(Mark
One)
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FORM
10-Q
|
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d)
|
|
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
¨
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF
|
|
THE
SECURITIES EXCHANGE ACT OF 1934
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South
Carolina
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80-0030931
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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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|
Page
No.
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PART
I. FINANCIAL INFORMATION
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||
Item
1. Financial Statements
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||
Condensed
Consolidated Balance Sheets - September 30, 2010 (Unaudited) and December
31, 2009
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3
|
|
Condensed
Consolidated Statements of Operations – Nine and three months
ended
|
||
September
30, 2010 and 2009 (Unaudited)
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4
|
|
Condensed
Consolidated Statements of Shareholders’ Equity and Comprehensive Income
(Loss) -
|
||
Nine
months ended September 30, 2010 and 2009 (Unaudited)
|
5
|
|
Condensed
Consolidated Statements of Cash Flows - Nine months ended
|
||
September
30, 2010 and 2009 (Unaudited)
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6
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|
Notes
to Condensed Consolidated Financial Statements
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7-17
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|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
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18-36
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|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
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36
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|
Item
4. Controls and Procedures
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36
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PART
II. OTHER INFORMATION
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||
Item
1. Legal Proceedings
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37
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Item
1A. Risk Factors
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37
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|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
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38
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Item
3. Defaults Upon Senior Securities
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38
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Item
6. Exhibits
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38
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September
30,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Cash
and cash equivalents:
|
||||||||
Cash
and due from banks
|
$ | 2,729,387 | $ | 2,942,295 | ||||
Interest-bearing
deposits with other banks
|
57,715,023 | 50,356,191 | ||||||
Total
cash and cash equivalents
|
60,444,410 | 53,298,486 | ||||||
Time
deposits in other banks
|
100,000 | 502,089 | ||||||
Securities
available-for-sale
|
90,403,646 | 121,948,744 | ||||||
Nonmarketable
equity securities
|
4,525,300 | 4,812,100 | ||||||
Total
investment securities
|
94,928,946 | 126,760,844 | ||||||
Mortgage
loans held for sale
|
3,213,184 | 5,100,609 | ||||||
Loans
receivable
|
364,399,841 | 406,627,401 | ||||||
Less
allowance for loan losses
|
(6,819,964 | ) | (9,800,746 | ) | ||||
Loans,
net
|
357,579,877 | 396,826,655 | ||||||
Premises
and equipment, net
|
26,050,487 | 26,469,436 | ||||||
Accrued
interest receivable
|
2,347,994 | 2,661,030 | ||||||
Other
real estate owned
|
12,742,086 | 8,954,214 | ||||||
Cash
surrender value life insurance
|
11,723,592 | 11,409,937 | ||||||
Other
assets
|
10,864,654 | 13,525,073 | ||||||
Total
assets
|
$ | 579,995,230 | $ | 645,508,373 | ||||
Liabilities
and Shareholders’ Equity
|
||||||||
Liabilities
|
||||||||
Deposits
|
||||||||
Noninterest-bearing
transaction accounts
|
$ | 42,170,819 | $ | 44,298,626 | ||||
Interest-bearing
transaction accounts
|
37,563,382 | 47,733,229 | ||||||
Savings
|
113,914,458 | 103,604,793 | ||||||
Time
deposits $100,000 and over
|
170,851,463 | 195,346,191 | ||||||
Other
time deposits
|
123,715,653 | 161,780,140 | ||||||
Total
deposits
|
488,215,775 | 552,762,979 | ||||||
Securities
sold under agreement to repurchase
|
920,166 | 598,342 | ||||||
Advances
from Federal Home Loan Bank
|
26,000,000 | 34,000,000 | ||||||
Junior
subordinated debentures
|
10,310,000 | 10,310,000 | ||||||
Accrued
interest payable
|
534,549 | 680,880 | ||||||
Other
liabilities
|
2,904,488 | 1,932,345 | ||||||
Total
liabilities
|
528,884,978 | 600,284,546 | ||||||
Shareholders’
Equity
|
||||||||
Preferred
stock, no par value, authorized 10,000,000 shares:
|
||||||||
Series
A cumulative perpetual preferred stock 15,349 issued
|
||||||||
and
outstanding at September 30, 2010 and December 31, 2009
|
14,681,684 | 14,536,176 | ||||||
Series
B cumulative perpetual preferred stock 767 shares issue
|
||||||||
and
outstanding at September 30, 2010 and December 31, 2009
|
823,615 | 835,960 | ||||||
Series
C cumulative mandatory convertible preferred stock
|
||||||||
2,293
shares issued and outstanding at September 30, 2010
|
2,293,000 | - | ||||||
Common
stock, $0.01 par value; 20,000,000 shares authorized,
|
||||||||
4,113,539
and 3,582,691 shares issued and outstanding
|
||||||||
at
September 30, 2010 and December 31, 2009, respectively
|
41,135 | 35,827 | ||||||
Capital
surplus
|
28,133,315 | 26,181,576 | ||||||
Treasury
stock at cost at 12,632 and 11,535 shares at
|
||||||||
September
30, 2010 and December 31, 2009, respectively
|
(168,408 | ) | (163,936 | ) | ||||
Nonvested
restricted stock
|
(771,993 | ) | (206,004 | ) | ||||
Retained
earnings
|
4,186,029 | 5,269,463 | ||||||
1,891,875 | (1,265,235 | ) | ||||||
Total
shareholders’ equity
|
51,110,252 | 45,223,827 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 579,995,230 | $ | 645,508,373 |
Nine Months Ended
|
Three Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Interest
income:
|
||||||||||||||||
Loans,
including fees
|
$ | 17,719,753 | $ | 21,583,188 | $ | 5,653,540 | $ | 7,745,134 | ||||||||
Investment
securities:
|
||||||||||||||||
Taxable
|
1,742,007 | 1,690,701 | 548,823 | 687,731 | ||||||||||||
Nontaxable
|
1,903,865 | 1,327,111 | 596,994 | 581,312 | ||||||||||||
Federal
funds sold
|
- | 1,346 | - | 14 | ||||||||||||
Other
interest income
|
88,258 | 105,096 | 32,786 | 68,376 | ||||||||||||
Total
|
21,453,883 | 24,707,442 | 6,832,143 | 9,082,567 | ||||||||||||
Interest
expense:
|
||||||||||||||||
Time
deposits over $100,000
|
4,217,795 | 4,106,264 | 1,314,398 | 1,530,962 | ||||||||||||
Other
deposits
|
3,696,742 | 5,353,235 | 1,098,707 | 1,919,434 | ||||||||||||
Other
interest expense
|
1,175,163 | 2,153,744 | 394,111 | 576,774 | ||||||||||||
Total
|
9,089,700 | 11,613,243 | 2,807,216 | 4,027,170 | ||||||||||||
Net
interest income
|
12,364,183 | 13,094,199 | 4,024,927 | 5,055,397 | ||||||||||||
Provision
for loan losses
|
3,541,650 | 8,122,271 | 1,475,751 | 3,266,449 | ||||||||||||
Net
interest income after provision for loan losses
|
8,822,533 | 4,971,928 | 2,549,176 | 1,788,948 | ||||||||||||
Noninterest
income:
|
||||||||||||||||
Service
charges on deposit accounts
|
1,378,482 | 1,430,484 | 466,792 | 495,390 | ||||||||||||
Gain
on sales of mortgage loans
|
597,653 | 2,017,670 | 217,190 | 803,133 | ||||||||||||
Income
from bank owned life insurance
|
313,655 | 316,071 | 105,308 | 107,916 | ||||||||||||
Other
charges, commissions and fees
|
498,781 | 412,040 | 174,785 | 144,137 | ||||||||||||
Gain
on sale of securities
|
803,398 | 1,875,486 | 801,797 | 846,027 | ||||||||||||
Gain
on sale of fixed assets
|
- | 86,810 | - | - | ||||||||||||
Other
non-interest income
|
237,764 | 332,007 | 62,764 | 51,239 | ||||||||||||
Total
|
3,829,733 | 6,470,568 | 1,828,636 | 2,447,842 | ||||||||||||
Noninterest
expenses:
|
||||||||||||||||
Salaries
and employee benefits
|
7,117,834 | 7,921,638 | 2,454,159 | 2,598,865 | ||||||||||||
Occupancy
expense
|
1,153,239 | 1,079,855 | 375,324 | 369,823 | ||||||||||||
Furniture
and equipment expense
|
868,036 | 811,838 | 269,680 | 249,269 | ||||||||||||
Other
operating expenses
|
5,032,370 | 4,782,213 | 2,124,208 | 1,882,893 | ||||||||||||
Total
|
14,171,479 | 14,595,544 | 5,223,371 | 5,100,850 | ||||||||||||
Loss
before income taxes
|
(1,519,213 | ) | (3,153,048 | ) | (845,559 | ) | (864,060 | ) | ||||||||
Income
tax benefit
|
(1,259,612 | ) | (1,681,227 | ) | (534,977 | ) | (532,988 | ) | ||||||||
Net
Loss
|
(259,601 | ) | (1,471,821 | ) | (310,582 | ) | (331,072 | ) | ||||||||
Preferred
stock dividends
|
704,048 | 478,971 | 249,247 | 210,839 | ||||||||||||
Deemed
dividends on preferred stock resulting from net accretion of discount and
amortization of premium
|
133,163 | 101,948 | 44,876 | 44,876 | ||||||||||||
Net
loss available to common shareholders
|
$ | (1,096,812 | ) | $ | (2,052,740 | ) | $ | (604,705 | ) | $ | (586,787 | ) | ||||
Average
common shares outstanding, basic
|
3,878,476 | 3,559,592 | 4,110,007 | 3,585,572 | ||||||||||||
Average
common shares outstanding, diluted
|
3,878,476 | 3,559,592 | 4,110,007 | 3,585,572 | ||||||||||||
Loss
per share
|
||||||||||||||||
Basic
loss per share
|
$ | (0.28 | ) | $ | (0.58 | ) | $ | (0.15 | ) | $ | (0.16 | ) | ||||
Diluted
loss per share
|
$ | (0.28 | ) | $ | (0.58 | ) | $ | (0.15 | ) | $ | (0.16 | ) |
Accumulated
|
||||||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||||||
Nonvested
|
Comprehensive
|
|||||||||||||||||||||||||||||||
Preferred
|
Common
|
Capital
|
Treasury
|
Restricted
|
Retained
|
Income
|
||||||||||||||||||||||||||
Stock
|
Stock
|
Surplus
|
Stock
|
Stock
|
Earnings
|
(Loss)
|
Total
|
|||||||||||||||||||||||||
Balance,
December 31, 2008
|
$ | - | $ | 35,250 | $ | 26,120,460 | $ | (159,777 | ) | $ | (207,653 | ) | $ | 11,839,005 | $ | (201,527 | ) | $ | 37,425,758 | |||||||||||||
Issuance
of Series A preferred stock, net of issuance cost of
$116,786
|
14,375,740 | 14,375,740 | ||||||||||||||||||||||||||||||
Issuance
of Series B preferred stock, net of issuance cost $6,902
|
849,572 | 849,572 | ||||||||||||||||||||||||||||||
Net
loss
|
(1,471,821 | ) | (1,471,821 | ) | ||||||||||||||||||||||||||||
Other
comprehensive income, net of tax expense of $262,763
|
510,069 | 510,069 | ||||||||||||||||||||||||||||||
Comprehensive
loss
|
(961,752 | ) | ||||||||||||||||||||||||||||||
Preferred
stock dividends
|
(369,446 | ) | (369,446 | ) | ||||||||||||||||||||||||||||
Accretion
of Series A Preferred stock discount
|
111,399 | (111,399 | ) | - | ||||||||||||||||||||||||||||
Amortization
of Series B Preferred stock premium
|
(9,451 | ) | 9,451 | - | ||||||||||||||||||||||||||||
Issuance
of stock to employees
|
2 | 998 | 1,000 | |||||||||||||||||||||||||||||
Issuance
of restricted stock
|
566 | 65,704 | 51,769 | 118,039 | ||||||||||||||||||||||||||||
Purchase
of treasury stock
|
(4,130 | ) | (4,130 | ) | ||||||||||||||||||||||||||||
Balance,
September 30, 2009
|
$ | 15,327,260 | $ | 35,818 | $ | 26,187,162 | $ | (163,907 | ) | $ | (155,884 | ) | $ | 9,895,790 | $ | 308,542 | $ | 51,434,781 | ||||||||||||||
Balance,
December 31, 2009
|
$ | 15,372,136 | $ | 35,827 | $ | 26,181,576 | $ | (163,936 | ) | $ | (206,004 | ) | $ | 5,269,463 | $ | (1,265,235 | ) | $ | 45,223,827 | |||||||||||||
Issuance
of Series C
|
2,293,000 | 2,293,000 | ||||||||||||||||||||||||||||||
Issuance
of common stock net of issuance cost of $329,390
|
3,404 | 1,198,860 | 1,202,264 | |||||||||||||||||||||||||||||
Net
loss
|
(259,601 | ) | (259,601 | ) | ||||||||||||||||||||||||||||
Other
comprehensive gain, net of tax expense of $1,617,391
|
3,157,110 | 3,157,110 | ||||||||||||||||||||||||||||||
Comprehensive
income
|
2,897,509 | |||||||||||||||||||||||||||||||
Preferred
Stock Dividend
|
(690,670 | ) | (690,670 | ) | ||||||||||||||||||||||||||||
Accretion
of Series A
|
||||||||||||||||||||||||||||||||
Preferred
stock discount
|
145,508 | (145,508 | ) | - | ||||||||||||||||||||||||||||
Amortization
of Series B
|
||||||||||||||||||||||||||||||||
Preferred
stock premium
|
(12,345 | ) | 12,345 | - | ||||||||||||||||||||||||||||
Issuance
Restricted Stock
|
1,904 | 752,879 | (565,989 | ) | 188,794 | |||||||||||||||||||||||||||
Purchase
of treasury stock
|
(4,472 | ) | (4,472 | ) | ||||||||||||||||||||||||||||
Balance
September 30, 2010
|
$ | 17,798,299 | $ | 41,135 | $ | 28,133,315 | $ | (168,408 | ) | $ | (771,993 | ) | $ | 4,186,029 | $ | 1,891,875 | $ | 51,110,252 |
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2010
|
2009
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (259,601 | ) | $ | (1,471,821 | ) | ||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Provision
for loan losses
|
3,541,650 | 8,122,271 | ||||||
Depreciation
and amortization expense
|
818,696 | 821,799 | ||||||
Gain
on sale of premises, furniture and equipment
|
- | (86,810 | ) | |||||
Gain
on sale of available-for-sale securities
|
(803,398 | ) | (1,875,486 | ) | ||||
Impairment
loss on available-for-sale securities
|
18,750 | - | ||||||
Loss
(gain) on sale of other real estate owned
|
(525,872 | ) | 32,892 | |||||
Write
down of other real estate owned
|
202,597 | - | ||||||
Discount
accretion and premium amortization
|
218,600 | 92,669 | ||||||
Disbursements
for loans held-for-sale
|
(26,938,340 | ) | (149,964,244 | ) | ||||
Proceeds
from loans held-for-sale
|
28,825,044 | 149,732,281 | ||||||
Net
increase in valuation allowance for loans held-for-sale
|
721 | 3,282 | ||||||
Decrease
in interest receivable
|
313,036 | 47,287 | ||||||
Increase
in cash surrender value of life insurance
|
(313,655 | ) | (316,070 | ) | ||||
Decrease
in interest payable
|
(146,331 | ) | (10,011 | ) | ||||
Amortization
of deferred compensation on restricted stock
|
188,794 | 118,039 | ||||||
Increase
in other liabilities
|
6,540 | 1,004,234 | ||||||
(Increase)
decrease in other assets
|
1,852,457 | (3,436,537 | ) | |||||
Net
cash provided by operating activities
|
6,999,688 | 2,813,775 | ||||||
Cash
flows from investing activities:
|
||||||||
Net
decrease in loans receivable
|
26,493,504 | 25,787,643 | ||||||
Purchases
of securities available-for-sale
|
(8,283,383 | ) | (111,450,874 | ) | ||||
Proceeds
on sales of securities available-for-sale
|
40,631,817 | 103,217,000 | ||||||
Maturities
of securities available-for-sale
|
4,537,212 | 8,071,301 | ||||||
(Increase)
decrease in nonmarketable equity securities
|
286,800 | (237,400 | ) | |||||
(Increase)
decrease in time deposits in other banks
|
402,089 | (250,529 | ) | |||||
Proceeds
from sales of other real estate owned
|
5,896,143 | 222,608 | ||||||
Improvements
on other real estate owned
|
(149,116 | ) | - | |||||
Proceeds
from disposal of premises, furniture, and equipment
|
- | 2,286,810 | ||||||
Purchases
of premises and equipment
|
(243,572 | ) | (809,269 | ) | ||||
Net
cash provided by investing activities
|
69,571,494 | 26,837,290 | ||||||
Cash
flows from financing activities:
|
||||||||
Net
increase (decrease) in demand deposits, interest-bearing and savings
accounts
|
(1,987,989 | ) | 13,701,833 | |||||
Net
increase (decrease) in certificates of deposit and other time
deposits
|
(62,559,215 | ) | 96,024,986 | |||||
Net
increase (decrease) in securities sold under agreements to
repurchase
|
321,824 | (7,324,112 | ) | |||||
Decrease
in advances from the Federal Home Loan Bank
|
(8,000,000 | ) | (30,000,000 | ) | ||||
Repayment
of note payable
|
- | (6,950,000 | ) | |||||
Net
proceeds from issuance of preferred stock
|
2,293,000 | 15,225,312 | ||||||
Net
proceeds from issuance of common stock
|
1,201,262 | - | ||||||
Issuance
of shares to employees
|
1,002 | 1,000 | ||||||
Preferred
stock dividends paid
|
(690,670 | ) | (369,446 | ) | ||||
Purchase
of treasury stock
|
(4,472 | ) | (4,130 | ) | ||||
Net
cash provided (used) by financing activities
|
(69,425,258 | ) | 80,305,443 | |||||
Net
increase in cash and cash equivalents
|
7,145,924 | 109,956,508 | ||||||
Cash
and cash equivalents, beginning of period
|
53,298,486 | 5,708,607 | ||||||
Cash
and cash equivalents, end of period
|
$ | 60,444,410 | $ | 115,665,115 | ||||
Cash
paid during the period for
|
||||||||
Income
taxes
|
$ | - | $ | 4,257 | ||||
Interest
|
$ | 9,236,031 | $ | 11,623,254 | ||||
Supplemental
noncash investing and financing activities
|
||||||||
Foreclosures
on loans
|
$ | 9,211,624 | $ | 7,019,811 |
Pre-tax
|
Tax
|
Net-of-tax
|
||||||||||
Amount
|
Expense
|
Amount
|
||||||||||
For the Nine Months Ended
September 30, 2010:
|
||||||||||||
Unrealized
gains on securities available-for-sale
|
$ | 5,577,899 | $ | (1,890,546 | ) | $ | 3,687,353 | |||||
Reclassification
adjustment for gains (losses) in net income
|
803,398 | (273,155 | ) | 530,243 | ||||||||
$ | 4,774,501 | $ | (1,617,391 | ) | $ | 3,157,110 | ||||||
For the Nine Months Ended
September 30, 2009:
|
||||||||||||
Unrealized
gains on securities available-for-sale
|
$ | 2,648,318 | $ | (900,429 | ) | $ | 1,747,889 | |||||
Reclassification
adjustment for gains (losses) in net income
|
1,875,486 | (637,666 | ) | 1,237,820 | ||||||||
$ | 772,832 | $ | (262,763 | ) | $ | 510,069 | ||||||
For the Three Months Ended
September 30, 2010:
|
||||||||||||
Unrealized
gains on securities available-for-sale
|
$ | 2,753,576 | $ | (936,360 | ) | $ | 1,817,216 | |||||
Reclassification
adjustment for gains (losses) realized in net income
|
801,797 | (272,611 | ) | 529,186 | ||||||||
$ | 1,951,779 | $ | (663,749 | ) | $ | 1,288,030 | ||||||
For the Three Months Ended
September 30, 2009:
|
||||||||||||
Unrealized
gains on securities available-for-sale
|
$ | 3,335,971 | $ | (1,134,230 | ) | $ | 2,201,741 | |||||
Reclassification
adjustment for gains (losses) realized in net income
|
846,027 | (287,649 | ) | 558,378 | ||||||||
$ | 2,489,944 | $ | (846,581 | ) | $ | 1,643,363 |
Amortized
|
Gross Unrealized
|
Estimated
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||||||||
September
30, 2010
|
||||||||||||||||
U.S.
Government agencies
|
$ | 5,094 | $ | 189 | $ | - | $ | 5,283 | ||||||||
Mortgage-backed
securities
|
37,521,038 | 1,032,523 | - | 38,553,561 | ||||||||||||
Municipals
|
49,820,036 | 2,083,006 | 98,865 | 51,804,177 | ||||||||||||
Other
|
200,000 | - | 159,375 | 40,625 | ||||||||||||
$ | 87,546,168 | $ | 3,115,718 | $ | 258,240 | $ | 90,403,646 |
Amortized
|
Gross Unrealized
|
Estimated
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||||||||
December
31, 2009
|
||||||||||||||||
U.S.
Government agencies
|
$ | 3,021,782 | $ | 751 | $ | 11,167 | $ | 3,011,366 | ||||||||
Mortgage-backed
securities
|
59,324,978 | - | 1,192,307 | 58,132,671 | ||||||||||||
Municipals
|
61,300,256 | 460,262 | 1,023,326 | 60,737,192 | ||||||||||||
Other
|
218,750 | - | 151,235 | 67,515 | ||||||||||||
$ | 123,865,766 | $ | 461,013 | $ | 2,378,035 | $ | 121,948,744 |
Securities
|
||||||||
Available-For-Sale
|
||||||||
Amortized
|
Estimated
|
|||||||
Cost
|
Fair
Value
|
|||||||
Due
after one year but within five years
|
$ | 3,586,962 | $ | 3,623,917 | ||||
Due
after five years but within ten years
|
21,636,368 | 22,322,736 | ||||||
Due
after ten years
|
24,601,800 | 25,862,807 | ||||||
49,825,130 | 51,809,460 | |||||||
Mortgage-backed
securities
|
37,521,038 | 38,553,561 | ||||||
Other
|
200,000 | 40,625 | ||||||
Total
|
$ | 87,546,168 | $ | 90,403,646 |
September 30, 2010
|
December 31, 2009
|
|||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||
Less
Than 12 Months
|
||||||||||||||||
U.S.
government agencies and corporations
|
$ | - | $ | - | $ | 2,995,629 | $ | 11,167 | ||||||||
Mortgage-backed
securities
|
- | - | 58,132,671 | 1,192,307 | ||||||||||||
Municipals
|
- | - | 27,850,269 | 688,885 | ||||||||||||
- | - | 88,978,569 | 1,892,359 | |||||||||||||
12
Months or More
|
||||||||||||||||
Municipals
|
2,389,983 | 98,865 | 4,314,797 | 334,441 | ||||||||||||
Other
|
40,625 | 159,375 | 67,515 | 151,235 | ||||||||||||
2,430,608 | 258,240 | 4,382,312 | 485,676 | |||||||||||||
Total
securities available-for-sale
|
$ | 2,430,608 | $ | 258,240 | $ | 93,360,881 | $ | 2,378,035 |
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2010
|
2009
|
|||||||
Common
shares outstanding at beginning of the period
|
3,582,691 | 3,525,004 | ||||||
Issuance
of common stock
|
340,145 | - | ||||||
Issuance
of restricted shares
|
191,043 | 62,222 | ||||||
Forfeitures
of restricted shares
|
(633 | ) | (5,643 | ) | ||||
Issuance
of stock to employees
|
293 | 200 | ||||||
Common
shares outstanding at end of the period
|
4,113,539 | 3,581,783 |
Nine Months Ended
|
Three Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Accretion
of Series A preferred stock discount
|
$ | 145,508 | $ | 111,399 | $ | 49,036 | $ | 49,036 | ||||||||
Amortization
of Series B preferred stock premium
|
(12,345 | ) | (9,451 | ) | (4,160 | ) | (4,160 | ) | ||||||||
Accretion
net of amortization
|
$ | 133,163 | $ | 101,948 | $ | 44,876 | $ | 44,876 |
Nine Months Ended
|
Three Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
Loss available to common shareholders
|
||||||||||||||||
Net
loss
|
$ | (259,601 | ) | $ | (1,471,821 | ) | $ | (310,582 | ) | $ | (331,072 | ) | ||||
Preferred
stock dividends
|
704,048 | 478,971 | 249,247 | 210,839 | ||||||||||||
Deemed
dividends on preferred stock resulting from
|
||||||||||||||||
net
accretion of discount and amortization
|
||||||||||||||||
of
premium
|
133,163 | 101,948 | 44,876 | 44,876 | ||||||||||||
Net
loss available to common shareholders
|
$ | (1,096,812 | ) | $ | (2,052,740 | ) | $ | (604,705 | ) | $ | (586,787 | ) | ||||
Basic
Net loss per share:
|
||||||||||||||||
Net
loss available to common shareholders
|
$ | (1,096,812 | ) | $ | (2,052,740 | ) | $ | (604,705 | ) | $ | (586,787 | ) | ||||
Average
common shares outstanding – basic
|
3,878,476 | 3,559,592 | 4,110,007 | 3,585,572 | ||||||||||||
Basic
net loss per share
|
$ | (0.28 | ) | $ | (0.58 | ) | $ | (0.15 | ) | $ | (0.16 | ) |
Nine Months Ended
|
Three Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
loss available to common shareholders
|
$ | (1,096,812 | ) | $ | (2,052,740 | ) | $ | (604,705 | ) | $ | (586,787 | ) | ||||
Average
common shares outstanding – basic
|
3,878,476 | 3,559,592 | 4,110,007 | 3,585,572 | ||||||||||||
Dilutive
potential common shares
|
- | - | - | - | ||||||||||||
Average
common shares outstanding – diluted
|
3,878,476 | 3,559,592 | 4,110,007 | 3,585,572 | ||||||||||||
Diluted
net loss per share
|
$ | (0.28 | ) | $ | (0.58 | ) | $ | (0.15 | ) | $ | (0.16 | ) |
2010
|
2009
|
|||||||||||||||
Weighted-
|
Weighted-
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Exercise
|
Exercise
|
|||||||||||||||
Shares
|
Price
|
Shares
|
Price
|
|||||||||||||
Outstanding
at beginning of year
|
89,293 | $ | 14.95 | 93,981 | $ | 14.95 | ||||||||||
Forfeited
|
(4,959 | ) | 14.95 | (4,688 | ) | 14.95 | ||||||||||
Outstanding
at end of period
|
84,334 | $ | 14.95 | 89,283 | $ | 14.95 |
September 30,
|
December 31,
|
|||||||||||||||
2010
|
2009
|
|||||||||||||||
Carrying
|
Estimated Fair
|
Carrying
|
Estimated Fair
|
|||||||||||||
Amount
|
Value
|
Amount
|
Value
|
|||||||||||||
Financial
Assets:
|
||||||||||||||||
Cash
and due from banks
|
$ | 2,729,387 | $ | 2,729,387 | $ | 2,942,295 | $ | 2,942,295 | ||||||||
Interest-bearing
deposits with other banks
|
57,715,023 | 57,715,023 | 50,356,191 | 50,356,191 | ||||||||||||
Time
deposits in other banks
|
100,000 | 100,000 | 502,089 | 502,089 | ||||||||||||
Securities
available-for-sale
|
90,403,646 | 90,403,646 | 121,948,744 | 121,948,744 | ||||||||||||
Nonmarketable
equity securities
|
4,525,300 | 4,525,300 | 4,812,100 | 4,812,100 | ||||||||||||
Loans,
including loans held for sale
|
367,613,025 | 367,179,000 | 411,728,010 | 410,265,000 | ||||||||||||
Accrued
interest receivable
|
2,347,994 | 2,347,994 | 2,661,030 | 2,661,030 | ||||||||||||
Financial
Liabilities:
|
||||||||||||||||
Demand
deposit, interest-bearing
|
||||||||||||||||
transaction,
and savings accounts
|
$ | 193,648,659 | $ | 193,648,659 | $ | 195,636,648 | $ | 195,636,648 | ||||||||
Certificates
of deposit
|
294,567,116 | 294,427,000 | 357,126,331 | 352,318,000 | ||||||||||||
Securities
sold under agreements
|
||||||||||||||||
to
repurchase
|
920,116 | 920,116 | 598,342 | 598,342 | ||||||||||||
Advances
from Federal Home Loan Bank
|
26,000,000 | 25,986,000 | 34,000,000 | 33,992,000 | ||||||||||||
Junior
subordinated debentures
|
10,310,000 | 10,310,000 | 10,310,000 | 10,310,000 | ||||||||||||
Accrued
interest payable
|
534,549 | 534,459 | 680,880 | 680,880 | ||||||||||||
Notional
|
Notional
|
|||||||||||||||
Amount
|
Amount
|
|||||||||||||||
Off-Balance
Sheet Financial Instruments:
|
||||||||||||||||
Commitments
to extend credit
|
$ | 32,949,344 | $ | 39,873,440 | ||||||||||||
Standby
letters of credit
|
2,193,040 | 2,583,466 |
Level
1 —
|
Quoted
prices in active markets for identical assets or
liabilities.
|
|
Level
2 —
|
Observable
market based inputs or unobservable inputs that are corroborated by market
data.
|
|
Level
3 —
|
Unobservable
inputs that are not corroborated by market
data.
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
September
30, 2010
|
||||||||||||||||
Available
for-sale-securities:
|
||||||||||||||||
U.S.
Government agencies
|
$ | 5,283 | $ | - | $ | 5,283 | $ | - | ||||||||
Mortgage-backed
securities
|
38,553,561 | - | 38,553,561 | - | ||||||||||||
Municipals
|
51,804,177 | - | 51,804,177 | - | ||||||||||||
Other
|
40,625 | - | 40,625 | - | ||||||||||||
90,403,646 | - | 90,403,646 | - | |||||||||||||
Mortgage
loans held for sale (1)
|
3,213,184 | - | 3,213,184 | - | ||||||||||||
$ | 93,616,830 | $ | - | $ | 93,616,830 | $ | - | |||||||||
December
31, 2009
|
||||||||||||||||
Available
for-sale-securities:
|
||||||||||||||||
U.S.
Government agencies
|
$ | 3,011,366 | $ | - | $ | 3,011,366 | $ | - | ||||||||
Mortgage-backed
securities
|
58,132,671 | - | 58,132,671 | - | ||||||||||||
Municipals
|
60,737,192 | - | 60,737,192 | - | ||||||||||||
Other
|
67,515 | - | 67,515 | - | ||||||||||||
121,948,744 | - | 121,948,744 | - | |||||||||||||
Mortgage
loans held for sale (1)
|
5,100,609 | - | 5,100,609 | - | ||||||||||||
$ | 127,049,353 | $ | - | $ | 127,049,353 | $ | - |
Total
|
Level
1
|
Level
2
|
Level
3
|
|||||||||||||
September
30, 2010
|
||||||||||||||||
Impaired
loans receivable
|
$ | 22,259,032 | $ | - | $ | 22,259,032 | $ | - | ||||||||
Other
real estate owned
|
12,742,086 | - | 12,742,086 | - | ||||||||||||
Total
assets at fair value
|
$ | 35,001,118 | $ | - | $ | 35,001,118 | $ | - | ||||||||
December
31, 2009
|
||||||||||||||||
Impaired
loans receivable
|
$ | 44,937,157 | $ | - | $ | 44,937,157 | $ | - | ||||||||
Other
real estate owned
|
8,954,214 | - | 8,954,214 | - | ||||||||||||
Total
assets at fair value
|
$ | 53,891,371 | $ | - | $ | 53,891,371 | $ | - |
|
·
|
the
challenges, costs and complications associated with the continued
development of our branches;
|
|
·
|
the
potential that loan charge-offs may exceed the allowance for loan losses
or that such allowance will be increased as a result of factors beyond the
control of us;
|
|
·
|
our
dependence on senior management;
|
|
·
|
competition
from existing financial institutions operating in our market areas as well
as the entry into such areas of new competitors with greater resources,
broader branch networks and more comprehensive
services;
|
|
·
|
adverse
conditions in the stock market, the public debt market, and other capital
markets (including changes in interest rate
conditions);
|
|
·
|
changes
in deposit rates, the net interest margin, and funding
sources;
|
|
·
|
inflation,
interest rate, market, and monetary
fluctuations;
|
|
·
|
risks
inherent in making loans including repayment risks and value of
collateral;
|
|
·
|
the
strength of the United States economy in general and the strength of the
local economies in which we conduct operations may be different than
expected resulting in, among other things, a deterioration in credit
quality or a reduced demand for credit, including the resultant effect on
our loan portfolio and allowance for loan
losses;
|
|
·
|
fluctuations
in consumer spending and saving
habits;
|
|
·
|
the
demand for our products and
services;
|
|
·
|
technological
changes;
|
|
·
|
the
impact of existing and any future regulatory enforcement actions on our
future operations;
|
|
·
|
the
ability to increase market share;
|
|
·
|
the
adequacy of expense projections and estimates of impairment
loss;
|
|
·
|
the
impact of changes in accounting policies by the
SEC;
|
|
·
|
unanticipated
regulatory or judicial proceedings;
|
|
·
|
the
potential negative effects of future legislation affecting financial
institutions (including without limitation laws concerning taxes, banking,
securities, and insurance);
|
|
·
|
the
effects of, and changes in, trade, monetary and fiscal policies and laws,
including interest rate policies of the Board of Governors of the Federal
Reserve System;
|
|
·
|
the
timely development and acceptance of products and services, including
products and services offered through alternative delivery channels such
as the Internet;
|
|
·
|
the
impact on our business, as well as on the risks set forth above, of
various domestic or international military or terrorist activities or
conflicts;
|
|
·
|
other
factors described in this report and in other reports we have filed with
the SEC; and
|
|
·
|
our
success at managing the risks involved in the
foregoing.
|
|
·
|
Minimum
Leverage and Risk-Based Capital Requirements. Under the Act, the
appropriate Federal banking agencies are required to establish minimum
leverage and risk-based capital requirements on a consolidated basis for
all insured depository institutions and bank holding companies, which can
be no less than the currently applicable leverage and risk-based capital
requirements for depository
institutions.
|
|
·
|
Deposit
Insurance Modifications. The Act modifies the
FDIC’s assessment base upon which deposit insurance premiums are
calculated. The new assessment base will equal our average total
consolidated assets minus the sum of our average tangible equity during
the assessment period. The Act also makes permanent the increase in
maximum federal deposit insurance limits from $100,000 to
$250,000.
|
|
·
|
Creation of
New Consumer Protection Bureau. The Act creates a new
Bureau of Consumer Financial Protection within the Federal Reserve with
broad powers to supervise and enforce consumer protection laws. The Bureau
of Consumer Financial Protection will have broad rule-making authority for
a wide range of consumer protection laws that apply to all insured
depository institutions. The Bureau of Consumer Financial Protection has
examination and enforcement authority over all depository institutions
with more than $10 billion in assets. Depository institutions with $10
billion or less in assets, such as the Bank, will be examined by their
applicable bank regulators.
|
|
·
|
Executive
Compensation and Corporate Governance Requirements. The Act includes
provisions that may impact our corporate governance, including a grant of
authority to the SEC to issue rules that allow shareholders to nominate
directors by using the company’s proxy solicitation
materials. The Act further requires the SEC to adopt rules that
prohibit the listing of any equity security of a company that does not
have an independent compensation committee and require all exchange-traded
companies to adopt clawback policies for incentive compensation paid to
executive officers in the event of accounting restatements based on
material non-compliance with financial reporting
requirements.
|
Three
Months Ended
|
Average
Balances, Income and Expenses, and
Rates
|
|||||||||||||||||||||||||||||||||||
September
30,
|
2010
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||
Average
|
Income/
|
Yield/
|
Average
|
Income/
|
Yield/
|
Average
|
Income/
|
Yield/
|
||||||||||||||||||||||||||||
(Dollars in
thousands) (1)
|
Balance
|
Expense
|
Rate
|
Balance
|
Expense
|
Rate
|
Balance
|
Expense
|
Rate
|
|||||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||||||
Earning
assets:
|
||||||||||||||||||||||||||||||||||||
Loans (2)
|
$ | 372,071 | $ | 5,653 | 6.03 | % | $ | 453,877 | $ | 7,745 | 6.77 | % | $ | 472,091 | $ | 8,235 | 6.94 | % | ||||||||||||||||||
Securities,
taxable
|
60,426 | 549 | 3.60 | 61,410 | 688 | 4.44 | 26,330 | 349 | 5.29 | |||||||||||||||||||||||||||
Securities,
nontaxable
|
56,460 | 597 | 4.20 | 47,718 | 581 | 4.83 | 30,072 | 325 | 4.31 | |||||||||||||||||||||||||||
Federal
funds sold
|
- | - | - | 111 | - | 0.05 | 7,828 | 43 | 2.17 | |||||||||||||||||||||||||||
Other
earning assets
|
41,970 | 33 | 0.31 | 82,648 | 68 | 0.33 | 4,742 | 99 | 8.30 | |||||||||||||||||||||||||||
Total
earning assets
|
530,927 | 6,832 | 5.11 | 645,764 | 9,082 | 5.58 | 541,063 | 9,051 | 6.66 | |||||||||||||||||||||||||||
Non
earning assets
|
57,538 | 51,324 | 41,488 | |||||||||||||||||||||||||||||||||
Total
assets
|
$ | 588,465 | $ | 697,088 | $ | 582,551 | ||||||||||||||||||||||||||||||
Liabilities
and Shareholders' Equity
|
||||||||||||||||||||||||||||||||||||
Interest-bearing
deposits:
|
||||||||||||||||||||||||||||||||||||
Transaction
accounts
|
$ | 36,620 | $ | 51 | 0.56 | % | $ | 39,262 | $ | 57 | 0.58 | % | $ | 26,567 | $ | 41 | 0.62 | % | ||||||||||||||||||
Savings
and money market accounts
|
111,307 | 302 | 1.08 | 111,533 | 495 | 1.76 | 102,612 | 545 | 2.11 | |||||||||||||||||||||||||||
Time
deposits
|
304,834 | 2,060 | 2.68 | 386,731 | 2,898 | 2.97 | 278,084 | 2,628 | 3.76 | |||||||||||||||||||||||||||
Total
interest-bearing deposits
|
452,761 | 2,413 | 2.11 | 537,526 | 3,450 | 2.55 | 407,263 | 3,214 | 3.14 | |||||||||||||||||||||||||||
Other
interest-bearing liabilities:
|
||||||||||||||||||||||||||||||||||||
Securities
sold under agreement to repurchase
|
808 | - | 0.00 | 1,238 | - | 0.06 | 6,207 | 23 | 1.50 | |||||||||||||||||||||||||||
Federal
funds purchased
|
- | - | 0.00 | - | - | - | 488 | 3 | 2.33 | |||||||||||||||||||||||||||
Federal
Home Loan Bank borrowing
|
26,000 | 238 | 3.63 | 51,136 | 432 | 3.35 | 68,684 | 720 | 4.17 | |||||||||||||||||||||||||||
Junior
subordinated debentures
|
10,310 | 156 | 6.01 | 10,310 | 145 | 5.57 | 10,310 | 156 | 6.01 | |||||||||||||||||||||||||||
Note
payable
|
- | - | - | - | - | - | 3,000 | 31 | 4.12 | |||||||||||||||||||||||||||
Total
other interest-bearing liabilities
|
37,118 | 394 | 4.21 | 62,684 | 577 | 3.65 | 88,689 | 933 | 4.18 | |||||||||||||||||||||||||||
Total
interest-bearing liabilities
|
489,879 | 2,807 | 2.27 | 600,210 | 4,027 | 2.66 | 495,952 | 4,147 | 3.33 | |||||||||||||||||||||||||||
Noninterest-bearing
deposits
|
44,184 | 44,077 | 45,803 | |||||||||||||||||||||||||||||||||
Other
liabilities
|
3,610 | 2,302 | 2,841 | |||||||||||||||||||||||||||||||||
Shareholders'
equity
|
50,792 | 50,499 | 37,955 | |||||||||||||||||||||||||||||||||
Total
liabilities and equity
|
$ | 588,465 | $ | 697,088 | $ | 582,551 | ||||||||||||||||||||||||||||||
Net
interest income/interest spread
|
$ | 4,025 | 2.84 | % | $ | 5,055 | 2.92 | % | $ | 4,904 | 3.33 | % | ||||||||||||||||||||||||
Net
yield on earning assets
|
3.01 | % | 3.11 | % | 3.61 | % |
(1)
|
Prior
year percentages based on actual dollar
amounts
|
(2)
|
Includes
mortgage loans held for sale and nonaccruing
loans
|
Nine
Months Ended
|
Average
Balances, Income and Expenses, and
Rates
|
|||||||||||||||||||||||||||||||||||
September
30,
|
2010
|
2009
|
2008
|
|||||||||||||||||||||||||||||||||
|
Average
|
Income/
|
Yield/
|
Average
|
Income/
|
Yield/
|
Average
|
Income/
|
Yield/
|
|||||||||||||||||||||||||||
(Dollars in
thousands) (1)
|
Balance
|
Expense
|
Rate
|
Balance
|
Expense
|
Rate
|
Balance
|
Expense
|
Rate
|
|||||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||||||
Earning
assets:
|
||||||||||||||||||||||||||||||||||||
Loans
(2)
|
$ | 386,276 | $ | 17,720 | 6.13 | % | $ | 473,583 | $ | 21,583 | 6.09 | % | $ | 482,495 | $ | 25,895 | 7.17 | % | ||||||||||||||||||
Securities,
taxable
|
60,827 | 1,742 | 3.83 | 49,871 | 1,691 | 4.53 | 26,536 | 1,026 | 5.16 | |||||||||||||||||||||||||||
Securities,
nontaxable
|
59,261 | 1,904 | 4.30 | 38,105 | 1,327 | 4.66 | 30,718 | 981 | 4.27 | |||||||||||||||||||||||||||
Federal
funds sold
|
- | - | - | 685 | 1 | 0.26 | 3,462 | 54 | 5.10 | |||||||||||||||||||||||||||
Other
earning assets
|
40,347 | 88 | 0.29 | 57,835 | 105 | 0.24 | 4,771 | 213 | 5.97 | |||||||||||||||||||||||||||
Total
earning assets
|
546,711 | 21,454 | 5.25 | 620,079 | 24,707 | 5.33 | 547,982 | 28,169 | 6.87 | |||||||||||||||||||||||||||
Non
earning assets
|
56,748 | 41,700 | 40,987 | |||||||||||||||||||||||||||||||||
Total
assets
|
$ | 603,459 | $ | 661,779 | $ | 588,969 | ||||||||||||||||||||||||||||||
Liabilities
and Shareholders' Equity
|
||||||||||||||||||||||||||||||||||||
Interest-bearing
deposits:
|
||||||||||||||||||||||||||||||||||||
Transaction
accounts
|
$ | 38,394 | $ | 140 | 0.49 | % | $ | 37,052 | $ | 160 | 0.58 | % | $ | 28,487 | $ | 136 | 0.64 | % | ||||||||||||||||||
Savings
and money market accounts
|
106,489 | 982 | 1.23 | 102,779 | 1,346 | 1.75 | 93,318 | 1,648 | 2.36 | |||||||||||||||||||||||||||
Time
deposits
|
325,166 | 6,793 | 2.79 | 345,579 | 7,953 | 3.08 | 284,303 | 8,869 | 4.17 | |||||||||||||||||||||||||||
Total
interest-bearing deposits
|
470,049 | 7,915 | 2.25 | 485,410 | 9,459 | 2.61 | 406,108 | 10,653 | 3.50 | |||||||||||||||||||||||||||
Other
interest-bearing liabilities:
|
||||||||||||||||||||||||||||||||||||
Securities
sold under agreement to repurchase
|
788 | - | 0.00 | 2,719 | 1 | 0.06 | 7,397 | 103 | 1.86 | |||||||||||||||||||||||||||
Federal
funds purchased
|
1 | - | 0.26 | 27 | - | 0.82 | 4,637 | 115 | 3.33 | |||||||||||||||||||||||||||
Federal
Home Loan Bank borrowing
|
26,613 | 712 | 3.57 | 65,875 | 1,666 | 3.38 | 71,629 | 2,034 | 3.80 | |||||||||||||||||||||||||||
Junior
subordinated debentures
|
10,310 | 463 | 6.01 | 10,310 | 452 | 5.86 | 10,310 | 465 | 6.03 | |||||||||||||||||||||||||||
Note
payable
|
- | - | 0.00 | 1,986 | 35 | 2.35 | 3,000 | 100 | 4.46 | |||||||||||||||||||||||||||
Total
other interest-bearing liabilities
|
37,712 | 1,175 | 4.17 | 80,917 | 2,154 | 3.56 | 96,973 | 2,817 | 3.88 | |||||||||||||||||||||||||||
Total
interest-bearing liabilities
|
507,761 | 9,090 | 2.39 | 566,327 | 11,613 | 2.74 | 503,081 | 13,470 | 3.58 | % | ||||||||||||||||||||||||||
Noninterest-bearing
deposits
|
43,879 | 45,349 | 44,795 | |||||||||||||||||||||||||||||||||
Other
liabilities
|
3,857 | 2,419 | 3,142 | |||||||||||||||||||||||||||||||||
Shareholders'
equity
|
47,962 | 47,683 | 37,951 | |||||||||||||||||||||||||||||||||
Total
liabilities and equity
|
$ | 603,459 | $ | 661,779 | $ | 588,969 | ||||||||||||||||||||||||||||||
Net
interest income/interest spread
|
$ | 12,364 | 2.86 | % | $ | 13,094 | 2.59 | % | $ | 14,699 | 3.29 | % | ||||||||||||||||||||||||
Net
yield on earning assets
|
3.02 | % | 2.82 | % | 3.58 | % |
|
(1)
|
Prior
year percentages based on actual dollar
amounts
|
|
(2)
|
Includes
mortgage loans held for sale and nonaccruing
loans
|
Three
Months Ended September 30,
|
2010
Compared to 2009
|
2009
Compared to 2008
|
||||||||||||||||||||||
Due
to increase (decrease) in
|
Due
to increase (decrease) in
|
|||||||||||||||||||||||
(Dollars
in thousands)
|
Volume
|
Rate
|
Total
|
Volume
|
Rate
|
Total
|
||||||||||||||||||
Interest
income:
|
||||||||||||||||||||||||
Loans
|
$ | (1,301 | ) | $ | (791 | ) | $ | (2,092 | ) | $ | (299 | ) | $ | (191 | ) | $ | (490 | ) | ||||||
Securities,
taxable
|
(11 | ) | (128 | ) | (139 | ) | 401 | (62 | ) | 339 | ||||||||||||||
Securities,
tax exempt
|
98 | (82 | ) | 16 | 211 | 45 | 256 | |||||||||||||||||
Federal
funds sold
|
- | - | - | (21 | ) | (22 | ) | (43 | ) | |||||||||||||||
Other
earning assets
|
(32 | ) | (3 | ) | (35 | ) | 21 | (52 | ) | (31 | ) | |||||||||||||
Total
interest income
|
(1,246 | ) | (1,004 | ) | (2,250 | ) | 313 | (282 | ) | 31 | ||||||||||||||
Interest
expense:
|
||||||||||||||||||||||||
Interest-bearing
deposits
|
||||||||||||||||||||||||
Interest-bearing
transaction accounts
|
(4 | ) | (2 | ) | (6 | ) | 19 | (3 | ) | 16 | ||||||||||||||
Savings
and money market accounts
|
(1 | ) | (192 | ) | (193 | ) | 45 | (95 | ) | (50 | ) | |||||||||||||
Time
deposits
|
(573 | ) | (265 | ) | (838 | ) | 896 | (626 | ) | 270 | ||||||||||||||
Total
interest-bearing deposits
|
(578 | ) | (459 | ) | (1,037 | ) | 960 | (724 | ) | 236 | ||||||||||||||
Other
interest-bearing liabilities
|
||||||||||||||||||||||||
Securities
sold under agreement to
repurchase
|
- | - | - | (11 | ) | (12 | ) | (23 | ) | |||||||||||||||
Federal
funds purchased
|
- | - | - | (1 | ) | (2 | ) | (3 | ) | |||||||||||||||
Federal
Home Loan Bank borrowings
|
(227 | ) | 33 | (194 | ) | (163 | ) | (125 | ) | (288 | ) | |||||||||||||
Junior
subordinated debentures
|
- | 11 | 11 | - | (11 | ) | (11 | ) | ||||||||||||||||
Note
payable
|
- | - | - | (16 | ) | (15 | ) | (31 | ) | |||||||||||||||
Total
other interest-bearing liabilities
|
(227 | ) | 44 | (183 | ) | (191 | ) | (165 | ) | (356 | ) | |||||||||||||
Total
interest expense
|
(805 | ) | (415 | ) | (1,220 | ) | 769 | (889 | ) | (120 | ) | |||||||||||||
Net
interest income
|
$ | (441 | ) | $ | (589 | ) | $ | (1,030 | ) | $ | (456 | ) | $ | 607 | $ | 151 | ||||||||
Nine
Months Ended September 30,
|
2010
Compared to 2009
|
2009
Compared to 2008
|
||||||||||||||||||||||
Due
to increase (decrease) in
|
Due
to increase (decrease) in
|
|||||||||||||||||||||||
(Dollars
in thousands)
|
Volume
|
Rate
|
Total
|
Volume
|
Rate
|
Total
|
||||||||||||||||||
Interest
income:
|
||||||||||||||||||||||||
Loans
|
$ | (4,004 | ) | $ | 141 | $ | (3,863 | ) | $ | (471 | ) | $ | (3,841 | ) | $ | (4,312 | ) | |||||||
Securities,
taxable
|
336 | (285 | ) | 51 | 803 | (138 | ) | 665 | ||||||||||||||||
Securities,
tax exempt
|
687 | (110 | ) | 577 | 251 | 95 | 346 | |||||||||||||||||
Federal
funds sold
|
(1 | ) | - | (1 | ) | (24 | ) | (29 | ) | (53 | ) | |||||||||||||
Other
earning assets
|
(36 | ) | 19 | (17 | ) | 51 | (159 | ) | (108 | ) | ||||||||||||||
Total
interest income
|
(3,018 | ) | (235 | ) | (3,253 | ) | 610 | (4,072 | ) | (3,462 | ) | |||||||||||||
Interest
expense:
|
||||||||||||||||||||||||
Interest-bearing
deposits
|
||||||||||||||||||||||||
Interest-bearing
transaction accounts
|
6 | (27 | ) | (21 | ) | 38 | (14 | ) | 24 | |||||||||||||||
Savings
and money market accounts
|
47 | (411 | ) | (364 | ) | 154 | (456 | ) | (302 | ) | ||||||||||||||
Time
deposits
|
(448 | ) | (711 | ) | (1,159 | ) | 1,682 | (2,598 | ) | (916 | ) | |||||||||||||
Total
interest-bearing deposits
|
(395 | ) | (1,149 | ) | (1,544 | ) | 1,874 | (3,068 | ) | (1,194 | ) | |||||||||||||
Other
interest-bearing liabilities
|
||||||||||||||||||||||||
Securities
sold under agreement to repurchase
|
- | (1 | ) | (1 | ) | (41 | ) | (61 | ) | (102 | ) | |||||||||||||
Federal
funds purchased
|
- | - | - | (65 | ) | (50 | ) | (115 | ) | |||||||||||||||
Federal
Home Loan Bank borrowings
|
(1,044 | ) | 90 | (954 | ) | (155 | ) | (213 | ) | (368 | ) | |||||||||||||
Junior
subordinated debentures
|
- | 11 | 11 | - | (13 | ) | (13 | ) | ||||||||||||||||
Note
payable
|
(17 | ) | (18 | ) | (35 | ) | (27 | ) | (38 | ) | (65 | ) | ||||||||||||
Total
other interest-bearing liabilities
|
(1,061 | ) | 82 | (979 | ) | (288 | ) | (375 | ) | (663 | ) | |||||||||||||
Total
interest expense
|
(1,456 | ) | (1,067 | ) | (2,523 | ) | 1,586 | (3443 | ) | (1,857 | ) | |||||||||||||
Net
interest income
|
$ | (1,562 | ) | $ | 832 | $ | (730 | ) | $ | (976 | ) | $ | (629 | ) | $ | (1.605 | ) |
Nine months ended
|
Three months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Service
fees on deposit accounts
|
$ | 1,378,482 | $ | 1,430,484 | $ | 466,792 | $ | 495,390 | ||||||||
Gain
on sale of mortgage loans
|
597,653 | 2,017,670 | 217,190 | 803,133 | ||||||||||||
Gain
on sale of securities available-for-sale
|
803,398 | 1,875,486 | 801,797 | 846,027 | ||||||||||||
Other
income
|
1,050,200 | 1,146,928 | 342,857 | 303,292 | ||||||||||||
Total
noninterest income
|
$ | 3,829,733 | $ | 6,470,568 | $ | 1,828,636 | $ | 2,447,842 |
September 30, 2010
|
December 31,2009
|
|||||||||||||||
Amortized
|
Amortized
|
|||||||||||||||
Cost
|
Estimated
|
Cost
|
Estimated
|
|||||||||||||
(Book Value)
|
Fair Value
|
(Book Value)
|
Fair Value
|
|||||||||||||
Government
sponsored enterprises
|
$ | 5,094 | $ | 5,283 | $ | 3,021,782 | $ | 3,011,366 | ||||||||
Mortgage-backed
securities
|
37,521,038 | 38,553,561 | 59,324,978 | 58,132,671 | ||||||||||||
Municipal
securities
|
49,820,036 | 51,804,177 | 61,300,256 | 60,737,192 | ||||||||||||
Other
|
200,000 | 40,625 | 218,750 | 67,515 | ||||||||||||
$ | 87,546,168 | $ | 90,403,646 | $ | 123,865,766 | $ | 121,948,744 |
After One But
|
After Five But
|
|||||||||||||||||||||||||||||||
September 30, 2010
|
Within Five Years
|
Within Ten Years
|
After Ten Years
|
Total
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
||||||||||||||||||||||||
U.S.
government agencies and corporations
|
$ | 5 | 6.31 | % | $ | - | - | % | $ | - | - | % | $ | 5 | 6.31 | % | ||||||||||||||||
Municipals
(1)
|
3,619 | 6.19 | 22,322 | 6.59 | 25,863 | 6.80 | 51,804 | 6.40 | ||||||||||||||||||||||||
Total securities
(2)
|
$ | 3,624 | 6.19 | % | $ | 22,322 | 6.59 | % | $ | 25,863 | 6.80 | % | $ | 51,809 | 6.67 | % |
(1)
|
Yields
are based on a tax equivalent basis of
34%.
|
(2)
|
Excludes
mortgage-backed securities totaling $38,553,560 with a yield of 4.27% and
other equity securities totaling
$40,625.
|
September 30,
|
% of
|
December 31,
|
% of
|
|||||||||||||
2010
|
Total
|
2009
|
Total
|
|||||||||||||
Mortgage
loans on real estate
|
||||||||||||||||
Residential
1-4 family
|
$ | 54,073,239 | 14.84 | % | $ | 57,539,371 | 14.15 | % | ||||||||
Multifamily
|
10,063,978 | 2.76 | 9,962,625 | 2.45 | ||||||||||||
Commercial
|
153,939,666 | 42.24 | 169,933,348 | 41.79 | ||||||||||||
Construction
|
65,514,912 | 17.98 | 77,566,504 | 19.08 | ||||||||||||
Second
mortgages
|
4,097,047 | 1.13 | 4,746,686 | 1.17 | ||||||||||||
Equity
lines of credit
|
29,088,806 | 7.98 | 31,596,471 | 7.77 | ||||||||||||
Total
mortgage loans
|
316,777,648 | 86.93 | 351,345,005 | 86.41 | ||||||||||||
Commercial
and industrial
|
40,857,460 | 11.21 | 45,887,237 | 11.28 | ||||||||||||
Consumer
|
6,301,018 | 1.73 | 7,942,668 | 1.95 | ||||||||||||
Other,
net
|
463,715 | 0.13 | 1,452,491 | 0.36 | ||||||||||||
Total
loans
|
$ | 364,399,841 | 100.00 | % | $ | 406,627,401 | 100.00 | % |
September 30, 2010
|
Over
|
|||||||||||||||
(Dollars in thousands)
|
One Year
|
|||||||||||||||
One Year or
|
Through
|
Over Five
|
||||||||||||||
Less
|
Five Years
|
Years
|
Total
|
|||||||||||||
Commercial
and industrial
|
$ | 58 | $ | 37,141 | $ | 3,658 | $ | 40,857 | ||||||||
Real
estate
|
10,979 | 238,612 | 67,187 | 316,778 | ||||||||||||
Consumer
and other
|
474 | 4,545 | 1,746 | 6,765 | ||||||||||||
$ | 11,511 | $ | 280,298 | $ | 72,591 | $ | 364,400 | |||||||||
Loans
maturing after one year with:
|
||||||||||||||||
Fixed
interest rates
|
$ | 177,495 | ||||||||||||||
Floating
interest rates
|
175,394 | |||||||||||||||
$ | 352,889 |
September 30,
|
||||||||
(Dollars in thousands)
|
2010
|
2009
|
||||||
Balance,
January 1
|
$ | 9,801 | $ | 8,224 | ||||
Loans
charged off:
|
||||||||
Real
estate – construction
|
3,899 | 5,079 | ||||||
Real
estate – mortgage
|
4,105 | 2,869 | ||||||
Commercial
and industrial
|
1,392 | 1,434 | ||||||
Consumer
and other
|
104 | 149 | ||||||
Total
loan losses
|
9,500 | 9,531 | ||||||
Recoveries
of previous loan losses:
|
||||||||
Real
estate – construction
|
1,186 | 978 | ||||||
Real
estate – mortgage
|
1,195 | 1 | ||||||
Commercial
and industrial
|
432 | 24 | ||||||
Consumer
and other
|
164 | 18 | ||||||
Total
recoveries
|
2,977 | 1,021 | ||||||
Net
charge-offs
|
6,523 | 8,510 | ||||||
Provision
for loan losses
|
3,542 | 8,122 | ||||||
Balance,
September 30
|
$ | 6,820 | $ | 7,836 | ||||
Total
loans outstanding, end of period
|
$ | 364,400 | $ | 427,672 | ||||
Allowance
for loan losses to loans outstanding
|
1.87 | % | 1.83 | % |
(Dollars
in thousands)
|
2010
|
2009
|
||||||
Loans
over 90 days past due and still accruing
|
$ | 1,915 | $ | 332 | ||||
Loans
on nonaccrual:
|
||||||||
Real
Estate Construction
|
14,449 | 15,341 | ||||||
Real
Estate Mortgage
|
5,877 | 8,820 | ||||||
Commercial
|
785 | 470 | ||||||
Consumer
|
6 | 381 | ||||||
Total
nonaccrual loans
|
21,117 | 25,012 | ||||||
Total
of nonperforming loans
|
23,032 | 25,344 | ||||||
Other
real estate owned
|
12,742 | 7,144 | ||||||
Total
nonperforming assets
|
$ | 35,774 | $ | 32,488 | ||||
Percentage
of nonperforming assets to total loans
|
9.82 | % | 7.60 | % | ||||
Percentage
of nonperforming loans to total loans
|
6.32 | % | 5.93 | % | ||||
Allowance
for loan losses as a percentage of non-performing loans
|
29.61 | % | 30.92 | % |
2010
|
2009
|
|||||||||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||||||
Amount
|
Rate
|
Amount
|
Rate
|
|||||||||||||
Noninterest
bearing demand deposits
|
$ | 43,878,840 | 0.00 | % | $ | 45,349,056 | 0.00 | % | ||||||||
Interest
bearing demand deposits
|
38,393,935 | 0.49 | 37,051,911 | 0.58 | ||||||||||||
Savings
accounts
|
106,488,937 | 1.23 | 102,778,863 | 1.75 | ||||||||||||
Time
deposits
|
325,166,239 | 2.79 | 345,579,198 | 3.08 | ||||||||||||
$ | 513,927,951 | 2.06 | % | $ | 530,759,028 | 2.38 | % |
September 30,
|
||||
2010
|
||||
Three
months or less
|
$ | 19,938,921 | ||
Over
three through twelve months
|
49,019,383 | |||
Over
one year through three years
|
70,720,039 | |||
Over
three years
|
31,173,120 | |||
Total
|
$ | 170,851,463 |
Maximum
|
||||||||||||||||||||
Outstanding
|
Weighted
|
|||||||||||||||||||
at any
|
Average
|
Average
|
Ending
|
Period
|
||||||||||||||||
(Dollars in thousands)
|
Month End
|
Balance
|
Interest Rate
|
Balance
|
End Rate
|
|||||||||||||||
At
or for the nine months ended September 30,
2010
|
||||||||||||||||||||
Securities
sold under agreement to repurchase
|
$ | 934 | $ | 789 | - | % | $ | 920 | 0.25 | % | ||||||||||
Advances
from Federal Home Loan Bank
|
27,010 | 26,613 | 3.57 | 26,000 | 3.89 | |||||||||||||||
Federal
funds purchased
|
1 | 1 | 0.26 | - | - | |||||||||||||||
Junior
subordinated debentures
|
10,310 | 10,310 | 6.01 | 10,310 | 5.93 |
Maximum
|
||||||||||||||||||||
Outstanding
|
Weighted
|
|||||||||||||||||||
at any
|
Average
|
Average
|
Ending
|
Period
|
||||||||||||||||
(Dollars in thousands)
|
Month End
|
Balance
|
Interest Rate
|
Balance
|
End Rate
|
|||||||||||||||
At
or for the year ended December 31,
2009
|
||||||||||||||||||||
Securities
sold under agreement to repurchase
|
$ | 7,664 | $ | 2,262 | 0.05 | % | $ | 598 | 0.25 | % | ||||||||||
Advances
from Federal Home Loan Bank
|
93,500 | 59,800 | 3.57 | 34,000 | 3.17 | |||||||||||||||
Federal
funds purchased
|
11,482 | 21 | 0.82 | - | - | |||||||||||||||
Note
payable
|
6,950 | 1,485 | 2.01 | - | - | |||||||||||||||
Junior
subordinated debentures
|
10,310 | 10,310 | 5.95 | 10,310 | 5.93 |
September 30,
|
||||||||
2010
|
2009
|
|||||||
Return
on average assets
|
(0.06 | )% | (0.30 | )% | ||||
Return
on average equity
|
(0.72 | )% | (4.13 | )% | ||||
Average
equity to average assets ratio
|
7.95 | % | 7.21 | % |
September 30, 2010
|
December 31, 2009
|
|||||||||||||||
Holding
|
Holding
|
|||||||||||||||
Company
|
Bank
|
Company
|
Bank
|
|||||||||||||
Tier
1 capital (to risk-weighted assets)
|
13.38 | % | 11.95 | % | 11.52 | % | 10.75 | % | ||||||||
Total
capital (to risk-weighted assets)
|
14.63 | % | 13.20 | % | 12.78 | % | 12.01 | % | ||||||||
Leverage
or Tier 1 capital (to total average assets)
|
9.77 | % | 8.71 | % | 8.25 | % | 7.69 | % |
After
|
||||||||||||||||||||||||
After One
|
Three
|
|||||||||||||||||||||||
Through
|
Through
|
Greater
|
||||||||||||||||||||||
Within One
|
Three
|
Twelve
|
Within One
|
Than
|
||||||||||||||||||||
(Dollars in thousands)
|
Month
|
Months
|
Months
|
Year
|
One Year
|
Total
|
||||||||||||||||||
Unused
commitments to extend credit
|
$ | 2,321 | $ | 21 | $ | 5,635 | $ | 7,977 | $ | 24,972 | $ | 32,949 | ||||||||||||
Standby
letters of credit
|
30 | 490 | 1,647 | 2,167 | 26 | 2,193 | ||||||||||||||||||
Totals
|
$ | 2,351 | $ | 511 | $ | 7,282 | $ | 10,144 | $ | 24,998 | $ | 35,142 |
September 30, 2010
|
||||||||||||||||||||||||
After One
|
Three
|
Greater Than
|
||||||||||||||||||||||
Through
|
Through
|
One Year or
|
||||||||||||||||||||||
Within One
|
Three
|
Twelve
|
Within One
|
Non-
|
||||||||||||||||||||
(Dollars in thousands)
|
Month
|
Months
|
Months
|
Year
|
Sensitive
|
Total
|
||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning
assets
|
||||||||||||||||||||||||
Interest-bearing
deposits in other banks
|
$ | 57,715 | $ | - | $ | - | $ | 57,715 | $ | - | $ | 57,715 | ||||||||||||
Loans
(1)
|
40,906 | 37,146 | 65,381 | 143,433 | 224,180 | 367,613 | ||||||||||||||||||
Securities,
taxable
|
- | - | - | - | 38,599 | 38,599 | ||||||||||||||||||
Securities,
nontaxable
|
- | - | - | - | 51,804 | 51,804 | ||||||||||||||||||
Nonmarketable
securities
|
4,525 | - | - | 4,525 | - | 4,525 | ||||||||||||||||||
Time
Deposits in other banks
|
- | - | 100 | 100 | - | 100 | ||||||||||||||||||
Total
earning assets
|
103,146 | 37,146 | 65,481 | 205,773 | 314,583 | 520,356 | ||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Interest-bearing
liabilities
|
||||||||||||||||||||||||
Interest-bearing
deposits:
|
||||||||||||||||||||||||
Demand
deposits
|
37,563 | - | - | 37,563 | - | 37,563 | ||||||||||||||||||
Savings
deposits
|
113,914 | - | - | 113,914 | - | 113,914 | ||||||||||||||||||
Time
deposits
|
19,698 | 32,934 | 114,858 | 167,490 | 127,077 | 294,567 | ||||||||||||||||||
Total
interest-bearing deposits
|
171,175 | 32,934 | 114,858 | 318,967 | 127,077 | 446,044 | ||||||||||||||||||
Federal
Home Loan Bank Advances
|
- | 13,000 | - | 13,000 | 13,000 | 26,000 | ||||||||||||||||||
Junior
subordinated debentures
|
- | - | - | - | 10,310 | 10,310 | ||||||||||||||||||
Repurchase
agreements
|
920 | - | - | 920 | - | 920 | ||||||||||||||||||
Total
interest-bearing liabilities
|
172,095 | 45,934 | 114,858 | 332,887 | 150,387 | 483,274 | ||||||||||||||||||
Period
gap
|
$ | (68,949 | ) | $ | (8,788 | ) | $ | (49,377 | ) | $ | (127,114 | ) | $ | 164,196 | ||||||||||
Cumulative
gap
|
$ | (68,949 | ) | $ | (77,737 | ) | $ | (127,114 | ) | $ | (127,114 | ) | $ | 37,082 | ||||||||||
Ratio
of cumulative gap to total earning assets
|
(13.22 | )% | (14.91 | )% | (24.38 | )% | (24.38 | )% | 7.13 | % |
(a)
|
Not
applicable.
|
(b)
|
The
following stock repurchases were made during the period covered by this
report in connection with administration of the Company’s employee stock
ownership plan.
|
Total
|
||||||||||||||||
Number of
|
Maximum
|
|||||||||||||||
Shares
|
Number of
|
|||||||||||||||
Purchased as
|
Shares that
|
|||||||||||||||
Part of
|
May Yet Be
|
|||||||||||||||
Total
|
Publicly
|
Purchased
|
||||||||||||||
Number of
|
Average
|
Announced
|
Under the
|
|||||||||||||
Shares
|
Price Paid
|
Plans or
|
Plans or
|
|||||||||||||
Period
|
Purchased
|
per Share
|
Programs
|
Programs
|
||||||||||||
July
1, 2010 – July 31, 2010
|
- | $ | - | - | - | |||||||||||
August
1, 2010 – August 31, 2010
|
33 | $ | 4.30 | - | - | |||||||||||
September
1, 2010 – September 30, 2010
|
- | $ | - | - | - | |||||||||||
33 | $ | 4.30 | - | - |
Exhibit Number
|
Exhibit
|
|
31.1
|
Certification
pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as
amended.
|
|
31.2
|
Certification
pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as
amended.
|
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley
Act of 2002.
|
|
32.2
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley
Act of
2002.
|
FIRST
RELIANCE BANCSHARES, INC.
|
|||
Date: November
11, 2010
|
By:
|
/s/ F.R. SAUNDERS, JR
|
|
F. R. Saunders, Jr.
|
|||
President & Chief Executive Officer
|
|||
Date: November
11, 2010
|
By:
|
/s/ JEFFERY A. PAOLUCCI
|
|
Jeffery A. Paolucci
|
|||
Senior Vice President and Chief Financial Officer
|