e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED March 31, 2011
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o |
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TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 000-49883
PLUMAS BANCORP
(Exact Name of Registrant as Specified in Its Charter)
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California |
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75-2987096 |
(State or Other Jurisdiction of
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(I.R.S. Employer Identification No.) |
Incorporation or Organization)
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35 S. Lindan Avenue, Quincy, California
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95971 |
(Address of Principal Executive Offices)
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(Zip Code) |
Registrants Telephone Number, Including Area Code (530) 283-7305
Indicated by check mark whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes o
No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
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Large Accelerated Filer o
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Accelerated Filer o
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Non-Accelerated Filer o
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Smaller Reporting Company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
April 29, 2011. 4,776,339 shares
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PLUMAS BANCORP
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(In thousands, except share data)
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March 31, |
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December 31, |
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2011 |
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2010 |
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Assets |
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Cash and cash equivalents |
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$ |
59,720 |
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$ |
64,628 |
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Investment securities |
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64,355 |
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63,017 |
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Loans, less allowance for loan losses of $8,759 at
March 31, 2011 and $7,324 at December 31, 2010 |
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295,902 |
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307,151 |
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Premises and equipment, net |
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14,183 |
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14,431 |
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Bank owned life insurance |
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10,555 |
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10,463 |
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Real estate and vehicles acquired through foreclosure |
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9,095 |
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8,884 |
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Accrued interest receivable and other assets |
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15,893 |
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15,906 |
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Total assets |
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$ |
469,703 |
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$ |
484,480 |
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Liabilities and Shareholders Equity |
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Deposits: |
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Non-interest bearing |
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$ |
110,791 |
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$ |
111,802 |
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Interest bearing |
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304,134 |
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313,085 |
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Total deposits |
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414,925 |
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424,887 |
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Accrued interest payable and other liabilities |
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5,897 |
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11,295 |
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Junior subordinated deferrable interest debentures |
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10,310 |
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10,310 |
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Total liabilities |
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431,132 |
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446,492 |
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Commitments and contingencies (Note 6) |
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Shareholders equity: |
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Serial preferred stock, no par value; 10,000,000
shares authorized; 11,949 issued and outstanding at
March 31, 2011 and December 31, 2010 |
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11,703 |
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11,682 |
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Common stock, no par value; 22,500,000 shares
authorized; issued and outstanding 4,776,339
shares at March 31, 2011 and December 31, 2010 |
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5,944 |
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6,027 |
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Retained earnings |
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21,057 |
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20,331 |
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Accumulated other comprehensive loss |
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(133 |
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(52 |
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Total shareholders equity |
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38,571 |
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37,988 |
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Total liabilities and shareholders equity |
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$ |
469,703 |
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$ |
484,480 |
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See notes to unaudited condensed consolidated financial statements.
2
PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(In thousands, except per share data)
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For the Three Months |
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Ended March 31, |
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2011 |
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2010 |
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Interest Income: |
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Interest and fees on loans |
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$ |
4,382 |
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$ |
4,769 |
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Interest on investment securities: |
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Taxable |
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351 |
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507 |
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Exempt from Federal income taxes |
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4 |
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107 |
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Other |
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29 |
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5 |
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Total interest income |
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4,766 |
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5,388 |
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Interest Expense: |
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Interest on deposits |
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500 |
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788 |
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Interest on borrowings |
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69 |
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Interest on junior subordinated deferrable interest debentures |
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76 |
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74 |
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Other |
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10 |
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1 |
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Total interest expense |
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586 |
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932 |
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Net interest income before provision for loan losses |
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4,180 |
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4,456 |
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Provision for Loan Losses |
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1,700 |
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1,500 |
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Net interest income after provision for loan losses |
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2,480 |
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2,956 |
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Non-Interest Income: |
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Service charges |
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828 |
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898 |
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Gain on sale of loans |
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722 |
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Earnings on Bank owned life insurance policies |
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117 |
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109 |
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Gain on sale of investments |
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165 |
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570 |
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Other |
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195 |
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210 |
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Total non-interest income |
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2,027 |
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1,787 |
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Non-Interest Expenses: |
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Salaries and employee benefits |
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2,371 |
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2,549 |
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Occupancy and equipment |
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805 |
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713 |
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Other |
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1,072 |
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1,448 |
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Total non-interest expenses |
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4,248 |
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4,710 |
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Income before provision (benefit) for income taxes |
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259 |
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33 |
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Provision (Benefit) for Income Taxes |
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36 |
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(101 |
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Net income |
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$ |
223 |
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$ |
134 |
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Preferred Stock Dividends and Discount Accretion |
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(171 |
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(171 |
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Net income (loss) available to common shareholders |
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$ |
52 |
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$ |
(37 |
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Basic income (loss) per common share |
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$ |
0.01 |
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$ |
(0.01 |
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Diluted income (loss) per common share |
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$ |
0.01 |
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$ |
(0.01 |
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See notes to unaudited condensed consolidated financial statements.
3
PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
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For the Three Months |
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Ended March 31, |
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2011 |
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2010 |
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Cash Flows from Operating Activities: |
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Net income |
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$ |
223 |
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$ |
134 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Provision for loan losses |
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1,700 |
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1,500 |
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Change in deferred loan origination costs/fees, net |
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(89 |
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(45 |
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Depreciation and amortization |
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371 |
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442 |
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Stock-based compensation expense |
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(83 |
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(72 |
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Amortization of investment security premiums |
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113 |
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159 |
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Accretion of investment security discounts |
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(5 |
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(58 |
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Net loss on sale of other real estate |
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19 |
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Gain on sale of investments |
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(165 |
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(570 |
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Gain on sale of loans held for sale |
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(722 |
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Loans originated for sale |
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(4,915 |
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(3,271 |
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Proceeds from secured borrowing |
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3,446 |
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Proceeds from loan sales |
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5,238 |
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Net gain on sale of other vehicles owned |
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(3 |
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Benefit from change in OREO valuation |
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(400 |
) |
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Earnings on bank-owned life insurance policies |
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(92 |
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(86 |
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Decrease in accrued interest receivable and other assets |
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140 |
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945 |
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Decrease in accrued interest payable and other liabilities |
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(590 |
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(423 |
) |
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Net cash provided by operating activities |
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724 |
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2,117 |
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Cash Flows from Investing Activities: |
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Proceeds from matured and called available-for-sale investment securities |
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7,000 |
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7,245 |
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Proceeds from principal repayments from available-for-sale
government-guaranteed mortgage-backed securities |
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1,845 |
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1,897 |
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Purchases of available-for-sale securities |
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(14,185 |
) |
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(1,100 |
) |
Proceeds from sale of available-for-sale securities |
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3,921 |
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14,540 |
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Net decrease in loans |
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5,463 |
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5,716 |
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Proceeds from sale of other real estate |
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334 |
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1,436 |
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Proceeds from sale of other vehicles |
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7 |
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34 |
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Purchase of premises and equipment |
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(55 |
) |
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(1,053 |
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Net cash provided by investing activities |
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4,330 |
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28,715 |
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Continued on next page.
4
PLUMAS BANCORP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
(Continued)
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For the Three Months |
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Ended March 31, |
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2011 |
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2010 |
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Cash Flows from Financing Activities: |
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Net decrease in demand, interest bearing and savings deposits |
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$ |
(1,428 |
) |
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$ |
(8,042 |
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Net (decrease) increase in time deposits |
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(8,534 |
) |
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6,778 |
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Net decrease in short-term borrowings |
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(20,000 |
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Payment of cash dividends on preferred stock |
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(150 |
) |
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Net cash used in financing activities |
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(9,962 |
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(21,414 |
) |
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(Decrease) increase in cash and cash equivalents |
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(4,908 |
) |
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9,418 |
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Cash and Cash Equivalents at Beginning of Year |
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64,628 |
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59,493 |
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Cash and Cash Equivalents at End of Period |
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$ |
59,720 |
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$ |
68,911 |
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Supplemental Disclosure of Cash Flow Information: |
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Cash paid during the period for: |
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Interest expense |
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$ |
586 |
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$ |
897 |
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Income taxes |
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$ |
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$ |
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Non-Cash Investing Activities: |
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Real estate and vehicles acquired through foreclosure |
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$ |
152 |
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$ |
1,148 |
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Net change in unrealized gain/loss on available-for-sale securities |
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$ |
(81 |
) |
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$ |
(190 |
) |
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See notes to unaudited condensed consolidated financial statements.
5
PLUMAS BANCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
During 2002, Plumas Bancorp (the Company) was incorporated as a bank holding company for the
purpose of acquiring Plumas Bank (the Bank) in a one bank holding company reorganization. This
corporate structure gives the Company and the Bank greater flexibility in terms of operation
expansion and diversification. The Company formed Plumas Statutory Trust I (Trust I) for the sole
purpose of issuing trust preferred securities on September 26, 2002. The Company formed Plumas
Statutory Trust II (Trust II) for the sole purpose of issuing trust preferred securities on
September 28, 2005.
The Bank operates eleven branches in California, including branches in Alturas, Chester, Fall River
Mills, Greenville, Kings Beach, Portola, Quincy, Redding, Susanville, Tahoe City, and Truckee. In
addition to its branch network, the Bank operates an administrative office in Reno, Nevada and a
lending office specializing in government-guaranteed lending in Auburn, California. The Banks
primary source of revenue is generated from providing loans to customers who are predominately
small and middle market businesses and individuals residing in the surrounding areas.
The Banks deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to
applicable legal limits. The Bank participated in the Federal Deposit Insurance Corporation (FDIC)
Transaction Account Guarantee Program. Under the program, through December 31, 2010, all
noninterest-bearing transaction accounts were fully guaranteed by the FDIC for the entire amount in
the account. On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the Dodd-Frank Act), which, in part, permanently raises the current
standard maximum deposit insurance amount to $250,000. Amendments related to the enactment of the
Dodd-Frank Act now provide full deposit insurance coverage for noninterest bearing deposit
transaction accounts beginning December 31, 2010 for an additional two year period.
2. REGULATORY MATTERS
Effective March 16, 2011, in connection with the Banks regularly scheduled 2010 Joint FDIC and
California Department of Financial Institutions (DFI) examination, the Bank entered into a
Consent Order (Order) with the FDIC and the DFI. The FDIC and DFI in the Consent Order, require
certain actions to be taken by the Bank including among others:
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Within 240 days of the date of the Order, increase and maintain the Banks leverage
ratio to at least 10% and within 120 days of the date of the Order, maintain its total
risk-based capital ratio at 13% or more; |
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Reduce or eliminate certain classified assets to a level not exceeding sixty percent of
Tier I Capital and allowance for loan and lease losses (ALLL) or by approximately $19.4
million within 180 days of the date of the Order and reducing them to fifty percent of Tier
I Capital and ALLL or by an additional $4.9 million within 240 days of the Order; |
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Obtain an independent study of the management and personnel structure of the Bank within
150 days of the date of the Order to determine whether the Bank is staffed by qualified
individuals commensurate with its size and risk profile to ensure the safe and profitable
operation of the Bank; |
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Not pay cash dividends to Plumas Bancorp without the prior written consent of the FDIC
and DFI. |
One of Managements top priorities has and will continue to be to reduce its problem assets. The
Order serves to formalize and reinforce the Companys on-going plans to strengthen the Companys
operations and to implement the Banks strategic plan. Currently the Bank has exceeded the
Orders total risk-based capital ratio goal of 13% and Management expects to achieve the leverage
ratio target of 10% by year end through a combination of profit retention and a reduction in higher
rate deposits resulting in a corresponding reduction in lower rate interest-earning assets. As of
March 31, 2011, the Banks leverage ratio was 9.2% and total risk-based capital ratio was 14.3%.
6
3. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements include the accounts of the Company and the
accounts of its wholly-owned subsidiary, Plumas Bank. Plumas Statutory Trust I and Plumas
Statutory Trust II are not consolidated into the Companys consolidated financial statements and,
accordingly, are accounted for under the equity method. In the opinion of management, the
unaudited condensed consolidated financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the Companys financial position at March
31, 2011 and the results of its operations and its cash flows for the three-month periods ended
March 31, 2011 and 2010. Certain reclassifications have been made to prior periods balances to
conform to classifications used in 2011.
The unaudited condensed consolidated financial statements of the Company have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim
reporting on Form 10-Q. Accordingly, certain disclosures normally presented in the notes to the
annual consolidated financial statements prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP) have been omitted. The Company believes
that the disclosures are adequate to make the information not misleading. These interim financial
statements should be read in conjunction with the consolidated financial statements and notes
thereto included in the Companys 2010 Annual Report to Shareholders on Form 10-K. The results of
operations for the three-month period ended March 31, 2011 may not necessarily be indicative of
future operating results. In preparing such financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and liabilities as of the date
of the balance sheet and revenues and expenses for the periods reported. Actual results could
differ significantly from those estimates.
Management has determined that because all of the commercial banking products and services offered
by the Company are available in each branch of the Bank, all branches are located within the same
economic environment and management does not allocate resources based on the performance of
different lending or transaction activities, it is appropriate to aggregate the Bank branches and
report them as a single operating segment. No single customer accounts for more than 10% of the
revenues of the Company or the Bank.
4. INVESTMENT SECURITIES
The amortized cost and estimated fair value of investment securities at March 31, 2011 and December
31, 2010 consisted of the following:
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March 31, 2011 |
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Gross |
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Gross |
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Estimated |
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Amortized |
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Unrealized |
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Unrealized |
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Fair |
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Cost |
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Gains |
|
|
Losses |
|
|
Value |
|
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities |
|
$ |
1,017,000 |
|
|
$ |
5,000 |
|
|
|
|
|
|
$ |
1,022,000 |
|
U.S. Government agencies |
|
|
42,422,000 |
|
|
|
33,000 |
|
|
$ |
(245,000 |
) |
|
|
42,210,000 |
|
U.S. Government agencies
collateralized by mortgage
obligations |
|
|
20,831,000 |
|
|
|
97,000 |
|
|
|
(95,000 |
) |
|
|
20,833,000 |
|
Obligations of states and
political subdivisions |
|
|
312,000 |
|
|
|
|
|
|
|
(22,000 |
) |
|
|
290,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
64,582,000 |
|
|
$ |
135,000 |
|
|
$ |
(362,000 |
) |
|
$ |
64,355,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses on available-for-sale investment securities totaling $227,000 were recorded, net
of $94,000 in tax benefit, as accumulated other comprehensive income within shareholders equity at
March 31, 2011. During the three months ended March 31, 2011 the Company sold ten
available-for-sale securities for $3,921,000, which resulted in the recognition of a $165,000 gain
on sale. During the three months ended March 31, 2010 the Company sold forty available-for-sale
securities for $14,540,000, which resulted in the recognition of a $570,000 gain on sale.
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities |
|
$ |
1,025,000 |
|
|
$ |
7,000 |
|
|
|
|
|
|
$ |
1,032,000 |
|
U.S. Government agencies |
|
|
40,662,000 |
|
|
|
58,000 |
|
|
$ |
(290,000 |
) |
|
|
40,430,000 |
|
U.S. Government agencies
collateralized by mortgage
obligations |
|
|
21,110,000 |
|
|
|
270,000 |
|
|
|
(107,000 |
) |
|
|
21,273,000 |
|
Obligations of states and
political subdivisions |
|
|
308,000 |
|
|
|
|
|
|
|
(26,000 |
) |
|
|
282,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
63,105,000 |
|
|
$ |
335,000 |
|
|
$ |
(423,000 |
) |
|
$ |
63,017,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses on available-for-sale investment securities totaling $88,000 were recorded, net
of $36,000 in tax benefit, as accumulated other comprehensive loss within shareholders equity at
December 31, 2010. During the year ended December 31, 2010 the Company sold sixty-five
available-for-sale securities for $40,902,000, recording a $1,160,000 gain on sale
Investment securities with unrealized losses at March 31, 2011 are summarized and classified
according to the duration of the loss period as follows:
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months |
|
|
|
Fair |
|
|
Unrealized |
|
|
|
Value |
|
|
Losses |
|
Debt securities: |
|
|
|
|
|
|
|
|
U.S. Government agencies |
|
$ |
28,379,000 |
|
|
$ |
245,000 |
|
U.S. Government agencies
collateralized by mortgage
obligations |
|
|
11,614,000 |
|
|
|
95,000 |
|
Obligations of states and political subdivisions |
|
|
290,000 |
|
|
|
22,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
40,283,000 |
|
|
$ |
362,000 |
|
|
|
|
|
|
|
|
Investment securities with unrealized losses at December 31, 2010 are summarized and classified
according to the duration of the loss period as follows:
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months |
|
|
|
Fair |
|
|
Unrealized |
|
|
|
Value |
|
|
Losses |
|
Debt securities: |
|
|
|
|
|
|
|
|
U.S. Government agencies |
|
$ |
14,763,000 |
|
|
$ |
290,000 |
|
U.S. Government agencies
collateralized by mortgage
obligations |
|
|
13,205,000 |
|
|
|
107,000 |
|
Obligations of states and political subdivisions |
|
|
282,000 |
|
|
|
26,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
28,250,000 |
|
|
$ |
423,000 |
|
|
|
|
|
|
|
|
At March 31, 2011, the Company held 57 securities of which 29 were in a loss position. Of the
securities in a loss position, all were in a loss position for less than twelve months. Of the 29
securities 19 are U.S. government agencies, 8 are U.S. Government agencies collateralized by
mortgage obligations and 2 are obligations of states and political subdivisions. The unrealized
losses relate principally to market rate conditions. All of the securities continue to pay as
scheduled. When analyzing an issuers financial condition, management considers the length of time
and extent to which the market value has been less than cost; the historical and implied volatility
of the security; the financial condition of the issuer of the security; and the Companys intent
and ability to hold the security to recovery. As of March 31, 2011, management does not have the
intent to sell these securities nor does it believe it is more likely than not that it will be
required to sell these securities before the recovery of its amortized
cost basis. Based on the Companys evaluation of the above and other relevant factors, the Company
does not believe the securities that are in an unrealized loss position as of March 31, 2011 are
other than temporarily impaired.
8
The amortized cost and estimated fair value of investment securities at March 31, 2011 by
contractual maturity are shown below. Expected maturities will differ from contractual maturities
because the issuers of the securities may have the right to call or prepay obligations with or
without call or prepayment penalties.
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|
Estimated |
|
|
|
Amortized |
|
|
Fair |
|
|
|
Cost |
|
|
Value |
|
Within one year |
|
$ |
2,019,000 |
|
|
$ |
2,025,000 |
|
After one year through five years |
|
|
41,420,000 |
|
|
|
41,207,000 |
|
After five years through ten years |
|
|
312,000 |
|
|
|
290,000 |
|
|
|
|
|
|
|
|
|
|
|
43,751,000 |
|
|
|
43,522,000 |
|
|
|
|
|
|
|
|
|
|
Investment securities not due at a single maturity date: |
|
|
|
|
|
|
|
|
Government-guaranteed mortgage- backed securities |
|
|
20,831,000 |
|
|
|
20,833,000 |
|
|
|
|
|
|
|
|
|
|
$ |
64,582,000 |
|
|
$ |
64,355,000 |
|
|
|
|
|
|
|
|
Investment securities with amortized costs totaling $44,145,000 and $36,828,000 and estimated fair
values totaling $43,965,000 and $36,814,000 at March 31, 2011 and December 31, 2010, respectively,
were pledged to secure deposits, including public deposits and treasury, tax and loan accounts.
5. LOANS
Outstanding loans are summarized below, in thousands:
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
Commercial |
|
$ |
28,417 |
|
|
$ |
33,433 |
|
Agricultural |
|
|
37,721 |
|
|
|
38,469 |
|
Real estate residential |
|
|
43,355 |
|
|
|
43,291 |
|
Real estate commercial |
|
|
119,722 |
|
|
|
119,222 |
|
Real estate construction and land development |
|
|
28,699 |
|
|
|
31,199 |
|
Equity lines of credit |
|
|
36,271 |
|
|
|
36,946 |
|
Installment |
|
|
2,919 |
|
|
|
2,879 |
|
Other |
|
|
7,287 |
|
|
|
8,761 |
|
|
|
|
|
|
|
|
|
|
|
304,391 |
|
|
|
314,200 |
|
Deferred loan costs, net |
|
|
270 |
|
|
|
275 |
|
Allowance for loan losses |
|
|
(8,759 |
) |
|
|
(7,324 |
) |
|
|
|
|
|
|
|
|
|
$ |
295,902 |
|
|
$ |
307,151 |
|
|
|
|
|
|
|
|
At March 31, 2011 and December 31, 2010, nonaccrual loans totaled $24,393,000 and $25,313,000,
respectively.
Changes in the allowance for loan losses were as follows, in thousands:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Balance, beginning of period |
|
$ |
7,324 |
|
|
$ |
9,568 |
|
Provision charged to operations |
|
|
1,700 |
|
|
|
1,500 |
|
Losses charged to allowance |
|
|
(401 |
) |
|
|
(2,850 |
) |
Recoveries |
|
|
136 |
|
|
|
48 |
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
8,759 |
|
|
$ |
8,266 |
|
|
|
|
|
|
|
|
9
The following table shows the loan portfolio allocated by managements internal risk ratings
at the dates indicated, in thousands:
March 31,
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Credit Exposure |
|
|
|
Credit Risk Profile by Internally Assigned Grade |
|
|
|
|
|
|
|
|
|
|
|
Real Estate- |
|
|
Real Estate- |
|
|
Real Estate- |
|
|
|
|
|
|
|
|
|
Commercial |
|
|
Agricultural |
|
|
Residential |
|
|
Commercial |
|
|
Construction |
|
|
Equity LOC |
|
|
Total |
|
Grade: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass |
|
$ |
23,473 |
|
|
$ |
32,678 |
|
|
$ |
39,898 |
|
|
$ |
97,017 |
|
|
$ |
13,883 |
|
|
$ |
33,697 |
|
|
$ |
240,646 |
|
Watch |
|
|
1,121 |
|
|
|
426 |
|
|
|
870 |
|
|
|
5,463 |
|
|
|
2,363 |
|
|
|
617 |
|
|
|
10,860 |
|
Substandard |
|
|
3,692 |
|
|
|
4,617 |
|
|
|
2,587 |
|
|
|
17,242 |
|
|
|
12,253 |
|
|
|
1,910 |
|
|
|
42,301 |
|
Doubtful |
|
|
131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200 |
|
|
|
47 |
|
|
|
378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
28,417 |
|
|
$ |
37,721 |
|
|
$ |
43,355 |
|
|
$ |
119,722 |
|
|
$ |
28,699 |
|
|
$ |
36,271 |
|
|
$ |
294,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Credit Exposure |
|
|
|
Credit Risk Profile by Internally Assigned Grade |
|
|
|
|
|
|
|
|
|
|
|
Real Estate- |
|
|
Real Estate- |
|
|
Real Estate- |
|
|
|
|
|
|
|
|
|
Commercial |
|
|
Agricultural |
|
|
Residential |
|
|
Commercial |
|
|
Construction |
|
|
Equity LOC |
|
|
Total |
|
Grade: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass |
|
$ |
28,923 |
|
|
$ |
34,081 |
|
|
$ |
39,194 |
|
|
$ |
96,527 |
|
|
$ |
15,987 |
|
|
$ |
34,787 |
|
|
$ |
249,499 |
|
Watch |
|
|
904 |
|
|
|
646 |
|
|
|
1,738 |
|
|
|
8,192 |
|
|
|
2,165 |
|
|
|
585 |
|
|
|
14,230 |
|
Substandard |
|
|
3,606 |
|
|
|
3,742 |
|
|
|
2,295 |
|
|
|
14,503 |
|
|
|
12,982 |
|
|
|
1,502 |
|
|
|
38,630 |
|
Doubtful |
|
|
|
|
|
|
|
|
|
|
64 |
|
|
|
|
|
|
|
65 |
|
|
|
72 |
|
|
|
201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
33,433 |
|
|
$ |
38,469 |
|
|
$ |
43,291 |
|
|
$ |
119,222 |
|
|
$ |
31,199 |
|
|
$ |
36,946 |
|
|
$ |
302,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Credit Exposure |
|
|
Consumer Credit Exposure |
|
|
|
Credit Risk Profile Based on Payment Activity |
|
|
Credit Risk Profile Based on Payment Activity |
|
|
|
March 31, 2011 |
|
|
December 31, 2010 |
|
|
|
Installment |
|
|
Other |
|
|
Total |
|
|
Installment |
|
|
Other |
|
|
Total |
|
Grade: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performing |
|
$ |
2,864 |
|
|
$ |
7,054 |
|
|
$ |
9,918 |
|
|
$ |
2,830 |
|
|
$ |
8,643 |
|
|
$ |
11,473 |
|
Non-performing |
|
|
55 |
|
|
|
233 |
|
|
|
288 |
|
|
|
49 |
|
|
|
118 |
|
|
|
167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,919 |
|
|
$ |
7,287 |
|
|
$ |
10,206 |
|
|
$ |
2,879 |
|
|
$ |
8,761 |
|
|
$ |
11,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
The following table shows the allocation of the allowance for loan losses by impairment
methodology at the dates indicated, in thousands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate- |
|
|
Real Estate- |
|
|
Real Estate- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
Agricultural |
|
|
Residential |
|
|
Commercial |
|
|
Construction |
|
|
Equity LOC |
|
|
Installment |
|
|
Other |
|
|
Total |
|
March 31, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
760 |
|
|
$ |
184 |
|
|
$ |
632 |
|
|
$ |
1,819 |
|
|
$ |
3,011 |
|
|
$ |
652 |
|
|
$ |
66 |
|
|
$ |
200 |
|
|
$ |
7,324 |
|
Charge-offs |
|
|
(79 |
) |
|
|
(94 |
) |
|
|
(48 |
) |
|
|
|
|
|
|
|
|
|
|
(71 |
) |
|
|
(52 |
) |
|
|
(57 |
) |
|
|
(401 |
) |
Recoveries |
|
|
6 |
|
|
|
102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
24 |
|
|
|
136 |
|
Provision |
|
|
257 |
|
|
|
(22 |
) |
|
|
107 |
|
|
|
221 |
|
|
|
983 |
|
|
|
67 |
|
|
|
81 |
|
|
|
6 |
|
|
|
1,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
944 |
|
|
$ |
170 |
|
|
$ |
691 |
|
|
$ |
2,040 |
|
|
$ |
3,994 |
|
|
$ |
648 |
|
|
$ |
99 |
|
|
$ |
173 |
|
|
$ |
8,759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually
evaluated for impairment |
|
$ |
211 |
|
|
$ |
|
|
|
$ |
133 |
|
|
$ |
388 |
|
|
$ |
2,425 |
|
|
$ |
|
|
|
$ |
8 |
|
|
$ |
|
|
|
$ |
3,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively
evaluated for impairment |
|
$ |
733 |
|
|
$ |
170 |
|
|
$ |
558 |
|
|
$ |
1,652 |
|
|
$ |
1,569 |
|
|
$ |
648 |
|
|
$ |
91 |
|
|
$ |
173 |
|
|
$ |
5,594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
28,417 |
|
|
$ |
37,721 |
|
|
$ |
43,355 |
|
|
$ |
119,722 |
|
|
$ |
28,699 |
|
|
$ |
36,271 |
|
|
$ |
2,919 |
|
|
$ |
7,287 |
|
|
$ |
304,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually
evaluated for impairment |
|
$ |
2,988 |
|
|
$ |
1,041 |
|
|
$ |
3,596 |
|
|
$ |
7,510 |
|
|
$ |
11,280 |
|
|
$ |
1,332 |
|
|
$ |
116 |
|
|
$ |
116 |
|
|
$ |
27,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively
evaluated for impairment |
|
$ |
25,429 |
|
|
$ |
36,680 |
|
|
$ |
39,759 |
|
|
$ |
112,212 |
|
|
$ |
17,419 |
|
|
$ |
34,939 |
|
|
$ |
2,803 |
|
|
$ |
7,171 |
|
|
$ |
276,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
760 |
|
|
$ |
184 |
|
|
$ |
632 |
|
|
$ |
1,819 |
|
|
$ |
3,011 |
|
|
$ |
652 |
|
|
$ |
66 |
|
|
$ |
200 |
|
|
$ |
7,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually
evaluated for impairment |
|
$ |
22 |
|
|
$ |
|
|
|
$ |
121 |
|
|
$ |
201 |
|
|
$ |
1,479 |
|
|
$ |
72 |
|
|
$ |
8 |
|
|
$ |
|
|
|
$ |
1,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively
evaluated for impairment |
|
$ |
738 |
|
|
$ |
184 |
|
|
$ |
511 |
|
|
$ |
1,618 |
|
|
$ |
1,532 |
|
|
$ |
580 |
|
|
$ |
58 |
|
|
$ |
200 |
|
|
$ |
5,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
33,433 |
|
|
$ |
38,469 |
|
|
$ |
43,291 |
|
|
$ |
119,222 |
|
|
$ |
31,199 |
|
|
$ |
36,946 |
|
|
$ |
2,879 |
|
|
$ |
8,761 |
|
|
$ |
314,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually
evaluated for impairment |
|
$ |
2,706 |
|
|
$ |
868 |
|
|
$ |
3,870 |
|
|
$ |
8,204 |
|
|
$ |
11,501 |
|
|
$ |
1,382 |
|
|
$ |
106 |
|
|
$ |
118 |
|
|
$ |
28,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively
evaluated for impairment |
|
$ |
30,727 |
|
|
$ |
37,601 |
|
|
$ |
39,421 |
|
|
$ |
111,018 |
|
|
$ |
19,698 |
|
|
$ |
35,564 |
|
|
$ |
2,773 |
|
|
$ |
8,643 |
|
|
$ |
285,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
The following table shows an aging analysis of the loan portfolio by the time past due, in
thousands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90 Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-89 Days |
|
|
and Still |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
Past Due |
|
|
Accruing |
|
|
Nonaccrual |
|
|
Past Due |
|
|
Current |
|
|
Total |
|
As of March 31, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
311 |
|
|
$ |
|
|
|
$ |
2,988 |
|
|
$ |
3,299 |
|
|
$ |
25,118 |
|
|
$ |
28,417 |
|
Agricultural |
|
|
697 |
|
|
|
|
|
|
|
1,041 |
|
|
|
1,738 |
|
|
|
35,983 |
|
|
|
37,721 |
|
Real estate construction |
|
|
2,258 |
|
|
|
|
|
|
|
9,428 |
|
|
|
11,686 |
|
|
|
17,013 |
|
|
|
28,699 |
|
Real estate commercial |
|
|
3,579 |
|
|
|
|
|
|
|
7,510 |
|
|
|
11,089 |
|
|
|
108,633 |
|
|
|
119,722 |
|
Residential: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate residential |
|
|
3 |
|
|
|
|
|
|
|
1,919 |
|
|
|
1,922 |
|
|
|
41,433 |
|
|
|
43,355 |
|
Equity LOC |
|
|
559 |
|
|
|
|
|
|
|
1,332 |
|
|
|
1,891 |
|
|
|
34,380 |
|
|
|
36,271 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment |
|
|
20 |
|
|
|
|
|
|
|
55 |
|
|
|
75 |
|
|
|
2,844 |
|
|
|
2,919 |
|
Other |
|
|
270 |
|
|
|
113 |
|
|
|
120 |
|
|
|
503 |
|
|
|
6,784 |
|
|
|
7,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
7,697 |
|
|
$ |
113 |
|
|
$ |
24,393 |
|
|
$ |
32,203 |
|
|
$ |
272,188 |
|
|
$ |
304,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
352 |
|
|
$ |
|
|
|
$ |
2,706 |
|
|
$ |
3,058 |
|
|
$ |
30,375 |
|
|
$ |
33,433 |
|
Agricultural |
|
|
272 |
|
|
|
|
|
|
|
868 |
|
|
|
1,140 |
|
|
|
37,329 |
|
|
|
38,469 |
|
Real estate construction |
|
|
136 |
|
|
|
|
|
|
|
9,797 |
|
|
|
9,933 |
|
|
|
21,266 |
|
|
|
31,199 |
|
Real estate commercial |
|
|
802 |
|
|
|
|
|
|
|
8,204 |
|
|
|
9,006 |
|
|
|
110,216 |
|
|
|
119,222 |
|
Residential: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate residential |
|
|
400 |
|
|
|
|
|
|
|
2,189 |
|
|
|
2,589 |
|
|
|
40,702 |
|
|
|
43,291 |
|
Equity LOC |
|
|
494 |
|
|
|
|
|
|
|
1,382 |
|
|
|
1,876 |
|
|
|
35,070 |
|
|
|
36,946 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment |
|
|
56 |
|
|
|
|
|
|
|
49 |
|
|
|
105 |
|
|
|
2,774 |
|
|
|
2,879 |
|
Other |
|
|
348 |
|
|
|
45 |
|
|
|
118 |
|
|
|
511 |
|
|
|
8,250 |
|
|
|
8,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,860 |
|
|
$ |
45 |
|
|
$ |
25,313 |
|
|
$ |
28,218 |
|
|
$ |
285,982 |
|
|
$ |
314,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
The following table shows information related to impaired loans at the dates indicted, in thousands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid |
|
|
|
|
|
|
Average |
|
|
Interest |
|
|
|
Recorded |
|
|
Principal |
|
|
Related |
|
|
Recorded |
|
|
Income |
|
|
|
Investment |
|
|
Balance |
|
|
Allowance |
|
|
Investment |
|
|
Recognized |
|
As of March 31, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance
recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
2,747 |
|
|
$ |
3,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural |
|
|
1,041 |
|
|
|
1,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction |
|
|
1,325 |
|
|
|
1,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commercial |
|
|
5,029 |
|
|
|
5,029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate residential |
|
|
1,818 |
|
|
|
1,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Lines of Credit |
|
|
1,332 |
|
|
|
1,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment |
|
|
107 |
|
|
|
107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
116 |
|
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
241 |
|
|
|
241 |
|
|
$ |
211 |
|
|
|
|
|
|
|
|
|
Agricultural |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction |
|
|
9,955 |
|
|
|
11,825 |
|
|
|
2,425 |
|
|
|
|
|
|
|
|
|
Real estate commercial |
|
|
2,481 |
|
|
|
2,481 |
|
|
|
388 |
|
|
|
|
|
|
|
|
|
Real estate residential |
|
|
1,778 |
|
|
|
1,789 |
|
|
|
133 |
|
|
|
|
|
|
|
|
|
Equity Lines of Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment |
|
|
9 |
|
|
|
9 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
2,988 |
|
|
|
3,326 |
|
|
|
211 |
|
|
$ |
2,818 |
|
|
$ |
2 |
|
Agricultural |
|
|
1,041 |
|
|
|
1,271 |
|
|
|
|
|
|
|
1,028 |
|
|
|
4 |
|
Real estate construction |
|
|
11,280 |
|
|
|
13,225 |
|
|
|
2,425 |
|
|
|
11,529 |
|
|
|
37 |
|
Real estate commercial |
|
|
7,510 |
|
|
|
7,510 |
|
|
|
388 |
|
|
|
7,590 |
|
|
|
54 |
|
Real estate residential |
|
|
3,596 |
|
|
|
3,607 |
|
|
|
133 |
|
|
|
3,725 |
|
|
|
49 |
|
Equity Lines of Credit |
|
|
1,332 |
|
|
|
1,332 |
|
|
|
|
|
|
|
1,333 |
|
|
|
2 |
|
Installment |
|
|
116 |
|
|
|
116 |
|
|
|
8 |
|
|
|
117 |
|
|
|
2 |
|
Other |
|
|
116 |
|
|
|
116 |
|
|
|
|
|
|
|
129 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
27,979 |
|
|
$ |
30,503 |
|
|
$ |
3,165 |
|
|
$ |
28,269 |
|
|
$ |
154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance
recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
2,680 |
|
|
$ |
3,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural |
|
|
868 |
|
|
|
1,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction |
|
|
4,151 |
|
|
|
5,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate commercial |
|
|
5,994 |
|
|
|
5,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate residential |
|
|
2,244 |
|
|
|
2,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Lines of Credit |
|
|
1,310 |
|
|
|
1,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment |
|
|
98 |
|
|
|
98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
118 |
|
|
|
118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
26 |
|
|
|
26 |
|
|
$ |
22 |
|
|
|
|
|
|
|
|
|
Agricultural |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction |
|
|
7,350 |
|
|
|
8,770 |
|
|
|
1,479 |
|
|
|
|
|
|
|
|
|
Real estate commercial |
|
|
2,210 |
|
|
|
2,210 |
|
|
|
201 |
|
|
|
|
|
|
|
|
|
Real estate residential |
|
|
1,626 |
|
|
|
1,743 |
|
|
|
121 |
|
|
|
|
|
|
|
|
|
Equity Lines of Credit |
|
|
72 |
|
|
|
72 |
|
|
|
72 |
|
|
|
|
|
|
|
|
|
Installment |
|
|
8 |
|
|
|
8 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
2,706 |
|
|
|
3,044 |
|
|
|
22 |
|
|
$ |
1,924 |
|
|
$ |
11 |
|
Agricultural |
|
|
868 |
|
|
|
1,109 |
|
|
|
|
|
|
|
1,454 |
|
|
|
102 |
|
Real estate construction |
|
|
11,501 |
|
|
|
13,939 |
|
|
|
1,479 |
|
|
|
8,440 |
|
|
|
100 |
|
Real estate commercial |
|
|
8,204 |
|
|
|
8,204 |
|
|
|
201 |
|
|
|
7,516 |
|
|
|
261 |
|
Real estate residential |
|
|
3,870 |
|
|
|
3,988 |
|
|
|
121 |
|
|
|
750 |
|
|
|
121 |
|
Equity Lines of Credit |
|
|
1,382 |
|
|
|
1,382 |
|
|
|
72 |
|
|
|
565 |
|
|
|
|
|
Installment |
|
|
106 |
|
|
|
106 |
|
|
|
8 |
|
|
|
44 |
|
|
|
2 |
|
Other |
|
|
118 |
|
|
|
118 |
|
|
|
|
|
|
|
140 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
28,755 |
|
|
$ |
31,890 |
|
|
$ |
1,903 |
|
|
$ |
20,833 |
|
|
$ |
608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
6. COMMITMENTS AND CONTINGENCIES
The Company is party to claims and legal proceedings arising in the ordinary course of business.
In the opinion of the Companys management, the amount of ultimate liability with respect to such
proceedings will not have a material adverse effect on the financial condition or result of
operations of the Company taken as a whole.
In the normal course of business, there are various outstanding commitments to extend credit, which
are not reflected, in the financial statements, including loan commitments of $70,617,000 and
$71,605,000 and stand-by letters of credit of $133,000 and $164,000 at March 31, 2011 and December
31, 2010, respectively.
Of the loan commitments outstanding at March 31, 2011, $3,777,000 are real estate construction loan
commitments that are expected to fund within the next twelve months. The remaining commitments
primarily relate to revolving lines of credit or other commercial loans, and many of these are
expected to expire without being drawn upon. Therefore, the total commitments do not necessarily
represent future cash requirements. Each loan commitment and the amount and type of collateral
obtained, if any, are evaluated on an individual basis. Collateral held varies, but may include
real property, bank deposits, debt or equity securities or business assets.
Stand-by letters of credit are conditional commitments written to guarantee the performance of a
customer to a third party. These guarantees are primarily related to the purchases of inventory by
commercial customers and are typically short-term in nature. Credit risk is similar to that
involved in extending loan commitments to customers and accordingly, evaluation and collateral
requirements similar to those for loan commitments are used. The deferred liability related to the
Companys stand-by letters of credit was not significant at March 31, 2011 or December 31, 2010.
7. EARNINGS PER SHARE
Basic earnings (loss) per share is computed by dividing income (loss) available to common
shareholders by the weighted average number of common shares outstanding for the period. Diluted
earnings (loss) per share reflects the potential dilution that could occur if securities or other
contracts to issue common stock, such as stock options, result in the issuance of common stock
which shares in the earnings of the Company. The treasury stock method has been applied to
determine the dilutive effect of stock options in computing diluted earnings per share.
|
|
|
|
|
|
|
|
|
|
|
For the Three Months |
|
|
|
Ended March 31, |
|
(In thousands, except per share data) |
|
2011 |
|
|
2010 |
|
Net Income (loss): |
|
|
|
|
|
|
|
|
Net income |
|
$ |
223 |
|
|
$ |
134 |
|
Dividends on preferred shares |
|
|
(171 |
) |
|
|
(171 |
) |
|
|
|
|
|
|
|
Net income (loss) available to common shareholders |
|
$ |
52 |
|
|
$ |
(37 |
) |
|
|
|
|
|
|
|
Earnings (Loss) Per Share: |
|
|
|
|
|
|
|
|
Earnings (loss) per share |
|
$ |
0.01 |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
Weighted Average Number of Shares Outstanding: |
|
|
4,776 |
|
|
|
4,776 |
|
Shares of common stock issuable under stock options for which the exercise prices were greater than
the average market prices were not included in the computation of diluted earnings per share due to
their antidilutive effect. When a net loss occurs, no difference in earnings per share is
calculated because the conversion of potential common stock is anti-dilutive.
14
8. COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) for the three months ended March 31, 2011 and 2010 totaled
$142,000 and ($56,000), respectively. Comprehensive loss is comprised of unrealized (losses), net
of taxes, on available-for-sale investment securities, which were $(81,000) and ($190,000) for the
three months ended March 31, 2011 and 2010, respectively, together with net income.
At March 31, 2011 and December 31, 2010, accumulated other comprehensive loss totaled $133,000 and
$52,000, respectively, and is reflected, net of taxes, as a component of shareholders equity.
9. STOCK-BASED COMPENSATION
In 2001 and 1991, the Company established Stock Option Plans for which 559,280 shares of common
stock remain reserved for issuance to employees and directors and no shares are available for
future grants under incentive and nonstatutory agreements as of March 31, 2011.
The Company determines the fair value of the options previously granted on the date of grant
using a Black-Scholes-Merton option pricing model that uses assumptions based on expected option
life, expected stock volatility and the risk-free interest rate. The expected volatility
assumptions used by the Company are based on the historical volatility of the Companys common
stock over the most recent period commensurate with the estimated expected life of the Companys
stock options. The Company bases its expected life assumption on its historical experience and on
the terms and conditions of the stock options it grants to employees. The risk-free rate is based
on the U.S. Treasury yield curve for the periods within the contractual life of the options in
effect at the time of the grant. The Company also makes assumptions regarding estimated forfeitures
that will impact the total compensation expenses recognized under the Plans.
The fair value of each option is estimated on the date of grant using the following assumptions.
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, 2011 |
|
Expected life of stock options |
|
|
5.3 years |
|
Interest ratestock options |
|
|
2.26 |
% |
Volatilitystock options |
|
|
46.1 |
% |
Dividend yields |
|
|
3.05 |
% |
Weighted-average fair value of options granted during the period |
|
$ |
0.99 |
|
No options were granted during the three months ended March 31, 2010.
During the three months ended March 31, 2011 and 2010 the Company recognized a reversal of
compensation cost related to a revision in the estimated forfeiture rate. This resulted in a
credit to operating expense of $88,000 and $72,000 during the three months ended March 31, 2011 and
March 31 2010, respectively and a reduction in the future income tax benefit of $5,000 and $4,000,
respectively.
15
The following table summarizes information about stock option activity for the three months
ended March 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Remaining |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Contractual |
|
|
|
|
|
|
|
|
|
|
Exercise |
|
|
Term |
|
|
Intrinsic Value |
|
|
|
Shares |
|
|
Price |
|
|
(in years) |
|
|
(in thousands) |
|
Options outstanding at December 31, 2010 |
|
|
312,030 |
|
|
$ |
13.41 |
|
|
|
|
|
|
|
|
|
Options granted |
|
|
248,000 |
|
|
|
2.95 |
|
|
|
|
|
|
|
|
|
Options exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options cancelled |
|
|
(750 |
) |
|
$ |
12.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2011 |
|
|
559,280 |
|
|
$ |
8.77 |
|
|
|
5.4 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at March 31, 2011 |
|
|
294,887 |
|
|
$ |
13.45 |
|
|
|
3.3 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected to vest after March 31, 2011 |
|
|
217,040 |
|
|
$ |
3.55 |
|
|
|
7.8 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2011, there was $180,000 of total unrecognized compensation cost related to non-vested
stock option awards which is expected to be recognized over a weighted-average period of 3.4 years.
The total fair value of options vested during the three months ended March 31, 2011 was $148,000.
10. INCOME TAXES
The Company files its income taxes on a consolidated basis with its subsidiary. The allocation of
income tax expense (benefit) represents each entitys proportionate share of the consolidated
provision for income taxes.
Deferred tax assets and liabilities are recognized for the tax consequences of temporary
differences between the reported amount of assets and liabilities and their tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The
determination of the amount of deferred income tax assets which are more likely than not to be
realized is primarily dependent on projections of future earnings, which are subject to uncertainty
and estimates that may change given economic conditions and other factors. The realization of
deferred income tax assets is assessed and a valuation allowance is recorded if it is more likely
than not that all or a portion of the deferred tax asset will not be realized. More likely than
not is defined as greater than a 50% chance. All available evidence, both positive and negative
is considered to determine whether, based on the weight of that evidence, a valuation allowance is
needed. Based upon our analysis of available evidence, we have determined that it is more likely
than not that all of our deferred income tax assets as of March 31, 2011 and December 31, 2010
will be fully realized and therefore no valuation allowance was recorded. On the consolidated
balance sheet, net deferred tax assets are included in accrued interest receivable and other
assets.
When tax returns are filed, it is highly certain that some positions taken would be sustained upon
examination by the taxing authorities, while others are subject to uncertainty about the merits of
the position taken or the amount of the position that would be ultimately sustained. The benefit
of a tax position is recognized in the financial statements in the period during which, based on
all available evidence, management believes it is more likely than not that the position will be
sustained upon examination, including the resolution of appeals or litigation processes, if any.
Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that
is more than 50 percent likely of being realized upon settlement with the applicable taxing
authority. The portion of the benefits associated with tax positions taken that exceeds the amount
measured as described above is reflected as a liability for unrecognized tax benefits in the
accompanying balance sheet along with any associated interest and penalties that would be payable
to the taxing authorities upon examination.
16
Interest expense and penalties associated with unrecognized tax benefits, if any, are classified as
income tax expense in the consolidated statement of income. There have been no significant changes
to unrecognized tax benefits or accrued interest and penalties for the quarter ended March 31,
2011.
11. FAIR VALUE MEASUREMENT
Fair Value of Financial Instruments
The estimated fair values of the Companys financial instruments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
December 31, 2010 |
|
|
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
|
|
Amount |
|
|
Value |
|
|
Amount |
|
|
Value |
|
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
59,720,000 |
|
|
$ |
59,720,000 |
|
|
$ |
64,628,000 |
|
|
$ |
64,628,000 |
|
Investment securities |
|
|
64,355,000 |
|
|
|
64,355,000 |
|
|
|
63,017,000 |
|
|
|
63,017,000 |
|
Loans |
|
|
295,902,000 |
|
|
|
300,236,000 |
|
|
|
307,151,000 |
|
|
|
304,045,000 |
|
FHLB stock |
|
|
2,188,000 |
|
|
|
2,188,000 |
|
|
|
2,188,000 |
|
|
|
2,188,000 |
|
Bank owned life insurance |
|
|
10,555,000 |
|
|
|
10,555,000 |
|
|
|
10,463,000 |
|
|
|
10,463,000 |
|
Accrued interest receivable |
|
|
1,828,000 |
|
|
|
1,828,000 |
|
|
|
1,784,000 |
|
|
|
1,784,000 |
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
$ |
414,925,000 |
|
|
$ |
415,192,000 |
|
|
$ |
424,887,000 |
|
|
$ |
425,009,000 |
|
Junior subordinated deferrable
interest debentures |
|
|
10,310,000 |
|
|
|
3,012,000 |
|
|
|
10,310,000 |
|
|
|
2,992,000 |
|
Accrued interest payable |
|
|
623,000 |
|
|
|
623,000 |
|
|
|
623,000 |
|
|
|
623,000 |
|
These estimates do not reflect any premium or discount that could result from offering the
Companys entire holdings of a particular financial instrument for sale at one time, nor do they
attempt to estimate the value of anticipated future business related to the instruments. In
addition, the tax ramifications related to the realization of unrealized gains and losses can have
a significant effect on fair value estimates and have not been considered in any of these
estimates.
The following methods and assumptions were used by management to estimate the fair value of its
financial instruments at March 31, 2011 and December 31, 2010:
Cash and cash equivalents: For cash and cash equivalents, the carrying amount is estimated
to be fair value.
Investment securities: For investment securities, fair values are based on quoted market
prices, where available. If quoted market prices are not available, fair values are estimated
using quoted market prices for similar securities and indications of value provided by brokers.
Loans: For variable-rate loans that reprice frequently with no significant change in
credit risk, fair values are based on carrying values. Fair values of loans held for sale, if any,
are estimated using quoted market prices for similar loans. The fair values for other loans are
estimated using discounted cash flow analyses, using interest rates currently being offered at each
reporting date for loans with similar terms to borrowers of comparable creditworthiness. The fair
value of loans is adjusted for the allowance for loan losses. The carrying value of accrued
interest receivable approximates its fair value.
The fair value of impaired loans is based on either the estimated fair value of underlying
collateral or estimated cash flows, discounted at the loans effective rate. Assumptions regarding
credit risk and cash flows are determined using available market information and specific borrower
information.
FHLB stock: The carrying amount of FHLB stock approximates its fair value. This investment
is carried at cost and is redeemable at par with certain restrictions.
Bank owned life insurance: The fair values of bank owned life insurance policies are based
on current cash surrender values at each reporting date provided by the insurers.
17
Deposits: The fair values for demand deposits are, by definition, equal to the amount
payable on demand at the reporting date represented by their carrying amount. Fair values for
fixed-rate certificates of deposit are estimated using a discounted cash flow analysis using
interest rates offered at each reporting date by the Bank for certificates with similar remaining
maturities. The carrying amount of accrued interest payable approximates its fair value.
Junior subordinated deferrable interest debentures: The fair value of junior subordinated
deferrable interest debentures was determined based on the current market value for like kind
instruments of a similar maturity and structure.
Commitments to extend credit and letters of credit: The fair value of commitments are
estimated using the fees currently charged to enter into similar agreements. Commitments to extend
credit are primarily for variable rate loans and letters of credit.
For these commitments, there is no significant difference between the committed amounts and their
fair values and therefore, these items are not included in the table above.
Because no market exists for a significant portion of the Companys financial instruments, fair
value estimates are based on judgments regarding current economic conditions, risk characteristics
of various financial instruments and other factors. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and therefore cannot be determined with
precision. Changes in assumptions could significantly affect the fair values presented.
The Company measures fair value under the fair value hierarchy described below.
Level 1: Quoted prices for identical instruments traded in active exchange markets.
Level 2: Quoted prices for similar instruments in active markets, quoted prices for identical or
similar instruments in markets that are not active and model-based valuation techniques for which
all significant assumptions are observable or can be corroborated by observable market data.
Level 3: Model based techniques that use one significant assumption not observable in the market.
These unobservable assumptions reflect the Companys estimates of assumptions that market
participants would use on pricing the asset or liability. Valuation techniques include management
judgment and estimation which may be significant.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair
value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value
measurement in its entirety falls has been determined based on the lowest level input that is
significant to the fair value measurement in its entirety. The Companys assessment of the
significance of a particular input to the fair value measurement in its entirety requires judgment,
and considers factors specific to the asset or liability.
Management monitors the availability of observable market data to assess the appropriate
classification of financial instruments within the fair value hierarchy. Changes in economic
conditions or model-based valuation techniques may require the transfer of financial instruments
from one fair value level to another. In such instances, the transfer is reported at the beginning
of the reporting period.
Management evaluates the significance of transfers between levels based upon the nature of the
financial instrument and size of the transfer relative to total assets, total liabilities or total
earnings.
The following tables present information about the Companys assets and liabilities measured at
fair value on a recurring and non recurring basis as of March 31, 2011 and December 31, 2010, and
indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine
such fair value:
18
Assets and liabilities measured at fair value on a recurring basis at March 31, 2011 are summarized
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at March 31, 2011 Using |
|
|
|
|
|
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
|
|
|
|
|
|
Active Markets for |
|
|
Observable Inputs |
|
|
Unobservable Inputs |
|
|
|
Total Fair Value |
|
|
Identical Assets (Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
securities |
|
$ |
1,022,000 |
|
|
$ |
1,022,000 |
|
|
|
|
|
|
|
|
|
U.S. Government
agencies |
|
|
42,210,000 |
|
|
|
42,210,000 |
|
|
|
|
|
|
|
|
|
U.S. Government
agencies
collateralized
by mortgage
obligations |
|
|
20,833,000 |
|
|
|
|
|
|
$ |
20,833,000 |
|
|
|
|
|
Obligations of
states and
political
subdivisions |
|
|
290,000 |
|
|
|
290,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
64,355,000 |
|
|
$ |
43,522,000 |
|
|
$ |
20,833,000 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets and liabilities measured at fair value on a recurring basis at December 31, 2010 are
summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2010 Using |
|
|
|
|
|
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
|
|
|
|
|
|
Active Markets for |
|
|
Observable Inputs |
|
|
Unobservable Inputs |
|
|
|
Total Fair Value |
|
|
Identical Assets (Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
securities |
|
$ |
1,032,000 |
|
|
$ |
1,032,000 |
|
|
|
|
|
|
|
|
|
U.S. Government
agencies |
|
|
40,430,000 |
|
|
|
40,430,000 |
|
|
|
|
|
|
|
|
|
U.S. Government
agencies
collateralized
by mortgage
obligations |
|
|
21,273,000 |
|
|
|
|
|
|
$ |
21,273,000 |
|
|
|
|
|
Obligations of
states and
political
subdivisions |
|
|
282,000 |
|
|
|
282,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
63,017,000 |
|
|
$ |
41,744,000 |
|
|
$ |
21,273,000 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of securities available-for-sale equals quoted market price, if available. If
quoted market prices are not available, fair value is determined using quoted market prices for
similar securities. There were no changes in the valuation techniques used during 2011 or 2010.
Changes in fair market value are recorded in other comprehensive income.
19
Assets and liabilities measured at fair value on a non-recurring basis at March 31, 2011 are
summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at March 31, 2011 Using |
|
|
|
|
|
|
|
Quoted Prices in |
|
|
|
|
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
Active Markets for |
|
|
Significant Other |
|
|
Unobservable |
|
|
|
|
|
|
|
|
|
|
Identical Assets |
|
|
Observable Inputs |
|
|
Inputs |
|
|
Total Gains |
|
|
|
Total Fair Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
(Losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
961,000 |
|
|
|
|
|
|
$ |
961,000 |
|
|
|
|
|
|
$ |
(179,000 |
) |
Agricultural |
|
|
150,000 |
|
|
|
|
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
Real estate
residential |
|
|
1,645,000 |
|
|
|
|
|
|
|
1,645,000 |
|
|
|
|
|
|
|
(28,000 |
) |
Real estate
commercial |
|
|
2,093,000 |
|
|
|
|
|
|
|
2,093,000 |
|
|
|
|
|
|
|
(222,000 |
) |
Real estate
construction and
land development |
|
|
7,679,000 |
|
|
|
|
|
|
|
7,679,000 |
|
|
|
|
|
|
|
(946,000 |
) |
Installment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans |
|
|
12,528,000 |
|
|
|
|
|
|
|
12,528,000 |
|
|
|
|
|
|
|
(1,383,000 |
) |
Other real estate |
|
|
9,070,000 |
|
|
|
|
|
|
|
9,070,000 |
|
|
|
|
|
|
|
400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
21,598,000 |
|
|
$ |
|
|
|
$ |
21,598,000 |
|
|
$ |
|
|
|
$ |
(983,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2010
are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2010 Using |
|
|
|
|
|
|
|
Quoted Prices in |
|
|
|
|
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
Active Markets for |
|
|
Significant Other |
|
|
Unobservable |
|
|
|
|
|
|
|
|
|
|
Identical Assets |
|
|
Observable Inputs |
|
|
Inputs |
|
|
Total Gains |
|
|
|
Total Fair Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
(Losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
$ |
914,000 |
|
|
|
|
|
|
$ |
914,000 |
|
|
|
|
|
|
$ |
(259,000 |
) |
Agricultural |
|
|
243,000 |
|
|
|
|
|
|
|
243,000 |
|
|
|
|
|
|
|
(117,000 |
) |
Real estate
residential |
|
|
1,505,000 |
|
|
|
|
|
|
|
1,505,000 |
|
|
|
|
|
|
|
(213,000 |
) |
Real estate
commercial |
|
|
2,009,000 |
|
|
|
|
|
|
|
2,009,000 |
|
|
|
|
|
|
|
(201,000 |
) |
Real estate
construction and
land development |
|
|
8,850,000 |
|
|
|
|
|
|
|
8,850,000 |
|
|
|
|
|
|
|
(559,000 |
) |
Equity lines of
credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,000 |
) |
Installment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,000 |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans |
|
|
13,521,000 |
|
|
|
|
|
|
|
13,521,000 |
|
|
|
|
|
|
|
(1,356,000 |
) |
Other real estate |
|
|
8,867,000 |
|
|
|
|
|
|
|
8,867,000 |
|
|
|
|
|
|
|
(235,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
22,388,000 |
|
|
$ |
|
|
|
$ |
22,388,000 |
|
|
$ |
|
|
|
$ |
(1,591,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has no liabilities which are reported at fair value.
20
The following methods were used to estimate the fair value of each class of assets above.
Impaired Loans: The fair value of impaired loans is based on the fair value of the
collateral, if collateral dependent or the present value of the expected cash flows discounted at
the loans effective rate for those loans not collateral dependent. If the Company determines that
the value of an impaired loan is less than the recorded investment in the loan, the carrying value
is adjusted through a charge-off recorded through the allowance for loan losses. Total losses of
$1,383,000 and $1,356,000 represent impairment charges recognized during the three months and year
ended March 31, 2011 and December 31, 2010, respectively related to the above impaired loans. There
were no changes in the valuation techniques used during 2011 or 2010.
Other Real Estate: The fair value of other real estate is based on property appraisals at
the time of transfer and as appropriate thereafter, less estimated costs to sell. Estimated costs
to sell other real estate were based on standard market factors. Management periodically reviews
other real estate to determine whether the property continues to be carried at the lower of its
recorded book value or estimated fair value, net of estimated costs to sell.
12. Financial Accounting Standards
Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses
In July 2010, the FASB issued FASB ASU 2010-20, Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses. ASU 2010-20 requires more robust and
disaggregated disclosures about the credit quality of financing receivables (loans) and allowances
for loan losses, including disclosure about credit quality indicators, past due information and
modifications of finance receivables. The disclosures as of the end of a reporting period are
effective for interim and annual reporting periods ending on and after December 15, 2010.
The disclosures about activity that occurs during a reporting period are effective for interim and
annual reporting periods beginning on or after December 15, 2010. The adoption of this guidance
has significantly expanded disclosure requirements related to accounting policies and disclosures
related to the allowance for loan losses but did not have an impact on the Companys financial
position, results of operation or cash flows.
Creditors Determination of Whether a Restructuring is a Troubled Debt Restructuring
In January 2011, the FASB issued ASU 2011-01, Receivables (Topic 310): Deferral of the Effective
Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. ASU 2011-01 approved
the deferral of certain disclosure requirements surrounding TDRs included in ASU 2010-20, which
were scheduled to be effective on January 1, 2011. The disclosure requirements were delayed until
the FASB finalized the standards update related to their exposure draft, Clarifications to
Accounting for Troubled Debt Restructurings by Creditors. In April 2011, the FASB issued ASU
2011-02, Receivables (Topic 310): A Creditors Determination of Whether a Restructuring is a
Troubled Debt Restructuring. ASU 2011-02 provides additional guidance to creditors for evaluating
whether a modification or restructuring of a receivable is a TDR. The new guidance will require
creditors to evaluate modifications and restructurings of receivables using a more principles-based
approach, which may result in more modifications and restructurings being considered TDR. The
amendments are effective for the first interim or annual period beginning on or after June 15,
2011. The disclosures which were deferred by ASU 2011-01 are required for interim and annual
periods beginning on or after June 15, 2011. Management is currently determining the potential
impact that the adoption of this standard may have on the Companys financial position, results of
operations and disclosures.
21
PART I FINANCIAL INFORMATION
|
|
|
ITEM 2. |
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Certain matters discussed in this Quarterly Report are forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ materially from those
projected in the forward-looking statements. Such risks and uncertainties include, among others,
(1) significant increases in competitive pressures in the financial services industry; (2) changes
in the interest rate environment resulting in reduced margins; (3) general economic conditions,
either nationally or regionally, maybe less favorable than expected, resulting in, among other
things, a deterioration in credit quality; (4) changes in regulatory environment; (5) loss of key
personnel; (6) fluctuations in the real estate market; (7) changes in business conditions and
inflation; (8) operational risks including data processing systems failures or fraud; and (9)
changes in securities markets. Therefore, the information set forth herein should be carefully
considered when evaluating the business prospects of Plumas Bancorp (the Company).
When the Company uses in this Quarterly Report the words anticipate, estimate, expect,
project, intend, commit, believe and similar expressions, the Company intends to identify
forward-looking statements. Such statements are not guarantees of performance and are subject to
certain risks, uncertainties and assumptions, including those described in this Quarterly Report.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated, estimated, expected,
projected, intended, committed or believed. The future results and stockholder values of the
Company may differ materially from those expressed in these forward-looking statements. Many of
the factors that will determine these results and values are beyond the Companys ability to
control or predict. For those statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
INTRODUCTION
The following discussion and analysis sets forth certain statistical information relating to the
Company as of March 31, 2011 and December 31, 2010 and for the three month periods ended March 31,
2011 and 2010. This discussion should be read in conjunction with the condensed consolidated
financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and
the consolidated financial statements and notes thereto included in Plumas Bancorps Annual Report
filed on Form 10-K for the year ended December 31, 2010.
Plumas Bancorp trades on The NASDAQ Capital Market under the ticker symbol PLBC.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no changes to the Companys critical accounting policies from those disclosed in
the Companys 2010 Annual Report to Shareholders on Form 10-K.
This discussion should be read in conjunction with our unaudited condensed consolidated financial
statements, including the notes thereto, appearing elsewhere in this report.
22
OVERVIEW
Earnings for the first quarter of 2011 increased by $89 thousand from $134 thousand during the
first quarter of 2010 to $223 thousand during the current quarter. This $89 thousand increase in
earnings includes a $240 thousand increase in non-interest income and a $462 thousand decline in
non-interest expense, partially offset by a decline of $276 thousand in net interest income, a $200
thousand increase in the provision for loan losses and a $137 thousand increase in income tax
expense.
Net income (loss) allocable to common shareholders increased from a loss of ($37) thousand during
the first quarter of 2010 to income of $52 thousand or $0.01 per share during the current quarter.
Loss allocable to common shareholders is calculated by subtracting preferred stock dividends and
discount amortized on preferred stock from net income.
Total assets at March 31, 2011 were $470 million, a decrease of $14.8 million from $485 million at
December 31, 2010. This decrease was mostly related to a decline in net loan balances of $11.2
million. Cash and due from banks decreased by $4.9 million, from $64.6 million at December 31,
2010 to $59.7 million at March 31, 2011; however, this was partially offset by an increase in
investment securities of $1.3 million from $63.0 million at December 31, 2010 to $64.3 million at
March 31, 2011.
Deposits decreased by $10.0 million from $425 million at December 31, 2010 to $415 million at March
31, 2011. The decline in deposits was mostly related to maturities from a higher rate promotional
time deposit product we began offering in June, 2009 and continued to offer until April 30, 2010.
Other liabilities decreased by $5.4 million primarily related to the derecognition of a $4.3
million secured borrowing that was outstanding at December 31, 2010 which represented SBA loans
sold but subject to a 90 day premium recourse provision. Under ASC Topic 860, Accounting for
Transfers of Financial Assets, we are required to maintain this liability and the related loans on
balance sheet until the premium recourse period has passed. Once the 90 days has passed and no
premium recourse remains we remove the sold loans from assets and derecognize the secured
borrowing. During 2011, the SBA modified its requirement related to the recourse provisions on the
sale of SBA loans and, as a result, no longer requires the 90 day premium recourse requirement.
Therefore; no secured borrowings were outstanding at March 31, 2011.
The annualized return on average assets was 0.19% for the three months ended March 31, 2011 up from
0.11% for the three months ended March 31, 2010. The annualized return (loss) on average common
equity was 0.8% for the three months ended March 31, 2011 up from a loss of (0.6%) for the same
period in 2010.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2011
Net interest income before provision for loan losses. Net interest income, on a nontax-equivalent
basis, was $4.2 million for the three months ended March 31, 2011, a decrease of $276 thousand, or
6%, from $4.5 million for the same period in 2010. The decrease in net interest income can
primarily be attributed to a decrease in interest income related to a decline in average balance
and yield on loans and investment securities. Interest expense decreased by $346 thousand mostly
related to a decline in rates paid on deposit accounts. Borrowing costs declined by $69 thousand
as we had no Federal Home Loan Bank (FHLB) borrowings outstanding during the first quarter of 2011.
Net interest margin for the three months ended March 31, 2011 decreased 31 basis points, or 7%, to
3.99%, down from 4.30% for the same period in 2010.
Interest income decreased $622 thousand or 12%, to $4.8 million for the three months ended March
31, 2011, down from $5.4 million during the same period in 2010. Interest and fees on loans
decreased $387 thousand to $4.4 million for the three months ended March 31, 2011 as compared to
$4.8 million during the first quarter of 2010. The Companys average loan balances were $309
million for the three months ended March 31, 2011, down $18.4 million, or 6%, from $328 million for
the same period in 2010. The decline in loan balances reflects the difficult economic environment
in recent years and the Companys efforts to reduce it exposure in certain loan categories such as
construction and land development loans. The average rate earned on the Companys loan balances
decreased 16 basis points to 5.74% during the first three months of 2011 compared to 5.90% during
the first three months of 2010. The decrease in loan yield reflects an increase in average
nonperforming loan balances from $16.9 million during the first quarter of 2010 to $24.7 million
during the current quarter. Interest income on investment securities decreased by $259 thousand as
average balances declined by $16.3 million, from $84.1 million for the quarter ended March 31, 2010
to $67.8 million during the
current quarter, and yield declined by 84 basis points. The decline in yield is primarily related
to the replacement of matured and sold investment securities with new investments with market
yields below those which they replaced.
23
Interest expense on deposits decreased by $288 thousand, or 37%, to $500 thousand for the three
months ended March 31, 2011, down from $788 thousand for the same period in 2010. This decrease
primarily relates to decreases in the average balance and rate paid on time deposits and a decline
in the rate paid on NOW and money market accounts.
Interest on time deposits declined by $150 thousand related both to a decrease in average balance
and a decline in rate paid. Average time deposits declined by $13.2 million from $127.3 million
during the first quarter of 2010 to $114.1 million during the current quarter. The decrease in
time deposits is mostly related to a promotional time deposit product we began offering in June,
2009 and continued to offer until April 30, 2010. These promotional time deposits, which total $38
million at March 31, 2011, began maturing at the end of 2010 and will continue to mature into the
third quarter of 2011. The average rate paid on time deposits decreased from 1.71% during the
first quarter of 2010 to 1.38% during the current quarter. This decrease primarily relates to a
decline in market rates in the Companys service area and the maturity of the higher rate
promotional deposits.
Interest expense on NOW accounts declined by $102 thousand. Rates paid on NOW accounts declined by
39 basis points from 0.61% during the first quarter of 2010 to 0.22% during the three months ended
March 31, 2011 as we significantly lowered the rate paid on local public agencies NOW accounts.
Although we lost some deposits by lowering this rate; we currently are more focused on the
profitability of the public sweep accounts rather than the amount of deposits we can generate from
this source.
Interest expense on money market accounts decreased by $40 thousand related to a decrease in rate
paid on these accounts of 34 basis points from 0.68% during the 2010 quarter to 0.34% during the
current quarter. This was primarily related to a significantly drop in the rates paid on our
money market sweep product.
Interest on borrowings decreased by $69 thousand as there were no outstanding FHLB borrowings
during the first quarter of 2011.
Interest expense paid on junior subordinated debentures, which fluctuates with changes in the
3-month London Interbank Offered Rate (LIBOR) rate, increased by $2 thousand as a result of an
increase in the LIBOR rate.
24
The following table presents for the three-month periods indicated the distribution of consolidated
average assets, liabilities and shareholders equity. It also presents the amounts of interest
income from interest-earning assets and the resultant annualized yields, as well as the amounts of
interest expense on interest-bearing liabilities and the resultant cost expressed in both dollars
and annualized rate percentages. Average balances are based on daily averages. Nonaccrual loans
are included in the calculation of average loans while nonaccrued interest thereon is excluded from
the computation of yields earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2011 |
|
|
For the Three Months Ended March 31, 2010 |
|
|
|
Average Balance |
|
|
Interest |
|
|
Yield/ |
|
|
Average Balance |
|
|
Interest |
|
|
Yield/ |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
|
Rate |
|
|
(in thousands) |
|
|
(in thousands) |
|
|
Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1) (2) |
|
$ |
309,402 |
|
|
$ |
4,382 |
|
|
|
5.74 |
% |
|
$ |
327,796 |
|
|
$ |
4,769 |
|
|
|
5.90 |
% |
Investment securities (1) |
|
|
67,855 |
|
|
|
355 |
|
|
|
2.12 |
% |
|
|
84,142 |
|
|
|
614 |
|
|
|
2.96 |
% |
Interest-bearing deposits |
|
|
47,849 |
|
|
|
29 |
|
|
|
0.25 |
% |
|
|
8,300 |
|
|
|
5 |
|
|
|
0.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
|
425,106 |
|
|
|
4,766 |
|
|
|
4.55 |
% |
|
|
420,238 |
|
|
|
5,388 |
|
|
|
5.20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
12,782 |
|
|
|
|
|
|
|
|
|
|
|
41,211 |
|
|
|
|
|
|
|
|
|
Other assets |
|
|
42,806 |
|
|
|
|
|
|
|
|
|
|
|
49,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
480,694 |
|
|
|
|
|
|
|
|
|
|
$ |
511,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW deposits |
|
$ |
100,057 |
|
|
|
54 |
|
|
|
0.22 |
% |
|
$ |
103,724 |
|
|
|
156 |
|
|
|
0.61 |
% |
Money market deposits |
|
|
42,101 |
|
|
|
35 |
|
|
|
0.34 |
% |
|
|
44,534 |
|
|
|
75 |
|
|
|
0.68 |
% |
Savings deposits |
|
|
55,390 |
|
|
|
24 |
|
|
|
0.18 |
% |
|
|
49,687 |
|
|
|
20 |
|
|
|
0.16 |
% |
Time deposits |
|
|
114,106 |
|
|
|
387 |
|
|
|
1.38 |
% |
|
|
127,296 |
|
|
|
537 |
|
|
|
1.71 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
|
|
311,654 |
|
|
|
500 |
|
|
|
0.65 |
% |
|
|
325,241 |
|
|
|
788 |
|
|
|
0.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
|
|
|
|
|
|
|
|
|
% |
|
|
4,000 |
|
|
|
5 |
|
|
|
0.51 |
% |
Long-term borrowings |
|
|
|
|
|
|
|
|
|
|
|
% |
|
|
20,000 |
|
|
|
64 |
|
|
|
1.30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other interest-bearing liabilities |
|
|
656 |
|
|
|
10 |
|
|
|
6.18 |
% |
|
|
138 |
|
|
|
1 |
|
|
|
2.94 |
% |
Junior subordinated debentures |
|
|
10,310 |
|
|
|
76 |
|
|
|
2.99 |
% |
|
|
10,310 |
|
|
|
74 |
|
|
|
2.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
|
322,620 |
|
|
|
586 |
|
|
|
0.74 |
% |
|
|
359,689 |
|
|
|
932 |
|
|
|
1.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits |
|
|
111,385 |
|
|
|
|
|
|
|
|
|
|
|
106,087 |
|
|
|
|
|
|
|
|
|
Other liabilities |
|
|
8,290 |
|
|
|
|
|
|
|
|
|
|
|
6,365 |
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
38,399 |
|
|
|
|
|
|
|
|
|
|
|
38,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities & equity |
|
$ |
480,694 |
|
|
|
|
|
|
|
|
|
|
$ |
511,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of funding interest-earning assets (3) |
|
|
|
|
|
|
|
|
|
|
0.56 |
% |
|
|
|
|
|
|
|
|
|
|
0.90 |
% |
Net interest income and margin (4) |
|
|
|
|
|
$ |
4,180 |
|
|
|
3.99 |
% |
|
|
|
|
|
$ |
4,456 |
|
|
|
4.30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Not computed on a tax-equivalent basis. |
|
(2) |
|
Net loan fees included in loan interest income for the three-month periods ended March 31,
2011 and 2010 were $4,000 and $11,000, respectively. |
|
(3) |
|
Total annualized interest expense divided by the average balance of total earning assets. |
|
(4) |
|
Annualized net interest income divided by the average balance of total earning assets. |
25
The following table sets forth changes in interest income and interest expense for the
three-month periods indicated and the amount of change attributable to variances in volume, rates
and the combination of volume and rates based on the relative changes of volume and rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 over 2010 change in net interest income |
|
|
|
for the three months ended March 31 |
|
|
|
(in thousands) |
|
|
|
Volume (1) |
|
|
Rate (2) |
|
|
Mix (3) |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ |
(268 |
) |
|
$ |
(126 |
) |
|
$ |
7 |
|
|
$ |
(387 |
) |
Investment securities |
|
|
(119 |
) |
|
|
(174 |
) |
|
|
34 |
|
|
|
(259 |
) |
Interest bearing deposits |
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
(363 |
) |
|
|
(300 |
) |
|
|
41 |
|
|
|
(622 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW deposits |
|
|
(6 |
) |
|
|
(100 |
) |
|
|
4 |
|
|
|
(102 |
) |
Money market deposits |
|
|
(4 |
) |
|
|
(38 |
) |
|
|
2 |
|
|
|
(40 |
) |
Savings deposits |
|
|
2 |
|
|
|
2 |
|
|
|
|
|
|
|
4 |
|
Time deposits |
|
|
(56 |
) |
|
|
(105 |
) |
|
|
11 |
|
|
|
(150 |
) |
Short-term borrowings |
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
(5 |
) |
Long-term borrowings |
|
|
(64 |
) |
|
|
|
|
|
|
|
|
|
|
(64 |
) |
Other |
|
|
4 |
|
|
|
1 |
|
|
|
4 |
|
|
|
9 |
|
Junior subordinated debentures |
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
(129 |
) |
|
|
(238 |
) |
|
|
21 |
|
|
|
(346 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
(234 |
) |
|
$ |
(62 |
) |
|
$ |
20 |
|
|
$ |
(276 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The volume change in net interest income represents the change in average balance multiplied by
the previous years rate. |
|
(2) |
|
The rate change in net interest income represents the change in rate multiplied by the previous
years average balance. |
|
(3) |
|
The mix change in net interest income represents the change in average balance multiplied by
the change in rate. |
Provision for loan losses. During the three months ended March 31, 2011 we recorded a
provision for loan losses of $1.7 million up $0.2 million from the $1.5 million provision recorded
during the first quarter of 2010. The $1.7 million provision recorded for the three months ended
March 31, 2011 primarily relates to a specific reserve required on one significant land development
loan relationship.
The allowance for loan losses is maintained at a level that management believes will be appropriate
to absorb inherent losses on existing loans based on an evaluation of the collectibility of the
loans and prior loan loss experience. The evaluations take into consideration such factors as
changes in the nature and volume of the portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the borrowers ability to repay
their loan. The allowance for loan losses is based on estimates, and ultimate losses may vary from
the current estimates. These estimates are reviewed periodically and, as adjustments become
necessary, they are reported in earnings in the periods in which they become known.
Based on information currently available, management believes that the allowance for loan losses is
appropriate to absorb potential risks in the portfolio. However, no assurance can be given that
the Company may not sustain charge-offs which are in excess of the allowance in any given period.
See Analysis of Asset Quality and Allowance for Loan Losses for further discussion of loan
quality trends and the provision for loan losses.
Non-interest income. During the three months ended March 31, 2011 non-interest income increased by
$240 thousand to $2.0 million, from $1.8 million during the quarter ended March 31, 2010. The
largest component of this increase was $722 thousand in gains on the sale of government guaranteed
loans. During the first quarter of 2010 loans sold were subject to a 90 day premium recourse period
and therefore no gains were recorded. During 2011, related to a change in
SBA requirements guaranteed portions of SBA loans are no longer required to be sold with the 90 day
premium recourse requirement. This resulted in recognizing gains for loans sold during the fourth
quarter of 2010 as well as loans sold in the current quarter during the three months ended March
31, 2011.
26
Reductions in non-interest income included $405 thousand in gain on sale of investment securities
from $570 thousand during the 2010 quarter to $165 thousand during the current quarter. During the
three months ended March 31, 2010 we chose to sell the majority of our municipal securities
portfolio as part or our overall asset/liability management strategy and related to a favorable
market price of these securities. In addition, we sold $4 million in U.S. government agency
securities to lock in significant gains that were available on these securities. During the 2011
quarter we sold $3.8 million in mortgage backed securities recording a gain on sale of $165
thousand.
Service charges on deposit accounts declined by $70 thousand primarily related to a decline in
overdraft fees as new regulations placed additional restrictions on the Bank in charging overdraft
fees on ATM and Point of Sale transactions. Merchant processing fees declined by $52 thousand
related to the sale of our merchant processing portfolio in June, 2010.
The following table describes the components of non-interest income for the three-month periods
ending March 31, 2011 and 2010 in thousands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months |
|
|
|
|
|
|
|
|
|
Ended March 31 |
|
|
Dollar |
|
|
Percentage |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
Service charges on deposit accounts |
|
$ |
828 |
|
|
$ |
898 |
|
|
$ |
(70 |
) |
|
|
-7.8 |
% |
Gain on sale of loans |
|
|
722 |
|
|
|
|
|
|
|
722 |
|
|
|
100 |
% |
Gain on sale of securities |
|
|
165 |
|
|
|
570 |
|
|
|
(405 |
) |
|
|
-71.1 |
% |
Earnings on life insurance policies |
|
|
117 |
|
|
|
109 |
|
|
|
8 |
|
|
|
7.3 |
% |
Loan servicing income |
|
|
54 |
|
|
|
35 |
|
|
|
19 |
|
|
|
54.3 |
% |
Customer service fees |
|
|
34 |
|
|
|
39 |
|
|
|
(5 |
) |
|
|
-12.8 |
% |
Safe deposit box and night depository income |
|
|
17 |
|
|
|
17 |
|
|
|
|
|
|
|
0.0 |
% |
Merchant processing income |
|
|
1 |
|
|
|
53 |
|
|
|
(52 |
) |
|
|
-98.1 |
% |
Other |
|
|
89 |
|
|
|
66 |
|
|
|
23 |
|
|
|
34.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-interest income |
|
$ |
2,027 |
|
|
$ |
1,787 |
|
|
$ |
240 |
|
|
|
13.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense. During the three months ended March 31, 2011, total non-interest expense
decreased by $462 thousand, or 10%, to $4.2 million, down from $4.7 million for the comparable
period in 2010. This decrease in non-interest expense was primarily the result of savings in
salaries and employee benefits, a $400 thousand reduction in the valuation allowance for losses on
OREO and a reduction in OREO expense. These items were partially offset by increases in other
expense categories the most significant of which were occupancy and equipment costs and
professional fees.
Salaries and employee benefits decreased by $178 thousand primarily related to declines in salary
expense and 401k matching contributions. Salary expense, excluding commissions, declined by $297
thousand related to a reduction in staffing in all areas with the exception of government
guaranteed lending and problem assets. While the Company has reduced personnel in most functional
areas, we have increased staffing in our problem asset department to effectively manage our
increased level of nonperforming assets. Additionally, we have increased staffing in our government
guaranteed lending department as we see continued opportunities for loan growth in this area.
Commission expense, which relates to government guaranteed lending personnel and is included in
salary expense, increased by $231 thousand resulting from the increase in government guaranteed
loan sales. During the second quarter of 2010 we discontinued the practice of matching
contributions to our 401k plan which resulted in cost savings of $41 thousand as compared to the
2010 quarter.
27
OREO represents real property taken by the Bank either through foreclosure or through a deed in
lieu thereof from the borrower. When other real estate is acquired, any excess of the
Banks recorded investment in the loan balance and accrued interest income over the estimated
fair market value of the property less costs to sell is charged against the allowance for loan
losses. A valuation allowance for losses on other real estate is maintained to provide for
temporary declines in value. The allowance is established through a provision for losses on other
real estate which is included in other expenses. Subsequent gains or losses on sales or write-downs
resulting from permanent impairment are recorded in other income or expenses as incurred. The
reduction in our OREO valuation allowance relates to changes in estimated values on several of our
OREO properties based on recent appraisals.
OREO expense declined by $87 thousand from $160 thousand during the three months ended March 31,
2010 to $73 thousand during the same period in 2011. These savings were primarily related to
property taxes on OREO properties as we received a refund of overpayment of prior your taxes in
2011 and some of our OREO properties were reassessed during the second half of 2010 resulting in
lower tax expense in 2011.
The increase in occupancy and equipment expense primarily relates to the reversal of accrued rental
expense during the 2010 quarter for our Redding branch. On March 31, 2010 we purchased the
building housing our Redding branch at a cost of $1.0 million. Previously we had leased this
building. Under the terms of the lease agreement we were provided free rent for a period of time;
however we recognized monthly rent expense equal to the total payments required under the lease
dividend by the term of the lease in months. At the time of the purchase we reversed this accrual
recognizing a $184 thousand reduction in occupancy costs. Reductions in occupancy and equipment
expense during the 2011 quarter included reduced costs related to owning the Redding branch and a
$35 thousand reduction in equipment deprecation expense.
Professional fees increased by $37 thousand primarily related to an increase in legal expense
related to both corporate matters and loan collection activities.
The following table describes the components of non-interest expense for the three-month periods
ending March 31, 2011 and 2010, in thousands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months |
|
|
|
|
|
|
|
|
|
Ended March 31 |
|
|
Dollar |
|
|
Percentage |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
Salaries and employee benefits |
|
$ |
2,371 |
|
|
$ |
2,549 |
|
|
$ |
(178 |
) |
|
|
-7.0 |
% |
Occupancy and equipment |
|
|
805 |
|
|
|
713 |
|
|
|
92 |
|
|
|
12.9 |
% |
Outside service fees |
|
|
325 |
|
|
|
304 |
|
|
|
21 |
|
|
|
6.9 |
% |
FDIC Insurance and assessments |
|
|
276 |
|
|
|
253 |
|
|
|
23 |
|
|
|
9.1 |
% |
Professional fees |
|
|
216 |
|
|
|
179 |
|
|
|
37 |
|
|
|
20.7 |
% |
Telephone and data communication |
|
|
87 |
|
|
|
90 |
|
|
|
(3 |
) |
|
|
-3.3 |
% |
OREO expense |
|
|
73 |
|
|
|
160 |
|
|
|
(87 |
) |
|
|
-54.4 |
% |
Loan and collection expenses |
|
|
61 |
|
|
|
63 |
|
|
|
(2 |
) |
|
|
-3.2 |
% |
Director compensation and retirement |
|
|
57 |
|
|
|
56 |
|
|
|
1 |
|
|
|
1.8 |
% |
Business development |
|
|
56 |
|
|
|
66 |
|
|
|
(10 |
) |
|
|
-15.2 |
% |
Advertising and shareholder relations |
|
|
56 |
|
|
|
58 |
|
|
|
(2 |
) |
|
|
-3.4 |
% |
Insurance |
|
|
55 |
|
|
|
22 |
|
|
|
33 |
|
|
|
150.0 |
% |
Armored car and courier |
|
|
51 |
|
|
|
56 |
|
|
|
(5 |
) |
|
|
-8.9 |
% |
Postage |
|
|
46 |
|
|
|
59 |
|
|
|
(13 |
) |
|
|
-22.0 |
% |
Deposit premium amortization |
|
|
43 |
|
|
|
43 |
|
|
|
|
|
|
|
|
% |
Stationery and supplies |
|
|
33 |
|
|
|
34 |
|
|
|
(1 |
) |
|
|
-2.9 |
% |
Benefit from changes in valuation of OREO |
|
|
(400 |
) |
|
|
|
|
|
|
(400 |
) |
|
|
-100 |
% |
Other |
|
|
37 |
|
|
|
5 |
|
|
|
32 |
|
|
|
640.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-interest expense |
|
$ |
4,248 |
|
|
$ |
4,710 |
|
|
$ |
(462 |
) |
|
|
-9.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
Provision (benefit) for income taxes. The Company recorded an income tax provision of $36
thousand, or 13.9% of pre-tax income for the three months ended March 31, 2011. This compares to
an income tax benefit of $101 thousand or 306.1% of pre-tax loss during the first three months of
2010. The percentages for 2011 and 2010 differ from the statutory rate as tax exempt income such
as earnings on Bank owned life insurance and municipal loan and investment income decrease the tax
provision and increase the tax benefit.
Deferred tax assets and liabilities are recognized for the tax consequences of temporary
differences between the reported amount of assets and liabilities and their tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The
determination of the amount of deferred income tax assets which are more likely than not to be
realized is primarily dependent on projections of future earnings, which are subject to uncertainty
and estimates that may change given economic conditions and other factors. The realization of
deferred income tax assets is assessed and a valuation allowance is recorded if it is more likely
than not that all or a portion of the deferred tax asset will not be realized. More likely than
not is defined as greater than a 50% chance. All available evidence, both positive and negative
is considered to determine whether, based on the weight of that evidence, a valuation allowance is
needed. Based upon our analysis of available evidence, we have determined that it is more likely
than not that all of our deferred income tax assets as of March 31, 2011 and December 31, 2010
will be fully realized and therefore no valuation allowance was recorded. On the consolidated
balance sheet, net deferred tax assets are included in accrued interest receivable and other
assets.
FINANCIAL CONDITION
Loan Portfolio. The Company continues to manage the mix of its loan portfolio consistent with its
identity as a community bank serving the financing needs of all sectors of the area it serves.
Although the Company offers a broad array of financing options, it continues to concentrate its
focus on small to medium sized commercial businesses. These commercial loans offer diversification
as to industries and types of businesses, thus limiting material exposure in any industry
concentrations. The Company offers both fixed and floating rate loans and obtains collateral in
the form of real property, business assets and deposit accounts, but looks to business and personal
cash flows as its primary source of repayment.
The Companys largest lending categories are commercial real estate loans, residential real estate
loans, and agricultural loans. These categories accounted for approximately 39.3%, 14.2% and
12.4%, respectively of the Companys total loan portfolio at March 31, 2011, and approximately
37.9%, 13.8% and 12.2%, respectively of the Companys total loan portfolio at December 31, 2010.
Additionally, construction and land development loans represented 9.4% and 9.9% of the loan
portfolio as of March 31, 2011 and December 31, 2010, respectively. The construction and land
development portfolio component has been identified by Management as a higher-risk loan category.
The quality of the construction and land development category is highly dependent on property
values both in terms of the likelihood of repayment once the property is transacted by the current
owner as well as the level of collateral the Company has securing the loan in the event of default.
Loans in this category are characterized by the speculative nature of commercial and residential
development properties and can include property in various stages of development from raw land to
finished lots. The decline in these loans as a percentage of the Companys loan portfolio reflects
managements continued efforts, which began in 2009, to reduce its exposure to construction and
land development loans due to the severe valuation decrease in the real estate market.
The Companys real estate related loans, including real estate mortgage loans, real estate
construction loans, consumer equity lines of credit, and agricultural loans secured by real estate
comprised 82% and 80% of the total loan portfolio at March 31, 2011 and December 31, 2010,
respectively. Moreover, the business activities of the Company currently are focused in the
California counties of Plumas, Nevada, Placer, Lassen, Modoc, Shasta, Sierra and in Washoe County
in Northern Nevada. Consequently, the results of operations and financial condition of the Company
are dependent upon the general trends in these economies and, in particular, the residential and
commercial real estate markets. In addition, the concentration of the Companys operations in
these areas of Northeastern California and Northwestern Nevada exposes it to greater risk than
other banking companies with a wider geographic base in the event of catastrophes, such as
earthquakes, fires and floods in these regions.
29
The rates of interest charged on variable rate loans are set at specific increments in relation to
the Companys lending rate or other indexes such as the published prime interest rate or U.S.
Treasury rates and vary with changes in these indexes. At March 31, 2011 and December 31, 2010,
approximately 71% and 66%, respectively, of the Companys loan portfolio was comprised of variable
rate loans. While real estate mortgage, commercial and consumer lending remain the foundation of
the Companys historical loan mix, some changes in the mix have occurred due to the changing
economic environment and the resulting change in demand for certain loan types. In addition, the
Company remains committed to the agricultural industry in Northeastern California and will continue
to pursue high quality agricultural loans. Agricultural loans include both commercial and
commercial real estate loans. The Companys agricultural loan balances totaled $38 million at
March 31, 2011 and December 31, 2010.
Analysis of Asset Quality and Allowance for Loan Losses. The Company attempts to minimize credit
risk through its underwriting and credit review policies. The Companys credit review process
includes internally prepared credit reviews as well as contracting with an outside firm to conduct
periodic credit reviews. The Companys management and lending officers evaluate the loss exposure
of classified and impaired loans on a quarterly basis, or more frequently as loan conditions
change. The Management Asset Resolution Committee (MARC) reviews the asset quality of criticized
loans on a monthly basis and reports the findings to the full Board of Directors. The Boards Loan
Committee reviews the asset quality of new loans on a monthly basis and reports the findings to the
full Board of Directors. In managements opinion, this loan review system helps facilitate the
early identification of potential criticized loans.
The Company has implemented MARC to develop an action plan to significantly reduce nonperforming
loans. It consists of members of executive management, credit administration management and the
Board of Directors, and the activities are governed by a formal written charter. The MARC meets at
least monthly and reports to the Board of Directors.
More specifically, a formal plan to effect repayment and/or disposition of every significant
nonperforming loan relationship is developed and documented for review and on-going oversight by
the MARC. Some of the strategies used include but are not limited to: 1) obtaining additional
collateral, 2) obtaining additional investor cash infusion, 3) sale of the promissory note to an
outside party, 4) proceeding with foreclosure on the underlying collateral, 5) legal action against
borrower/guarantors to encourage settlement of debt and/or collect any deficiency balance owed.
Each step includes a benchmark timeline to track progress.
MARC also provides guidance for the maintenance and timely disposition of OREO properties;
including developing financing and marketing programs to incent individuals to purchase OREO.
The allowance for loan losses is established through charges to earnings in the form of the
provision for loan losses. Loan losses are charged to and recoveries are credited to the allowance
for loan losses. The allowance for loan losses is maintained at a level deemed appropriate by
management to provide for known and inherent risks in loans. The adequacy of the allowance for
loan losses is based upon managements continuing assessment of various factors affecting the
collectibility of loans; including current economic conditions, maturity of the portfolio, size of
the portfolio, industry concentrations, borrower credit history, collateral, the existing allowance
for loan losses, independent credit reviews, current charges and recoveries to the allowance for
loan losses and the overall quality of the portfolio as determined by management, regulatory
agencies, and independent credit review consultants retained by the Company. There is no precise
method of predicting specific losses or amounts which may ultimately be charged off on particular
segments of the loan portfolio. The collectibility of a loan is subjective to some degree, but
must relate to the borrowers financial condition, cash flow, quality of the borrowers management
expertise, collateral and guarantees, and state of the local economy.
Formula allocations are calculated by applying loss factors to outstanding loans with similar
characteristics. Loss factors are based on the Companys historical loss experience as adjusted
for changes in the business cycle and may be adjusted for significant factors that, in managements
judgment, affect the collectibility of the portfolio as of the evaluation date. Effective for the
third quarter of 2010, the Company modified its method of estimating the allowance for loan losses
for non-impaired loans. This modification incorporated historical loss experience based on a
rolling eight quarters ending with the most recently completed calendar quarter to identified pools
of loans. This modification did not have a material affect on the Companys allowance for loans
losses or provision for loan losses.
30
The discretionary allocation is based upon managements evaluation of various loan segment
conditions that are not directly measured in the determination of the formula and specific
allowances. The conditions may include, but are not limited to, general economic and business
conditions affecting the key lending areas of the Company, credit quality trends, collateral
values, loan volumes and concentrations, and other business conditions.
The following table provides certain information for the three-month period indicated with respect
to the Companys allowance for loan losses as well as charge-off and recovery activity, in
thousands:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months |
|
|
|
Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
Balance at January 1, |
|
$ |
7,324 |
|
|
$ |
9,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs: |
|
|
|
|
|
|
|
|
Commercial and agricultural |
|
|
(173 |
) |
|
|
(377 |
) |
Real estate mortgage |
|
|
(119 |
) |
|
|
(781 |
) |
Real estate construction |
|
|
|
|
|
|
(1,567 |
) |
Consumer |
|
|
(109 |
) |
|
|
(125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total charge-offs |
|
|
(401 |
) |
|
|
(2,850 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries: |
|
|
|
|
|
|
|
|
Commercial and agricultural |
|
|
108 |
|
|
|
5 |
|
Real estate mortgage |
|
|
|
|
|
|
3 |
|
Real estate construction |
|
|
|
|
|
|
|
|
Consumer |
|
|
28 |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recoveries |
|
|
136 |
|
|
|
48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs |
|
|
(265 |
) |
|
|
(2,802 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan losses |
|
|
1,700 |
|
|
|
1,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, |
|
$ |
8,759 |
|
|
$ |
8,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized net charge-offs during the three-month period to average
loans |
|
|
0.35 |
% |
|
|
3.47 |
% |
Allowance for loan losses to total loans |
|
|
2.88 |
% |
|
|
2.53 |
% |
We currently anticipate that net charge-offs could range from approximately $3.5 million to
$5.5 million in 2011, the largest part of which are anticipated to be related to real estate loans
consistent with 2010 activity. For other categories of loans we expect charge-offs to be similar
to 2010 activity. However, given the lack of stability in the real estate market and the recent
volatility in charge-offs, there can be no assurance that charge offs of loans in future periods
will not increase or decrease from this estimate.
The allowance for loan losses totaled $8.8 million at March 31, 2011 and $7.3 million at December
31, 2010. The increase in the allowance for loan losses from December 31, 2010 is primarily
attributable to a $1.3 million increase in specific reserves related to impaired loans from $1.9
million at December 31, 2010 to $3.2 million at March 31, 2011. General reserves increased by $174
thousand to $5.6 million at March 31, 2011. Related to the increase in specific reserves on
impaired loans and an increase in general reserves, the allowance for loan losses as a percentage
of total loans increased from 2.33% at December 31, 2010 to 2.88% at March 31, 2011. The percentage
of general reserves to unimpaired loans also increased from 1.90% at December 31, 2010 to 2.02% at
March 31, 2011.
31
The Company places loans 90 days or more past due on nonaccrual status unless the loan is well
secured and in the process of collection. A loan is considered to be in the process of collection
if, based on a probable specific event, it is expected that the loan will be repaid or brought
current. Generally, this collection period would not exceed 90 days. When a loan is placed on
nonaccrual status the Companys general policy is to reverse and charge against current income
previously accrued but unpaid interest. Interest income on such loans is subsequently recognized
only to the extent that cash is received and future collection of principal is deemed by management
to be probable. Where the collectibility of the principal or interest on a loan is considered to
be doubtful by management, it is placed on nonaccrual status prior to becoming 90 days delinquent.
Impaired loans are measured based on the present value of the expected future cash flows discounted
at the loans effective interest rate or the fair value of the collateral if the loan is collateral
dependent. The amount of impaired loans is not directly comparable to the amount of nonperforming
loans disclosed later in this section. The primary difference between impaired loans and
nonperforming loans is that impaired loan recognition considers not only loans 90 days or more past
due, restructured loans and nonaccrual loans but also may include identified problem loans other
than delinquent loans where it is considered probable that we will not collect all amounts due to
us (including both principal and interest) in accordance with the contractual terms of the loan
agreement.
A restructuring of a debt constitutes a troubled debt restructuring (TDR) if the Company, for
economic or legal reasons related to the debtors financial difficulties, grants a concession to
the debtor that it would not otherwise consider. Restructured workout loans typically present an
elevated level of credit risk as the borrowers are not able to perform according to the original
contractual terms. Loans that are reported as TDRs are considered impaired and measured for
impairment as described above.
Nonperforming loans at March 31, 2011 were $24.5 million, a decrease of $0.9 million from the $25.4
million balance at December 31, 2010. Specific reserves on nonaccrual loans totaled $3.0 million at
March 31, 2011 and $1.8 million at December 31, 2010, respectively. Performing loans past due
thirty to eighty-nine days increased from $2.9 million at December 31, 2010 to $7.7 million at
March 31, 2011. This increase primarily relates to five loans, ranging from $0.7 million to $1.7
million in principal balance, none of which were over sixty days past due.
A substandard loan is not adequately protected by the current sound worth and paying capacity of
the borrower or the value of the collateral pledged, if any. Total substandard loans increased by
$3.7 million from $38.6 million at December 31, 2010 to $42.3 million at March 31, 2011. However,
loans classified as watch decreased by $3.3 million from $14.2 million at December 31, 2010 to
$10.9 million at March 31, 2011. At March 31, 2011, $19.5 million of performing loans were
classified as substandard. Further deterioration in the credit quality of individual performing
substandard loans or other adverse circumstances could result in the need to place these loans on
nonperforming status.
At March 31, 2011 and December 31, 2010, the Companys recorded investment in impaired loans
totaled $28.0 million and $28.8 million, respectively. The specific allowance for loan losses
related to impaired loans totaled $3.2 million and $1.9 million at March 31, 2011 and December 31,
2010, respectively. Additionally, $2.8 million has been charged off against the impaired loans at
March 31, 2011 and December 31 2010.
It is the policy of management to make additions to the allowance for loan losses so that it
remains appropriate to absorb the inherent risk of loss in the portfolio. Management believes that
the allowance at March 31, 2011 is appropriate. However, the determination of the amount of the
allowance is judgmental and subject to economic conditions which cannot be predicted with
certainty. Accordingly, the Company cannot predict whether charge-offs of loans in excess of the
allowance may occur in future periods.
OREO represents real property taken by the Bank either through foreclosure or through a deed in
lieu thereof from the borrower. Repossessed assets include vehicles and other commercial assets
acquired under agreements with delinquent borrowers. Repossessed assets and OREO are carried at
fair market value, less selling costs. OREO holdings represented thirty-one properties totaling
$9.1 million at March 31, 2011 and thirty-one properties totaling $8.9 million at December 31,
2010. Of the thirty-one properties at March 31, 2011, three properties represent 80% of the balance
or $7.3 million of the $9.1 million. These three properties were transferred into OREO during the
third quarter of 2009. We have actively marketed the properties and while we have received offers
for each property, to date none have been accepted by the Bank. Nonperforming assets as a
percentage of total assets were 7.15% at March 31, 2011 and at December 31, 2010.
32
The following table provides a summary of the change in the OREO balance for the three months ended
March 31, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
(in thousands) |
|
Beginning Balance |
|
$ |
8,867 |
|
|
$ |
11,204 |
|
Additions |
|
|
137 |
|
|
|
1,172 |
|
Dispositions |
|
|
(334 |
) |
|
|
(1,456 |
) |
Benefit from
change in OREO
valuation |
|
|
400 |
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
$ |
9,070 |
|
|
$ |
10,920 |
|
|
|
|
|
|
|
|
The reduction in our OREO valuation allowance relates to changes in estimated values on several of
our OREO properties based on recent appraisals.
Investment Portfolio and Federal Funds Sold. Total investment securities increased by $1.4 million
from $63.0 million at December 31, 2010 to $64.4 million as of March 31, 2011. The investment
portfolio balances in U.S. Treasuries, U.S. Government agencies, and municipal obligations
comprised 2%, 97% and less than 1%, respectively, at March 31, 2011 and December 31, 2010. There
were no Federal funds sold at March 31, 2011 or December 31, 2010; however, the Bank maintained
interest earning balances at the Federal Reserve Bank (FRB) totaling $48.3 million at March 31,
2011 and $52.3 million at December 31, 2010, respectively. These balances currently earn 25 basis
points.
The Company classifies its investment securities as available-for-sale or held-to-maturity.
Currently all securities are classified as available-for-sale. Securities classified as
available-for-sale may be sold to implement the Companys asset/liability management strategies and
in response to changes in interest rates, prepayment rates and similar factors.
Deposits. Total deposits were $414.9 million as of March 31, 2011, a decrease of $10.0 million, or
2%, from the December 31, 2010 balance of $424.9 million. The decline in deposits was mostly
related to maturities from a higher rate promotional time deposit product we began offering in
June, 2009 and continued to offer until April 30, 2010. These promotional time deposits, which
total $38 million at March 31, 2011, began maturing at the end of 2010 and will continue to mature
into the third quarter of 2011.
The Company continues to manage the mix of its deposits consistent with its identity as a community
bank serving the financial needs of its customers. There were only minor changes in the composition
of our deposits at March 31, 2011 and December 31, 2010. Non-interest bearing demand deposits were
27% of total deposits at March 31, 2011 and 26% of total deposits at December 31, 2010. Interest
bearing transaction accounts were 23% of total deposits at March 31, 2011 and 24% of total deposits
at December 31, 2010. Money market and savings deposits totaled 24% of total deposits at March 31,
2011 and 22% at December 31, 2010. Time deposits were 26% of total deposits at March 31, 2011 and
28% of total deposits at December 31, 2010.
Deposits represent the Banks primary source of funds. Deposits are primarily core deposits in that
they are demand, savings and time deposits generated from local businesses and individuals. These
sources are considered to be relatively stable, long-term relationships thereby enhancing steady
growth of the deposit base without major fluctuations in overall deposit balances. The Company
experiences, to a small degree, some seasonality with the slower growth period between November
through April, and the higher growth period from May through October. In order to assist in
meeting any funding demands, the Company maintains secured borrowing arrangements with the Federal
Home Loan Bank and the Federal Reserve Bank of San Francisco. Included in time deposits at March
31, 2011 and December 31, 2010 were $2 million in CDARS reciprocal time deposits which, under
regulatory guidelines, are classified as brokered deposits.
Borrowing Arrangements. Exclusive of our junior subordinated deferrable interest
debentures there were no outstanding borrowings at March 31, 2011 or December 31, 2010.
The average balance in short-term borrowings during the three months ended March 31, 2011 and 2010
were $0 and $4.0 million, respectively. The average rate paid on short-term borrowings during the
three months ended March 31, 2010 was 0.51%. The maximum amount of short-term borrowings
outstanding at any month-end during the three months ended March 31, 2010 was $20 million.
33
Capital Resources
Shareholders equity as of March 31, 2011 totaled $38.6 million up from $38.0 million as of
December 31, 2010.
On January 30, 2009, under the Capital Purchase Program, the Company sold (i) 11,949 shares of the
Companys Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the Preferred Shares) and
(ii) a ten-year warrant to purchase up to 237,712 shares of the Companys common stock, no par
value at an exercise price, subject to anti-dilution adjustments, of $7.54 per share, for an
aggregate purchase price of $11,949,000 in cash. Ten million of the twelve million in proceeds from
the sale of the Series A Preferred Stock was injected into Plumas Bank providing addition capital
for the bank to support growth in loans and investment securities and strengthen its capital
ratios. The remainder provides funds for holding company activities and general corporate purposes.
It is the policy of the Company to periodically distribute excess retained earnings to the
shareholders through the payment of cash dividends. Such dividends help promote shareholder value
and capital adequacy by enhancing the marketability of the Companys stock. All authority to
provide a return to the shareholders in the form of a cash or stock dividend or split rests with
the Board of Directors (the Board). The Board will periodically, but on no regular schedule,
review the appropriateness of a cash dividend payment. No common cash dividends were paid in 2009
or 2010 and none are anticipated to be paid in 2011.
The Company is subject to various restrictions on the payment of dividends. See Note 2 Regulatory
Matters of the Companys Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q.
At the request of the FRB, Plumas Bancorp deferred its regularly scheduled quarterly interest
payments on its outstanding junior subordinated debentures relating to its two trust preferred
securities and suspended quarterly cash dividend payments on its Series A Preferred Stock.
Therefore, Plumas Bancorp is currently in arrears with the dividend payments on the Series A
Preferred Stock and interest payments on the junior subordinated debentures as permitted by the
related documentation. As of March 31, 2011 the amount of the arrearage on the dividend payments of
the Series A Preferred Stock is $597 thousand and the amount of the arrearage on the payments on
the subordinated debt associated with the trust preferred securities is $312 thousand.
Capital Standards.
The Company uses a variety of measures to evaluate its capital adequacy, with risk-based capital
ratios calculated separately for the Company and the Bank. Management reviews these capital
measurements on a monthly basis and takes appropriate action to ensure that they are within
established internal and external guidelines. The FDIC has promulgated risk-based capital
guidelines for all state non-member banks such as the Bank. These guidelines establish a
risk-adjusted ratio relating capital to different categories of assets and off-balance sheet
exposures. There are two categories of capital under the guidelines: Tier 1 capital includes
common stockholders equity, and qualifying trust-preferred securities (including notes payable to
unconsolidated special purpose entities that issue trust-preferred securities), less goodwill and
certain other deductions, notably the unrealized net gains or losses (after tax adjustments) on
available-for-sale investment securities carried at fair market value; Tier 2 capital can include
qualifying subordinated debt and the allowance for loan losses, subject to certain limitations. The
Series A Preferred Stock qualifies as Tier 1 capital for the Company.
As noted previously, the Companys junior subordinated debentures represent borrowings from its
unconsolidated subsidiaries that have issued an aggregate $10 million in trust-preferred
securities. These trust-preferred securities currently qualify for inclusion as Tier 1 capital for
regulatory purposes as they do not exceed 25% of total Tier 1 capital, but are classified as
long-term debt in accordance with GAAP. On March 1, 2005, the Federal Reserve Board adopted a
final rule that allows the continued inclusion of trust-preferred securities (and/or related
subordinated debentures) in the Tier I capital of bank holding companies.
34
The following table presents the Companys and the Banks capital ratios as of March 31, 2011 and
December 31, 2010, in thousands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
December 31, 2010 |
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
Tier 1 Leverage Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumas Bancorp and Subsidiary |
|
$ |
43,845 |
|
|
|
9.2 |
% |
|
$ |
42,944 |
|
|
|
8.9 |
% |
Minimum regulatory requirement |
|
|
19,036 |
|
|
|
4.0 |
% |
|
|
19,361 |
|
|
|
4.0 |
% |
Plumas Bank |
|
|
43,521 |
|
|
|
9.2 |
% |
|
|
43,262 |
|
|
|
8.9 |
% |
Minimum requirement for
Well-Capitalized institution
under the prompt corrective
action plan |
|
|
23,776 |
|
|
|
5.0 |
% |
|
|
24,190 |
|
|
|
5.0 |
% |
Minimum regulatory requirement |
|
|
19,021 |
|
|
|
4.0 |
% |
|
|
19,352 |
|
|
|
4.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Risk-Based Capital Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumas Bancorp and Subsidiary |
|
|
43,845 |
|
|
|
13.2 |
% |
|
|
42,994 |
|
|
|
12.7 |
% |
Minimum regulatory requirement |
|
|
13,323 |
|
|
|
4.0 |
% |
|
|
13,570 |
|
|
|
4.0 |
% |
Plumas Bank |
|
|
43,521 |
|
|
|
13.1 |
% |
|
|
43,262 |
|
|
|
12.8 |
% |
Minimum requirement for
Well-Capitalized institution
under the prompt corrective
action plan |
|
|
19,972 |
|
|
|
6.0 |
% |
|
|
20,342 |
|
|
|
6.0 |
% |
Minimum regulatory requirement |
|
|
13,315 |
|
|
|
4.0 |
% |
|
|
13,561 |
|
|
|
4.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Risk-Based Capital Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumas Bancorp and Subsidiary |
|
|
48,067 |
|
|
|
14.4 |
% |
|
|
47,274 |
|
|
|
13.9 |
% |
Minimum regulatory requirement |
|
|
26,647 |
|
|
|
8.0 |
% |
|
|
27,140 |
|
|
|
8.0 |
% |
Plumas Bank |
|
|
47,741 |
|
|
|
14.3 |
% |
|
|
47,539 |
|
|
|
14.0 |
% |
Minimum requirement for
Well-Capitalized institution
under the prompt corrective
action plan |
|
|
33,286 |
|
|
|
10.0 |
% |
|
|
33,903 |
|
|
|
10.0 |
% |
Minimum regulatory requirement |
|
|
26,629 |
|
|
|
8.0 |
% |
|
|
27,123 |
|
|
|
8.0 |
% |
Management believes that the Company and the Bank met all their capital adequacy requirements
as of March 31, 2011 and December 31, 2010. On March 16, 2011, the Bank entered into a Consent
Order (Order) with the FDIC and the DFI. Within 240 days of the date of the Order we are required
to increase and maintain the Banks Tier 1 capital to a level such that its leverage ratio is at
least 10% and its total risk-based capital is at least 13%. Currently the Bank has exceeded the
Orders total risk-based capital ratio goal of 13% and Management expects to achieve the leverage
ratio target of 10% by year-end without the injection of any new capital.
See Note 2 Regulatory Matters of the Companys Condensed Consolidated Financial Statements in
Item 1 of this Form 10-Q for information related to the Order.
The current and projected capital positions of the Company and the Bank and the impact of capital
plans and long-term strategies are reviewed regularly by management. The Company policy is to
maintain the Banks ratios above the prescribed well-capitalized leverage, Tier 1 risk-based and
total risk-based capital ratios of 5%, 6% and 10%, respectively, at all times.
Off-Balance Sheet Arrangements
Loan Commitments. In the normal course of business, there are various commitments outstanding to
extend credits that are not reflected in the financial statements. Commitments to extend credit
and letters of credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Annual review of commercial credit lines, letters of credit
and ongoing monitoring of outstanding balances reduces the risk of loss associated with these
commitments. As of March 31, 2011, the Company had $70.6 million in unfunded loan commitments and
$133 thousand in letters of credit. This compares to $71.6 million in unfunded loan commitments and
$164 thousand in letters of credit at December 31, 2010. Of the $70.6 million in unfunded loan
commitments, $32.8 million and $37.8 million represented commitments to commercial and consumer
customers, respectively. Of the total
unfunded commitments at March 31, 2011, $35.9 million were secured by real estate, of which $7.5
million was secured by commercial real estate and $28.4 million was secured by residential real
estate in the form of equity lines of credit. The commercial loan commitments not secured by real
estate primarily represent business lines of credit, while the consumer loan commitments not
secured by real estate primarily represent revolving credit card lines. Since, some of the
commitments are expected to expire without being drawn upon; the total commitment amounts do not
necessarily represent future cash requirements.
35
Operating Leases. The Company leases one depository branch, one lending office and one loan
administration office and two non branch automated teller machine locations. Total rental expenses
under all operating leases, including premises, totaled $46,000 and a credit of $95,000, during the
three months ended March 31, 2011 and 2010, respectively. The expiration dates of the leases vary,
with the first such lease expiring during 2011 and the last such lease expiring during 2015.
The increase in rental expense during 2011 resulted from the purchase of our Redding branch
building on March 31, 2010. Previously we had leased this building. Under the terms of the lease
agreement we were provided free rent for a period of time; however, in accordance with applicable
accounting standards we recognized monthly rent expense equal to the total payments required under
the lease dividend by the term of the lease in months. At the time of the purchase we reversed this
accrual recognizing a $184 thousand reduction in rental expense.
Liquidity
The Company manages its liquidity to provide the ability to generate funds to support asset
growth, meet deposit withdrawals (both anticipated and unanticipated), fund customers borrowing
needs, satisfy maturity of short-term borrowings and maintain reserve requirements. The Companys
liquidity needs are managed using assets or liabilities, or both. On the asset side, in addition to
cash and due from banks, the Company maintains an investment portfolio containing U.S. Government,
agency and municipal securities that are classified as available-for-sale. On the liability side,
liquidity needs are managed by charging competitive offering rates on deposit products and the use
of established lines of credit.
The Company is a member of the FHLB and can borrow up to $93,475,000 from the FHLB secured by
commercial and residential mortgage loans with carrying values totaling $147,640,000. The Company
is required to hold FHLB stock as a condition of membership. At March 31, 2011, the Company held
$2,188,000 of FHLB stock which is recorded as a component of other assets. At this level of stock
holdings the Company can borrow up to $46,561,000. There were no borrowings outstanding as of March
31, 2011. To borrow the $93,475,000 in available credit the Company would need to purchase
$2,205,000 in additional FHLB stock. In addition, the Company has the ability to secure advances
through the FRB discount window. These advances also must be collateralized.
Customer deposits are the Companys primary source of funds. Total deposits were $414.9 million as
of March 31, 2011, a decrease of $10.0 million, or 2%, from the December 31, 2010 balance of $424.9
million. Deposits are held in various forms with varying maturities. The Companys securities
portfolio, Federal funds sold, Federal Home Loan Bank advances, and cash and due from banks serve
as the primary sources of liquidity, providing adequate funding for loans during periods of high
loan demand. During periods of decreased lending, funds obtained from the maturing or sale of
investments, loan payments, and new deposits are invested in short-term earning assets, such as
cash held at the FRB, Federal funds sold and investment securities, to serve as a source of funding
for future loan growth. Management believes that the Companys available sources of funds,
including borrowings, will provide adequate liquidity for its operations in the foreseeable future.
36
|
|
|
ITEM 3. |
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As a smaller reporting company we are not required to provide the information required by this
item.
|
|
|
ITEM 4. |
|
CONTROLS AND PROCEDURES |
The Companys Interim Chief Executive Officer and Interim Chief Financial Officer, based on
their evaluation of the Companys disclosure controls and procedures as of the end of the Companys
fiscal quarter ended March 31, 2011 (as defined in Exchange Act Rule 13a15(e), have concluded
that the Companys disclosure controls and procedures are adequate and effective for purposes of
Rule 13a15(e) in timely alerting them to material information relating to the Company required to
be included in the Companys filings with the SEC under the Securities Exchange Act of 1934.
There were no significant changes in the Companys internal control over financial reporting or in
other factors that could significantly affect internal controls that occurred during the Companys
fiscal quarter ended March 31, 2011.
PART II OTHER INFORMATION
|
|
|
ITEM 1. |
|
LEGAL PROCEEDINGS |
From time to time, the Company and/or its subsidiaries are a party to claims and legal proceedings
arising in the ordinary course of business. In the opinion of the Companys management, the amount
of ultimate liability with respect to such proceedings will not have a material adverse effect on
the financial condition or results of operations of the Company taken as a whole.
As a smaller reporting company we are not required to provide the information required by this
item.
37
|
|
|
ITEM 2. |
|
UNREGISTERD SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
(a) None.
(b) None.
(c) None.
|
|
|
ITEM 3. |
|
DEFAULTS UPON SENIOR SECURITIES |
Under the terms of the Series A Preferred Stock, Plumas Bancorp is required to pay dividends on a
quarterly basis at a rate of 5% per year for the first five years, after which the dividend rate
automatically increases to 9%. Dividend payments on the Series A Preferred Stock may be deferred
without default, but the dividend is cumulative and, if Plumas Bancorp fails to pay dividends for
six quarters, the holder will have the right to appoint representatives to Plumas Bancorp board of
directors. As previously disclosed, Plumas Bancorp has determined to defer regularly scheduled
quarterly interest payments on its Series A Preferred Stock. Therefore, Plumas Bancorp is currently
in arrears with the dividend payments on the Series A Preferred Stock. As of the date of filing
this report, the amount of the arrearage on the dividend payments of the Series A Preferred Stock
is $597 thousand.
|
|
|
ITEM 4. |
|
(REMOVED AND RESERVED) |
None.
|
|
|
ITEM 5. |
|
OTHER INFORMATION |
None.
38
The following documents are included or incorporated by reference in this Quarterly Report on Form
10Q:
|
|
|
|
|
|
3.1 |
|
|
Articles of Incorporation as amended of Registrant included as exhibit 3.1 to the Registrants
Form S-4, File No. 333-84534, which is incorporated by reference herein. |
|
|
|
|
|
|
3.2 |
|
|
Bylaws of Registrant as amended on March 16, 2011 included as exhibit 3.2 to the Registrants
Form 10-K for December 31, 2010, which is incorporated by this reference herein. |
|
|
|
|
|
|
3.3 |
|
|
Amendment of the Articles of Incorporation of Registrant dated November 1, 2002, is included
as exhibit 3.3 to the Registrants 10-Q for September 30, 2005, which is incorporated by this
reference herein. |
|
|
|
|
|
|
3.4 |
|
|
Amendment of the Articles of Incorporation of Registrant dated August 17, 2005, is included as
exhibit 3.4 to the Registrants 10-Q for September 30, 2005, which is incorporated by this
reference herein. |
|
|
|
|
|
|
4 |
|
|
Specimen form of certificate for Plumas Bancorp included as exhibit 4 to the Registrants Form
S-4, File No. 333-84534, which is incorporated by reference herein. |
|
|
|
|
|
|
4.1 |
|
|
Certificate of Determination of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, is
included as exhibit 4.1 to Registrants 8-K filed on January 30, 2009, which is incorporated
by this reference herein. |
|
|
|
|
|
|
10.1 |
|
|
Executive Salary Continuation Agreement of Andrew J. Ryback dated December 17, 2008, is
included as exhibit 10.1 to the Registrants 10-K for December 31, 2008, which is incorporated
by this reference herein. |
|
|
|
|
|
|
10.2 |
|
|
Split Dollar Agreement of Andrew J. Ryback dated August 23, 2005, is included as Exhibit 10.2
to the Registrants 8-K filed on October 17, 2005, which is incorporated by this reference
herein. |
|
|
|
|
|
|
10.8 |
|
|
Director Retirement Agreement of John Flournoy dated March 21, 2007, is included as Exhibit
10.8 to Registrants 10-Q for March 31, 2007, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.11 |
|
|
First Amendment to Executive Salary Continuation Agreement of Robert T. Herr dated
September 15, 2004, is included as Exhibit 10.11 to the Registrants 8-K filed on September 17,
2004, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.18 |
|
|
Amended and Restated Director Retirement Agreement of Daniel E. West dated May 10, 2000, is
included as Exhibit 10.18 to the Registrants 10-QSB for June 30, 2002, which is incorporated
by this reference herein. |
|
|
|
|
|
|
10.19 |
|
|
Consulting Agreement of Daniel E. West dated May 10, 2000, is included as Exhibit 10.19 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.20 |
|
|
Split Dollar Agreements of Robert T. Herr dated September 15, 2004, is included as Exhibit
10.20 to the Registrants 8-K filed on September 17, 2004, which is incorporated by this
reference herein. |
|
|
|
|
|
|
10.21 |
|
|
Amended and Restated Director Retirement Agreement of Alvin G. Blickenstaff dated April 19,
2000, is included as Exhibit 10.21 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein. |
|
|
|
|
|
|
10.22 |
|
|
Consulting Agreement of Alvin G. Blickenstaff dated May 8, 2000, is included as Exhibit 10.22
to the Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.24 |
|
|
Amended and Restated Director Retirement Agreement of Gerald W. Fletcher dated May 10, 2000,
is included as Exhibit 10.24 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein. |
|
|
|
|
|
|
10.25 |
|
|
Consulting Agreement of Gerald W. Fletcher dated May 10, 2000, is included as Exhibit 10.25 to
the Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein. |
39
|
|
|
|
|
|
10.27 |
|
|
Amended and Restated Director Retirement Agreement of Arthur C. Grohs dated May 9, 2000, is
included as Exhibit 10.27 to the Registrants 10-QSB for June 30, 2002, which is incorporated
by this reference herein. |
|
|
|
|
|
|
10.28 |
|
|
Consulting Agreement of Arthur C. Grohs dated May 9, 2000, is included as Exhibit 10.28 to the
Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.33 |
|
|
Amended and Restated Director Retirement Agreement of Terrance J. Reeson dated April 19, 2000,
is included as Exhibit 10.33 to the Registrants 10-QSB for June 30, 2002, which is
incorporated by this reference herein. |
|
|
|
|
|
|
10.34 |
|
|
Consulting Agreement of Terrance J. Reeson dated May 10, 2000, is included as Exhibit 10.34 to
the Registrants 10-QSB for June 30, 2002, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.35 |
|
|
Letter Agreement, dated January 30, 2009 by and between Plumas Bancorp, Inc. and the United
States Department of the Treasury and Securities Purchase Agreement Standard Terms attached
thereto, is included as exhibit 10.1 to Registrants 8-K filed on January 30, 2009, which is
incorporated by this reference herein. |
|
|
|
|
|
|
10.36 |
|
|
Form of Senior Executive Officer letter agreement, is included as exhibit 10.2 to Registrants
8-K filed on January 30, 2009, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.37 |
|
|
Deferred Fee Agreement of Alvin Blickenstaff is included as Exhibit 10.37 to the Registrants
10-Q for March 31, 2009, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.40 |
|
|
2001 Stock Option Plan as amended is included as exhibit 99.1 of the Form S-8 filed July 23,
2002, File No. 333-96957, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.41 |
|
|
Form of Indemnification Agreement (Plumas Bancorp) is included as Exhibit 10.41 to the
Registrants 10-Q for March 31, 2009, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.42 |
|
|
Form of Indemnification Agreement (Plumas Bank) is included as Exhibit 10.42 to the
Registrants 10-Q for March 31, 2009, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.43 |
|
|
Plumas Bank 401(k) Profit Sharing Plan as amended is included as exhibit 99.1 of the Form S-8
filed February 14, 2003, File No. 333-103229, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.44 |
|
|
Executive Salary Continuation Agreement of Robert T. Herr dated June 4, 2002, is included as
Exhibit 10.44 to the Registrants 10-Q for March 31, 2003, which is incorporated by this
reference herein. |
|
|
|
|
|
|
10.46 |
|
|
1991 Stock Option Plan as amended is included as Exhibit 10.46 to the Registrants 10-Q for
September 30, 2004, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.47 |
|
|
Specimen form of Incentive Stock Option Agreement under the 1991 Stock Option Plan is included
as Exhibit 10.47 to the Registrants 10-Q for September 30, 2004, which is incorporated by
this reference herein. |
|
|
|
|
|
|
10.48 |
|
|
Specimen form of Non-Qualified Stock Option Agreement under the 1991 Stock Option Plan is
included as Exhibit 10.48 to the Registrants 10-Q for September 30, 2004, which is
incorporated by this reference herein. |
|
|
|
|
|
|
10.49 |
|
|
Amended and Restated Plumas Bancorp Stock Option Plan is included as Exhibit 10.49 to the
Registrants 10-Q for September 30, 2006, which is incorporated by this reference herein. |
|
|
|
|
|
|
10.50 |
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|
Executive Salary Continuation Agreement of Rose Dembosz, is included as exhibit 10.50 to the
Registrants 10-K for December 31, 2008, which is incorporated by this reference herein. |
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10.51 |
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First Amendment to Split Dollar Agreement of Andrew J. Ryback, is included as exhibit 10.51 to
the Registrants 10-K for December 31, 2008, which is incorporated by this reference herein. |
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10.56 |
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Second Amendment to Executive Salary Continuation Agreement of Robert T. Herr dated
June 4, 2002 and Amended September 15, 2004, is included as exhibit 10.56 to the Registrants
10-K for December 31, 2008, which is incorporated by this reference herein. |
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10.57 |
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First Amendment to Split Dollar Agreements of Robert T. Herr dated September 15, 2004, is
included as exhibit 10.57 to the Registrants 10-K for December 31, 2008, which is
incorporated by this reference herein. |
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10.58 |
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Executive Salary Continuation Agreement of Robert T. Herr dated December 17, 2008, is included
as exhibit 10.58 to the Registrants 10-K for December 31, 2008, which is incorporated by this
reference herein. |
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10.64 |
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First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Alvin Blickenstaff adopted on September 19, 2007, is included as Exhibit 10.64 to the
Registrants 8-K filed on September 25, 2007, which is incorporated by this reference herein. |
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10.65 |
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First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Arthur C. Grohs adopted on September 19, 2007, is included as Exhibit 10.65 to the
Registrants 8-K filed on September 25, 2007, which is incorporated by this reference herein. |
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10.67 |
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First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Terrance J. Reeson adopted on September 19, 2007, is included as Exhibit 10.67 to the
Registrants 8-K filed on September 25, 2007, which is incorporated by this reference herein. |
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10.69 |
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First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Daniel E. West adopted on September 19, 2007, is included as Exhibit 10.69 to the Registrants
8-K filed on September 25, 2007, which is incorporated by this reference herein. |
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10.70 |
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First Amendment to the Plumas Bank Amended and Restated Director Retirement Agreement for
Gerald W. Fletcher adopted on October 9, 2007, is included as Exhibit 10.70 to the
Registrants 10-Q for September 30, 2007, which is incorporated by this reference herein. |
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10.71 |
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Consent Order issued by the FDIC and CDFI to Plumas Bank on March 18, 2011, is included as
Exhibit 10.1 of the Registrants 8-K filed on March 21, 2011, which is incorporated by this
reference herein. |
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10.72 |
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Stipulation and Consent to the Issuance of Consent Order among Plumas Bank and the FDIC
entered into on March 16, 2011, is included as Exhibit 10.2 of the Registrants 8-K filed on
March 21, 2011, which is incorporated by this reference herein. |
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11 |
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Computation of per share earnings appears in the attached 10-Q under Plumas Bancorp and
Subsidiary Notes to Condensed Consolidated Financial Statements as
Footnote 7 Earnings
Per Share. |
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31.1 |
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Rule 13a-14(a) [Section 302] Certification of Principal Financial Officer dated May 5, 2011. |
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31.2 |
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Rule 13a-14(a) [Section 302] Certification of Principal Executive Officer dated May 5, 2011. |
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32.1 |
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Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 5, 2011. |
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32.2 |
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Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated May 5, 2011. |
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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PLUMAS BANCORP |
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(Registrant) |
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Date: May 5, 2011 |
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/s/ Richard L. Belstock |
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Richard L. Belstock
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Interim Chief Financial Officer |
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/s/ Andrew J. Ryback |
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Andrew J. Ryback
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Interim President and Chief Executive Officer |
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42