x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2013. |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . |
VIRGINIA
|
|
54-1284688
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
628 Main Street
|
|
|
Danville, Virginia
|
|
24541
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Yes
|
x
|
No
|
¨
|
|
Yes
|
x
|
No
|
¨
|
|
Large accelerated filer -
|
Accelerated filer x
|
Non-accelerated filer -
|
Yes
|
¨
|
No
|
x
|
|
Index
|
|
|
Page
|
|
|
|
|
Part I.
|
FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
Item 1.
|
Financial Statements
|
|
|
|
|
|
|
|
Consolidated Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012
|
3
|
|
|
|
|
|
|
Consolidated Statements of Income for the three months ended September 30, 2013 and 2012 (unaudited)
|
4
|
|
|
|
|
|
|
Consolidated Statements of Income for the nine months ended September 30, 2013 and 2012 (unaudited)
|
5
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for the three months and nine months ended September 30, 2013 and 2012 (unaudited)
|
6
|
|
|
|
|
|
|
Consolidated Statements of Changes in Shareholders' Equity for the nine months ended September 30, 2013 and 2012 (unaudited)
|
7
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 (unaudited)
|
8
|
|
|
|
|
|
|
Notes to Consolidated Financial Statements (unaudited)
|
9
|
|
|
|
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
37
|
|
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
56
|
|
|
|
|
|
Item 4.
|
Controls and Procedures
|
57
|
|
|
|
|
Part II.
|
OTHER INFORMATION
|
|
|
|
|
|
|
|
Item 1.
|
Legal Proceedings
|
58
|
|
|
|
|
|
Item 1A.
|
Risk Factors
|
58
|
|
|
|
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
58
|
|
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
58
|
|
|
|
|
|
Item 4.
|
Mine Safety Disclosures
|
58
|
|
|
|
|
|
Item 5.
|
Other Information
|
58
|
|
|
|
|
|
Item 6.
|
Exhibits
|
58
|
|
|
|
|
SIGNATURES
|
59
|
Item 1. | Financial Statements |
American National Bankshares Inc. and Subsidiaries
|
||||||||
Consolidated Balance Sheets
|
||||||||
(Dollars in thousands, except share data)
|
||||||||
Assets
|
(Unaudited)
September 30, 2013
|
(Audited)
December 31, 2012
|
||||||
Cash and due from banks
|
$
|
24,071
|
$
|
20,435
|
||||
Interest-bearing deposits in other banks
|
54,198
|
27,007
|
||||||
|
||||||||
Securities available for sale, at fair value
|
347,618
|
335,246
|
||||||
Restricted stock, at cost
|
4,885
|
5,287
|
||||||
Loans held for sale
|
3,919
|
13,852
|
||||||
|
||||||||
Loans, net of unearned income
|
798,996
|
788,705
|
||||||
Less allowance for loan losses
|
(12,684
|
)
|
(12,118
|
)
|
||||
Net loans
|
786,312
|
776,587
|
||||||
|
||||||||
Premises and equipment, net
|
23,982
|
24,543
|
||||||
Other real estate owned, net
|
4,215
|
6,193
|
||||||
Goodwill
|
39,043
|
39,043
|
||||||
Core deposit intangibles, net
|
3,489
|
4,660
|
||||||
Bank owned life insurance
|
14,597
|
14,289
|
||||||
Accrued interest receivable and other assets
|
17,856
|
16,545
|
||||||
Total assets
|
$
|
1,324,185
|
$
|
1,283,687
|
||||
|
||||||||
Liabilities
|
||||||||
Liabilities:
|
||||||||
Demand deposits -- noninterest bearing
|
$
|
231,583
|
$
|
217,275
|
||||
Demand deposits -- interest bearing
|
170,641
|
153,578
|
||||||
Money market deposits
|
181,559
|
166,111
|
||||||
Savings deposits
|
85,016
|
81,135
|
||||||
Time deposits
|
402,284
|
409,568
|
||||||
Total deposits
|
1,071,083
|
1,027,667
|
||||||
|
||||||||
Customer repurchase agreements
|
44,026
|
49,942
|
||||||
Long-term borrowings
|
9,983
|
10,079
|
||||||
Trust preferred capital notes
|
27,394
|
27,317
|
||||||
Accrued interest payable and other liabilities
|
5,873
|
5,436
|
||||||
Total liabilities
|
1,158,359
|
1,120,441
|
||||||
|
||||||||
Shareholders' equity
|
||||||||
Preferred stock, $5 par, 2,000,000 shares authorized, none outstanding
|
-
|
-
|
||||||
Common stock, $1 par, 20,000,000 shares authorized, 7,886,476 shares outstanding at September 30, 2013 and 7,846,912 shares outstanding at December 31, 2012
|
7,886
|
7,847
|
||||||
Capital in excess of par value
|
57,905
|
57,211
|
||||||
Retained earnings
|
97,762
|
90,591
|
||||||
Accumulated other comprehensive income, net
|
2,273
|
7,597
|
||||||
Total shareholders' equity
|
165,826
|
163,246
|
||||||
Total liabilities and shareholders' equity
|
$
|
1,324,185
|
$
|
1,283,687
|
American National Bankshares Inc. and Subsidiaries
|
||||||||
Consolidated Statements of Income
|
||||||||
(Dollars in thousands, except share and per share data) (Unaudited)
|
||||||||
|
Three Months Ended
September 30
|
|||||||
|
2013
|
2012
|
||||||
Interest and Dividend Income:
|
||||||||
Interest and fees on loans
|
$
|
11,100
|
$
|
11,421
|
||||
Interest and dividends on securities:
|
||||||||
Taxable
|
845
|
995
|
||||||
Tax-exempt
|
1,056
|
1,059
|
||||||
Dividends
|
67
|
52
|
||||||
Other interest income
|
38
|
19
|
||||||
Total interest and dividend income
|
13,106
|
13,546
|
||||||
|
||||||||
Interest Expense:
|
||||||||
Interest on deposits
|
1,338
|
1,725
|
||||||
Interest on short-term borrowings
|
3
|
33
|
||||||
Interest on long-term borrowings
|
82
|
84
|
||||||
Interest on trust preferred capital notes
|
190
|
204
|
||||||
Total interest expense
|
1,613
|
2,046
|
||||||
|
||||||||
Net Interest Income
|
11,493
|
11,500
|
||||||
Provision for Loan Losses
|
-
|
333
|
||||||
|
||||||||
Net Interest Income After Provision for Loan Losses
|
11,493
|
11,167
|
||||||
|
||||||||
Noninterest Income:
|
||||||||
Trust fees
|
1,077
|
926
|
||||||
Service charges on deposit accounts
|
452
|
414
|
||||||
Other fees and commissions
|
471
|
421
|
||||||
Mortgage banking income
|
464
|
615
|
||||||
Securities gains, net
|
4
|
-
|
||||||
Other
|
299
|
314
|
||||||
Total noninterest income
|
2,767
|
2,690
|
||||||
|
||||||||
Noninterest Expense:
|
||||||||
Salaries
|
3,610
|
3,933
|
||||||
Employee benefits
|
856
|
780
|
||||||
Occupancy and equipment
|
933
|
929
|
||||||
FDIC assessment
|
163
|
84
|
||||||
Bank franchise tax
|
187
|
173
|
||||||
Core deposit intangible amortization
|
330
|
421
|
||||||
Foreclosed real estate, net
|
245
|
412
|
||||||
Other
|
2,131
|
2,148
|
||||||
Total noninterest expense
|
8,455
|
8,880
|
||||||
Income Before Income Taxes
|
5,805
|
4,977
|
||||||
Income Taxes
|
1,562
|
1,338
|
||||||
Net Income
|
$
|
4,243
|
$
|
3,639
|
||||
|
||||||||
Net Income Per Common Share:
|
||||||||
Basic
|
$
|
0.54
|
$
|
0.46
|
||||
Diluted
|
$
|
0.54
|
$
|
0.46
|
||||
Average Common Shares Outstanding:
|
||||||||
Basic
|
7,877,901
|
7,838,314
|
||||||
Diluted
|
7,892,015
|
7,855,537
|
American National Bankshares Inc. and Subsidiaries
|
||||||||
Consolidated Statements of Income
|
||||||||
(Dollars in thousands, except share and per share data) (Unaudited)
|
||||||||
|
Nine Months Ended
September 30
|
|||||||
|
2013
|
2012
|
||||||
Interest and Dividend Income:
|
||||||||
Interest and fees on loans
|
$
|
33,853
|
$
|
37,224
|
||||
Interest and dividends on securities:
|
||||||||
Taxable
|
2,574
|
3,130
|
||||||
Tax-exempt
|
3,153
|
3,218
|
||||||
Dividends
|
176
|
155
|
||||||
Other interest income
|
106
|
47
|
||||||
Total interest and dividend income
|
39,862
|
43,774
|
||||||
|
||||||||
Interest Expense:
|
||||||||
Interest on deposits
|
4,143
|
5,291
|
||||||
Interest on short-term borrowings
|
38
|
127
|
||||||
Interest on long-term borrowings
|
246
|
252
|
||||||
Interest on trust preferred capital notes
|
567
|
616
|
||||||
Total interest expense
|
4,994
|
6,286
|
||||||
|
||||||||
Net Interest Income
|
34,868
|
37,488
|
||||||
Provision for Loan Losses
|
294
|
1,799
|
||||||
|
||||||||
Net Interest Income After Provision for Loan Losses
|
34,574
|
35,689
|
||||||
|
||||||||
Noninterest Income:
|
||||||||
Trust fees
|
2,609
|
2,774
|
||||||
Service charges on deposit accounts
|
1,290
|
1,315
|
||||||
Other fees and commissions
|
1,393
|
1,323
|
||||||
Mortgage banking income
|
1,713
|
1,665
|
||||||
Securities gains, net
|
203
|
160
|
||||||
Other
|
1,015
|
1,487
|
||||||
Total noninterest income
|
8,223
|
8,724
|
||||||
|
||||||||
Noninterest Expense:
|
||||||||
Salaries
|
10,552
|
11,853
|
||||||
Employee benefits
|
2,622
|
2,657
|
||||||
Occupancy and equipment
|
2,721
|
2,942
|
||||||
FDIC assessment
|
485
|
530
|
||||||
Bank franchise tax
|
559
|
538
|
||||||
Core deposit intangible amortization
|
1,171
|
1,514
|
||||||
Foreclosed real estate, net
|
681
|
430
|
||||||
Other
|
6,410
|
7,176
|
||||||
Total noninterest expense
|
25,201
|
27,640
|
||||||
Income Before Income Taxes
|
17,596
|
16,773
|
||||||
Income Taxes
|
4,992
|
4,685
|
||||||
Net Income
|
$
|
12,604
|
$
|
12,088
|
||||
|
||||||||
Net Income Per Common Share:
|
||||||||
Basic
|
$
|
1.60
|
$
|
1.54
|
||||
Diluted
|
$
|
1.60
|
$
|
1.54
|
||||
Average Common Shares Outstanding:
|
||||||||
Basic
|
7,867,835
|
7,830,928
|
||||||
Diluted
|
7,878,961
|
7,846,659
|
American National Bankshares Inc. and Subsidiaries
|
||||||||
Consolidated Statements of Comprehensive Income (Loss)
|
||||||||
(Dollars in thousands) (Unaudited)
|
||||||||
|
Three Months Ended
September 30
|
|||||||
|
2013
|
2012
|
||||||
|
||||||||
Net income
|
$
|
4,243
|
$
|
3,639
|
||||
|
||||||||
Other comprehensive income:
|
||||||||
|
||||||||
Unrealized gains on securities available for sale
|
193
|
2,396
|
||||||
Income tax (expense)
|
(67
|
)
|
(838
|
)
|
||||
|
||||||||
Reclassification adjustment for (gains) on securities
|
(4
|
)
|
-
|
|||||
Income tax expense
|
1
|
-
|
||||||
|
||||||||
Other comprehensive income
|
123
|
1,558
|
||||||
|
||||||||
Comprehensive income
|
$
|
4,366
|
$
|
5,197
|
|
Nine Months Ended
September 30
|
|||||||
|
2013
|
2012
|
||||||
|
||||||||
Net income
|
$
|
12,604
|
$
|
12,088
|
||||
|
||||||||
Other comprehensive income (loss):
|
||||||||
|
||||||||
Unrealized gains (losses) on securities available for sale
|
(7,988
|
)
|
3,004
|
|||||
Income tax benefit (expense)
|
2,796
|
(1,051
|
)
|
|||||
|
||||||||
Reclassification adjustment for (gains) on securities
|
(203
|
)
|
(160
|
)
|
||||
Income tax expense
|
71
|
56
|
||||||
|
||||||||
Other comprehensive income (loss)
|
(5,324
|
)
|
1,849
|
|||||
|
||||||||
Comprehensive income
|
$
|
7,280
|
$
|
13,937
|
American National Bankshares Inc. and Subsidiaries
|
||||||||||||||||||||
Consolidated Statements of Changes in Shareholders' Equity
|
||||||||||||||||||||
Nine Months Ended September 30, 2013 and 2012
|
||||||||||||||||||||
(Dollars in thousands) (Unaudited)
|
||||||||||||||||||||
|
Common
Stock
|
Capital in
Excess of
Par Value
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Total
Shareholders'
Equity
|
|||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Balance, December 31, 2011
|
$
|
7,807
|
$
|
56,395
|
$
|
81,797
|
$
|
6,830
|
$
|
152,829
|
||||||||||
|
||||||||||||||||||||
Net income
|
-
|
-
|
12,088
|
-
|
12,088
|
|||||||||||||||
|
||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
1,849
|
1,849
|
|||||||||||||||
|
||||||||||||||||||||
Stock options exercised
|
7
|
111
|
-
|
-
|
118
|
|||||||||||||||
|
||||||||||||||||||||
Equity based compensation
|
29
|
539
|
-
|
-
|
568
|
|||||||||||||||
|
||||||||||||||||||||
Cash dividends declared, $0.69 per share
|
-
|
-
|
(5,407
|
)
|
-
|
(5,407
|
)
|
|||||||||||||
|
||||||||||||||||||||
Balance, September 30, 2012
|
$
|
7,843
|
$
|
57,045
|
$
|
88,478
|
$
|
8,679
|
$
|
162,045
|
||||||||||
|
||||||||||||||||||||
Balance, December 31, 2012
|
$
|
7,847
|
$
|
57,211
|
$
|
90,591
|
$
|
7,597
|
$
|
163,246
|
||||||||||
|
||||||||||||||||||||
Net income
|
-
|
-
|
12,604
|
-
|
12,604
|
|||||||||||||||
|
||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
(5,324
|
)
|
(5,324
|
)
|
|||||||||||||
|
||||||||||||||||||||
Stock options exercised
|
17
|
292
|
-
|
-
|
309
|
|||||||||||||||
|
||||||||||||||||||||
Equity based compensation
|
22
|
402
|
-
|
-
|
424
|
|||||||||||||||
|
||||||||||||||||||||
Cash dividends declared, $0.69 per share
|
-
|
-
|
(5,433
|
)
|
-
|
(5,433
|
)
|
|||||||||||||
|
||||||||||||||||||||
Balance, September 30, 2013
|
$
|
7,886
|
$
|
57,905
|
$
|
97,762
|
$
|
2,273
|
$
|
165,826
|
American National Bankshares Inc. and Subsidiaries
|
||||||||
Consolidated Statements of Cash Flows
|
||||||||
Nine Months Ended September 30, 2013 and 2012
|
||||||||
(Dollars in thousands) (Unaudited)
|
||||||||
|
2013
|
2012
|
||||||
Cash Flows from Operating Activities:
|
||||||||
Net income
|
$
|
12,604
|
$
|
12,088
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provision for loan losses
|
294
|
1,799
|
||||||
Depreciation
|
1,284
|
1,315
|
||||||
Net accretion of purchase accounting adjustments
|
(5,809
|
)
|
(6,914
|
)
|
||||
Core deposit intangible amortization
|
1,171
|
1,514
|
||||||
Net amortization (accretion) of securities
|
2,430
|
2,480
|
||||||
Net gain on sale or call of securities
|
(203
|
)
|
(160
|
)
|
||||
Gain on sale of loans held for sale
|
(1,466
|
)
|
(1,469
|
)
|
||||
Proceeds from sales of loans held for sale
|
78,936
|
70,077
|
||||||
Originations of loans held for sale
|
(67,537
|
)
|
(70,396
|
)
|
||||
Net gain on foreclosed real estate
|
(86
|
)
|
(170
|
)
|
||||
Valuation allowance on foreclosed real estate
|
327
|
279
|
||||||
Net gain on sale of premises and equipment
|
-
|
(504
|
)
|
|||||
Equity based compensation expense
|
424
|
568
|
||||||
Deferred income tax expense (benefit)
|
(1,388
|
)
|
2,657
|
|||||
Net change in interest receivable
|
107
|
202
|
||||||
Net change in other assets
|
2,529
|
(233
|
)
|
|||||
Net change in interest payable
|
(100
|
)
|
(77
|
)
|
||||
Net change in other liabilities
|
537
|
1,018
|
||||||
Net cash provided by operating activities
|
24,054
|
14,074
|
||||||
|
||||||||
Cash Flows from Investing Activities:
|
||||||||
Proceeds from sales of securities available for sale
|
2,627
|
4,209
|
||||||
Proceeds from maturities, calls and paydowns of securities available for sale
|
41,961
|
52,328
|
||||||
Purchases of securities available for sale
|
(67,378
|
)
|
(50,641
|
)
|
||||
Net change in restricted stock
|
402
|
735
|
||||||
Net (increase) decrease in loans
|
(5,943
|
)
|
27,475
|
|||||
Proceeds from sale of premises and equipment
|
-
|
572
|
||||||
Purchases of premises and equipment
|
(723
|
)
|
(594
|
)
|
||||
Proceeds from sales of foreclosed real estate
|
3,286
|
4,720
|
||||||
Net cash (used in) provided by investing activities
|
(25,768
|
)
|
38,804
|
|||||
|
||||||||
Cash Flows from Financing Activities:
|
||||||||
Net change in demand, money market, and savings deposits
|
50,700
|
(14,251
|
)
|
|||||
Net change in time deposits
|
(7,006
|
)
|
8,335
|
|||||
Net change in customer repurchase agreements
|
(5,916
|
)
|
186
|
|||||
Net change in other short-term borrowings
|
-
|
(3,000
|
)
|
|||||
Net change in long-term borrowings
|
(113
|
)
|
(112
|
)
|
||||
Common stock dividends paid
|
(5,433
|
)
|
(5,407
|
)
|
||||
Proceeds from exercise of stock options
|
309
|
118
|
||||||
Net cash provided by (used in) financing activities
|
32,541
|
(14,131
|
)
|
|||||
|
||||||||
Net Increase in Cash and Cash Equivalents
|
30,827
|
38,747
|
||||||
|
||||||||
Cash and Cash Equivalents at Beginning of Period
|
47,442
|
28,893
|
||||||
|
||||||||
Cash and Cash Equivalents at End of Period
|
$
|
78,269
|
$
|
67,640
|
(dollars in thousands)
|
||||
Consideration paid:
|
||||
Common shares issued (1,626,157)
|
$
|
29,905
|
||
Cash paid to shareholders
|
12
|
|||
Fair value of options
|
132
|
|||
Preferred shares issued (5,000)
|
5,000
|
|||
Value of consideration
|
35,049
|
|||
|
||||
Assets acquired:
|
||||
Cash and cash equivalents
|
34,783
|
|||
Investment securities
|
51,442
|
|||
Loans held for sale
|
113
|
|||
Loans, net of unearned income
|
328,123
|
|||
Premises and equipment, net
|
5,708
|
|||
Deferred income taxes
|
15,310
|
|||
Core deposit intangible
|
6,556
|
|||
Other real estate owned
|
3,538
|
|||
Other assets
|
13,535
|
|||
Total assets
|
459,108
|
|||
|
||||
Liabilities assumed:
|
||||
Deposits
|
420,248
|
|||
FHLB advances
|
9,858
|
|||
Other borrowings
|
6,546
|
|||
Other liabilities
|
3,982
|
|||
Total liabilities
|
440,634
|
|||
Net assets acquired
|
18,474
|
|||
Goodwill resulting from merger with MidCarolina
|
$
|
16,575
|
Contractually required principal and interest at acquisition
|
$
|
56,681
|
||
Contractual cash flows not expected to be collected (nonaccretable difference)
|
17,472
|
|||
Expected cash flows at acquisition
|
39,209
|
|||
Interest component of expected cash flows (accretable discount)
|
1,663
|
|||
Fair value of acquired loans accounted for under FASB ASC 310-30
|
$
|
37,546
|
|
September 30, 2013
|
|||||||||||||||
(in thousands)
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
Securities available for sale:
|
||||||||||||||||
Federal agencies and GSEs
|
$
|
59,897
|
$
|
191
|
$
|
296
|
$
|
59,792
|
||||||||
Mortgage-backed and CMOs
|
69,107
|
1,185
|
405
|
69,887
|
||||||||||||
State and municipal
|
199,692
|
6,730
|
470
|
205,952
|
||||||||||||
Corporate
|
11,037
|
2
|
162
|
10,877
|
||||||||||||
Equity securities
|
1,000
|
110
|
-
|
1,110
|
||||||||||||
Total securities available for sale
|
$
|
340,733
|
$
|
8,218
|
$
|
1,333
|
$
|
347,618
|
|
December 31, 2012
|
|||||||||||||||
(in thousands)
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
Securities available for sale:
|
||||||||||||||||
Federal agencies and GSE
|
$
|
42,458
|
$
|
306
|
$
|
5
|
$
|
42,759
|
||||||||
Mortgage-backed and CMOs
|
81,585
|
1,829
|
106
|
83,308
|
||||||||||||
State and municipal
|
189,810
|
12,935
|
14
|
202,731
|
||||||||||||
Corporate
|
6,317
|
131
|
-
|
6,448
|
||||||||||||
Total securities available for sale
|
$
|
320,170
|
$
|
15,201
|
$
|
125
|
$
|
335,246
|
|
Total
|
Less than 12 Months
|
12 Months or More
|
|||||||||||||||||||||
(in thousands)
|
Estimated
Fair
Value
|
Unrealized
Loss
|
Estimated
Fair
Value
|
Unrealized
Loss
|
Estimated
Fair
Value
|
Unrealized
Loss
|
||||||||||||||||||
Federal agencies and GSEs
|
$
|
29,406
|
$
|
296
|
$
|
29,406
|
$
|
296
|
$
|
-
|
$
|
-
|
||||||||||||
Mortgage-backed and CMOs
|
19,528
|
405
|
13,980
|
311
|
5,548
|
94
|
||||||||||||||||||
State and municipal
|
30,064
|
470
|
28,629
|
465
|
1,435
|
5
|
||||||||||||||||||
Corporate
|
9,720
|
162
|
9,720
|
162
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
88,718
|
$
|
1,333
|
$
|
81,735
|
$
|
1,234
|
$
|
6,983
|
$
|
99
|
|
Total
|
Less than 12 Months
|
12 Months or More
|
|||||||||||||||||||||
(in thousands)
|
Estimated
Fair
Value
|
Unrealized
Loss
|
Estimated
Fair
Value
|
Unrealized
Loss
|
Estimated
Fair
Value
|
Unrealized
Loss
|
||||||||||||||||||
Federal agencies and GSEs
|
$
|
5,501
|
$
|
5
|
$
|
5,501
|
$
|
5
|
$
|
-
|
$
|
-
|
||||||||||||
Mortgage-backed and CMOs
|
16,353
|
106
|
12,941
|
42
|
3,412
|
64
|
||||||||||||||||||
State and municipal
|
4,329
|
14
|
4,329
|
14
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
26,183
|
$
|
125
|
$
|
22,771
|
$
|
61
|
$
|
3,412
|
$
|
64
|
(in thousands)
|
September 30, 2013
|
December 31, 2012
|
||||||
|
||||||||
Commercial
|
$
|
124,504
|
$
|
126,192
|
||||
Commercial real estate:
|
||||||||
Construction and land development
|
43,386
|
48,812
|
||||||
Commercial real estate
|
361,968
|
355,433
|
||||||
Residential real estate:
|
||||||||
Residential
|
173,695
|
161,033
|
||||||
Home equity
|
89,154
|
91,313
|
||||||
Consumer
|
6,289
|
5,922
|
||||||
Total loans
|
$
|
798,996
|
$
|
788,705
|
(in thousands)
|
September 30, 2013
|
December 31, 2012
|
||||||
Outstanding principal balance
|
$
|
152,673
|
$
|
219,569
|
||||
Carrying amount
|
141,883
|
203,981
|
(in thousands)
|
September 30, 2013
|
December 31, 2012
|
||||||
Outstanding principal balance
|
$
|
22,291
|
$
|
26,349
|
||||
Carrying amount
|
16,953
|
20,182
|
(in thousands)
|
Accretable Discount
|
|||
Balance at December 31, 2012
|
$
|
2,165
|
||
Accretion
|
(1,713
|
)
|
||
Reclassification from nonaccretable difference
|
1,391
|
|||
Balance at September 30, 2013
|
$
|
1,843
|
|
||||||||||||||||||||||||||||
(in thousands)
|
30- 59 Days
Past Due
|
60-89 Days
Past Due
|
90 Days +
Past Due
and Still
Accruing
|
Non-
Accrual
Loans
|
Total
Past
Due
|
Current
|
Total
Loans
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
15
|
$
|
15
|
$
|
124,489
|
$
|
124,504
|
||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||||||
Construction and land development
|
265
|
-
|
-
|
916
|
1,181
|
42,205
|
43,386
|
|||||||||||||||||||||
Commercial real estate
|
-
|
-
|
-
|
1,712
|
1,712
|
360,256
|
361,968
|
|||||||||||||||||||||
Residential:
|
||||||||||||||||||||||||||||
Residential
|
375
|
255
|
-
|
1,623
|
2,253
|
171,442
|
173,695
|
|||||||||||||||||||||
Home equity
|
107
|
-
|
-
|
373
|
480
|
88,674
|
89,154
|
|||||||||||||||||||||
Consumer
|
9
|
1
|
-
|
8
|
18
|
6,271
|
6,289
|
|||||||||||||||||||||
Total
|
$
|
756
|
$
|
256
|
$
|
-
|
$
|
4,647
|
$
|
5,659
|
$
|
793,337
|
$
|
798,996
|
(in thousands)
|
30- 59 Days
Past Due
|
60-89 Days
Past Due
|
90 Days +
Past Due
and Still
Accruing
|
Non-
Accrual
Loans
|
Total
Past
Due
|
Current
|
Total
Loans
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Commercial
|
$
|
219
|
$
|
-
|
$
|
-
|
$
|
52
|
$
|
271
|
$
|
125,921
|
$
|
126,192
|
||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||||||
Construction and land development
|
417
|
-
|
-
|
1,208
|
1,625
|
47,187
|
48,812
|
|||||||||||||||||||||
Commercial real estate
|
1,120
|
-
|
-
|
1,526
|
2,646
|
352,787
|
355,433
|
|||||||||||||||||||||
Residential:
|
||||||||||||||||||||||||||||
Residential
|
672
|
168
|
-
|
2,130
|
2,970
|
158,063
|
161,033
|
|||||||||||||||||||||
Home equity
|
144
|
-
|
-
|
397
|
541
|
90,772
|
91,313
|
|||||||||||||||||||||
Consumer
|
33
|
-
|
-
|
3
|
36
|
5,886
|
5,922
|
|||||||||||||||||||||
Total
|
$
|
2,605
|
$
|
168
|
$
|
-
|
$
|
5,316
|
$
|
8,089
|
$
|
780,616
|
$
|
788,705
|
(in thousands)
|
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Commercial real estate:
|
||||||||||||||||||||
Construction and land development
|
980
|
997
|
-
|
1,070
|
27
|
|||||||||||||||
Commercial real estate
|
328
|
328
|
-
|
326
|
12
|
|||||||||||||||
Residential:
|
||||||||||||||||||||
Residential
|
462
|
757
|
-
|
471
|
8
|
|||||||||||||||
Home equity
|
10
|
10
|
-
|
10
|
-
|
|||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
$
|
1,780
|
$
|
2,092
|
$
|
-
|
$
|
1,877
|
$
|
47
|
||||||||||
With a related allowance recorded:
|
||||||||||||||||||||
Commercial
|
9
|
9
|
7
|
10
|
1
|
|||||||||||||||
Commercial real estate:
|
||||||||||||||||||||
Construction and land development
|
524
|
546
|
81
|
576
|
-
|
|||||||||||||||
Commercial real estate
|
944
|
944
|
316
|
959
|
-
|
|||||||||||||||
Residential
|
||||||||||||||||||||
Residential
|
88
|
88
|
14
|
89
|
-
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
19
|
19
|
19
|
20
|
1
|
|||||||||||||||
|
$
|
1,584
|
$
|
1,606
|
$
|
437
|
$
|
1,654
|
$
|
2
|
||||||||||
Total:
|
||||||||||||||||||||
Commercial
|
$
|
9
|
$
|
9
|
$
|
7
|
$
|
10
|
$
|
1
|
||||||||||
Commercial real estate:
|
||||||||||||||||||||
Construction and land development
|
1,504
|
1,543
|
81
|
1,646
|
27
|
|||||||||||||||
Commercial real estate
|
1,272
|
1,272
|
316
|
1,285
|
12
|
|||||||||||||||
Residential:
|
||||||||||||||||||||
Residential
|
550
|
845
|
14
|
560
|
8
|
|||||||||||||||
Home equity
|
10
|
10
|
-
|
10
|
-
|
|||||||||||||||
Consumer
|
19
|
19
|
19
|
20
|
1
|
|||||||||||||||
|
$
|
3,364
|
$
|
3,698
|
$
|
437
|
$
|
3,531
|
$
|
49
|
(in thousands)
|
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
39
|
$
|
39
|
$
|
-
|
$
|
276
|
$
|
11
|
||||||||||
Commercial real estate:
|
||||||||||||||||||||
Construction and land development
|
2,302
|
2,335
|
-
|
1,562
|
-
|
|||||||||||||||
Commercial real estate
|
305
|
306
|
-
|
557
|
8
|
|||||||||||||||
Residential:
|
||||||||||||||||||||
Residential
|
270
|
541
|
-
|
861
|
15
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
$
|
2,916
|
$
|
3,221
|
$
|
-
|
$
|
3,256
|
$
|
34
|
||||||||||
With a related allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
110
|
$
|
110
|
$
|
107
|
$
|
35
|
$
|
-
|
||||||||||
Commercial real estate:
|
||||||||||||||||||||
Construction and land development
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Commercial real estate
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Residential:
|
||||||||||||||||||||
Residential
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
21
|
21
|
21
|
10
|
||||||||||||||||
|
$
|
131
|
$
|
131
|
$
|
128
|
$
|
45
|
$
|
-
|
||||||||||
Total:
|
||||||||||||||||||||
Commercial
|
$
|
149
|
$
|
149
|
$
|
107
|
$
|
311
|
$
|
11
|
||||||||||
Commercial real estate:
|
||||||||||||||||||||
Construction and land development
|
2,302
|
2,335
|
-
|
1,562
|
-
|
|||||||||||||||
Commercial real estate
|
305
|
306
|
-
|
557
|
8
|
|||||||||||||||
Residential:
|
||||||||||||||||||||
Residential
|
270
|
541
|
-
|
861
|
15
|
|||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
21
|
21
|
21
|
10
|
-
|
|||||||||||||||
|
$
|
3,047
|
$
|
3,352
|
$
|
128
|
$
|
3,301
|
$
|
34
|
|
Loans Modified as a TDR for the
Three Months Ended September 30, 2012
|
|||||||||||
(dollars in thousands)
|
Number of
Contracts
|
Pre-Modification
Outstanding Recorded
Investment
|
Post-Modification
Outstanding Recorded
Investment
|
|||||||||
Commercial
|
–
|
$
|
–
|
$
|
–
|
|||||||
Commercial real estate:
|
||||||||||||
Construction and land development
|
–
|
–
|
–
|
|||||||||
Home Equity
|
–
|
–
|
–
|
|||||||||
Commercial real estate
|
1
|
229
|
229
|
|||||||||
Consumer
|
1
|
22
|
21
|
|||||||||
Total
|
2
|
$
|
251
|
$
|
250
|
|
Loans Modified as a TDR for the
Nine Months Ended September 30, 2012
|
|||||||||||
(dollars in thousands)
|
Number of
Contracts
|
Pre-Modification
Outstanding Recorded
Investment
|
Post-Modification
Outstanding Recorded
Investment
|
|||||||||
Commercial
|
1
|
$
|
11
|
$
|
11
|
|||||||
Commercial real estate:
|
||||||||||||
Construction and land development
|
7
|
2,188
|
1,283
|
|||||||||
Home Equity
|
–
|
–
|
–
|
|||||||||
Commercial real estate
|
1
|
22
|
21
|
|||||||||
Consumer
|
–
|
–
|
–
|
|||||||||
Total
|
11
|
$
|
2,454
|
$
|
1,548
|
|
Commercial
|
Commercial
Real Estate
Construction
|
Commercial
Real Estate
Other
|
Residential
|
Home
Equity
|
|||||||||||||||
|
||||||||||||||||||||
Pass
|
$
|
122,952
|
$
|
37,189
|
$
|
349,125
|
$
|
159,504
|
$
|
86,491
|
||||||||||
Special Mention
|
1,480
|
1,346
|
7,566
|
10,098
|
1,685
|
|||||||||||||||
Substandard
|
72
|
4,851
|
5,277
|
4,093
|
978
|
|||||||||||||||
Doubtful
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
124,504
|
$
|
43,386
|
$
|
361,968
|
$
|
173,695
|
$
|
89,154
|
|
Consumer
|
|||
|
||||
Performing
|
$
|
6,277
|
||
Nonperforming
|
12
|
|||
Total
|
$
|
6,289
|
|
Commercial
|
Commercial
Real Estate
Construction
|
Commercial
Real Estate
Other
|
Residential
|
Home
Equity
|
|||||||||||||||
|
||||||||||||||||||||
Pass
|
$
|
125,072
|
$
|
39,417
|
$
|
340,094
|
$
|
146,875
|
$
|
89,066
|
||||||||||
Special Mention
|
922
|
2,287
|
10,321
|
10,731
|
1,060
|
|||||||||||||||
Substandard
|
198
|
7,108
|
5,018
|
3,427
|
1,187
|
|||||||||||||||
Doubtful
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total
|
$
|
126,192
|
$
|
48,812
|
$
|
355,433
|
$
|
161,033
|
$
|
91,313
|
|
Consumer
|
|||
|
||||
Performing
|
$
|
5,856
|
||
Nonperforming
|
66
|
|||
Total
|
$
|
5,922
|
(in thousands)
|
Nine Months Ended
September 30, 2013
|
Year Ended
December 31, 2012
|
Nine Months Ended
September 30, 2012
|
|||||||||
|
||||||||||||
Allowance for Loan Losses
|
||||||||||||
Balance, beginning of period
|
$
|
12,118
|
$
|
10,529
|
$
|
10,529
|
||||||
Provision for loan losses
|
294
|
2,133
|
1,799
|
|||||||||
Charge-offs
|
(629
|
)
|
(2,086
|
)
|
(1,682
|
)
|
||||||
Recoveries
|
901
|
1,542
|
1,352
|
|||||||||
Balance, end of period
|
$
|
12,684
|
$
|
12,118
|
$
|
11,998
|
||||||
|
||||||||||||
Reserve for Unfunded Lending Commitments
|
||||||||||||
Balance, beginning of period
|
$
|
201
|
$
|
200
|
$
|
200
|
||||||
Provision for loan losses
|
1
|
1
|
4
|
|||||||||
Charge-offs
|
-
|
-
|
-
|
|||||||||
Balance, end of period
|
$
|
202
|
$
|
201
|
$
|
204
|
|
Commercial
|
Commercial
Real Estate
|
Residential
Real Estate
|
Consumer
|
Total
|
|||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
||||||||||||||||||||
Allowance for Loan Losses
|
||||||||||||||||||||
Balance as of December 31, 2012
|
$
|
1,450
|
$
|
6,822
|
$
|
3,638
|
$
|
208
|
$
|
12,118
|
||||||||||
Charge-offs
|
(129
|
)
|
(23
|
)
|
(327
|
)
|
(150
|
)
|
(629
|
)
|
||||||||||
Recoveries
|
307
|
292
|
194
|
108
|
901
|
|||||||||||||||
Provision for loan losses
|
35
|
166
|
88
|
5
|
294
|
|||||||||||||||
Balance as of September 30, 2013
|
$
|
1,663
|
$
|
7,257
|
$
|
3,593
|
$
|
171
|
$
|
12,684
|
||||||||||
|
||||||||||||||||||||
Balance as of September 30, 2013
|
||||||||||||||||||||
|
||||||||||||||||||||
Allowance for Loan Losses
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
7
|
$
|
397
|
$
|
14
|
$
|
19
|
$
|
437
|
||||||||||
Collectively evaluated for impairment
|
1,656
|
6,687
|
3,402
|
152
|
11,897
|
|||||||||||||||
Loans acquired with deteriorated credit quality
|
-
|
173
|
177
|
-
|
350
|
|||||||||||||||
Total
|
$
|
1,663
|
$
|
7,257
|
$
|
3,593
|
$
|
171
|
$
|
12,684
|
||||||||||
|
||||||||||||||||||||
Loans
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
9
|
$
|
2,776
|
$
|
560
|
$
|
19
|
$
|
3,364
|
||||||||||
Collectively evaluated for impairment
|
124,324
|
393,655
|
254,430
|
6,270
|
778,679
|
|||||||||||||||
Loans acquired with deteriorated credit quality
|
171
|
8,923
|
7,859
|
-
|
16,953
|
|||||||||||||||
Total
|
$
|
124,504
|
$
|
405,354
|
$
|
262,849
|
$
|
6,289
|
$
|
798,996
|
|
Commercial
|
Commercial
Real Estate
|
Residential
Real Estate
|
Consumer
|
Total
|
|||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
||||||||||||||||||||
Allowance for Loan Losses
|
||||||||||||||||||||
Balance as of December 31, 2011
|
$
|
1,236
|
$
|
5,719
|
$
|
3,412
|
$
|
162
|
$
|
10,529
|
||||||||||
Charge-offs
|
(748
|
)
|
(572
|
)
|
(694
|
)
|
(72
|
)
|
(2,086
|
)
|
||||||||||
Recoveries
|
707
|
475
|
279
|
81
|
1,542
|
|||||||||||||||
Provision
|
255
|
1,200
|
641
|
37
|
2,133
|
|||||||||||||||
Balance as of December 31, 2012
|
$
|
1,450
|
$
|
6,822
|
$
|
3,638
|
$
|
208
|
$
|
12,118
|
||||||||||
|
||||||||||||||||||||
Balance as of December 31, 2012
|
||||||||||||||||||||
|
||||||||||||||||||||
Allowance for Loan Losses
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
107
|
$
|
-
|
$
|
-
|
$
|
21
|
$
|
128
|
||||||||||
Collectively evaluated for impairment
|
1,343
|
6,376
|
3,609
|
187
|
11,515
|
|||||||||||||||
Loans acquired with deteriorated credit quality
|
-
|
446
|
29
|
-
|
475
|
|||||||||||||||
Total
|
$
|
1,450
|
$
|
6,822
|
$
|
3,638
|
$
|
208
|
$
|
12,118
|
||||||||||
|
||||||||||||||||||||
Loans
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
149
|
$
|
2,607
|
$
|
270
|
$
|
21
|
$
|
3,047
|
||||||||||
Collectively evaluated for impairment
|
125,707
|
388,495
|
245,373
|
5,901
|
765,476
|
|||||||||||||||
Loans acquired with deteriorated credit quality
|
336
|
13,143
|
6,703
|
-
|
20,182
|
|||||||||||||||
Total
|
$
|
126,192
|
$
|
404,245
|
$
|
252,346
|
$
|
5,922
|
$
|
788,705
|
|
Goodwill
|
Intangibles
|
||||||
Balance as of December 31, 2012
|
$
|
39,043
|
$
|
4,660
|
||||
Additions
|
-
|
-
|
||||||
Amortization
|
-
|
(1,171
|
)
|
|||||
Impairment
|
-
|
-
|
||||||
Balance as of September 30, 2013
|
$
|
39,043
|
$
|
3,489
|
|
September 30, 2013
|
December 31, 2012
|
||||||
|
||||||||
Customer repurchase agreements
|
$
|
44,026
|
$
|
49,942
|
||||
FHLB overnight borrowings
|
-
|
-
|
||||||
|
$
|
44,026
|
$
|
49,942
|
September 30, 2013
|
December 31, 2012
|
||||||||||||||||
Due by
|
Advance
Amount
|
Weighted
Average
Rate
|
Due by
|
Advance Amount
|
Weighted
Average
Rate
|
||||||||||||
|
|
||||||||||||||||
April 2014
|
$
|
75
|
3.78
|
%
|
April 2014
|
$
|
188
|
3.78
|
%
|
||||||||
November 2017
|
9,908
|
2.98
|
November 2017
|
9,891
|
2.98
|
||||||||||||
|
$
|
9,983
|
3.00
|
%
|
|
$
|
10,079
|
3.01
|
%
|
|
Date
|
Interest
|
Maturity
|
(Amounts in thousands)
Principal Amount
|
||||||||||||||||
Issuing Entity
|
Issued
|
Rate
|
Date
|
September 30, 2013
|
December 31, 2012
|
|||||||||||||||
AMNB Trust I
|
04-07-06
|
Libor plus
|
06-30-36
|
$
|
20,619
|
$
|
20,619
|
|||||||||||||
|
1.35
|
%
|
||||||||||||||||||
|
||||||||||||||||||||
MidCarolina I
|
10-29-02
|
Libor plus
|
11-07-32
|
4,084
|
4,042
|
|||||||||||||||
|
3.45
|
%
|
||||||||||||||||||
|
||||||||||||||||||||
MidCarolina II
|
12-03-03
|
Libor plus
|
10-07-33
|
2,691
|
2,656
|
|||||||||||||||
|
2.95
|
%
|
||||||||||||||||||
|
||||||||||||||||||||
|
$
|
27,394
|
$
|
27,317
|
|
Option
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual Term
|
Aggregate
Intrinsic
Value
($000)
|
|||||||||
|
|
||||||||||||
Outstanding at December 31, 2012
|
240,517
|
$
|
24.28
|
|
|||||||||
Granted
|
-
|
-
|
|
||||||||||
Exercised
|
17,475
|
17.70
|
|
||||||||||
Forfeited
|
11,795
|
27.64
|
|
||||||||||
Expired
|
4,000
|
24.00
|
|
||||||||||
Outstanding at September 30, 2013
|
207,247
|
$
|
24.65
|
3.09 years
|
$
|
267
|
|||||||
Exercisable at September 30, 2013
|
207,247
|
$
|
24.65
|
3.09 years
|
$
|
267
|
Restricted Stock
|
Shares
|
Weighted Average Grant Date Value
|
||||||
|
||||||||
Nonvested at January 1, 2013
|
39,327
|
$
|
20.17
|
|||||
Granted
|
12,121
|
20.47
|
||||||
Vested
|
18,432
|
21.44
|
||||||
Forfeited
|
-
|
-
|
||||||
Nonvested at September 30, 2013
|
33,016
|
$
|
19.58
|
|
Three Months Ended
September 30, 2013
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
Shares
|
Per
Share
Amount
|
Shares
|
Per
Share
Amount
|
||||||||||||
Basic
|
7,877,901
|
$
|
0.54
|
7,838,314
|
$
|
0.46
|
||||||||||
Effect of dilutive securities - stock options
|
14,114
|
-
|
17,223
|
-
|
||||||||||||
Diluted
|
7,892,015
|
$
|
0.54
|
7,855,537
|
$
|
0.46
|
|
Nine Months Ended
September 30,
|
|||||||||||||||
|
2013
|
2012
|
||||||||||||||
|
Shares
|
Per
Share
Amount
|
Shares
|
Per
Share
Amount
|
||||||||||||
Basic
|
7,867,835
|
$
|
1.60
|
7,830,928
|
$
|
1.54
|
||||||||||
Effect of dilutive securities - stock options
|
11,126
|
-
|
15,731
|
-
|
||||||||||||
Diluted
|
7,878,961
|
$
|
1.60
|
7,846,659
|
$
|
1.54
|
Components of Net Periodic Benefit Cost
(in thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Service cost
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Interest cost
|
72
|
97
|
216
|
291
|
||||||||||||
Expected return on plan assets
|
(128
|
)
|
(135
|
)
|
(384
|
)
|
(405
|
)
|
||||||||
Recognized net actuarial loss
|
69
|
83
|
207
|
249
|
||||||||||||
|
||||||||||||||||
Net periodic benefit cost
|
$
|
13
|
$
|
45
|
$
|
39
|
$
|
135
|
|
Three Months Ended September 30, 2013
|
|||||||||||||||||||
(in thousands)
|
Community
Banking
|
Trust and
Investment
Services
|
Other
|
Intersegment
Eliminations
|
Total
|
|||||||||||||||
Interest income
|
$
|
13,094
|
$
|
-
|
$
|
12
|
$
|
-
|
$
|
13,106
|
||||||||||
Interest expense
|
1,423
|
-
|
190
|
-
|
1,613
|
|||||||||||||||
Noninterest income
|
1,567
|
1,195
|
5
|
-
|
2,767
|
|||||||||||||||
Income before income taxes
|
5,150
|
849
|
(194
|
)
|
-
|
5,805
|
||||||||||||||
Net income
|
3,754
|
616
|
(127
|
)
|
-
|
4,243
|
||||||||||||||
Depreciation and amortization
|
757
|
3
|
-
|
-
|
760
|
|||||||||||||||
Total assets
|
1,322,205
|
-
|
1,980
|
-
|
1,324,185
|
|||||||||||||||
Capital expenditures
|
139
|
4
|
-
|
-
|
143
|
|
Three Months Ended September 30, 2012
|
|||||||||||||||||||
|
Community
Banking
|
Trust and
Investment
Services
|
Other
|
Intersegment
Eliminations
|
Total
|
|||||||||||||||
Interest income
|
$
|
13,546
|
$
|
-
|
$
|
1
|
$
|
(1
|
)
|
$
|
13,546
|
|||||||||
Interest expense
|
1,843
|
-
|
204
|
(1
|
)
|
2,046
|
||||||||||||||
Noninterest income
|
1,640
|
1,034
|
16
|
-
|
2,690
|
|||||||||||||||
Income before income taxes
|
4,628
|
637
|
(288
|
)
|
-
|
4,977
|
||||||||||||||
Net income
|
3,364
|
465
|
(190
|
)
|
-
|
3,639
|
||||||||||||||
Depreciation and amortization
|
866
|
5
|
-
|
-
|
871
|
|||||||||||||||
Total assets
|
1,304,795
|
-
|
912
|
-
|
1,305,707
|
|||||||||||||||
Capital expenditures
|
21
|
-
|
-
|
-
|
21
|
|
Nine Months Ended September 30, 2013
|
|||||||||||||||||||
|
Community
Banking
|
Trust and
Investment
Services
|
Other
|
Intersegment
Eliminations
|
Total
|
|||||||||||||||
Interest income
|
$
|
39,850
|
$
|
-
|
$
|
12
|
$
|
-
|
$
|
39,862
|
||||||||||
Interest expense
|
4,427
|
-
|
567
|
-
|
4,994
|
|||||||||||||||
Noninterest income
|
5,252
|
2,956
|
15
|
-
|
8,223
|
|||||||||||||||
Income before income taxes
|
16,478
|
1,828
|
(710
|
)
|
-
|
17,596
|
||||||||||||||
Net income
|
11,777
|
1,296
|
(469
|
)
|
12,604
|
|||||||||||||||
Depreciation and amortization
|
2,443
|
12
|
-
|
-
|
2,455
|
|||||||||||||||
Total assets
|
1,322,205
|
-
|
1,980
|
-
|
1,324,185
|
|||||||||||||||
Capital expenditures
|
723
|
-
|
-
|
-
|
723
|
|
Nine Months Ended September 30, 2012
|
|||||||||||||||||||
|
Community
Banking
|
Trust and
Investment
Services
|
Other
|
Intersegment
Eliminations
|
Total
|
|||||||||||||||
Interest income
|
$
|
43,774
|
$
|
-
|
$
|
6
|
$
|
(6
|
)
|
$
|
43,774
|
|||||||||
Interest expense
|
5,675
|
-
|
617
|
(6
|
)
|
6,286
|
||||||||||||||
Noninterest income
|
5,601
|
3,096
|
27
|
-
|
8,724
|
|||||||||||||||
Operating income before income taxes
|
15,815
|
1,845
|
(887
|
)
|
-
|
16,773
|
||||||||||||||
Net income
|
11,348
|
1,330
|
(590
|
)
|
12,088
|
|||||||||||||||
Depreciation and amortization
|
2,814
|
15
|
-
|
-
|
2,829
|
|||||||||||||||
Total assets
|
1,304,795
|
-
|
912
|
-
|
1,305,707
|
|||||||||||||||
Capital expenditures
|
594
|
-
|
-
|
-
|
594
|
Level 1 – | Valuation is based on quoted prices in active markets for identical assets and liabilities. |
Level 2 – | Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. |
Level 3 – | Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. |
|
Fair Value Measurements at September 30, 2013 Using
|
|||||||||||||||
|
Balance as of
September 30,
|
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable Inputs
|
||||||||||||
Description
|
2013
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
Federal agencies and GSEs
|
$
|
59,792
|
$
|
- |
$
|
59,792 |
$
|
- | ||||||||
Mortgage-backed and CMOs
|
69,887
|
-
|
69,887
|
-
|
||||||||||||
State and municipal
|
205,952
|
-
|
205,952
|
-
|
||||||||||||
Corporate
|
10,877
|
-
|
10,877
|
-
|
||||||||||||
Equity
|
1,110
|
-
|
-
|
1,110
|
||||||||||||
Total
|
$
|
347,618
|
$
|
-
|
$
|
346,508
|
$
|
1,110
|
|
Fair Value Measurements at December 31, 2012 Using
|
|||||||||||||||
|
Balance as of
December 31,
|
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable Inputs
|
||||||||||||
Description
|
2012
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
Federal agencies and GSEs
|
$
|
42,759
|
$
|
-
|
$
|
42,759
|
$
|
-
|
||||||||
Mortgage-backed and CMOs
|
83,308
|
-
|
83,308
|
-
|
||||||||||||
State and municipal
|
202,731
|
2,110
|
200,621
|
-
|
||||||||||||
Corporate
|
6,448
|
-
|
6,097
|
351
|
||||||||||||
Total
|
$
|
335,246
|
$
|
2,110
|
$
|
332,785
|
$
|
351
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
|||||||||||||||||||||||
|
Total Realized / Unrealized Gains
(Losses) Included in
|
|||||||||||||||||||||||
|
Balances as of January 1, 2013
|
Net Income
|
Other Comprehensive Income
|
Purchases, Sales, Issuances and Settlements, Net
|
Transfer In (Out) of Level 3
|
Balances as of September 30, 2013
|
||||||||||||||||||
Securities available for sale:
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Corporate
|
$
|
351
|
$
|
136
|
$
|
-
|
$
|
(487
|
)
|
$
|
-
|
$
|
-
|
|||||||||||
Equity | - | - | - | 1,110 | - | 1,110 | ||||||||||||||||||
Total assets
|
$
|
351
|
$
|
136
|
$
|
-
|
$
|
623
|
|
$
|
-
|
$
|
1,110
|
|
Fair Value Measurements at September 30, 2013 Using
|
|||||||||||||||
|
Balance as of
September 30,
|
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable Inputs
|
||||||||||||
Description
|
2013
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
||||||||||||||||
Loans held for sale
|
$
|
3,919
|
$
|
-
|
$
|
3,919
|
$
|
-
|
||||||||
Impaired loans, net of valuation allowance
|
1,147
|
-
|
-
|
1,147
|
||||||||||||
Other real estate owned
|
4,215
|
-
|
-
|
4,215
|
|
Fair Value Measurements at December 31, 2012 Using
|
|||||||||||||||
|
Balance as of
December 31,
|
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable Inputs
|
||||||||||||
Description
|
2012
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
||||||||||||||||
Loans held for sale
|
$
|
13,852
|
$
|
-
|
$
|
13,852
|
$
|
-
|
||||||||
Impaired loans, net of valuation allowance
|
3
|
-
|
-
|
3
|
||||||||||||
Other real estate owned
|
6,193
|
-
|
-
|
6,193
|
Assets
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Weighted
Rate
|
|
|
|
|
|
|
|
Securities available for sale
|
|
Consideration of equity conversion options
|
|
Stock price in different rate environments
|
|
11%
|
|
|
|
|
|
|
|
Impaired loans
|
|
Discounted appraised value
|
|
Selling cost
|
|
6 %
|
|
|
|
|
|
|
|
Other real estate owned
|
|
Discounted appraised value
|
|
Discount for lack of marketability and age of appraisal
|
|
6 %
|
Other real estate owned
|
|
Discounted appraised value
|
|
Discount for lack of marketability and age of appraisal
|
|
9 %
|
Assets
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Weighted
Rate
|
|
|
|
|
|
|
|
Securities available for sale
|
|
Discounted cash flow analysis
|
|
Discount rate
|
|
38%
|
|
|
|
|
|
|
|
Impaired loans
|
|
Discounted appraised value
|
|
Selling cost
|
|
6%
|
|
|
|
|
|
|
|
Other real estate owned
|
|
Discounted appraised value
|
|
Selling cost
|
|
6%
|
Other real estate owned
|
|
Discounted appraised value
|
|
Discount for lack of marketability and age of appraisal
|
|
9%
|
|
Fair Value Measurements at September 30, 2013 Using
|
|||||||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable Inputs
|
Fair Value
|
||||||||||||||||
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
Balance
|
|||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
78,269
|
$
|
-
|
$
|
78,269
|
$
|
-
|
$
|
78,269
|
||||||||||
Securities available for sale
|
347,618
|
-
|
346,508
|
1,110
|
347,618
|
|||||||||||||||
Loans held for sale
|
3,919
|
-
|
3,919
|
-
|
3,919
|
|||||||||||||||
Loans, net of allowance
|
786,312
|
-
|
-
|
781,766
|
781,766
|
|||||||||||||||
Bank owned life insurance
|
14,597
|
-
|
14,597
|
-
|
14,597
|
|||||||||||||||
Accrued interest receivable
|
4,604
|
-
|
4,604
|
-
|
4,604
|
|||||||||||||||
|
||||||||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Deposits
|
$
|
1,071,083
|
$
|
-
|
$
|
604,281
|
$
|
405,777
|
$
|
1,010,058
|
||||||||||
Repurchase agreements
|
44,026
|
-
|
44,026
|
-
|
44,026
|
|||||||||||||||
Other borrowings
|
9,983
|
-
|
-
|
10,625
|
10,625
|
|||||||||||||||
Trust preferred capital notes
|
27,394
|
-
|
-
|
18,817
|
18,817
|
|||||||||||||||
Accrued interest payable
|
655
|
-
|
655
|
-
|
655
|
|
Fair Value Measurements at December 31, 2012 Using
|
|||||||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable Inputs
|
Fair Value
|
||||||||||||||||
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
Balance
|
|||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
47,442
|
$
|
-
|
$
|
47,442
|
$
|
-
|
$
|
47,442
|
||||||||||
Securities available for sale
|
335,246
|
2,110
|
332,785
|
351
|
335,246
|
|||||||||||||||
Loans held for sale
|
13,852
|
-
|
13,852
|
-
|
13,852
|
|||||||||||||||
Loans, net of allowance
|
776,587
|
-
|
-
|
777,761
|
777,761
|
|||||||||||||||
Bank owned life insurance
|
14,289
|
-
|
14,289
|
-
|
14,289
|
|||||||||||||||
Accrued interest receivable
|
4,711
|
-
|
4,711
|
-
|
4,711
|
|||||||||||||||
|
||||||||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Deposits
|
$
|
1,027,667
|
$
|
-
|
$
|
582,633
|
$
|
424,378
|
$
|
1,007,011
|
||||||||||
Repurchase agreements
|
49,942
|
-
|
49,942
|
-
|
49,942
|
|||||||||||||||
Other borrowings
|
10,079
|
-
|
-
|
11,062
|
11,062
|
|||||||||||||||
Trust preferred capital notes
|
27,317
|
-
|
-
|
22,524
|
22,524
|
|||||||||||||||
Accrued interest payable
|
755
|
-
|
755
|
-
|
755
|
|
Nine Months Ended
September 30,
|
|||||||
|
2013
|
2012
|
||||||
Supplemental Schedule of Cash and Cash Equivalents:
|
||||||||
Cash and due from banks
|
$
|
24,071
|
$
|
25,740
|
||||
Interest-bearing deposits in other banks
|
54,198
|
41,900
|
||||||
|
||||||||
|
$
|
78,269
|
$
|
67,640
|
||||
|
||||||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid for:
|
||||||||
Interest on deposits and borrowed funds
|
$
|
5,094
|
$
|
5,924
|
||||
Income taxes
|
4,275
|
108
|
||||||
Noncash investing and financing activities:
|
||||||||
Transfer of loans to other real estate owned
|
1,549
|
5,735
|
||||||
Unrealized (loss) gain on securities available for sale
|
(8,191
|
)
|
2,844
|
For the Three Month Period
|
Net Unrealized Gains (Losses) on Securities
|
Adjustments Related to Pension Benefits
|
Accumulated Other Comprehensive Income
|
|||||||||
|
||||||||||||
Balance at June 30, 2012
|
$
|
9,123
|
$
|
(2,002
|
)
|
$
|
7,121
|
|||||
|
||||||||||||
Net unrealized gains on securities available for sale, net of tax, $838
|
1,558
|
-
|
1,558
|
|||||||||
|
||||||||||||
Balance at September 30, 2012
|
$
|
10,681
|
$
|
(2,002
|
)
|
$
|
8,679
|
|||||
|
||||||||||||
Balance at June 30, 2013
|
$
|
4,353
|
$
|
(2,203
|
)
|
$
|
2,150
|
|||||
|
||||||||||||
Net unrealized losses on securities available for sale, net of tax, $67
|
126
|
-
|
126
|
|||||||||
|
||||||||||||
Reclassification adjustment for gains on securities, net of tax, $(1)
|
(3
|
)
|
-
|
(3
|
)
|
|||||||
|
||||||||||||
Balance at September 30, 2013
|
$
|
4,476
|
$
|
(2,203
|
)
|
$
|
2,273
|
|
||||||||||||
For the Nine Month Period
|
Net Unrealized Gains (Losses) on Securities
|
Adjustments Related to Pension Benefits
|
Accumulated Other Comprehensive Income
|
|||||||||
|
||||||||||||
Balance at December 31, 2011
|
$
|
8,832
|
$
|
(2,002
|
)
|
$
|
6,830
|
|||||
|
||||||||||||
Net unrealized gains on securities available for sale, net of tax, $1,051
|
1,953
|
-
|
1,953
|
|||||||||
|
||||||||||||
Reclassification adjustment for gains on securities, net of tax, $(56)
|
(104
|
)
|
-
|
(104
|
)
|
|||||||
|
||||||||||||
Balance at September 30, 2012
|
$
|
10,681
|
$
|
(2,002
|
)
|
$
|
8,679
|
|||||
|
||||||||||||
Balance at December 31, 2012
|
$
|
9,800
|
$
|
(2,203
|
)
|
$
|
7,597
|
|||||
|
||||||||||||
Net unrealized losses on securities available for sale, net of tax, $(2,796)
|
(5,192
|
)
|
-
|
(5,192
|
)
|
|||||||
|
||||||||||||
Reclassification adjustment for gains on securities, net of tax, $(71)
|
(132
|
)
|
-
|
(132
|
)
|
|||||||
|
||||||||||||
Balance at September 30, 2013
|
$
|
4,476
|
$
|
(2,203
|
)
|
$
|
2,273
|
For the Three Month Period
|
Amount
|
Affected Line Item in
|
|||
|
Reclassified
|
the Statement of Where
|
|||
Details about AOCI Components
|
from AOCI
|
Net Income is Presented
|
|||
|
|
||||
Available for sale securities:
|
|
||||
Realized gain on sale of securities
|
$
|
4
|
Securities gains, net
|
||
|
(1
|
)
|
Income tax expense
|
||
Total reclassifications
|
$
|
3
|
Net of tax
|
For the Nine Month Period
|
Amount
|
Affected Line Item in
|
|||
|
Reclassified
|
the Statement of Where
|
|||
Details about AOCI Components
|
from AOCI
|
Net Income is Presented
|
|||
|
|
||||
Available for sale securities:
|
|
||||
Realized gain on sale of securities
|
$
|
203
|
Securities gains, net
|
||
|
(71
|
)
|
Income tax expense
|
||
Total reclassifications
|
$
|
132
|
Net of tax
|
·
|
Financial market volatility including the level of interest rates could affect the values of financial instruments and the amount of net interest income earned;
|
·
|
General economic or business conditions, either nationally or in the market areas in which the Company does business, may be less favorable than expected, resulting in deteriorating credit quality, reduced demand for credit, or a weakened ability to generate deposits;
|
·
|
Competition among financial institutions may increase and competitors may have greater financial resources and develop products and technology that enable those competitors to compete more successfully than the Company;
|
·
|
Businesses that the Company is engaged in may be adversely affected by legislative or regulatory changes, including changes in accounting standards;
|
·
|
The ability to retain key personnel;
|
·
|
The failure of assumptions underlying the allowance for loan losses; and
|
·
|
Risks associated with mergers and other acquisitions and other expansion activities.
|
SUMMARY INCOME STATEMENT
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||
|
||||||||||||||||
For the three months ended September 30,
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
|
||||||||||||||||
Interest income
|
$
|
13,106
|
$
|
13,546
|
$
|
(440
|
)
|
-3.2
|
%
|
|||||||
Interest expense
|
(1,613
|
)
|
(2,046
|
)
|
433
|
-21.2
|
%
|
|||||||||
Net interest income
|
11,493
|
11,500
|
(7
|
)
|
-0.1
|
%
|
||||||||||
Provision for loan losses
|
-
|
(333
|
)
|
333
|
-100.0
|
%
|
||||||||||
Noninterest income
|
2,767
|
2,690
|
77
|
2.9
|
%
|
|||||||||||
Noninterest expense
|
(8,455
|
)
|
(8,880
|
)
|
425
|
-4.8
|
%
|
|||||||||
Income tax expense
|
(1,562
|
)
|
(1,338
|
)
|
(224
|
)
|
16.7
|
%
|
||||||||
|
||||||||||||||||
Net income
|
$
|
4,243
|
$
|
3,639
|
$
|
604
|
16.6
|
%
|
||||||||
|
SUMMARY INCOME STATEMENT
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||
|
||||||||||||||||
For the nine months ended September 30,
|
2013
|
2012
|
$ Change
|
% Change
|
||||||||||||
|
||||||||||||||||
Interest income
|
$
|
39,862
|
$
|
43,774
|
$
|
(3,912
|
)
|
-8.9
|
%
|
|||||||
Interest expense
|
(4,994
|
)
|
(6,286
|
)
|
1,292
|
-20.6
|
%
|
|||||||||
Net interest income
|
34,868
|
37,488
|
(2,620
|
)
|
-7.0
|
%
|
||||||||||
Provision for loan losses
|
(294
|
)
|
(1,799
|
)
|
1,505
|
-83.7
|
%
|
|||||||||
Noninterest income
|
8,223
|
8,724
|
(501
|
)
|
-5.7
|
%
|
||||||||||
Noninterest expense
|
(25,201
|
)
|
(27,640
|
)
|
2,439
|
-8.8
|
%
|
|||||||||
Income tax expense
|
(4,992
|
)
|
(4,685
|
)
|
(307
|
)
|
6.6
|
%
|
||||||||
|
||||||||||||||||
Net income
|
$
|
12,604
|
$
|
12,088
|
$
|
516
|
4.3
|
%
|
||||||||
|
Net Interest Income Analysis
|
||||||||||||||||||||||||
For the Three Months Ended September 30, 2013 and 2012
|
||||||||||||||||||||||||
(in thousands, except rates)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
|
Interest
|
|||||||||||||||||||||||
|
Average Balance
|
Income/Expense
|
Yield/Rate
|
|||||||||||||||||||||
|
||||||||||||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
||||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Commercial
|
$
|
126,745
|
$
|
126,701
|
$
|
1,511
|
$
|
1,598
|
4.73
|
%
|
5.00
|
%
|
||||||||||||
Real estate
|
663,539
|
676,905
|
9,517
|
9,743
|
5.74
|
5.76
|
||||||||||||||||||
Consumer
|
5,671
|
6,844
|
104
|
119
|
7.28
|
6.90
|
||||||||||||||||||
Total loans
|
795,955
|
810,450
|
11,132
|
11,460
|
5.59
|
5.65
|
||||||||||||||||||
|
||||||||||||||||||||||||
Securities:
|
||||||||||||||||||||||||
Federal agencies & GSEs
|
55,543
|
36,181
|
126
|
118
|
0.91
|
1.30
|
||||||||||||||||||
Mortgage-backed & CMOs
|
72,505
|
92,708
|
322
|
472
|
1.78
|
2.04
|
||||||||||||||||||
State and municipal
|
195,673
|
180,820
|
1,945
|
1,933
|
3.98
|
4.28
|
||||||||||||||||||
Other
|
15,861
|
13,846
|
116
|
121
|
2.93
|
3.50
|
||||||||||||||||||
Total securities
|
339,582
|
323,555
|
2,509
|
2,644
|
2.96
|
3.27
|
||||||||||||||||||
|
||||||||||||||||||||||||
Deposits in other banks
|
54,307
|
32,567
|
38
|
19
|
0.28
|
0.23
|
||||||||||||||||||
|
||||||||||||||||||||||||
Total interest-earning assets
|
1,189,844
|
1,166,572
|
13,679
|
14,123
|
4.59
|
4.84
|
||||||||||||||||||
|
||||||||||||||||||||||||
Non-earning assets
|
117,503
|
131,126
|
||||||||||||||||||||||
|
||||||||||||||||||||||||
Total assets
|
$
|
1,307,347
|
$
|
1,297,698
|
||||||||||||||||||||
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Demand
|
$
|
163,825
|
$
|
144,284
|
25
|
44
|
0.06
|
0.12
|
||||||||||||||||
Money market
|
184,428
|
168,212
|
83
|
126
|
0.18
|
0.30
|
||||||||||||||||||
Savings
|
84,390
|
78,808
|
17
|
29
|
0.08
|
0.15
|
||||||||||||||||||
Time
|
401,662
|
448,598
|
1,213
|
1,526
|
1.20
|
1.35
|
||||||||||||||||||
Total deposits
|
834,305
|
839,902
|
1,338
|
1,725
|
0.64
|
0.81
|
||||||||||||||||||
|
||||||||||||||||||||||||
Customer repurchase agreements
|
46,712
|
46,297
|
3
|
33
|
0.03
|
0.28
|
||||||||||||||||||
Other short-term borrowings
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Long-term borrowings
|
37,388
|
37,413
|
272
|
288
|
2.91
|
3.08
|
||||||||||||||||||
Total interest-bearing
|
||||||||||||||||||||||||
liabilities
|
918,405
|
923,612
|
1,613
|
2,046
|
0.70
|
0.88
|
||||||||||||||||||
|
||||||||||||||||||||||||
Noninterest bearing demand deposits
|
218,819
|
204,532
|
||||||||||||||||||||||
Other liabilities
|
6,993
|
9,686
|
||||||||||||||||||||||
Shareholders' equity
|
163,130
|
159,868
|
||||||||||||||||||||||
Total liabilities and
|
||||||||||||||||||||||||
shareholders' equity
|
$
|
1,307,347
|
$
|
1,297,698
|
||||||||||||||||||||
|
||||||||||||||||||||||||
Interest rate spread
|
3.89
|
%
|
3.96
|
%
|
||||||||||||||||||||
Net interest margin
|
4.06
|
%
|
4.14
|
%
|
||||||||||||||||||||
|
||||||||||||||||||||||||
Net interest income (taxable equivalent basis)
|
12,066
|
12,077
|
||||||||||||||||||||||
Less: Taxable equivalent adjustment
|
573
|
577
|
||||||||||||||||||||||
Net interest income
|
$
|
11,493
|
$
|
11,500
|
||||||||||||||||||||
|
(in thousands)
|
||||||||||||
|
||||||||||||
|
Three Months Ended September 30,
|
|||||||||||
|
2013 vs. 2012
|
|||||||||||
|
Interest
|
Change
|
||||||||||
|
Increase
|
Attributable to
|
||||||||||
Interest income
|
(Decrease)
|
Rate
|
Volume
|
|||||||||
Loans:
|
||||||||||||
Commercial
|
$
|
(87
|
)
|
$
|
(88
|
)
|
$
|
1
|
||||
Real Estate
|
(226
|
)
|
(34
|
)
|
(192
|
)
|
||||||
Consumer
|
(15
|
)
|
6
|
(21
|
)
|
|||||||
Total loans
|
(328
|
)
|
(116
|
)
|
(212
|
)
|
||||||
Securities:
|
||||||||||||
Federal agencies
|
8
|
(43
|
)
|
51
|
||||||||
Mortgage-backed
|
(150
|
)
|
(55
|
)
|
(95
|
)
|
||||||
State and municipal
|
12
|
(141
|
)
|
153
|
||||||||
Other securities
|
(5
|
)
|
(21
|
)
|
16
|
|||||||
Total securities
|
(135
|
)
|
(260
|
)
|
125
|
|||||||
Deposits in other banks
|
19
|
4
|
15
|
|||||||||
Total interest income
|
(444
|
)
|
(372
|
)
|
(72
|
)
|
||||||
|
||||||||||||
Interest expense
|
||||||||||||
Deposits:
|
||||||||||||
Demand
|
(19
|
)
|
(24
|
)
|
5
|
|||||||
Money market
|
(43
|
)
|
(54
|
)
|
11
|
|||||||
Savings
|
(12
|
)
|
(14
|
)
|
2
|
|||||||
Time
|
(313
|
)
|
(162
|
)
|
(151
|
)
|
||||||
Total deposits
|
(387
|
)
|
(254
|
)
|
(133
|
)
|
||||||
|
||||||||||||
Customer repurchase agreements
|
(30
|
)
|
(30
|
)
|
-
|
|||||||
Other borrowings
|
(16
|
)
|
(16
|
)
|
-
|
|||||||
Total interest expense
|
(433
|
)
|
(300
|
)
|
(133
|
)
|
||||||
Net interest income
|
$
|
(11
|
)
|
$
|
(72
|
)
|
$
|
61
|
||||
|
Net Interest Income Analysis
|
||||||||||||||||||||||||
For the Nine Months Ended September 30, 2013 and 2012
|
||||||||||||||||||||||||
(in thousands, except rates)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
|
Interest
|
|||||||||||||||||||||||
|
Average Balance
|
Income/Expense
|
Yield/Rate
|
|||||||||||||||||||||
|
||||||||||||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
||||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Commercial
|
$
|
127,592
|
$
|
129,821
|
$
|
4,706
|
$
|
5,136
|
4.95
|
%
|
5.29
|
%
|
||||||||||||
Real estate
|
660,698
|
679,375
|
28,927
|
31,720
|
5.84
|
6.23
|
||||||||||||||||||
Consumer
|
5,955
|
9,060
|
316
|
485
|
7.12
|
7.16
|
||||||||||||||||||
Total loans
|
794,245
|
818,256
|
33,949
|
37,341
|
5.70
|
6.09
|
||||||||||||||||||
|
||||||||||||||||||||||||
Securities:
|
||||||||||||||||||||||||
Federal agencies & GSEs
|
51,668
|
36,179
|
368
|
435
|
0.95
|
1.60
|
||||||||||||||||||
Mortgage-backed & CMOs
|
76,286
|
97,057
|
1,040
|
1,487
|
1.82
|
2.04
|
||||||||||||||||||
State and municipal
|
192,113
|
181,393
|
5,804
|
5,884
|
4.03
|
4.33
|
||||||||||||||||||
Other
|
13,718
|
11,598
|
306
|
332
|
2.97
|
3.82
|
||||||||||||||||||
Total securities
|
333,785
|
326,227
|
7,518
|
8,138
|
3.00
|
3.33
|
||||||||||||||||||
|
||||||||||||||||||||||||
Deposits in other banks
|
51,650
|
27,291
|
106
|
47
|
0.28
|
0.23
|
||||||||||||||||||
|
||||||||||||||||||||||||
Total interest-earning assets
|
1,179,680
|
1,171,774
|
41,573
|
45,526
|
4.70
|
5.18
|
||||||||||||||||||
|
||||||||||||||||||||||||
Non-earning assets
|
122,390
|
134,330
|
||||||||||||||||||||||
|
||||||||||||||||||||||||
Total assets
|
$
|
1,302,070
|
$
|
1,306,104
|
||||||||||||||||||||
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Demand
|
$
|
160,858
|
$
|
141,682
|
85
|
154
|
0.07
|
0.15
|
||||||||||||||||
Money market
|
175,486
|
175,497
|
254
|
414
|
0.19
|
0.32
|
||||||||||||||||||
Savings
|
83,859
|
77,977
|
54
|
88
|
0.09
|
0.15
|
||||||||||||||||||
Time
|
408,826
|
448,014
|
3,750
|
4,635
|
1.23
|
1.38
|
||||||||||||||||||
Total deposits
|
829,029
|
843,170
|
4,143
|
5,291
|
0.67
|
0.84
|
||||||||||||||||||
|
||||||||||||||||||||||||
Customer repurchase agreements
|
48,016
|
47,419
|
38
|
125
|
0.11
|
0.35
|
||||||||||||||||||
Other short-term borrowings
|
-
|
662
|
-
|
2
|
-
|
0.40
|
||||||||||||||||||
Long-term borrowings
|
37,393
|
37,418
|
813
|
868
|
2.90
|
3.09
|
||||||||||||||||||
Total interest-bearing
|
||||||||||||||||||||||||
liabilities
|
914,438
|
928,669
|
4,994
|
6,286
|
0.73
|
0.90
|
||||||||||||||||||
|
||||||||||||||||||||||||
Noninterest bearing demand deposits
|
216,594
|
210,932
|
||||||||||||||||||||||
Other liabilities
|
6,443
|
9,180
|
||||||||||||||||||||||
Shareholders' equity
|
164,595
|
157,323
|
||||||||||||||||||||||
Total liabilities and
|
||||||||||||||||||||||||
shareholders' equity
|
$
|
1,302,070
|
$
|
1,306,104
|
||||||||||||||||||||
|
||||||||||||||||||||||||
Interest rate spread
|
3.97
|
%
|
4.28
|
%
|
||||||||||||||||||||
Net interest margin
|
4.14
|
%
|
4.47
|
%
|
||||||||||||||||||||
|
||||||||||||||||||||||||
Net interest income (taxable equivalent basis)
|
36,579
|
39,240
|
||||||||||||||||||||||
Less: Taxable equivalent adjustment
|
1,711
|
1,752
|
||||||||||||||||||||||
Net interest income
|
$
|
34,868
|
$
|
37,488
|
||||||||||||||||||||
|
Changes in Net Interest Income (Rate/Volume Analysis)
|
||||||||||||
(in thousands)
|
||||||||||||
|
||||||||||||
|
Nine Months Ended September 30,
|
|||||||||||
|
2013 vs. 2012
|
|||||||||||
|
Interest
|
Change
|
||||||||||
|
Increase
|
Attributable to
|
||||||||||
Interest income
|
(Decrease)
|
Rate
|
Volume
|
|||||||||
Loans:
|
||||||||||||
Commercial
|
$
|
(430
|
)
|
$
|
(343
|
)
|
$
|
(87
|
)
|
|||
Real Estate
|
(2,793
|
)
|
(1,938
|
)
|
(855
|
)
|
||||||
Consumer
|
(169
|
)
|
(4
|
)
|
(165
|
)
|
||||||
Total loans
|
(3,392
|
)
|
(2,285
|
)
|
(1,107
|
)
|
||||||
Securities:
|
||||||||||||
Federal agencies
|
(67
|
)
|
(214
|
)
|
147
|
|||||||
Mortgage-backed
|
(447
|
)
|
(152
|
)
|
(295
|
)
|
||||||
State and municipal
|
(80
|
)
|
(417
|
)
|
337
|
|||||||
Other securities
|
(26
|
)
|
(81
|
)
|
55
|
|||||||
Total securities
|
(620
|
)
|
(864
|
)
|
244
|
|||||||
Deposits in other banks
|
59
|
10
|
49
|
|||||||||
Total interest income
|
(3,953
|
)
|
(3,139
|
)
|
(814
|
)
|
||||||
|
||||||||||||
Interest expense
|
||||||||||||
Deposits:
|
||||||||||||
Demand
|
(69
|
)
|
(88
|
)
|
19
|
|||||||
Money market
|
(160
|
)
|
(160
|
)
|
-
|
|||||||
Savings
|
(34
|
)
|
(40
|
)
|
6
|
|||||||
Time
|
(885
|
)
|
(500
|
)
|
(385
|
)
|
||||||
Total deposits
|
(1,148
|
)
|
(788
|
)
|
(360
|
)
|
||||||
|
||||||||||||
Repurchase agreements
|
(87
|
)
|
(89
|
)
|
2
|
|||||||
Other borrowings
|
(57
|
)
|
(42
|
)
|
(15
|
)
|
||||||
Total interest expense
|
(1,292
|
)
|
(919
|
)
|
(373
|
)
|
||||||
Net interest income
|
$
|
(2,661
|
)
|
$
|
(2,220
|
)
|
$
|
(441
|
)
|
|||
|
|
|
September 30, 2013
|
|||||||||||||||||
(in thousands)
|
Income Statement Effect
|
Remaining Premium/ (Discount) Balance on December 31, 2012
|
For the Three Months Ended
|
For the Nine Months Ended
|
Remaining Premium/ (Discount) Balance
|
||||||||||||||
|
|
||||||||||||||||||
Interest income/(expense):
|
|
||||||||||||||||||
Loans
|
Income
|
$
|
(9,631
|
)
|
$
|
1,231
|
$
|
3,912
|
$
|
(5,708
|
)
|
(1
|
)
|
||||||
Accretable portion of loans acquired with deteriorated credit quality
|
Income
|
(2,165
|
)
|
491
|
1,713
|
(1,843
|
)
|
(2
|
)
|
||||||||||
Time deposits - brokered
|
Income
|
(278
|
)
|
69
|
278
|
-
|
|||||||||||||
FHLB advances
|
Expense
|
109
|
(6
|
)
|
(17
|
)
|
92
|
||||||||||||
Trust preferred securities
|
Expense
|
2,066
|
(26
|
)
|
(77
|
)
|
1,989
|
||||||||||||
Net Interest Income
|
|
1,759
|
5,809
|
||||||||||||||||
|
|
||||||||||||||||||
Non-interest (expense)
|
|
||||||||||||||||||
Amortization of core deposit intangible
|
Expense
|
$
|
4,094
|
(237
|
)
|
(889
|
)
|
$
|
3,205
|
||||||||||
Net non-interest expense
|
|
(237
|
)
|
(889
|
)
|
||||||||||||||
|
|
||||||||||||||||||
Change in pretax income
|
|
$
|
1,522
|
$
|
4,920
|
||||||||||||||
|
|
||||||||||||||||||
(1) - Remaining discount balance includes $11 in charge-offs against the mark
|
|||||||||||||||||||
(2) - Remaining discount balance includes $1,391 in reclassifications from the non-accretable difference
|
|||||||||||||||||||
|
|
|
|
September 30, 2012
|
|||||||||||||||||
(in thousands)
|
Income Statement Effect
|
Remaining Premium/ (Discount) Balance on December 31, 2011
|
For the Three Months ended
|
For the Nine Months Ended
|
Remaining Premium/ (Discount) Balance
|
||||||||||||||
|
|
||||||||||||||||||
Interest income/(expense):
|
|
||||||||||||||||||
Loans
|
Income
|
$
|
(15,908
|
)
|
$
|
1,431
|
$
|
4,792
|
$
|
(10,954
|
)
|
(1
|
)
|
||||||
Accretable portion of loans acquired with deteriorated credit quality
|
Income
|
(1,056
|
)
|
71
|
1,808
|
(3,115
|
)
|
(2
|
)
|
||||||||||
Time deposits
|
Income
|
(110
|
)
|
33
|
99
|
(11
|
)
|
||||||||||||
Time deposits - brokered
|
Income
|
(694
|
)
|
104
|
312
|
(382
|
)
|
||||||||||||
Time deposits - CDARs
|
Income
|
22
|
-
|
-
|
-
|
||||||||||||||
FHLB advances
|
Expense
|
(11
|
)
|
(5
|
)
|
(17
|
)
|
6
|
|||||||||||
Trust preferred securities
|
Expense
|
(47
|
)
|
(26
|
)
|
(80
|
)
|
33
|
|||||||||||
Net Interest Income
|
|
1,608
|
6,914
|
||||||||||||||||
|
|
||||||||||||||||||
Non-interest (expense)
|
|
||||||||||||||||||
Premises and equipment
|
|
||||||||||||||||||
Amortization of core deposit intangible
|
Expense
|
$
|
5,652
|
(327
|
)
|
(1,231
|
)
|
$
|
4,421
|
||||||||||
Net non-interest expense
|
|
(327
|
)
|
(1,231
|
)
|
||||||||||||||
|
|
||||||||||||||||||
Change in pretax income
|
|
$
|
1,281
|
$
|
5,683
|
||||||||||||||
|
|
||||||||||||||||||
|
|
||||||||||||||||||
(1) - Remaining discount balance includes $162 in charge-offs against the mark
|
|||||||||||||||||||
(2) - Remaining discount balance includes $2,130 in reclassifications from the non-accretable difference
|
|
||||||||
|
September 30,
|
December 31,
|
||||||
(in thousands)
|
2013
|
2012
|
||||||
|
||||||||
Commercial
|
$
|
124,504
|
$
|
126,192
|
||||
Commercial real estate:
|
||||||||
Construction and land development
|
43,386
|
48,812
|
||||||
Commercial real estate
|
361,968
|
355,433
|
||||||
Residential real estate:
|
||||||||
Residential
|
173,695
|
161,033
|
||||||
Home equity
|
89,154
|
91,313
|
||||||
Consumer
|
6,289
|
5,922
|
||||||
Total loans
|
$
|
798,996
|
$
|
788,705
|
|
|
|
|
|
Summary of Loan Loss Experience
|
||||||||
(in thousands)
|
||||||||
|
||||||||
|
Nine Months Ended
|
Year Ended
|
||||||
|
September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
|
||||||||
Balance at beginning of period
|
$
|
12,118
|
$
|
10,529
|
||||
|
||||||||
Charge-offs:
|
||||||||
Construction and land development
|
-
|
202
|
||||||
Commercial real estate
|
23
|
370
|
||||||
Residential real estate
|
206
|
579
|
||||||
Home equity
|
121
|
115
|
||||||
Total real estate
|
350
|
1,266
|
||||||
Commercial and industrial
|
129
|
748
|
||||||
Consumer
|
150
|
72
|
||||||
Total charge-offs
|
629
|
2,086
|
||||||
|
||||||||
Recoveries:
|
||||||||
Construction and land development
|
222
|
87
|
||||||
Commercial real estate
|
70
|
388
|
||||||
Residential real estate
|
133
|
252
|
||||||
Home equity
|
61
|
27
|
||||||
Total real estate
|
486
|
754
|
||||||
Commercial and industrial
|
307
|
707
|
||||||
Consumer
|
108
|
81
|
||||||
Total recoveries
|
901
|
1,542
|
||||||
|
||||||||
Net charge-offs (recoveries)
|
(272
|
)
|
544
|
|||||
Provision for loan losses
|
294
|
2,133
|
||||||
Balance at end of period
|
$
|
12,684
|
$
|
12,118
|
||||
|
Asset Quality Ratios
|
||||||
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Allowance to loans
|
|
1.59
|
%
|
|
1.54
|
%
|
Net charge-offs (recoveries) to allowance (1)
|
|
(2.86)
|
|
|
4.49
|
|
Net charge-offs (recoveries) to average loans (1)
|
(0.05)
|
|
|
0.07
|
|
|
Nonperforming assets to total assets
|
|
0.67
|
|
|
0.90
|
|
Nonperforming loans to loans
|
|
0.58
|
|
|
0.67
|
|
Provision to net charge-offs (recoveries) (1)
|
|
(81.07)
|
|
|
392.10
|
|
Provision to average loans (1)
|
|
0.05
|
|
|
0.26
|
|
Allowance to nonperforming loans
|
|
272.95
|
|
|
227.95
|
|
|
|
|
|
|
|
|
(1) - annualized
|
|
|
|
|
|
|
Nonperforming Assets
|
||||||||
(in thousands)
|
||||||||
|
||||||||
|
September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
Nonaccrual loans:
|
||||||||
Real estate
|
$
|
4,624
|
$
|
5,261
|
||||
Commercial
|
15
|
52
|
||||||
Consumer
|
8
|
3
|
||||||
Total nonaccrual loans
|
4,647
|
5,316
|
||||||
|
||||||||
Loans past due 90 days
|
||||||||
and accruing interest:
|
||||||||
Real estate
|
-
|
-
|
||||||
Total past due loans
|
-
|
-
|
||||||
|
||||||||
Total nonperforming loans
|
4,647
|
5,316
|
||||||
|
||||||||
Foreclosed real estate
|
4,215
|
6,193
|
||||||
|
||||||||
Total nonperforming assets
|
$
|
8,862
|
$
|
11,509
|
||||
|
Impaired Loans
|
||||||||
(in thousands)
|
||||||||
|
||||||||
|
September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
|
||||||||
Accruing
|
$
|
1,135
|
$
|
499
|
||||
Nonaccruing
|
2,229
|
2,548
|
||||||
Total impaired loans
|
$
|
3,364
|
$
|
3,047
|
||||
|
(in thousands)
|
||||||||
|
||||||||
|
September 30,
|
December 31,
|
||||||
|
2013
|
2012
|
||||||
|
||||||||
Construction and land development
|
$
|
2,445
|
$
|
3,290
|
||||
Farmland
|
-
|
236
|
||||||
1-4 family residential
|
1,431
|
1,090
|
||||||
Multifamily (5 or more) residential
|
-
|
1,012
|
||||||
Commercial real estate
|
339
|
565
|
||||||
|
$
|
4,215
|
$
|
6,193
|
||||
|
|
September 30,
2013
|
December 31,
2012
|
||||||
|
||||||||
Commitments to extend credit
|
$
|
170,696
|
$
|
170,202
|
||||
Standby letters of credit
|
3,100
|
4,591
|
||||||
Mortgage loan rate-lock commitments
|
5,298
|
9,486
|
Estimated Changes in Net Interest Income
|
||||||||
(dollars in thousands)
|
||||||||
|
||||||||
|
September 30, 2013
|
|||||||
|
Change in Net Interest Income
|
|||||||
|
||||||||
Change in interest rates
|
Amount
|
Percent
|
||||||
|
||||||||
Up 4%
|
$
|
8,708
|
20.1
|
%
|
||||
Up 3%
|
6,530
|
15.1
|
%
|
|||||
Up 2%
|
4,262
|
9.8
|
%
|
|||||
Up 1%
|
1,977
|
4.6
|
%
|
Estimated Changes in Economic Value of Equity
|
||||||||||||
(dollars in thousands)
|
||||||||||||
|
||||||||||||
|
September 30, 2013
|
|||||||||||
|
||||||||||||
Change in interest rates
|
Amount
|
$ Change
|
% Change
|
|||||||||
|
||||||||||||
Up 4%
|
$
|
211,506
|
$
|
23,777
|
12.7
|
%
|
||||||
Up 3%
|
206,849
|
19,120
|
10.2
|
%
|
||||||||
Up 2%
|
200,783
|
13,054
|
7.0
|
%
|
||||||||
Up 1%
|
193,434
|
5,705
|
3.0
|
%
|
||||||||
Flat
|
187,729
|
-
|
||||||||||
|
Item 1. | Legal Proceedings |
Item1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
11.0 | Refer to EPS calculation in the Notes to Financial Statements |
31.1 | Section 302 Certification of Jeffrey V. Haley, President and Chief Executive Officer |
31.2 | Section 302 Certification of William W. Traynham, Senior Vice President and Chief Financial Officer |
32.1 | Section 906 Certification of Jeffrey V. Haley, President and Chief Executive Officer |
32.2 | Section 906 Certification of William W. Traynham, Senior Vice President and Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey V. Haley
|
|
|
Jeffrey V. Haley
|
|
Date – November 8, 2013
|
President and Chief Executive Officer
|
|
|
|
|
|
/s/ William W. Traynham
|
|
|
William W. Traynham
|
|
|
Senior Vice President and
|
|
Date – November 8, 2013
|
Chief Financial Officer
|
|