAS No. 159 – fair value option
|
(2,471
|
)
|
|
(2,819
|
)
|
||
|
Fair value adjustments for purchase accounting
|
(167
|
)
|
|
(123
|
)
|
||
|
Interest on nonaccrual loans
|
36
|
|
|
(368
|
)
|
||
|
Deferred loan costs
|
(570
|
)
|
|
(602
|
)
|
||
|
Prepaid expenses
|
(238
|
)
|
|
(305
|
)
|
||
|
Total deferred tax liabilities
|
(8,122
|
)
|
|
(8,362
|
)
|
||
|
Valuation Allowance
|
—
|
|
|
(2,686
|
)
|
||
|
Net deferred tax assets
|
$
|
11,630
|
|
|
$
|
9,724
|
|
|
(In thousands)
|
|
|
|
|
|
||||||
|
2013
|
Federal
|
|
State
|
|
Total
|
||||||
|
Current
|
$
|
1,059
|
|
|
$
|
819
|
|
|
$
|
1,878
|
|
|
Deferred
|
(1,055
|
)
|
|
(718
|
)
|
|
(1,773
|
)
|
|||
|
|
$
|
4
|
|
|
$
|
101
|
|
|
$
|
105
|
|
|
2012
|
|
|
|
|
|
|
|
|
|||
|
Current
|
$
|
719
|
|
|
$
|
(416
|
)
|
|
$
|
303
|
|
|
Deferred
|
466
|
|
|
764
|
|
|
1,230
|
|
|||
|
|
$
|
1,185
|
|
|
$
|
348
|
|
|
$
|
1,533
|
|
|
|
Year Ended December 31,
|
||||
|
|
2013
|
|
2012
|
||
|
Statutory federal income tax rate
|
34.0
|
%
|
|
34.0
|
%
|
|
State franchise tax, net of federal income tax benefit
|
0.9
|
|
|
3.0
|
|
|
Low Income Housing – federal credits
|
0.0
|
|
|
(1.1
|
)
|
|
Cash surrender value of life insurance
|
(2.4
|
)
|
|
(2.4
|
)
|
|
Valuation Allowance
|
(33.0
|
)
|
|
(13.2
|
)
|
|
Other
|
1.9
|
|
|
(0.1
|
)
|
|
|
1.4
|
%
|
|
20.2
|
%
|
|
10.
|
Stock Based Compensation
|
|
|
2005
Plan
|
|
Weighted
Average
Exercise Price
|
|||
|
Options outstanding December 31, 2012
|
194,224
|
|
|
$
|
10.27
|
|
|
Granted during the year
|
25,502
|
|
|
4.16
|
|
|
|
Exercised during the year
|
5,202
|
|
|
2.29
|
|
|
|
Forfeited during the year
|
21,442
|
|
|
2.29
|
|
|
|
Options outstanding December 31, 2013
|
193,082
|
|
|
$
|
10.57
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Weighted average grant-date fair value of stock options granted
|
$
|
2.80
|
|
|
$
|
1.33
|
|
|
Total fair value of stock options vested
|
$
|
24,310
|
|
|
$
|
26,246
|
|
|
Total intrinsic value of stock options exercised
|
$
|
9,665
|
|
|
n/a
|
|
|
|
|
Year Ended
|
|
Year Ended
|
|
|
December 31, 2013
|
|
December 31, 2012
|
|
Risk Free Interest Rate
|
1.20%
|
|
1.02%
|
|
Expected Dividend Yield
|
—%
|
|
—%
|
|
Expected Life in Years
|
5.5 years
|
|
5.5 years
|
|
Expected Price Volatility
|
78.88%
|
|
79.43%
|
|
11.
|
Employee Benefit Plans
|
|
12.
|
Commitments and Contingent Liabilities
|
|
(In thousands):
|
|
||
|
2014
|
$
|
530
|
|
|
2015
|
457
|
|
|
|
2016
|
310
|
|
|
|
2017
|
274
|
|
|
|
2018
|
270
|
|
|
|
Thereafter
|
347
|
|
|
|
|
$
|
2,188
|
|
|
|
Contractual amount – December 31,
|
||||||
|
(In thousands)
|
2013
|
|
2012
|
||||
|
Commitments to extend credit
|
$
|
63,271
|
|
|
$
|
60,050
|
|
|
Standby letters of credit
|
2,001
|
|
|
2,504
|
|
||
|
13.
|
Fair Value Measurements and Disclosure
|
|
December 31, 2013
|
|||||||||||||||||||
|
(In thousands)
|
Carrying Amount
|
|
Estimated Fair Value
|
|
Quoted Prices In Active Markets for Identical Assets Level 1
|
|
Significant Other Observable Inputs Level 2
|
|
Significant Unobservable Inputs Level 3
|
||||||||||
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash and cash equivalents
|
$
|
135,212
|
|
|
$
|
135,212
|
|
|
$
|
135,212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest-bearing deposits
|
1,515
|
|
|
1,515
|
|
|
—
|
|
|
1,515
|
|
|
—
|
|
|||||
|
Investment securities
|
43,616
|
|
|
43,616
|
|
|
10,746
|
|
|
32,870
|
|
|
—
|
|
|||||
|
Loans
|
384,025
|
|
|
380,615
|
|
|
—
|
|
|
—
|
|
|
380,615
|
|
|||||
|
Accrued interest receivable
|
1,644
|
|
|
1,644
|
|
|
—
|
|
|
1,644
|
|
|
—
|
|
|||||
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Noninterest-bearing
|
214,317
|
|
|
214,317
|
|
|
214,317
|
|
|
—
|
|
|
—
|
|
|||||
|
NOW and money market
|
198,928
|
|
|
198,928
|
|
|
198,928
|
|
|
—
|
|
|
—
|
|
|||||
|
Savings
|
45,758
|
|
|
45,758
|
|
|
45,758
|
|
|
—
|
|
|
—
|
|
|||||
|
Time Deposits
|
83,486
|
|
|
83,362
|
|
|
—
|
|
|
—
|
|
|
83,362
|
|
|||||
|
Total Deposits
|
542,489
|
|
|
542,365
|
|
|
459,003
|
|
|
—
|
|
|
83,362
|
|
|||||
|
Junior Subordinated Debt
|
11,125
|
|
|
11,125
|
|
|
—
|
|
|
—
|
|
|
11,125
|
|
|||||
|
Accrued interest payable
|
44
|
|
|
44
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|||||
|
December 31, 2012
|
|||||||||||||||||||
|
(In thousands)
|
Carrying Amount
|
|
Estimated Fair Value
|
|
Quoted Prices In Active Markets for Identical Assets Level 1
|
|
Significant Other Observable Inputs Level 2
|
|
Significant Unobservable Inputs Level 3
|
||||||||||
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash and cash equivalents
|
$
|
141,627
|
|
|
$
|
141,627
|
|
|
$
|
141,627
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest-bearing deposits
|
1,507
|
|
|
1,507
|
|
|
—
|
|
|
1,507
|
|
|
—
|
|
|||||
|
Investment securities
|
31,844
|
|
|
31,844
|
|
|
13,593
|
|
|
18,251
|
|
|
—
|
|
|||||
|
Loans
|
388,249
|
|
|
386,836
|
|
|
—
|
|
|
—
|
|
|
386,836
|
|
|||||
|
Accrued interest receivable
|
1,694
|
|
|
1,694
|
|
|
—
|
|
|
1,694
|
|
|
—
|
|
|||||
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Noninterest-bearing
|
217,014
|
|
|
217,014
|
|
|
217,014
|
|
|
—
|
|
|
—
|
|
|||||
|
NOW and money market
|
203,771
|
|
|
203,771
|
|
|
203,771
|
|
|
—
|
|
|
—
|
|
|||||
|
Savings
|
43,117
|
|
|
43,117
|
|
|
43,117
|
|
|
—
|
|
|
—
|
|
|||||
|
Time Deposits
|
99,385
|
|
|
99,529
|
|
|
—
|
|
|
—
|
|
|
99,529
|
|
|||||
|
Total Deposits
|
563,287
|
|
|
563,431
|
|
|
463,902
|
|
|
—
|
|
|
99,529
|
|
|||||
|
Junior Subordinated Debt
|
10,068
|
|
|
10,068
|
|
|
—
|
|
|
—
|
|
|
10,068
|
|
|||||
|
Accrued interest payable
|
71
|
|
|
71
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|||||
|
Description of Assets
|
December 31, 2013
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
AFS Securities (2):
|
|
|
|
|
|
|
|
||||||||
|
U.S. Government agencies
|
$
|
14,501
|
|
|
$
|
—
|
|
|
$
|
14,500
|
|
|
$
|
—
|
|
|
U.S Govt collateralized mortgage obligations
|
25,385
|
|
|
7,016
|
|
|
18,370
|
|
|
—
|
|
||||
|
Mutual Funds
|
3,730
|
|
|
3,730
|
|
|
—
|
|
|
—
|
|
||||
|
Total AFS securities
|
43,616
|
|
|
10,746
|
|
|
32,870
|
|
|
—
|
|
||||
|
Impaired Loans (1):
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Commercial and industrial
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Real estate mortgage
|
1,388
|
|
|
—
|
|
|
—
|
|
|
1,388
|
|
||||
|
RE construction & development
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Agricultural
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Installment/Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Total impaired loans
|
1,388
|
|
|
—
|
|
|
—
|
|
|
1,388
|
|
||||
|
Other real estate owned (1)
|
3,889
|
|
|
—
|
|
|
—
|
|
|
3,889
|
|
||||
|
Total
|
$
|
48,893
|
|
|
$
|
10,746
|
|
|
$
|
32,870
|
|
|
$
|
5,277
|
|
|
Description of Liabilities
|
December 31, 2013
|
|
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
|
Junior subordinated debt (2)
|
$
|
11,125
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,125
|
|
|
Total
|
$
|
11,125
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,125
|
|
|
Description of Assets
|
December 31, 2012
|
|
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
|
AFS Securities (2):
|
|
|
|
|
|
|
|
||||||||
|
U.S. Government agencies
|
$
|
6,600
|
|
|
$
|
—
|
|
|
$
|
6,600
|
|
|
$
|
—
|
|
|
U.S Govt collateralized mortgage obligations
|
21,283
|
|
|
9,632
|
|
|
11,651
|
|
|
—
|
|
||||
|
Mutual Funds
|
3,961
|
|
|
3,961
|
|
|
—
|
|
|
—
|
|
||||
|
Total AFS securities
|
31,844
|
|
|
13,593
|
|
|
18,251
|
|
|
—
|
|
||||
|
Impaired Loans (1):
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Commercial and industrial
|
47
|
|
|
—
|
|
|
—
|
|
|
47
|
|
||||
|
Real estate mortgage
|
2,159
|
|
|
—
|
|
|
—
|
|
|
2,159
|
|
||||
|
RE construction & development
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Agricultural
|
136
|
|
|
—
|
|
|
—
|
|
|
136
|
|
||||
|
Installment/Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Total impaired loans
|
2,342
|
|
|
—
|
|
|
—
|
|
|
2,342
|
|
||||
|
Other real estate owned (1)
|
4,483
|
|
|
—
|
|
|
—
|
|
|
4,483
|
|
||||
|
Total
|
$
|
38,669
|
|
|
$
|
13,593
|
|
|
$
|
18,251
|
|
|
$
|
6,825
|
|
|
Description of Liabilities
|
December 31, 2012
|
|
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
|
Junior subordinated debt (2)
|
$
|
10,068
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,068
|
|
|
Total
|
$
|
10,068
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,068
|
|
|
December 31, 2013
|
||||||
|
Financial Instrument
|
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Range, Weighted Average
|
||
|
Impaired Loans:
|
|
|
|
|
||
|
Real estate mortgage
|
$
|
1,388
|
|
Sales Comparison Approach
|
Adjustment for difference between comparable sales
|
1%-32%, 17.5%
|
|
Other real estate owned:
|
|
|
|
|
||
|
Real estate construction
|
3,889
|
|
Discounted cash flow
|
Discount rate
|
1%-10%, 8.49%
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Reconciliation of Assets:
|
Private label
residential
mortgage
obligations
|
|
Private label
residential
mortgage
obligations
|
||||
|
Beginning balance
|
$
|
—
|
|
|
$
|
7,972
|
|
|
Total gains or (losses) included in earnings (or other comprehensive loss)
|
—
|
|
|
(468
|
)
|
||
|
Transfers in and/or out of Level 3
|
—
|
|
|
(7,504
|
)
|
||
|
Ending balance
|
$
|
—
|
|
|
$
|
—
|
|
|
The amount of total gains or (losses) for the period included in earnings (or other comprehensive loss) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date
|
$
|
—
|
|
|
$
|
—
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Reconciliation of Liabilities:
|
Junior
Subordinated
Debt
|
|
Junior
Subordinated
Debt
|
||||
|
Beginning balance
|
$
|
10,068
|
|
|
$
|
9,027
|
|
|
Total gains (losses) included in earnings (or changes in net assets)
|
776
|
|
|
774
|
|
||
|
Transfers in and/or out of Level 3
|
281
|
|
|
267
|
|
||
|
Ending balance
|
$
|
11,125
|
|
|
$
|
10,068
|
|
|
The amount of total gains (losses) for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses and accrued interest relating to liabilities still held at the reporting date
|
$
|
776
|
|
|
$
|
774
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||
|
Financial Instrument
|
Valuation Technique
|
Unobservable Input
|
Weighted Average
|
|
Financial Instrument
|
Valuation Technique
|
Unobservable Input
|
Weighted Average
|
|
Subordinated Debt
|
Discounted cash flow
|
Discount Rate
|
8.19%
|
|
Subordinated Debt
|
Discounted cash flow
|
Discount Rate
|
7.23%
|
|
14.
|
Regulatory Matters
|
|
•
|
During May of 2010, the California Department of Business Oversight (formerly known as the California Department of Financial Institutions) issued a written order (the “Order”) pursuant to section 1913 of the California Financial Code to the Bank as a result of a regulatory examination that was conducted by the Federal Reserve and the California Department of Business Oversight in June 2009. The Order issued by the California Department of Business Oversight was similar to the agreement with the Federal Reserve Bank of San Francisco, except for certain additional requirements.
|
|
•
|
On September 24, 2013, the Bank entered into a Memorandum of Understanding (the “MOU”) with the California Department of Business Oversight (formerly known as the California Department of Financial Institutions). Effective October 15, 2013, the California Department of Business Oversight terminated the Order issued in May 2010. One additional requirement is that the Bank must maintain a ratio of tangible shareholders’ equity to total tangible assets equal to or greater than
9.0%
.
|
|
|
|
|
|
|
To Be Well Capitalized Under
|
||||||||||
|
|
Actual
|
For Capital
Adequacy Purposes
|
Prompt Corrective
Action Provisions
|
||||||||||||
|
(In thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||
|
As of December 31, 2013 (Company):
|
|
|
|
|
|
|
|||||||||
|
Total Capital (to Risk Weighted Assets)
|
$
|
77,530
|
|
17.20
|
%
|
$
|
36,061
|
|
8.00
|
%
|
N/A
|
|
N/A
|
|
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
71,827
|
|
15.93
|
%
|
18,031
|
|
4.00
|
%
|
N/A
|
|
N/A
|
|
|||
|
Tier 1 Capital (to Average Assets)
|
71,827
|
|
11.19
|
%
|
25,672
|
|
4.00
|
%
|
N/A
|
|
N/A
|
|
|||
|
As of December 31, 2013 (Bank):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total Capital (to Risk Weighted Assets)
|
$
|
78,499
|
|
17.41
|
%
|
$
|
36,061
|
|
8.00
|
%
|
$
|
45,077
|
|
10.00
|
%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
72,796
|
|
16.15
|
%
|
18,031
|
|
4.00
|
%
|
27,046
|
|
6.00
|
%
|
|||
|
Tier 1 Capital (to Average Assets)
|
72,796
|
|
11.43
|
%
|
25,484
|
|
4.00
|
%
|
31,855
|
|
5.00
|
%
|
|||
|
As of December 31, 2012 - (Company):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total Capital (to Risk Weighted Assets)
|
$
|
71,436
|
|
15.49
|
%
|
$
|
36,892
|
|
8.00
|
%
|
N/A
|
|
N/A
|
|
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
65,742
|
|
14.26
|
%
|
18,446
|
|
4.00
|
%
|
N/A
|
|
N/A
|
|
|||
|
Tier 1 Capital (to Average Assets)
|
65,742
|
|
10.66
|
%
|
24,671
|
|
4.00
|
%
|
N/A
|
|
N/A
|
|
|||
|
As of December 31, 2012 – (Bank):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total Capital (to Risk Weighted Assets)
|
$
|
73,296
|
|
15.77
|
%
|
$
|
37,175
|
|
8.00
|
%
|
$
|
46,468
|
|
10.00
|
%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
67,558
|
|
14.54
|
%
|
18,587
|
|
4.00
|
%
|
27,168
|
|
6.00
|
%
|
|||
|
Tier 1 Capital (to Average Assets)
|
67,558
|
|
10.95
|
%
|
24,671
|
|
4.00
|
%
|
30,838
|
|
5.00
|
%
|
|||
|
15.
|
Supplemental Cash Flow Disclosures
|
|
|
Year Ended December 31,
|
||||||
|
(In thousands)
|
2013
|
|
2012
|
||||
|
Cash paid (received) during the period for:
|
|
|
|
||||
|
Interest
|
$
|
1,356
|
|
|
$
|
2,101
|
|
|
Income Taxes
|
(3,679
|
)
|
|
(89
|
)
|
||
|
Noncash investing activities:
|
|
|
|
|
|
||
|
Loans transferred to foreclosed property
|
437
|
|
|
1,999
|
|
||
|
Financed OREO
|
2,328
|
|
|
508
|
|
||
|
Extinguishment of Note Payable
|
—
|
|
|
83
|
|
||
|
16.
|
Common Stock Dividend
|
|
17.
|
Net Income Per Share
|
|
|
Year Ended December 31,
|
||||||
|
(In thousands, except earnings per share data)
|
2013
|
|
2012
|
||||
|
Net income available to common shareholders
|
$
|
7,269
|
|
|
$
|
6,069
|
|
|
Weighted average shares outstanding
|
14,798,135
|
|
|
14,789,001
|
|
||
|
Add: dilutive effect of stock options
|
902
|
|
|
—
|
|
||
|
Weighted average shares outstanding adjusted for potential dilution
|
14,799,037
|
|
|
14,789,001
|
|
||
|
Basic earnings per share
|
$
|
0.49
|
|
|
$
|
0.41
|
|
|
Diluted earnings per share
|
$
|
0.49
|
|
|
$
|
0.41
|
|
|
Anti-dilutive shares excluded from earnings per share calculation
|
189,000
|
|
|
192,000
|
|
||
|
(In thousands)
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Goodwill
|
$
|
4,488
|
|
|
$
|
4,488
|
|
|
Core deposit intangible assets
|
62
|
|
|
249
|
|
||
|
Total goodwill and intangible assets
|
$
|
4,550
|
|
|
$
|
4,737
|
|
|
(In thousands)
|
December 31, 2013
|
|
December 31, 2012
|
||||
|
Amortization expense - core deposit intangibles
|
$
|
187
|
|
|
$
|
198
|
|
|
Amortization expense - other intangibles
|
—
|
|
|
106
|
|
||
|
Total amortization expense
|
$
|
187
|
|
|
$
|
304
|
|
|
Impairment losses - core deposit intangibles
|
$
|
—
|
|
|
$
|
—
|
|
|
Impairment losses - goodwill
|
—
|
|
|
—
|
|
||
|
Total impairment losses
|
$
|
—
|
|
|
$
|
—
|
|
|
United Security Bancshares – (parent only)
|
|
|
|
||||
|
Balance Sheets - December 31, 2013 and 2012.
|
|
|
|
||||
|
(In thousands)
|
2013
|
|
2012
|
||||
|
Assets
|
|
|
|
||||
|
Cash and equivalents
|
$
|
66
|
|
|
$
|
296
|
|
|
Investment in bank subsidiary
|
87,775
|
|
|
79,969
|
|
||
|
Other assets
|
2,298
|
|
|
562
|
|
||
|
Total assets
|
90,139
|
|
|
80,827
|
|
||
|
Liabilities & Shareholders' Equity
|
|
|
|
|
|
||
|
Liabilities:
|
|
|
|
|
|
||
|
Junior subordinated debt securities (at fair value)
|
11,125
|
|
|
10,068
|
|
||
|
Deferred taxes
|
2,471
|
|
|
1,239
|
|
||
|
Other liabilities
|
—
|
|
|
79
|
|
||
|
Total liabilities
|
13,596
|
|
|
11,386
|
|
||
|
Shareholders' Equity:
|
|
|
|
|
|
||
|
Common stock, no par value 20,000,000 shares authorized, 14,799,888 and 14,217,303 issued and outstanding, in 2013 and 2012
|
45,778
|
|
|
43,173
|
|
||
|
Retained earnings
|
30,884
|
|
|
26,179
|
|
||
|
Accumulated other comprehensive (loss) income
|
(119
|
)
|
|
89
|
|
||
|
Total shareholders' equity
|
76,543
|
|
|
69,441
|
|
||
|
Total liabilities and shareholders' equity
|
$
|
90,139
|
|
|
$
|
80,827
|
|
|
United Security Bancshares – (parent only)
|
Year ended December 31,
|
||||||
|
Income Statements
|
|||||||
|
(In thousands)
|
2013
|
|
2012
|
||||
|
Income
|
|
|
|
||||
|
Loss on fair value option of financial assets
|
$
|
(776
|
)
|
|
$
|
(774
|
)
|
|
Total (loss) income
|
(776
|
)
|
|
(774
|
)
|
||
|
Expense
|
|
|
|
|
|
||
|
Interest expense
|
281
|
|
|
270
|
|
||
|
Other expense
|
159
|
|
|
201
|
|
||
|
Total expense
|
440
|
|
|
471
|
|
||
|
(Loss) Income before taxes and equity in undistributed income of subsidiary
|
(1,216
|
)
|
|
(1,245
|
)
|
||
|
Income tax benefit
|
(500
|
)
|
|
(512
|
)
|
||
|
Undistributed income of subsidiary
|
7,985
|
|
|
6,802
|
|
||
|
Net Income
|
$
|
7,269
|
|
|
$
|
6,069
|
|
|
United Security Bancshares – (parent only)
|
Year ended December 31,
|
||||||
|
Statement of Cash Flows
|
|||||||
|
(In thousands)
|
2013
|
|
2012
|
||||
|
Cash Flows From Operating Activities
|
|
|
|
||||
|
Net income (loss)
|
$
|
7,269
|
|
|
$
|
6,069
|
|
|
Adjustments to reconcile net income (loss) to cash provided by operating activities:
|
|
|
|
|
|
||
|
Equity in undistributed income of subsidiary
|
(7,985
|
)
|
|
(6,802
|
)
|
||
|
Deferred taxes
|
1,232
|
|
|
(376
|
)
|
||
|
Write-down of other investments
|
—
|
|
|
68
|
|
||
|
Loss on fair value option of financial liability
|
776
|
|
|
774
|
|
||
|
Increase in income tax receivable
|
(1,732
|
)
|
|
—
|
|
||
|
Net change in other assets/liabilities
|
198
|
|
|
243
|
|
||
|
Net cash (used in) operating activities
|
(242
|
)
|
|
(24
|
)
|
||
|
Cash Flows From Investing Activities
|
|
|
|
|
|
||
|
Investment in bank stock
|
—
|
|
|
9
|
|
||
|
Net cash provided by investing activities
|
—
|
|
|
9
|
|
||
|
Cash Flows From Financing Activities
|
|
|
|
|
|
||
|
Proceeds from exercise of stock options
|
12
|
|
|
—
|
|
||
|
Proceeds from sale investment in bank stock
|
—
|
|
|
295
|
|
||
|
Net cash provided by financing activities
|
12
|
|
|
295
|
|
||
|
Net increase (decrease) in cash and cash equivalents
|
(230
|
)
|
|
280
|
|
||
|
Cash and cash equivalents at beginning of year
|
296
|
|
|
16
|
|
||
|
Cash and cash equivalents at end of year
|
$
|
66
|
|
|
$
|
296
|
|
|
Supplemental cash flow disclosures
|
|
|
|
|
|
||
|
Non-cash financing activities:
|
|
|
|
|
|
||
|
Dividends declared not paid
|
$
|
—
|
|
|
$
|
—
|
|
|
3.1
|
Articles of Incorporation of Registrant (1)
|
|
|
|
|
3.2
|
Bylaws of Registrant (1)
|
|
|
|
|
4.1
|
Specimen common stock certificate of United Security Bancshares (1)
|
|
|
|
|
10.1
|
Amended and Restated Executive Salary Continuation Agreement for Dennis Woods (4)
|
|
|
|
|
10.2
|
Amended and Restated Employment Agreement for Dennis R. Woods (4)
|
|
|
|
|
10.3
|
Amended and Restated Executive Salary Continuation Agreement for Kenneth Donahue (4)
|
|
|
|
|
10.4
|
Amended and Restated Change in Control Agreement for Kenneth Donahue (4)
|
|
|
|
|
10.5
|
Amended and Restated Executive Salary Continuation Agreement for David Eytcheson (4)
|
|
|
|
|
10.6
|
Amended and Restated Change in Control Agreement for David Eytcheson (4)
|
|
|
|
|
10.7
|
Amended and Restated Executive Salary Continuation Agreement for Rhodlee Braa (4)
|
|
|
|
|
10.8
|
Amended and Restated Change in Control Agreement for Rhodlee Braa (4)
|
|
|
|
|
10.9
|
Amended and Restated Executive Salary Continuation Agreement for William F. Scarborough (4)
|
|
|
|
|
10.10
|
Amended and Restated Change in Control Agreement for William F. Scarborough (4)
|
|
|
|
|
10.11
|
USB 2005 Stock Option Plan. Filed as Exhibit B to the Company's 2005 Schedule 14A Definitive Proxy filed April 18, 2005 and incorporated herein by reference.
|
|
|
|
|
10.12
|
Stock Option Agreement for William F. Scarborough dated August 1, 2005 (2)
|
|
|
|
|
10.13
|
Stock Option Agreement for Dennis R. Woods dated February 6, 2006 (3)
|
|
|
|
|
10.14
|
Written Agreement between United Security Bancshares, United Security Bank, and the Federal Reserve Bank of San Francisco dated March 23, 2010 (5)
|
|
|
|
|
10.15
|
Stock Option Agreement for Richard B. Shupe dated February 7, 2010 (6)
|
|
|
|
|
11.1
|
Computation of earnings per share.
|
|
|
See Note 19 to Consolidated Financial Statements and related documents set forth in “Item 8. Financial Statements and Supplementary Data” of this report are filed as part of this report.
|
|
|
|
|
21
|
Subsidiaries of the Company
|
|
|
|
|
23.1
|
Consent of Moss Adams LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
31.1
|
Certification of the Chief Executive Officer of United Security Bancshares pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2
|
Certification of the Chief Financial Officer of United Security Bancshares pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.1
|
Certification of the Chief Executive Officer of United Security Bancshares pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
32.2
|
Certification of the Chief Financial Officer of United Security Bancshares pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
March 21, 2014
|
|
/S/ Dennis R. Woods
|
|
|
|
Dennis R. Woods
|
|
|
|
President and Chief Executive Officer
|
|
March 21, 2014
|
|
/S/ Richard B. Shupe
|
|
|
|
Richard B. Shupe
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
Date:
|
March 21, 2014
|
|
/s/ Robert G. Bitter
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March 21, 2014
|
|
/s/ Stanley J. Cavalla
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March 21, 2014
|
|
/s/ Tom Ellithorpe
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March 21, 2014
|
|
/s/ R. Todd Henry
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March 21, 2014
|
|
/s/ Ronnie D. Miller
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March 21, 2014
|
|
/s/ Robert M. Mochizuki
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March 21, 2014
|
|
/s/ Walter Reinhard
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March 21, 2014
|
|
/s/ John Terzian
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
March 21, 2014
|
|
/s/ Mike Woolf
|
|
|
|
|
|
|
Director
|
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|