x
|
Annual
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
o
|
Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
Washington
|
91-1815009
|
(State
or Other Jurisdiction of
|
(IRS
Employer Identification No.)
|
Incorporation
or Organization)
|
Large
accelerated filer 0
|
Accelerated
filer T
|
|
Non-accelerated
filer 0
|
Smaller
reporting company 0
|
PART I
|
Page
|
||
Forward
Looking Information
|
3
|
||
Item
1.
|
Business
|
4
|
|
Item
1A.
|
Risk
Factors
|
11
|
|
Item
1B.
|
Unresolved Staff Comments |
16
|
|
Item
2.
|
Properties
|
16
|
|
Item
3.
|
Legal
Proceedings
|
16
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
16
|
|
PART II
|
|||
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
17
|
|
Item
6.
|
Selected
Financial Data
|
19
|
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
20
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
42
|
|
Item
8.
|
Financial
Statements and Supplementary Data
|
43
|
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
43
|
|
Item
9A.
|
Controls
and Procedures
|
43
|
|
Item
9B.
|
Other
Information
|
45
|
|
PART III
|
|||
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
45
|
|
Item
11.
|
Executive
Compensation
|
46
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
46
|
|
Item
13.
|
Certain
Relationships and Related Transactions and Director
Independence
|
46
|
|
Item
14.
|
Principal
Accountant Fees and Services
|
46
|
|
PART IV
|
|||
Item
15.
|
Exhibits
and Financial Statement Schedules
|
47
|
|
FINANCIAL
STATEMENTS
|
F-1
- F-33
|
||
SIGNATURES
|
48
|
ITEM
1.
|
Business
|
|
·
|
Total
reported loans for construction, land development and other land represent
100% or more of the bank’s capital;
or
|
|
·
|
Total
commercial real estate loans represent 300% or more o the bank’s total
capital.
|
ITEM
1A.
|
Risk
Factors
|
|
·
|
An
increase in loan delinquencies, problem assets and
foreclosures;
|
|
·
|
A
decrease in the demand for loans and other products and
services;
|
|
·
|
An
increase or decrease in the usage of unfunded commitments;
or
|
|
·
|
A
decrease in the value of loan collateral, especially real estate, which in
turn may reduce a customer’s borrowing power and significantly increase
our exposure to particular loans.
|
|
·
|
Treasury's
program to purchase, manage, modify, sell and insure troubled mortgage
related assets and financial
instruments;
|
|
·
|
Treasury's
capital purchase program, pursuant to which it provides Tier 1 capital to
eligible financial institutions by acquiring preferred stock and
warrants;
|
|
·
|
homeowner
relief that encourages loan restructuring and
modification;
|
|
·
|
the
FDIC's temporary increase in deposit insurance coverage from $100,000 to
$250,000 (and unlimited coverage on certain noninterest-bearing accounts)
through December 31, 2009;
|
|
·
|
the
Federal Reserve's program to pay interest on depository institution
balances;
|
|
·
|
liquidity
and credit facilities for financial institutions and investment
banks;
|
|
·
|
lowering
the federal funds rate;
|
|
·
|
emergency
action against short selling
practices;
|
|
·
|
a
temporary guaranty program for money market
funds;
|
|
·
|
commercial
paper funding facilities to provide liquidity to commercial paper
issuers;
|
|
·
|
coordinated
international efforts to address illiquidity and other weaknesses in the
banking sector.
|
ITEM
1.B.
|
Unresolved
Staff Comments
|
ITEM
2.
|
Properties
|
ITEM
3.
|
Legal
Proceedings
|
ITEM
4.
|
Submission
of Matters to a Vote of Security
Holders
|
2008
|
2007
|
|||||||||||||||||||||||
Shares
Traded
|
|
High
|
|
Low
|
|
Shares
Traded
|
|
High
|
|
Low
|
||||||||||||||
First
Quarter
|
78,700 | $ | 14.72 | $ | 10.50 | 112,200 | $ | 17.25 | $ | 16.10 | ||||||||||||||
Second
Quarter
|
42,600 | $ | 14.50 | $ | 11.10 | 188,100 | $ | 17.10 | $ | 15.25 | ||||||||||||||
Third
Quarter
|
55,600 | $ | 12.70 | $ | 8.50 | 48,600 | $ | 16.20 | $ | 14.50 | ||||||||||||||
Fourth
Quarter
|
71,700 | $ | 10.00 | $ | 5.75 | 128,800 | $ | 15.25 | $ | 12.05 |
COMPARISON
OF FIVE YEAR CUMULATIVE TOTAL
RETURN
|
Period
Ending
|
||||||||||||||||||||||||
Index
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
12/31/07
|
12/31/08
|
||||||||||||||||||
Pacific
Financial Corporation
|
$ | 100.00 | $ | 103.14 | $ | 132.75 | $ | 141.38 | $ | 113.36 | $ | 56.73 | ||||||||||||
S&P
500
|
100.00 | 109.00 | 114.35 | 132.41 | 139.68 | 77.28 | ||||||||||||||||||
NASDAQ
Bank Index
|
100.00 | 109.72 | 107.60 | 122.47 | 98.09 | 76.96 |
ITEM
6.
|
Selected
Financial Data
|
|
As
of and For the Year ended December 31,
|
|||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
|
(dollars
in thousands, except per share data)
|
|||||||||||||||||||
Operations
Data
|
||||||||||||||||||||
Net
interest income
|
$ | 21,715 | $ | 24,503 | $ | 23,867 | $ | 22,284 | $ | 19,520 | ||||||||||
Provision
for credit losses
|
4,791 | 482 | 625 | 1,100 | 970 | |||||||||||||||
Non-interest
income
|
5,057 | 4,475 | 4,176 | 4,081 | 3,162 | |||||||||||||||
Non-interest
expense
|
21,591 | 20,379 | 18,118 | 16,566 | 13,555 | |||||||||||||||
Provision
(benefit) for income taxes
|
(561 | ) | 2,086 | 2,749 | 2,653 | 2,450 | ||||||||||||||
Net
income
|
951 | 6,031 | 6,551 | 6,046 | 5,707 | |||||||||||||||
Net
income per share:
|
||||||||||||||||||||
Basic
(1)
|
.13 | .83 | .92 | .86 | .85 | |||||||||||||||
Diluted
(1)
|
.13 | .82 | .90 | .84 | .83 | |||||||||||||||
Dividends
declared
|
333 | 4,955 | 4,893 | 4,719 | 4,624 | |||||||||||||||
Dividends
declared per share (1)
|
.05 | .75 | .75 | .73 | .72 | |||||||||||||||
Dividends
paid ratio
|
35 | % | 82 | % | 75 | % | 78 | % | 81 | % | ||||||||||
Performance
Ratios
|
||||||||||||||||||||
Interest
rate spread
|
4.23 | % | 4.92 | % | 5.13 | % | 5.34 | % | 5.37 | % | ||||||||||
Net
interest margin (2)
|
4.12 | % | 4.82 | % | 5.04 | % | 5.25 | % | 5.25 | % | ||||||||||
Efficiency
ratio (3)
|
80.65 | % | 70.33 | % | 64.61 | % | 62.83 | % | 59.76 | % | ||||||||||
Return
on average assets
|
.16 | % | 1.08 | % | 1.26 | % | 1.31 | % | 1.41 | % | ||||||||||
Return
on average equity
|
1.83 | % | 11.46 | % | 13.16 | % | 12.70 | % | 14.21 | % | ||||||||||
Balance
Sheet Data
|
||||||||||||||||||||
Total
assets
|
$ | 625,835 | $ | 565,587 | $ | 562,384 | $ | 489,409 | $ | 441,791 | ||||||||||
Loans,
net
|
478,695 | 433,904 | 420,768 | 393,574 | 341,671 | |||||||||||||||
Total
deposits
|
511,307 | 467,336 | 466,841 | 399,726 | 363,501 | |||||||||||||||
Other
borrowings
|
60,757 | 37,446 | 36,809 | 35,790 | 25,233 | |||||||||||||||
Shareholders’
equity
|
50,074 | 50,699 | 48,984 | 46,600 | 45,303 | |||||||||||||||
Book
value per share (1) (4)
|
6.84 | 6.97 | 6.83 | 6.55 | 6.42 | |||||||||||||||
Equity
to assets ratio
|
8.00 | % | 8.96 | % | 8.71 | % | 9.52 | % | 10.25 | % | ||||||||||
Asset
Quality Ratios
|
||||||||||||||||||||
Nonperforming
loans to total loans
|
3.40 | % | 1.41 | % | 1.76 | % | 1.67 | % | .15 | % | ||||||||||
Allowance
for loan losses
|
||||||||||||||||||||
to
total loans
|
1.57 | % | 1.14 | % | .95 | % | 1.33 | % | 1.23 | % | ||||||||||
Allowance
for loan losses
|
||||||||||||||||||||
to
nonperforming loans
|
44.97 | % | 78.10 | % | 52.30 | % | 78.67 | % | 901.28 | % | ||||||||||
Nonperforming
assets to
|
||||||||||||||||||||
total
assets
|
3.43 | % | .62 | % | 1.30 | % | 1.36 | % | .12 | % |
ITEM
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
·
|
For
the near term, the Bank intends to prudently manage
capital. During the fourth quarter, the Company reduced the
cash dividend to $0.05 per share as part of our efforts to preserve
capital.
|
|
·
|
The
Company will continue efforts to align personnel expense with the reduced
economic activity and lower volumes of real estate transactions within our
markets. In January 2009, the Bank completed a reduction in
work force of approximately 10% of full-time equivalent
staff.
|
|
·
|
Closure
of the Everson Branch during the fourth quarter of 2008, and consolidation
of the Birch Bay branch expected during the second quarter of
2009.
|
|
·
|
Reduction
in land and residential construction concentrations as a percentage of
total regulatory capital. This includes the suspension of new
raw land and land development loans and curtailment of loans for new
speculative home construction.
|
|
·
|
With
respect to new term commercial real estate lending activities, placing
greater emphasis on owner occupied properties as opposed to non-owner
occupied commercial real estate.
|
|
·
|
The
addition of an individual focusing on special assets dedicated solely to
the resolution of problem loans primarily in the land, land development
and residential construction
categories.
|
|
·
|
Net
interest income decreased by 11.4% or $2,788,000 to $21,715,000 as
compared to 2007. The decrease was primarily due to interest
rate decreases, which were only partially offset by a larger interest
earning asset base and improved returns on the investment
portfolio. Growth in earning assets was mainly driven by loan
production and investment purchases, which were funded from wholesale
funding sources.
|
|
·
|
The
net interest margin for 2008 declined to 4.12% compared to 4.82% in
2007. The margin compression was mainly attributable to a
series of rate reductions in the Federal Funds rate by the Federal Open
Market Committee (FOMC) during 2008 for a combined 400 basis points which
caused an immediate reduction in the variable rate loan portfolio and a
delayed reduction of the Bank’s costs of funds on its portfolio of time
deposits. The reversal of interest income on loans placed on
non-accrual status also contributed to margin
compression.
|
|
·
|
The
provision for credit losses increased $4,309,000, or 893.9%, to $4,791,000
for 2008. The significant increase is the result of changes in
loan loss rates and the increase in substandard loans, primarily in the
land acquisition and development and residential construction loan
portfolios.
|
|
·
|
In
2008, return on average assets and return on average equity decreased to
0.16% and 1.83%, respectively, compared to 1.08% and 11.46% in 2007 as a
result of the aforementioned net interest margin compression and increase
in provision for credit losses.
|
|
·
|
Total
assets at December 31, 2008 increased by $60,248,000, or 10.7%, to
$625,835,000 compared to $565,587,000 at the end of 2007. Gross
loans (including loans held for sale) grew $41,731,000, or 9.2%, to
$497,804,000 compared to $456,073,000 at December 31, 2007, primarily in
the commercial real estate category. Other contributing factors
were an increase in the investment portfolio of $8,638,000 and an increase
in foreclosed real estate of
$6,810,000.
|
|
·
|
Non-accrual
loans increased $11,197,000, or 321.9%, to $14,676,000 at December 31,
2008. The increase in non-accrual loans during the year was
primarily related to non-performing construction and land development
loans, which contributed $11,787,000 of the $14,676,000 outstanding
balance at December 31, 2008. Non-performing assets totaled
$21,486,000, or 3.4% of total assets at December 31,
2008.
|
|
·
|
Total
deposits increased $43,971,000, or 9.4%, compared to the prior
year. This increase is mostly attributable to increases in
brokered certificates of deposits, which increased $30,305,000 to
$35,305,000 at year-end 2008, compared to $5,000,000 at the end of
2007.
|
|
·
|
During
the course of the year, the Company made continued investment in
technology and delivery systems to improve electronic banking products,
including remote deposit capture, improved data processing systems, and
enhanced disaster recovery redundancy
capabilities. Additionally, we are in the process of changing
online banking platforms which will also include electronic statement
delivery and mobile banking services. This conversion is
expected to be completed by June
2009.
|
(dollars in
thousands)
|
2008
|
Increase
(Decrease)
Amount
|
%
|
2007
|
Increase
(Decrease)
Amount
|
%
|
2006
|
|||||||||||||||||||||
Interest
income
|
$ | 33,713 | $ | (6,423 | ) | (16.0 | ) | $ | 40,136 | $ | 3,692 | 10.1 | $ | 36,444 | ||||||||||||||
Interest
expense
|
11,998 | (3,635 | ) | (23.3 | ) | 15,633 | 3,056 | 24.3 | 12,577 | |||||||||||||||||||
Net
interest income
|
21,715 | (2,788 | ) | (11.4 | ) | 24,503 | 636 | 2.7 | 23,867 | |||||||||||||||||||
Provision
for credit losses
|
4,791 | 4,309 | 894.0 | 482 | (143 | ) | (22.9 | ) | 625 | |||||||||||||||||||
Net
interest income after provisions
for credit losses
|
16,924 | (7,097 | ) | (29.5 | ) | 24,021 | 779 | 3.4 | 23,242 | |||||||||||||||||||
Other
operating income
|
5,057 | 582 | 13.0 | 4,475 | 299 | 7.2 | 4,176 | |||||||||||||||||||||
Other
operating expense
|
21,591 | 1,212 | 5.9 | 20,379 | 2,261 | 12.5 | 18,118 | |||||||||||||||||||||
Income
before income taxes
|
390 | (7,727 | ) | (95.2 | ) | 8,117 | (1,183 | ) | (12.7 | ) | 9,300 | |||||||||||||||||
Income
taxes (benefit)
|
(561 | ) | (2,647 | ) | (126.9 | ) | 2,086 | (663 | ) | (24.1 | ) | 2,749 | ||||||||||||||||
Net
income
|
$ | 951 | $ | (5,080 | ) | (84.2 | ) | $ | 6,031 | $ | 520 | (7.9 | ) | $ | 6,551 |
Year Ended December
31,
|
||||||||||||||||||||||||||||||||||||
2008
|
|
2007
|
2006
|
|||||||||||||||||||||||||||||||||
|
Interest
|
|
Interest
|
Interest
|
||||||||||||||||||||||||||||||||
(dollars
in thousands)
|
Average
|
Income
|
Avg
|
Average
|
Income
|
Avg
|
Average
|
Income
|
Avg
|
|||||||||||||||||||||||||||
Balance
|
(Expense)
|
Rate
|
Balance
|
(Expense)
|
Rate
|
Balance
|
(Expense)
|
Rate
|
||||||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||||||
Earning
assets:
|
||||||||||||||||||||||||||||||||||||
Loans
(1)
|
$ | 471,338 | $ | 31,385 | 6.66 | % | $ | 453,940 | $ | 37,823 | 8.33 | % | $ | 415,695 | $ | 34,002 | 8.18 | % | ||||||||||||||||||
Investment
securities:
|
||||||||||||||||||||||||||||||||||||
Taxable
|
31,090 | 1,648 | 5.30 | 26,522 | 1,336 | 5.04 | 22,395 | 1,021 | 4.56 | |||||||||||||||||||||||||||
Tax-Exempt
(1)
|
19,440 | 1,193 | 6.14 | 17,514 | 1,074 | 6.13 | 16,120 | 983 | 6.10 | |||||||||||||||||||||||||||
Total
investment
|
||||||||||||||||||||||||||||||||||||
securities
|
50,530 | 2,841 | 5.62 | 44,036 | 2,410 | 5.47 | 38,515 | 2,004 | 5.20 | |||||||||||||||||||||||||||
Federal
Home Loan Bank Stock
|
2,022 | 19 | 0.94 | 1,858 | 7 | 0.38 | 1,858 | — | — | |||||||||||||||||||||||||||
Federal
funds sold and
|
||||||||||||||||||||||||||||||||||||
deposits
in banks
|
3,787 | 44 | 1.16 | 8,499 | 426 | 5.01 | 17,631 | 909 | 5.16 | |||||||||||||||||||||||||||
Total
earning assets/interest
|
||||||||||||||||||||||||||||||||||||
income
|
$ | 527,677 | $ | 34,289 | 6.50 | % | $ | 508,333 | $ | 40,666 | 8.00 | % | $ | 473,699 | $ | 36,915 | 7.79 | % | ||||||||||||||||||
Cash
and due from banks
|
11,454 | 12,236 | 12,150 | |||||||||||||||||||||||||||||||||
Bank
premises and equipment
|
||||||||||||||||||||||||||||||||||||
(net)
|
16,522 | 13,249 | 11,103 | |||||||||||||||||||||||||||||||||
Other
assets
|
34,948 | 30,013 | 26,904 | |||||||||||||||||||||||||||||||||
Allowance
for credit losses
|
(5,875 | ) | (4,618 | ) | (5,114 | ) | ||||||||||||||||||||||||||||||
Total
assets
|
$ | 584,726 | $ | 559,213 | $ | 518,742 | ||||||||||||||||||||||||||||||
Liabilities
and Shareholders’ Equity
|
||||||||||||||||||||||||||||||||||||
Interest
bearing liabilities:
|
||||||||||||||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||||||||||||||
Savings
and interest-
|
||||||||||||||||||||||||||||||||||||
bearing
demand
|
$ | 204,539 | $ | (2,903 | ) | 1.42 | % | $ | 194,356 | $ | (4,947 | ) | 2.55 | % | $ | 195,921 | $ | (4,650 | ) | 2.37 | % | |||||||||||||||
Time
|
186,319 | (6,891 | ) | 3.70 | 177,362 | (8,513 | ) | 4.80 | 148,055 | (6,196 | ) | 4.18 | ||||||||||||||||||||||||
Total
deposits
|
390,858 | (9,794 | ) | 2.51 | 371,718 | (13,460 | ) | 3.62 | 343,976 | (10,846 | ) | 3.15 | ||||||||||||||||||||||||
Short-term
borrowings
|
13,398 | (349 | ) | 2.61 | 5,961 | (329 | ) | 5.52 | 1,388 | (75 | ) | 5.40 | ||||||||||||||||||||||||
Long-term
borrowings
|
26,336 | (991 | ) | 3.76 | 21,286 | (820 | ) | 3.85 | 23,092 | (868 | ) | 3.76 | ||||||||||||||||||||||||
Secured
borrowings
|
1,387 | (94 | ) | 6.78 | 1,517 | (110 | ) | 7.25 | 1,981 | (141 | ) | 7.12 | ||||||||||||||||||||||||
Junior
subordinated debentures
|
13,403 | (770 | ) | 5.74 | 13,403 | (914 | ) | 6.82 | 9,539 | (647 | ) | 6.78 | ||||||||||||||||||||||||
Total
borrowings
|
54,524 | (2,204 | ) | 4.04 | 42,167 | (2,173 | ) | 5.15 | 36,000 | (1,731 | ) | 4.81 | ||||||||||||||||||||||||
Total
interest-bearing liabilities/
|
||||||||||||||||||||||||||||||||||||
Interest
expense
|
$ | 445,382 | $ | (11,998 | ) | 2.69 | % | $ | 413,885 | $ | (15,633 | ) | 3.78 | % | $ | 379,976 | $ | (12,577 | ) | 3.31 | % | |||||||||||||||
Demand
deposits
|
82,620 | 87,467 | 84,846 | |||||||||||||||||||||||||||||||||
Other
liabilities
|
4,750 | 5,227 | 4,133 | |||||||||||||||||||||||||||||||||
Shareholders’
equity
|
51,974 | 52,634 | 49,787 | |||||||||||||||||||||||||||||||||
Total
liabilities and shareholders’
|
||||||||||||||||||||||||||||||||||||
equity
|
$ | 584,726 | $ | 559,213 | $ | 518,742 | ||||||||||||||||||||||||||||||
Net
interest income (1)
|
$ | 22,291 | $ | 25,033 | $ | 24,338 | ||||||||||||||||||||||||||||||
Net
interest income as a percentage of average earning assets
|
||||||||||||||||||||||||||||||||||||
Interest
income
|
6.50 | % | 8.00 | % | 7.79 | % | ||||||||||||||||||||||||||||||
Interest
expense
|
2.27 | % | 3.08 | % | 2.66 | % | ||||||||||||||||||||||||||||||
Net interest
income
|
4.23 | % | 4.92 | % | 5.13 | % | ||||||||||||||||||||||||||||||
Net
interest margin (2)
|
4.12 | % | 4.82 | % | 5.04 | % | ||||||||||||||||||||||||||||||
Tax
equivalent adjustment (1)
|
$ | 576 | $ | 530 | $ | 471 |
2008 compared to 2007
|
2007 compared to 2006
|
|||||||||||||||||||||||
Increase (decrease) due to
|
Increase (decrease) due to
|
|||||||||||||||||||||||
(dollars
in thousands)
|
Volume
|
Rate
|
Net
|
Volume
|
Rate
|
Net
|
||||||||||||||||||
Interest earned on: | ||||||||||||||||||||||||
Loans
|
$ | 1,403 | $ | (7,841 | ) | $ | (6,438 | ) | $ | 3,177 | $ | 644 | $ | 3,821 | ||||||||||
Securities: | ||||||||||||||||||||||||
Taxable
|
239 | 73 | 312 | 201 | 114 | 315 | ||||||||||||||||||
Tax-exempt
|
118 | 1 | 119 | 85 | 6 | 91 | ||||||||||||||||||
Total
securities
|
357 | 74 | 431 | 286 | 120 | 406 | ||||||||||||||||||
Federal
Home Loan Bank stock
|
1 | 11 | 12 | — | 7 | 7 | ||||||||||||||||||
Fed
funds sold and interest
bearing
deposits in other banks
|
(160 | ) | (222 | ) | (382 | ) | (458 | ) | (25 | ) | (483 | ) | ||||||||||||
Total
interest earning assets
|
1,601 | (7,978 | ) | (6,377 | ) | 3,005 | 746 | 3,751 | ||||||||||||||||
Interest paid on: | ||||||||||||||||||||||||
Savings
and interest bearing
Demand
deposits
|
(247 | ) | 2,291 | 2,044 | 37 | (334 | ) | (297 | ) | |||||||||||||||
Time
deposits
|
(412 | ) | 2,034 | 1,622 | (1,330 | ) | (987 | ) | (2,317 | ) | ||||||||||||||
Total
borrowings
|
(558 | ) | 527 | (31 | ) | (312 | ) | (130 | ) | (442 | ) | |||||||||||||
Total
interest bearing liabilities
|
(1,217 | ) | 4,852 | 3,635 | (1,605 | ) | (1,451 | ) | (3,056 | ) | ||||||||||||||
Change
in net interest income
|
$ | 384 | $ | (3,126 | ) | $ | (2,742 | ) | $ | 1,400 | $ | (705 | ) | $ | 695 |
(dollars in
thousands)
|
2008
|
Increase
(Decrease)
Amount
|
%
|
2007
|
Increase
(Decrease)
Amount
|
%
|
2006
|
|||||||||||||||||||||
Service
charges on deposit accounts
|
$ | 1,577 | $ | 83 | 5.6 | $ | 1,494 | $ | 42 | 2.9 | $ | 1,452 | ||||||||||||||||
Income
from and gains on sale of foreclosed real estate
|
390 | 390 | 100.0 | — | (5 | ) | (100.0 | ) | 5 | |||||||||||||||||||
Net
gains on sales of loans
|
1,426 | (558 | ) | (28.1 | ) | 1,984 | 89 | 4.7 | 1,895 | |||||||||||||||||||
Net
loss on sales of securities
|
(165 | ) | (145 | ) | (725.0 | ) | (20 | ) | (20 | ) | (100.0 | ) | — | |||||||||||||||
Earnings
on bank owned life insurance
|
607 | 210 | 52.9 | 397 | 43 | 12.1 | 354 | |||||||||||||||||||||
Other
operating income
|
1,222 | 602 | 97.1 | 620 | 150 | 31.9 | 470 | |||||||||||||||||||||
Total
non-interest income
|
$ | 5,057 | $ | 582 | 13.0 | $ | 4,475 | $ | 299 | (7.2 | ) | $ | 4,176 |
(dollars in
thousands)
|
2008
|
Increase
(Decrease)
Amount
|
%
|
2007
|
Increase
(Decrease)
Amount
|
%
|
2006
|
|||||||||||||||||||||
Salaries
and employee
benefits
|
$ | 12,381 | $ | 101 | 0.8 | $ | 12,280 | $ | 1,671 | 15.8 | $ | 10,609 | ||||||||||||||||
Occupancy
and equipment
|
2,855 | 327 | 12.9 | 2,528 | 110 | 4.5 | 2,418 | |||||||||||||||||||||
Marketing
and advertising
|
528 | (32 | ) | (5.7 | ) | 560 | 75 | 15.5 | 485 | |||||||||||||||||||
State
taxes
|
366 | (70 | ) | (16.1 | ) | 436 | 61 | 16.3 | 375 | |||||||||||||||||||
Data
processing
|
764 | 371 | 94.4 | 393 | (29 | ) | (6.9 | ) | 422 | |||||||||||||||||||
Professional
services
|
828 | 287 | 53.0 | 541 | (106 | ) | (16.4 | ) | 647 | |||||||||||||||||||
Other
expense
|
3,869 | 228 | 6.3 | 3,641 | 479 | 15.1 | 3,162 | |||||||||||||||||||||
Total
non-interest expense
|
$ | 21,591 | $ | 1,212 | 5.9 | $ | 20,379 | $ | 2,261 | 12.5 | $ | 18,118 |
Held
To Maturity
|
||||||||||||
(dollars
in thousands)
|
2008
|
2007
|
2006
|
|||||||||
Obligations
of states and political subdivisions
|
$ | 5,750 | $ | 3,562 | $ | 5,155 | ||||||
Mortgage-backed
securities
|
636 | 767 | 949 | |||||||||
Total
|
$ | 6,386 | $ | 4,329 | $ | 6,104 |
Available
For Sale
|
||||||||||||
(dollars
in thousands)
|
2008
|
2007
|
2006
|
|||||||||
U.S.
Agency securities
|
$ | 1,759 | $ | 3,818 | $ | 8,311 | ||||||
Obligations
of states and political subdivisions
|
19,584 | 16,136 | 13,619 | |||||||||
Mortgage-backed
securities
|
27,205 | 18,540 | 10,232 | |||||||||
Corporate
bonds
|
945 | 1,512 | 1,512 | |||||||||
Mutual
funds
|
— | 2,906 | 2,934 | |||||||||
Total
|
$ | 49,493 | $ | 42,912 | $ | 36,608 |
Held
To Maturity
(dollars
in thousands)
|
Due
in one year or less
|
Due
after
one
through five years
|
|
Due
after
five
through
ten
years
|
|
Due
after ten years
|
|
Total
|
||||||||||||
Obligations
of states and political
subdivisions
|
$ | 18 | $ | 959 | $ | 807 | $ | 3,966 | $ | 5,750 | ||||||||||
Weighted
average yield
|
11.41 | % | 6.55 | % | 5.86 | % | 6.58 | % | ||||||||||||
Mortgage-backed
securities
|
— | — | — | 636 | 636 | |||||||||||||||
Weighted
average yield
|
— | — | — | 5.59 | % | |||||||||||||||
Total
|
$ | 18 | $ | 959 | $ | 807 | $ | 4,602 | $ | 6,386 |
Available
For Sale
(dollars
in thousands)
|
Due
in one year or less
|
|
Due
after
one
through five years
|
|
|
Due
after
five
through
ten
years
|
|
|
Due
after ten years
|
|
|
Total
|
||||||||
U.S.
Agency securities
|
$ | — | $ | 1,017 | $ | — | $ | 742 | $ | 1,759 |
|
|||||||||
Weighted
average yield
|
— | 5.75 | % | — | 5.86 | % | ||||||||||||||
Obligations
of states and political
subdivisions
|
1,575 | 4,839 | 3,582 | 9,588 | 19,584 | |||||||||||||||
Weighted
average yield
|
6.35 | % | 5.27 | % | 5.20 | % | 6.06 | % | ||||||||||||
Mortgage-backed
securities
|
169 | 97 | 5,423 | 21,516 | 27,205 | |||||||||||||||
Weighted
average yield
|
4.01 | % | 3.65 | % | 4.90 | % | 5.45 | % | ||||||||||||
Other
securities
|
945 | — | — | — | 945 | |||||||||||||||
Weighted
average yield
|
4.26 | % | — | — | — | |||||||||||||||
Total
|
$ | 2,689 | $ | 5,953 | $ | 9,005 | $ | 31,846 | $ | 49,493 |
(dollars in
thousands)
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Commercial
|
$ | 91,888 | $ | 128,145 | $ | 132,843 | $ | 124,536 | $ | 111,050 | ||||||||||
Real
estate construction
|
100,725 | 93,249 | 87,063 | 87,621 | 49,347 | |||||||||||||||
Real
estate mortgage residential
|
108,420 | 87,094 | 91,598 | 67,858 | 63,268 | |||||||||||||||
Real
estate commercial
|
188,444 | 137,620 | 117,608 | 117,645 | 112,743 | |||||||||||||||
Installment
|
7,293 | 7,283 | 8,668 | 9,945 | 9,653 | |||||||||||||||
Credit
cards and overdrafts
|
1,959 | 3,363 | 1,990 | 1,863 | 1,979 | |||||||||||||||
Less
unearned income
|
(925 | ) | (681 | ) | (601 | ) | (487 | ) | (281 | ) | ||||||||||
Total
|
$ | 497,804 | $ | 456,073 | $ | 439,169 | $ | 408,981 | $ | 347,759 |
|
Due
after
|
|||||||||||||||
Due
in one
|
one
through
|
Due
after
|
||||||||||||||
(dollars in thousands)
|
year or less
|
five years
|
five years
|
Total
|
||||||||||||
Commercial
|
$ | 30,024 | $ | 27,995 | $ | 33,869 | $ | 91,888 | ||||||||
Real
estate construction
|
81,190 | 10,736 | 8,799 | 100,725 | ||||||||||||
Real
estate mortgage residential
|
12,104 | 15,088 | 81,228 | 108,420 | ||||||||||||
Real
estate commercial
|
14,274 | 28,587 | 145,583 | 188,444 | ||||||||||||
Installment
|
1,687 | 3,860 | 1,746 | 7,293 | ||||||||||||
Credit
cards and overdrafts
|
1,959 | — | — | 1,959 | ||||||||||||
Total
|
$ | 141,238 | $ | 86,266 | $ | 271,225 | $ | 498,729 | ||||||||
Less
unearned income
|
(925 | ) | ||||||||||||||
Total
loans
|
$ | 497,804 | ||||||||||||||
Total
loans maturing after one year with
|
||||||||||||||||
Predetermined
interest rates (fixed)
|
$ | 42,507 | $ | 91,035 | $ | 133,542 | ||||||||||
Floating
or adjustable rates (variable)
|
125,993 | 4,636 | 130,629 | |||||||||||||
Total
|
$ | 168,500 | $ | 95,671 | $ | 264,171 |
(dollars
in thousands)
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Non-accrual
loans
|
$ | 14,676 | $ | 3,479 | $ | 7,335 | $ | 6,650 | $ | 470 | ||||||||||
Accruing
loans past due 90 days
or more
|
2,274 | 2,932 | 376 | 82 | — | |||||||||||||||
Restructured
loans
|
— | — | — | — | — | |||||||||||||||
Foreclosed
real estate
|
6,810 | — | — | 37 | 40 |
(dollars
in thousands)
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Balance
at beginning of year
|
$ | 5,007 | $ | 4,033 | $ | 5,296 | $ | 4,236 | $ | 2,238 | ||||||||||
Charge-offs:
|
||||||||||||||||||||
Commercial
|
18 | — | 1,925 | 41 | 235 | |||||||||||||||
Real
estate loans
|
2,053 | 40 | — | — | 18 | |||||||||||||||
Credit
card
|
66 | 18 | 16 | 7 | 11 | |||||||||||||||
Installment
|
89 | 93 | 4 | 17 | 11 | |||||||||||||||
Total
charge-offs
|
2,226 | 151 | 1,945 | 65 | 275 | |||||||||||||||
Recoveries:
|
||||||||||||||||||||
Commercial
|
— | 619 | — | 3 | 7 | |||||||||||||||
Real
estate loans
|
40 | 21 | 51 | 19 | 123 | |||||||||||||||
Credit
card
|
2 | 2 | 5 | 1 | 1 | |||||||||||||||
Installment
|
9 | 1 | 1 | 2 | — | |||||||||||||||
Total
recoveries
|
51 | 643 | 57 | 25 | 131 | |||||||||||||||
Net
charge-offs (recoveries)
|
2,175 | (492 | ) | 1,888 | 40 | 144 | ||||||||||||||
Provision
for credit losses
|
4,791 | 482 | 625 | 1,100 | 970 | |||||||||||||||
BNW
Bancorp, Inc. acquisition
|
— | — | — | — | 1,172 | |||||||||||||||
Balance
at end of year
|
$ | 7,623 | $ | 5,007 | $ | 4,033 | $ | 5,296 | $ | 4,236 | ||||||||||
Ratio
of net charge-offs (recoveries)
|
||||||||||||||||||||
to
average loans outstanding
|
.46 | % | (.11 | %) | .45 | % | .01 | % | .05 | % |
(dollars
in thousands)
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Total
impaired loans
|
$ | 22,117 | $ | 6,431 | $ | 7,379 | $ | 6,650 | $ | 7,934 | ||||||||||
Total
impaired loans with valuation
allowance
|
462 | 3,052 | 51 | 4,917 | 7,464 | |||||||||||||||
Valuation
allowance related to impaired
loans
|
118 | 72 | 17 | 924 | 200 |
|
%
of
|
|
%
of
|
|
%
of
|
%
of
|
%
of
|
|||||||||||||||||||||||||||||||||
2008
|
Total
|
2007
|
Total
|
2006
|
Total
|
2005
|
Total
|
2004
|
Total
|
|||||||||||||||||||||||||||||||
(dollars in thousands)
|
Reserve
|
Loans
|
Reserve
|
Loans
|
Reserve
|
Loans
|
Reserve
|
Loans
|
Reserve
|
Loans
|
||||||||||||||||||||||||||||||
Commercial
loans
|
$ | 1,392 | 18 | % | $ | 1,780 | 36 | % | $ | 1,705 | 42 | % | $ | 1,589 | 32 | % | $ | 1,680 | 32 | % | ||||||||||||||||||||
Real
estate loans
|
5,975 | 79 | % | 3,016 | 60 | % | 2,167 | 54 | % | 3,548 | 65 | % | 2,432 | 65 | % | |||||||||||||||||||||||||
Consumer
loans
|
256 | 3 | % | 211 | 4 | % | 161 | 4 | % | 159 | 3 | % | 124 | 3 | % | |||||||||||||||||||||||||
Total
allowance
|
$ | 7,623 | 100 | % | $ | 5,007 | 100 | % | $ | 4,033 | 100 | % | $ | 5,296 | 100 | % | $ | 4,236 | 100 | % | ||||||||||||||||||||
Ratio
of allowance for credit
|
||||||||||||||||||||||||||||||||||||||||
losses
to loans outstanding
|
||||||||||||||||||||||||||||||||||||||||
at
end of year
|
1.57 | % | 1.14 | % | .95 | % | 1.33 | % | 1.23 | % |
(dollars
in thousands)
|
2008
|
Rate
|
2007
|
Rate
|
2006
|
Rate
|
||||||||||||||||||
Non-interest
bearing demand deposits
|
$ | 82,620 | 0.00 | % | $ | 87,467 | 0.00 | % | $ | 84,846 | 0.00 | % | ||||||||||||
Interest
bearing demand deposits
|
53,816 | 0.81 | % | 42,803 | 0.48 | % | 48,140 | 0.57 | % | |||||||||||||||
Savings
deposits
|
150,723 | 1.64 | % | 151,553 | 3.13 | % | 147,781 | 2.96 | % | |||||||||||||||
Time
deposits
|
186,319 | 3.70 | % | 177,362 | 4.80 | % | 148,055 | 4.18 | % | |||||||||||||||
Total
|
$ | 473,478 | 2.07 | % | $ | 459,185 | 2.93 | % | $ | 428,822 | 2.53 | % |
(dollars
in thousands)
|
Under
$100,000
|
Over
$100,000
|
Total
|
|||||||||
3
months or less
|
$ | 20,397 | $ | 71,745 | $ | 92,142 | ||||||
Over
3 through 6 months
|
12,253 | 14,894 | 27,147 | |||||||||
Over
6 through 12 months
|
19,375 | 29,177 | 48,552 | |||||||||
Over
12 months
|
21,948 | 28,175 | 50,123 | |||||||||
Total
|
$ | 73,973 | $ | 143,991 | $ | 217,964 |
(dollars in
thousands)
|
2008
|
2007
|
2006
|
|||||||||
Amount
outstanding at end of period
|
$ | 23,500 | $ | 10,125 | $ | — | ||||||
Weighted
average interest rate thereon
|
2.37 | % | 4.26 | % | — | % | ||||||
Maximum
month-end balance during the year
|
34,290 | 18,695 | 6,500 | |||||||||
Average
balance during the year
|
13,398 | 5,961 | 1,388 | |||||||||
Average
interest rate during the year
|
2.61 | % | 5.52 | % | 5.40 | % |
Payments
due by Period
|
||||||||||||||||||||
Contractual
obligations
|
Less
than
1
year
|
1
– 3 years
|
3
– 5 years
|
More
than
5
years
|
Total
|
|||||||||||||||
Operating
leases
|
$ | 304 | $ | 355 | $ | 117 | $ | — | $ | 776 | ||||||||||
Total
deposits
|
461,184 | 41,099 | 9,024 | — | 511,307 | |||||||||||||||
Federal
Home Loan Bank borrowings
|
— | 15,000 | 7,500 | — | 22,500 | |||||||||||||||
Secured
borrowings
|
330 | 163 | 861 | — | 1,354 | |||||||||||||||
Junior
subordinated debentures
|
— | — | — | 13,403 | 13,403 | |||||||||||||||
Total
long-term obligations
|
$ | 461,818 | $ | 56,617 | $ | 17,502 | $ | 13,403 | $ | 549,340 |
2008
|
2007
|
|
||||||
Commitments
to extend credit
|
$ | 101,459 | $ | 108,095 | ||||
Standby
letters of credit
|
1,519 | 3,489 |
Year
ended December 31,
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Return
on average assets
|
.16 | % | 1.08 | % | 1.26 | % | 1.31 | % | 1.41 | % | ||||||||||
Return
on average equity
|
1.83 | % | 11.46 | % | 13.16 | % | 12.70 | % | 14.21 | % | ||||||||||
Average
equity to average assets ratio
|
8.89 | % | 9.41 | % | 9.60 | % | 10.30 | % | 9.91 | % | ||||||||||
Dividend
payout ratio
|
35 | % | 82 | % | 75 | % | 78 | % | 81 | % |
Actual
|
Capital
Adequacy Purposes
|
|||||||||||||||
(dollars
in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||
December
31, 2008
|
||||||||||||||||
Tier
1 capital (to average assets)
|
||||||||||||||||
Consolidated
|
$ | 53,011 | 8.87 | % | $ | 23,905 | 4.00 | % | ||||||||
Bank
|
52,181 | 8.75 | % | 23,858 | 4.00 | % | ||||||||||
Tier
1 capital (to risk-weighted assets)
|
||||||||||||||||
Consolidated
|
53,011 | 10.54 | % | 20,117 | 4.00 | % | ||||||||||
Bank
|
52,181 | 10.40 | % | 20,068 | 4.00 | % | ||||||||||
Total
capital (to risk-weighted assets)
|
||||||||||||||||
Consolidated
|
59,315 | 11.79 | % | 40,233 | 8.00 | % | ||||||||||
Bank
|
58,470 | 11.65 | % | 40,137 | 8.00 | % | ||||||||||
December
31, 2007
|
||||||||||||||||
Tier
1 capital (to average assets)
|
||||||||||||||||
Consolidated
|
$ | 50,825 | 9.28 | % | $ | 21,906 | 4.00 | % | ||||||||
Bank
|
50,210 | 9.19 | % | 21,860 | 4.00 | % | ||||||||||
Tier
1 capital (to risk-weighted assets)
|
||||||||||||||||
Consolidated
|
50,825 | 11.37 | % | 17,887 | 4.00 | % | ||||||||||
Bank
|
50,210 | 11.26 | % | 17,840 | 4.00 | % | ||||||||||
Total
capital (to risk-weighted assets)
|
||||||||||||||||
Consolidated
|
55,832 | 12.49 | % | 35,774 | 8.00 | % | ||||||||||
Bank
|
55,217 | 12.38 | % | 35,679 | 8.00 | % |
(dollars in
thousands)
|
Due
in one year or less
|
Due
after one through five years
|
Due
after five years
|
Total
|
||||||||||||
Interest earning assets | ||||||||||||||||
Loans,
including loans held for sale
|
$ | 234,412 | $ | 167,618 | $ | 95,774 | $ | 497,804 | ||||||||
Investment
securities
|
2,707 | 6,912 | 46,260 | 55,879 | ||||||||||||
Fed
Funds sold and interest bearing balances
with banks
|
1,357 | — | — | 1,357 | ||||||||||||
Federal
Home Loan Bank stock
|
— | — | 2,170 | 2,170 | ||||||||||||
Total
interest earning assets
|
$ | 238,476 | $ | 174,530 | $ | 144,204 | $ | 557,210 | ||||||||
Interest bearing liabilities | ||||||||||||||||
Interest
bearing demand deposits
|
$ | 68,113 | $ | — | $ | — | $ | 68,113 | ||||||||
Savings
deposits
|
145,164 | — | — | 145,164 | ||||||||||||
Time
deposits
|
167,841 | 50,123 | — | 217,964 | ||||||||||||
Short
term borrowings
|
23,500 | — | — | 23,500 | ||||||||||||
Long
term borrowings
|
— | 22,500 | — | 22,500 | ||||||||||||
Secured
borrowings
|
330 | 1,024 | — | 1,354 | ||||||||||||
Junior
subordinated debentures
|
8,248 | 5,155 | — | 13,403 | ||||||||||||
Total
interest bearing liabilities
|
$ | 413,196 | $ | 78,802 | $ | — | $ | 491,998 | ||||||||
Net
interest rate sensitivity GAP
|
$ | (174,720 | ) | $ | 95,728 | $ | 144,204 | $ | 65,212 | |||||||
Cumulative
interest rate sensitivity GAP
|
(78,992 | ) | 65,212 | 65,212 | ||||||||||||
Cumulative
interest rate sensitivity GAP as
a % of earning assets
|
(14.2 | )% | 11.7 | % | 11.7 | % |
ITEM
7A.
|
Quantitative
and Qualitative Disclosures About Market
Risk
|
Expected
Maturity
|
||||||||||||||||||||||||||||||||
Year
ended December 31, 2008
|
There-
|
Fair
|
||||||||||||||||||||||||||||||
(dollars
in thousands)
|
2009
|
2010
|
2011
|
2012
|
2013
|
after
|
Total
|
Value
|
||||||||||||||||||||||||
Financial
Assets
|
||||||||||||||||||||||||||||||||
Cash
and cash equivalents
|
||||||||||||||||||||||||||||||||
Non-interest
bearing
|
$ | 16,182 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 16,182 | $ | 16,182 | ||||||||||||||||
Interest
bearing deposits in banks
|
582 | — | — | — | — | — | 582 | 582 | ||||||||||||||||||||||||
Weighted
average interest rate
|
— | — | — | — | — | — | ||||||||||||||||||||||||||
Federal
fund sold
|
775 | — | — | — | — | — | 775 | 775 | ||||||||||||||||||||||||
Weighted
average interest rate
|
.24 | % | — | — | — | — | ||||||||||||||||||||||||||
Securities
available for sale
|
||||||||||||||||||||||||||||||||
Fixed
rate
|
2,689 | 407 | 2,272 | 1,499 | 758 | 30,004 | 37,629 | 37,629 | ||||||||||||||||||||||||
Weighted
average interest rate
|
5.47 | % | 6.75 | % | 4.95 | % | 5.24 | % | 5.26 | % | 5.55 | % | ||||||||||||||||||||
Variable
rate
|
— | — | — | — | 1,017 | 10,847 | 11,864 | 11,864 | ||||||||||||||||||||||||
Weighted
average interest rate
|
— | — | — | — | 5.75 | % | 5.40 | % | ||||||||||||||||||||||||
Securities
held to maturity
|
||||||||||||||||||||||||||||||||
Fixed
rate
|
18 | 735 | — | — | 224 | 5,409 | 6,386 | 6,418 | ||||||||||||||||||||||||
Weighted
average interest rate
|
9.29 | % | 6.93 | % | — | — | 5.64 | % | 6.36 | % | ||||||||||||||||||||||
Loans
receivable
|
||||||||||||||||||||||||||||||||
Fixed
rate
|
21,882 | 7,775 | 9,121 | 8,931 | 14,680 | 47,323 | 109,712 | 96,931 | ||||||||||||||||||||||||
Weighted
average interest rate
|
7.03 | % | 6.00 | % | 7.05 | % | 7.09 | % | 5.76 | % | 6.28 | % | ||||||||||||||||||||
Adjustable
rate
|
319,284 | 24,398 | 23,777 | 9,300 | 16,936 | 2,172 | 388,092 | 343,666 | ||||||||||||||||||||||||
Weighted
average interest rate
|
6.21 | % | 8.15 | % | 6.69 | % | 8.06 | % | 6.86 | % | 7.33 | % | ||||||||||||||||||||
Federal
Home Loan Bank stock
|
— | — | — | — | — | 2,170 | 2,170 | 2,170 | ||||||||||||||||||||||||
Weighted
average interest rate
|
— | — | — | — | — | — | ||||||||||||||||||||||||||
Financial
Liabilities
|
||||||||||||||||||||||||||||||||
Non-interest
bearing deposits
|
$ | 12,010 | $ | 10,208 | $ | 8,677 | $ | 7,376 | $ | 6,269 | $ | 35,526 | $ | 80,066 | $ | 80,066 | ||||||||||||||||
Interest
bearing checking accounts
|
17,028 | 12,771 | 9,578 | 7,184 | 5,388 | 16,164 | 68,113 | 68,113 | ||||||||||||||||||||||||
Weighted
average interest rate
|
1.03 | % | 1.03 | % | 1.03 | % | 1.03 | % | 1.03 | % | 1.03 | % | ||||||||||||||||||||
Money
Market accounts
|
23,304 | 17,478 | 13,108 | 9,831 | 7,373 | 22,121 | 93,215 | 93,215 | ||||||||||||||||||||||||
Weighted
average interest rate
|
1.12 | % | 1.12 | % | 1.12 | % | 1.12 | % | 1.12 | % | 1.12 | % | ||||||||||||||||||||
Savings
accounts
|
10,390 | 8,312 | 6,649 | 5,320 | 4,256 | 17,022 | 51,949 | 51,949 | ||||||||||||||||||||||||
Weighted
average interest rate
|
.79 | % | .79 | % | .79 | % | .79 | % | .79 | % | .79 | % | ||||||||||||||||||||
Certificates
of deposit
|
||||||||||||||||||||||||||||||||
Fixed
rate
|
165,881 | 27,709 | 12,926 | 4,538 | 4,486 | — | 215,540 | 217,159 | ||||||||||||||||||||||||
Weighted
average interest rate
|
2.89 | % | 3.78 | % | 4.40 | % | 4.62 | % | 3.75 | % | — | |||||||||||||||||||||
Variable
rate
|
1,960 | 464 | — | — | — | — | 2,424 | 2,424 | ||||||||||||||||||||||||
Weighted
average interest rate
|
2.19 | % | 2.24 | % | — | — | — | — | ||||||||||||||||||||||||
Short
Term borrowings
|
23,500 | — | — | — | — | — | 23,500 | 23,779 | ||||||||||||||||||||||||
Weighted
average interest rate
|
2.37 | % | — | — | — | — | — | |||||||||||||||||||||||||
Long
Term Borrowings
|
||||||||||||||||||||||||||||||||
Fixed
rate
|
— | 4,500 | 10,500 | 5,000 | 2,500 | — | 22,500 | 23,033 | ||||||||||||||||||||||||
Weighted
average interest rate
|
— | 3.77 | % | 3.85 | % | 3.76 | % | 3.45 | % | — | ||||||||||||||||||||||
Secured
borrowings
|
330 | — | 163 | 861 | — | — | 1,354 | 1,354 | ||||||||||||||||||||||||
Weighted
average interest rate
|
6.81 | % | — | 6.66 | % | 6.56 | % | — | ||||||||||||||||||||||||
Junior
subordinated debentures
|
— | — | — | — | — | 13,403 | 13,403 | 7,113 | ||||||||||||||||||||||||
Weighted
average interest rate
|
— | — | — | — | — | 6.67 | % |
ITEM
8.
|
Financial
Statements and Supplementary Data
|
ITEM
9.
|
Changes
in and disagreements with accountants on accounting and financial
disclosure
|
ITEM
9A.
|
Controls
and Procedures
|
ITEM 9B.
|
Other
Information
|
ITEM
10.
|
Directors
and Executive Officers of the
Registrant
|
ITEM
11.
|
Executive
Compensation
|
ITEM
12.
|
Security
Ownership of Certain Beneficial Owners and Management and
RelatedStockholder
Matters
|
ITEM
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
ITEM
14.
|
Principal
Accountant Fees and Services
|
ITEM
15.
|
Exhibits
and Financial Statement Schedules
|
(a)
|
(1) The
following financial statements are filed below:
|
||
Report
of Independent Registered Public Accounting Firm – Deloitte & Touche
LLP
|
F-1
|
||
Consolidated
Balance Sheets
|
F-2
|
||
Consolidated
Statements of Income
|
F-3
|
||
Consolidated
Statements of Shareholders’ Equity
|
F-4
|
||
Consolidated
Statements of Cash Flows
|
F-5
|
||
Notes
to Consolidated Financial Statements
|
F-7
|
||
(a)
|
(2) Schedules: None
|
||
(a)
|
(3) Exhibits: See
Exhibit Index immediately following the signature page.
|
2008
|
2007
|
|||||||
Assets
|
||||||||
Cash
and due from banks
|
$ | 16,182 | $ | 15,044 | ||||
Interest
bearing deposits in banks
|
582 | 253 | ||||||
Federal
funds sold
|
775 | — | ||||||
Securities
available for sale, at fair value (amortized cost of $52,930 and
$43,323)
|
49,493 | 42,912 | ||||||
Securities
held to maturity (fair value of $6,418 and $4,368)
|
6,386 | 4,329 | ||||||
Federal
Home Loan Bank stock, at cost
|
2,170 | 1,858 | ||||||
Loans
held for sale
|
11,486 | 17,162 | ||||||
Loans
|
486,318 | 438,911 | ||||||
Allowance
for credit losses
|
7,623 | 5,007 | ||||||
Loans
- net
|
478,695 | 433,904 | ||||||
Premises
and equipment
|
16,631 | 15,427 | ||||||
Foreclosed
real estate
|
6,810 | — | ||||||
Accrued
interest receivable
|
2,772 | 3,165 | ||||||
Cash
surrender value of life insurance
|
15,718 | 15,111 | ||||||
Goodwill
|
11,282 | 11,282 | ||||||
Other
intangible assets
|
1,587 | 1,728 | ||||||
Other
assets
|
5,266 | 3,412 | ||||||
Total
assets
|
$ | 625,835 | $ | 565,587 | ||||
Liabilities
and Shareholders’ Equity
|
||||||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Demand,
non-interest bearing
|
$ | 80,066 | $ | 86,883 | ||||
Savings
and interest-bearing demand
|
213,277 | 204,775 | ||||||
Time,
interest-bearing
|
217,964 | 175,678 | ||||||
Total
deposits
|
511,307 | 467,336 | ||||||
Accrued
interest payable
|
1,002 | 1,399 | ||||||
Secured
borrowings
|
1,354 | 1,418 | ||||||
Short-term
borrowings
|
23,500 | 10,125 | ||||||
Long-term
borrowings
|
22,500 | 12,500 | ||||||
Junior
subordinated debentures
|
13,403 | 13,403 | ||||||
Other
liabilities
|
2,695 | 8,707 | ||||||
Total
liabilities
|
575,761 | 514,888 | ||||||
Commitments
and Contingencies (See note 12)
|
— | — | ||||||
Shareholders’
Equity
|
||||||||
Common
stock (par value $1); authorized: 25,000,000
shares;
issued
and outstanding: 2008 – 7,317,430 shares; 2007 – 6,606,545
shares
|
7,318 | 6,607 | ||||||
Additional
paid-in capital
|
31,626 | 27,163 | ||||||
Retained
earnings
|
13,937 | 17,807 | ||||||
Accumulated
other comprehensive loss
|
(2,807 | ) | (878 | ) | ||||
Total
shareholders’ equity
|
50,074 | 50,699 | ||||||
|
||||||||
Total
liabilities and shareholders’ equity
|
$ | 625,835 | $ | 565,587 |
2008
|
2007
|
2006
|
||||||||||
Interest
and Dividend Income
|
||||||||||||
Loans
|
$ | 31,215 | $ | 37,658 | $ | 33,883 | ||||||
Federal
funds sold and deposits in banks
|
44 | 426 | 909 | |||||||||
Securities
available for sale:
|
||||||||||||
Taxable
|
1,610 | 1,290 | 946 | |||||||||
Tax-exempt
|
609 | 528 | 434 | |||||||||
Securities
held to maturity:
|
||||||||||||
Taxable
|
38 | 46 | 57 | |||||||||
Tax-exempt
|
178 | 181 | 215 | |||||||||
Federal
Home Loan Bank stock dividends
|
19 | 7 | — | |||||||||
Total
interest and dividend income
|
33,713 | 40,136 | 36,444 | |||||||||
|
||||||||||||
Interest
Expense
|
||||||||||||
Deposits
|
9,794 | 13,460 | 10,846 | |||||||||
Short-term
borrowings
|
349 | 329 | 75 | |||||||||
Long-term
borrowings
|
991 | 820 | 868 | |||||||||
Secured
borrowings
|
94 | 110 | 141 | |||||||||
Junior
subordinated debentures
|
770 | 914 | 647 | |||||||||
Total
interest expense
|
11,998 | 15,633 | 12,577 | |||||||||
Net
interest income
|
21,715 | 24,503 | 23,867 | |||||||||
Provision
for Credit Losses
|
4,791 | 482 | 625 | |||||||||
Net
interest income after provision for credit losses
|
16,924 | 24,021 | 23,242 | |||||||||
Non-Interest
Income
|
||||||||||||
Service
charges on deposit accounts
|
1,577 | 1,494 | 1,452 | |||||||||
Income
from and gains on sale of foreclosed real estate
|
390 | — | 5 | |||||||||
Net
gains from sales of loans
|
1,426 | 1,984 | 1,895 | |||||||||
Net
loss on sales of securities available for sale
|
(165 | ) | (20 | ) | — | |||||||
Earnings
on bank owned life insurance
|
607 | 397 | 354 | |||||||||
Other
operating income
|
1,222 | 620 | 470 | |||||||||
Total
non-interest income
|
5,057 | 4,475 | 4,176 | |||||||||
Non-Interest
Expense
|
||||||||||||
Salaries
and employee benefits
|
12,381 | 12,280 | 10,609 | |||||||||
Occupancy
|
1,565 | 1,336 | 1,266 | |||||||||
Equipment
|
1,290 | 1,192 | 1,152 | |||||||||
State
taxes
|
366 | 436 | 375 | |||||||||
Data
processing
|
764 | 393 | 422 | |||||||||
Professional
services
|
828 | 541 | 647 | |||||||||
Other
|
4,397 | 4,201 | 3,647 | |||||||||
Total
non-interest expense
|
21,591 | 20,379 | 18,118 | |||||||||
Income
before income taxes
|
390 | 8,117 | 9,300 | |||||||||
Income
Taxes
|
(561 | ) | 2,086 | 2,749 | ||||||||
Net
income
|
$ | 951 | $ | 6,031 | $ | 6,551 | ||||||
Earnings
Per Share
|
||||||||||||
Basic
|
$ | 0.13 | $ | 0.83 | $ | 0.92 | ||||||
Diluted
|
$ | 0.13 | $ | 0.82 | $ | 0.90 | ||||||
Weighted
Average Shares Outstanding:
|
||||||||||||
Basic
|
7,311,611 | 7,239,323 | 7,131,707 | |||||||||
Diluted
|
7,328,168 | 7,334,846 | 7,244,388 |
Accumulated
|
||||||||||||||||||||||||
Shares
of
|
Additional
|
Other
|
||||||||||||||||||||||
Common
|
Common
|
Paid-in
|
Retained
|
Comprehensive
|
||||||||||||||||||||
Stock
|
Stock
|
Capital
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||||
Balance
at January 1, 2006
|
6,464,536 | $ | 6,464 | $ | 25,386 | $ | 15,073 | $ | (323 | ) | $ | 46,600 | ||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Net
income
|
— | — | — | 6,551 | — | 6,551 | ||||||||||||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||||||||||
Change
in fair value of
securities
available for sale
|
— | — | — | — | 5 | 5 | ||||||||||||||||||
Comprehensive
income
|
6,556 | |||||||||||||||||||||||
Stock
options exercised
|
44,945 | 45 | 364 | — | — | 409 | ||||||||||||||||||
Issuance
of common stock
|
14,926 | 15 | 218 | — | — | 233 | ||||||||||||||||||
Stock
compensation expense
|
— | — | 36 | — | — | 36 | ||||||||||||||||||
Cash
dividends declared ($0.75 per share)
|
— | — | — | (4,893 | ) | — | (4, 893 | ) | ||||||||||||||||
Tax
benefit from exercies of stock options
|
— | — | 43 | — | — | 43 | ||||||||||||||||||
Balance
at December 31, 2006
|
6,524,407 | $ | 6,524 | $ | 26,047 | $ | 16,731 | $ | (318 | ) | $ | 48,984 | ||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Net
income
|
— | — | — | 6,031 | — | 6,031 | ||||||||||||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||||||||||
Change
in fair value of
|
||||||||||||||||||||||||
securities
available for sale
|
— | — | — | — | 46 | 46 | ||||||||||||||||||
Prior
service cost at initiation of
|
||||||||||||||||||||||||
defined
benefit plan
|
— | — | — | — | (704 | ) | (704 | ) | ||||||||||||||||
Amortization
of unrecognized prior
|
||||||||||||||||||||||||
service
costs and net gains/losses
|
— | — | — | — | 98 | 98 | ||||||||||||||||||
Comprehensive
income
|
5,471 | |||||||||||||||||||||||
Stock
options exercised
|
74,026 | 74 | 775 | — | — | 849 | ||||||||||||||||||
Issuance
of common stock
|
25,012 | 25 | 395 | — | — | 420 | ||||||||||||||||||
Common
stock repurchased and retired
|
(16,900 | ) | (16 | ) | (203 | ) | (219 | ) | ||||||||||||||||
Stock
compensation expense
|
— | — | 97 | — | — | 97 | ||||||||||||||||||
Cash
dividends declared ($0.75 per share)
|
— | — | — | (4,955 | ) | — | (4,955 | ) | ||||||||||||||||
Tax
benefit from exercise of stock options
|
— | — | 52 | — | — | 52 | ||||||||||||||||||
Balance
at December 31, 2007
|
6,606,545 | $ | 6,607 | $ | 27,163 | $ | 17,807 | $ | (878 | ) | $ | 50,699 | ||||||||||||
Comprehensive
income (loss):
|
||||||||||||||||||||||||
Net
income
|
— | — | — | 951 | — | 951 | ||||||||||||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||||||||||
Change
in fair value of
|
||||||||||||||||||||||||
securities
available for sale
|
— | — | — | — | (1,997 | ) | (1,997 | ) | ||||||||||||||||
Amortization
of unrecognized prior
|
||||||||||||||||||||||||
service
costs and net gains/losses
|
— | — | — | — | 68 | 68 | ||||||||||||||||||
Comprehensive
income (loss)
|
(978 | ) | ||||||||||||||||||||||
Stock
options exercised
|
6,656 | 6 | 52 | — | — | 58 | ||||||||||||||||||
Issuance
of common stock
|
41,672 | 42 | 524 | — | — | 566 | ||||||||||||||||||
Common
stock repurchased and retired
|
(2,300 | ) | (2 | ) | (24 | ) | (26 | ) | ||||||||||||||||
Stock
compensation expense
|
— | — | 87 | — | — | 87 | ||||||||||||||||||
Cash
dividends declared ($0.05 per share)
|
— | — | — | (333 | ) | — | (333 | ) | ||||||||||||||||
Stock
dividends declared (10%)
|
664,857 | 665 | 3,823 | (4,488 | ) | — | — | |||||||||||||||||
Tax
benefit from exercise of stock options
|
— | — | 1 | — | — | 1 | ||||||||||||||||||
Balance
at December 31, 2008
|
7,317,430 | $ | 7,318 | $ | 31,626 | $ | 13,937 | $ | (2,807 | ) | $ | 50,074 |
2008
|
2007
|
2006
|
||||||||||
Cash
Flows from Operating Activities
|
||||||||||||
Net
income
|
$ | 951 | $ | 6,031 | $ | 6,551 | ||||||
Adjustments
to reconcile net income to net cash
|
||||||||||||
provided
by operating activities:
|
||||||||||||
Depreciation
and amortization
|
1,604 | 1,476 | 1,257 | |||||||||
Provision
for credit losses
|
4,791 | 482 | 625 | |||||||||
Deferred
income taxes
|
(752 | ) | (305 | ) | 759 | |||||||
Originations
of loans held for sale
|
(96,986 | ) | (123,406 | ) | (109,444 | ) | ||||||
Proceeds
from sales of loans held for sale
|
99,709 | 122,549 | 107,082 | |||||||||
Net
gains on sales of loans
|
(1,426 | ) | (1,984 | ) | (1,895 | ) | ||||||
Loss
on sales of securities available for sale
|
165 | 20 | — | |||||||||
Gain
on sales of foreclosed real estate
|
(390 | ) | — | (5 | ) | |||||||
(Gain)
loss on sale of premises and equipment
|
(301 | ) | 18 | 3 | ||||||||
Earnings
on bank owned life insurance
|
(607 | ) | (397 | ) | (354 | ) | ||||||
(Increase)
decrease in accrued interest receivable
|
393 | (159 | ) | (642 | ) | |||||||
Increase
(decrease) in accrued interest payable
|
(397 | ) | (16 | ) | 868 | |||||||
Write-down
of foreclosed real estate
|
73 | — | — | |||||||||
Other
- net
|
(1,151 | ) | 1,129 | (864 | ) | |||||||
Net
cash provided by operating activities
|
5,676 | 5,438 | 3,941 | |||||||||
Cash
Flows from Investing Activities
|
||||||||||||
Net
(increase) decrease in interest bearing deposits in banks
|
(329 | ) | 5,226 | (5,196 | ) | |||||||
Net
(increase) decrease in federal funds sold
|
(775 | ) | 20,345 | (20,345 | ) | |||||||
Activity
in securities available for sale:
|
||||||||||||
Sales
|
5,208 | 805 | — | |||||||||
Maturities,
prepayments and calls
|
5,921 | 8,807 | 4,822 | |||||||||
Purchases
|
(21,254 | ) | (15,090 | ) | (11,783 | ) | ||||||
Activity
in securities held to maturity:
|
||||||||||||
Maturities
|
828 | 943 | 392 | |||||||||
Purchases
|
(2,888 | ) | — | — | ||||||||
Investment
in PFC Statutory Trust II
|
— | — | (248 | ) | ||||||||
Proceeds
from sales of SBA loan pools
|
— | 1,139 | — | |||||||||
Increase
in loans made to customers, net of principal collections
|
(53,408 | ) | (14,821 | ) | (27,959 | ) | ||||||
Purchases
of premises and equipment
|
(2,933 | ) | (5,191 | ) | (2,718 | ) | ||||||
Proceeds
from sales of premises and equipment
|
668 | 190 | 4 | |||||||||
Proceeds
from sales of foreclosed real estate
|
1,499 | — | 42 | |||||||||
Purchase
of bank owned life insurance
|
— | (5,000 | ) | — | ||||||||
Deposit
assumption and transfer
|
— | — | (1,268 | ) | ||||||||
Net
cash used in investing activities
|
(67,463 | ) | (2,647 | ) | (64,257 | ) |
2008
|
2007
|
2006
|
||||||||||
Cash
Flows from Financing Activities
|
||||||||||||
Net
increase in deposits
|
$ | 43,971 | $ | 495 | $ | 67,115 | ||||||
Net
increase (decrease) in short-term borrowings
|
6,875 | 3,125 | (3,985 | ) | ||||||||
Decrease
in secured borrowings
|
(64 | ) | (488 | )) | (244 | ) | ||||||
Proceeds
from issuance of long-term borrowings
|
23,500 | — | 2,000 | |||||||||
Repayments
of long-term borrowings
|
(7,000 | ) | (2,000 | ) | (5,000 | ) | ||||||
Proceeds
from junior subordinated debentures
|
— | — | 8,248 | |||||||||
Common
stock issued
|
624 | 1,269 | 642 | |||||||||
Repurchase
and retirement of common stock
|
(26 | ) | (219 | ) | — | |||||||
Cash
dividends paid
|
(4,955 | ) | (4,893 | ) | (4,719 | ) | ||||||
Net
cash provided by (used in) financing activities
|
62,925 | (2,711 | ) | 64,057 | ||||||||
Net
change in cash and due from banks
|
1,138 | 80 | 3,741 | |||||||||
Cash
and Due from Banks
|
||||||||||||
Beginning
of year
|
15,044 | 14,964 | 11,223 | |||||||||
End
of year
|
$ | 16,182 | $ | 15,044 | $ | 14,964 | ||||||
Supplemental
Disclosures of Cash Flow Information
|
||||||||||||
Interest
paid
|
$ | 12,395 | $ | 15,649 | $ | 11,709 | ||||||
Income
taxes paid
|
1,091 | 2,297 | 1,667 | |||||||||
Supplemental
Disclosures of Non-Cash Investing Activities
|
||||||||||||
Fair
value adjustment of securities available for sale, net of
tax
|
$ | (1,997 | ) | $ | 46 | $ | 5 | |||||
Transfer
of securities held to maturity to available for sale
|
— | 825 | — | |||||||||
Transfer
of loans held for sale to loans held for investment
|
4,259 | — | — | |||||||||
Foreclosed
real estate acquired in settlement of loans
|
(7,992 | ) | — | — | ||||||||
Reclass
of long-term borrowings to short-term borrowings
|
6,500 | — | — |
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
Securities
Available for Sale
|
Cost
|
Gains
|
Losses
|
Value
|
||||||||||||
December
31, 2008
|
||||||||||||||||
U.S.
Government agency securities
|
$ | 1,671 | $ | 88 | $ | — | $ | 1,759 | ||||||||
Obligations
of states and political subdivisions
|
19,876 | 158 | 450 | 19,584 | ||||||||||||
Mortgage-backed
securities
|
30,370 | 330 | 3,495 | 27,205 | ||||||||||||
Corporate
bonds
|
1,013 | — | 68 | 945 | ||||||||||||
Mutual
funds
|
— | — | — | — | ||||||||||||
Total
|
$ | 52,930 | $ | 576 | $ | 4,013 | $ | 49,493 | ||||||||
December
31, 2007
|
||||||||||||||||
U.S.
Government agency securities
|
$ | 3,796 | $ | 22 | $ | — | $ | 3,818 | ||||||||
Obligations
of states and political subdivisions
|
16,248 | 83 | 195 | 16,136 | ||||||||||||
Mortgage-backed
securities
|
18,706 | 23 | 189 | 18,540 | ||||||||||||
Corporate
bonds
|
1,532 | — | 20 | 1,512 | ||||||||||||
Mutual
funds
|
3,041 | — | 135 | 2,906 | ||||||||||||
Total
|
$ | 43,323 | $ | 128 | $ | 539 | $ | 42,912 | ||||||||
Securities
Held to Maturity
|
||||||||||||||||
December
31, 2008
|
||||||||||||||||
State
and municipal securities
|
$ | 5,750 | $ | 40 | $ | 12 | $ | 5,778 | ||||||||
Mortgage-backed
securities
|
636 | 5 | 1 | 640 | ||||||||||||
Total
|
$ | 6,386 | $ | 45 | $ | 13 | $ | 6,418 | ||||||||
December
31, 2007
|
||||||||||||||||
State
and municipal securities
|
$ | 3,562 | $ | 48 | $ | 5 | $ | 3,605 | ||||||||
Mortgage-backed
securities
|
767 | — | 4 | 763 | ||||||||||||
Total
|
$ | 4,329 | $ | 48 | $ | 9 | $ | 4,368 |
Less
than 12
Months
|
More
than 12
Months
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Loss
|
Value
|
Loss
|
Value
|
Loss
|
|||||||||||||||||||
December
31, 2008
|
||||||||||||||||||||||||
Available
for Sale
|
||||||||||||||||||||||||
Obligations
of states and
|
||||||||||||||||||||||||
political
subdivisions
|
$ | 8,756 | $ | 349 | $ | 889 | $ | 101 | $ | 9,645 | $ | 450 | ||||||||||||
Mortgage-backed
securities
|
10,522 | 3,006 | 4,302 | 489 | 14,824 | 3,495 | ||||||||||||||||||
Corporate
bonds
|
945 | 68 | — | — | 945 | 68 | ||||||||||||||||||
Mutual
funds
|
— | — | — | — | — | — | ||||||||||||||||||
Total
|
$ | 20,223 | $ | 3,423 | $ | 5,191 | $ | 590 | $ | 25,414 | $ | 4,013 | ||||||||||||
Held
to Maturity
|
||||||||||||||||||||||||
State
and municipal securities
|
$ | 378 | $ | 12 | $ | — | $ | — | $ | 378 | $ | 12 | ||||||||||||
Mortgage-backed
securities
|
160 | 1 | — | — | 160 | 1 | ||||||||||||||||||
Total
|
$ | 538 | $ | 13 | $ | — | $ | — | $ | 538 | $ | 13 | ||||||||||||
December
31, 2007
|
||||||||||||||||||||||||
Available
for Sale
|
||||||||||||||||||||||||
Obligations
of states and
|
||||||||||||||||||||||||
political
subdivisions
|
$ | 2,984 | $ | 38 | $ | 6,460 | $ | 157 | $ | 9,444 | $ | 195 | ||||||||||||
Mortgage-backed
securities
|
10,582 | 88 | 4,435 | 101 | 15,017 | 189 | ||||||||||||||||||
Corporate
bonds
|
— | — | 1,512 | 20 | 1,512 | 20 | ||||||||||||||||||
Mutual
funds
|
— | — | 2,906 | 135 | 2,906 | 135 | ||||||||||||||||||
Total
|
$ | 13,566 | $ | 126 | $ | 15,313 | $ | 413 | $ | 28,879 | $ | 539 | ||||||||||||
Held
to Maturity
|
||||||||||||||||||||||||
State
and municipal securities
|
$ | 83 | $ | — | $ | 980 | $ | 5 | $ | 1,063 | $ | 5 | ||||||||||||
Mortgage-backed
securities
|
— | — | 763 | 4 | 763 | 4 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total
|
$ | 83 | $ | — | $ | 1,743 | $ | 9 | $ | 1,826 | $ | 9 |
Held
to Maturity
|
Available
for Sale
|
|||||||||||||||
Amortized
|
Fair
|
Amortized
|
Fair
|
|||||||||||||
Cost
|
Value
|
Cost
|
Value
|
|||||||||||||
Due
in one year or less
|
$ | 17 | $ | 17 | $ | 2,583 | $ | 2,520 | ||||||||
Due
from one year to five years
|
960 | 974 | 5,730 | 5,856 | ||||||||||||
Due
from five to ten years
|
807 | 824 | 3,576 | 3,582 | ||||||||||||
Due
after ten years
|
3,966 | 3,963 | 10,671 | 10,330 | ||||||||||||
Mortgage-backed
securities
|
636 | 640 | 30,370 | 27,205 | ||||||||||||
Total
|
$ | 6,386 | $ | 6,418 | $ | 52,930 | $ | 49,493 |
2008
|
2007
|
|||||||
Commercial
and agricultural
|
$ | 91,888 | $ | 128,145 | ||||
Real
estate:
|
||||||||
Construction
|
100,725 | 93,249 | ||||||
Residential
1-4 family
|
82,468 | 60,616 | ||||||
Multi-family
|
7,860 | 6,353 | ||||||
Commercial
|
188,444 | 137,620 | ||||||
Farmland
|
18,092 | 20,125 | ||||||
Consumer
|
9,252 | 10,646 | ||||||
498,729 | 456,754 | |||||||
Less
unearned income
|
(925 | ) | (681 | ) | ||||
Total
|
$ | 497,804 | $ | 456,073 |
2008
|
2007
|
2006
|
||||||||||
Balance
at beginning of year
|
$ | 5,007 | $ | 4,033 | $ | 5,296 | ||||||
Provision
for credit losses
|
4,791 | 482 | 625 | |||||||||
Charge-offs
|
(2,226 | ) | (151 | ) | (1,945 | ) | ||||||
Recoveries
|
51 | 643 | 57 | |||||||||
Net
(charge-offs) recoveries
|
(2,175 | ) | 492 | (1,888 | ) | |||||||
|
||||||||||||
Balance
at end of year
|
$ | 7,623 | $ | 5,007 | $ | 4,033 |
2008
|
2007
|
2006
|
||||||||||
December
31
|
||||||||||||
Impaired
loans without a valuation allowance
|
$ | 21,655 | $ | 3,379 | $ | 7,328 | ||||||
Impaired
loans with a valuation allowance
|
462 | 3,052 | 51 | |||||||||
Total
impaired loans
|
$ | 22,117 | $ | 6,431 | $ | 7,739 | ||||||
Valuation
allowance related to impaired loans
|
$ | 118 | $ | 72 | $ | 17 | ||||||
Years
Ended December 31
|
||||||||||||
Average
investment in impaired loans
|
$ | 16,915 | $ | 2,938 | $ | 6,475 | ||||||
Interest
income recognized on a cash basis on impaired loans
|
34 | 457 | 272 |
2008
|
2007
|
|||||||
Land
and premises
|
$ | 16,546 | $ | 12,261 | ||||
Equipment,
furniture and fixtures
|
7,585 | 7,569 | ||||||
Construction
in progress
|
835 | 4,462 | ||||||
24,966 | 24,292 | |||||||
Less
accumulated depreciation and amortization
|
8,335 | 8,865 | ||||||
Total
premises and equipment
|
$ | 16,631 | $ | 15,427 |
2009
|
$ | 304 | ||
2010
|
229 | |||
2011
|
126 | |||
2012
|
63 | |||
2013
|
54 | |||
Total
minimum payments required
|
$ | 776 |
2008
|
2007
|
|||||||
Demand
deposits, non-interest bearing
|
$ | 80,066 | $ | 86,883 | ||||
NOW
and money market accounts
|
161,329 | 149,565 | ||||||
Savings
deposits
|
51,948 | 55,210 | ||||||
Time
certificates, $100,000 or more
|
143,991 | 99,540 | ||||||
Other
time certificates
|
73,973 | 76,138 | ||||||
Total
|
$ | 511,307 | $ | 467,336 |
2009
|
$ | 167,841 | ||
2010
|
28,173 | |||
2011
|
12,926 | |||
2012
|
4,538 | |||
2013
|
4,486 | |||
Total
|
$ | 217,964 |
|
2008
|
2007
|
2006
|
|||||||||
Amount
outstanding at end of year
|
$ | 23,500 | $ | 10,125 | $ | — | ||||||
Weighted
average interest rate at December 31
|
2.37 | % | 4.26 | % | — | |||||||
Maximum
month-end balance during the year
|
34,290 | 18,695 | 6,500 | |||||||||
Average
balance during the year
|
13,398 | 5,961 | 1,388 | |||||||||
Average
interest rate during the year
|
2.61 | % | 5.52 | % | 5.40 | % |
Issuance
|
Preferred
|
Rate
|
Initial
|
Rate
at
|
Maturity
|
||||||||||||||||
Issuance
Trust
|
Date
|
Security
|
Type
|
Rate
|
12/31/08
|
Date
|
|||||||||||||||
PFC
Statutory Trust I
|
12/2005
|
$ | 5,000 |
Fixed
|
(1) | 6.39 | % | 6.39 | % | 3/2036 | |||||||||||
PFC
Statutory Trust II
|
6/2006
|
$ | 8,000 |
Variable
|
(2) | 7.02 | % | 6.42 | % | 7/2036 |
(1)
|
Fixed
rate until March 15, 2011, at which time becomes a variable rate, adjusted
quarterly, equal to 145 basis points over the three month LIBOR
rate.
|
(2)
|
The
variable rate preferred securities reprice
quarterly.
|
2008
|
2007
|
2006
|
||||||||||
Current
|
$ | 191 | $ | 2,391 | $ | 1,990 | ||||||
Deferred
provision (benefit)
|
(752 | ) | (305 | ) | 759 | |||||||
Total
income taxes (benefit)
|
$ | (561 | ) | $ | 2,086 | $ | 2,749 |
2008
|
2007
|
|||||||
Deferred
Tax Assets
|
||||||||
Allowance
for credit losses
|
$ | 2,521 | $ | 1,579 | ||||
Deferred
compensation
|
136 | 160 | ||||||
Supplemental
executive retirement plan
|
341 | 275 | ||||||
Unrealized
loss on securities available for sale
|
1,169 | 140 | ||||||
Loan
fees/costs
|
274 | 242 | ||||||
Other
|
145 | 132 | ||||||
Total
deferred tax assets
|
4,586 | 2,528 | ||||||
Deferred
Tax Liabilities
|
||||||||
Depreciation
|
$ | 251 | $ | 88 | ||||
Loan
fees/costs
|
2,447 | 2,346 | ||||||
Core
deposit intangible
|
109 | 157 | ||||||
Other
|
439 | 378 | ||||||
Total
deferred tax liabilities
|
3,246 | 2,969 | ||||||
Net
deferred tax assets (liabilities)
|
$ | 1,340 | $ | (441 | ) |
2008
|
2007
|
2006
|
||||||||||||||||||||||
|
Percent
|
|
Percent
|
|
Percent
|
|||||||||||||||||||
|
of
Pre-tax
|
|
of
Pre-tax
|
|
Pre-tax
|
|||||||||||||||||||
Amount
|
Income
|
Amount
|
Income
|
Amount
|
Income
|
|||||||||||||||||||
Income
tax at statutory rate
|
$ | 137 | 35.0 | % | $ | 2,841 | 35.0 | % | $ | 3,255 | 35.0 | % | ||||||||||||
Adjustments
resulting from:
|
||||||||||||||||||||||||
Tax-exempt
income
|
(371 | ) | (95.1 | ) | (316 | ) | (3.9 | ) | (275 | ) | (2.9 | ) | ||||||||||||
Net
earnings on life insurance policies
|
(199 | ) | (51.0 | ) | (139 | ) | (1.7 | ) | (112 | ) | (1.2 | ) | ||||||||||||
Other
|
(128 | ) | (32.8 | ) | (300 | ) | (3.7 | ) | (119 | ) | (1.3 | ) | ||||||||||||
Total
income tax expense
|
||||||||||||||||||||||||
(benefit)
|
$ | (561 | ) | (143.8 | )% | $ | 2,086 | 25.7 | % | $ | 2,749 | 29.6 | % |
2008
|
2007
|
|||||||
Net periodic pension cost: | ||||||||
Service
Cost
|
$ | 93 | $ | 91 | ||||
Interest
Cost
|
48 | 41 | ||||||
Amortization
of prior service cost
|
70 | 70 | ||||||
Amortization
of net (gain)/loss
|
(2 | ) | — | |||||
Net
periodic pension cost
|
$ | 209 | $ | 202 | ||||
Weighted
average assumptions:
|
||||||||
Discount
rate
|
6.38 | % | 5.94 | % | ||||
Rate
of compensation increases
|
3.00 | 5.00 |
2008
|
2007
|
|||||||
Change
in Benefit Obligation:
|
||||||||
Benefit
obligation at beginning of year
|
$ | 808 | $ | 704 | ||||
Service
cost
|
93 | 91 | ||||||
Interest
cost
|
48 | 41 | ||||||
Actuarial
gain
|
— | (28 | ) | |||||
Benefit
obligation at end of year
|
$ | 949 | $ | 808 |
2008
|
2007
|
|||||||
Net
gain
|
$ | (25 | ) | $ | (28 | ) | ||
Prior
service cost
|
564 | 634 | ||||||
Total
recognized in accumulative other comprehensive loss
|
$ | 538 | $ | 606 |
2008
|
2007
|
|||||||
Projected
benefit obligation
|
$ | 949 | $ | 808 | ||||
Accumulated
benefit obligation
|
765 | 633 |
2009
– 2013
|
$ | 0 | ||
2014
– 2018
|
397 |
2008
|
2007
|
|||||||
Commitments
to extend credit
|
$ | 101,459 | $ | 108,095 | ||||
Standby
letters of credit
|
1,519 | 3,489 |
Grant
period ended
|
Expected
Life
|
Risk
Free
Interest
Rate
|
Expected
Volatility
|
Dividend
Yield
|
Average
Fair
Value
|
|||||||||||||
December
31, 2008
|
6.5
years
|
3.75 | % | 16.19 | % | 6.05 | % | $ | 0.83 | |||||||||
December
31, 2007
|
6.5
years
|
4.59 | % | 15.66 | % | 4.92 | % | $ | 1.54 | |||||||||
December
31, 2006
|
6.5
years
|
4.97 | % | 16.53 | % | 4.83 | % | $ | 1.71 |
2008
|
2007
|
2006
|
||||||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||||
Average
|
Average
|
Average
|
||||||||||||||||||||||
Exercise
|
Exercise
|
Exercise
|
||||||||||||||||||||||
Shares
|
Price
|
Shares
|
Price
|
Shares
|
Price
|
|||||||||||||||||||
Outstanding
at beginning of year
|
689,868 | $ | 12.55 | 769,702 | $ | 12.45 | 756,442 | $ | 12.07 | |||||||||||||||
Granted
|
8,250 | 11.27 | 106,975 | 13.93 | 62,700 | 13.75 | ||||||||||||||||||
Exercised
|
(7,321 | ) | 7.93 | (81,429 | ) | 10.43 | (49,440 | ) | 8.30 | |||||||||||||||
Expired
|
— | — | (1,870 | ) | 5.35 | — | — | |||||||||||||||||
Forfeited
|
(6,270 | ) | 12.42 | (103,510 | ) | 15.09 | — | — | ||||||||||||||||
Outstanding
at end of year
|
684,527 | $ | 12.58 | 689,868 | $ | 12.55 | 769,702 | $ | 12.45 | |||||||||||||||
Exercisable
at end of year
|
557,587 | $ | 12.32 | 495,985 | $ | 12.24 | 627,575 | $ | 12.42 |
2008
|
2007
|
|||||||||||||||
Shares
|
Weighted
Average Fair Value
|
Shares
|
Weighted
Average Fair Value
|
|||||||||||||
Non-vested
beginning of period
|
193,884 | $ | 1.80 | 142,127 | $ | 2.15 | ||||||||||
Granted
|
8,250 | 0.83 | 106,975 | 1.54 | ||||||||||||
Vested
|
(73,984 | ) | 2.02 | (36,188 | ) | 2.37 | ||||||||||
Forfeited
|
(1,210 | ) | 1.85 | (19,030 | ) | 1.84 | ||||||||||
Non-vested
end of period
|
126,940 | $ | 1.62 | 193,884 | $ | 1.80 |
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||||
Range
of exercise prices
|
Number
|
Weighted
average remaining contractual life (years)
|
Weighted
average exercise price
|
Number
|
Weighted
average remaining contractual life (years)
|
Weighted
average exercise price
|
||||||||||||||||||
0.00
– 11.10
|
263,447 | 2.7 | $ | 10.25 | 263,447 | 2.5 | $ | 10.25 | ||||||||||||||||
11.11
– 12.49
|
93,060 | 4.5 | 11.92 | 67,210 | 2.9 | 11.90 | ||||||||||||||||||
12.50
– 14.74
|
185,075 | 5.3 | 14.20 | 92,345 | 5.7 | 14.29 | ||||||||||||||||||
14.75
– 16.00
|
142,945 | 6.3 | 15.22 | 134,585 | 5.8 | 15.23 | ||||||||||||||||||
684,527 | 4.5 | $ | 12.58 | 557,587 | 3.9 | $ | 12.32 |
Actual
|
Capital
Adequacy Purposes |
To
be Well
Capitalized Under Prompt Corrective Action Provisions |
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
December
31, 2008
|
||||||||||||||||||||||||
Tier
1 capital (to average assets):
|
||||||||||||||||||||||||
Company
|
$ | 53,011 | 8.87 | % | $ | 23,905 | 4.00 | % |
NA
|
NA
|
||||||||||||||
Bank
|
52,181 | 8.75 | 23,858 | 4.00 | $ | 29,823 | 5.00 | % | ||||||||||||||||
Tier
1 capital (to risk-weighted assets):
|
||||||||||||||||||||||||
Company
|
53,011 | 10.54 | 20,117 | 4.00 |
NA
|
NA
|
||||||||||||||||||
Bank
|
52,181 | 10.40 | 20,068 | 4.00 | 30,106 | 6.00 | ||||||||||||||||||
Total
capital (to risk-weighted assets):
|
||||||||||||||||||||||||
Company
|
59,315 | 11.79 | 40,233 | 8.00 |
NA
|
NA
|
||||||||||||||||||
Bank
|
58,470 | 11.65 | 40,137 | 8.00 | 50,177 | 10.00 | ||||||||||||||||||
December
31, 2007
|
||||||||||||||||||||||||
Tier
1 capital (to average assets):
|
||||||||||||||||||||||||
Company
|
$ | 50,825 | 9.28 | % | $ | 21,906 | 4.00 | % |
NA
|
NA
|
||||||||||||||
Bank
|
50,210 | 9.19 | 21,860 | 4.00 | $ | 27,325 | 5.00 | % | ||||||||||||||||
Tier
1 capital (to risk-weighted assets):
|
||||||||||||||||||||||||
Company
|
50,825 | 11.37 | 17,887 | 4.00 |
NA
|
NA
|
||||||||||||||||||
Bank
|
50,210 | 11.26 | 17,840 | 4.00 | 26,760 | 6.00 | ||||||||||||||||||
Total
capital (to risk-weighted assets):
|
||||||||||||||||||||||||
Company
|
55,832 | 12.49 | 35,774 | 8.00 |
NA
|
NA
|
||||||||||||||||||
Bank
|
55,217 | 12.38 | 35,679 | 8.00 | 44,599 | 10.00 |
Before-
|
Tax
|
|||||||||||
Tax
|
Benefit
|
Net-of-Tax
|
||||||||||
Amount
|
(Expense)
|
Amount
|
||||||||||
2008
|
||||||||||||
Unrealized
holding losses arising during the year
|
$ | (3,190 | ) | $ | 1,084 | $ | (2,106 | ) | ||||
Reclassification
adjustments for losses realized in net income
|
165 | (56 | ) | 109 | ||||||||
Net
unrealized losses
|
$ | (3,025 | ) | $ | 1,028 | $ | (1,997 | ) | ||||
2007
|
||||||||||||
Unrealized
holding gains arising during the year
|
$ | 71 | $ | (25 | ) | $ | 46 | |||||
Reclassification
adjustments for gains realized in net income
|
— | — | — | |||||||||
Net
unrealized gains
|
$ | 71 | $ | (25 | ) | $ | 46 | |||||
2006
|
||||||||||||
Unrealized
holding gains arising during the year
|
$ | 8 | $ | (3 | ) | $ | 5 | |||||
Reclassification
adjustments for gains realized in net income
|
— | — | — | |||||||||
Net
unrealized gains
|
$ | 8 | $ | (3 | ) | $ | 5 |
Readily
Available
Market
Prices
Level
1
|
Observable
Market Prices
Level
2
|
Significant
Unobservable
Inputs
Level
3
|
Total
|
|||||||||||||
Available
for sale securities
|
$ | — | $ | 49,493 | $ | — | $ | 49,493 |
Readily
Available
Market
Prices
Level
1
|
Observable
Market Prices
Level
2
|
Significant
Unobservable
Inputs
Level
3
|
Total
|
|||||||||||||
Impaired
loans
|
$ | — | $ | — | $ | 9,532 | $ | 9,532 | ||||||||
OREO
|
$ | — | $ | — | $ | 6,810 | $ | 6,810 |
2008
|
2007
|
|||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Amount
|
Value
|
Amount
|
Value
|
|||||||||||||
Financial
Assets
|
||||||||||||||||
Cash
and due from banks, interest-bearing deposits in banks, and federal funds
sold
|
$ | 17,539 | $ | 17,539 | $ | 15,297 | $ | 15,297 | ||||||||
Securities
available for sale
|
49,493 | 49,493 | 42,912 | 42,912 | ||||||||||||
Securities
held to maturity
|
6,386 | 6,418 | 4,329 | 4,368 | ||||||||||||
Loans
held for sale
|
11,486 | 11,752 | 17,162 | 17,407 | ||||||||||||
Loans,
net
|
478,695 | 440,597 | 433,904 | 434,120 | ||||||||||||
Financial
Liabilities
|
||||||||||||||||
Deposits
|
$ | 511,307 | $ | 512,926 | $ | 467,336 | $ | 468,326 | ||||||||
Short-term
borrowings
|
23,500 | 23,779 | 10,125 | 10,093 | ||||||||||||
Long-term
borrowings
|
22,500 | 23,033 | 12,500 | 12,436 | ||||||||||||
Secured
borrowings
|
1,354 | 1,354 | 1,418 | 1,418 | ||||||||||||
Junior
subordinated debentures
|
13,403 | 7,113 | 13,403 | 13,275 |
Net
Income
|
Shares
|
Per
Share
|
||||||||||
(Numerator)
|
(Denominator)
|
Amount
|
||||||||||
Year
Ended December 31, 2008
|
||||||||||||
Basic
earnings per share:
|
$ | 951 | 7,311,611 | $ | 0.13 | |||||||
Effect
of dilutive securities:
|
— | 16,557 | — | |||||||||
Diluted
earnings per share:
|
$ | 951 | 7,328,168 | $ | 0.13 | |||||||
Year
Ended December 31, 2007
|
||||||||||||
Basic
earnings per share:
|
$ | 6,031 | 7,239,323 | $ | 0.83 | |||||||
Effect
of dilutive securities:
|
— | 95,523 | (.01 | ) | ||||||||
Diluted
earnings per share:
|
$ | 6,031 | 7,334,846 | $ | 0.82 | |||||||
Year
Ended December 31, 2006
|
||||||||||||
Basic
earnings per share:
|
$ | 6,551 | 7,131,707 | $ | 0.92 | |||||||
Effect
of dilutive securities:
|
— | 112,681 | (.02 | ) | ||||||||
Diluted
earnings per share:
|
$ | 6,551 | 7,244,388 | $ | 0.90 |
2008
|
2007
|
|||||||
Assets
|
||||||||
Cash
|
$ | 513 | $ | 4,929 | ||||
Investment
in the Bank
|
62,244 | 63,084 | ||||||
Due
from the Bank
|
785 | 783 | ||||||
Other
assets
|
407 | 403 | ||||||
Total
assets
|
$ | 63,949 | $ | 69,199 | ||||
Liabilities
and Shareholders’ Equity
|
||||||||
Dividends
payable
|
$ | 333 | $ | 4,955 | ||||
Junior
subordinated debentures
|
13,403 | 13,403 | ||||||
Other
liabilities
|
139 | 142 | ||||||
Shareholders’
equity
|
50,074 | 50,699 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 63,949 | $ | 69,199 |
2008
|
2007
|
2006
|
||||||||||
Dividend
Income from the Bank
|
$ | 900 | $ | 4,700 | $ | 5,150 | ||||||
Other
Income
|
27 | 27 | 19 | |||||||||
Total
Income
|
927 | 4,727 | 5,169 | |||||||||
Expenses
|
(1,066 | ) | (1,236 | ) | (934 | ) | ||||||
Income
(loss) before income tax benefit
|
(139 | ) | 3,491 | 4,235 | ||||||||
Income
Tax Benefit
|
— | — | 294 | |||||||||
Income
(loss) before equity in undistributed income of the Bank
|
(139 | ) | 3,491 | 4,529 | ||||||||
Equity
in Undistributed Income of the Bank
|
1,090 | 2,540 | 2,022 | |||||||||
Net
income
|
$ | 951 | $ | 6,031 | $ | 6,551 |
2008
|
2007
|
2006
|
||||||||||
Operating
Activities
|
||||||||||||
Net
income
|
$ | 951 | $ | 6,031 | $ | 6,551 | ||||||
Adjustments
to reconcile net income to
|
||||||||||||
net
cash provided by operating activities:
|
||||||||||||
Equity
in undistributed income of subsidiary
|
(1,090 | ) | (2,540 | ) | (2,022 | ) | ||||||
Net
change in other assets
|
(4 | ) | — | (294 | ) | |||||||
Net
change in other liabilities
|
(3 | ) | 1 | 141 | ||||||||
Other
- net
|
87 | 97 | 35 | |||||||||
Net
cash provided by (used in) operating activities
|
(59 | ) | 3,589 | 4,411 | ||||||||
Investing
Activities
|
||||||||||||
Contribution
to subsidiary
|
— | — | (8,000 | ) | ||||||||
Purchase
of trust common securities
|
— | — | (248 | ) | ||||||||
Net
cash used in investing activities
|
— | — | (8,248 | ) | ||||||||
Financing
Activities
|
||||||||||||
Proceeds
from junior subordinated debentures
|
— | — | 8,248 | |||||||||
Common
stock issued
|
624 | 1,269 | 642 | |||||||||
Repurchase
and retirement of common stock
|
(26 | ) | (219 | ) | — | |||||||
Dividends
paid
|
(4,955 | ) | (4,893 | ) | (4,719 | ) | ||||||
Net
cash provided by (used in) financing activities
|
(4,357 | ) | (3,843 | ) | 4,171 | |||||||
Net
increase (decrease) in cash
|
(4,416 | ) | (254 | ) | 334 | |||||||
Cash
|
||||||||||||
Beginning
of year
|
4,929 | 5,183 | 4,849 | |||||||||
End
of year
|
$ | 513 | $ | 4,929 | $ | 5,183 |
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||||||||||
Year
Ended December 31, 2008
|
||||||||||||||||
Interest
income
|
$ | 8,937 | $ | 8,279 | $ | 8,460 | $ | 8,037 | ||||||||
Interest
expense
|
3,492 | 2,777 | 2,784 | 2,945 | ||||||||||||
Net
interest income
|
5,445 | 5,502 | 5,676 | 5,092 | ||||||||||||
Provision
for credit losses
|
126 | 2,228 | 600 | 1,837 | ||||||||||||
Non-interest
income
|
1,210 | 1,292 | 896 | 1,659 | ||||||||||||
Non-interest
expenses
|
5,157 | 5,505 | 5,371 | 5,558 | ||||||||||||
Income
(loss) before income taxes
|
1,372 | (939 | ) | 601 | (644 | ) | ||||||||||
Income
taxes (benefit)
|
324 | (266 | ) | 14 | (633 | ) | ||||||||||
Net
income (loss)
|
$ | 1,048 | $ | (673 | ) | $ | 587 | $ | (11 | ) | ||||||
Earnings
(loss) per common share:
|
||||||||||||||||
Basic
|
$ | .15 | $ | (.09 | ) | $ | .08 | $ | (.01 | ) | ||||||
Diluted
|
.15 | (.09 | ) | .08 | (.01 | ) | ||||||||||
Year
Ended December 31, 2007
|
||||||||||||||||
Interest
income
|
$ | 9,811 | $ | 10,346 | $ | 10,331 | $ | 9,648 | ||||||||
Interest
expense
|
3,806 | 4,033 | 4,000 | 3,794 | ||||||||||||
Net
interest income
|
6,005 | 6,313 | 6,331 | 5,854 | ||||||||||||
Provision
for credit losses
|
257 | 105 | 60 | 60 | ||||||||||||
Non-interest
income
|
946 | 1,149 | 1,063 | 1,317 | ||||||||||||
Non-interest
expenses
|
4,820 | 5,184 | 5,017 | 5,358 | ||||||||||||
Income
before income taxes
|
1,874 | 2,173 | 2,317 | 1,753 | ||||||||||||
Income
taxes
|
340 | 607 | 686 | 453 | ||||||||||||
Net
income
|
$ | 1,534 | $ | 1,566 | $ | 1,631 | $ | 1,300 | ||||||||
Earnings
per common share:
|
||||||||||||||||
Basic
|
$ | .21 | $ | .22 | $ | .22 | $ | .18 | ||||||||
Diluted
|
.21 | .22 | .22 | .17 |
PACIFIC FINANCIAL
CORPORATION
(Registrant)
|
|||
/s/ Dennis A. Long
|
/s/ Denise Portmann | ||
Dennis A. Long, President and CEO | Denise Portmann, CFO | ||
Principal Executive Officer and Director | Principal Financial and Accounting Officer | |
/s/ Dennis A. Long
|
/s/ Denise Portmann | |
Dennis
A. Long, President and CEO and Director
|
Denise
Portmann, CFO
|
|
Principal
Executive Officer
|
Principal
Financial and Accounting Officer
|
|
Remaining
Directors
|
||
/s/ Gary C. Forcum
|
/s/
G. Dennis Archer
|
|
Gary
C. Forcum (Chairman of the Board)
|
G.
Dennis Archer
|
|
/s/
Joseph A. Malik
|
/s/
Edwin Ketel
|
|
Joseph
A. Malik
|
Edwin
Ketel
|
|
/s/
Randy Rust
|
|
|
Randy
Rust
|
John
Ferlin
|
|
/s/
Douglas M. Schermer
|
/s/
Robert J. Worrell
|
|
Douglas
M. Schermer
|
Robert
J. Worrell
|
|
/s/
Susan C. Freese
|
/s/
Randy W. Rognlin
|
|
Susan
C. Freese
|
Randy
W. Rognlin
|
EXHIBIT
NO.
|
EXHIBIT |
3.1
|
RestatedArticles
of Incorporation. Incorporated by reference to Exhibit 3.2 to the
Company’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2000.
|
3.2
|
Bylaws.
Incorporated by reference to Exhibit 2b to Form 8-A filed by the Company
and declared effective on March 7, 2000 (Registration No.
000-29329).
|
10.1
|
Amended
and
Restated Employment Agreement with Dennis A. Long dated December 29,
2008.*
|
10.2
|
Amended
and Restated Employment Agreement with John Van Dijk dated December 29,
2008.*
|
10.3
|
Amended
and Restated Employment Agreement with Bruce D. MacNaughton dated December
29, 2008.*
|
10.4
|
Amended
and Restated Employment Agreement with Denise Portmann dated December 29,
2008.*
|
10.5
|
Bank
of the Pacific Incentive Stock Option Plan. Incorporated by
reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 1999, (the “1999
10-K”).*
|
10.6
|
The
Bank of Grays Harbor Incentive Stock Option Plan. Incorporated
by reference to Exhibit 10.8 of the 1999
10-K.*
|
10.7
|
2000
Stock Incentive Compensation Plan, as amended (the “2000
Plan”). Incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2007 (the “March 2007 10-Q”).
|
10.8
|
Forms
of stock option agreements under the 2000 Plan. Incorporated by
reference to Exhibits 10.2 and 10.3 to the March 2007
10-Q.*
|
10.9
|
2008
SOX Officer Incentive Plan. Incorporated by reference to
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008.*
|
10.10
|
The
Bank of Grays Harbor Employee Deferred Compensation
Plan. Incorporated by reference to Exhibit 10.10 to the
Company’s Annual Report on Form 10-K for the year ended December 31,
2000.*
|
10.11
|
Supplemental
Executive Retirement Plan effective January 1,
2007. Incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K dated March 13, 2008 (the “March 2008
8-K”).*
|
10.12
|
Individual
Participation Agreement (SERP) dated March 13, 2008, between the Company
and Dennis A. Long. Incorporated by reference to Exhibit 10.2
to the March 2008 8-K.*
|
10.13
|
Individual
Participation Agreement (SERP) dated March 13, 2008, between the Company
and John Van Dijk. Incorporated by reference to Exhibit 10.3 to
the March 2008 8-K.*
|
10.14
|
Individual
Participation Agreement (SERP) dated March 13, 2008, between the Company
and Bruce MacNaughton. Incorporated by reference to Exhibit
10.4 to the March 2008 8-K.*
|
10.15
|
Individual
Participation Agreement (SERP) dated March 13, 2008, between the Company
and Denise Portmann. Incorporated by reference to Exhibit 10.5
to the March 2008 8-K.*
|
21
|
Subsidiaries
of Registrant – Bank of the Pacific, organized under Washington
law
|
23.1
|
Consent
of Deloitte & Touche, LLP, Independent Registered Public Accounting
Firm
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Rule
13a-14(a)
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Rule
13a-14(a)
|
32
|
Certification
Pursuant to 18 U.S.C. 1350
|
99
|
Description
of common stock of the Company. Incorporated by reference
to Exhibit 99 to the Company’s Quarterly Report on Form 10-Q for the
quarter ended September 30,
2000.
|