NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
Home Bancorp, Inc., a Louisiana Corporation (Company), was organized by Home Bank (Bank) in May 2008 to
facilitate the conversion of the Bank from the mutual to the stock form (Conversion) of ownership. The Conversion was completed on October 2, 2008, at which time the Company became the holding company for the Bank, with the Company
owning all of the issued and outstanding shares of the Banks common stock. Shares of the Companys common stock were issued and sold in an offering to certain depositors of the Bank.
Home Bank is a federally chartered stock savings bank. The Bank was officially chartered in 1908 as a Louisiana state chartered savings association. The
Bank converted to a federal mutual savings bank charter in 1993. In 2010, the Bank expanded into the Northshore (of Lake Ponchartrain) through a Federal Deposit Insurance Corporation (FDIC) assisted acquisition of certain assets and
liabilities of the former Statewide Bank (Statewide). In July 2011, the Bank expanded into the Greater New Orleans region through its acquisition of GS Financial Corporation (GSFC), the former holding company of Guaranty
Savings Bank (Guaranty). The Bank currently conducts business from 22 banking offices in the Greater Lafayette, Northshore, Baton Rouge and Greater New Orleans regions of south Louisiana.
The Bank is primarily engaged in attracting deposits from the general public and using those funds to invest in loans and investment securities. The
Banks principal sources of funds are customer deposits, repayments of loans, repayments of investments and funds borrowed from outside sources such as the Federal Home Loan Bank (FHLB) of Dallas. The Bank derives its income
principally from interest earned on loans and investment securities and, to a lesser extent, from fees received in connection with the origination of loans, service charges on deposit accounts and for other services. The Banks primary expenses
are interest expense on deposits and borrowings and general operating expenses.
The Bank is regulated by the Office of the Comptroller of the
Currency (OCC) and its deposits are insured to the maximum amount permissible under federal law by the FDIC. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was passed by Congress.
The act, among other things, imposed new restrictions and an expanded framework of regulatory oversight for financial institutions and their holding companies, including the Bank and the Company. Under the new law, the Companys and the
Banks former primary regulator, the Office of Thrift Supervision (OTS), was eliminated and existing federal thrifts are now subject to regulation and supervision by the OCC, which also currently supervises and regulates all
national banks. Savings and loan holding companies are now regulated by the Federal Reserve Board (FRB), which has the authority to promulgate new regulations governing the Company that will impose additional capital requirements and may
result in additional restrictions on investments and other holding company activities. The law also created a new Consumer Financial Protection Bureau (CFPB) that has the authority to promulgate rules intended to protect consumers in the
financial products and services market. The creation of this independent bureau is expected to result in new regulatory requirements which would raise the cost of regulatory compliance. The federal preemption of state laws currently accorded
federally chartered financial institutions has been reduced. In addition, regulations mandated by the new law could require changes in regulatory capital requirements, loan loss provisioning practices, and compensation practices which may have a
material impact on our operations. Because many of the regulations under the new law have not been promulgated, we cannot determine the full impact on our business and operations at this time.
50
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and the Bank. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of 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. Material estimates that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses, income taxes, valuation of investments with
other-than-temporary impairment, acquisition accounting valuations and valuation of share-based compensation.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, due from banks and interest-bearing deposits with the FHLB. The Company considers all highly liquid debt instruments
with original maturities of three months or less (excluding interest-bearing deposits in banks) to be cash equivalents.
The Bank is required
to maintain cash reserves with the FRB. The requirement is dependent upon the Banks cash on hand or noninterest-bearing balances. The reserve requirements as of December 31, 2012 and 2011 were $16,466,000 and $9,993,000, respectively, and
the Bank was in compliance with such requirements at such dates.
Investment Securities
The Company follows the guidance under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 320,
Investments Debt and Equity
Securities
. This standard addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Under the topic, investment securities, which the
Company both positively intends and has the ability to hold to maturity, are classified as held to maturity and carried at amortized cost.
Investment securities that are acquired with the intention of being resold in the near term are classified as trading securities under ASC 320 and are
carried at fair value, with unrealized holding gains and losses recognized in current earnings. The Company did not hold any securities for trading purposes at, or during the years ended, December 31, 2012 or 2011.
Securities not meeting the criteria of either trading securities or held to maturity are classified as available for sale and are carried at fair value.
Unrealized holding gains and losses for these securities are recognized, net of related income tax effects in the Consolidated Statements of Comprehensive Income.
Interest income earned on securities either held to maturity or available for sale is included in current earnings, including the amortization of premiums and the accretion of discounts using the interest
method. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield. The gain or loss realized on the sale of securities classified as available for sale and held to maturity, as determined
using the specific identification method for determining the cost of the securities sold, is computed with reference to its amortized cost and is also included in current earnings.
The Company reviews investment securities for other-than-temporary impairment quarterly. Impairment is considered to be other-than-temporary if it is likely that all amounts contractually due will not be
received for debt securities and when there is no positive evidence indicating that an investments carrying amount is recoverable in the near term for equity securities. When a decline in the fair value of available for sale and held to
maturity securities below cost is deemed to be credit related, a charge for other-than-temporary impairment is included in earnings as Other-than-temporary impairment of securities. The decline in fair value attributed to non-credit
related factors is recognized in other comprehensive income and a new cost basis for the security is established. The new cost basis is not changed for subsequent recoveries in fair value. Increases and decreases
51
between fair value and cost on available for sale securities are reflected in the Consolidated Statements of Comprehensive Income. In evaluating whether impairment is temporary or
other-than-temporary, the Company considers, among other things, the time period the security has been in an unrealized loss position; the financial condition of the issuer and its industry; recommendations of investment advisors; economic
forecasts; market or industry trends; changes in tax laws, regulations, or other governmental policies significantly affecting the issuer; any downgrades from rating agencies; and any reduction or elimination of dividends. The Companys intent
and ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value is also considered.
Loans Held for Sale
The Company sells mortgage loans and loan participations for an amount equal to the principal amount of loans or participations with yields to investors
based upon current market rates. Realized gains and losses related to loan sales are included in noninterest income.
The Company allocates
the cost to acquire or originate a mortgage loan between the loan and the right to service the loan if it intends to sell or securitize the loan and retain servicing rights. In addition, the Company periodically assesses capitalized mortgage
servicing rights for impairment based on the fair value of such rights. To the extent that temporary impairment exists, write-downs are recognized in current earnings as an adjustment to the corresponding valuation allowance. Permanent impairment is
recognized through a write-down of the asset with a corresponding reduction in the valuation allowance. For purposes of performing its impairment evaluation, the portfolio is stratified on the basis of certain risk characteristics, including loan
type and interest rates. Capitalized servicing rights are amortized over the period of, and in proportion to, estimated net servicing income, which considers appropriate prepayment assumptions.
For financial reporting purposes, the Company classifies a portion of its loan portfolio as Mortgage loans held for sale. Included in this
category are loans which the Company has the current intent to sell and loans which are available to be sold in the event that the Company determines that loans should be sold to support the Companys investment and liquidity objectives, as
well as to support its overall asset and liability management strategies. Loans included in this category for which the Company has the current intention to sell are recorded at the lower of aggregate cost or fair value. As of December 31, 2012
and 2011, the Company had $5,627,000 and $1,673,000, respectively, in loans classified as Mortgage loans held for sale.
As of
December 31, 2012 and 2011, the Company had $133,107,000 and $136,525,000, respectively, outstanding in loans sold to government agencies that it was servicing through a third party.
Loans
Loans are carried net of discounts on loan originations and purchased loans are amortized using the level yield interest method over the remaining contractual life of the loan. Nonrefundable loan
origination fees, net of direct loan origination costs, are deferred and recognized over the life of the loan as an adjustment of yield using the interest method.
Interest on loans receivable is accrued as earned using the interest method over the life of the loan. Interest on loans deemed uncollectible is excluded from income. The accrual of interest is
discontinued and reversed against current income once loans become more than 90 days past due or earlier if conditions warrant. The past due status of loans is determined based on the contractual terms. When a loan is placed on nonaccrual status,
previously accrued and uncollected interest is charged against interest income on loans. Interest payments are applied to reduce the principal balance on nonaccrual loans. Loans are returned to accrual status when all past due payments are received
in full and future payments are probable.
Third party property valuations are obtained at the time of origination for real estate secured
loans. When a determination is made that a loan has deteriorated to the point of becoming a problem loan, updated valuations may be ordered to help determine if there is impairment, which may lead to a recommendation for partial charge off or
appropriate allowance allocation. Property valuations are ordered through, and reviewed by, the Companys Appraisal and Review Department. The Company typically orders an as is valuation for collateral property if the loan is in a
criticized loan classification.
52
Loans, or portions of loans, are charged off in the period that such loans, or portions thereof, are deemed
uncollectible. The collectability of individual loans is determined through an estimate of the fair value of the underlying collateral and/or assessment of the financial condition and repayment capacity of the borrower.
Acquisition
Accounting for Loans and Related FDIC Loss Sharing Receivable
The Company accounts for acquisitions in accordance with ASC Topic 805,
Business Combinations
, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. The fair value of loans acquired from GSFC and Statewide (acquired
loans) is represented by the expected cash flows from the portfolio discounted at current market rates. In estimating the cash flows, the Company uses a model based on assumptions about the amount and timing of principal and interest payments,
estimated prepayments, estimated default rates, estimated loss severities in the event of defaults and current market rates.
The Company
accounts for all loans acquired from Statewide and approximately $9,600,000 in contractual value of loans acquired from GSFC under ASC 310-30,
Loans and Debt Securities Acquired with Deteriorated Credit Quality
. In accordance with
ASC 310-30 and in estimating the fair value of the acquired loans as of the acquisition date, we (a) calculate the contractual amount and timing of undiscounted principal and interest payments (the undiscounted contractual cash
flows) and (b) estimate the amount and timing of undiscounted expected principal and interest payments (the undiscounted expected cash flows). The difference between the undiscounted contractual cash flows and the undiscounted
expected cash flows is the nonaccretable difference.
On the acquisition date, the amount by which the undiscounted expected cash flows exceed
the estimated fair value of the acquired loans is the accretable yield. The accretable yield is recorded into interest income over the life of the loans using the effective yield method. The accretable yield changes over time due to both accretion
and as actual and expected cash flows vary from the estimated cash flows at acquisition. The accretable yield is measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the
current carrying value of the loans. The remaining undiscounted expected cash flows are calculated at each financial reporting date based on information currently available. Increases in expected cash flows over those originally estimated increase
the accretable yield and are recognized as interest income prospectively. Increases in expected cash flows may also lead to the reduction of any allowance for loan losses recorded after the acquisition. Decreases in expected cash flows compared to
those originally estimated decrease the accretable yield and are recognized by recording an allowance for loan losses. As the accretable yield increases or decreases from changes in cash flow expectations, the offset is a decrease or increase to the
nonaccretable difference. There is no carryover of allowance for loan losses as the loans acquired are initially recorded at fair value as of the date of acquisition.
Because the FDIC will reimburse the Company for certain loans acquired from Statewide (Covered Loans) should the Company experience a loss, a FDIC loss sharing receivable was recorded at
discounted fair value at the acquisition date. The receivable was recognized at the same time as the Covered Loans, and measured on the same basis, subject to collectability or contractual limitations. The loss sharing agreements on the acquisition
date reflect the reimbursements expected to be received from the FDIC, using an appropriate discount rate, which reflects credit risk and other uncertainties. The amount of the FDIC loss sharing receivable was $15,546,000 and $24,222,000 at
December 31, 2012 and 2011, respectively. The balance of the loss share receivable decreased during 2012 because expected future cash flows from Covered Loans increased, and as a result, we expect to collect less from the FDIC on the
indemnification asset. Also, the submission of claims and receipt of cash from the FDIC under the terms of the loss sharing agreements reduced the loss sharing receivable as well.
Allowance for Loan Losses
The allowance for loan losses on loans in our portfolio is maintained at an amount which management believes covers the reasonably estimable and probable
losses on such portfolio. The allowance for loan losses is comprised of specific and general reserves. The Company determines specific reserves based on the provisions of ASC 310,
Receivables
. The Companys allowance for loan losses
includes a measure of impairment related to those loans specifically identified for evaluation under the topic. This measurement is based on a comparison of the recorded investment in the loan with either the expected cash flows discounted using the
loans original effective interest rate, observable market price for the loan or the fair value of the collateral underlying certain collateral-dependent loans. General reserves are based on managements evaluation of many factors,
including
53
current economic trends, industry experience, historical loss experience (generally three years), industry loan concentrations, the borrowers abilities to repay and repayment performance,
probability of foreclosure and estimated collateral values. As these factors change, adjustments to the loan loss reserve are charged to current operations. Loans that are determined to be uncollectible are charged-off against the allowance for loan
losses once that determination is made.
While management uses available information to make loan loss allowance evaluations, adjustments to
the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. The OCC, as an integral part of its examination processes, periodically reviews the allowance for loan losses. The OCC may require
the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them as of the time of their examinations. To the extent the OCCs estimates differ from managements estimates, additional
provisions to the allowance for loan losses may be required as of the time of their examination. As part of the risk management program, an independent review is performed on the loan portfolio, which supplements managements assessment of the
loan portfolio and the allowance for loan losses. The result of the independent review is reported directly to the Audit Committee of the Board of Directors.
Repossessed Assets
Repossessed assets are recorded at the lesser of the balance of the loan or fair value less estimated selling costs at the date acquired or upon receiving
new property valuations. Costs relating to the development and improvement of foreclosed property are capitalized, and costs relating to holding and maintaining the property are expensed. Write-downs from cost to fair value at the dates of
foreclosure are charged against the allowance for loan losses. Valuations are performed periodically and a charge to operations is recorded if the carrying value of a property exceeds its fair value less selling costs. Generally, the Company
appraises the property at the time of foreclosure and at least every 12 months following the foreclosure. Excluding Covered Assets, the Company had $3,771,000 and $2,868,000 of repossessed assets as of December 31, 2012 and 2011, respectively.
Including Covered Assets, the Company had $6,454,000 and $8,964,000 of repossessed assets as of December 31, 2012 and 2011, respectively.
Federal Home Loan Bank Stock
As a member of the FHLB, the Bank is required to maintain a minimum investment in its stock that varies with the level of FHLB advances outstanding. The stock is bought from and sold to the FHLB based
upon its $100 par value. The stock does not have a readily determinable fair value and as such is classified as restricted stock, carried at cost and evaluated for impairment in accordance with GAAP. The stocks value is determined by the
ultimate recoverability of the par value rather than by recognizing temporary declines. The determination of whether the par value will ultimately be recovered is influenced by criteria such as: (a) the significance of the decline in net assets
of the FHLB as compared to the capital stock amount and the length of time this situation has persisted, (b) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating
performance, (c) the impact of legislative and regulatory changes on the customer base of the FHLB and (d) the liquidity position of the FHLB.
While the Federal Home Loan Banks have been negatively impacted by current economic conditions, the FHLB of Dallas remains in compliance with regulatory capital and liquidity requirements and continues to
pay dividends on the stock and make redemptions at par value. With consideration given to these factors, management concluded that its FHLB stock was not impaired at December 31, 2012. As of December 31, 2012 and 2011, the Company had
$2,273,000 and $5,200,000 of FHLB stock, respectively.
Office Properties and Equipment
Office properties and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method with rates based on the estimated useful lives of the individual
assets, which range from 3 to 40 years. Expenditures which substantially increase the useful lives of existing property and equipment are capitalized while routine expenditures for repairs and maintenance are expensed as incurred.
54
Cash Surrender Value of Bank-owned Life Insurance
Life insurance contracts represent single premium life insurance contracts on the lives of certain officers of the Bank. The Bank is the beneficiary of
these policies. These contracts are reported at their cash surrender value and changes in the cash surrender value are included in noninterest income.
Intangible Assets
Intangible assets consist of goodwill, core deposit intangibles and mortgage servicing rights. These assets are recorded in other assets on the Consolidated Statements of Financial Condition. Goodwill
totaled $856,000 and $914,000 at December 31, 2012 and 2011, respectively. Goodwill represents the excess purchase price over the fair value of net assets acquired in business acquisitions. Goodwill is not amortized but rather is evaluated for
impairment at least annually. Core deposit intangibles totaled $1,385,000 and $1,762,000 at December 31, 2012 and 2011, respectively. Core deposit intangibles represent the estimated value related to customer deposit relationships assumed in
the Companys acquisitions. Core deposit intangibles are being amortized over nine or 10 years using an accelerated method. Mortgage servicing rights totaled $611,000 and $545,000 at December 31, 2012 and 2011, respectively. The
rights represent servicing assets related to mortgage loans sold and serviced at fair value. Mortgage servicing rights are being amortized over a maximum of 10 years using an accelerated method.
Transfer of Financial Assets
Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. Control over transferred assets is deemed to
be surrendered when the assets have been isolated from the Company, the transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets and the Company does not
maintain effective control over the transferred assets through an agreement to repurchase them before maturity.
Salary Continuation Agreements
The Company records the expense associated with its salary continuation agreements over the service periods of the persons covered under these agreements.
Income Taxes
The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized
in income taxes during the period that includes the enactment date.
In the event the future tax consequences of differences between the
financial reporting bases and the tax bases of the Companys assets and liabilities results in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation
allowance is provided for the portion of the deferred tax asset when it is more likely than not that some or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, management considers the
scheduled reversals of deferred tax liabilities, projected future taxable earnings and tax planning strategies.
The income tax benefit or
expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.
A tax position
is recognized as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with a tax examination presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50
percent likely of being realized on examination. For tax positions not meeting the more likely than not test, no tax benefit is recorded.
The
Company recognizes interest and penalties accrued related to unrecognized tax benefits, if applicable, in noninterest expense. During the years ended December 31, 2012, 2011, and 2010, the Company did not recognize any interest or penalties in
its financial statements, nor has it recorded an accrued liability for interest or penalty payments.
55
Stock-based Compensation Plans
The Company issues stock options under the 2009 Stock Option Plan to directors, officers and other key employees. In accordance with the requirements of
ASC 718,
Compensation Stock Compensation
, the Company has adopted a fair value based method of accounting for employee stock compensation plans, whereby compensation cost is measured as of the grant date based on the fair value of the
award and is recognized over the service period, which is usually the vesting period.
The Company issues restricted stock under the 2009
Recognition and Retention Plan (RRP) for directors, officers and other key employees. The RRP allows for the issuance of restricted stock awards that may not be sold or otherwise transferred until certain restrictions have lapsed. The
holders of the restricted stock have the right to vote the shares as awards are earned. The unearned compensation related to these awards is amortized to compensation expense over the service period, which is usually the vesting period. The total
share-based compensation expense for these awards is determined based on the market price of the Companys common stock as of the date of grant applied to the total number of shares granted and is amortized over the vesting period.
Earnings Per Share
Earnings per share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects additional
common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance.
Comprehensive Income
GAAP generally requires that recognized revenues, expenses, gains and losses be included in net earnings. Although certain changes in assets and liabilities, such as unrealized gains and losses on
available for sale securities, are reported as a separate component of the equity section of the balance sheets, such items, along with net earnings, are components of comprehensive income. The tax effect for unrealized gains on investment
securities was $853,987, $474,623 and $4,155 for the periods ending December 31, 2012, 2011 and 2010, respectively. The reclassification adjustment for (gains) losses included in net income had a tax effect of ($75,406), $58,068 and $397,913 for the
periods ending December 31, 2012, 2011 and 2010. Comprehensive income is reflected in the Consolidated Statements of Comprehensive Income.
Reclassifications
Certain reclassifications have been made to prior period balances to conform to the current period presentation.
Recent Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, Fair Value
Measurement. ASU 2011-04 amends the fair value measurement and disclosure requirements in order to gain consistency between GAAP and the International Financial Reporting Standards. The guidance, which became effective on January 1, 2012, did
not have a material impact on the Companys results of operations, financial position or disclosures.
In June 2011, the FASB issued ASU
No. 2011-05,
Comprehensive Income
. ASU 2011-05 requires entities to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement of
comprehensive income or in two separate consecutive statements. The revised financial statement presentation for comprehensive income became effective on January 1, 2012 and has been incorporated into this annual report on Form 10-K. The
consolidated statements of comprehensive income are reflected as a separate statement on page 47.
In September 2011, the FASB issued ASU
No. 2011-08, Intangibles Goodwill and Other. ASU 2011-08 amends the accounting guidance on goodwill impairment testing. The amendments in this accounting standard update are intended to reduce complexity and costs by allowing an entity
the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of
events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The adoption of ASU 2011-08 became
effective on January 1, 2012. The adoption of the guidance did not have a material impact on the Companys results of operations, financial position or disclosures.
56
In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220), Deferral of the Effective
Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220)
Presentation of Comprehensive Income. Both ASUs are effective for annual reporting periods beginning after December 15, 2011, and both were adopted by the Company as of January 1, 2012. ASU 2011-05 eliminates the option to present
the components of other comprehensive income as part of the statement of changes in stockholders equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the
face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and
comprehensive income or separately in consecutive statements of income and comprehensive income. ASU 2011-12 defers the changes in ASU 2011-05 that pertain to how, when and where reclassification adjustments are presented. The Companys
adoption of these standards did not have a material impact on the consolidated financial statements
In July 2012, the FASB issued ASU
No. 2012-02, which amends the guidance in ASC 350-30 on testing indefinite-lived intangible assets, other than goodwill, for impairment. Under the revised guidance, companies testing an indefinite-lived intangible asset for impairment have the
option of performing a qualitative assessment before calculating the fair value of the asset (i.e., step 1 of the impairment test). If companies determine, on the basis of qualitative factors, that the fair value of the indefinite-lived intangible
asset is more likely than not less than the carrying amount, the two-step impairment test would be required. This update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with
early adoption permitted. The adoption of ASU 2012-02 is not to have a material impact on the Companys results of operations, financial position or disclosures.
In October 2012, the FASB issued ASU No. 2012-06, Subsequent Accounting for an Indemnification Asset as a result of a Government-Assisted Acquisition of a Financial Institution. ASU 2012-06 requires
the change in measurement of the indemnification asset would be accounted for on the same basis as the change in the indemnified item. Any amortization period for the changes in value would be limited to the shorter of the term of the
indemnification agreement and the remaining life of the indemnified assets. The amendments are effective for fiscal years beginning on or after December 15, 2012 and interim periods within those fiscal years. The amendments will be applied
prospectively to any new indemnification assets acquired after the date of adoption and to indemnification assets existing as of the date of adoption. The Company is currently evaluating ASU 2012-06s potential impact on the Companys
results of operations, financial position or disclosures.
3. Acquisition Activity
GS Financial Corp.
On
July 15, 2011, the Company acquired GSFC, the former holding company of Guaranty Savings Bank (Guaranty) of Metairie, Louisiana. On the acquisition date, Home Bancorp Acquisition Corp., a newly created wholly owned subsidiary of the
Company, was merged with and into GSFC, and immediately thereafter, GSFC was merged with and into the Company, with the Company as the surviving corporation, and Guaranty, the former subsidiary of GSFC, was merged with and into Home Bank, with Home
Bank as the surviving institution. Shareholders of GSFC received $21.00 per share in cash, yielding an aggregate purchase price of $26,417,000. As a result of the acquisition, the four former Guaranty branches in the Greater New Orleans area were
added to the Banks branch office network. Assets acquired from GSFC totaled $256,677,000, which included loans of $182,440,000, investment securities of $46,481,000 and cash of $9,262,000. The Bank also recorded a core deposit intangible asset
of $859,000 and goodwill of $296,000 relating to the acquisition of GSFC, and assumed liabilities of $230,614,000, which included $193,518,000 in deposits and $34,707,000 in Federal Home Loan Bank (FHLB) advances.
Acquired loans which are impaired as of the date of acquisition are accounted for under ASC 310-30,
Loans and Debt Securities Acquired with
Deteriorated Credit Quality
. In accordance with ASC 310-30 and in estimating the fair value of the acquired loans with deteriorated credit quality as of the acquisition date, we (a) calculated the contractual amount and timing of
undiscounted principal and interest payments (the undiscounted contractual cash flows) and (b) estimated the amount and timing of undiscounted expected principal and interest payments (the undiscounted expected cash
flows). The difference between the undiscounted contractual cash flows and
57
the undiscounted expected cash flows is the nonaccretable difference. The nonaccretable difference totaled $5,490,000 as of July 15, 2011 and represented an estimate of the undiscounted loss
exposure in the acquired loans with deteriorated credit quality as of the acquisition date.
The following table summarizes the accretable
yield on the loans acquired from GSFC with deteriorated credit quality as of July 15, 2011 and the changes therein through December 31, 2012.
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
Balance, beginning of period
|
|
$
|
(644
|
)
|
|
$
|
|
|
Acquisition accretable yield
|
|
|
|
|
|
|
(1,169
|
)
|
Accretion
|
|
|
966
|
|
|
|
525
|
|
Net transfers from nonaccretable difference to accretable yield
|
|
|
(1,161
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
(839
|
)
|
|
$
|
(644
|
)
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012, the weighted average remaining contractual life of the loan portfolio acquired with deteriorated credit
quality from GSFC was 8.8 years.
Statewide Bank
On March 12, 2010, the Bank acquired certain assets and liabilities of the former Statewide Bank (Statewide), a full-service community bank formerly headquartered in Covington, Louisiana,
from the Federal Deposit Insurance Corporation (FDIC). As a result of the Statewide acquisition, the Banks branch office network was expanded to include six branches in the Northshore (of Lake Pontchartrain) region of Louisiana.
Assets acquired in the Statewide transaction totaled $188,026,000, which included loans of $110,415,000, investment securities of $24,841,000 and cash of $11,569,000. In addition, the Bank recorded an FDIC loss sharing receivable, representing the
portion of estimated losses covered by loss sharing agreements between the Bank and the FDIC, of $34,422,000. The loss sharing agreements between the Bank and the FDIC afford us significant protection against future losses in the loan portfolio
(Covered Loans) and repossessed assets (collectively referred to as Covered Assets) acquired in the Statewide transaction. The Bank also recorded a core deposit intangible asset of $1,429,000 and goodwill of $560,000 relating
to the Statewide acquisition, and assumed liabilities of $223,910,000, which included $206,925,000 in deposits and $16,824,000 in FHLB advances.
The following table summarizes the accretable yield on the Covered Loans as of March 12, 2010 and the changes therein through December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Balance, beginning of period
|
|
$
|
(8,550
|
)
|
|
$
|
(5,505
|
)
|
|
$
|
|
|
Acquisition accretable yield
|
|
|
|
|
|
|
|
|
|
|
(11,110
|
)
|
Accretion
|
|
|
4,613
|
|
|
|
5,170
|
|
|
|
5,605
|
|
Net transfers from nonaccretable difference to accretable yield
|
|
|
(36
|
)
|
|
|
(8,215
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
(3,973
|
)
|
|
$
|
(8,550
|
)
|
|
$
|
(5,505
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012, the weighted average remaining contractual life of the Covered Loan portfolio was 3.0 years.
Over the life of the Covered Loans, the Company will continue to estimate cash flows expected to be collected on pools of loans sharing common risk
characteristics. The Company will evaluate whether the present value of Covered Loans has decreased and if so, a provision for loan loss will be recognized. For any increases in cash flows expected to be collected, the Company will adjust the amount
of accretable yield recognized on a prospective basis over the remaining life of the applicable loan or pool of loans. During the year ended December 31, 2012 there was an aggregate $36,000 increase in expected cash flows from the Covered Loans
acquired from Statewide over the amounts originally estimated. Such amount was recorded as an increase in the accretable yield to be recognized in interest income in future periods and a decrease to the nonaccretable yield.
58
The FDIC loss sharing receivable will continue to be measured on the same basis as the related Covered
Loans. Because the Covered Loans are subject to the accounting prescribed by ASC 310, subsequent changes to the basis of the FDIC loss sharing receivable will also follow that model. Deterioration in the credit quality of the loans (immediately
recorded as a provision to the allowance for loan losses) would immediately increase the basis of the FDIC loss sharing receivable, with the offset recorded through the consolidated statement of income. Increases in the credit quality or cash flows
of loans (reflected as an adjustment to yield and accreted into income over the remaining life of the loans) decrease the basis of the FDIC loss sharing receivable, with such decrease being accreted into income over 1) the same period or 2) the life
of the loss sharing agreements, whichever is shorter. Loss assumptions used in the basis of the Covered Loans are consistent with the loss assumptions used to measure the FDIC loss sharing receivable.
4. Investment Securities
Summary information regarding investment securities classified as available for sale and held to maturity as of December 31, 2012
and 2011 follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross Unrealized
Losses
|
|
|
Fair Value
|
|
December 31, 2012
|
|
|
|
|
|
|
|
Less Than
1 Year
|
|
|
Over 1
Year
|
|
|
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
99,137
|
|
|
$
|
3,391
|
|
|
$
|
14
|
|
|
$
|
1
|
|
|
$
|
102,513
|
|
Non-U.S. agency mortgage-backed
|
|
|
12,426
|
|
|
|
280
|
|
|
|
|
|
|
|
38
|
|
|
|
12,668
|
|
Municipal bonds
|
|
|
16,843
|
|
|
|
774
|
|
|
|
32
|
|
|
|
|
|
|
|
17,585
|
|
U.S. government agency
|
|
|
23,944
|
|
|
|
553
|
|
|
|
7
|
|
|
|
|
|
|
|
24,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale
|
|
$
|
152,350
|
|
|
$
|
4,998
|
|
|
$
|
53
|
|
|
$
|
39
|
|
|
$
|
157,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
693
|
|
|
$
|
13
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
706
|
|
Municipal bonds
|
|
|
972
|
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
1,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity
|
|
$
|
1,665
|
|
|
$
|
81
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross Unrealized
Losses
|
|
|
Fair Value
|
|
December 31, 2011
|
|
|
|
|
|
|
|
Less Than
1 Year
|
|
|
Over 1
Year
|
|
|
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
113,692
|
|
|
$
|
2,879
|
|
|
$
|
42
|
|
|
$
|
|
|
|
$
|
116,529
|
|
Non-U.S. agency mortgage-backed
|
|
|
14,833
|
|
|
|
37
|
|
|
|
766
|
|
|
|
425
|
|
|
|
13,679
|
|
Municipal bonds
|
|
|
11,598
|
|
|
|
623
|
|
|
|
|
|
|
|
|
|
|
|
12,221
|
|
U.S. government agency
|
|
|
12,521
|
|
|
|
310
|
|
|
|
|
|
|
|
|
|
|
|
12,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale
|
|
$
|
152,644
|
|
|
$
|
3,849
|
|
|
$
|
808
|
|
|
$
|
425
|
|
|
$
|
155,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
2,289
|
|
|
$
|
49
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,338
|
|
Municipal bonds
|
|
|
1,173
|
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
1,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity
|
|
$
|
3,462
|
|
|
$
|
113
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59
Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently
when economic and market conditions warrant such evaluations. Consideration is given to (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the Companys intent to
sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost, which may extend to maturity and our ability and intent to hold the security for a period of time that allows
for the recovery in value in the case of equity securities.
The Company developed a process to identify securities that could potentially
have a credit impairment that is other-than-temporary. This process involves evaluating each security for impairment by monitoring credit performance, collateral type, collateral geography, bond credit support, loan-to-value ratios, credit scores,
loss severity levels, pricing levels, downgrades by rating agencies, cash flow projections and other factors as indicators of potential credit issues. When the Company determines that a security is deemed to be other than temporarily impaired, an
impairment loss is recognized.
During 2010, managements assessment of its investment securities concluded the decline in the fair
values of certain non-agency (or private-label) mortgage-back securities were other-than-temporary. During 2010, the Company recorded pre-tax impairment charges of $1,229,000 associated with the credit deterioration of those securities.
As of December 31, 2012, 16 debt securities had unrealized losses totaling 0.7% of the individual securities amortized cost basis and 0.1% of
the Companys total amortized cost basis of the investment securities portfolio. Five of the 16 securities had been in a continuous loss position for over 12 months at such date. The five securities had an aggregate amortized cost basis and
unrealized loss of $2,653,000 and $39,000, respectively, at December 31, 2012. Management has the intent and ability to hold these debt securities until maturity, or until anticipated recovery, no declines in these five securities were deemed
to be other-than-temporary.
As of December 31, 2011, 17 debt securities had unrealized losses totaling 5.4% of the individual
securities amortized cost basis and 0.8% of the Companys total amortized cost basis of the investment securities portfolio. The unrealized losses at such date for the 17 securities primarily related to elevated delinquencies and defaults
in the mortgage loans underlying certain non-agency mortgage-backed securities. Four of the 17 securities had been in a continuous loss position for over 12 months at such date. The four securities had an aggregate amortized cost basis and
unrealized loss of $3,119,000 and $425,000, respectively, at December 31, 2011. As management has the intent and ability to hold these debt securities until maturity, or until anticipated recovery if classified as available for sale, no
declines in these four securities were deemed to be other-than-temporary.
60
The amortized cost and estimated fair value by maturity of investment securities as of December 31,
2012 are shown in the following tables. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. The expected maturity of a security, may differ from
its contractual maturity because of the exercise of call options and potential paydowns. Accordingly, actual maturities may differ from contractual maturities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
One Year
or Less
|
|
|
After One
Year through
Five Years
|
|
|
After Five
Years
through Ten
Years
|
|
|
After
Ten Years
|
|
|
Total
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
5
|
|
|
$
|
768
|
|
|
$
|
10,486
|
|
|
$
|
91,254
|
|
|
$
|
102,513
|
|
Non-U.S. agency mortgage-backed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,668
|
|
|
|
12,668
|
|
Municipal bonds
|
|
|
|
|
|
|
3,204
|
|
|
|
10,346
|
|
|
|
4,035
|
|
|
|
17,585
|
|
U.S. government agency
|
|
|
|
|
|
|
6,976
|
|
|
|
12,128
|
|
|
|
5,386
|
|
|
|
24,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
5
|
|
|
$
|
10,948
|
|
|
$
|
32,960
|
|
|
$
|
113,343
|
|
|
$
|
157,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
4
|
|
|
$
|
650
|
|
|
$
|
52
|
|
|
$
|
|
|
|
$
|
706
|
|
Municipal bonds
|
|
|
|
|
|
|
1,040
|
|
|
|
|
|
|
|
|
|
|
|
1,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities held to maturity
|
|
$
|
4
|
|
|
$
|
1,690
|
|
|
$
|
52
|
|
|
$
|
|
|
|
$
|
1,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
One Year
or Less
|
|
|
After One
Year through
Five Years
|
|
|
After Five
Years
through Ten
Years
|
|
|
After
Ten Years
|
|
|
Total
|
|
Amortized Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
5
|
|
|
$
|
720
|
|
|
$
|
10,329
|
|
|
$
|
88,083
|
|
|
$
|
99,137
|
|
Non-U.S. agency mortgage-backed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,426
|
|
|
|
12,426
|
|
Municipal bonds
|
|
|
|
|
|
|
3,119
|
|
|
|
9,896
|
|
|
|
3,828
|
|
|
|
16,843
|
|
U.S. government agency
|
|
|
|
|
|
|
6,816
|
|
|
|
11,981
|
|
|
|
5,147
|
|
|
|
23,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
5
|
|
|
$
|
10,655
|
|
|
$
|
32,206
|
|
|
$
|
109,484
|
|
|
$
|
152,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
4
|
|
|
$
|
637
|
|
|
$
|
52
|
|
|
$
|
|
|
|
$
|
693
|
|
Municipal bonds
|
|
|
|
|
|
|
972
|
|
|
|
|
|
|
|
|
|
|
|
972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities held to maturity
|
|
$
|
4
|
|
|
$
|
1,609
|
|
|
$
|
52
|
|
|
$
|
|
|
|
$
|
1,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2012, the Company recorded gross gains of $230,000 and gross losses of $8,000 related to the sale
of investment securities. For the year ended December 31, 2011, the Company recorded gross gains of $238,000 and gross losses of $409,000 related to the sale of investment securities.
As of December 31, 2012 and 2011, the Company had accrued interest receivable for investment securities of $565,000 and $495,000, respectively.
As of December 31, 2012 and 2011, the Company had $41,462,000 and $20,912,000, respectively, of securities pledged to secure public deposits.
61
5. Loans
Loans, including Covered Loans and net of unearned income, consisted of the following as of December 31 of the years indicated.
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
177,816
|
|
|
$
|
182,817
|
|
Home equity loans and lines
|
|
|
40,425
|
|
|
|
43,665
|
|
Commercial real estate
|
|
|
252,805
|
|
|
|
226,999
|
|
Construction and land
|
|
|
75,529
|
|
|
|
78,994
|
|
Multi-family residential
|
|
|
19,659
|
|
|
|
20,125
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
566,234
|
|
|
|
552,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans:
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
72,253
|
|
|
|
82,980
|
|
Consumer
|
|
|
34,641
|
|
|
|
30,791
|
|
|
|
|
|
|
|
|
|
|
Total other loans
|
|
|
106,894
|
|
|
|
113,771
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
673,128
|
|
|
$
|
666,371
|
|
|
|
|
|
|
|
|
|
|
A summary of activity in the allowance for loan losses for the years ended December 31, 2012, 2011 and 2010 is as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Balance, beginning of period
|
|
$
|
5,104
|
|
|
$
|
3,920
|
|
|
$
|
3,352
|
|
Provision
|
|
|
2,411
|
|
|
|
1,460
|
|
|
|
865
|
|
Loans charged-off
|
|
|
(2,325
|
)
|
|
|
(334
|
)
|
|
|
(369
|
)
|
Recoveries
|
|
|
129
|
|
|
|
58
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
5,319
|
|
|
$
|
5,104
|
|
|
$
|
3,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The allowance for loan losses and recorded investment in loans as of the periods indicated is as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2012
|
|
(dollars in thousands)
|
|
One- to
Four-Family
First
Mortgage
|
|
|
Home
Equity
Loans
and
Lines
|
|
|
Commercial
Real Estate
|
|
|
Construction
and Land
|
|
|
Multi-
Family
Residential
|
|
|
Commercial
and
Industrial
|
|
|
Consumer
|
|
|
Total
|
|
Allowance for Credit Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
778
|
|
|
$
|
336
|
|
|
$
|
1,755
|
|
|
$
|
904
|
|
|
$
|
64
|
|
|
$
|
922
|
|
|
$
|
345
|
|
|
$
|
5,104
|
|
Charge-offs
|
|
|
|
|
|
|
(32
|
)
|
|
|
(1,980
|
)
|
|
|
(215
|
)
|
|
|
|
|
|
|
(60
|
)
|
|
|
(38
|
)
|
|
|
(2,325
|
)
|
Recoveries
|
|
|
|
|
|
|
15
|
|
|
|
94
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
14
|
|
|
|
129
|
|
Provision
|
|
|
204
|
|
|
|
24
|
|
|
|
2,171
|
|
|
|
96
|
|
|
|
22
|
|
|
|
(185
|
)
|
|
|
79
|
|
|
|
2,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
982
|
|
|
$
|
343
|
|
|
$
|
2,040
|
|
|
$
|
785
|
|
|
$
|
86
|
|
|
$
|
683
|
|
|
$
|
400
|
|
|
$
|
5,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
49
|
|
|
$
|
|
|
|
$
|
134
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collectively evaluated for impairment
|
|
$
|
749
|
|
|
$
|
322
|
|
|
$
|
1,906
|
|
|
$
|
785
|
|
|
$
|
86
|
|
|
$
|
683
|
|
|
$
|
400
|
|
|
$
|
4,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
184
|
|
|
$
|
21
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
177,816
|
|
|
$
|
40,425
|
|
|
$
|
252,805
|
|
|
$
|
75,529
|
|
|
$
|
19,659
|
|
|
$
|
72,253
|
|
|
$
|
34,641
|
|
|
$
|
673,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment, excluding acquired loans
|
|
$
|
1,464
|
|
|
$
|
56
|
|
|
$
|
3,428
|
|
|
$
|
60
|
|
|
$
|
528
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collectively evaluated for impairment
|
|
$
|
163,491
|
|
|
$
|
36,801
|
|
|
$
|
224,127
|
|
|
$
|
70,373
|
|
|
$
|
16,949
|
|
|
$
|
70,757
|
|
|
$
|
34,036
|
|
|
$
|
616,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
12,861
|
|
|
$
|
3,568
|
|
|
$
|
25,250
|
|
|
$
|
5,096
|
|
|
$
|
2,182
|
|
|
$
|
1,496
|
|
|
$
|
605
|
|
|
$
|
51,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2011
|
|
(dollars in thousands)
|
|
One- to
Four-Family
First
Mortgage
|
|
|
Home
Equity
Loans
and
Lines
|
|
|
Commercial
Real Estate
|
|
|
Construction
and Land
|
|
|
Multi-
Family
Residential
|
|
|
Commercial
and
Industrial
|
|
|
Consumer
|
|
|
Total
|
|
Allowance for Credit Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
641
|
|
|
$
|
296
|
|
|
$
|
1,258
|
|
|
$
|
666
|
|
|
$
|
46
|
|
|
$
|
746
|
|
|
$
|
267
|
|
|
$
|
3,920
|
|
Charge-offs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(281
|
)
|
|
|
(53
|
)
|
|
|
(334
|
)
|
Recoveries
|
|
|
16
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
11
|
|
|
|
58
|
|
Provision
|
|
|
121
|
|
|
|
40
|
|
|
|
491
|
|
|
|
238
|
|
|
|
18
|
|
|
|
432
|
|
|
|
120
|
|
|
|
1,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
778
|
|
|
$
|
336
|
|
|
$
|
1,755
|
|
|
$
|
904
|
|
|
$
|
64
|
|
|
$
|
922
|
|
|
$
|
345
|
|
|
$
|
5,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
72
|
|
|
$
|
15
|
|
|
$
|
129
|
|
|
$
|
196
|
|
|
$
|
|
|
|
$
|
66
|
|
|
$
|
|
|
|
$
|
478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collectively evaluated for impairment
|
|
$
|
706
|
|
|
$
|
321
|
|
|
$
|
1,626
|
|
|
$
|
708
|
|
|
$
|
64
|
|
|
$
|
806
|
|
|
$
|
345
|
|
|
$
|
4,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
50
|
|
|
$
|
|
|
|
$
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
182,817
|
|
|
$
|
43,665
|
|
|
$
|
226,999
|
|
|
$
|
78,994
|
|
|
$
|
20,125
|
|
|
$
|
82,980
|
|
|
$
|
30,791
|
|
|
$
|
666,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment, excluding acquired loans
|
|
$
|
1,090
|
|
|
$
|
94
|
|
|
$
|
2,249
|
|
|
$
|
2,305
|
|
|
$
|
529
|
|
|
$
|
136
|
|
|
$
|
|
|
|
$
|
6,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collectively evaluated for impairment
|
|
$
|
168,943
|
|
|
$
|
38,406
|
|
|
$
|
190,553
|
|
|
$
|
71,208
|
|
|
$
|
16,392
|
|
|
$
|
78,494
|
|
|
$
|
29,529
|
|
|
$
|
593,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
12,784
|
|
|
$
|
5,165
|
|
|
$
|
34,197
|
|
|
$
|
5,481
|
|
|
$
|
3,204
|
|
|
$
|
4,350
|
|
|
$
|
1,262
|
|
|
$
|
66,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Although the Company has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and
unimproved real estate and is dependent on the real estate market.
Credit quality indicators on the Companys loan portfolio, excluding
loans acquired with deteriorated credit quality, as of the dates indicated are as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
(dollars in thousands)
|
|
Pass
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Total
|
|
One- to four-family first mortgage
|
|
$
|
157,813
|
|
|
$
|
1,659
|
|
|
$
|
5,483
|
|
|
$
|
|
|
|
$
|
164,955
|
|
Home equity loans and lines
|
|
|
36,330
|
|
|
|
138
|
|
|
|
389
|
|
|
|
|
|
|
|
36,857
|
|
Commercial real estate
|
|
|
214,286
|
|
|
|
5,605
|
|
|
|
7,664
|
|
|
|
|
|
|
|
227,555
|
|
Construction and land
|
|
|
69,458
|
|
|
|
388
|
|
|
|
587
|
|
|
|
|
|
|
|
70,433
|
|
Multi-family residential
|
|
|
15,786
|
|
|
|
1,163
|
|
|
|
528
|
|
|
|
|
|
|
|
17,477
|
|
Commercial and industrial
|
|
|
67,983
|
|
|
|
2,590
|
|
|
|
184
|
|
|
|
|
|
|
|
70,757
|
|
Consumer
|
|
|
33,976
|
|
|
|
59
|
|
|
|
1
|
|
|
|
|
|
|
|
34,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
595,632
|
|
|
$
|
11,602
|
|
|
$
|
14,836
|
|
|
$
|
|
|
|
$
|
622,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
(dollars in thousands)
|
|
Pass
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Total
|
|
One- to four-family first mortgage
|
|
$
|
165,997
|
|
|
$
|
2,595
|
|
|
$
|
1,441
|
|
|
$
|
|
|
|
$
|
170,033
|
|
Home equity loans and lines
|
|
|
37,849
|
|
|
|
320
|
|
|
|
331
|
|
|
|
|
|
|
|
38,500
|
|
Commercial real estate
|
|
|
176,651
|
|
|
|
11,435
|
|
|
|
4,716
|
|
|
|
|
|
|
|
192,802
|
|
Construction and land
|
|
|
69,538
|
|
|
|
1,595
|
|
|
|
2,380
|
|
|
|
|
|
|
|
73,512
|
|
Multi-family residential
|
|
|
16,164
|
|
|
|
228
|
|
|
|
529
|
|
|
|
|
|
|
|
16,921
|
|
Commercial and industrial
|
|
|
74,822
|
|
|
|
3,621
|
|
|
|
187
|
|
|
|
|
|
|
|
78,631
|
|
Consumer
|
|
|
29,429
|
|
|
|
22
|
|
|
|
78
|
|
|
|
|
|
|
|
29,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
570,450
|
|
|
$
|
19,816
|
|
|
$
|
9,662
|
|
|
$
|
|
|
|
$
|
599,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
The above classifications follow regulatory guidelines and can generally be described as follows:
|
|
Pass loans are of satisfactory quality.
|
|
|
Special mention loans have an existing weakness that could cause future impairment, including the deterioration of financial ratios, past due status,
questionable management capabilities and possible reduction in the collateral values.
|
|
|
Substandard loans have an existing specific and well defined weakness that may include poor liquidity and deterioration of financial ratios. The loan
may be past due and related deposit accounts experiencing overdrafts. Immediate corrective action is necessary.
|
|
|
Doubtful loans have specific weaknesses that are severe enough to make collection or liquidation in full highly questionable and improbable.
|
In addition, residential loans are classified using an inter-regulatory agency methodology that incorporates the extent of
delinquencies and loan-to-value ratios. These classifications were the most current available as of December 31, 2012 and were generally updated within the last three months. Loans acquired with deteriorated credit quality are excluded from the
schedule of credit quality indicators.
Age analysis of past due loans, excluding loans acquired with deteriorated credit quality as of the
dates indicated is as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
(dollars in thousands)
|
|
30-59
Days
Past
Due
|
|
|
60-89
Days
Past
Due
|
|
|
Greater
Than
90
Days
Past
Due
|
|
|
Total
Past Due
|
|
|
Current
Loans
|
|
|
Total
Loans
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
4,509
|
|
|
$
|
672
|
|
|
$
|
3,226
|
|
|
$
|
8,407
|
|
|
$
|
156,548
|
|
|
$
|
164,955
|
|
Home equity loans and lines
|
|
|
90
|
|
|
|
116
|
|
|
|
149
|
|
|
|
355
|
|
|
|
36,502
|
|
|
|
36,857
|
|
Commercial real estate
|
|
|
1,451
|
|
|
|
854
|
|
|
|
3,565
|
|
|
|
5,870
|
|
|
|
221,685
|
|
|
|
227,555
|
|
Construction and land
|
|
|
956
|
|
|
|
|
|
|
|
586
|
|
|
|
1,542
|
|
|
|
68,891
|
|
|
|
70,433
|
|
Multi-family residential
|
|
|
531
|
|
|
|
42
|
|
|
|
529
|
|
|
|
1,102
|
|
|
|
16,375
|
|
|
|
17,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
7,537
|
|
|
|
1,684
|
|
|
|
8,055
|
|
|
|
17,276
|
|
|
|
500,001
|
|
|
|
517,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
110
|
|
|
|
102
|
|
|
|
171
|
|
|
|
383
|
|
|
|
70,374
|
|
|
|
70,757
|
|
Consumer
|
|
|
478
|
|
|
|
449
|
|
|
|
1
|
|
|
|
928
|
|
|
|
33,108
|
|
|
|
34,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other loans
|
|
|
588
|
|
|
|
551
|
|
|
|
172
|
|
|
|
1,311
|
|
|
|
103,482
|
|
|
|
104,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
8,125
|
|
|
$
|
2,235
|
|
|
$
|
8,227
|
|
|
$
|
18,587
|
|
|
$
|
603,483
|
|
|
$
|
622,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
(dollars in thousands)
|
|
30-59
Days
Past
Due
|
|
|
60-89
Days
Past
Due
|
|
|
Greater
Than
90
Days
Past
Due
|
|
|
Total
Past Due
|
|
|
Current
Loans
|
|
|
Total
Loans
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
3,740
|
|
|
$
|
451
|
|
|
$
|
2,053
|
|
|
$
|
6,244
|
|
|
$
|
163,789
|
|
|
$
|
170,033
|
|
Home equity loans and lines
|
|
|
242
|
|
|
|
|
|
|
|
171
|
|
|
|
413
|
|
|
|
38,087
|
|
|
|
38,500
|
|
Commercial real estate
|
|
|
1,384
|
|
|
|
704
|
|
|
|
1,862
|
|
|
|
3,950
|
|
|
|
188,852
|
|
|
|
192,802
|
|
Construction and land
|
|
|
1,376
|
|
|
|
13
|
|
|
|
812
|
|
|
|
2,201
|
|
|
|
71,312
|
|
|
|
73,513
|
|
Multi-family residential
|
|
|
944
|
|
|
|
|
|
|
|
707
|
|
|
|
1,651
|
|
|
|
15,270
|
|
|
|
16,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
7,686
|
|
|
|
1,168
|
|
|
|
5,605
|
|
|
|
14,459
|
|
|
|
477,310
|
|
|
|
491,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
309
|
|
|
|
95
|
|
|
|
|
|
|
|
404
|
|
|
|
78,226
|
|
|
|
78,631
|
|
Consumer
|
|
|
216
|
|
|
|
38
|
|
|
|
50
|
|
|
|
304
|
|
|
|
29,225
|
|
|
|
29,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other loans
|
|
|
525
|
|
|
|
133
|
|
|
|
50
|
|
|
|
708
|
|
|
|
107,451
|
|
|
|
108,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
8,211
|
|
|
$
|
1,301
|
|
|
$
|
5,655
|
|
|
$
|
15,167
|
|
|
$
|
584,761
|
|
|
$
|
599,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012 and 2011, the Company did not have any loans greater than 90 days past due which were accruing interest.
The following is a summary of information pertaining to impaired loans, excluding acquired loans, as of the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2012
|
|
(dollars in thousands)
|
|
Recorded
Investment
|
|
|
Unpaid
Principal
Balance
|
|
|
Related
Allowance
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
1,117
|
|
|
$
|
1,117
|
|
|
$
|
|
|
|
$
|
956
|
|
|
$
|
62
|
|
Home equity loans and lines
|
|
|
56
|
|
|
|
56
|
|
|
|
|
|
|
|
71
|
|
|
|
2
|
|
Commercial real estate
|
|
|
2,985
|
|
|
|
2,985
|
|
|
|
|
|
|
|
3,451
|
|
|
|
100
|
|
Construction and land
|
|
|
60
|
|
|
|
60
|
|
|
|
|
|
|
|
631
|
|
|
|
|
|
Multi-family residential
|
|
|
528
|
|
|
|
528
|
|
|
|
|
|
|
|
528
|
|
|
|
|
|
Commercial and industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,746
|
|
|
$
|
4,746
|
|
|
$
|
|
|
|
$
|
5,685
|
|
|
$
|
164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
347
|
|
|
$
|
347
|
|
|
$
|
49
|
|
|
$
|
445
|
|
|
$
|
23
|
|
Home equity loans and lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
Commercial real estate
|
|
|
443
|
|
|
|
443
|
|
|
|
134
|
|
|
|
296
|
|
|
|
30
|
|
Construction and land
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
950
|
|
|
|
|
|
Multi-family residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
790
|
|
|
$
|
790
|
|
|
$
|
183
|
|
|
$
|
1,723
|
|
|
$
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
1,464
|
|
|
$
|
1,464
|
|
|
$
|
49
|
|
|
$
|
1,401
|
|
|
$
|
85
|
|
Home equity loans and lines
|
|
|
56
|
|
|
|
56
|
|
|
|
|
|
|
|
74
|
|
|
|
2
|
|
Commercial real estate
|
|
|
3,428
|
|
|
|
3,428
|
|
|
|
134
|
|
|
|
3,747
|
|
|
|
130
|
|
Construction and land
|
|
|
60
|
|
|
|
60
|
|
|
|
|
|
|
|
1,581
|
|
|
|
|
|
Multi-family residential
|
|
|
528
|
|
|
|
528
|
|
|
|
|
|
|
|
528
|
|
|
|
|
|
Commercial and industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,536
|
|
|
$
|
5,536
|
|
|
$
|
183
|
|
|
$
|
7,408
|
|
|
$
|
217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2011
|
|
(dollars in thousands)
|
|
Recorded
Investment
|
|
|
Unpaid
Principal
Balance
|
|
|
Related
Allowance
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
540
|
|
|
$
|
540
|
|
|
$
|
|
|
|
$
|
745
|
|
|
$
|
28
|
|
Home equity loans and lines
|
|
|
79
|
|
|
|
79
|
|
|
|
|
|
|
|
58
|
|
|
|
3
|
|
Commercial real estate
|
|
|
1,748
|
|
|
|
1,748
|
|
|
|
|
|
|
|
996
|
|
|
|
60
|
|
Construction and land
|
|
|
733
|
|
|
|
733
|
|
|
|
|
|
|
|
672
|
|
|
|
40
|
|
Multi-family residential
|
|
|
529
|
|
|
|
529
|
|
|
|
|
|
|
|
41
|
|
|
|
25
|
|
Commercial and industrial
|
|
|
70
|
|
|
|
70
|
|
|
|
|
|
|
|
55
|
|
|
|
4
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,699
|
|
|
$
|
3,699
|
|
|
$
|
|
|
|
$
|
2,567
|
|
|
$
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
550
|
|
|
$
|
550
|
|
|
$
|
72
|
|
|
$
|
78
|
|
|
$
|
38
|
|
Home equity loans and lines
|
|
|
15
|
|
|
|
15
|
|
|
|
15
|
|
|
|
10
|
|
|
|
1
|
|
Commercial real estate
|
|
|
501
|
|
|
|
501
|
|
|
|
129
|
|
|
|
301
|
|
|
|
14
|
|
Construction and land
|
|
|
1,572
|
|
|
|
1,572
|
|
|
|
196
|
|
|
|
510
|
|
|
|
88
|
|
Multi-family residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
Commercial and industrial
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
130
|
|
|
|
3
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,704
|
|
|
$
|
2,704
|
|
|
$
|
478
|
|
|
$
|
1,056
|
|
|
$
|
144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
1,090
|
|
|
$
|
1,090
|
|
|
$
|
72
|
|
|
$
|
823
|
|
|
$
|
66
|
|
Home equity loans and lines
|
|
|
94
|
|
|
|
94
|
|
|
|
15
|
|
|
|
68
|
|
|
|
4
|
|
Commercial real estate
|
|
|
2,249
|
|
|
|
2,249
|
|
|
|
129
|
|
|
|
1,297
|
|
|
|
74
|
|
Construction and land
|
|
|
2,305
|
|
|
|
2,305
|
|
|
|
196
|
|
|
|
1,182
|
|
|
|
128
|
|
Multi-family residential
|
|
|
529
|
|
|
|
529
|
|
|
|
|
|
|
|
66
|
|
|
|
25
|
|
Commercial and industrial
|
|
|
136
|
|
|
|
136
|
|
|
|
66
|
|
|
|
185
|
|
|
|
7
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,403
|
|
|
$
|
6,403
|
|
|
$
|
478
|
|
|
$
|
3,623
|
|
|
$
|
304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A summary of information pertaining to nonaccrual noncovered loans as of December 31, 2012 and 2011 is as follows.
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
(1)
|
|
|
2011
(1)
|
|
Nonaccrual loans:
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
4,644
|
|
|
$
|
4,298
|
|
Home equity loans and lines
|
|
|
149
|
|
|
|
191
|
|
Commercial real estate
|
|
|
5,368
|
|
|
|
4,194
|
|
Construction and land
|
|
|
709
|
|
|
|
813
|
|
Multi-family residential
|
|
|
1,327
|
|
|
|
1,322
|
|
Commercial and industrial
|
|
|
170
|
|
|
|
139
|
|
Consumer
|
|
|
1
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
12,368
|
|
|
$
|
11,007
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes $10.2
million and $7.2 million in acquired loans from GSFC as of December 31, 2012 and 2011, respectively.
|
As of December 31, 2012, the Company was not committed to lend additional funds to any customer whose loan was classified as
impaired.
As of December 31, 2012 and 2011, the Company had accrued interest receivable for loans of $2,708,000 and $3,063,000,
respectively.
66
Troubled Debt Restructurings
During the course of its lending operations, the Company periodically grants concessions to its customers in an attempt to protect as much of its investment as possible and minimize risk of loss. These
concessions may include restructuring the terms of a customer loan to alleviate the burden of the customers near-term cash requirements. Effective January 1, 2011, the Company adopted the provisions of ASU No. 2011-02,
Receivables
(Topic 310): A Creditors Determination of Whether a Restructuring is a Troubled Debt Restructuring, which provides clarification on the determination of whether loan restructurings are considered troubled debt restructurings
(TDRs). In accordance with the ASU, in order to be considered a TDR, the Company must conclude that the restructuring of a loan to a borrower who is experiencing financial difficulties constitutes a concession. The Company
defines a concession to the customer as a modification of existing terms granted to the borrower for economic or legal reasons related to the borrowers financial difficulties that the Company would otherwise not consider. The concession is
either granted through an agreement with the customer or is imposed by a court or law. Concessions include modifying original loan terms to reduce or defer cash payments required as part of the loan agreement, including but not limited to:
|
|
|
a reduction of the stated interest rate for the remaining original life of the debt,
|
|
|
|
extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk characteristics,
|
|
|
|
reduction of the face amount or maturity amount of the debt as stated in the agreement, or
|
|
|
|
reduction of accrued interest receivable on the debt.
|
In its determination of whether the customer is experiencing financial difficulties, the Company considers numerous indicators, including, but not limited to:
|
|
|
whether the customer is currently in default on its existing loan, or is in an economic position where it is probable the customer will be in default
on its loan in the foreseeable future without a modification,
|
|
|
|
whether the customer has declared or is in the process of declaring bankruptcy,
|
|
|
|
whether there is substantial doubt about the customers ability to continue as a going concern,
|
|
|
|
whether, based on its projections of the customers current capabilities, the Company believes the customers future cash flows will be
insufficient to service the debt, including interest, in accordance with the contractual terms of the existing agreement for the foreseeable future, and
|
|
|
|
whether, without modification, the customer cannot obtain sufficient funds from other sources at an effective interest rate equal to the current market
rate for similar debt for a non-troubled debtor.
|
If the Company concludes that both a concession has been granted and the
concession was granted to a customer experiencing financial difficulties, the Company identifies the loan as a TDR in its loan system. For purposes of the determination of an allowance for loan losses on these TDRs, the loan is reviewed for specific
impairment in accordance with the Companys allowance for loan loss methodology. If it is determined that losses are probable on such TDRs, either because of delinquency or other credit quality indicators, the Company establishes specific
reserves for these loans.
67
Information about the Companys TDRs, including acquired loans at December 31, 2012 and 2011 is
presented in the following tables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012
|
|
(dollars in thousands)
|
|
Current
|
|
|
Past Due
Greater
Than
30 Days
|
|
|
Nonaccrual
TDRs
|
|
|
Total
TDRs
(1)
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
|
|
|
$
|
310
|
|
|
$
|
51
|
|
|
$
|
361
|
|
Home equity loans and lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
|
|
|
|
299
|
|
|
|
1,238
|
|
|
|
1,537
|
|
Construction and land
|
|
|
471
|
|
|
|
|
|
|
|
|
|
|
|
471
|
|
Multi-family residential
|
|
|
|
|
|
|
|
|
|
|
679
|
|
|
|
679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
471
|
|
|
|
609
|
|
|
|
1,968
|
|
|
|
3,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
5
|
|
|
|
|
|
|
|
896
|
|
|
|
901
|
|
Consumer
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other loans
|
|
|
34
|
|
|
|
|
|
|
|
896
|
|
|
|
930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
505
|
|
|
$
|
609
|
|
|
$
|
2,864
|
|
|
$
|
3,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2011
|
|
(dollars in thousands)
|
|
Current
|
|
|
Past Due
Greater
Than
30 Days
|
|
|
Nonaccrual
TDRs
|
|
|
Total
TDRs
(1)
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Home equity loans and lines
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
Commercial real estate
|
|
|
319
|
|
|
|
|
|
|
|
117
|
|
|
|
436
|
|
Construction and land
|
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
198
|
|
Multi-family residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
532
|
|
|
|
|
|
|
|
117
|
|
|
|
649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
Consumer
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other loans
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
598
|
|
|
$
|
|
|
|
$
|
117
|
|
|
$
|
715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
TDRs include $3,058,000 and $26,000 at December 31, 2012 and 2011, respectively, of acquired loans with deteriorated loan quality.
|
68
A summary of information pertaining to modified terms of loans, as of the date indicated is as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012
|
|
|
As of December 31, 2011
|
|
(dollars in thousands)
|
|
Number
of
Contracts
|
|
|
Pre-
modification
Outstanding
Recorded
Investment
|
|
|
Post-
modification
Outstanding
Recorded
Investment
|
|
|
Number
of
Contracts
|
|
|
Pre-modification
Outstanding
Recorded
Investment
|
|
|
Post-
modification
Outstanding
Recorded
Investment
|
|
Troubled debt restructurings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family first mortgage
|
|
|
2
|
|
|
$
|
365
|
|
|
$
|
361
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
Home equity loans and lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
19
|
|
|
|
15
|
|
Commercial real estate
|
|
|
3
|
|
|
|
1,556
|
|
|
|
1,537
|
|
|
|
2
|
|
|
|
447
|
|
|
|
435
|
|
Construction and land
|
|
|
3
|
|
|
|
936
|
|
|
|
471
|
|
|
|
2
|
|
|
|
199
|
|
|
|
199
|
|
Multi-family residential
|
|
|
1
|
|
|
|
787
|
|
|
|
679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
2
|
|
|
|
1,250
|
|
|
|
901
|
|
|
|
2
|
|
|
|
55
|
|
|
|
22
|
|
Other consumer
|
|
|
3
|
|
|
|
41
|
|
|
|
29
|
|
|
|
3
|
|
|
|
50
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
14
|
|
|
$
|
4,935
|
|
|
$
|
3,978
|
|
|
|
10
|
|
|
$
|
770
|
|
|
$
|
715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since December 31, 2012, a TDR with an outstanding balance of $310,000 which was performing as of year end, has defaulted. None of the
other performing troubled debt restructurings as of December 31, 2012 has defaulted subsequent to the restructuring through the date the financial statements were available to be issued.
6. Loan Servicing
Mortgage loans sold to and serviced for others are not included in the accompanying statements of financial condition. The unpaid
principal balances of these loans as of December 31 of the years indicated are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Mortgage loans sold to Federal Home Loan Mortgage Corporation without recourse
|
|
$
|
16,755
|
|
|
$
|
23,832
|
|
|
$
|
8,043
|
|
Mortgage loans sold to Federal National Mortgage Association without recourse
|
|
|
116,352
|
|
|
|
112,693
|
|
|
|
23,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
133,107
|
|
|
$
|
136,525
|
|
|
$
|
31,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company records servicing assets related to mortgage loans sold and serviced at fair value and will amortize these servicing assets
over the period of estimated net servicing income associated with each loan. Management assesses servicing assets for potential impairment annually. Activity related to servicing assets for the years ended December 31, 2012, 2011 and 2010 is
summarized as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Balance at the beginning of the year
|
|
$
|
545
|
|
|
$
|
145
|
|
|
$
|
78
|
|
Recognition of servicing assets from the transfer of financial assets
(1)
|
|
|
261
|
|
|
|
529
|
|
|
|
112
|
|
Amortization
|
|
|
(195
|
)
|
|
|
(129
|
)
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
611
|
|
|
$
|
545
|
|
|
$
|
145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value, end of period
|
|
$
|
1,995
|
|
|
$
|
1,811
|
|
|
$
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes $404,000 acquired in 2011 from the acquisition of GSFC.
|
Custodial and escrow account balances maintained in connection with the foregoing loan servicing arrangements were $1,313,000 and
$733,000 as of December 31, 2012 and 2011, respectively.
69
7. Office Properties and Equipment
Office properties and equipment consisted of the following as of December 31 of the years indicated.
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
Land
|
|
$
|
10,330
|
|
|
$
|
10,616
|
|
Buildings and improvements
|
|
|
22,809
|
|
|
|
22,597
|
|
Furniture and equipment
|
|
|
9,433
|
|
|
|
8,979
|
|
|
|
|
|
|
|
|
|
|
Total office properties and equipment
|
|
|
42,572
|
|
|
|
42,192
|
|
Less accumulated depreciation
|
|
|
11,795
|
|
|
|
10,428
|
|
|
|
|
|
|
|
|
|
|
Total office properties and equipment, net
|
|
$
|
30,777
|
|
|
$
|
31,764
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense for the years ended December 31, 2012, 2011 and 2010 was $1,452,000, $1,299,000 and $1,099,000, respectively.
8. Goodwill and Intangibles
The carrying amount of goodwill as of December 31, 2012 and 2011 was $856,000 and $914,000, respectively.
A summary of core deposit intangible assets as of December 31 of the years indicated follows.
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
Gross carrying amount
|
|
$
|
1,762
|
|
|
$
|
1,221
|
|
Core deposit intangibles acquired during the year
|
|
|
|
|
|
|
859
|
|
Less amortization
|
|
|
(377
|
)
|
|
|
(318
|
)
|
|
|
|
|
|
|
|
|
|
Total core deposit intangible asset
|
|
$
|
1,385
|
|
|
$
|
1,762
|
|
|
|
|
|
|
|
|
|
|
Amortization expense on the core deposit intangible assets for the years ended December 31, 2012, 2011 and 2010 was $377,000,
$318,000 and $208,000, respectively.
The carrying amount of the mortgage servicing asset as of December 31, 2012, 2011 and 2010 was
$611,000, $545,000 and $145,000, respectively.
9. Deposits
Deposits consisted of the following major classifications as of December 31 of the years indicated.
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
Demand deposit accounts
|
|
$
|
152,462
|
|
|
$
|
127,828
|
|
Savings
|
|
|
51,515
|
|
|
|
43,671
|
|
Money market accounts
|
|
|
191,191
|
|
|
|
180,790
|
|
NOW accounts
|
|
|
123,294
|
|
|
|
93,679
|
|
Certificates of deposit
|
|
|
252,967
|
|
|
|
284,766
|
|
|
|
|
|
|
|
|
|
|
Total deposits
|
|
$
|
771,429
|
|
|
$
|
730,734
|
|
|
|
|
|
|
|
|
|
|
70
As of December 31, 2012, the scheduled maturities of certificates of deposit are as follows.
|
|
|
|
|
(dollars in thousands)
|
|
Amount
|
|
2013
|
|
$
|
180,493
|
|
2014
|
|
|
38,056
|
|
2015
|
|
|
13,175
|
|
2016
|
|
|
4,325
|
|
2017
|
|
|
3,322
|
|
Thereafter
|
|
|
13,596
|
|
|
|
|
|
|
Total certificates of deposit
|
|
$
|
252,967
|
|
|
|
|
|
|
As of December 31, 2012 and 2011, the aggregate amount of certificates of deposit with balances of $100,000 or more was
$119,766,000 and $130,417,000, respectively.
10. Short-term FHLB Advances
As of December 31, 2012, short-term FHLB advances totaled $10,000,000, compared to $52,634,000 as of December 31, 2011. For
the years ended December 31, 2012 and 2011, the average volume of short-term FHLB advances carried by the Company was $26,467,000 and $39,139,000, respectively.
Collateral for short and long-term FHLB advances is secured through a blanket lien evidenced by the Banks pledge of first mortgage collateral, demand deposit accounts, capital stock and certain
other assets pursuant to the Advances, Collateral Pledge and Security Agreement. Under this collateral pledge agreement, the Bank must meet all statutory and regulatory capital standards and must meet all FHLB credit underwriting
standards. Management believes that the Bank was in compliance with all such requirements as of December 31, 2012 and 2011.
As of
December 31, 2012 and 2011, the Bank had $320,892,000 and $270,507,000, respectively, of additional FHLB advances available.
11. Long-term FHLB Advances
As of December 31, 2012 and 2011, long-term FHLB advances totaled $36,257,000 and $40,989,000, respectively. The following table
summarizes long-term advances as of December 31, 2012.
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
Amount
|
|
|
Weighted
Average
Rate
|
|
Fixed rate advances maturing in:
|
|
|
|
|
|
|
|
|
2013
|
|
$
|
13,290
|
|
|
|
0.82
|
%
|
2014
|
|
|
10,578
|
|
|
|
1.39
|
|
2015
|
|
|
2,389
|
|
|
|
1.72
|
|
2016
|
|
|
|
|
|
|
|
|
2017
|
|
|
10,000
|
|
|
|
3.22
|
|
|
|
|
|
|
|
|
|
|
Total long-term FHLB advances
|
|
$
|
36,257
|
|
|
|
1.71
|
%
|
|
|
|
|
|
|
|
|
|
71
12. Income Taxes
The Company files federal income tax returns on a calendar year basis. Income tax expense (benefit) for the years indicated is
summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Current
|
|
$
|
4,281
|
|
|
$
|
988
|
|
|
$
|
2,961
|
|
Deferred
|
|
|
324
|
|
|
|
1,647
|
|
|
|
(617
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense
|
|
$
|
4,605
|
|
|
$
|
2,635
|
|
|
$
|
2,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the Companys net deferred tax asset as of December 31 of the years indicated are as follows:
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
Deferred tax assets (liabilities):
|
|
|
|
|
|
|
|
|
FHLB stock dividends
|
|
$
|
10
|
|
|
$
|
(10
|
)
|
Provision for loan losses
|
|
|
1,809
|
|
|
|
1,735
|
|
Accumulated depreciation
|
|
|
(1,204
|
)
|
|
|
(1,487
|
)
|
Intangible assets
|
|
|
203
|
|
|
|
(1,144
|
)
|
Unrealized gain on securities available for sale
|
|
|
(1,668
|
)
|
|
|
(889
|
)
|
Discount on purchased loans
|
|
|
(435
|
)
|
|
|
1,227
|
|
Borrowings
|
|
|
67
|
|
|
|
217
|
|
Premium on purchased deposits
|
|
|
34
|
|
|
|
183
|
|
Mortgage servicing rights
|
|
|
(208
|
)
|
|
|
(184
|
)
|
Deferred compensation
|
|
|
284
|
|
|
|
245
|
|
Stock-based compensation
|
|
|
623
|
|
|
|
477
|
|
Other-than-temporary impairment of securities
|
|
|
|
|
|
|
16
|
|
Other
|
|
|
1,116
|
|
|
|
933
|
|
|
|
|
|
|
|
|
|
|
Deferred tax asset
|
|
$
|
631
|
|
|
$
|
1,319
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2012, 2011 and 2010, the provision for federal income taxes differed from the amount computed by
applying the federal income tax statutory rate of 34% on income from operations as indicated in the following analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Federal tax based on statutory rate
|
|
$
|
4,686
|
|
|
$
|
2,637
|
|
|
$
|
2,391
|
|
State tax based on statutory rate
|
|
|
13
|
|
|
|
16
|
|
|
|
39
|
|
Decrease resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of tax-exempt income
|
|
|
(160
|
)
|
|
|
(76
|
)
|
|
|
(18
|
)
|
Tax credits
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
66
|
|
|
|
58
|
|
|
|
(68
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
4,605
|
|
|
$
|
2,635
|
|
|
$
|
2,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
33.4
|
%
|
|
|
34.0
|
%
|
|
|
33.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings as of December 31, 2012, 2011 and 2010, included $5,837,000 for which no deferred federal income tax liability
has been recognized. This amount represents an allocation of income to bad debt deductions for tax purposes only. Reductions of amounts so allocated for purposes other than bad debt losses would create income for tax purposes only, which would be
subject to the then-current federal statutory income tax rate. The unrecorded deferred income tax liability on the above amount was $1,985,000 as of December 31, 2012, 2011 and 2010. Current accounting standards do not require the accrual of
this deferred tax amount to be recorded unless it is probable that the reserve (for tax purposes) will be significantly depleted by loan losses deductible for tax purposes in the future. Based on current estimates of losses within the Companys
loan portfolio, accrual of the deferred tax liability associated with this reserve was not required as of December 31, 2012, 2011 and 2010.
72
13. Commitments and Contingencies
Standby letters of credit represent commitments by the Bank to meet the obligations of certain customers if called upon. The Bank
normally secures its outstanding standby letters of credit with deposits from the customer.
Additionally, in the normal course of business,
there were various other commitments and contingent liabilities which are not reflected in the financial statements. Loan commitments are single-purpose commitments to lend which will be funded and reduced according to specified repayment schedules.
Most of these commitments have maturities of less than one year. The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and the
undisbursed portion of construction loans as of December 31 of the years indicated.
|
|
|
|
|
|
|
|
|
|
|
Contract Amount
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
Standby letters of credit
|
|
$
|
2,907
|
|
|
$
|
1,626
|
|
Available portion of lines of credit
|
|
|
59,124
|
|
|
|
60,675
|
|
Undisbursed portion of loans in process
|
|
|
47,678
|
|
|
|
37,840
|
|
Commitments to originate loans
|
|
|
77,857
|
|
|
|
53,711
|
|
The Bank uses the same credit policies in making commitments as it does for on-balance-sheet instruments. 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 of the customer. Collateral held varies but may
include certificates of deposit, property, plant and equipment and income-producing properties. There are no commitments which present an unusual risk to the Bank, and no material losses are anticipated as a result of these transactions.
14. Regulatory Matters
The Bank is subject to regulatory capital requirements administered by the OCC. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Companys financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The
Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Dividends paid by the Bank are the primary source of funds available to the Company. Banking regulations limit the amount of dividends that may be paid without prior approval of the regulatory
authorities. These restrictions for the Bank are based on the level of regulatory classified assets, prior earnings, and the ratio of equity capital to total assets. The Bank may not declare dividends without prior regulatory approval.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier 1 capital (as defined) to average assets and risk-weighted assets (as defined). Management believes, as of December 31, 2012, that the Bank meets all capital adequacy requirements to which it is subject.
As of December 31, 2012, the most recent notification from the OCC categorized the Bank as well capitalized under the OCC
regulatory classification framework. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage and tangible capital ratios as set forth in the following table. There are no
conditions or events since that notification that management believes have changed the Banks category.
73
The Banks actual capital amounts and ratios are also presented in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
Actual
|
|
|
Minimum
For Capital
Adequacy
Purposes
|
|
|
To Be Well
Capitalized
Under Prompt
Corrective
Action
Provisions
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 risk-based capital:
|
|
$
|
130,002
|
|
|
|
20.97
|
%
|
|
$
|
24,796
|
|
|
|
4.0
|
%
|
|
$
|
37,195
|
|
|
|
6.0
|
%
|
Total risk-based capital:
|
|
|
135,322
|
|
|
|
21.83
|
%
|
|
|
49,593
|
|
|
|
8.0
|
%
|
|
|
61,991
|
|
|
|
10.0
|
%
|
Tier 1 leverage capital:
|
|
|
130,002
|
|
|
|
13.67
|
%
|
|
|
38,050
|
|
|
|
4.0
|
%
|
|
|
47,562
|
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 risk-based capital:
|
|
$
|
118,878
|
|
|
|
20.34
|
%
|
|
$
|
23,378
|
|
|
|
4.0
|
%
|
|
$
|
35,068
|
|
|
|
6.0
|
%
|
Total risk-based capital:
|
|
|
123,504
|
|
|
|
21.13
|
%
|
|
|
46,757
|
|
|
|
8.0
|
%
|
|
|
58,446
|
|
|
|
10.0
|
%
|
Tier 1 leverage capital:
|
|
|
118,878
|
|
|
|
12.53
|
%
|
|
|
37,944
|
|
|
|
4.0
|
%
|
|
|
47,431
|
|
|
|
5.0
|
%
|
15. Benefit Plans
401(k) Match and Profit Sharing Plan
The Companys 401(k) defined contribution plan allows its participants to contribute up to 75% of their pretax earnings on a tax-deferred basis up to the statutory limit, and the Company contributes
a matching contribution on behalf of plan participants limited to 4% of the employees salaries. For the years ended December 31, 2012, 2011 and 2010, the Company made contributions of $386,000, $358,000 and $241,000, respectively, in
connection with the plans, which is included in compensation and benefits expense in the accompanying statements of income.
Employee Stock
Ownership Plan
In 2008, the Company established an employee stock ownership plan (ESOP) for the benefit of all eligible
employees of the Company. The leveraged ESOP is accounted for in accordance with the requirements of ASC 718,
Compensation Stock Compensation
.
Employees of the Bank who have been employed for a six-month period and who have attained age 21 are eligible to participate in the ESOP. It is anticipated that contributions will be made to the plan in
amounts necessary to amortize the debt to the Company over a period of 20 years.
Under ASC 718, unearned ESOP shares are not considered
outstanding and are shown as a reduction of shareholders equity as unearned compensation. Dividends on unallocated ESOP shares 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. To the extent that the fair value of the Companys ESOP shares differ from the cost of such shares, the differential is credited to shareholders equity. The
Company receives a tax deduction equal to the cost of the shares released. As the loan is internally leveraged, the loan receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a Company liability.
74
Compensation cost related to the ESOP was $612,000, $520,000 and $474,000 for the years ended
December 31, 2012, 2011 and 2010, respectively. The fair value of the unearned ESOP shares, using the closing quoted market price per share as of year-end, was approximately $10,264,000 and $9,271,000 as of December 31, 2012 and 2011,
respectively. A summary of the ESOP share allocation as of December 31, 2012 follows.
|
|
|
|
|
Shares allocated, beginning of year
|
|
|
114,570
|
|
Shares allocated during the year
|
|
|
35,706
|
|
Shares distributed during the year
|
|
|
(6,698
|
)
|
|
|
|
|
|
Allocated shares held by ESOP trust as of year end
|
|
|
143,578
|
|
Unallocated shares
|
|
|
562,393
|
|
|
|
|
|
|
Total ESOP shares
|
|
|
705,971
|
|
|
|
|
|
|
Salary Continuation Agreements
As a supplement to its 401(k) retirement plan, the Bank has entered into nonqualified salary continuation agreements with two executive officers of the Bank. Under his salary continuation agreement, the
Chief Executive Officer (CEO) will be entitled to a stated annual benefit for a period of ten years upon retirement from the Bank after attaining age 62. Benefits under the agreement vest over ten years, with 50% of this benefit having
vested in 2007. In the event of early retirement, the Bank shall pay the CEO his vested benefits in 120 equal monthly installments upon his attaining age 62. Upon death during active service, the Bank shall distribute to the executives
beneficiary an amount equal to two times his fully vested normal retirement benefit, payable in monthly installments over five years.
In the
event of a separation from service within 24 months following a change in control but prior to normal retirement age, the Bank shall distribute to the CEO his fully vested annual benefit in 12 equal monthly installments for ten years beginning the
earlier of 24 months after separation from service or age 62. If separation from service occurs more than 24 months following a change in control, the annual benefit shall be distributed beginning at age 62.
The Banks nonqualified salary continuation agreement with its Chief Lending Officer provides that the executive will be entitled to a stated annual
benefit for a period of ten years upon retirement from the Bank after attaining age 65, distributed monthly. In the event of early retirement, the Bank shall pay the executive his vested benefits in 120 equal monthly installments upon attaining age
65. Upon death during active service, the Bank shall distribute the fully vested normal retirement benefit to the executives beneficiary in 120 monthly installments. In the event of a separation from service within 24 months following a change
in control but prior to normal retirement age, the Bank shall distribute to the executive the vested portion of the annual benefit in a lump sum on the first day of the month following the separation from service. Benefits are subject to a six-month
delay to the extent required by applicable law. The Company had an outstanding liability totaling $835,000 and $722,000 as of December 31, 2012 and 2011, respectively, in connection with the agreements.
16. Stock-based Payment Arrangements
The Companys shareholders approved the 2009 Stock Option Plan (SOP) and the 2009 Recognition and Retention Plan
(RRP) on May 12, 2009 to provide incentives and awards for directors, officers and other key employees of the Company and its subsidiary. These plans are administered by a committee appointed by the Board of Directors, which selects
persons eligible to receive awards and determines the number of shares and/or options subject to each award, the terms, conditions and other provisions of the awards. In accordance with ASC 718, the Company adopted a fair value based method of
accounting for employee stock compensation plans, whereby compensation cost is measured as of the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period.
Stock Option Plan
The Company issues
stock options under the SOP to directors, officers and other key employees. The option exercise price cannot be less than the fair value of the underlying common stock as of the date of the option grant
75
and the maximum option term cannot exceed ten years. The stock options granted were issued with vesting periods of five years. The maximum number of shares issuable under the SOP is 892,687,
subject to adjustment. As of December 31, 2012, options to acquire 850,520 shares were outstanding under the SOP.
The fair value of each
option granted is estimated on the grant date using the Black-Scholes option pricing model. This model requires management to make certain assumptions, including the expected life of the option, the risk-free rate of interest, the expected
volatility and the expected dividend yield. The following assumptions were made in estimating 2012 fair values:
|
|
|
|
|
Expected dividends
|
|
|
1.5
|
%
|
Expected volatility
|
|
|
40.11
|
%
|
Risk-free interest rate
|
|
|
1.0
|
%
|
Expected term (in years)
|
|
|
6.5
|
|
As of December 31, 2012, there was $1,112,000 of unrecognized compensation cost related to stock options which is expected to be
recognized over a period of 2.2 years.
For the years ended December 31, 2012, 2011 and 2010, the Company recognized $663,000, $626,000
and $594,000, respectively, in compensation cost related to stock options, which is included in compensation and benefits expense in the accompanying consolidated statements of income.
The following table represents stock option activity for the year ended December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
Number of
Options
|
|
|
Weighted-
Average
Exercise
Price
|
|
|
Weighted-
Average
Grant
Date Fair
Value
|
|
|
Weighted-
Average
Remaining
Contractual
Term
(Years)
|
|
|
Aggregate
Intrinsic
Value
|
|
Outstanding as of January 1, 2012
|
|
|
833,180
|
|
|
$
|
11.58
|
|
|
$
|
3.79
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
49,500
|
|
|
|
17.13
|
|
|
|
5.93
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(17,060
|
)
|
|
|
12.11
|
|
|
|
4.00
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(15,100
|
)
|
|
|
14.58
|
|
|
|
4.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as of December 31, 2012
|
|
|
850,520
|
|
|
$
|
11.84
|
|
|
$
|
3.89
|
|
|
|
6.6
|
|
|
$
|
5,452,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable as of December 31, 2012
|
|
|
466,848
|
|
|
$
|
11.48
|
|
|
$
|
3.75
|
|
|
|
6.4
|
|
|
$
|
3,161,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition and Retention Plan
The Company issues restricted stock under the RRP to directors, officers and other key employees. A total of 357,075 shares of the Companys outstanding common stock, or 4% of total shares
outstanding at the time the RRP was implemented, were approved for restricted stock awards under the RRP. During 2009, the Company purchased in the open market all shares required to fund the RRP at an average cost of $11.81 per share. As of
December 31, 2012, the cost of such shares held by the RRP totaled $1,832,000, which is included in the Companys unallocated common stock held by the RRP in the consolidated statements of financial condition.
The RRP allows for the issuance of restricted stock awards that may not be sold or otherwise transferred until certain restrictions have lapsed. The
holders of the restricted stock provide instructions to the trustees of the RRP as to how their restricted stock shall be voted. The unearned compensation related to these awards is amortized to compensation expense over the five-year vesting
period. The total share-based compensation expense for these awards is determined based on the market price of the Companys common stock as of the date of grant applied to the total number of shares granted and is amortized over the vesting
period. As of December 31, 2012, unearned share-based compensation associated with these awards totaled $1,205,000.
For the years ended
December 31, 2012, 2011 and 2010, the Company recognized $802,000, $771,000 and $766,000, respectively, in compensation cost related to restricted stock grants, which is included in compensation and benefits expense in the accompanying
consolidated statements of income.
76
The following table represents unvested restricted stock activity in the RRP for the year ended
December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
|
Weighted-
Average
Grant
Date Fair
Value
|
|
Balance, beginning of year
|
|
|
211,860
|
|
|
$
|
11.64
|
|
Granted
|
|
|
8,000
|
|
|
|
17.03
|
|
Forfeited
|
|
|
(6,200
|
)
|
|
|
14.95
|
|
Released
|
|
|
(68,820
|
)
|
|
|
11.57
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
|
144,840
|
|
|
$
|
11.83
|
|
|
|
|
|
|
|
|
|
|
17. Earnings Per Share
Earnings per common share was computed based on the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
(in thousands, except per share data)
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income applicable to common shares
|
|
$
|
9,190
|
|
|
$
|
5,120
|
|
|
$
|
4,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
6,912
|
|
|
|
7,106
|
|
|
|
7,521
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock
|
|
|
271
|
|
|
|
125
|
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - assuming dilution
|
|
|
7,183
|
|
|
|
7,231
|
|
|
|
7,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share
|
|
$
|
1.33
|
|
|
$
|
0.72
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share - assuming dilution
|
|
$
|
1.28
|
|
|
$
|
0.71
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options on 850,520, 833,180 and 819,080 shares of common stock were not included in computing diluted earnings per share for the years
ended December 31, 2012, 2011 and 2010, respectively, because the effect of these shares were anti-dilutive.
18. Related Party Transactions
Certain directors and officers of the Company are customers of the Company. Loan transactions with directors, officers and employees
are made on the same terms as those prevailing at the time for comparable loans to other persons. Loans outstanding to directors, executive officers and their affiliates totaled $7,858,000 and $7,986,000 as of December 31, 2012 and 2011,
respectively. A summary of related party loan activity during 2012 follows.
|
|
|
|
|
(dollars in thousands)
|
|
|
|
Balance, beginning of year
|
|
$
|
7,986
|
|
New loans
|
|
|
3,495
|
|
Repayments, net
|
|
|
(3,623
|
)
|
|
|
|
|
|
Balance, end of year
|
|
$
|
7,858
|
|
|
|
|
|
|
None of the related party loans were identified as impaired or exceeded 5% of shareholders equity for the years ended 2012 or
2011.
Related party deposits totaled $11,552,000 and $5,973,000 as of December 31, 2012 and 2011, respectively.
77
19. Fair Value Disclosures
The Company groups its financial assets and liabilities measured at fair value in three levels
as required by ASC 820,
Fair Value Measurements and Disclosures
. Under this guidance, fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that
prioritizes the inputs used to develop those assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair
value are as follows:
|
|
Level 1 Quoted prices in active markets for identical assets or liabilities.
|
|
|
Level 2 Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities
in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
|
|
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. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
|
An assets or liabilitys categorization within the fair value hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. Management reviews and updates the fair value hierarchy classifications of the Companys assets and liabilities on a quarterly basis.
Recurring Basis
Investment Securities Available for Sale
Fair values of investment securities available for sale are primarily measured using information from a third-party pricing service. This pricing
service provides pricing information by utilizing evaluated pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids,
offers and reference data from market research publications. If quoted prices are available in an active market, investment securities are classified as Level 1 measurements. If quoted prices are not available in an active market,
fair values were estimated primarily by the use of pricing models. Level 2 investment securities were primarily comprised of mortgage-backed securities issued by government agencies and U.S. government-sponsored enterprises. In
certain cases, where there is limited or less transparent information provided by the Companys third-party pricing service, fair value is estimated by the use of secondary pricing services or through the use of non-binding third-party broker
quotes. Investment securities are classified within Level 3 when little or no market activity supports the fair value.
Management primarily
identifies investment securities which may have traded in illiquid or inactive markets by identifying instances of a significant decrease in the volume and frequency of trades, relative to historical levels, as well as instances of a significant
widening of the bid-ask spread in the brokered markets. Investment securities that are deemed to have been trading in illiquid or inactive markets may require the use of significant unobservable inputs. For example, management may use
quoted prices for similar investment securities in the absence of a liquid and active market for the investment securities being valued. As of December 31, 2012, management did not make adjustments to prices provided by the third-party
pricing service as a result of illiquid or inactive markets.
78
The following tables present the balances of assets and liabilities measured on a recurring basis as of
December 31, 2012 and 2011 aggregated by the level in the fair value hierarchy in which these measurements fall.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
December 31, 2012
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
102,513
|
|
|
$
|
|
|
|
$
|
102,513
|
|
|
$
|
|
|
Non-U.S. agency mortgage-backed
|
|
|
12,668
|
|
|
|
|
|
|
|
12,668
|
|
|
|
|
|
Municipal bonds
|
|
|
17,585
|
|
|
|
|
|
|
|
17,585
|
|
|
|
|
|
U.S. government agency
|
|
|
24,490
|
|
|
|
|
|
|
|
24,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
157,256
|
|
|
$
|
|
|
|
$
|
157,256
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
December 31, 2011
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. agency mortgage-backed
|
|
$
|
116,529
|
|
|
$
|
|
|
|
$
|
116,529
|
|
|
$
|
|
|
Non-U.S. agency mortgage-backed
|
|
|
13,679
|
|
|
|
|
|
|
|
13,679
|
|
|
|
|
|
Municipal bonds
|
|
|
12,221
|
|
|
|
|
|
|
|
12,221
|
|
|
|
|
|
U.S. government agency
|
|
|
12,831
|
|
|
|
|
|
|
|
12,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
155,260
|
|
|
$
|
|
|
|
$
|
155,260
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company did not record any liabilities at fair value for which measurement of the fair value was made on a recurring basis.
Nonrecurring Basis
In accordance with the provisions of ASC 310,
Receivables
, the Company records loans considered impaired at their fair value. A loan is considered impaired if it is probable the Company will be
unable to collect all amounts due according to the contractual terms of the loan agreement. Fair value is measured at the fair value of the collateral for collateral-dependent loans. For non-collateral-dependent loans, fair value is measured by
present valuing expected future cash flows. Impaired loans are classified as Level 3 assets when measured using appraisals from external parties of the collateral less any prior liens. Repossessed assets are initially recorded at fair value less
estimated costs to sell. The fair value of repossessed assets is based on property appraisals and an analysis of similar properties available. As such, the Company classifies repossessed assets as Level 3 assets.
Acquired loans with deteriorated credit quality, the FDIC loss sharing receivable, and acquired interest-bearing deposit liabilities
are measured on a nonrecurring basis using significant unobservable inputs (Level 3).
79
The Company has segregated all financial assets and liabilities that are measured at fair value on a
nonrecurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
(dollars in thousands)
|
|
December 31, 2012
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit quality
|
|
$
|
50,854
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
50,854
|
|
Acquired loans without deteriorated credit quality
|
|
|
117,536
|
|
|
|
|
|
|
|
|
|
|
|
117,536
|
|
Impaired loans excluding acquired loans
|
|
|
5,353
|
|
|
|
|
|
|
|
|
|
|
|
5,353
|
|
Repossessed assets
|
|
|
6,454
|
|
|
|
|
|
|
|
|
|
|
|
6,454
|
|
FDIC loss sharing receivable
|
|
|
15,546
|
|
|
|
|
|
|
|
|
|
|
|
15,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
195,743
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
195,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits acquired through business combinations
|
|
$
|
81,948
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
81,948
|
|
FHLB advances acquired through business combinations
|
|
|
18,257
|
|
|
|
|
|
|
|
|
|
|
|
18,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
100,205
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
100,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
(dollars in thousands)
|
|
December 31, 2011
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans with deteriorated credit quality
|
|
$
|
66,393
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
66,393
|
|
Acquired loans without deteriorated credit quality
|
|
|
155,064
|
|
|
|
|
|
|
|
|
|
|
|
155,064
|
|
Impaired loans excluding acquired loans
|
|
|
5,925
|
|
|
|
|
|
|
|
|
|
|
|
5,925
|
|
Repossessed assets
|
|
|
8,964
|
|
|
|
|
|
|
|
|
|
|
|
8,964
|
|
FDIC loss sharing receivable
|
|
|
24,222
|
|
|
|
|
|
|
|
|
|
|
|
24,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
260,568
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
260,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits acquired through business combinations
|
|
$
|
129,034
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
129,034
|
|
FHLB advances acquired through business combinations
|
|
|
34,123
|
|
|
|
|
|
|
|
|
|
|
|
34,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
163,157
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
163,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASC 820,
Fair Value Measurements and Disclosures
, requires the disclosure of each class of financial instruments for which it is
practicable to estimate. The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in
many instances, there are no quoted market prices for the Companys various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. ASC 820
excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
80
Fair value estimates are made at a specific point in time, based on relevant market information and
information about the financial statement element. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly
affect the estimates.
Fair value estimates included herein are based on existing on- and off-balance-sheet financial instruments without
attempting to estimate the value of anticipated future business and the fair value of assets and liabilities that are not required to be recorded or disclosed at fair value like premises and equipment. In addition, the tax ramifications related to
the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
The carrying value of cash and cash equivalents and interest-bearing deposits in banks approximate their fair value.
The fair value for investment securities is determined from quoted market prices when available. If a quoted market price is not available, fair value is
estimated using third party pricing services or quoted market prices of securities with similar characteristics.
The fair value of mortgage
loans held for sale and loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturity.
The cash surrender value of bank-owned life insurance (BOLI) approximates its fair value.
The fair value of demand deposits, savings and interest-bearing demand deposits is the amount payable on demand. The fair value of fixed-maturity
certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.
The carrying amount of the FHLB advances is estimated using the rates currently offered for advances of similar maturities.
Fair Value Limitations
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 the premium or discount on any particular financial instrument that could result from the sale of the Companys entire holdings. Fair
value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect
the estimates. Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial
instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes, premises and equipment and goodwill. In addition, the tax ramifications related to the realization of the unrealized gains
and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
The fair value of off-balance
sheet financial instruments as of December 31, 2012 and 2011 was immaterial.
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2012
|
|
(dollars in thousands)
|
|
Carrying
Amount
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
39,539
|
|
|
$
|
39,539
|
|
|
$
|
39,529
|
|
|
$
|
|
|
|
$
|
|
|
Interest-bearing deposits in banks
|
|
|
3,529
|
|
|
|
3,529
|
|
|
|
3,529
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale
|
|
|
157,256
|
|
|
|
157,256
|
|
|
|
|
|
|
|
157,256
|
|
|
|
|
|
Investment securities held to maturity
|
|
|
1,665
|
|
|
|
1,746
|
|
|
|
|
|
|
|
1,746
|
|
|
|
|
|
Mortgage loans held for sale
|
|
|
5,627
|
|
|
|
5,627
|
|
|
|
|
|
|
|
5,627
|
|
|
|
|
|
Loans, net
|
|
|
667,809
|
|
|
|
676,622
|
|
|
|
|
|
|
|
|
|
|
|
676,622
|
|
Cash surrender value of BOLI
|
|
|
17,286
|
|
|
|
17,286
|
|
|
|
17,286
|
|
|
|
|
|
|
|
|
|
FDIC loss sharing receivable
|
|
|
15,546
|
|
|
|
15,546
|
|
|
|
|
|
|
|
|
|
|
|
15,546
|
|
|
|
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
771,429
|
|
|
$
|
774,325
|
|
|
$
|
|
|
|
$
|
692,377
|
|
|
$
|
81,948
|
|
Short-term FHLB advances
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
Long-term FHLB advances
|
|
|
36,257
|
|
|
|
37,619
|
|
|
|
|
|
|
|
19,362
|
|
|
|
18,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2011
|
|
(dollars in thousands)
|
|
Carrying
Amount
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
31,769
|
|
|
$
|
31,769
|
|
|
$
|
31,769
|
|
|
$
|
|
|
|
$
|
|
|
Interest-bearing deposits in banks
|
|
|
5,583
|
|
|
|
5,583
|
|
|
|
5,583
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale
|
|
|
155,260
|
|
|
|
155,260
|
|
|
|
|
|
|
|
155,260
|
|
|
|
|
|
Investment securities held to maturity
|
|
|
3,462
|
|
|
|
3,575
|
|
|
|
|
|
|
|
3,575
|
|
|
|
|
|
Mortgage loans held for sale
|
|
|
1,673
|
|
|
|
1,673
|
|
|
|
|
|
|
|
1,673
|
|
|
|
|
|
Loans, net
|
|
|
661,267
|
|
|
|
686,538
|
|
|
|
|
|
|
|
|
|
|
|
686,538
|
|
Cash surrender value of BOLI
|
|
|
16,771
|
|
|
|
16,771
|
|
|
|
16,771
|
|
|
|
|
|
|
|
|
|
FDIC loss sharing receivable
|
|
|
24,222
|
|
|
|
24,222
|
|
|
|
|
|
|
|
|
|
|
|
24,222
|
|
|
|
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
730,734
|
|
|
$
|
732,266
|
|
|
$
|
|
|
|
$
|
603,232
|
|
|
$
|
129,034
|
|
Short-term FHLB advances
|
|
|
52,634
|
|
|
|
52,634
|
|
|
|
37,500
|
|
|
|
|
|
|
|
15,134
|
|
Long-term FHLB advances
|
|
|
40,989
|
|
|
|
42,465
|
|
|
|
|
|
|
|
23,476
|
|
|
|
18,989
|
|
82
20. Condensed Parent Company Only Financial Statements
Condensed financial statements of Home Bancorp, Inc. (parent company only) are shown below. The parent company has no significant
operating activities.
Condensed Balance Sheets
December 31, 2012 and 2011
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash in bank
|
|
$
|
2,088
|
|
|
$
|
1,975
|
|
Investment securities
|
|
|
4,182
|
|
|
|
9,126
|
|
Investment in subsidiary
|
|
|
135,298
|
|
|
|
122,998
|
|
Other assets
|
|
|
629
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
142,197
|
|
|
$
|
134,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
$
|
623
|
|
|
$
|
(114
|
)
|
Shareholders equity
|
|
|
141,574
|
|
|
|
134,285
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
142,197
|
|
|
$
|
134,171
|
|
|
|
|
|
|
|
|
|
|
Condensed Statements of Operations
For the Years Ended December 31, 2012, 2011 and 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
160
|
|
|
$
|
397
|
|
|
$
|
740
|
|
Gain on sale of investment
|
|
|
163
|
|
|
|
|
|
|
|
|
|
Dividend from subsidiary
|
|
|
|
|
|
|
18,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating income
|
|
|
323
|
|
|
|
18,397
|
|
|
|
740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
163
|
|
|
|
203
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
163
|
|
|
|
203
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense and equity in undistributed earnings of subsidiary
|
|
|
160
|
|
|
|
18,194
|
|
|
|
490
|
|
Income tax expense
|
|
|
63
|
|
|
|
76
|
|
|
|
192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before equity in undistributed earnings of subsidiary
|
|
|
97
|
|
|
|
18,118
|
|
|
|
298
|
|
Increase (decrease) in equity in undistributed earnings of subsidiary
|
|
|
9,093
|
|
|
|
(12,998
|
)
|
|
|
4,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
9,190
|
|
|
$
|
5,120
|
|
|
$
|
4,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83
Condensed Statements of Cash Flows
For the Years Ended December 31, 2012, 2011 and 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
9,190
|
|
|
$
|
5,120
|
|
|
$
|
4,688
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amortization of premium/discount on investments
|
|
|
(6
|
)
|
|
|
(20
|
)
|
|
|
(24
|
)
|
Gain on sale of investment securities
|
|
|
(163
|
)
|
|
|
|
|
|
|
|
|
Non-cash compensation
|
|
|
612
|
|
|
|
520
|
|
|
|
474
|
|
(Decrease) increase in accrued interest and other assets
|
|
|
(558
|
)
|
|
|
669
|
|
|
|
244
|
|
Decrease in equity in net income of subsidiary
|
|
|
(9,093
|
)
|
|
|
(5,002
|
)
|
|
|
(4,390
|
)
|
Dividend from subsidiary
|
|
|
|
|
|
|
18,000
|
|
|
|
|
|
Increase (decrease) in accrued expenses and other liabilities
|
|
|
788
|
|
|
|
(456
|
)
|
|
|
(185
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
770
|
|
|
|
18,831
|
|
|
|
807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from prepayment on available for sale securities
|
|
|
2,437
|
|
|
|
6,332
|
|
|
|
7,994
|
|
Proceeds from sale of available for sale securities
|
|
|
2,527
|
|
|
|
|
|
|
|
|
|
Net cash paid in acquisitions
|
|
|
|
|
|
|
(26,417
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
4,964
|
|
|
|
(20,085
|
)
|
|
|
7,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
207
|
|
|
|
75
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
(5,828
|
)
|
|
|
(5,467
|
)
|
|
|
(8,577
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Financing Activities
|
|
|
(5,621
|
)
|
|
|
(5,392
|
)
|
|
|
(8,577
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
|
113
|
|
|
|
(6,646
|
)
|
|
|
224
|
|
Cash and Cash Equivalents as of Beginning of Period
|
|
|
1,975
|
|
|
|
8,621
|
|
|
|
8,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents as of End of Period
|
|
$
|
2,088
|
|
|
$
|
1,975
|
|
|
$
|
8,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21. Consolidated Quarterly Results of Operations (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands, except per share data)
|
|
First
Quarter
|
|
|
Second
Quarter
|
|
|
Third
Quarter
|
|
|
Fourth
Quarter
|
|
|
|
|
|
|
Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
$
|
11,265
|
|
|
$
|
11,230
|
|
|
$
|
12,120
|
|
|
$
|
11,507
|
|
Total interest expense
|
|
|
1,313
|
|
|
|
1,262
|
|
|
|
1,204
|
|
|
|
1,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
9,952
|
|
|
|
9,968
|
|
|
|
10,916
|
|
|
|
10,372
|
|
Provision for loan losses
|
|
|
712
|
|
|
|
1,160
|
|
|
|
56
|
|
|
|
483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
9,240
|
|
|
|
8,808
|
|
|
|
10,860
|
|
|
|
9,889
|
|
Noninterest income
|
|
|
1,700
|
|
|
|
1,900
|
|
|
|
2,087
|
|
|
|
1,765
|
|
Noninterest expense
|
|
|
7,809
|
|
|
|
8,043
|
|
|
|
8,389
|
|
|
|
8,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
3,131
|
|
|
|
2,665
|
|
|
|
4,558
|
|
|
|
3,441
|
|
Income tax expense
|
|
|
1,071
|
|
|
|
912
|
|
|
|
1,506
|
|
|
|
1,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
2,060
|
|
|
$
|
1,753
|
|
|
$
|
3,052
|
|
|
$
|
2,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic
|
|
$
|
0.30
|
|
|
$
|
0.25
|
|
|
$
|
0.44
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - diluted
|
|
$
|
0.29
|
|
|
$
|
0.24
|
|
|
$
|
0.42
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands, except per share
data)
|
|
First
Quarter
|
|
|
Second
Quarter
|
|
|
Third
Quarter
|
|
|
Fourth
Quarter
|
|
|
|
|
|
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
$
|
8,158
|
|
|
$
|
8,117
|
|
|
$
|
10,789
|
|
|
$
|
11,371
|
|
Total interest expense
|
|
|
1,278
|
|
|
|
1,150
|
|
|
|
1,400
|
|
|
|
1,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
6,880
|
|
|
|
6,967
|
|
|
|
9,389
|
|
|
|
9,982
|
|
Provision for loan losses
|
|
|
102
|
|
|
|
264
|
|
|
|
526
|
|
|
|
568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
6,778
|
|
|
|
6,703
|
|
|
|
8,863
|
|
|
|
9,414
|
|
Noninterest income
|
|
|
1,222
|
|
|
|
2,102
|
|
|
|
1,599
|
|
|
|
1,858
|
|
Noninterest expense
|
|
|
6,708
|
|
|
|
6,811
|
|
|
|
9,182
|
|
|
|
8,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
1,292
|
|
|
|
1,994
|
|
|
|
1,280
|
|
|
|
3,189
|
|
Income tax expense
|
|
|
497
|
|
|
|
726
|
|
|
|
357
|
|
|
|
1,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
795
|
|
|
$
|
1,268
|
|
|
$
|
923
|
|
|
$
|
2,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic
|
|
$
|
0.11
|
|
|
$
|
0.18
|
|
|
$
|
0.13
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - diluted
|
|
$
|
0.11
|
|
|
$
|
0.17
|
|
|
$
|
0.13
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85