x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Washington
(State
or other jurisdiction of
incorporation
or organization)
|
91-1815009
(IRS
Employer Identification No.)
|
Large
accelerated filer ¨
|
Accelerated
Filer x
|
Non-accelerated
filer ¨
|
PART
I
|
FINANCIAL
INFORMATION
|
3
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
3
|
CONDENSED
CONSOLIDATED BALANCE SHEETS MARCH 31, 2009 AND DECEMBER 31,
2008
|
3
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2009 AND
2008
|
4
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2009
AND 2008
|
5
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS'EQUITY THREE MONTHS ENDED MARCH
31, 2009 AND YEAR ENDED DECEMBER 31, 2008
|
6
|
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
7
|
|
ITEM
2.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
16
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
25
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
25
|
PART
II
|
OTHER
INFORMATION
|
26
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
26
|
ITEM
1A.
|
RISK
FACTORS
|
26
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
26
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
26
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
26
|
ITEM
5.
|
OTHER
INFORMATION
|
27
|
ITEM
6.
|
EXHIBITS
|
27
|
SIGNATURES
|
28
|
March
31, 2009
|
December
31, 2008
|
|||||||
Assets
|
||||||||
Cash
and due from banks
|
$ | 12,036 | $ | 16,182 | ||||
Interest
bearing deposits in banks
|
5,147 | 582 | ||||||
Federal
funds sold
|
29,270 | 775 | ||||||
Investment
securities available-for-sale (amortized cost of $45,023 and
$52,930)
|
41,055 | 49,493 | ||||||
Investment
securities held-to-maturity (fair value of $6,909 and
$6,418)
|
6,849 | 6,386 | ||||||
Federal
Home Loan Bank stock, at cost
|
3,183 | 2,170 | ||||||
Loans
held for sale
|
13,778 | 11,486 | ||||||
Loans
|
490,732 | 486,318 | ||||||
Allowance
for credit losses
|
8,040 | 7,623 | ||||||
Loans,
net
|
482,692 | 478,695 | ||||||
Premises
and equipment
|
16,573 | 16,631 | ||||||
Foreclosed
real estate
|
7,249 | 6,810 | ||||||
Accrued
interest receivable
|
2,771 | 2,772 | ||||||
Cash
surrender value of life insurance
|
15,841 | 15,718 | ||||||
Goodwill
|
11,282 | 11,282 | ||||||
Other
intangible assets
|
1,551 | 1,587 | ||||||
Other
assets
|
5,875 | 5,266 | ||||||
Total
assets
|
$ | 655,152 | $ | 625,835 | ||||
Liabilities
and Shareholders' Equity
|
||||||||
Deposits:
|
||||||||
Demand,
non-interest bearing
|
$ | 70,363 | $ | 80,066 | ||||
Savings
and interest-bearing demand
|
205,727 | 213,277 | ||||||
Time,
interest-bearing
|
272,867 | 217,964 | ||||||
Total
deposits
|
548,957 | 511,307 | ||||||
Accrued
interest payable
|
957 | 1,002 | ||||||
Secured
borrowings
|
1,337 | 1,354 | ||||||
Short-term
borrowings
|
13,500 | 23,500 | ||||||
Long-term
borrowings
|
25,500 | 22,500 | ||||||
Junior
subordinated debentures
|
13,403 | 13,403 | ||||||
Other
liabilities
|
2,092 | 2,695 | ||||||
Total
liabilities
|
605,746 | 575,761 | ||||||
Commitments
and Contingencies (Note 6)
|
||||||||
Shareholders'
Equity
|
||||||||
Common
Stock (par value $1); 25,000,000 shares authorized; 7,323,271 shares
issued and outstanding at March 31, 2009 and 7,317,430 at
December 31, 2008
|
7,323 | 7,318 | ||||||
Additional
paid-in capital
|
31,672 | 31,626 | ||||||
Retained
earnings
|
13,623 | 13,937 | ||||||
Accumulated
other comprehensive loss
|
(3,212 | ) | (2,807 | ) | ||||
Total
shareholders' equity
|
49,406 | 50,074 | ||||||
Total
liabilities and shareholders' equity
|
$ | 655,152 | $ | 625,835 |
Three
Months Ended
March 31,
|
||||||||
2009
|
2008
|
|||||||
Interest
and dividend income
|
||||||||
Loans
|
$ | 7,523 | $ | 8,352 | ||||
Investment
securities and FHLB dividends
|
755 | 576 | ||||||
Deposits
with banks and federal funds sold
|
6 | 9 | ||||||
Total
interest and dividend income
|
8,284 | 8,937 | ||||||
Interest
Expense
|
||||||||
Deposits
|
2,285 | 2,994 | ||||||
Other
borrowings
|
531 | 498 | ||||||
Total
interest expense
|
2,816 | 3,492 | ||||||
Net
Interest Income
|
5,468 | 5,445 | ||||||
Provision
for credit losses
|
1,787 | 126 | ||||||
Net
interest income after provision for credit
losses
|
3,681 | 5,319 | ||||||
Non-interest
Income
|
||||||||
Service
charges on deposits
|
417 | 374 | ||||||
Gain
on sales of loans
|
1,195 | 459 | ||||||
Gain
on sale of investments available-for-sale
|
303 | — | ||||||
Other
operating income
|
360 | 377 | ||||||
Total
non-interest income
|
2,275 | 1,210 | ||||||
Non-interest
Expense
|
||||||||
Salaries
and employee benefits
|
3,460 | 3,142 | ||||||
Occupancy
and equipment
|
656 | 694 | ||||||
Write-down
of foreclosed real estate
|
783 | — | ||||||
Professional
services
|
178 | 144 | ||||||
Data
processing
|
247 | 53 | ||||||
Other
|
1,298 | 1,124 | ||||||
Total
non-interest expense
|
6,622 | 5,157 | ||||||
Income
(loss) income taxes
|
(666 | ) | 1,372 | |||||
Provision
(benefit) for income taxes
|
(352 | ) | 324 | |||||
Net
Income (Loss)
|
$ | (314 | ) | $ | 1,048 | |||
Earnings
(loss) per common share:
|
||||||||
Basic
|
$ | (0.04 | ) | $ | 0.15 | |||
Diluted
|
(0.04 | ) | 0.15 | |||||
Weighted
Average shares outstanding:
|
||||||||
Basic
|
7,323,271 | 7,298,590 | ||||||
Diluted
|
7,323,271 | 7,326,990 |
2009
|
2008
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
income (loss)
|
$ | (314 | ) | $ | 1,048 | |||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||
Provision
for credit losses
|
1,787 | 126 | ||||||
Depreciation
and amortization
|
388 | 409 | ||||||
Deferred
income taxes
|
(1 | ) | — | |||||
Origination
of loans held for sale
|
(74,370 | ) | (26,533 | ) | ||||
Proceeds
of loans held for sale
|
73,303 | 27,150 | ||||||
Gain
on sales of loans
|
(1,195 | ) | (459 | ) | ||||
Gain
on sale of investments available for sale
|
(303 | ) | — | |||||
Decrease
in accrued interest receivable
|
1 | 63 | ||||||
Decrease
in accrued interest payable
|
(45 | ) | (241 | ) | ||||
Write-down
of foreclosed real estate
|
783 | — | ||||||
Other,
net
|
(872 | ) | (327 | ) | ||||
Net
cash provided by (used in) operating activities
|
(838 | ) | 1,236 | |||||
INVESTING
ACTIVITIES
|
||||||||
Net
increase in federal funds sold
|
(28,495 | ) | (2,910 | ) | ||||
Net
(increase) decrease in interest bearing balances with
banks
|
(4,565 | ) | 25 | |||||
Purchase
of securities held-to-maturity
|
(498 | ) | — | |||||
Purchase
of securities available-for-sale
|
(1,327 | ) | (5,105 | ) | ||||
Proceeds
from maturities of investments held-to-maturity
|
34 | 28 | ||||||
Proceeds
from sales of securities available-for-sale
|
6,679 | — | ||||||
Proceeds
from maturities of securities available-for-sale
|
1,869 | 2,659 | ||||||
Net
increase in loans
|
(7,090 | ) | (6,227 | ) | ||||
Additions
to premises and equipment
|
(253 | ) | (1,157 | ) | ||||
Net
cash used in investing activities
|
(33,646 | ) | (12,687 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Net
increase (decrease) in deposits
|
37,650 | (2,526 | ) | |||||
Net
increase (decrease) in short-term borrowings
|
(10,000 | ) | 17,875 | |||||
Net
decrease in secured borrowings
|
(17 | ) | (14 | ) | ||||
Proceeds
from issuance of long-term borrowings
|
3,000 | 2,500 | ||||||
Repayments
of long-term borrowings
|
— | (2,500 | ) | |||||
Issuance
of common stock
|
38 | 565 | ||||||
Repurchase
and retirement of common stock
|
— | (26 | ) | |||||
Payment
of cash dividends
|
(333 | ) | (4,955 | ) | ||||
Net
cash provided by financing activities
|
30,338 | 10,919 | ||||||
Net
decrease in cash and due from banks
|
(4,146 | ) | (532 | ) | ||||
Cash
and due from Banks
|
||||||||
Beginning
of period
|
16,182 | 15,044 | ||||||
End
of period
|
$ | 12,036 | $ | 14,512 | ||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Cash
payments for:
|
||||||||
Interest
|
$ | 2,861 | $ | 3,733 | ||||
Income
taxes
|
— | 927 | ||||||
SUPPLEMENTAL
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
|
||||||||
Change
in fair value of securities available-for-sale, net of tax
|
$ | 351 | $ | 222 | ||||
Foreclosed
real estate acquired in settlement of loans
|
(1,222 | ) | — | |||||
Renewal
of short-term borrowings to long-term borrowings
|
— | 2,500 |
Shares
of
Common
Stock
|
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
|||||||||||||||||||
Balance
January 1, 2008
|
6,606,545 | $ | 6,607 | $ | 27,163 | $ | 17,807 | $ | (878 | ) | $ | 50,699 | ||||||||||||
Other
comprehensive income (loss):
|
||||||||||||||||||||||||
Net
income
|
951 | 951 | ||||||||||||||||||||||
Unrealized
holding loss on securities of $2,106 (net of tax of $1,084) less
reclassification adjustment for net losses included in net income of $109
(net of tax of $56)
|
(1,997 | ) | (1,997 | ) | ||||||||||||||||||||
Amortization
of unrecognized prior service costs and net
(gains)/losses
|
68 | 68 | ||||||||||||||||||||||
Comprehensive
income (loss)
|
(978 | ) | ||||||||||||||||||||||
Stock
options exercised
|
6,656 | 6 | 52 | 58 | ||||||||||||||||||||
Issuance
of common stock
|
41,672 | 42 | 524 | 566 | ||||||||||||||||||||
Common
stock repurchased and retired
|
(2,300 | ) | (2 | ) | (24 | ) | (26 | ) | ||||||||||||||||
Stock
compensation expense
|
87 | 87 | ||||||||||||||||||||||
Cash
dividends declared ($0.05 per share
|
(333 | ) | (333 | ) | ||||||||||||||||||||
Stock
dividends declared (10%)
|
664,857 | 665 | 3,823 | (4,488 | ) | — | ||||||||||||||||||
Tax
benefit from exercise of stock options
|
1 | 1 | ||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Balance
December 31, 2008
|
7,317,430 | $ | 7,318 | $ | 31,626 | $ | 13,937 | $ | (2,807 | ) | $ | 50,074 | ||||||||||||
Balance
January 1, 2009
|
7,317,430 | $ | 7,318 | $ | 31,626 | $ | 13,937 | $ | (2,807 | ) | $ | 50,074 | ||||||||||||
Other
comprehensive income:
|
||||||||||||||||||||||||
Net
loss
|
(314 | ) | (314 | ) | ||||||||||||||||||||
Unrealized
holding loss on securities of $151 (net of tax of $78) less
reclassification adjustment for net gains included in net income of
$200 (net of tax of $103)
|
(351 | ) | (351 | ) | ||||||||||||||||||||
Amortization
of unrecognized prior service costs and net (gains)/losses
|
(54 | ) | (54 | ) | ||||||||||||||||||||
Comprehensive
loss
|
(719 | ) | ||||||||||||||||||||||
Issuance
of common stock
|
5,841 | 5 | 33 | 38 | ||||||||||||||||||||
Stock
compensation expense
|
13 | 13 | ||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Balance
March 31, 2009
|
7,323,271 | $ | 7,323 | $ | 31,672 | $ | 13,623 | $ | (3,212 | ) | $ | 49,406 |
Three
months ended March 31,
|
2009
|
2008
|
||||||
Basic:
|
||||||||
Net
income (loss)
|
$ | (314 | ) | $ | 1,048 | |||
Weighted
average shares outstanding
|
7,323,271 | 7,298,590 | ||||||
Basic
earnings (loss) per share
|
$ | (0.04 | ) | $ | 0.15 | |||
Diluted:
|
||||||||
Net
income (loss)
|
$ | (314 | ) | $ | 1,048 | |||
Weighted
average shares outstanding
|
7,323,271 | 7,298,590 | ||||||
Effect
of dilutive stock options
|
— | 28,400 | ||||||
Weighted
average shares outstanding assuming dilution
|
7,323,271 | 7,326,990 | ||||||
Diluted
earnings (loss) per share
|
$ | (0.04 | ) | $ | 0.15 |
Securities
Held-to-Maturity
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||||
March
31, 2009
|
||||||||||||||||
State
and municipal securities
|
$ | 6,248 | $ | 54 | $ | 9 | $ | 6,293 | ||||||||
Mortgage-backed
securities
|
601 | 15 | — | 616 | ||||||||||||
Total
|
$ | 6,849 | $ | 69 | $ | 9 | $ | 6,909 | ||||||||
December
31, 2008
|
||||||||||||||||
State
and municipal securities
|
$ | 5,750 | $ | 40 | $ | 12 | $ | 5,778 | ||||||||
Mortgage-backed
securities
|
636 | 5 | 1 | 640 | ||||||||||||
Total
|
$ | 6,386 | $ | 45 | $ | 13 | $ | 6,418 | ||||||||
Securities
Available-for-Sale
|
||||||||||||||||
March
31, 2009
|
||||||||||||||||
U.S.
Government securities
|
$ | 1,944 | $ | 65 | $ | — | $ | 2,009 | ||||||||
State
and municipal securities
|
19,214 | 268 | 378 | 19,104 | ||||||||||||
Mortgage-backed
securities
|
22,856 | 148 | 3,946 | 19,058 | ||||||||||||
Corporate
securities
|
1,009 | — | 125 | 884 | ||||||||||||
Total
|
$ | 45,023 | $ | 481 | $ | 4,449 | $ | 41,055 | ||||||||
December
31, 2008
|
||||||||||||||||
U.S.
Government securities
|
$ | 1,671 | $ | 88 | $ | — | $ | 1,759 | ||||||||
State
and municipal securities
|
19,876 | 158 | 450 | 19,584 | ||||||||||||
Mortgage-backed
securities
|
30,370 | 330 | 3,495 | 27,205 | ||||||||||||
Corporate
securities
|
1,013 | — | 68 | 945 | ||||||||||||
Total
|
$ | 52,930 | $ | 576 | $ | 4,013 | $ | 49,493 |
Less than 12 Months
|
12 months or More
|
Total
|
||||||||||||||||||||||
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
|||||||||||||||||||
Held-to-Maturity
|
||||||||||||||||||||||||
March
31, 2009
|
||||||||||||||||||||||||
State
and municipal securities
|
$ | 381 | $ | 9 | $ | — | $ | — | $ | 381 | $ | 9 | ||||||||||||
Mortgage-backed
securities
|
— | — | — | — | — | — | ||||||||||||||||||
Total
|
$ | 381 | $ | 9 | $ | — | $ | — | $ | 381 | $ | 9 | ||||||||||||
December
31, 2008
|
||||||||||||||||||||||||
State
and municipal securities
|
$ | 378 | $ | 12 | $ | — | $ | — | $ | 378 | $ | 12 | ||||||||||||
Mortgage-backed
securities
|
160 | 1 | — | — | 160 | 1 | ||||||||||||||||||
Total
|
$ | 538 | $ | 13 | $ | — | $ | — | $ | 538 | $ | 13 | ||||||||||||
Available-for-Sale
|
||||||||||||||||||||||||
March
31, 2009
|
||||||||||||||||||||||||
State
and municipal securities
|
$ | 4,288 | $ | 149 | $ | 2,446 | $ | 229 | $ | 6,734 | $ | 378 | ||||||||||||
Mortgage-backed
securities
|
4,179 | 645 | 7,762 | 3,301 | 11,941 | 3,946 | ||||||||||||||||||
Corporate
securities
|
508 | 1 | 376 | 124 | 884 | 125 | ||||||||||||||||||
Total
|
$ | 8,975 | $ | 795 | $ | 10,584 | $ | 3,654 | $ | 19,559 | $ | 4,449 | ||||||||||||
December
31, 2008
|
||||||||||||||||||||||||
State
and municipal securities
|
$ | 8,756 | $ | 349 | $ | 889 | $ | 101 | $ | 9,645 | $ | 450 | ||||||||||||
Mortgage-backed
securities
|
10,522 | 3,006 | 4,302 | 489 | 14,824 | 3,495 | ||||||||||||||||||
Corporate
securities
|
945 | 68 | — | — | 945 | 68 | ||||||||||||||||||
Total
|
$ | 20,223 | $ | 3,423 | $ | 5,191 | $ | 590 | $ | 25,414 | $ | 4,013 |
Three
Months
Ended
March
31,
|
Twelve
Months
Ended
Ended
December 31,
|
|||||||||||
2009
|
2008
|
2008
|
||||||||||
Balance
at beginning of period
|
$ | 7,623 | $ | 5,007 | $ | 5,007 | ||||||
Provision
for credit losses
|
1,787 | 126 | 4,791 | |||||||||
Charge-offs
|
(1,378 | ) | (19 | ) | (2,226 | ) | ||||||
Recoveries
|
8 | 6 | 51 | |||||||||
Net
charge-offs
|
(1,370 | ) | (13 | ) | (2,175 | ) | ||||||
Balance
at end of period
|
$ | 8,040 | $ | 5,120 | $ | 7,623 |
Shares
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual
Term ( Years)
|
Aggregate
Intrinsic
Value
|
|||||||||||||
March
31, 2009
|
||||||||||||||||
Outstanding
beginning of period
|
684,527 | $ | 12.58 | |||||||||||||
Granted
|
— | — | ||||||||||||||
Exercised
|
— | — |
|
|
||||||||||||
Forfeited
|
(23,375 | ) | 14.14 | |||||||||||||
Expired
|
— | — | ||||||||||||||
Outstanding
end of period
|
661,152 | $ | 12.52 | 4.4 | — | |||||||||||
Exercisable
end of period
|
554,287 | $ | 12.31 | 3.7 | — | |||||||||||
March
31, 2008
|
||||||||||||||||
Outstanding
beginning of period
|
689,868 | $ | 12.55 | |||||||||||||
Granted
|
— | — | ||||||||||||||
Exercised
|
— | — | ||||||||||||||
Forfeited
|
— | — | ||||||||||||||
Outstanding
end of period
|
689,868 | $ | 12.55 | 5.4 | $ | 439 | ||||||||||
Exercisable
end of period
|
538,453 | $ | 12.16 | 4.4 | $ | 549 |
2009
|
2008
|
|||||||||||||||
Shares
|
Weighted
Average Fair
Value
|
Shares
|
Weighted
Average Fair
Value
|
|||||||||||||
Non-vested
beginning of period
|
126,940 | $ | 1.62 | 193,884 | $ | 1.80 | ||||||||||
Granted
|
— | — | — | — | ||||||||||||
Vested
|
(2,200 | ) | 4.11 | (42,469 | ) | 2.34 | ||||||||||
Forfeited
|
(17,875 | ) | 1.52 | — | — | |||||||||||
Non-vested
end of period
|
106,865 | $ | 1.58 | 151,415 | $ | 1.64 |
·
|
FSP
FAS 107-1 and APB 28-1, Interim Disclosures about the
Fair Value of Financial Instruments, amends SFAS No. 107, Disclosures about Fair Value
of Financial Instruments, to require an entity to provide
disclosures about fair values of financial instruments in interim
financial statements. This FSP is effective for interim periods
ending after June 15, 2009 with early adoption permitted for periods
ending after March 15, 2009. The Company will adopt the FSP and
include the required disclosures for the period ending June 30,
2009.
|
·
|
FSP
FAS 115-2 and FAS 124-2, Recognition and Presentation
of Other-Than-Temporary Impairments, applies to investments in debt
securities for which other-than-temporary impairments may be
recorded. If any entity’s management asserts that it does not
have the intent to sell a debt security and it is more likely than not
that it will not have to sell the security before recovery of its cost
basis, then an entity may separate other-than-temporary impairments into
two components: 1) the amount related to credit losses recorded in
earnings, and 2) all other amounts recorded in other comprehensive
income. This FSP is effective for interim periods ending after
June 15, 2009 with early adoption permitted. The Company will
adopt the FSP effective for the period ending June 30, 2009, but does not
anticipate the adoption will have a material effect on the Company’s
consolidated financial statements.
|
·
|
FSP
157-4, Determining Fair
Value When the Volume and Level of Activity for the Assets or Liability
Have Significant Decreased and Identifying Transactions That Are Not
Orderly, provides additional guidance for estimating fair value in
accordance with SFAS No. 157, Fair Value
Measurements. This FSP also provides guidance on
identifying circumstances that indicate a transaction is not
orderly. The provisions of FSP FAS 157-4 are effective for
interim periods ending after June 15, 2009 with early adoption
permitted. The Company will adopt the FSP effective for the
period ending June 30, 2009, but does not anticipate the adoption will
have a material effect on the Company’s consolidated financial
statements.
|
2009
|
2008
|
|||||||
Net
periodic pension cost:
|
||||||||
Service
Cost
|
$ | 84 | $ | 23 | ||||
Interest
Cost
|
43 | 12 | ||||||
Amortization
of prior service cost and net (gains)/losses
|
(54 | ) | 17 | |||||
Net
periodic pension cost
|
$ | 73 | $ | 52 |
Readily
Available
Market
Prices
Level
1
|
Observable
Market
Prices
Level
2
|
Significant
Unobservable
Inputs
Level
3
|
Total
|
|||||||||||||
March
31, 2009
|
||||||||||||||||
Available
for sale securities
|
$ | 884 | $ | 40,171 | $ | — | $ | 41,055 | ||||||||
December
31, 2008
|
||||||||||||||||
Available
for sale securities
|
$ | — | $ | 49,493 | $ | — | $ | 49,493 |
Readily
Available
Market
Prices
Level
1
|
Observable
Market
Prices
Level
2
|
Significant
Unobservable
Inputs
Level
3
|
Total
|
|||||||||||||
March
31, 2009
|
||||||||||||||||
Impaired
loans
|
$ | — | $ | — | $ | 1,481 | $ | 1,481 | ||||||||
OREO
|
$ | — | $ | — | $ | 1,705 | $ | 1,705 | ||||||||
December
31, 2008
|
||||||||||||||||
Impaired
loans
|
$ | — | $ | — | $ | 9,532 | $ | 9,532 | ||||||||
OREO
|
$ | — | $ | — | $ | 6,810 | $ | 6,810 |
2009
|
2008
|
|||||||||||||||||||||||
|
Interest
|
Interest
|
||||||||||||||||||||||
(dollars
in thousands)
|
Average
|
Income
|
Avg
|
Average
|
Income
|
Avg
|
||||||||||||||||||
Balance
|
(Expense)
|
Rate
|
Balance
|
(Expense)
|
Rate
|
|||||||||||||||||||
Interest
Earning Assets
|
||||||||||||||||||||||||
Loans
(1)
|
$ | 506,624 | $ | 7,568 | * | 5.98 | % | $ | 456,233 | $ | 8,396 | * | 7.36 | % | ||||||||||
Taxable
securities
|
34,890 | 504 | 5.78 | 30,686 | 389 | 5.07 | ||||||||||||||||||
Tax-exempt
securities
|
23,946 | 379 | * | 6.33 | 18,119 | 277 | * | 6.12 | ||||||||||||||||
Federal
Home Loan Bank Stock
|
2,990 | — | — | 1,858 | 5 | 1.08 | ||||||||||||||||||
Interest
earning balances with banks
|
7,696 | 6 | 0.31 | 1,101 | 9 | 3.27 | ||||||||||||||||||
Total
interest earning assets
|
$ | 576,146 | $ | 8,457 | 5.87 | % | $ | 507,997 | $ | 9,076 | 7.15 | % | ||||||||||||
Cash
and due from banks
|
10,177 | 11,732 | ||||||||||||||||||||||
Bank
premises and equipment (net)
|
16,657 | 15,667 | ||||||||||||||||||||||
Other
real estate owned
|
7,735 | — | ||||||||||||||||||||||
Other
assets
|
31,597 | 34,181 | ||||||||||||||||||||||
Allowance
for credit losses
|
(7,999 | ) | (5,057 | ) | ||||||||||||||||||||
Total
assets
|
$ | 634,313 | $ | 564,520 | ||||||||||||||||||||
Interest
Bearing Liabilities
|
||||||||||||||||||||||||
Savings
and interest bearing demand
|
$ | 201,167 | $ | (476 | ) | 0.95 | % | $ | 202,688 | $ | (939 | ) | 1.85 | % | ||||||||||
Time
deposits
|
243,754 | (1,809 | ) | 2.97 | 177,206 | (2,055 | ) | 4.64 | ||||||||||||||||
Total
deposits
|
444,921 | (2,285 | ) | 2.05 | 379,894 | (2,994 | ) | 3.15 | ||||||||||||||||
Short-term
borrowings
|
12,802 | (26 | ) | 0.81 | 8,126 | (70 | ) | 3.45 | ||||||||||||||||
Long-term
borrowings
|
37,800 | (345 | ) | 3.65 | 20,654 | (199 | ) | 3.85 | ||||||||||||||||
Secured
borrowings
|
1,346 | (22 | ) | 6.54 | 1,411 | (25 | ) | 7.09 | ||||||||||||||||
Junior
subordinated debentures
|
13,403 | (138 | ) | 4.12 | 13,403 | (204 | ) | 6.09 | ||||||||||||||||
Total
borrowings
|
65,351 | (531 | ) | 3.25 | 43,594 | (498 | ) | 4.57 | ||||||||||||||||
Total
interest-bearing liabilities
|
$ | 510,272 | $ | (2,816 | ) | 2.21 | % | $ | 423,488 | $ | (3,492 | ) | 3.30 | % | ||||||||||
Demand
deposits
|
71,164 | 82,593 | ||||||||||||||||||||||
Other
liabilities
|
2,363 | 6,706 | ||||||||||||||||||||||
Shareholders’
equity
|
50,514 | 51,733 | ||||||||||||||||||||||
Total
liabilities and shareholders’ equity
|
$ | 634,313 | $ | 564,520 | ||||||||||||||||||||
Net
interest income
|
$ | 5,641 | * | $ | 5,584 | * | ||||||||||||||||||
Net
interest spread
|
3.92 | % | 4.40 | % | ||||||||||||||||||||
Net
interest margin
|
3.80 | % | 4.29 | % | ||||||||||||||||||||
Tax
equivalent adjustment
|
$ | 173 | * | $ | 139 | * |
March 31,
2009
|
December 31,
2008
|
March 31,
2008
|
||||||||||
(in
thousands)
|
||||||||||||
Accruing
loans past due 90 days or more
|
$ | 1,978 | $ | 2,274 | $ | 119 | ||||||
Non-accrual
loans
|
18,340 | 14,676 | 3,934 | |||||||||
Foreclosed
real estate
|
7,249 | 6,810 | — | |||||||||
TOTAL
|
$ | 27,567 | $ | 23,760 | $ | 4,053 |
March
31,
2009
|
December
31,
2008
|
|||||||
Commercial
and industrial
|
$ | 88,445 | $ | 91,888 | ||||
Real
estate construction
|
101,811 | 100,725 | ||||||
Real
estate residential
|
121,834 | 108,420 | ||||||
Real
estate commercial
|
184,643 | 188,444 | ||||||
Installment
|
7,016 | 7,293 | ||||||
Credit
cards and overdrafts
|
1,650 | 1,959 | ||||||
Less
unearned income
|
(889 | ) | (925 | ) | ||||
Total
Loans
|
504,510 | 497,804 | ||||||
Allowance
for credit losses
|
(8,040 | ) | (7,623 | ) | ||||
Net
Loans
|
$ | 496,470 | $ | 490,181 |
March
31,
2009
|
December
31,
2008
|
|||||||
Non-interest
bearing demand
|
$ | 70,363 | $ | 80,066 | ||||
Interest
bearing demand
|
77,024 | 68,113 | ||||||
Money
market deposits
|
81,418 | 93,216 | ||||||
Savings
deposits
|
47,285 | 51,948 | ||||||
Time
deposits
|
272,867 | 217,964 | ||||||
Total
deposits
|
$ | 548,957 | $ | 511,307 |
ITEM 1.
|
LEGAL
PROCEEDINGS
|
ITEM 1A.
|
RISK
FACTORS
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
ITEM 3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
ITEM 4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
NAME
|
FOR
|
WITHHELD
|
Edwin
Ketel
|
4,605,735
|
143,485
|
Dennis
Long
|
4,658,898
|
90,322
|
Randy
Rust
|
4,658,898
|
90,322
|
FOR
|
AGAINST
|
WITHHELD
|
439,214
|
2,883,556
|
36,364
|
ITEM 5.
|
OTHER
INFORMATION
|
ITEM 6.
|
EXHIBITS
|
PACIFIC
FINANCIAL CORPORATION
|
|||
DATED: May
8, 2009
|
By:
|
/s/ Dennis A. Long
|
|
Dennis
A. Long
|
|||
Chief
Executive Officer
|
|||
By:
|
/s/ Denise Portmann
|
||
Denise
Portmann
|
|||
Chief
Financial
Officer
|
EXHIBIT NO.
|
EXHIBIT
|
|
31.1
|
Certification
of CEO under Rule 13a – 14(a) of the Exchange Act.
|
|
31.2
|
Certification
of CFO under Rule 13a – 14(a) of the Exchange Act.
|
|
32
|
Certification
of CEO and CFO under 18 U.S.C. Section
1350.
|