NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These interim financial statements do not contain all necessary disclosures required by accounting principles generally accepted in the
United States of America (GAAP) for a complete set of financial statements and, therefore, should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K
of ASB Bancorp, Inc. filed with the Securities and Exchange Commission (the SEC) on March 15, 2013. These financial statements were prepared on a basis consistent with the audited consolidated financial statements previously
referenced and include all normal and recurring adjustments that management believes are necessary in order to conform to GAAP. The results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2013 or any other future period.
Organization
ASB Bancorp, Inc. (the
Parent) was incorporated on May 12, 2011 by Asheville Savings Bank, S.S.B. (the Bank) to be the Banks holding company upon completion of the Banks conversion from the mutual to stock form of organization.
The Bank is headquartered in Asheville, North Carolina and provides mortgage, consumer and commercial banking services primarily in Buncombe,
Henderson, McDowell, Transylvania, and Madison counties in North Carolina. The Bank is regulated by the Office of the North Carolina Commissioner of Banks (NCCoB) and the Federal Deposit Insurance Corporation (FDIC). The
Company is regulated by the Board of Governors of the Federal Reserve System (the FRB) and the NCCoB.
Principles of
Consolidation
The consolidated financial statements include the accounts of the Parent and its wholly owned subsidiary, the Bank (collectively, the Company). The Bank has two wholly owned subsidiaries, Appalachian
Financial Services, Inc., which has on occasion managed the Banks real estate acquired through debt default but is currently inactive, and Wenoca, Inc., which serves as the Banks trustee regarding deeds of trust. Both subsidiaries are
organized as North Carolina corporations. For purposes of the consolidated financial statements, all significant intercompany accounts and transactions have been eliminated. The accounting and reporting policies of the Company conform to GAAP.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investment Securities
Realized gains and losses on sales of investment
securities are recognized at the time of sale (trade date) based upon the specific identification method.
Interest income
includes amortization of purchase premiums and discounts. Realized gains and losses are derived from the amortized cost of the security sold. Declines in the fair value of held to maturity and available for sale debt securities below their cost that
are deemed to be other than temporary because of credit risk impairment are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers, among other issues, (i) the length of time and the
extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) the intent of the Company to retain its investment in the issuer for a period of time sufficient to allow for
any anticipated recovery in fair value, and (iv) whether it is more likely than not that the Company will be required to sell the investment prior to a recovery.
7
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loans
Loans that management has the intent and ability to hold for the foreseeable
future are reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized fees and costs on originated loans. The net amount of nonrefundable loan origination fees and certain direct costs associated with the
lending processes are deferred and amortized to interest income over the contractual lives of the loans.
Loan Segments and Classes
The Banks portfolio segments and classes within those segments are subject to risks that could have an adverse impact on the credit
quality of the loan portfolio. Management has identified the risks described below as significant risks that are generally similar among the loan segments and classes.
Commercial loan segment
The Banks commercial loans are centrally underwritten based
primarily on the customers ability to generate the required cash flow to service the debt in accordance with the contractual terms and conditions of the loan agreement. The Banks commercial lenders and underwriters work to understand the
borrowers businesses and management experiences. The majority of the Banks commercial loans are secured by collateral, so collateral values are important to the transaction. In commercial loan transactions where the principals or other
parties provide personal guarantees, the Banks commercial lenders and underwriters analyze the relative financial strength and liquidity of each guarantor. Risks that are common to the Banks commercial loan classes include general
economic conditions, demand for the borrowers products and services, the personal circumstances of the principals, and reductions in collateral values.
In addition to these common risks for the Banks commercial loans, the various commercial loan classes also have certain risks specific to them.
Commercial construction and land development
loans are highly dependent on the supply and demand for commercial real estate in the Banks
markets as well as the demand for the newly constructed residential homes and lots being developed by the Banks commercial loan customers. Prolonged deterioration in demand could result in significant decreases in the underlying collateral
values and make repayment of the outstanding loans more difficult for the Banks commercial borrowers.
Commercial mortgage and
commercial and industrial
loans are primarily dependent on the ability of the Banks commercial loan customers to achieve business results consistent with those projected at loan origination resulting in cash flow sufficient to service the
debt. To the extent that a borrowers actual business results significantly underperform the original projections, the ability of that borrower to service the Banks loan on a basis consistent with the contractual terms may be at risk.
While these loans and leases are generally secured by real property, personal property, or business assets such as inventory or accounts receivable, it is possible that the liquidation of the collateral will not fully satisfy the obligation.
8
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Other commercial real estate
loans consist primarily of loans secured by multifamily housing. The
primary risk associated with multifamily loans is the ability of the income producing property that collateralizes the loan to produce adequate cash flow to service the debt. High unemployment or generally weak economic conditions may result in the
borrower having to provide rental rate concessions to achieve adequate occupancy rates.
Non-commercial loan segment
The Bank underwrites its non-commercial loans using automated credit scoring and analysis tools. These credit scoring tools take into account factors such
as payment history, credit utilization, length of credit history, types of credit currently in use, and recent credit inquiries. To the extent that the loan is secured by collateral, the value of the collateral is also evaluated. Common risks to
each class of non-commercial loans include general economic conditions within the Banks markets, such as unemployment and potential declines in collateral values, and the personal circumstances of the borrowers.
In addition to these common risks for the Banks non-commercial loans, various non-commercial loan classes may also have certain risks specific to
them.
Residential mortgage and non-commercial construction and land development
loans are to individuals and are typically secured by
1-4 family residential property, undeveloped land, and partially developed land in anticipation of pending construction of a personal residence. Significant and rapid declines in real estate values can result in residential mortgage loan borrowers
having debt levels in excess of the current market value of the collateral. Recent declines in value have led to unprecedented levels of foreclosures and losses within the banking industry. Non-commercial construction and land development loans can
experience delays in completion and cost overruns that exceed the borrowers financial ability to complete the project. Such cost overruns can result in foreclosure of partially completed and unmarketable collateral.
Revolving mortgage
loans are often secured by second liens on residential real estate, thereby making such loans particularly susceptible to
declining collateral values. A substantial decline in collateral value could render the Banks second lien position to be effectively unsecured. Additional risks include lien perfection inaccuracies and disputes with first lien holders that may
further weaken collateral positions. Further, the open-end structure of these loans creates the risk that customers may draw on the lines in excess of the collateral value if there have been significant declines since origination.
Consumer
loans include loans secured by personal property such as automobiles, marketable securities, other titled recreational vehicles including
boats and motorcycles, as well as unsecured consumer debt. The value of underlying collateral within this class is especially volatile due to potential rapid depreciation in values since date of loan origination in excess of principal repayment.
9
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Credit Quality Indicators
Loans are monitored for credit quality on a recurring basis and the composition of the loans outstanding by credit quality indicator is provided below.
Loan credit quality indicators are developed through review of individual borrowers on an ongoing basis, although certain non-commercial loans, including
residential mortgage, revolving mortgage and consumer loans, are evaluated upon origination and are reevaluated upon a change in delinquency status. Most commercial loans are evaluated at least annually with more frequent evaluation of more severely
criticized loans or leases. The indicators represent the rating for loans as of the date presented based on the most recent assessment performed. These credit quality indicators are defined as follows:
Pass
A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.
Special mention
A special mention asset has potential weaknesses that deserve managements close attention. If left
uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.
Substandard
A substandard asset is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral
pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not
corrected.
Doubtful
An asset classified doubtful has all the weaknesses inherent in an asset classified substandard with the
added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values.
Loss
Assets classified loss are considered uncollectible and of such little value that their continuing to be carried as an asset is not warranted. This classification is not necessarily
equivalent to no potential for recovery or salvage value, but rather that it is not appropriate to defer a full write-off even though partial recovery may be effected in the future.
Allowance for Loan Losses
The allowance for loan losses is managements estimate of probable credit losses that are inherent in the Banks loan portfolios at the balance
sheet date. The allowance increases when the Bank provides for loan losses through charges to operating earnings and when the Bank recovers amounts from loans previously written down or charged off. The allowance decreases when the Bank writes down
or charges off loans amounts that are deemed uncollectible.
Management determines the allowance for loan losses based on periodic evaluations
that are inherently subjective and require substantial judgment because the evaluations require the use of material estimates that are susceptible to significant change. The Bank generally uses two allowance methodologies that are primarily based on
managements determination as to whether or not a loan is considered to be impaired.
10
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Commercial loans, as well as non-commercial loans that are classified as substandard and secured by real
estate, are evaluated for impairment on a loan-by-loan basis and are considered impaired when it is probable, based on current information, that the borrower will be unable to pay contractual interest or principal as required by the loan agreement.
Loans that experience insignificant payment delays and payment shortfalls are not necessarily considered impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all
of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment history, and the amount of the shortfall relative to the principal and interest owed. Loans
that are deemed to be troubled debt restructurings are also included as impaired loans. Impaired loans are measured at their estimated fair value based on either the value of the loans expected future cash flows discounted at the loans
effective interest rate or on the collateral value, net of the estimated costs of disposal, if the loan is collateral dependent. For loans considered impaired, an individual allowance for loan losses is recorded when the loan principal balance
exceeds the estimated fair value.
For loans not considered impaired, management determines the allowance for loan losses based on estimated
loss percentages that are determined by and applied to the various classes of loans that comprise the segments of the Banks loan portfolio. The estimated loss percentages by loan class are based on a number of factors that include by class
(i) average historical losses over the past three years, (ii) levels and trends in delinquencies, impairments, and net charge-offs, (iii) trends in the volume and direction of loan balances within that class, terms, and
concentrations, (iv) trends in interest rates, (v) effects of changes in the Banks risk tolerance, underwriting standards, lending policies, procedures, and practices, and (vi) national and local business and economic
conditions.
Future material adjustments to the allowance for loan losses may be necessary due to changing economic conditions or declining
collateral values. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Banks allowance for loan losses and may require the Bank to make adjustments to the allowance for loan losses based
upon judgments that differ significantly from those of management.
Nonperforming Assets
Nonperforming assets can include
loans that are past due 90 days or more and continue to accrue interest, loans on which interest is not being accrued, and foreclosed real estate.
Loans Past Due 90 Days or More, Nonaccruing, Impaired, or Restructured
The Banks policies related to when loans are placed on nonaccruing status conform to guidelines prescribed by
bank regulatory authorities. Generally, the Bank suspends the accrual of interest on loans (i) that are maintained on a cash basis because of the deterioration of the financial condition of the borrower, (ii) for which payment in full of
principal or interest is not expected, or (iii) on which principal or interest has been in default for a period of 90 days or more, unless the loan is both well secured and in the process of collection. While a loan is on nonaccruing status,
the Bank recognizes interest income only to the extent cash payments are received in excess of collection of the principal outstanding on the loan. Loans are returned to accruing status when all principal and interest amounts contractually due are
brought current and concern no longer exists as to the future collectability of principal and interest, which is generally confirmed when the loan demonstrates performance for six consecutive months or payment cycles.
11
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A troubled debt restructuring (TDR) occurs when a borrower is experiencing financial
difficulty and the Bank grants a concession it would not otherwise consider to provide the borrower relief from one or more of the contractual loan conditions. Concessions that the Bank might consider include the allowance of interest-only payments
on more than a temporary basis, the reduction of interest rates, the extension of the loan term, the forgiveness of principal, or a combination of these. The Bank might require additional collateral or additional guarantors as conditions to
modifying loans as TDRs.
The Bank might consider modifying both accruing or nonaccruing loans as TDRs. When a modification includes a
reduction of principal that resulted from a partial charge off of the loan, the Bank typically accounts for the TDR as a nonaccruing loan.
The Bank classifies TDRs as impaired loans and evaluates the need for an allowance for loan loss on a loan-by-loan basis consistent with its evaluation
of impaired loans that have not been modified as TDRs. An allowance is based on either the present value of expected future cash flows discounted at the loans effective interest rate, the loans observable market price or the estimated
fair value of the underlying collateral less any selling costs, if the loan is deemed to be collateral dependent.
The Banks policy for
recognition of interest income on loans considered to be impaired, including restructured loans, is the same as its interest income recognition policy for loans not considered to be impaired.
Loan Charge-offs
The Bank charges off loan balances, in whole or in part, when available, verifiable, and documentable information confirms that specific loans, or portions of specific
loans, are uncollectible or unrecoverable. For unsecured loans, losses are confirmed when it can be determined that the borrower, or any guarantor, is unwilling or unable to pay the amounts as agreed. When the borrower, or any guarantors, are
unwilling or unable to pay the amounts as agreed on a loan secured by collateral and any recovery is dependent upon the sale of the collateral, the loan is deemed to be collateral dependent. Repayments or recoveries for collateral dependent loans
are directly affected by the value of the collateral at liquidation. As such, loan repayment can be affected by factors that influence the amount recoverable, the timing of the recovery, or a combination of the two. Such factors include economic
conditions that affect the markets in which the loan or its collateral is sold, bankruptcy, repossession and foreclosure laws, and consumer banking regulations. Losses are also confirmed when the loan, or a portion of the loan, is classified as loss
resulting from loan reviews conducted by the Bank.
Charge-offs of loans in the commercial loan segment are recognized when the
uncollectibility of the loan balance and the inability to recover sufficient value from the sale of any collateral securing the loan is confirmed. The uncollectibility of the loan balance is evidenced by the inability of the commercial borrower to
generate cash flows sufficient to repay the loan as agreed causing the loan to become delinquent. For collateral dependent commercial loans, the Bank determines the fair value of the collateral based on appraisals, current market conditions, and
estimated costs to sell the collateral. For collateral dependent commercial loans where the loan balance, including any accrued interest, net deferred fees or costs, and unamortized premiums or discounts, exceeds the fair value of the collateral
securing the loan, the deficiency is identified as unrecoverable, is deemed to be a confirmed loss, and is charged off.
12
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Charge-offs of loans in the non-commercial loan segment are generally confirmed and recognized in a
manner similar to loans in the commercial loan segment. Secured non-commercial loans that are identified as uncollectible and are deemed to be collateral dependent are confirmed as loss to the extent the fair value of the collateral is insufficient
to recover the loan balance. Closed-end consumer loans that become 120 cumulative days past due and open-end consumer loans that become 180 cumulative days past due are charged off to the extent that the fair value of any collateral, less estimated
costs to sell the collateral, is insufficient to recover the loan balance. Closed-end and open-end loans secured by residential real estate that become 180 days past due are charged off to the extent that the fair value of the residential real
estate securing the loan, less estimated costs to sell the collateral, is insufficient to recover the loan balance. Loans determined to be fraudulent are charged off within 90 days of discovery. Loans to borrowers in bankruptcy are subject to
modification by the bankruptcy court and are charged off to the extent that the fair value of any collateral securing the loan, less estimated costs to sell the collateral, is insufficient to recover the loan balance, unless the Bank expects
repayment is likely to occur. Such loans are charged off within 60 days of the receipt of notification from a bankruptcy court or when the loans become 120 days past due, whichever is shorter.
Foreclosed Real Estate
Foreclosed real estate consists of real estate and other assets acquired as a result of customers loan
defaults. Foreclosed real estate is stated at the lower of the related loan balance or the fair value of the property net of the estimated costs of disposal with a charge to the allowance for loan losses upon foreclosure. Any write-downs subsequent
to foreclosure are charged against operating earnings. To the extent recoverable, costs relating to the development and improvement of property are capitalized, whereas those costs relating to holding the property are charged to expense.
Comprehensive Income
Comprehensive income is defined as the change in equity of an enterprise during a period from transactions and
other events and circumstances from non-owner sources and, accordingly, includes both net income and amounts referred to as other comprehensive income (OCI). The items of other comprehensive income are included in the Consolidated
Statements of Comprehensive Income (Loss). The accumulated balance of other comprehensive income is included in the equity section of the Consolidated Balance Sheets. The Companys components of accumulated other comprehensive income include
unrealized gains and/or losses on investment securities classified as available for sale and certain changes in the Companys benefit obligations under its retirement plans. The Company adjusts the level of accumulated comprehensive income
related to its retirement plans on an annual basis, consistent with the receipt of its annual actuarial studies.
The changes in the
components of the Companys accumulated other comprehensive loss, net of income taxes, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2013
|
|
|
|
Beginning
|
|
|
OCI Before
|
|
|
Amount
|
|
|
Net
|
|
|
Ending
|
|
(dollars in thousands)
|
|
Balance
|
|
|
Reclassification
|
|
|
Reclassified
|
|
|
OCI
|
|
|
Balance
|
|
|
|
|
|
|
|
Unrealized gain (loss) on securities
|
|
$
|
1,879
|
|
|
$
|
(519
|
)
|
|
$
|
5
|
|
|
$
|
(514
|
)
|
|
$
|
1,365
|
|
Benefit plan liability
|
|
|
(4,946
|
)
|
|
|
221
|
|
|
|
(221
|
)
|
|
|
|
|
|
|
(4,946
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss, net of tax
|
|
$
|
(3,067
|
)
|
|
$
|
(298
|
)
|
|
$
|
(216
|
)
|
|
$
|
(514
|
)
|
|
$
|
(3,581
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Companys reclassifications out of accumulated other comprehensive income for the three months
ended March 31, 2013 were as follows:
|
|
|
|
|
|
|
(dollars in thousands)
|
|
|
|
|
|
Details about Accumulated Other Comprehensive Income Components
|
|
Amount Reclassified
from Accumulated Other
Comprehensive Income
|
|
|
Affected Line Item in the Statement
Where Net Income Is Presented
|
|
|
|
Reclassification of securities losses (gains) recognized in net income
|
|
$
|
7
|
|
|
Gain (loss) on sale of investment securities
|
Deferred income tax (benefit) expense
|
|
|
(2
|
)
|
|
Income tax provision
|
|
|
|
|
|
|
|
|
|
$
|
5
|
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
Amortization of defined benefit pension items:
|
|
|
|
|
|
|
Prior service cost (credit)
|
|
$
|
(18
|
)
|
|
|
Net loss
|
|
|
164
|
|
|
|
Curtailment credit
|
|
|
(481
|
)
|
|
|
|
|
|
|
|
|
|
Net periodic pension benefit
|
|
|
(335
|
)
|
|
Salaries and employee benefits
|
Deferred income tax (benefit) expense
|
|
|
114
|
|
|
Income tax provision
|
|
|
|
|
|
|
|
Total reclassifications for the period
|
|
$
|
(221
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
Income Taxes
The establishment of provisions for federal and state income taxes is a complex area of
accounting, which involves the use of significant judgments and estimates in applying relevant tax statutes. The Company is subject to audit by federal and state tax authorities, the results of which may produce tax liabilities that differ from the
Companys tax estimates and provisions. The Company continually evaluates its exposure to possible tax assessments arising from audits and it records its estimate of possible exposure based on current facts and circumstances. The Parent and the
Bank have entered into a formal agreement that will allow them, if so elected, to file consolidated federal and state income tax returns, where permitted, and each to pay its respective share of income taxes due.
Deferred tax assets and liabilities are recognized for the tax effects of differing carrying values of assets and liabilities for tax and financial
statement purposes that will reverse in future periods. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or
settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. When uncertainty exists concerning the recoverability of a deferred tax asset, the carrying value of the
asset may be reduced by a valuation allowance. The amount of any valuation allowance established is based upon an estimate of the deferred tax asset that is more likely than not to be recovered. Increases or decreases in the valuation allowance
result in increases or decreases to the provision for income taxes.
14
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A significant portion of the recorded deferred tax assets relate to a loan loss allowance on which the
realization of income tax benefits is dependent on the Banks ability to generate future taxable income. Because of this dependency, the Banks management considered the need for a valuation allowance, but determined there was sufficient
positive evidence to support their conclusion not to record a valuation allowance. The positive evidence that led the Banks management to conclude that the income tax benefits of the Banks deferred tax assets would be realized included
(1) the Bank has a sustained history of generating taxable income and realizing the income tax benefits of its deferred tax assets and income tax credits, (2) the Banks management believes that, based on certain credit quality
indicators, the credit quality issues that resulted in the 2010 net loss and caused the net operating loss carry forward and deferred tax asset related to the loan loss allowance have improved somewhat, (3) the Bank generated pretax income in
2011, (4) the Banks management is aware of one or more strategies that, if implemented, could generate future taxable income, and (5) the net operating loss carry forward does not expire in the near term and the Bank has not
experienced expiring loss carry forwards in its past. The Banks loss carry forward periods under applicable federal and North Carolina income tax laws are 20 years and 15 years, respectively, with remaining loss carry forward periods of 18
years and 13 years, respectively.
The Bank includes interest and penalties related to income tax liabilities in noninterest expense. The
Banks tax filings for the years ended December 31, 2008 through 2011 are currently open to audit under statutes of limitations by the Internal Revenue Service and the North Carolina Department of Revenue.
Pension Plan
The Bank has two noncontributory, defined benefit pension plans. The Bank recognizes the overfunded or underfunded
status of the plans as an asset or liability in its consolidated statement of financial position and recognizes changes in the funded status in the year in which the change occurs through comprehensive income. The funded status of a benefit plan is
measured as the difference between plan assets at fair value and the benefit obligation. For a pension plan, the benefit obligation is the projected benefit obligation. GAAP also requires an employer to measure the funded status of a plan as of the
date of its year-end statement of financial position and to include additional disclosure in the notes to financial statements about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the
gains or losses, prior service costs or credits, and transition asset or obligation.
Employee Stock Ownership Plan
(ESOP)
In connection with the mutual-to-stock conversion on October 11, 2011, the Bank established an ESOP for the benefit of all of its eligible employees. Full-time employees of the Bank who have been credited with
at least 1,000 hours of service during a 12-month period and who have attained age 21 are eligible to participate in the ESOP. Shares allocated under the ESOP vest at the rate of 20% per year of service beginning with the completion of two
years of service and fully vest upon the completion of six years of service. The Bank anticipates it will make contributions to the ESOP in amounts necessary to amortize the ESOP loan payable to the Company over a period of 15 years.
15
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Unallocated ESOP shares are not considered outstanding (including for the calculation of net income per
common share as discussed below) and are shown as a reduction of stockholders equity. Dividends on unallocated ESOP shares, if paid, are considered to be compensation expense. The Company recognizes compensation cost equal to the fair value of
the ESOP shares during the periods in which they are committed to be released. The fair value of the annual share allocations is recorded on a monthly basis with fair value determined by calculating the average closing stock price for each day
during the month. To the extent that the fair value of the Companys ESOP shares differs from the cost of such shares, the difference is recognized in stockholders equity. The Company recognizes a tax deduction equal to the cost of the
shares released. Because the ESOP is internally leveraged through a loan from the Company to the ESOP, the loan receivable by the Company from the ESOP is not reported as an asset nor is the debt of the ESOP shown as a liability in the consolidated
financial statements.
Equity Incentive Plan
The Company issued restricted stock and stock options under the 2012 Equity
Incentive Plan during the first quarter of 2013 to key officers and outside directors. In accordance with the requirements of ASC 718,
Compensation Stock Compensation,
the Company uses a fair value based method of accounting for
employee stock compensation plans, whereby compensation cost is measured based on the fair value of the award as of the grant date and recognized over the vesting period.
Net Income Per Common Share
Where presented, basic net income per common share is the Companys net income available to common stockholders, which represents net income less
dividends paid or payable to preferred stock shareholders, if any, divided by the weighted average number of common shares outstanding during the period. In calculating the weighted average number of common shares outstanding, shares held by the
ESOP are not considered to be outstanding until they are committed to be released for allocation. Also, the weighted average of unvested restricted shares are not considered outstanding until the shares vest.
For diluted income per common share, net income available to common shareholders is divided by the weighted average number of common shares issued and
outstanding for each period plus amounts representing the dilutive effect of stock options and restricted stock, as well as any adjustment to income that would result from the assumed issuance. The effects of restricted stock and stock options are
excluded from the computation of diluted income per common share in periods in which the effect would be antidilutive. Potential common shares that might be issued by the Company relate solely to outstanding stock options and restricted stock and
are determined using the treasury stock method.
16
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net income per common share has been computed based on the following:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
(dollars in thousands, except per share data)
|
|
2013
|
|
|
2012
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
740
|
|
|
$
|
284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average common shares issued
|
|
|
5,461,536
|
|
|
|
5,584,551
|
|
Less: Weighted average unvested restricted shares
|
|
|
223,382
|
|
|
|
|
|
Less: Weighted average unallocated ESOP shares
|
|
|
404,157
|
|
|
|
435,512
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares used to compute net income per common share Basic
|
|
|
4,833,997
|
|
|
|
5,149,039
|
|
Add: Effect of dilutive securities
|
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares used to compute net income per common share Diluted
|
|
|
4,834,195
|
|
|
|
5,149,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share Basic
|
|
$
|
0.15
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
Net income per common share Diluted
|
|
$
|
0.15
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
Reclassifications
Certain reclassifications have been made to the financial statements of the prior
periods presented to conform to the current period presentation. The reclassifications had no effect on net income, net income per share, or stockholders equity as previously reported.
17
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
Accounting Standards Update ASU 2011-11
In December, 2011, the FASB issued ASU 2011-11,
Disclosures about Offsetting Assets and Liabilities
, in an effort to improve comparability
between U.S. GAAP and IFRS financial statements with regard to the presentation of offsetting assets and liabilities on the statement of financial position arising from financial and derivative instruments, and repurchase agreements. The ASU
establishes additional disclosures presenting the gross amounts of recognized assets and liabilities, offsetting amounts, and the net balance reflected in the statement of financial position. Descriptive information regarding the nature and rights
of the offset must also be disclosed. The amendments are effective for annual reporting periods beginning on or after January 1, 2013. The adoption of the new guidance did not have an impact on the Companys financial statements.
Accounting Standards Update ASU 2012-02
In July, 2012, the FASB issued ASU 2012-02,
Testing Indefinite-Lived Intangible
Assets for Impairment,
which amends the guidance in ASC 350-30 on testing indefinite-lived intangible assets, other than goodwill, for impairment. The FASB amended the impairment testing requirements by allowing an entity to perform a
qualitative impairment assessment before calculating the fair value of the asset. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The
adoption of the new guidance did not have an impact on the Companys financial statements.
Accounting Standards Update ASU
2012-03
In August, 2012, the FASB issued ASU 2012-03,
Technical Amendments and Corrections to SEC Sections,
which amends a number of SEC sections in the FASB Accounting Standards Codification as a result of (1) the issuance of
SAB 114, (2) the issuance of SEC Final Rule 33-9250, and (3) corrections related to ASU 2010-22. ASU 2012-03 is effective for all entities upon issuance. The adoption of the new guidance did not have a significant impact on the
Companys financial statements.
Accounting Standards Update ASU 2013-02
In February, 2013, the FASB issued ASU
2013-02,
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,
which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income (AOCI). The ASU is intended to help entities
improve the transparency of changes in other comprehensive income (OCI) and items reclassified out of AOCI in their financial statements. It does not amend any existing requirements for reporting net income or OCI in the financial statements. Both
public and nonpublic entities that report items of OCI are affected by the ASU. ASU 2013-02 is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2012. Early adoption is
permitted. The amendments in the ASU should be applied prospectively. Other than the addition of the required disclosures, the adoption of the new guidance did not have an impact on the Companys financial statements.
18
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2. INVESTMENT SECURITIES
Securities Available for Sale
The maturities, amortized cost, unrealized gains, unrealized losses and fair values
of securities available for sale are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type and Maturity Group
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
(dollars in thousands)
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Sponsored Entity (GSE) and agency securities due -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 year but within 5 years
|
|
$
|
9,544
|
|
|
$
|
212
|
|
|
$
|
(10
|
)
|
|
$
|
9,746
|
|
After 5 years but within 10 years
|
|
|
2,383
|
|
|
|
3
|
|
|
|
(8
|
)
|
|
|
2,378
|
|
Asset-backed securities issued by the Small Business Administration (SBA)
|
|
|
66,573
|
|
|
|
1,606
|
|
|
|
(55
|
)
|
|
|
68,124
|
|
Residential mortgage-backed securities issued by GSEs (1)
|
|
|
123,724
|
|
|
|
1,246
|
|
|
|
(425
|
)
|
|
|
124,545
|
|
State and local government securities due -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 5 years but within 10 years
|
|
|
8,223
|
|
|
|
339
|
|
|
|
(26
|
)
|
|
|
8,536
|
|
After 10 years
|
|
|
43,888
|
|
|
|
399
|
|
|
|
(1,030
|
)
|
|
|
43,257
|
|
Mutual funds
|
|
|
715
|
|
|
|
23
|
|
|
|
|
|
|
|
738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
255,050
|
|
|
$
|
3,828
|
|
|
$
|
(1,554
|
)
|
|
$
|
257,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Sponsored Entity (GSE) and agency securities due -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 year but within 5 years
|
|
$
|
10,609
|
|
|
$
|
232
|
|
|
$
|
(16
|
)
|
|
$
|
10,825
|
|
After 5 years but within 10 years
|
|
|
1,416
|
|
|
|
6
|
|
|
|
|
|
|
|
1,422
|
|
Asset-backed securities issued by the Small Business Administration (SBA)
|
|
|
69,088
|
|
|
|
1,387
|
|
|
|
(64
|
)
|
|
|
70,411
|
|
Residential mortgage-backed securities issued by GSEs (1)
|
|
|
105,598
|
|
|
|
1,386
|
|
|
|
(297
|
)
|
|
|
106,687
|
|
State and local government securities due -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 5 years but within 10 years
|
|
|
7,613
|
|
|
|
388
|
|
|
|
(6
|
)
|
|
|
7,995
|
|
After 10 years
|
|
|
40,570
|
|
|
|
529
|
|
|
|
(442
|
)
|
|
|
40,657
|
|
Mutual funds
|
|
|
711
|
|
|
|
28
|
|
|
|
|
|
|
|
739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
235,605
|
|
|
$
|
3,956
|
|
|
$
|
(825
|
)
|
|
$
|
238,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Residential mortgage-backed securities were issued by United States government sponsored entities including the Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, or Government National Mortgage Association. The Company held no private label residential mortgage-backed securities at March 31, 2013 and December 31, 2012 or during the periods then ended.
|
19
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2. INVESTMENT SECURITIES (Continued)
Securities Held to Maturity
The maturities, amortized cost, unrealized gains,
unrealized losses and fair values of securities classified as held to maturity are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type and Maturity Group
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
(dollars in thousands)
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE and agency securities due -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 1 year but within 5 years
|
|
$
|
1,062
|
|
|
$
|
142
|
|
|
$
|
|
|
|
$
|
1,204
|
|
Residential mortgage-backed securities issued by GSEs (1)
|
|
|
1,074
|
|
|
|
75
|
|
|
|
|
|
|
|
1,149
|
|
State and local government securities due -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 5 years but within 10 years
|
|
|
952
|
|
|
|
129
|
|
|
|
|
|
|
|
1,081
|
|
After 10 years
|
|
|
1,468
|
|
|
|
139
|
|
|
|
|
|
|
|
1,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,556
|
|
|
$
|
485
|
|
|
$
|
|
|
|
$
|
5,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE and agency securities due -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 5 years but within 10 years
|
|
$
|
1,065
|
|
|
$
|
144
|
|
|
$
|
|
|
|
$
|
1,209
|
|
Residential mortgage-backed securities issued by GSEs (1)
|
|
|
1,166
|
|
|
|
83
|
|
|
|
|
|
|
|
1,249
|
|
State and local government securities due -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After 5 years but within 10 years
|
|
|
951
|
|
|
|
141
|
|
|
|
|
|
|
|
1,092
|
|
After 10 years
|
|
|
1,467
|
|
|
|
165
|
|
|
|
|
|
|
|
1,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,649
|
|
|
$
|
533
|
|
|
$
|
|
|
|
$
|
5,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Residential mortgage-backed securities were issued by United States government sponsored entities including the Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, or Government National Mortgage Association. The Company held no private label residential mortgage-backed securities at March 31, 2013 and December 31, 2012 or during the periods then ended.
|
20
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2. INVESTMENT SECURITIES (Continued)
The following tables show investment gross unrealized losses and fair value, aggregated by investment
category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2013 and December 31, 2012. The total number of securities with unrealized losses at March 31, 2013 and
December 31, 2012 were 71 and 54, respectively. The unrealized losses relate to debt securities that have incurred fair value reductions due to higher market interest rates since the securities were purchased. The unrealized losses are not
likely to reverse unless and until market interest rates decline to the levels that existed when the securities were purchased. Management has the intent to hold securities with unrealized losses until a recovery of the market value occurs.
Management has determined that it is more likely than not that the Company will not be required to sell any of the securities with unrealized losses prior to a recovery of market value sufficient to negate the unrealized loss. Management has
analyzed the creditworthiness of the underlying issuers and determined that the Company will collect all contractual cash flows, therefore all impairment is considered to be temporary.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
Less Than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
(dollars in thousands)
|
|
value
|
|
|
losses
|
|
|
value
|
|
|
losses
|
|
|
value
|
|
|
losses
|
|
|
|
|
|
|
|
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US GSE and agency
|
|
$
|
4,221
|
|
|
$
|
(18
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,221
|
|
|
$
|
(18
|
)
|
Asset-backed SBA
|
|
|
6,315
|
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
6,315
|
|
|
|
(55
|
)
|
Residential mortgage-backed GSE (1)
|
|
|
52,134
|
|
|
|
(425
|
)
|
|
|
|
|
|
|
|
|
|
|
52,134
|
|
|
|
(425
|
)
|
State and local government
|
|
|
32,813
|
|
|
|
(1,056
|
)
|
|
|
|
|
|
|
|
|
|
|
32,813
|
|
|
|
(1,056
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities
|
|
$
|
95,483
|
|
|
$
|
(1,554
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
95,483
|
|
|
$
|
(1,554
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Residential mortgage-backed securities were issued by United States government sponsored entities including the Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, or Government National Mortgage Association. The Company held no private label residential mortgage-backed securities at March 31, 2013 and December 31, 2012 or during the periods then ended.
|
21
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2. INVESTMENT SECURITIES (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
Less Than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
(dollars in thousands)
|
|
value
|
|
|
losses
|
|
|
value
|
|
|
losses
|
|
|
value
|
|
|
losses
|
|
|
|
|
|
|
|
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US GSE and agency
|
|
$
|
1,984
|
|
|
$
|
(16
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,984
|
|
|
$
|
(16
|
)
|
Asset-backed SBA
|
|
|
13,381
|
|
|
|
(63
|
)
|
|
|
390
|
|
|
|
(1
|
)
|
|
|
13,771
|
|
|
|
(64
|
)
|
Residential mortgage-backed GSE (1)
|
|
|
35,995
|
|
|
|
(297
|
)
|
|
|
|
|
|
|
|
|
|
|
35,995
|
|
|
|
(297
|
)
|
State and local government
|
|
|
24,018
|
|
|
|
(448
|
)
|
|
|
|
|
|
|
|
|
|
|
24,018
|
|
|
|
(448
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired securities
|
|
$
|
75,378
|
|
|
$
|
(824
|
)
|
|
$
|
390
|
|
|
$
|
(1
|
)
|
|
$
|
75,768
|
|
|
$
|
(825
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Residential mortgage-backed securities were issued by United States government sponsored entities including the Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, or Government National Mortgage Association. The Company held no private label residential mortgage-backed securities at March 31, 2013 and December 31, 2012 or during the periods then ended.
|
Investment securities pledged as collateral follow:
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
March 31,
2013
|
|
|
December 31,
2012
|
|
|
|
|
Pledged to Federal Reserve Discount Window
|
|
$
|
11,644
|
|
|
$
|
3,301
|
|
Pledged to repurchase agreements for commercial customers
|
|
|
819
|
|
|
|
922
|
|
Interest income from taxable and tax-exempt securities recognized in interest and dividend income follow:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
(dollars in thousands)
|
|
2013
|
|
|
2012
|
|
|
|
|
Interest income from taxable securities
|
|
$
|
767
|
|
|
$
|
1,260
|
|
Interest income from tax-exempt securities
|
|
|
318
|
|
|
|
108
|
|
|
|
|
|
|
|
|
|
|
Total interest income from securities
|
|
$
|
1,085
|
|
|
$
|
1,368
|
|
|
|
|
|
|
|
|
|
|
22
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2. INVESTMENT SECURITIES (Continued)
Proceeds and realized gains and losses from sales of securities recognized in net income follow:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
(dollars in thousands)
|
|
2013
|
|
|
2012
|
|
|
|
|
Proceeds from sales of securities
|
|
$
|
20,950
|
|
|
$
|
35,274
|
|
Realized gains (losses) from sales of securities
|
|
|
(7
|
)
|
|
|
502
|
|
3. LOANS RECEIVABLE
Loans receivable by segment and class follow:
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
March 31,
2013
|
|
|
December 31,
2012
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
6,075
|
|
|
$
|
5,161
|
|
Commercial mortgage
|
|
|
146,689
|
|
|
|
138,804
|
|
Commercial and industrial
|
|
|
10,369
|
|
|
|
11,093
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
163,133
|
|
|
|
155,058
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
Non-commercial construction and land development
|
|
|
3,885
|
|
|
|
3,729
|
|
Residential mortgage
|
|
|
163,893
|
|
|
|
163,571
|
|
Revolving mortgage
|
|
|
46,853
|
|
|
|
48,221
|
|
Consumer
|
|
|
18,197
|
|
|
|
17,552
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
232,828
|
|
|
|
233,073
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
|
395,961
|
|
|
|
388,131
|
|
Less: Deferred loan fees
|
|
|
(421
|
)
|
|
|
(410
|
)
|
|
|
|
|
|
|
|
|
|
Total loans receivable net of deferred loan fees
|
|
|
395,540
|
|
|
|
387,721
|
|
Less: Allowance for loan losses
|
|
|
(8,553
|
)
|
|
|
(8,513
|
)
|
|
|
|
|
|
|
|
|
|
Loans receivable, net
|
|
$
|
386,987
|
|
|
$
|
379,208
|
|
|
|
|
|
|
|
|
|
|
23
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
3. LOANS RECEIVABLE (Continued)
Loans receivable by segment, class, and grade follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
(dollars in thousands)
|
|
Pass
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Loss*
|
|
|
Loans
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
5,476
|
|
|
$
|
447
|
|
|
$
|
152
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,075
|
|
Commercial mortgage
|
|
|
121,925
|
|
|
|
23,848
|
|
|
|
916
|
|
|
|
|
|
|
|
|
|
|
|
146,689
|
|
Commercial and industrial
|
|
|
8,038
|
|
|
|
1,950
|
|
|
|
381
|
|
|
|
|
|
|
|
|
|
|
|
10,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
135,439
|
|
|
|
26,245
|
|
|
|
1,449
|
|
|
|
|
|
|
|
|
|
|
|
163,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial construction and land development
|
|
|
3,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,885
|
|
Residential mortgage
|
|
|
151,860
|
|
|
|
9,700
|
|
|
|
2,333
|
|
|
|
|
|
|
|
|
|
|
|
163,893
|
|
Revolving mortgage
|
|
|
43,477
|
|
|
|
2,651
|
|
|
|
725
|
|
|
|
|
|
|
|
|
|
|
|
46,853
|
|
Consumer
|
|
|
17,523
|
|
|
|
548
|
|
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
18,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
216,745
|
|
|
|
12,899
|
|
|
|
3,184
|
|
|
|
|
|
|
|
|
|
|
|
232,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
$
|
352,184
|
|
|
$
|
39,144
|
|
|
$
|
4,633
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
395,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
4,516
|
|
|
$
|
450
|
|
|
$
|
195
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,161
|
|
Commercial mortgage
|
|
|
117,046
|
|
|
|
21,231
|
|
|
|
527
|
|
|
|
|
|
|
|
|
|
|
|
138,804
|
|
Commercial and industrial
|
|
|
10,239
|
|
|
|
694
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
11,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
131,801
|
|
|
|
22,375
|
|
|
|
882
|
|
|
|
|
|
|
|
|
|
|
|
155,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial construction and land development
|
|
|
3,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,729
|
|
Residential mortgage
|
|
|
151,617
|
|
|
|
9,797
|
|
|
|
2,153
|
|
|
|
|
|
|
|
4
|
|
|
|
163,571
|
|
Revolving mortgage
|
|
|
45,140
|
|
|
|
2,294
|
|
|
|
787
|
|
|
|
|
|
|
|
|
|
|
|
48,221
|
|
Consumer
|
|
|
16,722
|
|
|
|
683
|
|
|
|
147
|
|
|
|
|
|
|
|
|
|
|
|
17,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
217,208
|
|
|
|
12,774
|
|
|
|
3,087
|
|
|
|
|
|
|
|
4
|
|
|
|
233,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
$
|
349,009
|
|
|
$
|
35,149
|
|
|
$
|
3,969
|
|
|
$
|
|
|
|
$
|
4
|
|
|
$
|
388,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Items included in the Loss column were fully reserved.
|
24
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
3. LOANS RECEIVABLE (Continued)
Loans receivable by segment, class, and delinquency status follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past Due
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
31-89
Days
|
|
|
90 Days
or More
|
|
|
Total
|
|
|
Current
|
|
|
Total
Loans
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,075
|
|
|
$
|
6,075
|
|
Commercial mortgage
|
|
|
984
|
|
|
|
389
|
|
|
|
1,373
|
|
|
|
145,316
|
|
|
|
146,689
|
|
Commercial and industrial
|
|
|
195
|
|
|
|
204
|
|
|
|
399
|
|
|
|
9,970
|
|
|
|
10,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
1,179
|
|
|
|
593
|
|
|
|
1,772
|
|
|
|
161,361
|
|
|
|
163,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial construction and land development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,885
|
|
|
|
3,885
|
|
Residential mortgage
|
|
|
3
|
|
|
|
830
|
|
|
|
833
|
|
|
|
163,060
|
|
|
|
163,893
|
|
Revolving mortgage
|
|
|
192
|
|
|
|
|
|
|
|
192
|
|
|
|
46,661
|
|
|
|
46,853
|
|
Consumer
|
|
|
246
|
|
|
|
18
|
|
|
|
264
|
|
|
|
17,933
|
|
|
|
18,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
441
|
|
|
|
848
|
|
|
|
1,289
|
|
|
|
231,539
|
|
|
|
232,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
$
|
1,620
|
|
|
$
|
1,441
|
|
|
$
|
3,061
|
|
|
$
|
392,900
|
|
|
$
|
395,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
16
|
|
|
$
|
40
|
|
|
$
|
56
|
|
|
$
|
5,105
|
|
|
$
|
5,161
|
|
Commercial mortgage
|
|
|
393
|
|
|
|
|
|
|
|
393
|
|
|
|
138,411
|
|
|
|
138,804
|
|
Commercial and industrial
|
|
|
135
|
|
|
|
114
|
|
|
|
249
|
|
|
|
10,844
|
|
|
|
11,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
544
|
|
|
|
154
|
|
|
|
698
|
|
|
|
154,360
|
|
|
|
155,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial construction and land development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,729
|
|
|
|
3,729
|
|
Residential mortgage
|
|
|
875
|
|
|
|
808
|
|
|
|
1,683
|
|
|
|
161,888
|
|
|
|
163,571
|
|
Revolving mortgage
|
|
|
203
|
|
|
|
60
|
|
|
|
263
|
|
|
|
47,958
|
|
|
|
48,221
|
|
Consumer
|
|
|
492
|
|
|
|
28
|
|
|
|
520
|
|
|
|
17,032
|
|
|
|
17,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
1,570
|
|
|
|
896
|
|
|
|
2,466
|
|
|
|
230,607
|
|
|
|
233,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
$
|
2,114
|
|
|
$
|
1,050
|
|
|
$
|
3,164
|
|
|
$
|
384,967
|
|
|
$
|
388,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
3. LOANS RECEIVABLE (Continued)
The recorded investment in loans, by segment and class, that are not accruing interest or are 90 days or
more past due and still accruing interest follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
December 31, 2012
|
|
(dollars in thousands)
|
|
Nonaccruing
|
|
|
Past Due
90 Days
or More
and Still
Accruing
|
|
|
Nonaccruing
|
|
|
Past Due
90 Days
or More
and Still
Accruing
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
|
|
|
$
|
|
|
|
$
|
40
|
|
|
$
|
|
|
Commercial mortgage
|
|
|
389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
204
|
|
|
|
|
|
|
|
114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
593
|
|
|
|
|
|
|
|
154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
830
|
|
|
|
|
|
|
|
808
|
|
|
|
|
|
Revolving mortgage
|
|
|
95
|
|
|
|
|
|
|
|
155
|
|
|
|
|
|
Consumer
|
|
|
30
|
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
955
|
|
|
|
|
|
|
|
997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
$
|
1,548
|
|
|
$
|
|
|
|
$
|
1,151
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Bank services loans for Habitat for Humanity of Western North Carolina as an in kind donation. The balances of these loans were $13.3 million at March 31, 2013 and December 31, 2012.
26
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
4. ALLOWANCE FOR LOAN LOSSES
An analysis of the allowance for loan losses by segment follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2013
|
|
(dollars in thousands)
|
|
Commercial
|
|
|
Non-
Commercial
|
|
|
Total
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
4,860
|
|
|
$
|
3,653
|
|
|
$
|
8,513
|
|
Provision for loan losses
|
|
|
172
|
|
|
|
(60
|
)
|
|
|
112
|
|
Charge-offs
|
|
|
|
|
|
|
(105
|
)
|
|
|
(105
|
)
|
Recoveries
|
|
|
10
|
|
|
|
23
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
5,042
|
|
|
$
|
3,511
|
|
|
$
|
8,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2012
|
|
(dollars in thousands)
|
|
Commercial
|
|
|
Non-
Commercial
|
|
|
Total
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
6,625
|
|
|
$
|
4,002
|
|
|
$
|
10,627
|
|
Provision for loan losses
|
|
|
482
|
|
|
|
116
|
|
|
|
598
|
|
Charge-offs
|
|
|
(571
|
)
|
|
|
(145
|
)
|
|
|
(716
|
)
|
Recoveries
|
|
|
16
|
|
|
|
37
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
6,552
|
|
|
$
|
4,010
|
|
|
$
|
10,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
4. ALLOWANCE FOR LOAN LOSSES (Continued)
Ending balances of loans and the related allowance, by segment and class, follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses
|
|
|
Total Loans Receivable
|
|
|
|
Loans
|
|
|
|
|
|
|
|
|
Loans
|
|
|
|
|
|
|
|
|
|
Individually
|
|
|
|
|
|
|
|
|
Individually
|
|
|
|
|
|
|
|
|
|
Evaluated
|
|
|
Loans
|
|
|
|
|
|
Evaluated
|
|
|
Loans
|
|
|
|
|
|
|
for
|
|
|
Collectively
|
|
|
|
|
|
for
|
|
|
Collectively
|
|
|
|
|
(dollars in thousands)
|
|
Impairment
|
|
|
Evaluated
|
|
|
Total
|
|
|
Impairment
|
|
|
Evaluated
|
|
|
Total
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
12
|
|
|
$
|
213
|
|
|
$
|
225
|
|
|
$
|
142
|
|
|
$
|
5,933
|
|
|
$
|
6,075
|
|
Commercial mortgage
|
|
|
670
|
|
|
|
3,617
|
|
|
|
4,287
|
|
|
|
4,036
|
|
|
|
142,653
|
|
|
|
146,689
|
|
Commercial and industrial
|
|
|
84
|
|
|
|
446
|
|
|
|
530
|
|
|
|
357
|
|
|
|
10,012
|
|
|
|
10,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
766
|
|
|
|
4,276
|
|
|
|
5,042
|
|
|
|
4,535
|
|
|
|
158,598
|
|
|
|
163,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial construction and land development
|
|
|
|
|
|
|
208
|
|
|
|
208
|
|
|
|
|
|
|
|
3,885
|
|
|
|
3,885
|
|
Residential mortgage
|
|
|
138
|
|
|
|
1,665
|
|
|
|
1,803
|
|
|
|
2,938
|
|
|
|
160,955
|
|
|
|
163,893
|
|
Revolving mortgage
|
|
|
107
|
|
|
|
966
|
|
|
|
1,073
|
|
|
|
198
|
|
|
|
46,655
|
|
|
|
46,853
|
|
Consumer
|
|
|
|
|
|
|
427
|
|
|
|
427
|
|
|
|
|
|
|
|
18,197
|
|
|
|
18,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
245
|
|
|
|
3,266
|
|
|
|
3,511
|
|
|
|
3,136
|
|
|
|
229,692
|
|
|
|
232,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
$
|
1,011
|
|
|
$
|
7,542
|
|
|
$
|
8,553
|
|
|
$
|
7,671
|
|
|
$
|
388,290
|
|
|
$
|
395,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
14
|
|
|
$
|
146
|
|
|
$
|
160
|
|
|
$
|
184
|
|
|
$
|
4,977
|
|
|
$
|
5,161
|
|
Commercial mortgage
|
|
|
633
|
|
|
|
3,477
|
|
|
|
4,110
|
|
|
|
3,673
|
|
|
|
135,131
|
|
|
|
138,804
|
|
Commercial and industrial
|
|
|
84
|
|
|
|
506
|
|
|
|
590
|
|
|
|
375
|
|
|
|
10,718
|
|
|
|
11,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
731
|
|
|
|
4,129
|
|
|
|
4,860
|
|
|
|
4,232
|
|
|
|
150,826
|
|
|
|
155,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial construction and land development
|
|
|
|
|
|
|
243
|
|
|
|
243
|
|
|
|
|
|
|
|
3,729
|
|
|
|
3,729
|
|
Residential mortgage
|
|
|
150
|
|
|
|
1,691
|
|
|
|
1,841
|
|
|
|
2,836
|
|
|
|
160,735
|
|
|
|
163,571
|
|
Revolving mortgage
|
|
|
114
|
|
|
|
1,009
|
|
|
|
1,123
|
|
|
|
208
|
|
|
|
48,013
|
|
|
|
48,221
|
|
Consumer
|
|
|
|
|
|
|
446
|
|
|
|
446
|
|
|
|
|
|
|
|
17,552
|
|
|
|
17,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
264
|
|
|
|
3,389
|
|
|
|
3,653
|
|
|
|
3,044
|
|
|
|
230,029
|
|
|
|
233,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
$
|
995
|
|
|
$
|
7,518
|
|
|
$
|
8,513
|
|
|
$
|
7,276
|
|
|
$
|
380,855
|
|
|
$
|
388,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
4. ALLOWANCE FOR LOAN LOSSES (Continued)
Impaired loans and the related allowance, by segment and class, follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded Investment
|
|
|
|
|
|
|
Unpaid
|
|
|
With a
|
|
|
With No
|
|
|
|
|
|
Related
|
|
|
|
Principal
|
|
|
Recorded
|
|
|
Recorded
|
|
|
|
|
|
Recorded
|
|
(dollars in thousands)
|
|
Balance
|
|
|
Allowance
|
|
|
Allowance
|
|
|
Total
|
|
|
Allowance
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
142
|
|
|
$
|
142
|
|
|
$
|
|
|
|
$
|
142
|
|
|
$
|
12
|
|
Commercial mortgage
|
|
|
4,036
|
|
|
|
3,510
|
|
|
|
526
|
|
|
|
4,036
|
|
|
|
670
|
|
Commercial and industrial
|
|
|
735
|
|
|
|
239
|
|
|
|
118
|
|
|
|
357
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
4,913
|
|
|
|
3,891
|
|
|
|
644
|
|
|
|
4,535
|
|
|
|
766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
3,084
|
|
|
|
1,567
|
|
|
|
1,371
|
|
|
|
2,938
|
|
|
|
138
|
|
Revolving mortgage
|
|
|
200
|
|
|
|
198
|
|
|
|
|
|
|
|
198
|
|
|
|
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
3,284
|
|
|
|
1,765
|
|
|
|
1,371
|
|
|
|
3,136
|
|
|
|
245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
8,197
|
|
|
$
|
5,656
|
|
|
$
|
2,015
|
|
|
$
|
7,671
|
|
|
$
|
1,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
225
|
|
|
$
|
144
|
|
|
$
|
40
|
|
|
$
|
184
|
|
|
$
|
14
|
|
Commercial mortgage
|
|
|
3,673
|
|
|
|
3,146
|
|
|
|
527
|
|
|
|
3,673
|
|
|
|
633
|
|
Commercial and industrial
|
|
|
748
|
|
|
|
249
|
|
|
|
126
|
|
|
|
375
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
4,646
|
|
|
|
3,539
|
|
|
|
693
|
|
|
|
4,232
|
|
|
|
731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
2,978
|
|
|
|
1,747
|
|
|
|
1,089
|
|
|
|
2,836
|
|
|
|
150
|
|
Revolving mortgage
|
|
|
211
|
|
|
|
208
|
|
|
|
|
|
|
|
208
|
|
|
|
114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
3,189
|
|
|
|
1,955
|
|
|
|
1,089
|
|
|
|
3,044
|
|
|
|
264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
7,835
|
|
|
$
|
5,494
|
|
|
$
|
1,782
|
|
|
$
|
7,276
|
|
|
$
|
995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
4. ALLOWANCE FOR LOAN LOSSES (Continued)
The average recorded investment in impaired loans and interest income recognized on impaired loans
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
March 31, 2013
|
|
|
March 31, 2012
|
|
|
|
Average
|
|
|
Interest
|
|
|
Average
|
|
|
Interest
|
|
|
|
Recorded
|
|
|
Income
|
|
|
Recorded
|
|
|
Income
|
|
(dollars in thousands)
|
|
Investment
|
|
|
Recognized
|
|
|
Investment
|
|
|
Recognized
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
$
|
156
|
|
|
$
|
2
|
|
|
$
|
16,153
|
|
|
$
|
2
|
|
Commercial mortgage
|
|
|
3,786
|
|
|
|
44
|
|
|
|
2,500
|
|
|
|
8
|
|
Commercial and industrial
|
|
|
362
|
|
|
|
1
|
|
|
|
504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
4,304
|
|
|
|
47
|
|
|
|
19,157
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial construction and land development
|
|
|
|
|
|
|
|
|
|
|
78
|
|
|
|
|
|
Residential mortgage
|
|
|
2,906
|
|
|
|
25
|
|
|
|
4,362
|
|
|
|
29
|
|
Revolving mortgage
|
|
|
201
|
|
|
|
1
|
|
|
|
336
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
3,107
|
|
|
|
26
|
|
|
|
4,776
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
$
|
7,411
|
|
|
$
|
73
|
|
|
$
|
23,933
|
|
|
$
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
4. ALLOWANCE FOR LOAN LOSSES (Continued)
The following table summarizes the Banks recorded investment in TDRs before and after their
modifications during the period indicated. The Bank restructured three loans during the three months ended March 31, 2013. The payment terms on one loan was extended during the three months ended March 31, 2013 and the Bank reduced the
interest rate below market levels on two loans during the three months ended March 31, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2013
|
|
|
Three Months Ended March 31, 2012
|
|
(dollars in thousands)
|
|
Number
of
Loans
|
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
|
Number
of
Loans
|
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
|
|
|
|
|
|
|
Below market interest rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage
|
|
|
2
|
|
|
$
|
147
|
|
|
$
|
147
|
|
|
|
3
|
|
|
$
|
897
|
|
|
$
|
897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-commercial
|
|
|
2
|
|
|
|
147
|
|
|
|
147
|
|
|
|
3
|
|
|
|
897
|
|
|
|
897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2
|
|
|
$
|
147
|
|
|
$
|
147
|
|
|
|
3
|
|
|
$
|
897
|
|
|
$
|
897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extended payment terms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial construction and land development
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
1
|
|
|
$
|
234
|
|
|
$
|
234
|
|
Commercial mortgage
|
|
|
1
|
|
|
|
89
|
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial
|
|
|
1
|
|
|
|
89
|
|
|
|
89
|
|
|
|
1
|
|
|
|
234
|
|
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1
|
|
|
$
|
89
|
|
|
$
|
89
|
|
|
|
1
|
|
|
$
|
234
|
|
|
$
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3
|
|
|
$
|
236
|
|
|
$
|
236
|
|
|
|
4
|
|
|
$
|
1,131
|
|
|
$
|
1,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no loans modified as TDRs within the preceding 12 months that stopped performing during the three months ended
March 31, 2013 and March 31, 2012.
31
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
4. ALLOWANCE FOR LOAN LOSSES (Continued)
In the determination of the allowance for loan losses, management considers TDRs on commercial loans,
and the subsequent nonperformance in accordance with their modified terms, by measuring impairment loan-by-loan based on either the present value of expected future cash flows discounted at the loans effective interest rate, the loans
obtainable market price, or the fair value of the collateral if the loan is collateral dependent.
The Banks loans that were considered
to be troubled debt restructurings follow:
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
March 31,
2013
|
|
|
December 31,
2012
|
|
|
|
|
Nonperforming restructured loans
|
|
$
|
116
|
|
|
$
|
114
|
|
Performing restructured loans
|
|
|
5,254
|
|
|
|
5,065
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,370
|
|
|
$
|
5,179
|
|
|
|
|
|
|
|
|
|
|
5. BENEFIT PLANS
Defined Benefit Plans
In January 2013, the Board of Directors amended the Banks Qualified and Non-qualified
pension plans, effective March 31, 2013, to curtail or eliminate benefits under the plans for services to be performed in future periods. During the three months ended March 31, 2013, pension expense was decreased by a $481,000 one-time
credit resulting from the curtailment of benefits for future service.
Net periodic benefit cost related to defined benefit plans included the
following components for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
(dollars in thousands)
|
|
2013
|
|
|
2012
|
|
|
|
|
Non-Qualified Defined Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net Periodic Benefit Costs
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
|
|
|
$
|
1
|
|
Interest cost
|
|
|
10
|
|
|
|
15
|
|
Amortization of prior service cost (credit)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Amortization of net loss
|
|
|
9
|
|
|
|
6
|
|
Curtailment credit
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
(15
|
)
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified Defined Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
Components of Net Periodic Benefit Costs
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
|
|
|
$
|
55
|
|
Interest cost
|
|
|
226
|
|
|
|
298
|
|
Expected return on plan assets
|
|
|
(246
|
)
|
|
|
(302
|
)
|
Amortization of prior service cost (credit)
|
|
|
(15
|
)
|
|
|
(21
|
)
|
Amortization of net loss
|
|
|
155
|
|
|
|
128
|
|
Curtailment credit
|
|
|
(450
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
(330
|
)
|
|
$
|
158
|
|
|
|
|
|
|
|
|
|
|
32
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
5. BENEFIT PLANS (Continued)
Employee Stock Ownership Plan
In conjunction with the Parents initial public
offering, the Bank established an ESOP to provide eligible employees the opportunity to own Parent stock. The Parent provided a loan to the ESOP in the amount of $4,468,000, which was used to purchase 446,764 shares of the Parents common stock
at a price of $10.00 per share in the Parents initial public offering. The loan bears a fixed interest rate of 3.25% and provides for annual payments of interest and principal over the 15 year term of the loan.
The Bank has committed to make contributions to the ESOP sufficient to support the debt service of the loan. The loan is secured by the shares purchased,
which are held in a suspense account until released for allocation to the participants, as principal and interest payments are made by the ESOP to the Parent.
Shares released are allocated to each eligible participant based on the ratio of each such participants compensation, as defined in the ESOP, to the total compensation of all eligible plan
participants. Forfeited shares shall be reallocated among other participants in the Plan. At the discretion of the Bank, cash dividends, when paid on allocated shares, will be distributed to participants accounts or used to repay the principal
and interest on the ESOP loan used to acquire Parent stock on which dividends were paid. Cash dividends on unallocated shares will be used to repay the outstanding debt of the ESOP.
Shares held by the ESOP include the following:
|
|
|
|
|
|
|
March 31,
2013
|
|
|
|
Allocated ESOP shares
|
|
|
38,737
|
|
ESOP shares committed to be released
|
|
|
7,739
|
|
ESOP shares distributed
|
|
|
(41
|
)
|
Unallocated ESOP shares
|
|
|
400,288
|
|
|
|
|
|
|
Total ESOP shares
|
|
|
446,723
|
|
|
|
|
|
|
|
|
Fair value of unallocated ESOP shares
(dollars in thousands)
|
|
$
|
6,801
|
|
|
|
|
|
|
As ESOP shares are earned by the participants, the Company recognizes compensation expense equal to the fair value of the
earned ESOP shares during the periods in which they become committed to be released.
Total expense recognized in connection with the ESOP was
as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
(dollars in thousands)
|
|
2013
|
|
|
2012
|
|
|
|
|
ESOP expense
|
|
$
|
128
|
|
|
$
|
94
|
|
|
|
|
|
|
|
|
|
|
33
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
5. BENEFIT PLANS (Continued)
2012 Equity Incentive Plan -
The Companys 2012 Equity Incentive Plan (the 2012
Equity Incentive Plan) provides for awards of restricted stock and stock options to key officers and outside directors. Cost recognized under the 2012 Equity Incentive Plan is based on the fair value of restricted stock and stock option awards
on their grant date. The maximum number of shares that may be awarded under the plan is 781,837 shares, including 223,382 for restricted stock shares and 558,455 shares for stock options.
Shares of common stock granted under the 2012 Equity Incentive Plan may be issued from authorized but unissued shares or, in the case of restricted stock awards, may be awarded with shares purchased on
the open market. During 2012, the Company purchased the 223,382 shares of its common stock at a total cost of $3.6 million, or an average of $16.12 per share, through an independent trustee to fulfill anticipated restricted stock awards. The
share-based awards granted under the 2012 Equity Incentive Plan have some similar characteristics, except some awards have been granted in restricted stock and other awards have been granted in stock options. Therefore, the following disclosures
have been disaggregated for the restricted stock awards and the stock option grants under the plan due to their dissimilar characteristics.
Share-based compensation expense related to restricted stock and stock options recognized for the three months ended March 31, 2013 was $164,000.
The table below presents restricted stock award activity for the three months ended March 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
Awards
|
|
|
Weighted
Average
Grant Date
Fair Value
|
|
|
|
|
Unvested restricted shares at December 31, 2012
|
|
|
|
|
|
$
|
|
|
Granted
|
|
|
223,382
|
|
|
|
15.71
|
|
Vested
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested restricted shares at March 31, 2013
|
|
|
223,382
|
|
|
$
|
15.71
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2013, unrecognized compensation expense adjusted for expected forfeitures was $3.0 million related to
restricted stock. The weighted-average period over which compensation cost related to unvested awards is expected to be recognized was 4.85 years at March 31, 2013. No restricted stock awards were vested at March 31, 2013.
34
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
5. BENEFIT PLANS (Continued)
The table below presents stock option activity for the three months ended March 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands, except per share data)
|
|
Stock
Options
Available for
Granting
|
|
|
Stock
Options
Outstanding
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Remaining
Contractual
Life
(years)
|
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
|
558,455
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
(467,000
|
)
|
|
|
467,000
|
|
|
|
15.71
|
|
|
|
10.00
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
8,000
|
|
|
|
(8,000
|
)
|
|
|
15.71
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2013
|
|
|
99,455
|
|
|
|
459,000
|
|
|
$
|
15.71
|
|
|
|
9.85
|
|
|
$
|
587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at March 31, 2013
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of each option award is estimated on the date of the grant using the Black-Scholes option pricing model.
The Company granted 467,000 options during the quarter ended March 31, 2013 with a fair value of $4.79 per option. The risk-free interest rate is based on a U.S. Treasury instrument with a life that is similar to the expected life of the option
grant. The expected term of the options is based on a calculated average life using the simplified method defined in and permitted by SEC Staff Accounting Bulletin No. 110 for newly public companies. Because the Company is a newly
public company, expected volatility is estimated based on the previous 6.5 years trading history for an aggregate of six composite indexes of U.S. Banks and Thrifts of similar size. The expected dividend yield is based upon current yield on date of
grant. Expected forfeitures are estimated at 5.63% based on the Companys aggregate annual turnover rate for directors, executives and senior managers over the past 6.5 years because the Company has no forfeiture history. The following table
illustrates the assumptions for the Black-Scholes model used in determining the fair value of options granted to directors and officers in the quarter ended March 31, 2013.
|
|
|
|
|
|
|
Three Months Ended
March 31, 2013
|
|
|
|
Expected life in years
|
|
|
6.5 years
|
|
Expected stock price volatility
|
|
|
27.54
|
%
|
Expected dividend yield
|
|
|
0.00
|
%
|
Risk-free interest rate
|
|
|
1.26
|
%
|
At March 31, 2013, the Company had $1.8 million of unrecognized compensation expense related to stock options. The
period over which compensation cost related to unvested stock options was 4.85 years at March 31, 2013. No options were vested at March 31, 2013.
35
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
6. COMMITMENTS AND CONTINGENCIES
Loan Commitments
The Bank is party to financial instruments with off-balance sheet risk in the normal course of
business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess
of the amount recorded in the accompanying consolidated balance sheets. Such financial instruments are recorded when they are funded.
The
Banks exposure to credit loss in the event of nonperformance by the counterparty to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The
Bank uses the same credit policies in making such commitments as it does for instruments that are included in the balance sheet.
Commitments
to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.
Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customers creditworthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on managements credit evaluation. Collateral held varies but may include accounts receivable, inventory, property and equipment, and
income-producing commercial real estate.
Standby letters of credit are conditional commitments issued by the Bank to guarantee the
performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same
as that involved in extending loan facilities to customers. The Banks policy for obtaining collateral, and the nature of such collateral, is essentially the same as that involved in making commitments to extend credit.
36
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
6. COMMITMENTS AND CONTINGENCIES (Continued)
The Banks commitments to extend or originate credit and under standby letters of credit follow:
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
March 31,
2013
|
|
|
December 31,
2012
|
|
|
|
|
Financial instruments whose contract amounts represent credit risk:
|
|
|
|
|
|
|
|
|
Commitments to extend or originate credit
|
|
$
|
131,995
|
|
|
$
|
144,733
|
|
Commitments under standby letters of credit
|
|
|
881
|
|
|
|
156
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
132,876
|
|
|
$
|
144,889
|
|
|
|
|
|
|
|
|
|
|
Concentrations of Credit Risk
The Banks primary market area consists of Buncombe, Henderson,
McDowell, Transylvania and Madison counties of North Carolina. The majority of the Banks loans are residential mortgage loans and commercial real estate loans. The Banks policy generally will allow residential mortgage loans up to 80% of
the value of the real estate that is pledged as collateral or up to 95% with private mortgage insurance and commercial real estate loans up to 85% of the value of the real estate that serves as collateral to secure the loan.
Interest Rate Risk
The Banks profitability depends to a large extent on its net interest income, which is the difference
between interest income from loans and investments and interest expense on deposits and borrowings. Like most financial institutions, the Banks interest income and interest expense are significantly affected by changes in market interest rates
and other economic factors beyond its control. The Banks interest-earning assets consist primarily of long-term, fixed-rate mortgage loans, adjustable rate mortgage loans and investments that typically adjust more slowly to changes in interest
rates than its interest-bearing liabilities, which are primarily term deposits. Accordingly, the Banks earnings are usually adversely affected during periods of rising interest rates and positively impacted during periods of declining interest
rates. However, based on the results of the Banks interest rate risk simulation model, which management believes accurately reflects the extraordinary stress currently existing in the financial markets with respect to potential margin
compression resulting from the Banks difficulty in reducing its cost of funds further in this competitive pricing environment, the Banks earnings may well be adversely affected if interest rates decline further. Such a decline in rates
could result from, among other things, the Federal Reserve Boards purchase of government securities and/or mortgage-backed securities in an effort to further stimulate the economy. Accordingly, the Bank is currently the beneficiary of a stable
rate environment and is carefully monitoring, through its Asset/Liability management process, the competitive landscape related to interest rates as well as various economic indicators in order to optimally position the Bank in terms of changes in
interest rates.
Litigation
The Bank is periodically involved in legal actions in the normal course of business. The Bank
is not a party to any pending legal proceedings that the Banks management believes would have a material adverse effect on the Banks financial condition, results of operations, or cash flows.
Investment Commitments
During 2012, the Bank indicated its intent to enter into an agreement to invest $2.0 million as a limited
partner in a Small Business Investment Company. The Bank invested $150,000 of its investment commitment in the first quarter of 2013. This investment is recognized using the cost method and is included in other assets on the balance
sheet.
37
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
7. FAIR VALUE MEASUREMENTS
FASB ASC Topic 820:
Fair Value Measurements and Disclosures
(FASB ASC Topic 820) requires disclosure of the fair
value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair
value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed below. The estimated fair value amounts shown below have been determined by the Bank using available market
information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the
amounts the Bank could realize in a current market exchange. The use of different market assumptions and/or valuation methodologies could have a material effect on the estimated fair value amounts.
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no highly liquid market exists for a significant portion of the Companys
financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.
The fair value
estimates presented below are based on pertinent information available to management as of March 31, 2013 and December 31, 2012. Although management is not aware of any factors that would significantly affect the estimated fair value
amounts, such amounts have not been comprehensively revalued since the dates presented herein and, therefore, current estimates of fair value may differ significantly from the amounts presented.
The fair value measurement and disclosure guidance contained in FASB ASC Topic 820 defines fair value as the exchange price that would be received for an
asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The guidance also establishes a fair value
hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.
Level 1
The fair values of Level 1
assets are determined by quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities that are traded in an active exchange market, as well as certain U.S. Treasury debt
securities.
Level 2
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently
than exchange-traded instruments whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain
U.S. Government and agency mortgage-backed debt securities, SBA asset-backed securities, securities issued by state and local governments, and corporate debt securities.
38
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
7. FAIR VALUE MEASUREMENTS (Continued)
Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments
whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category
generally includes certain private equity investments, loans receivable held for investment, accrued interest receivable and payable, time deposits, repurchase agreements, and FHLB advances.
The methodologies for estimating fair values of financial assets and financial liabilities were determined as discussed below. The estimated fair value approximates carrying value for cash and cash
equivalents, accrued interest, Federal Home Loan Bank Stock and demand deposits.
Investment Securities
Investment
securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is primarily based upon quoted prices of like or similar securities, if available. If quoted prices are not available, fair values are measured
using independent pricing models or other model- based valuation techniques such as the present value of future cash flows, adjusted for the securitys credit rating, prepayment assumptions and other factors such as credit loss assumptions. The
fair values of investments in mutual funds are determined by quoted prices and are included as recurring Level 1 assets. The fair values of investments in securities issued by U.S. GSEs, asset-backed securities issued by the SBA, residential
mortgage-backed securities issued by U.S. GSEs, and securities issued by state and local governments are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows,
adjusted for the securitys credit rating, prepayment assumptions and other factors such as credit loss assumptions and are included as recurring Level 2 assets.
Loans Held for Sale
Loans held for sale are residential mortgages carried at the lower of cost or market value. The market values of loans held for sale are based on what mortgage
buyers are currently offering on a best efforts basis to buy the loans. As such, mortgages held for sale are classified as nonrecurring Level 2 assets.
Loans Receivable
For variable rate loans, carrying value is a reasonable estimate of fair value. For fixed rate loans, fair values are estimated based on discounted future cash flows
using the current interest rates at which loans with similar terms would be made to borrowers of similar credit quality. Valuation adjustments are made for credit risk, which are represented by the allowance for loan losses, but do not include
adjustments for illiquidity or other market risks.
The Bank does not record loans at fair value on a recurring basis. However, from time to
time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered
impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with the accounting guidance contained in FASB ASC Topic 310:
Receivables
(FASB ASC Topic 310). The fair value of impaired
loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value, or discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the
fair value of the expected repayments or collateral exceed the recorded investments in such loans. Substantially all of the total impaired loans were evaluated based on the fair value of the collateral. In accordance with the fair value measurement
and disclosure guidance contained in FASB ASC Topic 820, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy.
39
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
7. FAIR VALUE MEASUREMENTS (Continued)
When the fair value of the collateral is based on an observable market price or a current appraised
value, the impaired loan is recorded as nonrecurring Level 2 assets. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market
price, the Bank records the impaired loan as nonrecurring Level 3 assets.
Accrued Interest Receivable and Payable
The
carrying amount is a reasonable estimate of fair value.
Deferred Compensation Assets
Assets include debt and equity
securities that are traded in an active exchange market. Fair values are obtained from quoted prices in active markets for identical assets.
Demand and Savings Deposits
By definition, the carrying values are equal to the fair values.
Time Deposits and Repurchase Agreements
Fair value of fixed maturity certificates of deposit is estimated using the FHLB Rate Curve
for similar remaining maturities. Fair value of repurchase agreements is estimated using the borrowing rate for overnight borrowings.
Federal Home Loan Bank Advances
The fair value of Federal Home Loan Bank advances is estimated using the rates currently offered for
advances of similar remaining maturities.
Deferred Compensation Liabilities
Fair values are measured based on the fair
values of the related deferred compensation assets.
Defined Benefit Plan Assets
The Nonqualified Defined Benefit Plan
had no plan assets because it was not funded. The assets of the Qualified Defined Benefit Plan, which are invested in interest-bearing depository accounts and money market, debt and equity security mutual funds, are included at fair value in the
Qualified Plans separate financial statements. Fair value measurement is based upon quoted prices of like or similar securities. The fair values of the Plans investments in interest-bearing depository accounts and money market, debt and
equity security mutual funds are determined by quoted prices and are included as recurring Level 1 assets.
Foreclosed
Properties
Foreclosed properties are measured and recorded at the lower of cost or estimated fair value. The fair value of foreclosed properties is measured using the current appraised value of the property less the estimated expenses
necessary to sell the property. Foreclosed properties are classified as nonrecurring Level 3 assets.
40
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
7. FAIR VALUE MEASUREMENTS (Continued)
The estimated fair values and carrying amounts of financial instruments follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
|
|
Total
Carrying
Amount
in
Balance
Sheet
|
|
(dollars in thousands)
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
50,321
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
50,321
|
|
|
$
|
50,321
|
|
Securities available for sale
|
|
|
738
|
|
|
|
256,586
|
|
|
|
|
|
|
|
257,324
|
|
|
|
257,324
|
|
Securities held to maturity
|
|
|
|
|
|
|
5,041
|
|
|
|
|
|
|
|
5,041
|
|
|
|
4,556
|
|
Investments in FHLB stock
|
|
|
|
|
|
|
|
|
|
|
3,131
|
|
|
|
3,131
|
|
|
|
3,131
|
|
Loans held for sale
|
|
|
|
|
|
|
11,777
|
|
|
|
|
|
|
|
11,777
|
|
|
|
11,603
|
|
Loans receivable, net
|
|
|
|
|
|
|
|
|
|
|
391,707
|
|
|
|
391,707
|
|
|
|
386,987
|
|
Accrued interest receivable
|
|
|
|
|
|
|
|
|
|
|
2,601
|
|
|
|
2,601
|
|
|
|
2,601
|
|
Deferred compensation assets
|
|
|
1,159
|
|
|
|
|
|
|
|
|
|
|
|
1,159
|
|
|
|
1,159
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
|
|
|
|
|
|
|
|
398,338
|
|
|
|
398,338
|
|
|
|
398,338
|
|
Time deposits
|
|
|
|
|
|
|
|
|
|
|
191,936
|
|
|
|
191,936
|
|
|
|
191,288
|
|
Repurchase agreements
|
|
|
|
|
|
|
|
|
|
|
616
|
|
|
|
616
|
|
|
|
618
|
|
Federal Home Loan Bank Advances
|
|
|
|
|
|
|
|
|
|
|
56,487
|
|
|
|
56,487
|
|
|
|
50,000
|
|
Deferred compensation liabilities
|
|
|
1,159
|
|
|
|
|
|
|
|
|
|
|
|
1,159
|
|
|
|
1,159
|
|
Accrued interest payable
|
|
|
|
|
|
|
|
|
|
|
129
|
|
|
|
129
|
|
|
|
129
|
|
|
|
|
|
|
|
Financial instruments whose contract amounts represent credit risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments to extend or originate credit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments under standby letters of credit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
7. FAIR VALUE MEASUREMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
|
|
Total
Carrying
Amount
in
Balance
Sheet
|
|
(dollars in thousands)
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
47,390
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
47,390
|
|
|
$
|
47,390
|
|
Securities available for sale
|
|
|
739
|
|
|
|
237,997
|
|
|
|
|
|
|
|
238,736
|
|
|
|
238,736
|
|
Securities held to maturity
|
|
|
|
|
|
|
5,182
|
|
|
|
|
|
|
|
5,182
|
|
|
|
4,649
|
|
Investments in FHLB stock
|
|
|
|
|
|
|
|
|
|
|
3,429
|
|
|
|
3,429
|
|
|
|
3,429
|
|
Loans held for sale
|
|
|
|
|
|
|
9,905
|
|
|
|
|
|
|
|
9,905
|
|
|
|
9,759
|
|
Loans receivable, net
|
|
|
|
|
|
|
|
|
|
|
382,428
|
|
|
|
382,428
|
|
|
|
379,208
|
|
Accrued interest receivable
|
|
|
|
|
|
|
|
|
|
|
2,764
|
|
|
|
2,764
|
|
|
|
2,764
|
|
Deferred compensation assets
|
|
|
1,081
|
|
|
|
|
|
|
|
|
|
|
|
1,081
|
|
|
|
1,081
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
|
|
|
|
|
|
|
|
389,095
|
|
|
|
389,095
|
|
|
|
389,095
|
|
Time deposits
|
|
|
|
|
|
|
|
|
|
|
189,755
|
|
|
|
189,755
|
|
|
|
189,204
|
|
Repurchase agreements
|
|
|
|
|
|
|
|
|
|
|
409
|
|
|
|
409
|
|
|
|
411
|
|
Federal Home Loan Bank Advances
|
|
|
|
|
|
|
|
|
|
|
56,905
|
|
|
|
56,905
|
|
|
|
50,000
|
|
Deferred compensation liabilities
|
|
|
1,081
|
|
|
|
|
|
|
|
|
|
|
|
1,081
|
|
|
|
1,081
|
|
Accrued interest payable
|
|
|
|
|
|
|
|
|
|
|
127
|
|
|
|
127
|
|
|
|
127
|
|
|
|
|
|
|
|
Financial instruments whose contract amounts represent credit risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments to extend or originate credit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments under standby letters of credit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
7. FAIR VALUE MEASUREMENTS (Continued)
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Below is a table that presents information about certain assets and liabilities measured at fair value on a recurring basis. There were no transfers to or
from Levels 1 and 2 during the three months ended March 31, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
Fair Value Measurement Using
|
|
|
Total
Carrying
Amount
in
Balance
Sheets
|
|
|
Assets/
Liabilities
Measured at
Fair Value
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE and agency securities
|
|
$
|
|
|
|
$
|
12,124
|
|
|
$
|
|
|
|
$
|
12,124
|
|
|
$
|
12,124
|
|
Asset-backed SBA securities
|
|
|
|
|
|
|
68,124
|
|
|
|
|
|
|
|
68,124
|
|
|
|
68,124
|
|
Residential mortgage-backed securities issued by GSEs
|
|
|
|
|
|
|
124,545
|
|
|
|
|
|
|
|
124,545
|
|
|
|
124,545
|
|
State and local government securities
|
|
|
|
|
|
|
51,793
|
|
|
|
|
|
|
|
51,793
|
|
|
|
51,793
|
|
Mutual funds
|
|
|
738
|
|
|
|
|
|
|
|
|
|
|
|
738
|
|
|
|
738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
738
|
|
|
$
|
256,586
|
|
|
$
|
|
|
|
$
|
257,324
|
|
|
$
|
257,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
182
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Money market mutual funds
|
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt security mutual funds
|
|
|
14,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity security mutual funds
|
|
|
3,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
18,022
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GSE and agency securities
|
|
$
|
|
|
|
$
|
12,247
|
|
|
$
|
|
|
|
$
|
12,247
|
|
|
$
|
12,247
|
|
Asset-backed SBA securities
|
|
|
|
|
|
|
70,411
|
|
|
|
|
|
|
|
70,411
|
|
|
|
70,411
|
|
Residential mortgage-backed securities issued by GSEs
|
|
|
|
|
|
|
106,687
|
|
|
|
|
|
|
|
106,687
|
|
|
|
106,687
|
|
State and local government securities
|
|
|
|
|
|
|
48,652
|
|
|
|
|
|
|
|
48,652
|
|
|
|
48,652
|
|
Mutual funds
|
|
|
739
|
|
|
|
|
|
|
|
|
|
|
|
739
|
|
|
|
739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
739
|
|
|
$
|
237,997
|
|
|
$
|
|
|
|
$
|
238,736
|
|
|
$
|
238,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,837
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Money market mutual funds
|
|
|
225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt security mutual funds
|
|
|
12,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
18,157
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
ASB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
7. FAIR VALUE MEASUREMENTS (Continued)
Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
As may be required from time to time, certain assets may be recorded at fair value on a nonrecurring basis in accordance with U.S. GAAP. Assets measured
at fair value on a nonrecurring basis are included in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
Fair Value Measurement Using
|
|
|
Total
Carrying
Amount
in
Balance
Sheets
|
|
|
Assets/
Liabilities
Measured at
Fair Value
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,071
|
|
|
$
|
5,071
|
|
|
$
|
5,071
|
|
Foreclosed properties
|
|
|
|
|
|
|
|
|
|
|
18,128
|
|
|
|
18,128
|
|
|
|
18,128
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,686
|
|
|
$
|
4,686
|
|
|
$
|
4,686
|
|
Foreclosed properties
|
|
|
|
|
|
|
|
|
|
|
19,411
|
|
|
|
19,411
|
|
|
|
19,411
|
|
44