UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
|
|
þ
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|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the quarterly period ended September 30, 2007.
|
|
|
o
|
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the transition period from
to
Commission file number 000-23277
CITIZENS BANCORP/OR
(Exact name of registrant as specified in its charter)
|
|
|
Oregon
(State of Incorporation)
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|
91-1841688
(I.R.S. Employer Identification Number)
|
275 Southwest Third Street
Corvallis, Oregon 97339
(Address of principal executive offices)
(541) 752-5161
(Registrants telephone number, including area code)
Indicate 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 is a large accelerated filer, an accelerated
filer, or a non-accelerated filer, as defined in Rule 12b-2 of the Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
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 the latest practicable date.
|
|
|
Class
|
|
Outstanding as of October 26, 2007
|
Common Stock, no par value
|
|
4,671,575
|
CITIZENS BANCORP
FORM 10-Q
SEPTEMBER 30, 2007
INDEX
PART I FINANCIAL INFORMATION
ITEM 1
CITIZENS BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
15,027
|
|
|
$
|
17,227
|
|
Interest bearing deposits in banks
|
|
|
1,004
|
|
|
|
11,709
|
|
Federal funds sold
|
|
|
340
|
|
|
|
9,340
|
|
Securities available for sale
|
|
|
39,224
|
|
|
|
46,204
|
|
Securities held to maturity (estimated fair value $4,982 and $5,542)
|
|
|
4,919
|
|
|
|
5,462
|
|
Federal Home Loan Bank stock, at cost
|
|
|
905
|
|
|
|
905
|
|
Loans held for sale
|
|
|
151
|
|
|
|
53
|
|
|
Loans
|
|
|
283,540
|
|
|
|
253,027
|
|
Allowance for credit losses
|
|
|
2,797
|
|
|
|
2,875
|
|
|
|
|
|
|
|
|
Net loans
|
|
|
280,743
|
|
|
|
250,152
|
|
|
|
|
|
|
|
|
|
|
Premises and equipment
|
|
|
9,799
|
|
|
|
8,439
|
|
Accrued interest receivable
|
|
|
2,560
|
|
|
|
2,112
|
|
Cash value of life insurance
|
|
|
4,543
|
|
|
|
4,416
|
|
Other assets
|
|
|
2,799
|
|
|
|
3,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
362,014
|
|
|
$
|
359,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders Equity
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
Demand, non-interest bearing
|
|
$
|
59,085
|
|
|
$
|
58,514
|
|
Savings and interest-bearing demand
|
|
|
181,669
|
|
|
|
171,580
|
|
Time
|
|
|
41,382
|
|
|
|
40,516
|
|
|
|
|
|
|
|
|
Total deposits
|
|
|
282,136
|
|
|
|
270,610
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
27,112
|
|
|
|
37,489
|
|
Accrued interest payable
|
|
|
99
|
|
|
|
100
|
|
Other liabilities
|
|
|
2,810
|
|
|
|
4,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
312,157
|
|
|
|
312,505
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity
|
|
|
|
|
|
|
|
|
Common stock (no par value); authorized 10,000,000
shares; issued and outstanding: 2007 - 4,671,496 shares; 2006 - 4,733,644
shares
|
|
|
28,740
|
|
|
|
30,027
|
|
Retained earnings
|
|
|
21,050
|
|
|
|
16,604
|
|
Accumulated other comprehensive gain (loss)
|
|
|
67
|
|
|
|
(107
|
)
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
49,857
|
|
|
|
46,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
362,014
|
|
|
$
|
359,029
|
|
|
|
|
|
|
|
|
See accompanying notes.
1
CITIZENS BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
Interest Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
15,698
|
|
|
$
|
13,644
|
|
|
$
|
5,593
|
|
|
$
|
4,884
|
|
Federal funds sold and deposits in banks
|
|
|
295
|
|
|
|
109
|
|
|
|
30
|
|
|
|
37
|
|
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
1,677
|
|
|
|
1,757
|
|
|
|
491
|
|
|
|
719
|
|
Tax-exempt
|
|
|
178
|
|
|
|
220
|
|
|
|
54
|
|
|
|
65
|
|
Other
|
|
|
6
|
|
|
|
29
|
|
|
|
2
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest and dividend income
|
|
|
17,854
|
|
|
|
15,759
|
|
|
|
6,170
|
|
|
|
5,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
3,625
|
|
|
|
2,689
|
|
|
|
1,220
|
|
|
|
1,073
|
|
Borrowed funds
|
|
|
91
|
|
|
|
141
|
|
|
|
47
|
|
|
|
73
|
|
Repurchase agreements
|
|
|
713
|
|
|
|
756
|
|
|
|
201
|
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense
|
|
|
4,429
|
|
|
|
3,586
|
|
|
|
1,468
|
|
|
|
1,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
13,425
|
|
|
|
12,173
|
|
|
|
4,702
|
|
|
|
4,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit losses
|
|
|
130
|
|
|
|
114
|
|
|
|
30
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for credit losses
|
|
|
13,295
|
|
|
|
12,059
|
|
|
|
4,672
|
|
|
|
4,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
839
|
|
|
|
972
|
|
|
|
293
|
|
|
|
312
|
|
Earnings on life insurance policies
|
|
|
127
|
|
|
|
118
|
|
|
|
43
|
|
|
|
40
|
|
Other
|
|
|
869
|
|
|
|
668
|
|
|
|
284
|
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-interest income
|
|
|
1,835
|
|
|
|
1,758
|
|
|
|
620
|
|
|
|
566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
5,469
|
|
|
|
5,020
|
|
|
|
1,855
|
|
|
|
1,697
|
|
Occupancy and equipment
|
|
|
1,082
|
|
|
|
966
|
|
|
|
372
|
|
|
|
323
|
|
Other
|
|
|
1,739
|
|
|
|
1,540
|
|
|
|
534
|
|
|
|
535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-interest expense
|
|
|
8,290
|
|
|
|
7,526
|
|
|
|
2,761
|
|
|
|
2,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense
|
|
|
6,840
|
|
|
|
6,291
|
|
|
|
2,531
|
|
|
|
2,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
2,394
|
|
|
|
2,168
|
|
|
|
892
|
|
|
|
786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
4,446
|
|
|
$
|
4,123
|
|
|
$
|
1,639
|
|
|
$
|
1,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.93
|
|
|
$
|
0.87
|
|
|
$
|
0.34
|
|
|
$
|
0.32
|
|
Diluted
|
|
$
|
0.93
|
|
|
$
|
0.87
|
|
|
$
|
0.34
|
|
|
$
|
0.32
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
4,781,269
|
|
|
|
4,736,758
|
|
|
|
4,781,433
|
|
|
|
4,743,481
|
|
Diluted
|
|
|
4,804,522
|
|
|
|
4,761,115
|
|
|
|
4,802,790
|
|
|
|
4,762,589
|
|
See accompanying notes.
2
CITIZENS BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS EQUITY
(Dollars in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2007 and 2006
|
|
|
|
Number of
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Other
|
|
|
Total
|
|
|
|
Shares
|
|
|
Comprehensive
|
|
|
Common
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Shareholders
|
|
|
|
Outstanding
|
|
|
Income
|
|
|
Stock
|
|
|
Earnings
|
|
|
Income (Loss)
|
|
|
Equity
|
|
Balance, at December 31, 2005
|
|
|
4,670,386
|
|
|
|
|
|
|
$
|
28,938
|
|
|
$
|
13,606
|
|
|
$
|
(248
|
)
|
|
$
|
42,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
$
|
4,123
|
|
|
|
|
|
|
|
4,123
|
|
|
|
|
|
|
|
4,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on securities
|
|
|
|
|
|
|
123
|
|
|
|
|
|
|
|
|
|
|
|
123
|
|
|
|
123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
|
|
|
$
|
4,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation expense
recognized in earnings
|
|
|
|
|
|
|
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
42
|
|
Issuance of common stock
under dividend reinvestment plan
|
|
|
64,951
|
|
|
|
|
|
|
|
1,127
|
|
|
|
|
|
|
|
|
|
|
|
1,127
|
|
Stock grants
|
|
|
90
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Stock options exercised
|
|
|
10,080
|
|
|
|
|
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
127
|
|
Repurchase of common stock
|
|
|
(6,261
|
)
|
|
|
|
|
|
|
(94
|
)
|
|
|
|
|
|
|
|
|
|
|
(94
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at September 30, 2006
|
|
|
4,739,246
|
|
|
|
|
|
|
$
|
30,141
|
|
|
$
|
17,729
|
|
|
$
|
(125
|
)
|
|
$
|
47,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at December 31, 2006
|
|
|
4,733,644
|
|
|
|
|
|
|
$
|
30,027
|
|
|
$
|
16,604
|
|
|
$
|
(107
|
)
|
|
$
|
46,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
$
|
4,446
|
|
|
|
|
|
|
|
4,446
|
|
|
|
|
|
|
|
4,446
|
|
|
Other
comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on securities
|
|
|
|
|
|
|
174
|
|
|
|
|
|
|
|
|
|
|
|
174
|
|
|
|
174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
|
|
|
|
$
|
4,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation expense
recognized in earnings
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
Issuance of common stock
under dividend reinvestment plan
|
|
|
75,197
|
|
|
|
|
|
|
|
1,189
|
|
|
|
|
|
|
|
|
|
|
|
1,189
|
|
Stock grants
|
|
|
195
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Stock options exercised
|
|
|
5,179
|
|
|
|
|
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
64
|
|
Income tax benefit from stock
options exercised
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
Repurchase of common stock
|
|
|
(142,719
|
)
|
|
|
|
|
|
|
(2,567
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,567
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, at September 30, 2007
|
|
|
4,671,496
|
|
|
|
|
|
|
$
|
28,740
|
|
|
$
|
21,050
|
|
|
$
|
67
|
|
|
$
|
49,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
3
CITIZENS BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
Net cash provided by operating activities
|
|
$
|
4,823
|
|
|
$
|
3,729
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Net (increase) decrease in interest bearing deposits in banks
|
|
|
10,705
|
|
|
|
(2,015
|
)
|
Net decrease in federal funds sold
|
|
|
9,000
|
|
|
|
204
|
|
Activity in securities available for sale:
|
|
|
|
|
|
|
|
|
Purchases
|
|
|
(14,019
|
)
|
|
|
(35,000
|
)
|
Maturities
|
|
|
21,420
|
|
|
|
55,500
|
|
Activitiy in securities held to maturity:
|
|
|
|
|
|
|
|
|
Purchases
|
|
|
(471
|
)
|
|
|
|
|
Maturities
|
|
|
1,025
|
|
|
|
1,995
|
|
Increase in loans made to customers, net of principal collections
|
|
|
(30,588
|
)
|
|
|
(26,609
|
)
|
Purchases of premises and equipment
|
|
|
(1,747
|
)
|
|
|
(1,459
|
)
|
Other real estate sold
|
|
|
270
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by investing activities
|
|
|
(4,405
|
)
|
|
|
(7,384
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Net increase in deposits
|
|
|
11,526
|
|
|
|
6,922
|
|
Net decrease in repurchase agreements and other borrowings
|
|
|
(10,377
|
)
|
|
|
(4,394
|
)
|
Payment of dividends, net of dividends reinvested
|
|
|
(1,272
|
)
|
|
|
(1,206
|
)
|
Exercise of stock options
|
|
|
64
|
|
|
|
127
|
|
Repurchase of common stock
|
|
|
(2,567
|
)
|
|
|
(94
|
)
|
Tax benefit from options exercised
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(2,618
|
)
|
|
|
1,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and due from banks
|
|
|
(2,200
|
)
|
|
|
(2,300
|
)
|
|
|
|
|
|
|
|
|
|
Cash and Due from Banks
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
17,227
|
|
|
|
18,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
15,027
|
|
|
$
|
16,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
4,430
|
|
|
$
|
3,561
|
|
Income taxes paid
|
|
$
|
1,785
|
|
|
$
|
1,950
|
|
Supplemental Schedule of Non-cash Investing and Financing Activities
|
|
|
|
|
|
|
|
|
Fair value adjustment of securities available for sale, net of tax
|
|
$
|
174
|
|
|
$
|
123
|
|
Issuance of common stock through dividend reinvestment plan
|
|
$
|
1,189
|
|
|
$
|
1,127
|
|
Stock grants
|
|
$
|
3
|
|
|
$
|
1
|
|
See accompanying notes.
4
CITIZENS BANCORP AND SUBSIDARY
Notes to Condensed Consolidated Financial Statements (unaudited)
|
1.
|
|
Basis of Presentation
|
|
|
|
|
The interim condensed consolidated financial statements include the accounts of Citizens
Bancorp (Bancorp or the Company), a bank holding company and its wholly owned
subsidiary, Citizens Bank (Bank) after elimination of intercompany transactions and
balances. Substantially all activity of Citizens Bancorp is conducted through its
subsidiary bank.
|
|
|
|
|
The interim condensed consolidated financial statements are unaudited but have been prepared
in accordance with accounting principles generally accepted in the United States for interim
condensed financial information and with instructions to form 10-Q. Accordingly, the
condensed consolidated interim financial statements do not include all of the information
and footnotes required by accounting principles generally accepted in the United States. In
the opinion of management, all adjustments consisting only of normal recurring accruals
necessary for a fair presentation for the interim periods included herein have been made.
|
|
|
|
|
The interim condensed consolidated financial statements should be read in conjunction with
the December 31, 2006 consolidated financial statements, including notes thereto, included
in Bancorps 2006 Annual Report to shareholders. The results of operations for the nine
months ended September 30, 2007, are not necessarily indicative of the results which may be
obtained for the full year ending December 31, 2007.
|
|
|
|
|
Certain amounts in 2006 have been reclassified to conform with the 2007 presentation.
|
|
|
2.
|
|
Use of Estimates in the Preparation of Financial Statements
|
|
|
|
|
The preparation of financial statements, in conformity with accounting principles generally
accepted in the United States, requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of income
and expenses during the reporting period. Actual results could differ from those estimates.
|
|
|
3.
|
|
Investment Securities
|
|
|
|
|
The amortized cost and estimated fair value of the investment securities held by the
Company, including unrealized gains and losses, at September 30, 2007 and December 31, 2006,
are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
September
30, 2007
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and Agency Securities
|
|
$
|
39,114
|
|
|
$
|
136
|
|
|
$
|
26
|
|
|
$
|
39,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and Municipal Securities
|
|
$
|
4,919
|
|
|
$
|
63
|
|
|
$
|
|
|
|
$
|
4,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and Agency Securities
|
|
$
|
46,379
|
|
|
$
|
39
|
|
|
$
|
(214
|
)
|
|
$
|
46,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and Municipal Securities
|
|
$
|
5,462
|
|
|
$
|
80
|
|
|
$
|
|
|
|
$
|
5,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
4.
|
|
Loan Portfolio
|
|
|
|
|
The composition of the loan portfolio was as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
December 31, 2006
|
|
Commercial
|
|
$
|
33,477
|
|
|
$
|
27,810
|
|
Agriculture
|
|
|
27,004
|
|
|
|
18,715
|
|
Real Estate
|
|
|
|
|
|
|
|
|
Construction
|
|
|
22,524
|
|
|
|
16,647
|
|
1-4 Family
|
|
|
25,617
|
|
|
|
25,254
|
|
Multi-family
|
|
|
22,384
|
|
|
|
23,530
|
|
Commercial
|
|
|
132,907
|
|
|
|
120,614
|
|
Farmland
|
|
|
17,127
|
|
|
|
17,508
|
|
Consumer Loans
|
|
|
2,980
|
|
|
|
3,382
|
|
|
|
|
|
|
|
|
|
|
|
284,020
|
|
|
|
253,460
|
|
|
|
|
|
|
|
|
|
|
Less: net deferred loan fees
|
|
|
480
|
|
|
|
433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans
|
|
|
283,540
|
|
|
|
253,027
|
|
|
|
|
|
|
|
|
|
|
Less: allowance for credit losses
|
|
|
2,797
|
|
|
|
2,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loans
|
|
$
|
280,743
|
|
|
$
|
250,152
|
|
|
|
|
|
|
|
|
|
|
|
Transactions in the allowance for loan losses and unfunded commitments were as follows for
the nine months ended September 30:
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
2007
|
|
|
2006
|
|
Balance at beginning of period
|
|
$
|
2,875
|
|
|
$
|
2,750
|
|
Provision charged to operations
|
|
|
130
|
|
|
|
114
|
|
Loans recovered
|
|
|
5
|
|
|
|
3
|
|
Loans charged off
|
|
|
(33
|
)
|
|
|
(17
|
)
|
Reclassification of allowance for unfunded commitments
|
|
|
(180
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
2,797
|
|
|
$
|
2,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for unfunded commitments
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
|
|
|
|
|
|
Reclassificaiton of allowance for unfunded commitments
|
|
$
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
$
|
2,797
|
|
|
|
|
|
Allowance for unfunded commitments
|
|
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allowance for credit losses
|
|
$
|
2,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company reclassified a specific reserve for unfunded loan commitments as of September
30, 2007. The allowance for credit losses has historically contained a component for a
reserve for unfunded commitments but the component has now been classified in other
liabilities. At September 30, 2007 the Company had approximately $80.6 million in
outstanding commitments to extend credit, compared to approximately $67.6 million at
year-end 2006.
|
6
|
5.
|
|
Non-Performing Assets
|
|
|
|
|
It is the policy of the Company to place loans on non-accrual after they become 90 days past
due unless the loans are well secured and in the process of collection. The Company may
place loans that are not contractually past due or that are deemed fully collateralized on
non-accrual status as a management tool to actively oversee specific loans.
|
|
|
|
|
Loans on non-accrual status as of September 30, 2007 and December 31, 2006 were
approximately $1,506,000 and $1,436,000 respectively. There were no loans with modified
terms as of September 30, 2007. Non-performing assets (defined as loans on non-accrual
status and loans past due 90 days or more) are deemed by management to have adequate
collateral or have specific reserves set aside to cover potential losses.
|
|
|
|
|
Two agricultural loan relationships constitute $1.3 million of the approximately $1.5
million in non-accrual status as of September 30, 2007. One of the agriculture loans, with a
balance of about $292 thousand, is fully secured by real estate. The farm operation is going
through a Chapter 12 bankruptcy procedure. The Company is fully secured and does not expect
a loss. The second agriculture relationship consists of two loans; one in the amount of
approximately $625 thousand which is fully secured by agriculture real estate and the other
loan is approximately $426 thousand and has a 90 % Farm Service Agency (FSA) guarantee, but
no other collateral support. The Company is exposed on the second loan in the amount of $42
thousand, but expects to get paid in full over the next 18 to 24 months through normal farm
operating cash flow. The remaining three non-accrual loans of approximately $162 thousand
are fully secured by real estate and management does not anticipate any loss.
|
|
|
|
|
Risk of nonpayment exists with respect to all loans, which could result in the
classification of such loans as non-performing. The following table presents information
with respect to non-performing assets at September 30, 2007 and December 31, 2006 (dollars
in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
Loans on non-accrual status
|
|
$
|
1,506
|
|
|
$
|
1,436
|
|
Loans past due 90 days or more but not on non-accrual status
|
|
|
113
|
|
|
|
187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing assets
|
|
$
|
1,619
|
|
|
$
|
1,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of non-performing assets to total assets
|
|
|
0.45
|
%
|
|
|
0.45
|
%
|
|
|
|
|
|
|
|
|
6.
|
|
Borrowings
|
|
|
|
|
The composition of borrowings is as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
December 31, 2006
|
|
Treasury tax and loan deposit note
|
|
$
|
1,752
|
|
|
$
|
1,890
|
|
Federal Home Loan Bank short term borrowings
|
|
|
|
|
|
|
12
|
|
Repurchase agreements
|
|
|
25,360
|
|
|
|
35,587
|
|
|
|
|
|
|
|
|
Total borrowings
|
|
$
|
27,112
|
|
|
$
|
37,489
|
|
|
|
|
|
|
|
|
7
|
7.
|
|
Basic and Diluted Earnings Per Common Share
|
|
|
|
|
The Companys basic earnings per common share is computed by dividing net income by the
weighted-average number of common shares outstanding during the period. The Companys
diluted earnings per common share is computed by dividing net income by the weighted-average
number of common shares outstanding plus the incremental shares arising from the dilutive
effect of stock-based compensation.
|
|
|
|
|
The numerators and denominators used in computing basic and diluted earnings per common
share for the nine months and three months ended September 30, 2007 and 2006 can be
reconciled as follows (dollars and weighted average shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
Net income
|
|
$
|
4,446
|
|
|
$
|
4,123
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic
|
|
|
4,781
|
|
|
|
4,737
|
|
Basic earnings per common share
|
|
$
|
0.93
|
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
Incremental shares arising from stock-based compensation
|
|
|
23
|
|
|
|
24
|
|
Weighted average shares outstanding diluted
|
|
|
4,804
|
|
|
|
4,761
|
|
Diluted earnings per common share
|
|
$
|
0.93
|
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
Net income
|
|
$
|
1,639
|
|
|
$
|
1,505
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic
|
|
|
4,781
|
|
|
|
4,743
|
|
Basic earnings per common share
|
|
$
|
0.34
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
Incremental shares arising from stock-based compensation
|
|
|
21
|
|
|
|
19
|
|
Weighted average shares outstanding diluted
|
|
|
4,802
|
|
|
|
4,762
|
|
Diluted earnings per common share
|
|
$
|
0.34
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
8.
|
|
Stock Based Compensation
|
|
|
|
|
In 1999, the Company adopted a qualified incentive stock option plan that allows for grants
of incentive stock options to certain employees. The plan authorized a total of 181,460
shares for options. For each stock option grant, the Board of Directors determines and
approves option exercise prices, numbers of options granted, vesting periods and expiration
dates. Cash was not used to settle any equity instruments previously granted. The Company
issues shares from authorized but unissued shares upon the exercise of stock options.
|
|
|
|
|
On January 1, 2006, the Company adopted Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 123 (Revised 2004) that requires
the measurement and recognition of compensation expense for all stock-based payment awards
made to employees and directors.
|
|
|
|
|
SFAS No. 123(R) superseded the Companys previous accounting under the provisions of SFAS
No. 123, Accounting for Stock-Based Compensation. As permitted by SFAS No. 123, the Company
measured compensation cost for options in accordance with Accounting Principles Board
Opinion (APB) No. 25, Accounting for Stock Issued to Employees and related
interpretations. Prior to January 1, 2006, no accounting recognition was given to these
prior stock options granted at fair market value until they were exercised. Upon exercise,
net proceeds, including tax benefits realized, were credited to equity.
|
|
|
|
|
SFAS No. 123(R) required the Company to estimate the fair value of stock-based payment
awards on the date of grant using an option-pricing model. The value of the portion of the
award that is ultimately expected to vest is recognized as expense over the requisite
service periods in the Companys consolidated statement of income. The Company adopted the
accelerated method for graded vested options which recognizes compensation expense for each
vesting tranche over its vesting period.
|
|
|
|
|
The Company uses the Black-Scholes option-pricing model to value stock options. The
Black-Scholes model requires the use of employee exercise behavior data and the use of
a number of assumptions including volatility of the Companys stock price, dividend yield,
weighted average risk-free interest rate, and weighted average expected life of the options.
There were no options granted during the nine months ended September 30, 2007 and 2006.
|
8
|
|
|
The Company adopted SFAS No. 123(R) using the modified prospective transition method. In
accordance with the modified prospective transition method, the Companys consolidated
financial statements prior to January 1, 2006 have not been restated to reflect, and do not
include, the impact of SFAS No. 123(R). Stock-based compensation expense recognized under
SFAS No. 123(R) for the nine months ended September 30, 2007 and 2006 totaled $16 thousand
and $42 thousand, respectively. At September 30, 2007, unrecognized stock-based compensation
totaled $10 thousand. These costs are expected to be recognized over a weighted average
period of 5 months.
|
|
|
|
|
Stock option activity for the nine months ended September 30, 2007 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
Average
|
|
|
Contractual
|
|
|
Intrinsic Value
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Term (years)
|
|
|
(in thousands)
|
|
Stock options outstanding, December 31, 2006
|
|
|
128,885
|
|
|
$
|
14.40
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Exercised
|
|
|
(5,179
|
)
|
|
$
|
12.39
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Forfeited
|
|
|
(2,160
|
)
|
|
$
|
18.12
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options outstanding, September 30, 2007
|
|
|
121,546
|
|
|
$
|
14.46
|
|
|
|
5.60
|
|
|
$
|
434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options exercisable, September 30, 2007
|
|
|
104,887
|
|
|
$
|
13.96
|
|
|
|
5.35
|
|
|
$
|
425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option activity for the nine months ended September 30, 2006 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
Average
|
|
|
Contractual
|
|
|
Intrinsic Value
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Term (years)
|
|
|
(in thousands)
|
|
Stock options outstanding, December 31, 2005
|
|
|
151,651
|
|
|
$
|
14.17
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Exercised
|
|
|
(10,080
|
)
|
|
$
|
12.65
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Forfeited
|
|
|
(2,940
|
)
|
|
$
|
16.66
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options outstanding, September 30, 2006
|
|
|
138,631
|
|
|
$
|
14.23
|
|
|
|
6.38
|
|
|
$
|
631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options exercisable, September 30, 2006
|
|
|
98,733
|
|
|
$
|
13.38
|
|
|
|
5.84
|
|
|
$
|
380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total intrinsic value of options exercised during the period ended September 30, 2007
and 2006 was $27 thousand and $50 thousand, respectively, and the total fair value of stock
options that vested was $9 thousand for both periods. The amount of cash received from
options exercised during the period ended September 30, 2007 and 2006 was $64 thousand and
$127 thousand, respectively.
|
|
|
9.
|
|
Operating Segments
|
|
|
|
|
The Company has operating segments which have been aggregated into three reporting segments
as provided in SFAS No. 131 Disclosure about Segments of an Enterprise and Related
Information.
|
|
|
|
|
Management has evaluated the Companys overall operation and determined that its business
consists of certain reportable segments as of September 30, 2007 and 2006. Our operating
segments are aggregated into reportable segments based primarily upon similar economic
characteristics, products, services, customers, and delivery methods. These segments are
community banking operations, mortgage department services, and treasury services. The
following describes these segments:
|
|
|
|
|
Community Banking
The principal business activities of this segment are attracting
deposits from the general public and originating commercial and real estate loans for small
and medium size businesses in the Companys branch market areas. This segments primary
sources of revenue are interest income and fees earned in connection with loans and
deposits. This segments principal expenses consist of interest paid on deposits, personnel,
occupancy, and other general expenses.
|
|
|
|
|
Mortgage Department
The principal business activities of this segment are to
originate process, underwrite, fund and sell residential 1-4 family real estate loans. A
small portion of loans are retained (less than 5 percent of originations) in the
departments portfolio. This segments primary sources of revenues are from interest from
retained loans, loan fees, and servicing released premiums. This segments primary expenses are
personnel, occupancy, and other general expenses.
|
9
|
|
|
Treasury Services
The treasury function of the Company, although not considered a
line of business, is responsible for the management of the investment portfolio, data
processing and holding company activities. This segments primary source of revenue is
interest income from the investment portfolio. This segments primary expenses are personnel
expenses, data processing expense, the Companys state and federal income tax expense, and
other general and administrative expenses.
|
|
|
|
|
The financial results of each segment are derived from the Companys general ledger system.
Selected financial information on the Companys segments is presented below for the nine
months ended September 30, 2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2007
|
|
|
|
Treasury
|
|
|
Mortgage
|
|
|
Community
|
|
|
|
|
(Dollars in thousands)
|
|
Services
|
|
|
Department
|
|
|
Banking
|
|
|
Consolidated
|
|
Interest income
|
|
$
|
2,284
|
|
|
$
|
339
|
|
|
$
|
15,231
|
|
|
$
|
17,854
|
|
Interest expense
|
|
|
250
|
|
|
|
|
|
|
|
4,179
|
|
|
|
4,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
2,034
|
|
|
|
339
|
|
|
|
11,052
|
|
|
|
13,425
|
|
Provision for credit losses
|
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
130
|
|
Non-interest income
|
|
|
103
|
|
|
|
46
|
|
|
|
1,686
|
|
|
|
1,835
|
|
Non-interest expense
|
|
|
4,383
|
|
|
|
130
|
|
|
|
3,777
|
|
|
|
8,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax expense
|
|
|
(2,376
|
)
|
|
|
255
|
|
|
|
8,961
|
|
|
|
6,840
|
|
Provision for income tax expense
|
|
|
2,394
|
|
|
|
|
|
|
|
|
|
|
|
2,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(4,770
|
)
|
|
$
|
255
|
|
|
$
|
8,961
|
|
|
$
|
4,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
67,504
|
|
|
$
|
5,470
|
|
|
$
|
289,039
|
|
|
$
|
362,014
|
|
Loans
|
|
$
|
4
|
|
|
$
|
5,442
|
|
|
$
|
278,094
|
|
|
$
|
283,540
|
|
Deposits
|
|
$
|
1,918
|
|
|
|
|
|
|
$
|
280,218
|
|
|
$
|
282,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2006
|
|
|
|
Treasury
|
|
|
Mortgage
|
|
|
Community
|
|
|
|
|
(Dollars in thousands)
|
|
Services
|
|
|
Department
|
|
|
Banking
|
|
|
Consolidated
|
|
Interest income
|
|
$
|
2,230
|
|
|
$
|
279
|
|
|
$
|
13,250
|
|
|
$
|
15,759
|
|
Interest expense
|
|
|
215
|
|
|
|
|
|
|
|
3,371
|
|
|
|
3,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
2,015
|
|
|
|
279
|
|
|
|
9,879
|
|
|
|
12,173
|
|
Provision for credit losses
|
|
|
114
|
|
|
|
|
|
|
|
|
|
|
|
114
|
|
Non-interest income
|
|
|
148
|
|
|
|
36
|
|
|
|
1,574
|
|
|
|
1,758
|
|
Non-interest expense
|
|
|
3,843
|
|
|
|
124
|
|
|
|
3,559
|
|
|
|
7,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax expense
|
|
|
(1,794
|
)
|
|
|
191
|
|
|
|
7,894
|
|
|
|
6,291
|
|
Provision for income tax expense
|
|
|
2,168
|
|
|
|
|
|
|
|
|
|
|
|
2,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(3,962
|
)
|
|
$
|
191
|
|
|
$
|
7,894
|
|
|
$
|
4,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
74,652
|
|
|
$
|
4,861
|
|
|
$
|
265,138
|
|
|
$
|
344,651
|
|
Loans
|
|
$
|
5
|
|
|
$
|
4,837
|
|
|
$
|
252,332
|
|
|
$
|
257,174
|
|
Deposits
|
|
$
|
1,500
|
|
|
|
|
|
|
$
|
259,505
|
|
|
$
|
261,005
|
|
|
10.
|
|
Recent Accounting Pronouncements
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|
|
|
|
At January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB)
Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes an
Interpretation of FASB Statement No. 109. FIN 48 prescribes a comprehensive model for how
a company will recognize, measure, present, and disclose in its financial statements
uncertain tax positions that it has taken or expects to take on a tax return. The Company is
subject to U.S. federal income tax and income of the State of Oregon. As of January 1, 2007
and September 30, 2007, the Company had no uncertain tax positions. The adoption of the
accounting standard did not have a material impact on the Companys condensed consolidated
financial statements.
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In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This Statement
defines fair value, establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. It clarifies that fair value is the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants in the market in which the reporting entity transacts. This
Statement does not require any new fair value measurements, but rather, it provides enhanced
guidance to other pronouncements that require or permit assets or liabilities to be measured
at fair value. This Statement is effective for fiscal years beginning after November 15,
2007, with earlier adoption permitted. The Company does not expect that the adoption of
this Statement will have a material impact on the Companys condensed consolidated financial
statements.
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10
In February 2007, FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities. SFAS No. 159 provides entities with an option to report certain
financial assets and liabilities at fair value with changes in fair value reported in
earnings. In addition, it requires disclosures related to an entitys election to use fair
value reporting. It also requires entities to display the fair value of those assets and
liabilities for which the entity has elected to use fair value on the face of the balance
sheet. SFAS No. 159 is effective for public companies for years beginning after November
15, 2007. Management does not expect the adoption of SFAS 159 to have a material impact on
the Companys condensed consolidated financial statements.
On September 20, 2006, the FASB ratified Emerging Issue Task Force (EITF) Issue 06-5,
Accounting for Purchases of Life Insurance Determining the Amount That Could Be Realized
in Accordance with FASB Technical Bulletin No. 85-4 (FTB 85-4), Accounting for Purchases of
Life Insurance (EITF 06-5). EITF 06-5 addresses the methods by which an entity should
determine the amounts that could be realized under an insurance contract at the consolidated
balance sheet date when applying FTB 85-4, and whether the determination should be on an
individual or group policy basis. EIFT 06-5 is effective for fiscal years beginning after
December 15, 2006. The adoption of EITF 06-5 did not have a material impact on the Companys
condensed consolidated financial statements.
In September 2006, the FASB ratified the consensuses reached by the Task Force on Issue
No. 06-4 (EITF 06-4)
Accounting for Deferred Compensation and Postretirement Benefit Aspects
of Endorsement Split-Dollar Life Insurance Arrangements
. A question arose when an employer
enters into an endorsement split-dollar life insurance arrangement related to whether the
employer should recognize a liability for the future benefits or premiums to be provided to
the employee. EITF 06-4 indicates that an employer should recognize a liability for future
benefits and that a liability for the benefit obligation has not been settled through the
purchase of an endorsement type policy. An entity should apply the provisions of EITF 06-4
either through a change in accounting principle through a cumulative effect adjustment to
retained earnings as of the beginning of the year of adoption or a change in accounting
principle through retrospective application to all prior periods. The provisions of EITF
06-4 are effective for fiscal years beginning after December 15, 2007. Management has not
yet completed its evaluation of the impact that EITF 06-4 may have on the Company.
ITEM 2
Managements Discussion and
Analysis of Financial Condition
And Results of Operations
Cautionary Information
Concerning Forward-looking Statements
The following section contains certain forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. This statement is included for the purpose of
availing Bancorp the protection of the safe harbor provisions of this Act. The forward looking
statements contained in this report are subject to factors, risks and uncertainties that may cause
actual results to differ materially from those projected. Factors that might result in such
material differences include, but are not limited to economic conditions, the regulatory
environment, rapidly changing technology, new legislation, competitive factors, the interest rate
environment and the overall condition of the banking industry. Forward looking statements can be
identified by such words as estimate, believe, expect, intend, anticipate, should,
may, will, or other similar words or phrases. Although Bancorp believes that the expectations
reflected in such forward looking statements are reasonable, it can give no assurances that such
expectations will prove to have been correct. Readers are therefore cautioned not to place undue
reliance on such forward looking statements, which reflect managements analysis only as of the
date of the statement. Bancorp does not intend to update these forward-looking statements other
than in its periodic filings under applicable security laws.
Critical Accounting Policies
Critical accounting policies are defined as those that include significant judgments and
uncertainties, and could potentially result in materially different results under various
assumptions and conditions. Bancorp believes that its most critical accounting policy upon which
financial condition depends, and which involves the most complex or subjective decisions or
assessments, is the Allowance for Credit Losses
.
Arriving at an appropriate level of allowance for
credit losses involves a high degree of judgment. Bancorps allowance for credit losses provides
for probable losses based upon evaluations of known and inherent risks in the loan portfolio.
Management uses historical information, national statistics relating to the probability of loss,
and the prevailing business environment to assess the adequacy of the allowance for credit losses.
In addition, the adequacy of the allowance is reviewed no less than quarterly in conjunction with a
concurrent analysis of specific problem credits in the portfolio, both in terms of risk trending
and the likelihood of default. The allowance for credit losses may be affected by changing economic
conditions and various external factors in ways currently unforeseen. The allowance for credit
losses is increased by provisions for loan losses and by recoveries of loans previously charged-off
and reduced by loans charged-off.
Overview
Citizens Bank (the Bank) was chartered October 1, 1957 by the State of Oregon as a commercial
bank with a single office in Corvallis, Citizens Bank. Since then, Citizens Bank has expanded to
an additional ten locations in the five counties of Benton, Linn, Lane, Polk, and Yamhill with
branches located in the communities of Corvallis, Philomath, Albany, Junction City,
McMinnville,
Harrisburg, Dallas, Springfield, and Lebanon.
11
Citizens Bancorp (the Company or Bancorp), an Oregon Corporation and financial holding company,
was formed in 1996 for the purpose of becoming the holding company of Citizens Bank. Bancorp is
headquartered in Corvallis, Oregon. Its principal business activities are conducted through its
full-service, commercial bank subsidiary, Citizens Bank.
At the holding company level the affairs of Bancorp are overseen by a Board of Directors elected by
the shareholders of Bancorp at the annual meeting of shareholders. The business of the Bank is
overseen by a Board of Directors elected by Bancorp, the sole owner of the Bank. As of the date of
this Form 10-Q, the respective members of the Board of Directors of the Bank and the Board of
Directors of Bancorp are identical.
Bancorps culture focuses on the tenets of collaborative leadership, branch autonomy, assertive
business development, a positive working environment, a commitment to the community, outstanding
customer service, and relationship banking. Management believes that a healthy culture together
with a progressive management style will result in constantly improved shareholder value.
Bancorps primary goal is to improve shareholder value through increased earnings while maintaining
a high level of safety and soundness. Bancorp is committed to independence and long-term
performance strategies.
The long-term benefit to Bancorp of its cultural and management style is the development of the
Bank over time. Risk levels have been greatly reduced because of expertise in loan, investment,
operational, and human resource management.
Bancorps primary market focus is to provide commercial bank services to businesses, professionals,
and individuals. Bancorp emphasizes the development of meaningful customer relationships and a
high level of service. Its employees are well-trained banking professionals who are committed to
these objectives.
The Bank offers deposit accounts, safe-deposit boxes, consumer loans, commercial loans,
agricultural loans, and commercial and residential real estate loans. Commercial loans include
operating lines of credit, equipment and real estate financing, capital needs, and other
traditional financing products.
The Bank has an emphasis in financing farm operations, equipment, and property. The Bank has also
emphasized loans to professionals with its professional line of credit products. The Banks loan
portfolio has some concentrations in real estate secured loans, primarily commercial properties.
The Bank also operates a small residential mortgage loan origination department that originates
loans and sells them into the secondary market.
Deposit products include regular and package checking accounts, savings accounts, certificates of
deposit, money market accounts, and IRA accounts. The Bank offers debit cards, check guarantee
cards, and ATM cards as well as credit cards as part of its retail banking services.
The Bank offers extended banking hours in selected locations as well as Saturday banking. ATM
machines are also available at ten (10) locations offering 24-hour transaction services; including
cash withdrawals, deposits, account transfers, and balance inquiries. The Bank also offers its
customers a 24-hour automated telephone service that offers account transfers and balance
inquiries. The Banks on-line banking product offers services to both individuals and business
account customers. Business customers have a comprehensive cash management option. All online users
have the availability of the bill payment feature. The Bank expects to continually enhance its
on-line banking product while maintaining its quality people to people customer service.
Citizens on-line banking can be reached at www.CitizensEBank.com.
The Bank offers health savings accounts to customers with high deductible medical plans. The Bank
has found this deposit product to be mutually beneficial to the customer and to the Bank.
2007 Activities
On January 10, 2007, the Company paid a cash dividend to shareholders declared in 2006 of $.52 per
share. The cash dividend paid out was $2.5 million of which $1.2 million was reinvested through the
Companys dividend reinvestment plan.
On March 20, 2007 the board of directors of the Bank approved managements proposal of a new branch
to be located in Lebanon, Oregon. The Company acquired property for its Lebanon, Oregon branch
located at 2122 S. Santiam Highway. The branch opened in August 2007 doing business out of its
mobile unit during the construction of a permanent building. Management anticipates the permanent
building to be completed mid-year 2008. The branch will be led by a branch manager skilled in
lending which will be mutually beneficial to the Lebanon community and the Company.
The Board of Directors and management decided not to pursue a branch location in Eugene, Oregon.
The Company does not have a manager identified for a Eugene branch. The Companys philosophy is to
build a branch around a quality branch manager as opposed to constructing a building and then
trying to locate a manager. This strategy supports the Companys culture of strong branch
managers.
On September 11, 2007 the Company filed a preliminary Proxy Statement and Schedule 13E-3 with the
Securities and Exchange Commission (SEC) disclosing the Companys plan to submit to shareholders
for approval amendments to its Articles of Incorporation (Articles) enabling the Company to
deregister its common stock with the SEC. Amendments to the Articles would convert certain common
shareholders to a new class of preferred stock and other shareholders would have their stock
repurchased. On October 23, 2007 and November 5, 2007 the Company filed amended Proxy Statements.
Details of
the pending deregistration proposal can be found in the documents
filed with the SEC at
www.sec.gov
under Citizens Bancorp/OR.
12
The Company reported net income of $1,639,000 in the third quarter ending September 30, 2007 or
$.34 per common share, as compared to net income of $1,505,000 or $.32 per common share for the
same period in 2006. For the first nine months of 2007, the Company earned $4,446,000 or $.93 per
common share as compared to the nine month period ending September 30, 2006 of $4,123,000 or $.87
per common share.
Material Changes in Financial Condition
Significant changes in the condensed consolidated balance sheet for the nine months ended September
30, 2007 include an increase in total assets; primarily in loans. Liabilities decreased primarily
in short-term borrowings and other liabilities relative to the payment of the cash dividend to
shareholders. Overall, the Company experienced an increase in loans and deposits and a decrease in
cash and due from banks, interest bearing deposits in banks and investment securities.
At September 30, 2007, total assets increased .8% or approximately $3.0 million as compared to
total assets at December 31, 2006. Major components of the change in assets were:
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|
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$2.2 million decrease in cash and due from banks or (12.8)%
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|
|
|
$10.7 million decrease in interest bearing deposits in banks or (91.4)%
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|
|
|
|
$9.0 million decrease in federal funds sold or (96.4)%
|
|
|
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|
$7.0 million decrease in securities available for sale or (15.1%)
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|
|
|
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$30.6 million increase in net loans or 12.1%
|
Loans were generally made to customers within the Companys market area. Loan growth increased
12.1% for the period ended September 30, 2007 as a result of calling by the Companys qualified
loan officers in the Companys market areas. The increase in loans was primarily funded by an
increase in deposits and by the decreases in various liquid assets as noted above. The Company has
a history of minimal loan charge-offs due to its exceptional underwriting policies, standards, and
loan review processes. The Companys loan officers are actively calling on potential and current
customers. Management anticipates that the loan portfolio will continue to grow in 2007 with high
quality loans that are appropriately priced.
The Company experienced an increase in deposits for the period ending September 30, 2007 as
compared to the period ending December 31, 2006. The decrease in short term borrowings resulted
from a decrease in balances in customer repurchase sweep accounts (REPOS). The decrease in
other liabilities was due primarily to the payment of the cash dividend during the first quarter of
2007. Major components of the change in liabilities for the Company were:
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$.571 million increase in demand, non-interest bearing deposits or 1.0%
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|
|
|
$10.1 million increase in savings and interest bearing deposits or 5.9%
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|
|
|
|
$.866 million increase in time certificates of deposits or 2.1%
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|
|
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|
$10.4 million decrease in repurchase agreements or (27.7)%
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|
|
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$1.5 million decrease in other liabilities, primarily due to the
payment of the cash dividend to shareholders or (34.7)%
|
Total deposits increased $11.5 million or 4.3% as of September 30, 2007 as compared to December 31,
2006. Average deposits for the period ending September 30, 2007 have increased $21.8 million or
8.7% as compared to the same period in 2006. Management believes a portion of the increase in
deposits is in new core customer relationships due to calling efforts in its market areas.
Competition for deposits has been and continues to be very strong within the Companys market
areas. The Company has a low cost of funds/high margin strategy along with building customer
relationships. It does not compete for deposits by trying to outbid competitors as the Company
enjoys good liquidity and alternate lower cost of funding sources than offering high
non-relationship deposit rates. Management anticipates that deposit competition will remain strong
but estimates that deposits will slowly grow by continuing to develop strong customer relationships
and offering reasonable deposit rates.
Repurchase account deposits decreased approximately $10.4 million or 27.7% as a result of decreases
in existing account balances for the period ending September 30, 2007 as compared to December 31,
2006. These accounts tend to have sizeable fluctuations in their balances as these are some of the
Companys large commercial accounts. Additionally two large accounts closed as a result of an
estate settlement and the other for business discontinuation purposes.
Material Changes in Results of Operations
The Company reported net income of approximately $4,446,000 or $.93 per common share, for the nine
months ended September 30, 2007, compared to net income of approximately $4,123,000 or $.87 per
common share, for the same period in 2006. This represents an increase in net income of $323,000
or 7.8%. The increase was primarily the result of a $1.3 million increase in net interest income
exceeding a $764,000 increase in non-interest expense. Net income for the quarter ended September
30, 2007, was approximately $1,639,000 or $.34 net income per common share, compared to net income
of approximately $1,505,000, or $.32 per common share, for the same period in 2006. This
represents an increase in net income of $134,000 or 8.9% for the quarter. The increase during both
these periods was largely attributable to an increase in interest income on loans due to a 12.2%
growth in loans for the nine month period and 4.1% for the three month period ended September 30,
2007.
13
Total interest income increased approximately $2.1 million or 13.3% for the nine months and
$440,000 or 7.7% for the three months ended September 30, 2007 as compared to the same periods in
2006. The change for the nine month and the three month period was primarily a result of an
increase in interest income from loans. The increase in loan interest income was attributable to
growth of the portfolio along with an increase in the overall yield of the portfolio.
Total interest expense increased approximately $843,000 or 23.5% for the nine months and increased
$50,000 or 3.5% for the three months ended September 30, 2007 as compared to the same periods in
2006. The increase in interest expense on deposits for the period ending September 30, 2007 was
the result of deposit growth and higher interest rates paid for customer deposits resulting from
overall market rate increases in 2007 compared to the same period in 2006.
Net interest income for the nine months ended September 30, 2007 increased approximately $1.3
million or 10.3% and $390,000 or 9.0% for the three-month period ended September 30, 2007 as
compared to the same periods in 2006. The increase in both the three-month and nine-month period
ended September 30, 2007 was primarily a result of the increase in interest income on loans more
than offsetting the increased interest expense on deposits.
Total non-interest income increased by $77,000 or 4.4% for the nine months and $54,000 or 9.5% for
the three months ended September 30, 2007 as compared to the same periods in 2006. Service charge
income decreased $133,000 or 13.7% for the nine month period and $19,000 or 6.1% of the three month
period ended September 30, 2007 as compared to the same periods in 2006. The decrease is primarily
a result of a decrease in overdraft fees on deposit accounts.
Total non-interest expense increased $764,000 or 10.2% for the nine months and $206,000 or 8.1% for
the three months ended September 30, 2007, as compared to the same periods in 2006. Salary and
benefit expense increased $449,000 or 8.9% for the nine months ended September 30, 2007 as a result
of routine salary adjustments, additional staff relative to the new branch in Lebanon, 401K plan
expense, and increased costs associated with medical benefits as compared to the same period in
2006.
Allowance for Credit Losses
The Company maintains an allowance for loan losses and unfunded loan commitments for losses that
occur from time to time as an incidental part of the business of banking. The allowance is
increased by provisions charged to earnings and by recoveries on loans previously charged off, and
is reduced by loan charge offs.
During the nine months ended September 30, 2007, the Companys provision for loan losses was
$130,000 as compared to $114,000 for the same nine-month period of 2006. The Companys provision
for loan losses is based on its analysis of delinquencies, loan types, loan classifications, and
other factors affecting the loan portfolio. The Company experienced $33,000 in loan losses and
$5,000 in recoveries for the nine months ended September 30, 2007 and $17,000 in losses and $3,000
in recoveries for the period ended September 30, 2006. Historically, the Companys loan charge-off
levels have been very low compared to its peers. Management believes that the allowance for loan
losses at September 30, 2007 of $2,797,000 or .99% of total loans is adequate. The allowance for
unfunded loan commitment was $180,000 as of September 30, 2007 which management also believes is
adequate.
The provision for credit losses represents charges made to operating expenses to maintain an
appropriate allowance for credit losses. Management considers various factors in establishing an
appropriate allowance. These factors include an assessment of the financial condition of the
borrower, a determination of the borrowers ability to service the debt from cash flow, a
conservative assessment of the value of the underlying collateral, the condition of the specific
industry of the borrower, the economic health of the local community, a comprehensive analysis of
the levels and trends of loan types, and a review of past due and classified loans.
It is Company policy that once each quarter, management makes recommendations to the Board
regarding the adequacy of the Companys allowance for credit losses at quarter end and the amount
of the provision that should be charged against earnings. Managements recommendations are based
on an internal loan review process to determine specific potential loss factors on classified
loans, risk factor of loan grades, historical loss factors derived from actual net charge-off
experience, trends in non-performing loans and other potential risks in the loan portfolio such as
industry concentration, the local economy and the volume of loans.
Management uses a loan grading system wherein loan officers assign a risk grade to each of their
loans at inception and at intervals based on receipt of financial information, renewal, or when
there is an indication that a credit may have improved or weakened. The risk grades in the loan
portfolio are used in determining a factor that is used in analyzing the adequacy of the allowance
for credit losses.
The Companys policy is to charge off loans when, in managements opinion, the loan or a portion of
the loan is deemed uncollectible following a concerted collection effort. Management continues to
pursue collection after a loan is charged-off until all possibilities for collection have been
exhausted.
14
Liquidity and Capital Resources
The Company has adopted policies to maintain a relatively liquid position to enable it to respond
to changes in the Companys financial environment. Generally, the Companys major sources of
liquidity are customer deposits, sales and maturities of securities, the use of borrowing lines
with correspondent banks including Federal Home Loan bank borrowings, loan repayments and net cash
provided by operating activities.
The analysis of liquidity should also include a review of the changes that appear in the condensed
consolidated statement of cash flows for the first nine months of 2007. The statement of cash
flows includes operating, investing and financing categories. Operating activities include net
income that is adjusted for non-cash items and increases or decreases in cash due to certain
changes in assets and liabilities. Investing activities consist primarily of both proceeds from
maturities and purchases of securities, and the net growth in loans. Financing activities present
the cash flows associated with the Banks deposit accounts and repurchase agreements.
Management believes that the Companys existing sources of liquidity will enable the Company to
fund its requirements in the normal course of business.
As of September 30, 2007, shareholders equity totaled $49,857,000 as compared to $46,524,000 at
December 31, 2006, an increase of 7.2%. This increase in equity was primarily due to the Companys
net income of $4,446,000 and dividend reinvestment of $1,189,000 which was decreased by the
repurchase of common stock of approximately $2,567,000.
Under the Companys stock bonus plan, 45,365 shares of common stock are authorized for
distribution. As of September 30, 2007, 595 shares had been issued under this Plan.
Capital ratios for Citizens Bank were as follows as of the dates indicated:
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September 30, 2007
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December 31, 2006
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Adequately
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Well
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Adequately
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Well
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Actual
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Capitalized
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Capitalized
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Actual
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Capitalized
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Capitalized
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Ratio
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Standards
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Standards
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Ratio
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Standards
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Standards
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Tier 1 Leverage Ratio
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13.86
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%
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4
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%
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5
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%
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13.17
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%
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4
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%
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5
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%
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Tier 1 Risk Based Capital
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15.30
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%
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4
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%
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6
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%
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15.67
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%
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4
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%
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6
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%
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Total Risk Based Capital
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16.22
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%
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8
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%
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10
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%
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16.64
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%
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8
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%
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10
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%
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ITEM 3. Quantitative & Qualitative Disclosures About Market Risk
Interest rate, credit, and operations risks are the most significant market risks impacting the
Companys performance. The Company relies on loan review, prudent loan underwriting standards and
an adequate allowance for credit losses to mitigate credit risk.
The Company uses an asset/liability management simulation model to measure interest rate risk. The
model quantifies interest rate risk through simulating forecasted net interest income over a 12
month time period under various rate scenarios, as well as monitoring the change in the present
value of equity under the same rate scenarios. The present value of equity is defined as the
difference between the market value of current assets less current liabilities. By measuring the
change in the present value of equity under different rate scenarios, management is able to
identify interest rate risk that may not be evident in simulating changes in forecasted net
interest income.
As of September 30, 2007 the Company is asset sensitive, meaning that interest bearing assets
mature or reprice more quickly than interest earning liabilities in a given period. An increase or
decrease in market rates of interest will not materially impact net interest income.
It should be noted that the simulation model does not take into account future management actions
that could be undertaken if there were a change in actual market interest rate during the year.
Also, certain assumptions are required to perform modeling simulations that may have significant
impact on the results. These include assumptions regarding the level of interest rates and balance
changes on deposit products that do not have stated maturities. These assumptions have been
developed through a combination of industry standards and future expected pricing behavior. The
model also includes assumptions about changes in the composition or mix of the balance sheet. The
results derived from the simulation model could vary significantly by external factors such as
changes in the prepayment assumptions, early withdrawals of deposits and competition. Management
has assessed these risks and believes that there has been no material change since December 31,
2006.
15
ITEM 4. Controls and Procedures
a)
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Evaluation of Disclosure Controls and Procedures:
An evaluation of the Companys disclosure
controls and procedures (as defined in Section 13(a)-15(e) and 15d-15(e)) of the Securities
Exchange Act of 1934 was carried out under the supervision and with the participation of the
Companys Chief Executive Officer, Chief Financial Officer and several other members of the
Companys senior management as of the end of the period covered by this quarterly report. The
Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys
disclosure controls and procedures as currently in effect are effective in ensuring that the
information required to be disclosed by the Company in the reports it files or submits under
the Act is (1) accumulated and communicated to the Companys management (including the Chief
Executive Officer and Chief Financial Officer) in a timely manner, and (2) recorded,
processed, summarized and reported within the time periods specified in the SECs rules and
forms.
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b)
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Changes in Internal Controls:
There were no significant changes in the Companys internal
controls or in other factors that could significantly affect the Companys internal controls
subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in
such controls requiring corrective actions. As a result, no corrective actions were taken.
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16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS
There has not been any material change in the risk factors disclosure from that
contained in the Companys Form 10-K for the fiscal year ended December 31, 2006.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
(a) Exhibits
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31.1
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Certification of the Chief Executive Officer pursuant to Section 302
of the Sarbanes Oxley Act of 2002.
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31.2
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Certification of the Chief Financial Officer pursuant to Section 302
of the Sarbanes Oxley Act of 2002.
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32.1
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Chief Executive Officer certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
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32.2
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Chief Financial Officer certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
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17
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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Date: November 13, 2007
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|
/s/ William V. Humphreys
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|
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|
|
|
|
|
|
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By:
|
|
William V. Humphreys
|
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|
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President and
Chief Executive Officer
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Date: November 13, 2007
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/s/ Lark E. Wysham
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By:
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Lark E. Wysham
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Executive Vice President and
Chief Financial Officer
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18
EXHIBIT INDEX
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|
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Exhibit
|
|
|
No.
|
|
Description
|
|
|
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31.1
|
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Certification of the Chief Executive Officer pursuant to Section 302
of the Sarbanes Oxley Act of 2002.
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|
|
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31.2
|
|
Certification of the Chief Financial Officer pursuant to Section 302
of the Sarbanes Oxley Act of 2002.
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|
|
|
32.1
|
|
Chief Executive Officer certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
|
|
|
|
32.2
|
|
Chief Financial Officer certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
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|
|
|
19
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