x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Kentucky
|
61-1142247
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
2500 Eastpoint Parkway, Louisville, Kentucky
|
40223
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer ¨
|
Accelerated filer ¨
|
|
Non-accelerated filer ¨
|
Smaller reporting company x
|
Page
|
||
3
|
||
36
|
||
51
|
||
51
|
||
52
|
||
52
|
||
52
|
||
52
|
||
52
|
||
52
|
||
52
|
March 31,
2013 |
December 31,
2012 |
|||||||
Assets
|
||||||||
Cash and due from financial institutions
|
$
|
68,497
|
$
|
46,512
|
||||
Federal funds sold
|
2,691
|
3,060
|
||||||
Cash and cash equivalents
|
71,188
|
49,572
|
||||||
Securities available for sale
|
183,247
|
178,476
|
||||||
Mortgage loans held for sale
|
—
|
507
|
||||||
Loans, net of allowance of $39,839 and $56,680, respectively
|
787,237
|
842,412
|
||||||
Premises and equipment
|
20,667
|
20,805
|
||||||
Other real estate owned
|
44,192
|
43,671
|
||||||
Federal Home Loan Bank stock
|
10,072
|
10,072
|
||||||
Bank owned life insurance
|
8,472
|
8,398
|
||||||
Accrued interest receivable and other assets
|
7,794
|
8,718
|
||||||
Total assets
|
$
|
1,132,869
|
$
|
1,162,631
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Deposits
|
||||||||
Non-interest bearing
|
$
|
108,841
|
$
|
114,310
|
||||
Interest bearing
|
927,519
|
950,749
|
||||||
Total deposits
|
1,036,360
|
1,065,059
|
||||||
Repurchase agreements
|
2,853
|
2,634
|
||||||
Federal Home Loan Bank advances
|
5,324
|
5,604
|
||||||
Accrued interest payable and other liabilities
|
10,069
|
10,169
|
||||||
Subordinated capital note
|
6,525
|
6,975
|
||||||
Junior subordinated debentures
|
25,000
|
25,000
|
||||||
Total liabilities
|
1,086,131
|
1,115,441
|
||||||
Stockholders’ equity
|
||||||||
Preferred stock, no par, 1,000,000 shares authorized,
|
||||||||
Series A – 35,000 issued and outstanding;
|
||||||||
Liquidation preference of $35 million at March 31, 2013
|
34,885
|
34,840
|
||||||
Series C – 317,042 issued and outstanding;
|
||||||||
Liquidation preference of $3.6 million at March 31, 2013
|
3,283
|
3,283
|
||||||
Common stock, no par, 86,000,000 shares authorized, 12,139,975
and 12,002,421 shares issued and outstanding, respectively
|
112,236
|
112,236
|
||||||
Additional paid-in capital
|
20,386
|
20,283
|
||||||
Retained deficit
|
(127,069
|
)
|
(126,517
|
)
|
||||
Accumulated other comprehensive income
|
3,017
|
3,065
|
||||||
Total stockholders' equity
|
46,738
|
47,190
|
||||||
Total liabilities and stockholders’ equity
|
$
|
1,132,869
|
$
|
1,162,631
|
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
Interest income
|
||||||||
Loans, including fees
|
$
|
10,033
|
$
|
14,512
|
||||
Taxable securities
|
867
|
841
|
||||||
Tax exempt securities
|
221
|
250
|
||||||
Fed funds sold and other
|
137
|
152
|
||||||
11,258
|
15,755
|
|||||||
Interest expense
|
||||||||
Deposits
|
2,704
|
4,000
|
||||||
Federal Home Loan Bank advances
|
43
|
57
|
||||||
Subordinated capital note
|
58
|
71
|
||||||
Junior subordinated debentures
|
154
|
171
|
||||||
Federal funds purchased and other
|
1
|
2
|
||||||
2,960
|
4,301
|
|||||||
Net interest income
|
8,298
|
11,454
|
||||||
Provision for loan losses
|
450
|
3,750
|
||||||
Net interest income after provision for loan losses
|
7,848
|
7,704
|
||||||
Non-interest income
|
||||||||
Service charges on deposit accounts
|
493
|
554
|
||||||
Income from fiduciary activities
|
517
|
251
|
||||||
Bank card interchange fees
|
172
|
177
|
||||||
Other real estate owned rental income
|
112
|
37
|
||||||
Title insurance commissions
|
13
|
22
|
||||||
Secondary market brokerage fees
|
15
|
17
|
||||||
Net gain on sales of loans originated for sale
|
58
|
45
|
||||||
Net gain on sales of securities
|
—
|
2,019
|
||||||
Other
|
267
|
323
|
||||||
1,647
|
3,445
|
|||||||
Non-interest expense
|
||||||||
Salaries and employee benefits
|
4,139
|
4,312
|
||||||
Occupancy and equipment
|
931
|
886
|
||||||
Other real estate owned expense
|
791
|
1,257
|
||||||
FDIC Insurance
|
639
|
873
|
||||||
Loan collection expense
|
853
|
360
|
||||||
Professional fees
|
406
|
356
|
||||||
State franchise tax
|
537
|
592
|
||||||
Communications
|
175
|
180
|
||||||
Postage and delivery
|
113
|
122
|
||||||
Insurance expense
|
333
|
97
|
||||||
Other
|
647
|
612
|
||||||
9,564
|
9,647
|
|||||||
Income (loss) before income taxes
|
(69
|
)
|
1,502
|
|||||
Income tax benefit
|
—
|
—
|
||||||
Net income (loss)
|
(69
|
)
|
1,502
|
|||||
Less:
|
||||||||
Dividends on preferred stock
|
438
|
437
|
||||||
Accretion on Series A preferred stock
|
45
|
45
|
||||||
Earnings (losses) allocated to participating securities
|
(28
|
)
|
35
|
|||||
Net income (loss) attributable to common shareholders
|
$
|
(524
|
)
|
$
|
985
|
|||
Basic earnings (loss) per common share
|
$
|
(0.04
|
)
|
$
|
0.08
|
|||
Diluted earnings (loss) per common share
|
$
|
(0.04
|
)
|
$
|
0.08
|
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
Net income (loss)
|
$
|
(69
|
)
|
$
|
1,502
|
|||
Other comprehensive income (loss), net of tax:
|
||||||||
Unrealized gain (loss) on securities:
|
||||||||
Unrealized gain (loss) arising during the period
|
(74
|
)
|
622
|
|||||
Reclassification of amount realized through sales
|
—
|
(2,019)
|
||||||
Included in net loss
|
(74
|
)
|
(1,397)
|
|||||
Tax effect
|
26
|
489
|
||||||
Net of tax
|
(48
|
)
|
(908)
|
|||||
Comprehensive income (loss)
|
$
|
(117
|
)
|
$
|
594
|
Accumulated
|
|||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Additional
|
Other
|
||||||||||||||||||||||||||||||||||||
Series A
|
Series C
|
Series A
|
Series C
|
Paid-In
|
Retained
|
Comprehensive
|
|||||||||||||||||||||||||||||||||
Common
|
Preferred
|
Preferred
|
Common
|
Preferred
|
Preferred
|
Capital
|
Deficit
|
Income
|
Total
|
||||||||||||||||||||||||||||||
Balances, January 1, 2013
|
12,002,421
|
35,000
|
317,042
|
$
|
112,236
|
$
|
34,840
|
$
|
3,283
|
$
|
20,283
|
$
|
(126,517
|
)
|
$
|
3,065
|
$
|
47,190
|
|||||||||||||||||||||
Issuance of unvested stock
|
142,663
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||||||||||||||||
Forfeited unvested stock
|
(5,109
|
)
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||
Stock-based compensation expense
|
–
|
–
|
–
|
–
|
–
|
–
|
103
|
–
|
103
|
||||||||||||||||||||||||||||||
Net loss
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
(69
|
)
|
–
|
(69
|
)
|
|||||||||||||||||||||||||||
Net change in accumulated other comprehensive income, net of taxes
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
(48
|
)
|
(48
|
)
|
|||||||||||||||||||||||||||
Dividends 5% on Series A preferred stock
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
(438
|
)
|
–
|
(438
|
)
|
|||||||||||||||||||||||||||
Accretion of Series A preferred stock discount
|
–
|
–
|
–
|
–
|
45
|
–
|
–
|
(45
|
)
|
–
|
–
|
||||||||||||||||||||||||||||
Balances, March 31, 2013
|
12,139,975
|
35,000
|
317,042
|
$
|
112,236
|
$
|
34,885
|
$
|
3,283
|
$
|
20,386
|
$
|
(127,069
|
)
|
$
|
3,017
|
$
|
46,738
|
2013
|
2012
|
|||||||
Cash flows from operating activities
|
||||||||
Net income (loss)
|
$
|
(69
|
) |
$
|
1,502
|
|||
Adjustments to reconcile net loss to
net cash from operating activities
|
||||||||
Depreciation and amortization
|
548
|
570
|
||||||
Provision for loan losses
|
450
|
3,750
|
||||||
Net amortization on securities
|
610
|
632
|
||||||
Stock-based compensation expense
|
103
|
105
|
||||||
Net gain on loans originated for sale
|
(58
|
) |
(45
|
)
|
||||
Loans originated for sale
|
(1,190
|
) |
(2,328
|
)
|
||||
Proceeds from sales of loans originated for sale
|
1,744
|
2,802
|
||||||
Net gain on sales of investment securities
|
—
|
(2,019
|
)
|
|||||
Net loss on sales of other real estate owned
|
197
|
402
|
||||||
Net write-down of other real estate owned
|
307
|
480
|
||||||
Earnings on bank owned life insurance
|
(74
|
) |
(74
|
)
|
||||
Net change in accrued interest receivable and other assets
|
762
|
3,231
|
||||||
Net change in accrued interest payable and other liabilities
|
(537
|
) |
3,881
|
|||||
Net cash from operating activities
|
2,793
|
12,889
|
||||||
Cash flows from investing activities
|
||||||||
Purchases of available-for-sale securities
|
(15,294
|
) |
(45,048
|
)
|
||||
Sales of available-for-sale securities
|
—
|
21,385
|
||||||
Maturities and prepayments of available-for-sale securities
|
9,864
|
8,056
|
||||||
Proceeds from sale of other real estate owned
|
2,640
|
9,018
|
||||||
Improvements to other real estate owned
|
—
|
(1
|
)
|
|||||
Loan originations and payments, net
|
50,983
|
30,798
|
||||||
Purchases of premises and equipment, net
|
(160
|
) |
(72
|
)
|
||||
Net cash from investing activities
|
48,033
|
24,136
|
||||||
Cash flows from financing activities
|
||||||||
Net change in deposits
|
(28,699
|
) |
(70,016
|
)
|
||||
Net change in repurchase agreements
|
219
|
188
|
||||||
Repayment of Federal Home Loan Bank advances
|
(280
|
) |
(327
|
)
|
||||
Repayment of subordinated capital note
|
(450
|
) |
(225
|
)
|
||||
Net cash from financing activities
|
(29,210
|
) |
(70,380
|
)
|
||||
Net change in cash and cash equivalents
|
21,616
|
(33,355
|
)
|
|||||
Beginning cash and cash equivalents
|
49,572
|
105,962
|
||||||
Ending cash and cash equivalents
|
$
|
71,188
|
$
|
72,607
|
||||
Supplemental cash flow information:
|
||||||||
Interest paid
|
$
|
4,992
|
$
|
4,296
|
||||
Income taxes paid (refunded)
|
—
|
(2,000
|
)
|
|||||
Supplemental non-cash disclosure:
|
||||||||
Transfer from loans to other real estate
|
$
|
3,680
|
$
|
4,216
|
||||
Financed sales of other real estate owned
|
15
|
192
|
|
●
|
Increasing capital through a possible public offering or private placement of common stock to new and existing shareholders. We have engaged a financial advisor to assist our Board in evaluating our options for increasing capital and redeeming our Series A preferred stock issued to the US Treasury in 2008 under the Capital Purchase Program.
|
|
●
|
Continuing to operate the Company and Bank in a safe and sound manner. This strategy will require us to continue to reduce the size of our balance sheet, reduce our lending concentrations, consider selling loans, and reduce other noninterest expense through the disposition of OREO.
|
|
●
|
Continuing with succession planning and adding resources to the management team. John T. Taylor was named President and CEO for PBI Bank and appointed to the board of directors in July 2012. Additionally, John R. Davis was appointed Chief Credit Officer of PBI Bank in August 2012, with responsibility for establishing and executing the credit quality policies and overseeing credit administration for the organization.
|
|
●
|
Evaluating our internal processes and procedures, distribution of labor, and work-flow to ensure we have adequately and appropriately deployed resources in an efficient manner in the current environment. To this end, we believe the opportunity exists for the centralization of key processes which will lead to improved execution and cost savings.
|
|
●
|
Executing on our commitment to improve credit quality and reduce loan concentrations and balance sheet risk.
|
|
o
|
We have reduced the size of our loan portfolio significantly from $1.3 billion at December 31, 2010, to $1.1 billion at December 31, 2011, to $899.1 million at December 31, 2012, and $827.1 million at March 31, 2013. We have significantly improved our staffing in the commercial lending area which is now led by John R. Davis.
|
|
o
|
Our Consent Order calls for us to reduce our construction and development loans to not more than 75% of total risk-based capital. We are now in compliance with construction and development loans totaling $62.5 million, or 73% of total risk-based capital, at March 31, 2013, down from $70.3 million, or 82% of total risk-based capital, at December 31, 2012.
|
|
o
|
Our Consent Order also requires us to reduce non-owner occupied commercial real estate loans, construction and development loans, and multi-family residential real estate loans as a group, to not more than 250% of total risk-based capital. While we have made significant improvements over the last year, we were not in compliance with this concentration limit at March 31, 2013. These loans totaled $299.4 million, or 351% of total risk-based capital, at March 31, 2013 and $311.1 million, or 362% of total risk-based capital, at December 31, 2012.
|
|
o
|
We are working to reduce our loan concentrations by curtailing new construction and development lending and new non-owner occupied commercial real estate lending. We are also receiving principal reductions from amortizing credits and pay-downs from our customers who sell properties built for resale. We have reduced the construction loan portfolio from $199.5 million at December 31, 2010 to $62.5 million at March 31, 2013. Our non-owner occupied commercial real estate loans declined from $293.3 million at December 31, 2010 to $187.2 million at March 31, 2013.
|
|
●
|
Executing on our commitment to sell other real estate owned and reinvest in quality income producing assets.
|
|
o
|
The remediation process for loans secured by real estate has led the Bank to acquire significant levels of OREO in 2012, 2011, and 2010. This trend has continued at a slower pace in 2013. The Bank acquired $33.5 million, $41.9 million, and $90.8 million during 2012, 2011, and 2010, respectively. For the first three months of March 31, 2013, we acquired $3.7 million of OREO.
|
|
o
|
We have incurred significant losses in disposing of this real estate. We incurred losses totaling $9.3 million, $42.8 million, and $13.9 million in 2012, 2011, and 2010, respectively, from sales and fair value write-downs attributable to declining valuations as evidenced by new appraisals and from changes in our sales strategies. During the three month period ended March 31, 2013, we incurred OREO losses totaling $504,000, which consisted of $197,000 in loss on sale and $307,000 from declining values as evidenced by new appraisals and reduced marketing prices in connection with our sales strategies.
|
|
o
|
To ensure that we maximize the value we receive upon the sale of OREO, we continually evaluate sales opportunities and channels. We are targeting multiple sales opportunities and channels through internal marketing and the use of brokers, auctions, technology sales platforms, and bulk sale strategies. Proceeds from the sale of OREO totaled $2.7 million during the three months ended March 31, 2013 and $22.5 million, $26.0 million and $25.0 million during 2012, 2011, and 2010, respectively.
|
|
o
|
At December 31, 2012 the OREO portfolio consisted of 51% construction, development, and land assets. At March 31, 2013 this concentration had declined to 49%. This is consistent with our reduction of construction, development and other land loans, which have declined to $62.5 million at March 31, 2013 compared to $70.3 million at December 31, 2012. Over the past three months, the composition of our OREO portfolio has shifted toward 1-4 family residential properties, which we have found to be more liquid than construction, development, and land assets, while commercial real estate has declined slightly as a percentage of the portfolio. Commercial real estate of this nature represents 34% of the portfolio at March 31, 2013 compared with 35% at December 31, 2012. 1-4 family residential properties represent 15% of the portfolio at March 31, 2013 compared with 12% at December 31, 2012.
|
|
●
|
Evaluating other strategic alternatives, such as the sale of assets or branches.
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
(in thousands)
|
||||||||||||||||
March 31, 2013
|
||||||||||||||||
U.S. Government and federal agency
|
$
|
23,697
|
$
|
511
|
$
|
(41
|
)
|
$
|
24,167
|
|||||||
Agency mortgage-backed: residential
|
79,937
|
868
|
(472
|
)
|
80,333
|
|||||||||||
State and municipal
|
53,542
|
2,277
|
(146
|
)
|
55,673
|
|||||||||||
Corporate bonds
|
18,880
|
1,510
|
(8
|
)
|
20,382
|
|||||||||||
Other
|
572
|
71
|
—
|
643
|
||||||||||||
Total debt securities
|
176,628
|
5,237
|
(667
|
)
|
181,198
|
|||||||||||
Equity
|
1,359
|
691
|
(1
|
)
|
2,049
|
|||||||||||
Total
|
$
|
177,987
|
$
|
5,928
|
$
|
(668
|
)
|
$
|
183,247
|
December 31, 2012
|
||||||||||||||||
U.S. Government and federal agency
|
$
|
5,603
|
$
|
530
|
$
|
—
|
$
|
6,133 | ||||||||
Agency mortgage-backed: residential
|
94,298
|
1,141
|
(257
|
)
|
95,182
|
|||||||||||
State and municipal
|
52,485
|
2,335
|
(87
|
)
|
54,733
|
|||||||||||
Corporate bonds
|
18,851
|
1,150
|
(37
|
)
|
19,964
|
|||||||||||
Other
|
572
|
46
|
—
|
618
|
||||||||||||
Total debt securities
|
171,809
|
5,202
|
(381
|
)
|
176,630
|
|||||||||||
Equity
|
1,359
|
487
|
—
|
1,846
|
||||||||||||
Total
|
$
|
173,168
|
$
|
5,689
|
$
|
(381
|
)
|
$
|
178,476
|
Three Months Ended
March 31,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
(in thousands)
|
||||||||||||||||
Proceeds
|
$
|
—
|
$
|
21,385
|
||||||||||||
Gross gains
|
—
|
2,019
|
||||||||||||||
Gross losses
|
—
|
—
|
March 31, 2013
|
||||||||
Amortized
Cost
|
Fair
Value
|
|||||||
(in thousands)
|
||||||||
Maturity
|
||||||||
Available-for-sale
|
||||||||
Within one year
|
$
|
13,105
|
$
|
13,517
|
||||
One to five years
|
14,663
|
16,123
|
||||||
Five to ten years
|
59,149
|
61,044
|
||||||
Beyond ten years
|
9,774
|
10,181
|
||||||
Agency mortgage-backed: residential
|
79,937
|
80,333
|
||||||
Total
|
$
|
176,628
|
$
|
181,198
|
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Description of Securities
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
March 31, 2013
|
||||||||||||||||||||||||
U.S government & agency
|
$
|
6,499
|
$
|
(41
|
)
|
$
|
—
|
$
|
—
|
$
|
6,499
|
$
|
(41
|
)
|
||||||||||
Agency mortgage-backed: residential
|
30,351
|
(472
|
)
|
—
|
—
|
30,351
|
(472
|
)
|
||||||||||||||||
State and municipal
|
11,225
|
(146
|
)
|
—
|
—
|
11,225
|
(146
|
)
|
||||||||||||||||
Corporate bonds
|
1,284
|
(8
|
)
|
—
|
—
|
1,284
|
(8
|
)
|
||||||||||||||||
Equity
|
2
|
(1
|
)
|
8
|
—
|
10
|
(1
|
)
|
||||||||||||||||
Total temporarily impaired
|
$
|
49,361
|
$
|
(668
|
)
|
$
|
8
|
$
|
—
|
$
|
49,369
|
$
|
(668
|
)
|
||||||||||
December 31, 2012
|
||||||||||||||||||||||||
Agency mortgage-backed: residential
|
$
|
23,375
|
$
|
(257
|
)
|
$
|
—
|
$
|
—
|
$
|
23,375
|
$
|
(257
|
)
|
||||||||||
State and municipal
|
7,961
|
(87
|
)
|
—
|
—
|
7,961
|
(87
|
)
|
||||||||||||||||
Corporate bonds
|
3,777
|
(37
|
)
|
—
|
—
|
3,777
|
(37
|
)
|
||||||||||||||||
Equity
|
2
|
—
|
—
|
—
|
2
|
—
|
||||||||||||||||||
Total temporarily impaired
|
$
|
35,115
|
$
|
(381
|
)
|
$
|
—
|
$
|
—
|
$
|
35,115
|
$
|
(381
|
)
|
Loans were as follows:
|
March
31,
|
December
31,
|
||||||
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
Commercial
|
$
|
49,932
|
$
|
52,567
|
||||
Commercial Real Estate:
|
||||||||
Construction
|
62,535
|
70,284
|
||||||
Farmland
|
75,347
|
80,825
|
||||||
Other
|
289,211
|
322,687
|
||||||
Residential Real Estate:
|
||||||||
Multi-family
|
49,590
|
50,986
|
||||||
1-4 Family
|
259,412
|
278,273
|
||||||
Consumer
|
18,129
|
20,383
|
||||||
Agriculture
|
22,214
|
22,317
|
||||||
Other
|
706
|
770
|
||||||
Subtotal
|
827,076
|
899,092
|
||||||
Less: Allowance for loan losses
|
(39,839
|
)
|
(56,680
|
)
|
||||
Loans, net
|
$
|
787,237
|
$
|
842,412
|
Commercial |
Commercial
Real Estate
|
Residential
Real Estate
|
Consumer | Agriculture | Other | Total | ||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
March 31, 2013:
|
|
|
||||||||||||||||||||||||||
Beginning balance
|
$
|
4,402
|
$
|
34,768
|
$
|
16,235
|
$
|
857
|
$
|
403
|
$
|
15
|
$
|
56,680
|
||||||||||||||
Provision for loan losses
|
1,438
|
(445
|
)
|
(450
|
)
|
86
|
(178
|
)
|
(1
|
)
|
450
|
|||||||||||||||||
Loans charged off
|
(976
|
)
|
(12,312
|
)
|
(4,339
|
)
|
(318
|
)
|
(17
|
)
|
–
|
(17,962
|
)
|
|||||||||||||||
Recoveries
|
126
|
158
|
94
|
91
|
202
|
–
|
671
|
|||||||||||||||||||||
Ending balance
|
$
|
4,990
|
$
|
22,169
|
$
|
11,540
|
$
|
716
|
$
|
410
|
$
|
14
|
$
|
39,839
|
||||||||||||||
March 31, 2012:
|
||||||||||||||||||||||||||||
Beginning balance
|
$
|
4,207
|
$
|
33,024
|
$
|
14,217
|
$
|
792
|
$
|
325
|
$
|
14
|
$
|
52,579
|
||||||||||||||
Provision for loan losses
|
89
|
772
|
2,506
|
224
|
161
|
(2
|
)
|
3,750
|
||||||||||||||||||||
Loans charged off
|
(256
|
)
|
(919
|
)
|
(1,029
|
)
|
(237
|
)
|
(141
|
)
|
–
|
(2,582
|
)
|
|||||||||||||||
Recoveries
|
42
|
105
|
26
|
33
|
–
|
–
|
206
|
|||||||||||||||||||||
Ending balance
|
$
|
4,082
|
$
|
32,982
|
$
|
15,720
|
$
|
812
|
$
|
345
|
$
|
12
|
$
|
53,953
|
Commercial
|
Commercial
Real Estate
|
Residential
Real Estate
|
Consumer
|
Agriculture
|
Other
|
Total
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
695
|
$
|
6,138
|
$
|
1,295
|
$
|
21
|
$
|
—
|
$
|
12
|
$
|
8,161
|
||||||||||||||
Collectively evaluated for impairment
|
4,295
|
16,031
|
10,245
|
695
|
410
|
2
|
31,678
|
|||||||||||||||||||||
Total ending allowance balance
|
$
|
4,990
|
$
|
22,169
|
$
|
11,540
|
$
|
716
|
$
|
410
|
$
|
14
|
$
|
39,839
|
||||||||||||||
Loans:
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
5,668
|
$
|
114,558
|
$
|
56,342
|
$
|
212
|
$
|
170
|
$
|
522
|
$
|
177,472
|
||||||||||||||
Loans collectively evaluated for impairment
|
44,264
|
312,535
|
252,660
|
17,917
|
22,044
|
184
|
649,604
|
|||||||||||||||||||||
Total ending loans balance
|
$
|
49,932
|
$
|
427,093
|
$
|
309,002
|
$
|
18,129
|
$
|
22,214
|
$
|
706
|
$
|
827,076
|
Commercial
|
Commercial
Real Estate
|
Residential
Real Estate
|
Consumer
|
Agriculture
|
Other
|
Total
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
263
|
$
|
16,046
|
$
|
4,641
|
$
|
68
|
$
|
5
|
$
|
11
|
$
|
21,034
|
||||||||||||||
Collectively evaluated for impairment
|
4,139
|
18,722
|
11,594
|
789
|
398
|
4
|
35,646
|
|||||||||||||||||||||
Total ending allowance balance
|
$
|
4,402
|
$
|
34,768
|
$
|
16,235
|
$
|
857
|
$
|
403
|
$
|
15
|
$
|
56,680
|
||||||||||||||
Loans:
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
5,296
|
$
|
125,922
|
$
|
56,799
|
$
|
212
|
$
|
55
|
$
|
524
|
$
|
188,808
|
||||||||||||||
Loans collectively evaluated for impairment
|
47,271
|
347,874
|
272,460
|
20,171
|
22,262
|
246
|
710,284
|
|||||||||||||||||||||
Total ending loans balance
|
$
|
52,567
|
$
|
473,796
|
$
|
329,259
|
$
|
20,383
|
$
|
22,317
|
$
|
770
|
$
|
899,092
|
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance
For Loan
Losses
Allocated
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Cash
Basis
Income
Recognized
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
With No Related Allowance Recorded:
|
||||||||||||||||||||||||
Commercial
|
$ | 2,197 | $ | 1,887 | $ | — | $ | 1,561 | $ | — | $ | — | ||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Construction
|
948 | 800 | — | 955 | 5 | 5 | ||||||||||||||||||
Farmland
|
4,070 | 4,071 | — | 4,259 | 67 | 67 | ||||||||||||||||||
Other
|
1,930 | 1,816 | — | 1,854 | 4 | 4 | ||||||||||||||||||
Residential real estate:
|
||||||||||||||||||||||||
Multi-family
|
640 | 640 | — | 641 | — | — | ||||||||||||||||||
1-4 Family
|
13,695 | 13,352 | — | 13,255 | 19 | 19 | ||||||||||||||||||
Consumer
|
13 | 13 | — | 41 | — | — | ||||||||||||||||||
Agriculture
|
170 | 170 | — | 107 | — | — | ||||||||||||||||||
Other
|
— | — | — | — | — | — | ||||||||||||||||||
With An Allowance Recorded:
|
||||||||||||||||||||||||
Commercial
|
4,303 | 3,781 | 695 | 3,921 | 30 | — | ||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Construction
|
26,693 | 24,481 | 154 | 24,968 | 34 | — | ||||||||||||||||||
Farmland
|
8,362 | 6,050 | 270 | 6,253 | 11 | — | ||||||||||||||||||
Other
|
97,688 | 77,340 | 5,714 | 81,951 | 330 | — | ||||||||||||||||||
Residential real estate:
|
||||||||||||||||||||||||
Multi-family
|
14,864 | 13,155 | 587 | 14,031 | 56 | — | ||||||||||||||||||
1-4 Family
|
33,389 | 29,195 | 708 | 28,644 | 103 | — | ||||||||||||||||||
Consumer
|
268 | 199 | 21 | 171 | — | — | ||||||||||||||||||
Agriculture
|
— | — | — | 5 | — | — | ||||||||||||||||||
Other
|
522 | 522 | 12 | 523 | 4 | — | ||||||||||||||||||
Total
|
$ | 209,752 | $ | 177,472 | $ | 8,161 | $ | 183,140 | $ | 663 | $ | 95 |
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance
For Loan
Losses
Allocated
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Cash
Basis
Income
Recognized
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
With No Related Allowance Recorded:
|
||||||||||||||||||||||||
Commercial
|
$ | 1,460 | $ | 1,234 | $ | — | $ | 1,637 | $ | 5 | $ | 4 | ||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Construction
|
1,155 | 1,109 | — | 1,745 | 2 | 2 | ||||||||||||||||||
Farmland
|
4,448 | 4,448 | — | 4,706 | 57 | 57 | ||||||||||||||||||
Other
|
2,134 | 1,892 | — | 3,436 | 3 | 3 | ||||||||||||||||||
Residential real estate:
|
||||||||||||||||||||||||
Multi-family
|
643 | 643 | — | 910 | — | — | ||||||||||||||||||
1-4 Family
|
13,539 | 13,158 | — | 11,291 | 56 | 56 | ||||||||||||||||||
Consumer
|
70 | 70 | — | 219 | 8 | 5 | ||||||||||||||||||
Agriculture
|
45 | 45 | — | 366 | 2 | — | ||||||||||||||||||
Other
|
— | — | — | — | — | — |
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance
For Loan
Losses
Allocated
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Cash
Basis
Income
Recognized
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
With An Allowance Recorded:
|
||||||||||||||||||||||||
Commercial
|
4,108 | 4,062 | 263 | 3,964 | 169 | 27 | ||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Construction
|
26,645 | 25,455 | 1,543 | 19,514 | 348 | 5 | ||||||||||||||||||
Farmland
|
8,557 | 6,456 | 734 | 5,794 | 43 | 2 | ||||||||||||||||||
Other
|
97,699 | 86,562 | 13,769 | 83,087 | 2,011 | 185 | ||||||||||||||||||
Residential real estate:
|
||||||||||||||||||||||||
Multi-family
|
14,906 | 14,906 | 1,643 | 11,187 | 468 | — | ||||||||||||||||||
1-4 Family
|
31,021 | 28,092 | 2,998 | 27,404 | 787 | 9 | ||||||||||||||||||
Consumer
|
142 | 142 | 68 | 29 | — | — | ||||||||||||||||||
Agriculture
|
10 | 10 | 5 | 6 | — | — | ||||||||||||||||||
Other
|
524 | 524 | 11 | 533 | 17 | — | ||||||||||||||||||
Total
|
$ | 207,106 | $ | 188,808 | $ | 21,034 | $ | 175,828 | $ | 3,976 | $ | 355 |
TDRs
Performing to
Modified
Terms
|
TDRs Not
Performing to
Modified
Terms
|
Total
TDRs
|
||||||||||
(in thousands)
|
||||||||||||
March 31, 2013
|
||||||||||||
Commercial
|
||||||||||||
Rate reduction
|
$
|
2,000
|
$
|
—
|
$
|
2,000
|
||||||
Principal deferral
|
883
|
—
|
883
|
|||||||||
Interest only payments
|
—
|
362
|
362
|
|||||||||
Commercial Real Estate:
|
||||||||||||
Construction
|
||||||||||||
Rate reduction
|
3,437
|
6,078
|
9,515
|
|||||||||
Farmland
|
||||||||||||
Rate reduction
|
150
|
—
|
150
|
|||||||||
Principal deferral
|
719
|
2,438
|
3,157
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
29,718
|
21,665
|
51,383
|
|||||||||
Principal deferral
|
1,188
|
—
|
1,188
|
|||||||||
Interest only payments
|
2,465
|
2,067
|
4,532
|
|||||||||
Residential Real Estate:
|
||||||||||||
Multi-family
|
||||||||||||
Rate reduction
|
4,727
|
6,946
|
11,673
|
|||||||||
Interest only payments
|
649
|
—
|
649
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
8,659
|
12,950
|
21,609
|
|||||||||
Consumer
|
||||||||||||
Rate reduction
|
54
|
86
|
140
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
522
|
—
|
522
|
|||||||||
Total TDRs
|
$
|
55,171
|
$
|
52,592
|
$
|
107,763
|
TDRs
Performing to
Modified Terms
|
TDRs Not
Performing to
Modified Terms
|
Total
TDRs
|
||||||||||
(in thousands)
|
||||||||||||
December 31, 2012
|
||||||||||||
Commercial
|
||||||||||||
Rate reduction
|
$
|
1,972
|
$
|
—
|
$
|
1,972
|
||||||
Principal deferral
|
887
|
—
|
887
|
|||||||||
Interest only payments
|
—
|
958
|
958
|
|||||||||
Commercial Real Estate:
|
||||||||||||
Construction
|
||||||||||||
Rate reduction
|
4,834
|
4,459
|
9,293
|
|||||||||
Farmland
|
||||||||||||
Rate reduction
|
150
|
—
|
150
|
|||||||||
Principal deferral
|
725
|
2,438
|
3,163
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
36,515
|
22,631
|
59,146
|
|||||||||
Principal deferral
|
1,195
|
—
|
1,195
|
|||||||||
Interest only payments
|
2,466
|
2,107
|
4,573
|
|||||||||
Residential Real Estate:
|
||||||||||||
Multi-family
|
||||||||||||
Rate reduction
|
13,087
|
—
|
13,087
|
|||||||||
Interest only payments
|
652
|
—
|
652
|
|||||||||
1-4 Family
|
||||||||||||
Rate reduction
|
14,323
|
7,871
|
22,194
|
|||||||||
Consumer
|
||||||||||||
Rate reduction
|
14
|
—
|
14
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
524
|
—
|
524
|
|||||||||
Total TDRs
|
$
|
77,344
|
$
|
40,464
|
$
|
117,808
|
TDRs
Performing to
Modified
Terms
|
TDRs Not
Performing to
Modified
Terms
|
Total
TDRs
|
||||||||||
(in thousands)
|
||||||||||||
March 31, 2013
|
||||||||||||
Commercial:
|
||||||||||||
Rate reduction
|
$
|
47
|
$
|
—
|
$
|
47
|
||||||
Commercial Real Estate:
|
||||||||||||
Construction
|
||||||||||||
Rate reduction
|
—
|
1,291
|
1,291
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
1,428
|
—
|
1,428
|
|||||||||
Residential Real Estate:
|
||||||||||||
Other
|
||||||||||||
Rate reduction
|
819
|
—
|
819
|
|||||||||
Consumer:
|
||||||||||||
Rate reduction
|
40
|
86
|
126
|
|||||||||
Total TDRs
|
$
|
2,334
|
$
|
1,377
|
$
|
3,711
|
TDRs
Performing to
Modified
Terms
|
TDRs Not
Performing to
Modified
Terms
|
Total
TDRs
|
||||||||||
(in thousands)
|
||||||||||||
March 31, 2012
|
||||||||||||
Commercial:
|
||||||||||||
Interest only payments
|
$
|
—
|
$
|
1,035
|
$
|
1,035
|
||||||
Commercial Real Estate:
|
||||||||||||
Other
|
||||||||||||
Rate reduction
|
3,199
|
—
|
3,199
|
|||||||||
Interest only payments
|
2,284
|
2,200
|
4,484
|
|||||||||
Residential Real Estate:
|
||||||||||||
Multi-family
|
||||||||||||
Rate reduction
|
8,386
|
—
|
8,386
|
|||||||||
1-4 Family
|
||||||||||||
Rate reduction
|
5,674
|
—
|
5,674
|
|||||||||
Total TDRs
|
$
|
19,543
|
$
|
3,235
|
$
|
22,778
|
Nonaccrual |
Loans Past
Due 90 Days
And Over Still
Accruing
|
|||||||||||||||
March 31,
2013
|
December 31,
2012
|
March 31,
2013
|
December 31,
2012
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Commercial
|
$ | 2,784 | $ | 2,437 | $ | — | $ | 36 | ||||||||
Commercial Real Estate:
|
||||||||||||||||
Construction
|
21,845 | 7,808 | — | — | ||||||||||||
Farmland
|
9,252 | 10,030 | — | — | ||||||||||||
Other
|
45,680 | 46,036 | — | — | ||||||||||||
Residential Real Estate:
|
||||||||||||||||
Multi-family
|
8,132 | 1,516 | — | — | ||||||||||||
1-4 Family
|
32,922 | 26,501 | — | 50 | ||||||||||||
Consumer
|
158 | 135 | — | — | ||||||||||||
Agriculture
|
170 | 54 | — | — | ||||||||||||
Other
|
— | — | — | — | ||||||||||||
Total
|
$ | 120,943 | $ | 94,517 | $ | — | $ | 86 |
30 – 59
Days
Past Due
|
60 – 89
Days
Past Due
|
90 Days
And Over
Past Due
|
Nonaccrual
|
Total
Past Due
And
Nonaccrual
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
March 31, 2013
|
||||||||||||||||||||
Commercial
|
$
|
388
|
$
|
82
|
$
|
—
|
$
|
2,784
|
$
|
3,254
|
||||||||||
Commercial Real Estate:
|
||||||||||||||||||||
Construction
|
—
|
—
|
—
|
21,845
|
21,845
|
|||||||||||||||
Farmland
|
920
|
176
|
—
|
9,252
|
10,348
|
|||||||||||||||
Other
|
2,995
|
2,027
|
—
|
45,680
|
50,702
|
|||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||
Multi-family
|
632
|
—
|
—
|
8,132
|
8,764
|
|||||||||||||||
1-4 Family
|
2,795
|
592
|
—
|
32,922
|
36,309
|
|||||||||||||||
Consumer
|
241
|
51
|
—
|
158
|
450
|
|||||||||||||||
Agriculture
|
81
|
32
|
—
|
170
|
283
|
|||||||||||||||
Other
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Total
|
$
|
8,052
|
$
|
2,960
|
$
|
—
|
$
|
120,943
|
$
|
131,955
|
30 – 59
Days
Past Due
|
60 – 89
Days
Past Due
|
90 Days
And Over
Past Due
|
Nonaccrual
|
Total
Past Due
And
Nonaccrual
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
December 31, 2012
|
||||||||||||||||||||
Commercial
|
$
|
1,279
|
$
|
90
|
$
|
36
|
$
|
2,437
|
$
|
3,842
|
||||||||||
Commercial Real Estate:
|
||||||||||||||||||||
Construction
|
10,510
|
5,815
|
—
|
7,808
|
24,133
|
|||||||||||||||
Farmland
|
922
|
58
|
—
|
10,030
|
11,010
|
|||||||||||||||
Other
|
5,138
|
13,037
|
—
|
46,036
|
64,211
|
|||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||
Multi-family
|
8,762
|
—
|
—
|
1,516
|
10,278
|
|||||||||||||||
1-4 Family
|
11,145
|
1,221
|
50
|
26,501
|
38,917
|
|||||||||||||||
Consumer
|
310
|
75
|
—
|
135
|
520
|
|||||||||||||||
Agriculture
|
153
|
7
|
—
|
54
|
214
|
|||||||||||||||
Other
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Total
|
$
|
38,219
|
$
|
20,303
|
$
|
86
|
$
|
94,517
|
$
|
153,125
|
Pass
|
Watch
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
March 31, 2013
|
||||||||||||||||||||||||
Commercial
|
$
|
28,627
|
$
|
8,996
|
$
|
1,690
|
$
|
10,559
|
$
|
60
|
$
|
49,932
|
||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
Construction
|
21,537
|
11,262
|
2,810
|
26,926
|
—
|
62,535
|
||||||||||||||||||
Farmland
|
42,233
|
13,652
|
3,506
|
15,956
|
—
|
75,347
|
||||||||||||||||||
Other
|
109,294
|
60,987
|
15,443
|
103,224
|
263
|
289,211
|
||||||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||||||
Multi-family
|
18,417
|
14,990
|
—
|
16,183
|
—
|
49,590
|
||||||||||||||||||
1-4 Family
|
145,798
|
48,304
|
3,364
|
61,946
|
—
|
259,412
|
||||||||||||||||||
Consumer
|
16,018
|
1,271
|
32
|
808
|
—
|
18,129
|
||||||||||||||||||
Agriculture
|
19,276
|
1,408
|
922
|
608
|
—
|
22,214
|
||||||||||||||||||
Other
|
184
|
522
|
—
|
—
|
—
|
706
|
||||||||||||||||||
Total
|
$
|
401,384
|
$
|
161,392
|
$
|
27,767
|
$
|
236,210
|
$
|
323
|
$
|
827,076
|
Pass
|
Watch
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
December 31, 2012
|
||||||||||||||||||||||||
Commercial
|
$
|
27,085
|
$
|
10,153
|
$
|
6,495
|
$
|
8,772
|
$
|
62
|
$
|
52,567
|
||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
Construction
|
26,085
|
21,713
|
3,647
|
18,839
|
—
|
70,284
|
||||||||||||||||||
Farmland
|
47,017
|
13,461
|
3,532
|
16,815
|
—
|
80,825
|
||||||||||||||||||
Other
|
122,603
|
66,223
|
14,955
|
118,635
|
271
|
322,687
|
||||||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||||||
Multi-family
|
18,387
|
14,637
|
—
|
17,962
|
—
|
50,986
|
||||||||||||||||||
1-4 Family
|
159,975
|
47,030
|
5,167
|
66,101
|
—
|
278,273
|
||||||||||||||||||
Consumer
|
17,232
|
2,211
|
35
|
842
|
63
|
20,383
|
||||||||||||||||||
Agriculture
|
19,256
|
1,467
|
869
|
725
|
—
|
22,317
|
||||||||||||||||||
Other
|
246
|
524
|
—
|
—
|
—
|
770
|
||||||||||||||||||
Total
|
$
|
437,886
|
$
|
177,419
|
$
|
34,700
|
$
|
248,691
|
$
|
396
|
$
|
899,092
|
March 31,
2013
|
December 31,
2012
|
|||||||
(in thousands)
|
||||||||
Commercial Real Estate:
|
||||||||
Construction
|
$
|
21,960
|
$
|
22,912
|
||||
Farmland
|
1,008
|
618
|
||||||
Other
|
15,333
|
15,577
|
||||||
Residential Real Estate:
|
||||||||
Multi-family
|
200
|
200
|
||||||
1-4 Family
|
6,619
|
5,518
|
||||||
45,120
|
44,825
|
|||||||
Valuation allowance
|
(928
|
)
|
(1,154
|
)
|
||||
$
|
44,192
|
$
|
43,671
|
For the Three
Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
OREO Valuation Allowance Activity:
|
||||||||
Beginning balance
|
$
|
1,154
|
$
|
1,667
|
||||
Provision to allowance
|
307
|
480
|
||||||
Write-downs
|
(533
|
)
|
(465
|
)
|
||||
Ending balance
|
$
|
928
|
$
|
1,682
|
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
OREO Activity
|
||||||||
OREO as of January 1
|
$
|
43,671
|
$
|
41,449
|
||||
Real estate acquired
|
3,680
|
4,216
|
||||||
Valuation adjustments for declining market values
|
(307
|
)
|
(480
|
)
|
||||
Improvements
|
—
|
1
|
||||||
Loss on sale
|
(197
|
)
|
(402
|
)
|
||||
Proceeds from sale of properties
|
(2,655
|
)
|
(9,210
|
)
|
||||
OREO as of March 31
|
$
|
44,192
|
$
|
35,574
|
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
Net loss on sales
|
$
|
197
|
$
|
402
|
||||
Provision to allowance
|
307
|
480
|
||||||
Operating expense
|
287
|
375
|
||||||
Total
|
$
|
791
|
$
|
1,257
|
March 31,
2013
|
December 31,
2012
|
|||||||
(in thousands)
|
||||||||
Non-interest bearing
|
$
|
108,841
|
$
|
114,310
|
||||
Interest checking
|
83,522
|
87,234
|
||||||
Money market
|
62,111
|
63,715
|
||||||
Savings
|
41,952
|
39,227
|
||||||
Certificates of deposit
|
739,934
|
760,573
|
||||||
Total
|
$
|
1,036,360
|
$
|
1,065,059
|
Retail
|
Brokered
|
Total
|
||||||||||
Year 1
|
$
|
377,218
|
$
|
15,000
|
$
|
392,218
|
||||||
Year 2
|
234,060
|
—
|
234,060
|
|||||||||
Year 3
|
94,199
|
—
|
94,199
|
|||||||||
Year 4
|
8,542
|
—
|
8,542
|
|||||||||
Year 5
|
10,839
|
—
|
10,839
|
|||||||||
Thereafter
|
76
|
—
|
76
|
|||||||||
$
|
724,934
|
$
|
15,000
|
$
|
739,934
|
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
Monthly amortizing advances with fixed rates from 0.00% to 5.25% and
|
||||||||
maturities ranging from 2013 through 2033, averaging 3.19% for 2013
|
$
|
5,324
|
$
|
5,604
|
Fair Value Measurements at March 31, 2013 Using
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
Quoted Prices In
|
Significant
|
|||||||||||||||
Active Markets for
|
Significant Other
|
Unobservable
|
||||||||||||||
Carrying
|
Identical Assets
|
Observable Inputs
|
Inputs
|
|||||||||||||
Description
|
Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
Available-for-sale securities
|
||||||||||||||||
U.S. Government and
|
||||||||||||||||
federal agency
|
$
|
24,167
|
$
|
—
|
$
|
24,167
|
$
|
—
|
||||||||
Agency mortgage-backed: residential
|
80,333
|
—
|
80,333
|
—
|
||||||||||||
State and municipal
|
55,673
|
—
|
55,673
|
—
|
||||||||||||
Corporate bonds
|
20,382
|
—
|
20,382
|
—
|
||||||||||||
Other debt securities
|
643
|
—
|
—
|
643
|
||||||||||||
Equity securities
|
2,049
|
2,049
|
—
|
—
|
||||||||||||
Total
|
$
|
183,247
|
$
|
2,049
|
$
|
180,555
|
$
|
643
|
Fair Value Measurements at December 31, 2012 Using
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
Description
|
Carrying
Value
|
Quoted Prices In
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
Available-for-sale securities
|
||||||||||||||||
U.S. Government and
|
||||||||||||||||
federal agency
|
$
|
6,133
|
$
|
—
|
$
|
6,133
|
$
|
—
|
||||||||
Agency mortgage-backed: residential
|
95,182
|
—
|
95,182
|
—
|
||||||||||||
State and municipal
|
54,733
|
—
|
54,733
|
—
|
||||||||||||
Corporate bonds
|
19,964
|
—
|
19,964
|
—
|
||||||||||||
Other debt securities
|
618
|
—
|
—
|
618
|
||||||||||||
Equity securities
|
1,846
|
1,846
|
—
|
—
|
||||||||||||
Total
|
$
|
178,476
|
$
|
1,846
|
$
|
176,012
|
$
|
618
|
State and Municipal
Securities
|
Other Debt
Securities
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Balances of recurring Level 3 assets at January 1
|
$
|
—
|
$
|
1,173
|
$
|
618
|
$
|
606
|
||||||||
Total gain (loss) for the period:
|
||||||||||||||||
Included in other comprehensive income (loss)
|
—
|
(9
|
)
|
25
|
(11
|
)
|
||||||||||
Sales
|
—
|
(411
|
)
|
—
|
—
|
|||||||||||
Balance of recurring Level 3 assets at March 31
|
$
|
—
|
$
|
753
|
$
|
643
|
$
|
595
|
Fair Value Measurements at March 31, 2013 Using
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
Quoted Prices In
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||
Carrying
Value
|
||||||||||||||||
Description
|
||||||||||||||||
Impaired loans:
|
||||||||||||||||
Commercial
|
$ | 3,086 | $ | — | $ | — | $ | 3,086 | ||||||||
Commercial real estate:
|
||||||||||||||||
Construction
|
24,327 | — | — | 24,327 | ||||||||||||
Farmland
|
5,780 | — | — | 5,780 | ||||||||||||
Other
|
71,626 | — | — | 71,626 | ||||||||||||
Residential real estate:
|
||||||||||||||||
Multi-family
|
12,568 | — | — | 12,568 | ||||||||||||
1-4 Family
|
28,487 | — | — | 28,487 | ||||||||||||
Consumer
|
178 | — | — | 178 | ||||||||||||
Other
|
510 | — | — | 510 | ||||||||||||
Other real estate owned, net:
|
||||||||||||||||
Commercial real estate:
|
||||||||||||||||
Construction
|
21,508 | — | — | 21,508 | ||||||||||||
Farmland
|
987 | — | — | 987 | ||||||||||||
Other
|
15,018 | — | — | 15,018 | ||||||||||||
Residential real estate:
|
||||||||||||||||
Multi-family
|
196 | — | — | 196 | ||||||||||||
1-4 Family
|
6,483 | — | — | 6,483 |
Fair Value Measurements at December 31, 2012 Using
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
Quoted Prices In
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||
Carrying
Value
|
||||||||||||||||
Description
|
||||||||||||||||
Impaired loans:
|
||||||||||||||||
Commercial
|
$ | 3,799 | $ | — | $ | — | $ | 3,799 | ||||||||
Commercial real estate:
|
||||||||||||||||
Construction
|
23,912 | — | — | 23,912 | ||||||||||||
Farmland
|
5,722 | — | — | 5,722 | ||||||||||||
Other
|
72,793 | — | — | 72,793 | ||||||||||||
Residential real estate:
|
||||||||||||||||
Multi-family
|
13,263 | — | — | 13,263 | ||||||||||||
1-4 Family
|
25,094 | — | — | 25,094 | ||||||||||||
Consumer
|
74 | — | — | 74 | ||||||||||||
Agriculture
|
5 | — | — | 5 | ||||||||||||
Other
|
513 | — | — | 513 | ||||||||||||
Other real estate owned, net:
|
||||||||||||||||
Commercial real estate:
|
||||||||||||||||
Construction
|
22,323 | — | — | 22,323 | ||||||||||||
Farmland
|
602 | — | — | 602 | ||||||||||||
Other
|
15,175 | — | — | 15,175 | ||||||||||||
Residential real estate:
|
||||||||||||||||
Multi-family
|
195 | — | — | 195 | ||||||||||||
1-4 Family
|
5,376 | — | — | 5,376 |
Fair Value
|
Valuation
Technique(s)
|
Unobservable Input(s)
|
Range (Weighted
Average)
|
||||||
(in thousands)
|
|||||||||
Impaired loans – Commercial
|
$
|
3,086
|
Market value approach
|
Adjustment for receivables and inventory discounts
|
16% - 32% (24%)
|
||||
Impaired loans – Commercial real estate
|
$
|
101,733
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0% - 69% (20%)
|
||||
Impaired loans – Residential real estate
|
$
|
41,055
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0% - 50% (15%)
|
||||
Other real estate owned – Commercial real estate
|
$
|
37,513
|
Sales comparison approach
Income approach
|
Adjustment for differences between the comparable sales
Discount or capitalization rate
|
3% - 50% (18%)
9% - 16% (12%)
|
||||
Other real estate owned – Residential real estate
|
$
|
6,679
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
4% - 31% (12%)
|
Fair Value
|
Valuation
Technique(s)
|
Unobservable Input(s)
|
Range (Weighted
Average)
|
||||||
(in thousands)
|
|||||||||
Impaired loans – Commercial
|
$
|
3,799
|
Market value approach
|
Adjustment for receivables and inventory discounts
|
16% - 32% (24%)
|
||||
Impaired loans – Commercial real estate
|
$
|
89,461
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0% - 69% (19%)
|
||||
Impaired loans – Residetial real estate
|
$
|
38,357
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0% - 38% (15%)
|
||||
Other real estate owned – Commercial real estate
|
$
|
38,100
|
Sales comparison approach
Income approach
|
Adjustment for differences between the comparable sales
Discount or capitalization rate
|
3% - 50% (18%)
9% - 16% (12%)
|
||||
Other real estate owned – Residential real estate
|
$
|
5,571
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0% - 30% (9%)
|
Fair Value Measurements at March 31, 2013 Using
|
||||||||||||||||||||
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
71,188
|
$
|
64,495
|
$
|
6,693
|
$
|
—
|
$
|
71,188
|
||||||||||
Securities available for sale
|
183,247
|
2,049
|
180,555
|
643
|
183,247
|
|||||||||||||||
Federal Home Loan Bank stock
|
10,072
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||
Mortgage loans held for sale
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Loans, net
|
787,237
|
—
|
—
|
798,265
|
798,265
|
|||||||||||||||
Accrued interest receivable
|
4,316
|
—
|
1,100
|
3,216
|
4,316
|
|||||||||||||||
Financial liabilities
|
||||||||||||||||||||
Deposits
|
$
|
1,036,360
|
$
|
108,841
|
$
|
930,566
|
$
|
—
|
$
|
1,039,407
|
||||||||||
Securities sold under agreements to repurchase
|
2,853
|
—
|
2,853
|
—
|
2,853
|
|||||||||||||||
Federal Home Loan Bank advances
|
5,324
|
—
|
5,326
|
—
|
5,326
|
|||||||||||||||
Subordinated capital notes
|
6,525
|
—
|
—
|
6,503
|
6,503
|
|||||||||||||||
Junior subordinated debentures
|
25,000
|
—
|
—
|
19,390
|
19,390
|
|||||||||||||||
Accrued interest payable
|
2,083
|
—
|
1,058
|
1,025
|
2,083
|
Fair Value Measurements at December 31, 2012 Using
|
||||||||||||||||||||
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
49,572
|
$
|
41,938
|
$
|
7,634
|
$
|
—
|
$
|
49,572
|
||||||||||
Securities available for sale
|
178,476
|
1,846
|
176,012
|
618
|
178,476
|
|||||||||||||||
Federal Home Loan Bank stock
|
10,072
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||
Mortgage loans held for sale
|
507
|
—
|
507
|
—
|
507
|
|||||||||||||||
Loans, net
|
842,412
|
—
|
—
|
853,996
|
853,996
|
|||||||||||||||
Accrued interest receivable
|
5,138
|
—
|
1,150
|
3,988
|
5,138
|
|||||||||||||||
Financial liabilities
|
||||||||||||||||||||
Deposits
|
$
|
1,065,059
|
$
|
114,310
|
$
|
955,216
|
$
|
—
|
$
|
1,069,526
|
||||||||||
Securities sold under agreements to repurchase
|
2,634
|
—
|
2,634
|
—
|
2,634
|
|||||||||||||||
Federal Home Loan Bank advances
|
5,604
|
—
|
5,607
|
—
|
5,607
|
|||||||||||||||
Subordinated capital notes
|
6,975
|
—
|
—
|
6,599
|
6,599
|
|||||||||||||||
Junior subordinated debentures
|
25,000
|
—
|
—
|
13,821
|
13,821
|
|||||||||||||||
Accrued interest payable
|
2,104
|
—
|
1,173
|
931
|
2,104
|
March 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$
|
13,944
|
$
|
19,838
|
||||
Other real estate owned write-down
|
10,165
|
10,408
|
||||||
Net operating loss carry-forward
|
21,184
|
15,051
|
||||||
New market tax credit carry-forward
|
208
|
208
|
||||||
Alternative minimum tax credit carry-forward
|
692
|
692
|
||||||
Net assets from acquisitions
|
618
|
592
|
||||||
Other than temporary impairment on securities
|
374
|
374
|
||||||
Amortization of non-compete agreements
|
18
|
19
|
||||||
Other
|
926
|
936
|
||||||
48,129
|
48,118
|
|||||||
Deferred tax liabilities:
|
||||||||
Fixed assets
|
380
|
409
|
||||||
Net unrealized gain on securities available for sale
|
1,841
|
1,858
|
||||||
FHLB stock dividends
|
1,276
|
1,276
|
||||||
Originated mortgage servicing rights
|
94
|
98
|
||||||
Other
|
535
|
549
|
||||||
4,126
|
4,190
|
|||||||
Net deferred tax assets before valuation allowance
|
44,003
|
43,928
|
||||||
Valuation allowance
|
(44,003
|
)
|
(43,928
|
)
|
||||
Net deferred tax asset
|
$
|
—
|
$
|
—
|
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
March 31, 2013
|
December 31, 2012
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Grant
|
Grant
|
|||||||||||||||
Shares
|
Price
|
Shares
|
Price
|
|||||||||||||
Outstanding, beginning
|
233,394
|
$
|
4.49
|
100,226
|
$
|
13.21
|
||||||||||
Granted
|
142,663
|
0.78
|
191,140
|
1.69
|
||||||||||||
Vested
|
(16,992
|
)
|
11.97
|
(44,781
|
)
|
8.89
|
||||||||||
Forfeited
|
(5,109
|
)
|
14.64
|
(13,191
|
)
|
15.22
|
||||||||||
Outstanding, ending
|
353,956
|
$
|
2.49
|
233,394
|
$
|
4.49
|
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
March 31, 2013
|
December 31, 2012
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Exercise
|
Exercise
|
|||||||||||||||
Shares
|
Price
|
Shares
|
Price
|
|||||||||||||
Outstanding, beginning
|
—
|
$
|
—
|
29,530
|
$
|
19.88
|
||||||||||
Forfeited
|
—
|
—
|
—
|
—
|
||||||||||||
Expired
|
—
|
—
|
(29,530
|
)
|
19.88
|
|||||||||||
Outstanding, ending
|
—
|
$ |
—
|
—
|
$
|
—
|
April 2013 – December 2013
|
$
|
308
|
||
2014
|
313
|
|||
2015
|
175
|
|||
2016
|
77
|
|||
2017 & thereafter
|
44
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2013
|
2012
|
|||||||
(in thousands, except
|
||||||||
share and per share data)
|
||||||||
Net income (loss)
|
$
|
(69
|
)
|
$
|
1,502
|
|||
Less:
|
||||||||
Preferred stock dividends
|
438
|
|
437
|
|
||||
Accretion of Series A preferred stock discount
|
45
|
|
45
|
|
||||
Earnings (loss) allocated to unvested shares
|
(13
|
) |
7
|
|
||||
Earnings (loss) allocated to Series C preferred
|
(15
|
) |
28
|
|
||||
Net income (loss) allocated to common shareholders, basic and diluted
|
$
|
(524
|
)
|
$
|
985
|
|||
Basic
|
||||||||
Weighted average common shares including
|
||||||||
unvested common shares outstanding
|
12,474,476
|
12,156,452
|
||||||
Less: Weighted average unvested common shares
|
293,675
|
|
88,107
|
|
||||
Less: Weighted average Series C preferred
|
332,894
|
|
332,894
|
|
||||
Weighted average common shares outstanding
|
11,847,907
|
11,735,451
|
||||||
Basic earnings (loss) per common share
|
$
|
(0.04
|
)
|
$
|
0.08
|
|||
Diluted
|
||||||||
Add: Dilutive effects of assumed exercises of common
|
||||||||
and Preferred Series C stock warrants
|
—
|
—
|
||||||
Weighted average common shares and potential common shares
|
11,847,907
|
11,735,451
|
||||||
Diluted earnings (loss) per common share
|
$
|
(0.04
|
)
|
$
|
0.08
|
March 31, 2013
|
December 31, 2012
|
|||||||||||||||||||||||||||
Regulatory
Minimums
|
Well-Capitalized
Minimums
|
Minimum Capital
Ratios Under
Consent Order
|
Porter
Bancorp
|
PBI
Bank
|
Porter
Bancorp
|
PBI
Bank
|
||||||||||||||||||||||
Tier 1 Capital
|
4.0 | % | 6.0 | % | N/A | 6.77 | % | 8.21 | % | 6.46 | % | 7.71 | % | |||||||||||||||
Total risk-based capital
|
8.0 | 10.0 | 12.0 | % | 10.16 | 10.29 | 9.81 | 9.82 | ||||||||||||||||||||
Tier 1 leverage ratio
|
4.0 | 5.0 | 9.0 | 4.91 | 5.95 | 4.50 | 5.37 |
|
●
|
Provision for loan losses expense was $450,000 for the first quarter of 2013, compared with $3.8 million for the prior year first quarter. The decrease was primarily attributable to the reduction in the loan portfolio size, the slower pace of loans migrating downward in risk grade classification, and stable collateral values for collateral dependent loans. Net charge-offs of $17.3 million were recognized for the first quarter. These elevated charge-offs were primarily the result of charging off specific reserves for loans that were deemed to be collateral dependent in accordance with regulatory guidance.
|
|
●
|
Net interest margin decreased 38 basis points to 3.07% in the first three months of 2013 compared with 3.45% in the first three months of 2012. The decrease in margin between periods was primarily due to a reduction in interest earning assets coupled with lower rates on those assets and elevated non-accrual loan levels. Average loans decreased 22.0% to $872.5 million in the first three months of 2013 compared with $1.1 billion in the first three months of 2012. Net loans decreased 24.7% to $787.2 million at March 31, 2013, compared with $1.0 billion at March 31, 2012.
|
|
●
|
We continued to execute on our strategy to reduce our commercial real estate and construction and development loans. Construction and development loans totaled $62.5 million, or 73% of total risk-based capital, at March 31, 2013 compared with $70.3 million, or 82% of total risk-based capital, at December 31, 2012. Non-owner occupied commercial real estate loans, construction and development loans, and multi-family residential real estate loans as a group totaled $299.4 million, or 351% of total risk-based capital, at March 31, 2013 compared with $311.1 million, or 362% of total risk-based capital, at December 31, 2012.
|
|
●
|
Loan proceeds received from the repayment of our commercial real estate and construction and development loans were used primarily to redeem maturing certificates of deposit during the quarter. Deposits decreased 17.3% to $1.0 billion compared with $1.3 billion at March 31, 2012. Certificate of deposit balances declined $20.6 million during the first three months of 2013 to $739.9 million at March 31, 2013, from $760.6 million at December 31, 2012. Demand deposits decreased 4.8% during the first three months of 2013 compared with the fourth quarter of 2012, and the first three months of 2012.
|
|
●
|
Non-performing loans increased $26.3 million to $120.9 million at March 31, 2013, compared with $94.6 million at December 31, 2012. The increase was primarily attributable to loans for two significant borrowing relationships being placed on non-accrual during the quarter. At December 31, 2012 one of these relationships was past due 30-59 days and totaled $23.5 million; the other was past due 60-89 days and totaled $12.7 million. The increase in non-performing loans was partially offset by net loan charge-offs in the first quarter of 2013 which totaled $17.3 million. These elevated charge-offs were primarily the result of charging off specific reserves for loans that were deemed to be collateral dependent, in accordance with regulatory guidance.
|
|
●
|
Loans past due 30-59 days decreased from $38.2 million at December 31, 2012 to $8.1 million at March 31, 2013 and loans past due 60-89 days decreased from $20.3 million at December 31, 2012 to $3.0 million at March 31, 2013.
|
|
●
|
Foreclosed properties were $44.2 million at March 31, 2013, compared with $43.7 million at December 31, 2012, and $35.6 million at March 31, 2012. The Company acquired $3.7 million of OREO and sold $2.9 million of OREO during the first quarter of 2013. In addition, fair value write-downs of $307,000 were recorded during the first quarter of 2013 to reflect declining values as evidenced by new appraisals and reduced marketing prices in connection with our sales strategies. Our ratio of non-performing assets to total assets increased to 14.58% at March 31, 2013, compared with 11.89% at December 31, 2012, and 9.61% at March 31, 2012.
|
|
●
|
Increasing capital through a possible public offering or private placement of common stock to new and existing shareholders. We have engaged a financial advisor to assist our Board in evaluating our options for increasing capital and redeeming our Series A preferred stock issued to the US Treasury in 2008 under the Capital Purchase Program.
|
|
●
|
Continuing to operate the Company and Bank in a safe and sound manner. This strategy will require us to continue to reduce the size of our balance sheet, reduce our lending concentrations, consider selling loans, and reduce other noninterest expense through the disposition of OREO.
|
|
●
|
Continuing with succession planning and adding resources to the management team. In March 2012, the Board of Directors formed a search committee comprised of its five independent directors to identify and hire a President and CEO for PBI Bank. John T. Taylor was named to these positions and appointed to the board of directors in July 2012. Additionally, John R. Davis was appointed Chief Credit Officer of PBI Bank, with responsibility for establishing and executing the credit quality policies and overseeing credit administration for the organization.
|
|
●
|
Evaluating our internal processes and procedures, distribution of labor, and work-flow to ensure we have adequately and appropriately deployed resources in an efficient manner in the current environment. To this end, we believe the opportunity exists for the centralization of key processes which will lead to improved execution and cost savings.
|
|
●
|
Executing on our commitment to improve credit quality and reduce loan concentrations and balance sheet risk.
|
|
o
|
We have reduced the size of our loan portfolio significantly from $1.3 billion at December 31, 2010, to $1.1 billion at December 31, 2011, to $899.1 million at December 31, 2012, and $827.1 million at March 31, 2013. We have significantly improved our staffing in the commercial lending area which is now led by John R. Davis.
|
|
o
|
Our Consent Order calls for us to reduce our construction and development loans to not more than 75% of total risk-based capital. We are now in compliance with construction and development loans totaling $62.5 million, or 73% of total risk-based capital, at March 31, 2013, down from $70.3 million, or 82% of total risk-based capital, at December 31, 2012.
|
|
o
|
Our Consent Order also requires us to reduce non-owner occupied commercial real estate loans, construction and development loans, and multi-family residential real estate loans as a group, to not more than 250% of total risk-based capital. While we have made significant improvements over the last year, we were not in compliance with this concentration limit at March 31, 2013. These loans totaled $299.4 million, or 351% of total risk-based capital, at March 31, 2013 and $311.1 million, or 362% of total risk-based capital, at December 31, 2012.
|
|
o
|
We are working to reduce our loan concentrations by curtailing new construction and development lending and new non-owner occupied commercial real estate lending. We are also receiving principal reductions from amortizing credits and pay-downs from our customers who sell properties built for resale. We have reduced the construction loan portfolio from $199.5 million at December 31, 2010 to $62.5 million at March 31, 2013. Our non-owner occupied commercial real estate loans declined from $293.3 million at December 31, 2010 to $187.2 million at March 31, 2013.
|
|
●
|
Executing on our commitment to sell other real estate owned and reinvest in quality income producing assets.
|
|
o
|
The remediation process for loans secured by real estate has led the Bank to acquire significant levels of OREO in 2012, 2011, and 2010. This trend has continued at a slower pace in 2013. The Bank acquired $33.5 million, $41.9 million, and $90.8 million during 2012, 2011 and 2010, respectively. For the first three months of March 31, 2013, we acquired $3.7 million of OREO. We have nonaccrual loans totaling $120.9 million at March 31, 2013. We expect to resolve many of these loans by foreclosure which could result in further additions to our OREO portfolio.
|
|
o
|
We have incurred significant losses in disposing of this real estate. We incurred losses totaling $9.3 million, $42.8 million, and $13.9 million in 2012, 2011 and 2010, respectively, from sales and fair value write-downs attributable to declining valuations as evidenced by new appraisals and from changes in our sales strategies. During the three month period ended March 31, 2013, we incurred OREO losses totaling $504,000, which consisted of $197,000 in loss on sale and $307,000 from declining values as evidenced by new appraisals and reduced marketing prices in connection with our sales strategies.
|
|
o
|
To ensure that we maximize the value we receive upon the sale of OREO, we continually to evaluate sales opportunities and channels. We are targeting multiple sales opportunities and channels through internal marketing and the use of brokers, auctions, technology sales platforms, and bulk sale strategies. Proceeds from the sale of OREO totaled $2.7 million during the three months ended March 31, 2013 and $22.5 million, $26.0 million and $25.0 million during fiscal 2012, 2011 and 2010, respectively.
|
|
o
|
At December 31, 2012 the OREO portfolio consisted of 51% construction, development, and land assets. At March 31, 2013 this concentration had declined to 49%. This is consistent with our reduction of construction, development and other land loans, which have declined to $62.5 million at March 31, 2013 compared to $70.3 million at December 31, 2012. Over the past three months, the composition of our OREO portfolio has shifted toward 1-4 family residential properties, which we have found to be more liquid than construction, development, and land assets, while commercial real estate has declined slightly as a percentage of the portfolio. Commercial real estate of this nature represents 34% of the portfolio at March 31, 2013 compared with 35% at December 31, 2012. 1-4 family residential properties represent 15% of the portfolio at March 31, 2013 compared with 12% at December 31, 2012.
|
|
●
|
Evaluating other strategic alternatives, such as the sale of assets or branches.
|
For the Three Months
|
Change from
|
|||||||||||||||
Ended March 31,
|
Prior Period
|
|||||||||||||||
2013
|
2012
|
Amount
|
Percent
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Gross interest income
|
$
|
11,258
|
$
|
15,755
|
$
|
(4,497
|
)
|
(28.5
|
)%
|
|||||||
Gross interest expense
|
2,960
|
4,301
|
(1,341
|
)
|
(31.2
|
)
|
||||||||||
Net interest income
|
8,298
|
11,454
|
(3,156
|
)
|
(27.6
|
)
|
||||||||||
Provision for loan losses
|
450
|
3,750
|
(3,300
|
)
|
(88.0
|
)
|
||||||||||
Non-interest income
|
1,647
|
3,445
|
(1,798
|
)
|
(52.2
|
)
|
||||||||||
Non-interest expense
|
9,564
|
9,647
|
(83
|
)
|
(0.9
|
)
|
||||||||||
Net income (loss) before taxes
|
(69
|
)
|
1,502
|
(1,571
|
)
|
(104.6
|
)
|
|||||||||
Income tax expense (benefit)
|
—
|
—
|
—
|
—
|
||||||||||||
Net income (loss)
|
(69
|
)
|
1,502
|
(1,571
|
)
|
(104.6
|
)
|
Three Months Ended March 31,
|
||||||||||||||||||||||||
2013
|
2012
|
|||||||||||||||||||||||
Average
Balance
|
Interest
Earned/Paid
|
Average
Yield/Cost
|
Average
Balance
|
Interest
Earned/Paid
|
Average
Yield/Cost
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loan receivables (1)(2)
|
$
|
872,505
|
$
|
10,033
|
4.66
|
%
|
$
|
1,119,181
|
$
|
14,512
|
5.22
|
%
|
||||||||||||
Securities
|
||||||||||||||||||||||||
Taxable
|
145,171
|
852
|
2.38
|
125,502
|
826
|
2.65
|
||||||||||||||||||
Tax-exempt (3)
|
28,470
|
221
|
4.84
|
27,103
|
250
|
5.71
|
||||||||||||||||||
FHLB stock
|
10,072
|
108
|
4.35
|
10,072
|
114
|
4.55
|
||||||||||||||||||
Other equity securities
|
1,359
|
15
|
4.48
|
1,359
|
15
|
4.44
|
||||||||||||||||||
Federal funds sold and other
|
53,892
|
29
|
0.22
|
67,661
|
38
|
0.23
|
||||||||||||||||||
Total interest-earning assets
|
1,111,469
|
11,258
|
4.15
|
%
|
1,350,878
|
15,755
|
4.73
|
%
|
||||||||||||||||
Less: Allowance for loan losses
|
(55,340
|
)
|
(52,894
|
)
|
||||||||||||||||||||
Non-interest earning assets
|
95,687
|
114,622
|
||||||||||||||||||||||
Total assets
|
$
|
1,151,816
|
$
|
1,412,606
|
||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Certificates of deposit and other time deposits
|
$
|
749,832
|
$
|
2,537
|
1.37
|
%
|
$
|
976,448
|
$
|
3,772
|
1.55
|
%
|
||||||||||||
NOW and money market deposits
|
153,524
|
133
|
0.35
|
153,098
|
186
|
0.49
|
||||||||||||||||||
Savings accounts
|
40,390
|
34
|
0.34
|
37,085
|
42
|
0.46
|
||||||||||||||||||
Repurchase agreements
|
2,566
|
1
|
0.16
|
1,673
|
2
|
0.48
|
||||||||||||||||||
FHLB advances
|
5,424
|
43
|
3.22
|
6,906
|
57
|
3.32
|
||||||||||||||||||
Junior subordinated debentures
|
31,745
|
212
|
2.71
|
32,645
|
242
|
2.98
|
||||||||||||||||||
Total interest-bearing liabilities
|
983,481
|
2,960
|
1.22
|
%
|
1,207,855
|
4,301
|
1.43
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing deposits
|
110,138
|
112,656
|
||||||||||||||||||||||
Other liabilities
|
10,448
|
7,436
|
||||||||||||||||||||||
Total liabilities
|
1,104,067
|
1,327,947
|
||||||||||||||||||||||
Stockholders’ equity
|
47,749
|
84,659
|
||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$
|
1,151,816
|
$
|
1,412,606
|
||||||||||||||||||||
Net interest income
|
$
|
8,298
|
$
|
11,454
|
||||||||||||||||||||
Net interest spread
|
2.93
|
%
|
3.30
|
%
|
||||||||||||||||||||
Net interest margin
|
3.07
|
%
|
3.45
|
%
|
(1)
|
Includes loan fees in both interest income and the calculation of yield on loans.
|
(2)
|
Calculations include non-accruing loans averaging $111.4 million and $92.0 million, respectively, in average loan amounts outstanding.
|
(3)
|
Taxable equivalent yields are calculated assuming a 35% federal income tax rate.
|
Three Months Ended March 31,
2013 vs. 2012
|
||||||||||||
Increase (decrease)
due to change in
|
Net
Change
|
|||||||||||
Rate
|
Volume
|
|||||||||||
(in thousands)
|
||||||||||||
Interest-earning assets:
|
||||||||||||
Loan receivables
|
$
|
(1,519
|
)
|
$
|
(2,960
|
)
|
$
|
(4,479
|
)
|
|||
Securities
|
(142
|
)
|
139
|
(3
|
)
|
|||||||
FHLB stock
|
(6
|
)
|
—
|
(6
|
)
|
|||||||
Other equity securities
|
—
|
—
|
—
|
|||||||||
Federal funds sold and other
|
(2
|
)
|
(7
|
)
|
(9
|
)
|
||||||
Total decrease in interest income
|
(1,669
|
)
|
(2,828
|
)
|
(4,497
|
)
|
||||||
Interest-bearing liabilities:
|
||||||||||||
Certificates of deposit and other time deposits
|
(430
|
)
|
(805
|
)
|
(1,235
|
)
|
||||||
NOW and money market accounts
|
(54
|
)
|
1
|
(53
|
)
|
|||||||
Savings accounts
|
(12
|
)
|
4
|
(8
|
)
|
|||||||
Federal funds purchased and repurchased agreements
|
(2
|
)
|
1
|
|
(1
|
)
|
||||||
FHLB advances
|
(2
|
)
|
(12
|
)
|
(14
|
)
|
||||||
Junior subordinated debentures
|
(23
|
)
|
(7
|
)
|
(30
|
)
|
||||||
Total decrease in interest expense
|
(523
|
)
|
(818
|
)
|
(1,341
|
)
|
||||||
Increase (decrease) in net interest income
|
$
|
(1,146
|
)
|
$
|
(2,010
|
)
|
$
|
(3,156
|
)
|
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
Service charges on deposit accounts
|
$
|
493
|
$
|
554
|
||||
Income from fiduciary activities
|
517
|
251
|
||||||
Bank card interchange fees
|
172
|
177
|
||||||
Other real estate owned rental income
|
112
|
37
|
||||||
Title insurance commissions
|
13
|
22
|
||||||
Secondary market brokerage fees
|
15
|
17
|
||||||
Gains on sales of loans originated for sale
|
58
|
45
|
||||||
Gains on sales of investment securities, net
|
—
|
2,019
|
||||||
Other
|
267
|
323
|
||||||
Total non-interest income
|
$
|
1,647
|
$
|
3,445
|
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
Salary and employee benefits
|
$
|
4,139
|
$
|
4,312
|
||||
Occupancy and equipment
|
931
|
886
|
||||||
Other real estate owned expense
|
791
|
1,257
|
||||||
FDIC insurance
|
639
|
873
|
||||||
Loan collection expense
|
853
|
360
|
||||||
Professional fees
|
406
|
356
|
||||||
State franchise tax
|
537
|
592
|
||||||
Communications
|
175
|
180
|
||||||
Postage and delivery
|
113
|
122
|
||||||
Office supplies
|
73
|
110
|
||||||
Advertising
|
59
|
33
|
||||||
Insurance expense
|
333
|
97
|
||||||
Other
|
515
|
469
|
||||||
Total non-interest expense
|
$
|
9,564
|
$
|
9,647
|
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
Federal statutory rate times financial statement income
|
$
|
(24
|
)
|
$
|
526
|
|||
Effect of:
|
||||||||
Valuation allowance
|
123
|
(419)
|
||||||
Tax-exempt income
|
(79
|
)
|
(88)
|
|||||
Non-taxable life insurance income
|
(26
|
)
|
(26)
|
|||||
Other, net
|
6
|
7
|
||||||
Total
|
$
|
—
|
$
|
—
|
As of March 31,
|
As of December 31,
|
|||||||||||||||
2013
|
2012
|
|||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Commercial
|
$
|
49,932
|
6.03
|
%
|
$
|
52,567
|
5.85
|
%
|
||||||||
Commercial Real Estate
|
||||||||||||||||
Construction
|
62,535
|
7.56
|
70,284
|
7.82
|
||||||||||||
Farmland
|
75,347
|
9.11
|
80,825
|
8.99
|
||||||||||||
Other
|
289,211
|
34.97
|
322,687
|
35.89
|
||||||||||||
Residential Real Estate
|
||||||||||||||||
Multi-family
|
49,590
|
6.00
|
50,986
|
5.67
|
||||||||||||
1-4 Family
|
259,412
|
31.36
|
278,273
|
30.95
|
||||||||||||
Consumer
|
18,129
|
2.19
|
20,383
|
2.27
|
||||||||||||
Agriculture
|
22,214
|
2.69
|
22,317
|
2.48
|
||||||||||||
Other
|
706
|
0.09
|
770
|
0.08
|
||||||||||||
Total loans
|
$
|
827,076
|
100.00
|
%
|
$
|
899,092
|
100.00
|
%
|
March 31,
2013
|
December 31,
2012
|
|||||||
(dollars in thousands)
|
||||||||
Loans past due 90 days or more still on accrual
|
$
|
—
|
$
|
86
|
||||
Non-accrual loans
|
120,943
|
94,517
|
||||||
Total non-performing loans
|
120,943
|
94,603
|
||||||
Real estate acquired through foreclosure
|
44,192
|
43,671
|
||||||
Other repossessed assets
|
—
|
—
|
||||||
Total non-performing assets
|
$
|
165,135
|
$
|
138,274
|
||||
Non-performing loans to total loans
|
14.62
|
%
|
10.52
|
%
|
||||
Non-performing assets to total assets
|
14.58
|
%
|
11.89
|
%
|
||||
Allowance for non-performing loans
|
$
|
5,838
|
$
|
13,250
|
||||
Allowance for non-performing loans to non-performing loans
|
4.83
|
%
|
14.01
|
%
|
Three Months Ended
March 31,
|
Year Ended
December 31,2012
|
|||||||||||
2013
|
2012
|
|||||||||||
(in thousands)
|
||||||||||||
Balance at beginning of period
|
$
|
56,680
|
$
|
52,579
|
$
|
52,579
|
||||||
Provision for loan losses
|
450
|
3,750
|
40,250
|
|||||||||
Recoveries
|
671
|
206
|
1,366
|
|||||||||
Charge-offs
|
(17,962
|
)
|
(2,582
|
)
|
(37,515
|
)
|
||||||
Balance at end of period
|
39,839
|
53,953
|
56,680
|
|||||||||
Allowance for loan losses to period-end loans
|
4.82%
|
4.91%
|
6.30%
|
|||||||||
Net charge-offs to average loans
|
1.98%
|
0.21%
|
3.50%
|
|||||||||
Allowance for loan losses to non-performing loans
|
32.94%
|
55.07%
|
59.91%
|
|||||||||
Allowance for loan losses for loans individually evaluated for impairment
|
$
|
8,161
|
$
|
7,833
|
$
|
21,034
|
||||||
Loans individually evaluated for impairment
|
177,472
|
192,360
|
188,808
|
|||||||||
Allowance for loan losses to loans individually evaluated for impairment
|
4.60%
|
4.07%
|
11.14%
|
|||||||||
Allowance for loan losses for loans collectively evaluated for impairment
|
$
|
31,678
|
$
|
46,120
|
$
|
35,646
|
||||||
Loans collectively evaluated for impairment
|
649,604
|
906,352
|
710,284
|
|||||||||
Allowance for loan losses to loans collectively evaluated for impairment
|
4.88%
|
5.09%
|
5.02%
|
For the Three Months
|
For the Year
|
|||||||||||||||
Ended March 31,
|
Ended December 31,
|
|||||||||||||||
2013
|
2012
|
|||||||||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||||||
Balance
|
Rate
|
Balance
|
Rate
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Demand
|
$
|
110,138
|
$
|
113,325
|
||||||||||||
Interest checking
|
88,173
|
0.28
|
%
|
89,820
|
0.37
|
%
|
||||||||||
Money market
|
65,351
|
0.45
|
63,212
|
0.49
|
||||||||||||
Savings
|
40,390
|
0.34
|
38,665
|
0.40
|
||||||||||||
Certificates of deposit
|
749,832
|
1.37
|
912,061
|
1.52
|
||||||||||||
Total deposits
|
$
|
1,053,884
|
1.04
|
%
|
$
|
1,217,083
|
1.20
|
%
|
For the Three Months
|
For the Year
|
|||||||||||||||
Ended March 31,
|
Ended December 31,
|
|||||||||||||||
2013
|
2012
|
|||||||||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||||||
Balance
|
Rate
|
Balance
|
Rate
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Less than $100,000
|
$
|
432,682
|
1.31
|
%
|
$
|
478,502
|
1.40
|
%
|
||||||||
$100,000 or more
|
317,150
|
1.46
|
%
|
433,559
|
1.64
|
%
|
||||||||||
Total
|
$
|
749,832
|
1.37
|
%
|
$
|
912,601
|
1.52
|
%
|
Maturity Period
|
Retail
|
Brokered
|
Total
|
|||||||||
(in thousands)
|
||||||||||||
Three months or less
|
$
|
39,605
|
$
|
15,000
|
$
|
54,605
|
||||||
Three months through six months
|
45,301
|
—
|
45,301
|
|||||||||
Six months through twelve months
|
59,882
|
—
|
59,882
|
|||||||||
Over twelve months
|
156,332
|
—
|
156,332
|
|||||||||
Total
|
$
|
301,120
|
$
|
15,000
|
$
|
316,120
|
March 31, 2013
|
December 31, 2012
|
|||||||||||||||||||||||||||
Regulatory
Minimums
|
Well-Capitalized
Minimums
|
Minimum Capital
Ratios Under
Consent Order
|
Porter
Bancorp
|
PBI
Bank
|
Porter
Bancorp
|
PBI
Bank
|
||||||||||||||||||||||
Tier 1 Capital
|
4.0 | % | 6.0 | % | N/A | 6.77 | % | 8.21 | % | 6.46 | % | 7.71 | % | |||||||||||||||
Total risk-based capital
|
8.0 | 10.0 | 12.0 | % | 10.16 | 10.29 | 9.81 | 9.82 | ||||||||||||||||||||
Tier 1 leverage ratio
|
4.0 | 5.0 | 9.0 | 4.91 | 5.95 | 4.50 | 5.37 |
Change in Future
Net Interest Income
|
||||||||
Dollar
Change
|
Percentage
Change
|
|||||||
(dollars in thousands)
|
||||||||
+ 200 basis points
|
$
|
2,151
|
7.06
|
%
|
||||
+ 100 basis points
|
1,097
|
3.60
|
Exhibit Number
|
Description of Exhibit
|
31.1
|
Certification of Principal Executive Officer, pursuant to Rule 13a - 14(a).
|
31.2
|
Certification of Principal Financial Officer, pursuant to Rule 13a - 14(a).
|
32.1
|
Certification of Principal Executive Officer, pursuant to 18 U.S.C Section 1350,
|
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of Principal Financial Officer, pursuant to 18 U.S.C Section 1350,
|
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
The following financial statements from the Company’s Quarterly Report on Form 10Q for the quarter ended March 31, 2013, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statement of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements.
|
PORTER BANCORP, INC.
|
||
(Registrant)
|
||
May 15, 2013
|
By:
|
/s/ Maria L. Bouvette
|
Maria L. Bouvette
|
||
Chairman & Chief Executive Officer
|
||
May 15, 2013
|
By:
|
/s/ Phillip W. Barnhouse
|
Phillip W. Barnhouse
|
||
Chief Financial Officer and Chief
|
||
Accounting Officer
|