x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
NORTH CAROLINA
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56-2259050
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.)
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Large
accelerated filer
|
¨
|
Accelerated
filer
|
o
|
Non-accelerated
filer
|
o (Do
not check if a smaller reporting
company)
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Smaller
reporting company
|
þ
|
PART I
|
FORM 10-K
|
PROXY
STATEMENT
|
ANNUAL
REPORT
|
|||
Item
1 – Business
|
3
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|||||
Item
1A – Risk Factors
|
20
|
|||||
Item
2 – Properties
|
20
|
|||||
Item
3 – Legal Proceedings
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21
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|||||
Item
4 – [Removed and Reserved]
|
22
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|||||
PART
II
|
||||||
Item
5 – Market for Registrant’s
Common
Equity, Related
Stockholder
Matters and Issuer
Purchases
of Equity Securities
|
22
|
|||||
Item
6 – Selected Financial Data
|
23
|
|||||
Item
7 – Management’s Discussion and
Analysis
of Financial Condition
and
Results of Operation
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25
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|||||
Item
7A – Quantitative and Qualitative
Disclosures About Market
Risk
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44
|
|||||
Item
8 – Financial Statements and
Supplementary
Data
|
45
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|||||
Item
9 – Changes in and Disagreements
with
Accountants on
Accounting
and Financial
Disclosure
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88
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|||||
Item
9A(T) – Controls and Procedures
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88
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|||||
Item
9B – Other Information
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89
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|||||
PART
III
|
||||||
Item
10 – Directors and Executive
Officers and Corporate
Governance
|
89
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X
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||||
Item
11 – Executive Compensation
|
89
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X
|
||||
Item
12 – Security Ownership of Certain
Beneficial Owners and
Management and Related
Stockholder Matters
|
90
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X
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||||
Item
13 – Certain Relationships and
Related Transactions, and
Director Independence
|
91
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X
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||||
Item
14 – Principal Accountant Fees and
Services
|
91
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X
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||||
PART
IV
|
||||||
Item
15 – Exhibits and Financial
Statement
Schedules
|
|
91
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|
|
At December 31,
|
||||||||||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||||||||||
% of Total
|
% of Total
|
% of Total
|
||||||||||||||||||||||
Amount
|
Loans
|
Amount
|
Loans
|
Amount
|
Loans
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Real
estate - commercial
|
$ | 359,450 | 47.28 | % | $ | 305,808 | 38.88 | % | $ | 350,961 | 51.85 | % | ||||||||||||
Real
estate - residential
|
96,731 | 12.73 | % | 89,873 | 11.43 | % | 18,257 | 2.70 | % | |||||||||||||||
Construction
loans
|
179,228 | 23.58 | % | 242,771 | 30.87 | % | 184,019 | 27.18 | % | |||||||||||||||
Commercial
and industrial loans
|
55,360 | 7.28 | % | 81,000 | 10.30 | % | 72,930 | 10.77 | % | |||||||||||||||
Home
equity loans and lines of credit
|
64,484 | 8.48 | % | 63,772 | 8.11 | % | 45,258 | 6.69 | % | |||||||||||||||
Loans
to individuals
|
4,966 | 0.65 | % | 3,199 | 0.41 | % | 5,489 | 0.81 | % | |||||||||||||||
Total
loans
|
760,219 | 100.00 | % | 786,423 | 100.00 | % | 676,914 | 100.00 | % | |||||||||||||||
Less: Net
deferred loan fees
|
(871 | ) | (1,046 | ) | (998 | ) | ||||||||||||||||||
Total
loans, net
|
$ | 759,348 | $ | 785,377 | $ | 675,916 |
At December 31,
|
||||||||||||||||
2006
|
2005
|
|||||||||||||||
% of Total
|
% of Total
|
|||||||||||||||
Amount
|
Loans
|
Amount
|
Loans
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Real
estate - commercial
|
$ | 304,823 | 55.36 | % | $ | 174,039 | 52.92 | % | ||||||||
Real
estate - residential
|
20,224 | 3.67 | % | 14,914 | 4.54 | % | ||||||||||
Construction
loans
|
110,033 | 19.99 | % | 46,607 | 14.17 | % | ||||||||||
Commercial
and industrial loans
|
67,822 | 12.32 | % | 52,708 | 16.03 | % | ||||||||||
Home
equity loans and lines of credit
|
42,704 | 7.76 | % | 34,921 | 10.62 | % | ||||||||||
Loans
to individuals
|
4,977 | 0.90 | % | 5,670 | 1.72 | % | ||||||||||
Total
loans
|
550,583 | 100.00 | % | 328,859 | 100.00 | % | ||||||||||
Less: Net
deferred loan fees
|
(764 | ) | (537 | ) | ||||||||||||
Total
loans, net
|
$ | 549,819 | $ | 328,322 |
Within
|
1-5
|
After 5
|
||||||||||||||
1 Year
|
Years
|
Years
|
Total
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Commercial
mortgage
|
$ | 63,343 | $ | 253,028 | $ | 43,079 | $ | 359,450 | ||||||||
Residential
mortgage
|
38,441 | 48,796 | 9,494 | 96,731 | ||||||||||||
Construction
loans
|
134,471 | 43,712 | 1,045 | 179,228 | ||||||||||||
Commercial
and industrial
|
33,723 | 21,094 | 543 | 55,360 | ||||||||||||
Home
equity lines and loans
|
4,269 | 6,932 | 53,283 | 64,484 | ||||||||||||
Individuals
|
2,717 | 2,177 | 72 | 4,966 | ||||||||||||
Total
|
$ | 276,964 | $ | 375,739 | $ | 107,516 | $ | 760,219 | ||||||||
Fixed
rate loans
|
$ | 455,839 | ||||||||||||||
Variable
rate loans
|
27,416 | |||||||||||||||
$ | 483,255 |
For the Year Ended December 31,
|
||||||||||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Average
|
Average
|
Average
|
Average
|
Average
|
Average
|
|||||||||||||||||||
Balance
|
Rate
|
Balance
|
Rate
|
Balance
|
Rate
|
|||||||||||||||||||
Non-interest
bearing deposits
|
$ | 62,247 | - | $ | 64,938 | - | $ | 70,660 | - | |||||||||||||||
Interest
bearing demand deposits
|
60,556 | 1.74 | % | 34,073 | 0.19 | % | 33,453 | 0.97 | % | |||||||||||||||
Money
market deposits
|
75,444 | 1.48 | % | 79,145 | 2.80 | % | 58,214 | 3.48 | % | |||||||||||||||
Savings
deposits
|
59,441 | 1.22 | % | 78,759 | 2.26 | % | 105,107 | 4.29 | % | |||||||||||||||
Time
deposits over $100,000
|
376,260 | 3.81 | % | 338,193 | 4.50 | % | 254,533 | 5.11 | % | |||||||||||||||
Time
deposits under $100,000
|
73,584 | 3.60 | % | 80,397 | 4.73 | % | 70,710 | 5.03 | % | |||||||||||||||
Total
interest bearing deposits
|
645,285 | 3.08 | % | 610,567 | 3.78 | % | 522,017 | 4.49 | % | |||||||||||||||
Total
average deposits
|
$ | 707,532 | 2.81 | % | $ | 675,505 | 3.41 | % | $ | 592,677 | 3.95 | % |
For the Year Ended December 31,
|
||||||||||||||||
2006
|
2005
|
|||||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||||||
Balance
|
Rate
|
Balance
|
Rate
|
|||||||||||||
Non-interest
bearing deposits
|
$ | 56,376 | - | $ | 42,641 | - | ||||||||||
Interest
bearing demand deposits
|
37,876 | 1.46 | % | 39,609 | 1.05 | % | ||||||||||
Money
market deposits
|
51,926 | 3.52 | % | 41,548 | 2.16 | % | ||||||||||
Savings
deposits
|
40,694 | 4.51 | % | 4,952 | 1.79 | % | ||||||||||
Time
deposits over $100,000
|
154,538 | 4.82 | % | 110,312 | 3.30 | % | ||||||||||
Time
deposits under $100,000
|
72,440 | 3.51 | % | 58,787 | 3.13 | % | ||||||||||
Total
interest bearing deposits
|
357,474 | 3.97 | % | 255,208 | 2.70 | % | ||||||||||
Total
average deposits
|
$ | 413,850 | 3.43 | % | $ | 297,849 | 2.31 | % |
Remaining maturity:
|
(in thousands)
|
|||
Three
months or less
|
$ | 73,378 | ||
Over
three months through one year
|
146,492 | |||
Over
one year through three years
|
110,817 | |||
Over
three years through five years
|
26,693 | |||
Total
|
$ | 357,380 |
|
-
|
publicly
available annual financial condition and management reports for certain
financial institutions, including audits by independent
accountants,
|
|
-
|
the
establishment of uniform accounting standards by federal banking
agencies,
|
|
-
|
the
establishment of a “prompt corrective action” system of regulatory
supervision and intervention, based on capitalization levels, with greater
scrutiny and restrictions placed on depository institutions with lower
levels of capital,
|
|
-
|
additional
grounds for the appointment of a conservator or receiver,
and
|
|
-
|
restrictions
or prohibitions on accepting brokered deposits, except for institutions
which significantly exceed minimum capital
requirements.
|
|
-
|
making
or servicing loans;
|
|
-
|
performing
certain data processing services;
|
|
-
|
providing
discount brokerage services;
|
|
-
|
acting
as fiduciary, investment or financial
advisor;
|
|
-
|
leasing
personal or real property;
|
|
-
|
making
investments in corporations or projects designed primarily to promote
community welfare; and
|
|
-
|
acquiring
a savings and loan association.
|
|
-
|
a
leverage capital requirement expressed as a percentage of adjusted total
assets;
|
|
-
|
a
risk-based requirement expressed as a percentage of total risk-weighted
assets; and
|
|
-
|
a
Tier 1 leverage requirement expressed as a percentage of adjusted total
assets.
|
Office Locations
|
Year
Opened
|
Approximate
Square Footage
|
Owned or Leased
|
|||
Main
Office
1005
High House Road
Cary,
NC
|
2000
|
8,100
|
Leased
|
|||
Cary
Office
1155
Kildaire Farm Road
Cary,
NC
|
1998
|
2,960
|
Leased
|
|||
Apex
Office
303
South Salem Street
Apex,
NC
|
1999
|
3,500
|
Leased
|
|||
Clayton
Office
315
East Main Street
Clayton,
NC
|
2000
|
2,990
|
Leased
|
|||
Holly
Springs Office
700
Holly Springs Road
Holly
Springs, NC
|
2003
|
3,500
|
Owned
|
|||
Pinehurst
Office
211-M
Central Park Avenue
Pinehurst,
NC
|
2003
|
2,850
|
Leased
|
|||
Southern
Pines Office
185
Morganton Road
Southern
Pines, NC
|
2003
|
3,500
|
Leased
|
|||
Sanford
Office
870
Spring Lane
Sanford,
NC
|
2004
|
3,500
|
Structure
owned with
ground
lease
|
|||
Garner
Office
945
Vandora Springs Road
Garner,
NC
|
2007
|
3,500
|
Leased
|
|||
Falls
of Neuse Office
6408
Falls of Neuse Road
Raleigh,
NC
|
2006
|
2,442
|
Owned
|
|||
Wilmington
Main Office
1508
Military Cutoff Road
Wilmington,
NC 28403
|
2006
|
6,634
|
Leased
|
|||
Knightdale
Office
7120
Knightdale Boulevard
Knightdale,
NC
|
2007
|
2,518
|
Owned
|
|||
Wilmington
Independence Office
2506
Independence Boulevard
Wilmington,
NC
|
2008
|
3,712
|
Structure
owned with
ground
lease
|
|||
Raleigh
Creedmoor Office
7100
Creedmoor Road
Raleigh,
NC
|
2008
|
3,712
|
Owned
|
|||
Raleigh
Main Office
4711
Six Forks Road
Raleigh,
NC
|
2009
|
18,250
|
Leased
|
|||
Raw
land
Zebulon,
NC
|
2006
|
1.38
acres
|
Owned
|
|||
Raw
land
Sanford,
NC
|
2007
|
1.37
acres
|
Owned
|
|||
Operations Locations
|
Year Opened
|
Approximate
Square Footage
|
Owned or Leased
|
|||
206
High House Road
Cary,
NC
|
|
2005
|
|
12,535
|
|
Leased
|
Low
|
High
|
|||||||
January
1, 2008 to March 31, 2008
|
$ | 7.94 | $ | 9.50 | ||||
April
1, 2008 to June 30, 2008
|
5.71 | 8.43 | ||||||
July
1, 2008 to September 30, 2008
|
5.70 | 6.80 | ||||||
October
1, 2008 to December 31, 2008
|
3.12 | 6.30 | ||||||
January
1, 2009 to March 31, 2009
|
2.80 | 4.80 | ||||||
April
1, 2009 to June 30, 2009
|
2.89 | 4.50 | ||||||
July
1, 2009 to September 30, 2009
|
3.45 | 4.95 | ||||||
October
1, 2009 to December 31, 2009
|
3.00 | 4.89 |
At or for the Years Ended
December 31,
|
||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
(Dollars in thousands, except share and per share data)
|
||||||||||||||||||||
Summary
of Operations
|
||||||||||||||||||||
Interest
income
|
$ | 56,206 | $ | 54,405 | $ | 54,872 | $ | 36,707 | $ | 22,827 | ||||||||||
Interest
expense
|
26,620 | 29,070 | 28,217 | 17,257 | 8,872 | |||||||||||||||
Net
interest income
|
29,586 | 25,335 | 26,655 | 19,450 | 13,955 | |||||||||||||||
Provision
for loan losses
|
11,526 | 6,485 | 1,684 | 991 | 807 | |||||||||||||||
Net
interest income after the provision for
loan losses
|
18,060 | 18,850 | 24,971 | 18,459 | 13,148 | |||||||||||||||
Non-interest
income
|
4,328 | 3,732 | 2,621 | 2,612 | 2,417 | |||||||||||||||
Non-interest
expense
|
53,943 | 19,972 | 17,823 | 13,387 | 10,762 | |||||||||||||||
Income
(loss) before income taxes
|
(31,555 | ) | 2,610 | 9,769 | 7,684 | 4,803 | ||||||||||||||
Income
taxes
|
(1,329 | ) | 599 | 3,520 | 2,780 | 1,659 | ||||||||||||||
Net
income (loss)
|
(30,226 | ) | 2,011 | 6,249 | 4,904 | 3,144 | ||||||||||||||
Effective
dividend on preferred stock
|
1,617 | - | - | - | - | |||||||||||||||
Net
income available (loss attributed) to common shareholders
|
$ | (31,843 | ) | $ | 2,011 | $ | 6,249 | $ | 4,904 | $ | 3,144 | |||||||||
Per
Share and Shares Outstanding(1)
|
||||||||||||||||||||
Net
income (loss), basic(2)
|
$ | (3.33 | ) | $ | 0.21 | $ | 0.68 | $ | 0.67 | $ | 0.58 | |||||||||
Net
income (loss), diluted(2)
|
$ | (3.33 | ) | $ | 0.21 | $ | 0.65 | $ | 0.64 | $ | 0.55 | |||||||||
Book
value at end of period
|
$ | 6.92 | $ | 9.88 | $ | 9.75 | $ | 9.13 | $ | 6.52 | ||||||||||
Tangible
book value
|
$ | 6.83 | $ | 6.64 | $ | 6.42 | $ | 5.67 | $ | 5.93 | ||||||||||
Weighted
average shares outstanding:
|
||||||||||||||||||||
Basic
|
9,569,290 | 9,500,103 | 9,211,779 | 7,281,016 | 5,402,390 | |||||||||||||||
Diluted
|
9,569,290 | 9,680,484 | 9,635,694 | 7,614,804 | 5,682,447 | |||||||||||||||
Shares
outstanding at period end
|
9,626,559 | 9,626,559 | 9,404,579 | 9,091,649 | 6,358,388 | |||||||||||||||
Balance
Sheet Data
|
||||||||||||||||||||
Total
assets
|
$ | 1,032,805 | $ | 968,311 | $ | 835,540 | $ | 697,909 | $ | 410,788 | ||||||||||
Total
investments(3)
|
227,341 | 113,278 | 97,858 | 89,069 | 57,752 | |||||||||||||||
Total
loans, net
|
741,781 | 772,792 | 667,643 | 542,874 | 323,971 | |||||||||||||||
Total
deposits
|
722,635 | 714,883 | 605,431 | 541,881 | 322,081 | |||||||||||||||
Borrowings
|
216,748 | 154,454 | 135,003 | 69,699 | 45,212 | |||||||||||||||
Stockholders’
equity
|
89,520 | 95,092 | 91,659 | 83,034 | 41,457 | |||||||||||||||
Selected
Performance Ratios
|
||||||||||||||||||||
Return
on average assets
|
(2.85 | )% | 0.22 | % | 0.80 | % | 0.93 | % | 0.84 | % | ||||||||||
Return
on average stockholders’ equity
|
(24.85 | )% | 2.13 | % | 7.15 | % | 8.72 | % | 10.34 | % | ||||||||||
Net
interest spread(4)
|
2.74 | % | 2.55 | % | 3.08 | % | 3.29 | % | 3.51 | % | ||||||||||
Net
interest margin(5)
|
3.09 | % | 3.05 | % | 3.79 | % | 4.03 | % | 4.01 | % | ||||||||||
Non-interest
income as a percentage of total
revenue(6)
|
12.76 | % | 12.85 | % | 8.95 | % | 11.84 | % | 14.76 | % | ||||||||||
Non-interest
income as a percentage of average
assets
|
0.41 | % | 0.41 | % | 0.34 | % | 0.49 | % | 0.64 | % | ||||||||||
Non-interest
expense to average assets
|
5.08 | % | 2.18 | % | 2.29 | % | 2.53 | % | 2.86 | % | ||||||||||
Efficiency
ratio(7)
|
159.06 | % | 68.71 | % | 60.88 | % | 60.68 | % | 65.73 | % | ||||||||||
Average
stockholders’ equity to average
total assets
|
11.46 | % | 10.32 | % | 11.24 | % | 10.64 | % | 8.08 | % | ||||||||||
Asset
Quality Ratios
|
||||||||||||||||||||
Net
charge-offs to average loans outstanding
|
0.84 | % | 0.29 | % | 0.06 | % | 0.02 | % | 0.04 | % | ||||||||||
Allowance
for loan losses to period end loans
|
2.31 | % | 1.60 | % | 1.22 | % | 1.26 | % | 1.33 | % | ||||||||||
Allowance
for loan losses to non-performing
loans
|
95 | % | 96 | % | 303 | % | 5,145 | % | 16,960 | % | ||||||||||
Non-performing
loans to period end loans
|
2.44 | % | 1.67 | % | 0.40 | % | 0.02 | % | 0.01 | % | ||||||||||
Non-performing
assets to total assets(8)
|
2.40 | % | 1.53 | % | 0.36 | % | 0.03 | % | 0.01 | % |
At or for the Years Ended
December 31,
|
||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
(Dollars in thousands, except share and per share data)
|
||||||||||||||||||||
Capital
Ratios
|
||||||||||||||||||||
Total
risk-based capital ratio
|
13.53 | % | 10.68 | % | 10.51 | % | 11.03 | % | 13.68 | % | ||||||||||
Tier
1 risk-based capital ratio
|
11.37 | % | 8.53 | % | 9.37 | % | 9.88 | % | 12.51 | % | ||||||||||
Leverage
ratio
|
9.03 | % | 7.67 | % | 8.56 | % | 9.13 | % | 11.51 | % | ||||||||||
Equity
to assets ratio
|
8.67 | % | 9.82 | % | 10.97 | % | 11.90 | % | 10.09 | % | ||||||||||
Other
Data
|
||||||||||||||||||||
Number
of full-service banking offices
|
15 | 13 | 12 | 11 | 9 | |||||||||||||||
Number
of full-time equivalent employees
|
158 | 147 | 126 | 122 | 90 |
(1)
|
Adjusted
to reflect the 10 % stock dividend distributed in 2007 and stock splits
effected in the form of 15% stock dividends in
2006.
|
(2)
|
Computed
based on the weighted average number of shares outstanding during each
period.
|
(3)
|
Consists
of interest-earning deposits, federal funds sold, investment securities
and FHLB stock.
|
(4)
|
Net
interest spread is the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
|
(5)
|
Net
interest margin is net interest income divided by average interest-earning
assets on a tax equivalent basis.
|
(7)
|
Efficiency
ratio is non-interest expense divided by the sum of net interest income
and non-interest income.
|
(8)
|
Non-performing
assets consist of non-accrual loans, accruing loans 90 days or more past
due, restructured loans only if in non-accrual status, and foreclosed
assets, where applicable.
|
For
the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||||||||||||||||||||||
Average
|
Average
|
Average
|
Average
|
Average
|
Average
|
|||||||||||||||||||||||||||||||
balance
|
Interest
|
rate
|
balance
|
Interest
|
rate
|
balance
|
Interest
|
rate
|
||||||||||||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||||||||||||||
Interest-earning
assets:
|
||||||||||||||||||||||||||||||||||||
Loan
portfolio
|
$ | 777,275 | $ | 47,989 | 6.17 | % | $ | 741,829 | $ | 49,479 | 6.67 | % | $ | 615,322 | $ | 50,022 | 8.13 | % | ||||||||||||||||||
Investment
securities
|
201,204 | 8,203 | 4.51 | % | 103,101 | 4,843 | 5.19 | % | 92,629 | 4,454 | 5.32 | % | ||||||||||||||||||||||||
Federal
funds and other
|
||||||||||||||||||||||||||||||||||||
interest-earning
assets
|
7,177 | 14 | 0.20 | % | 3,896 | 83 | 2.13 | % | 8,015 | 396 | 4.94 | % | ||||||||||||||||||||||||
Total
interest-earning assets
|
985,656 | 56,206 | 5.79 | % | 848,826 | 54,405 | 6.47 | % | 715,966 | 54,872 | 7.73 | % | ||||||||||||||||||||||||
Non-interest-earning
assets
|
75,317 | 66,746 | 61,425 | |||||||||||||||||||||||||||||||||
Total
assets
|
$ | 1,060,973 | $ | 915,572 | $ | 777,391 | ||||||||||||||||||||||||||||||
Interest-bearing
liabilities:
|
||||||||||||||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||||||||||||||
Interest-bearing
NOW
|
$ | 60,556 | 1,053 | 1.74 | % | $ | 34,073 | 64 | 0.19 | % | $ | 33,453 | 324 | 0.97 | % | |||||||||||||||||||||
Money
market and savings
|
134,885 | 1,848 | 1.37 | % | 157,904 | 3,995 | 2.53 | % | 163,321 | 6,536 | 4.00 | % | ||||||||||||||||||||||||
Time
deposits
|
449,844 | 16,970 | 3.77 | % | 418,590 | 19,003 | 4.54 | % | 325,243 | 16,569 | 5.09 | % | ||||||||||||||||||||||||
Short-term
borrowings
|
102,227 | 1,705 | 1.67 | % | 17,830 | 657 | 3.68 | % | 16,398 | 830 | 5.06 | % | ||||||||||||||||||||||||
Long-term
debt
|
126,255 | 5,045 | 4.00 | % | 124,493 | 5,351 | 4.30 | % | 77,670 | 3,958 | 5.10 | % | ||||||||||||||||||||||||
Total
interest-bearing
|
||||||||||||||||||||||||||||||||||||
liabilities
|
873,767 | 26,621 | 3.05 | % | 752,890 | 29,070 | 3.86 | % | 616,085 | 28,217 | 4.58 | % | ||||||||||||||||||||||||
Other
liabilities
|
65,579 | 68,156 | 73,899 | |||||||||||||||||||||||||||||||||
Total
liabilities
|
939,346 | 821,046 | 689,984 | |||||||||||||||||||||||||||||||||
Stockholders’
equity
|
121,627 | 94,526 | 87,407 | |||||||||||||||||||||||||||||||||
Total
liabilities and
|
||||||||||||||||||||||||||||||||||||
stockholders’
equity
|
$ | 1,060,973 | $ | 915,572 | $ | 777,391 | ||||||||||||||||||||||||||||||
Net
interest income and
|
||||||||||||||||||||||||||||||||||||
interest
rate spread
|
$ | 29,585 | 2.74 | % | $ | 25,335 | 2.61 | % | $ | 26,655 | 3.15 | % | ||||||||||||||||||||||||
Net
interest margin
|
3.09 | % | 3.05 | % | 3.79 | % | ||||||||||||||||||||||||||||||
Ratio
of average interest-earning
|
||||||||||||||||||||||||||||||||||||
assets
to average interest-
|
||||||||||||||||||||||||||||||||||||
bearing
liabilities
|
112.81 | % | 112.74 | % | 116.21 | % |
Year
Ended
|
Year
Ended
|
|||||||||||||||||||||||
December 31, 2009 vs. 2008
|
December 31, 2008 vs. 2007
|
|||||||||||||||||||||||
Increase (Decrease) Due to
|
Increase (Decrease) Due to
|
|||||||||||||||||||||||
Volume
|
Rate
|
Total
|
Volume
|
Rate
|
Total
|
|||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||
Interest
income:
|
||||||||||||||||||||||||
Loan
portfolio
|
$ | 2,295 | $ | (3,785 | ) | $ | (1,490 | ) | $ | 9,299 | $ | (9,842 | ) | $ | (543 | ) | ||||||||
Investment
securities
|
4,185 | (825 | ) | 3,360 | 494 | (105 | ) | 389 | ||||||||||||||||
Federal
funds and other
|
||||||||||||||||||||||||
interest-earning
assets
|
966 | (1,035 | ) | (69 | ) | (149 | ) | (164 | ) | (313 | ) | |||||||||||||
Total
interest income
|
7,446 | (5,645 | ) | 1,801 | 9,644 | (10,111 | ) | (467 | ) | |||||||||||||||
Interest
expense:
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
Interest-bearing
NOW
|
7 | 982 | 989 | 6 | (266 | ) | (260 | ) | ||||||||||||||||
Money
market and savings
|
(518 | ) | (1,629 | ) | (2,147 | ) | (210 | ) | (2,331 | ) | (2,541 | ) | ||||||||||||
Time
deposits
|
1,345 | (3,378 | ) | (2,033 | ) | 4,380 | (1,946 | ) | 2,434 | |||||||||||||||
Short-term
borrowings
|
1,585 | (537 | ) | 1,048 | 67 | (240 | ) | (173 | ) | |||||||||||||||
Long-term
debt
|
75 | (381 | ) | (306 | ) |
2090
|
(697 | ) | 1,393 | |||||||||||||||
Total
interest expense
|
2,494 | (4,943 | ) | (2,449 | ) | 6,333 | (5,480 | ) | 853 | |||||||||||||||
Net
interest income increase
|
||||||||||||||||||||||||
(decrease)
|
$ | 4,952 | $ | (702 | ) | $ | 4,250 | $ | 3,311 | $ | (4,631 | ) | $ | (1,320 | ) |
At December 31,
|
||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||
Nonaccrual
loans
|
||||||||||||||||||||
Construction
|
$ | 6,692 | $ | 7,696 | $ | 2,190 | $ | 127 | $ | - | ||||||||||
Commercial
real estate
|
4,655 | 365 | 417 | - | - | |||||||||||||||
Residential
mortgage
|
2,758 | 4,448 | - | - | - | |||||||||||||||
Home
equity loans and lines
|
1,314 | 82 | 106 | - | - | |||||||||||||||
Commercial
and industrial
|
2,706 | 503 | 13 | 8 | 25 | |||||||||||||||
Consumer
loans
|
9 | - | - | - | 1 | |||||||||||||||
Total
nonaccrual loans
|
18,134 | 13,094 | 2,726 | 135 | 26 | |||||||||||||||
Accruing
loans past due
|
||||||||||||||||||||
90
days or more
|
381 | - | - | - | - | |||||||||||||||
Total
nonperforming loans
|
18,515 | 13,094 | 2,726 | 135 | 26 | |||||||||||||||
Real
estate owned
|
6,306 | 1,716 | 272 | 98 | 22 | |||||||||||||||
Repossessed
assets
|
- | - | - | - | - | |||||||||||||||
Total
nonperforming assets
|
$ | 24,821 | $ | 14,810 | $ | 2,998 | $ | 233 | $ | 48 | ||||||||||
Restructured
loans in accrual
|
||||||||||||||||||||
status
not included above
|
$ | 13,691 | $ | - | $ | - | $ | - | $ | - | ||||||||||
Allowance
for loan losses
|
$ | 17,567 | $ | 12,585 | $ | 8,273 | $ | 6,945 | $ | 4,351 | ||||||||||
Nonperforming
loans to
|
||||||||||||||||||||
period
end loans
|
2.39 | % | 1.53 | % | 0.40 | % | 0.02 | % | 0.01 | % | ||||||||||
Nonperforming
loans and loans
|
||||||||||||||||||||
past
due 90 days or more to
|
||||||||||||||||||||
period
end loans
|
2.44 | % | 1.53 | % | 0.40 | % | 0.02 | % | 0.01 | % | ||||||||||
Allowance
for loan losses to
|
||||||||||||||||||||
period
end loans
|
2.31 | % | 1.60 | % | 1.22 | % | 1.26 | % | 1.33 | % | ||||||||||
Allowance
for loan losses to
|
||||||||||||||||||||
nonaccrual
loans
|
96.87 | % | 96.12 | % | 303.45 | % | 5,144.96 | % | 16,960.60 | % | ||||||||||
Allowance
for loan losses to
|
||||||||||||||||||||
nonperforming
loans
|
94.88 | % | 96.12 | % | 303.45 | % | 5,144.96 | % | 16,960.60 | % | ||||||||||
Nonperforming
loans to total assets
|
1.79 | % | 1.35 | % | 0.33 | % | 0.02 | % | 0.01 | % | ||||||||||
Nonperforming
assets to
|
||||||||||||||||||||
total
assets
|
2.40 | % | 1.67 | % | 0.36 | % | 0.03 | % | 0.01 | % |
At December 31,
|
||||||||||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||||||||||
%
of Total
|
%
of Total
|
%
of Total
|
||||||||||||||||||||||
Amount
|
Loans (1)
|
Amount
|
Loans (1)
|
Amount
|
Loans (1)
|
|||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||
Real
estate - commercial
|
$ | 5,811 | 47.28 | % | $ | 6,003 | 59.82 | % | $ | 3,771 | 51.85 | % | ||||||||||||
Real
estate - residential
|
1,075 | 12.73 | % | 103 | 2.43 | % | 130 | 2.70 | % | |||||||||||||||
Construction
loans
|
6,439 | 23.58 | % | 3,694 | 20.47 | % | 2,362 | 27.18 | % | |||||||||||||||
Commercial
and industrial loans
|
2,854 | 7.28 | % | 1,953 | 9.68 | % | 1,536 | 10.77 | % | |||||||||||||||
Home
equity loans and lines of credit
|
1,134 | 8.48 | % | 469 | 6.91 | % | 334 | 6.69 | % | |||||||||||||||
Loans
to individuals
|
254 | 0.65 | % | 363 | 0.69 | % | 140 | 0.81 | % | |||||||||||||||
Total
allowance
|
$ | 17,567 | 100.00 | % | $ | 12,585 | 100.00 | % | $ | 8,273 | 100.00 | % |
At December 31,
|
||||||||||||||||
2006
|
2005
|
|||||||||||||||
%
of Total
|
%
of Total
|
|||||||||||||||
Amount
|
Loans (1)
|
Amount
|
Loans (1)
|
|||||||||||||
(Dollars
in thousands)
|
||||||||||||||||
Real
estate - commercial
|
$ | 3,920 | 55.36 | % | $ | 1,876 | 52.92 | % | ||||||||
Real
estate - residential
|
121 | 3.67 | % | 90 | 4.54 | % | ||||||||||
Construction
loans
|
1,379 | 19.99 | % | 735 | 14.17 | % | ||||||||||
Commercial
and industrial loans
|
1,161 | 12.32 | % | 1,138 | 16.03 | % | ||||||||||
Home
equity loans and lines of credit
|
269 | 7.76 | % | 201 | 10.62 | % | ||||||||||
Loans
to individuals
|
95 | 0.90 | % | 311 | 1.72 | % | ||||||||||
Total
allowance
|
$ | 6,945 | 100.00 | % | $ | 4,351 | 100.00 | % |
(1)
|
Represents
total of all outstanding loans in each category as a percent of total
loans outstanding.
|
At or for the Year Ended December
31,
|
||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||
Balance
at beginning of period
|
$ | 12,585 | $ | 8,273 | $ | 6,945 | $ | 4,351 | $ | 3,668 | ||||||||||
Charge-offs:
|
||||||||||||||||||||
Construction
loans
|
3,290 | 277 | - | - | - | |||||||||||||||
Commercial
real estate
|
24 | 503 | 213 | - | 34 | |||||||||||||||
Commercial
and industrial loans
|
1,819 | 1,363 | 89 | 14 | 140 | |||||||||||||||
Residential
real estate
|
1,717 | - | 45 | 64 | - | |||||||||||||||
Loans
to individuals
|
90 | 44 | 15 | 8 | 9 | |||||||||||||||
Total
charge-offs
|
6,940 | 2,187 | 362 | 86 | 183 | |||||||||||||||
Recoveries:
|
||||||||||||||||||||
Commercial
and industrial loans
|
116 | 4 | 5 | 1 | 22 | |||||||||||||||
Commercial
real estate
|
- | 3 | - | - | - | |||||||||||||||
Construction
loans
|
270 | - | - | - | 27 | |||||||||||||||
Residential
real estate
|
10 | - | - | - | - | |||||||||||||||
Loans
to individuals
|
- | 7 | 1 | 1 | 10 | |||||||||||||||
Total
recoveries
|
396 | 14 | 6 | 2 | 59 | |||||||||||||||
Net
charge-offs
|
6,544 | 2,173 | 356 | 84 | 124 | |||||||||||||||
Allowance
acquired from Port City
|
||||||||||||||||||||
Capital
Bank merger
|
- | - | - | 1,687 | - | |||||||||||||||
Provision
for loan losses
|
11,526 | 6,485 | 1,684 | 991 | 807 | |||||||||||||||
Balance
at the end of the year
|
$ | 17,567 | $ | 12,585 | $ | 8,273 | $ | 6,945 | $ | 4,351 | ||||||||||
Total
loans outstanding at year-end
|
$ | 759,348 | $ | 785,377 | $ | 675,916 | $ | 549,819 | $ | 328,322 | ||||||||||
Average
loans outstanding for the year
|
$ | 777,275 | $ | 741,629 | $ | 615,322 | $ | 414,644 | $ | 297,045 | ||||||||||
Allowance
for loan losses to
|
||||||||||||||||||||
loans
outstanding
|
2.31 | % | 1.60 | % | 1.22 | % | 1.26 | % | 1.33 | % | ||||||||||
Ratio
of net loan charge-offs to
|
||||||||||||||||||||
average
loans outstanding
|
0.84 | % | 0.29 | % | 0.06 | % | 0.02 | % | 0.04 | % |
At December 31, 2009
|
At December 31, 2008
|
At December 31, 2007
|
||||||||||||||||||||||
Amortized
|
Fair
|
Amortized
|
Fair
|
Amortized
|
Fair
|
|||||||||||||||||||
cost
|
value
|
cost
|
value
|
cost
|
value
|
|||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||
Securities
available for sale:
|
||||||||||||||||||||||||
U.S.
government securities and obligations of U.S. government
agencies
|
$ | 12,235 | $ | 12,683 | $ | 10,665 | $ | 10,832 | $ | 8,364 | $ | 8,312 | ||||||||||||
Mortgage-backed
|
58,767 | 60,203 | 67,309 | 68,976 | 56,986 | 57,234 | ||||||||||||||||||
Collateralized
mortgage obligations
|
70,301 | 70,863 | - | - | - | - | ||||||||||||||||||
Municipal
|
48,820 | 49,029 | 26,089 | 25,350 | 24,810 | 24,695 | ||||||||||||||||||
Marketable
equity
|
402 | 345 | 565 | 491 | 536 | 517 | ||||||||||||||||||
Total
securities available for sale
|
$ | 190,525 | $ | 193,123 | $ | 104,628 | $ | 105,649 | $ | 90,696 | $ | 90,758 |
Net Interest Income
at
Risk
|
||||||||
(dollars in
thousands)
|
Estimated
Exposure to
|
|||||||
Net
Interest Income
|
||||||||
Rate
change
|
2009
|
2008
|
||||||
+200
basis points shock
|
$ | (775 | ) | $ | 847 | |||
-200
basis point shock
|
(1,002 | ) | (2,098 | ) | ||||
+200
basis point ramp
|
136 | 31 | ||||||
-200
basis point ramp
|
44 | (230 | ) |
Net
Economic Value of Equity
|
Estimated
Exposure to
|
|||||||
(dollars
in thousands)
|
Net
Economic Value of Equity
|
|||||||
Rate
Change
|
2009
|
2008
|
||||||
+100
basis point shock
|
$ | (6,268 | ) | $ | (2,594 | ) | ||
-100
basis point shock
|
6,108 | 7,531 | ||||||
+200
basis point shock
|
(20,293 | ) | (7,868 | ) | ||||
-200
basis point shock
|
10,077 | 10,931 |
Terms to Repricing at December 31, 2009
|
||||||||||||||||||||
More Than
|
More Than
|
|||||||||||||||||||
1 Year
|
1 Year to
|
3 Years to
|
More Than
|
|||||||||||||||||
or Less
|
3 Years
|
5 Years
|
5 Years
|
Total
|
||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||
INTEREST-EARNING
ASSETS:
|
||||||||||||||||||||
Loans
receivable:
|
||||||||||||||||||||
Commercial
mortgage loans
|
$ | 72,057 | $ | 135,643 | $ | 110,414 | $ | 41,336 | $ | 359,450 | ||||||||||
Residential
mortgage loans
|
41,420 | 34,063 | 11,986 | 9,262 | 96,731 | |||||||||||||||
Construction
and development
|
136,177 | 33,239 | 8,766 | 1,046 | 179,228 | |||||||||||||||
Commercial
and industrial loans
|
34,469 | 14,266 | 6,082 | 543 | 55,360 | |||||||||||||||
Home
equity lines and loans
|
17,714 | 4,904 | 2,008 | 39,858 | 64,484 | |||||||||||||||
Loans
to individuals
|
2,765 | 1,540 | 594 | 67 | 4,966 | |||||||||||||||
Interest-earning
deposits with banks
|
4,617 | - | - | - | 4,617 | |||||||||||||||
Fed
funds sold
|
17,825 | - | - | - | 17,825 | |||||||||||||||
Investment
securities available for sale
|
18,311 | 51,544 | 40,289 | 79,979 | 190,123 | |||||||||||||||
Federal
Home Loan Bank stock
|
11,777 | - | - | - | 11,777 | |||||||||||||||
Total
interest-earning assets
|
$ | 357,132 | $ | 275,199 | $ | 180,139 | $ | 172,091 | $ | 984,561 | ||||||||||
INTEREST-BEARING
LIABILITIES:
|
||||||||||||||||||||
Deposits:
|
||||||||||||||||||||
Money
market, NOW and savings
|
$ | 224,080 | $ | - | $ | - | $ | - | $ | 224,080 | ||||||||||
Time
|
270,916 | 126,894 | 39,652 | 50 | 437,512 | |||||||||||||||
Short-term
borrowings
|
74,000 | - | - | - | 74,000 | |||||||||||||||
Long-term
borrowings
|
- | 75,000 | 30,000 | 37,748 | 142,748 | |||||||||||||||
Total
interest-bearing liabilities
|
$ | 568,996 | $ | 201,894 | $ | 69,652 | $ | 37,798 | $ | 878,340 | ||||||||||
INTEREST
SENSITIVITY GAP PER PERIOD
|
$ | (211,864 | ) | $ | 73,305 | $ | 110,487 | $ | 134,293 | $ | 106,221 | |||||||||
CUMULATIVE
INTEREST SENSITIVITY GAP
|
$ | (211,864 | ) | $ | (138,559 | ) | $ | (28,072 | ) | $ | 106,221 | $ | 106,221 | |||||||
CUMULATIVE
GAP AS A PERCENTAGE OF TOTAL INTEREST-EARNING ASSETS
|
-21.52 | % | -14.07 | % | -2.85 | % | 10.79 | % | 10.79 | % | ||||||||||
CUMULATIVE
INTEREST-EARNING ASSETS AS A PERCENTAGE OF CUMULATIVE INTEREST-BEARING
LIABILITIES
|
62.77 | % | 82.03 | % | 96.66 | % | 112.09 | % | 112.09 | % |
Year
Ended December 31, 2009
|
Year
Ended December 31, 2008
|
|||||||||||||||||||||||||||||||
Fourth
|
Third
|
Second
|
First
|
Fourth
|
Third
|
Second
|
First
|
|||||||||||||||||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|||||||||||||||||||||||||
Operating
Data:
|
||||||||||||||||||||||||||||||||
Total
interest income
|
$ | 13,975 | $ | 14,069 | $ | 14,084 | $ | 14,078 | $ | 13,711 | $ | 13,794 | $ | 13,177 | $ | 13,722 | ||||||||||||||||
Total
interest expense
|
6,301 | 6,657 | 6,816 | 6,847 | 7,536 | 7,451 | 6,885 | 7,198 | ||||||||||||||||||||||||
Net
interest income
|
7,674 | 7,412 | 7,268 | 7,231 | 6,175 | 6,343 | 6,292 | 6,524 | ||||||||||||||||||||||||
Provision
for loan losses
|
6,740 | 1,958 | 1,132 | 1,696 | 3,937 | 1,282 | 459 | 806 | ||||||||||||||||||||||||
Net
interest income after provision
|
934 | 5,454 | 6,136 | 5,535 | 2,238 | 5,061 | 5,833 | 5,718 | ||||||||||||||||||||||||
Non-interest
income
|
1,659 | 1,128 | 752 | 789 | 1,050 | 1,057 | 817 | 808 | ||||||||||||||||||||||||
Non-interest
expense
|
36,142 | 5,887 | 6,295 | 5,619 | 4,792 | 5,066 | 5,093 | 5,021 | ||||||||||||||||||||||||
Income
(loss) before income taxes
|
(33,549 | ) | 695 | 593 | 705 | (1,504 | ) | 1,052 | 1,557 | 1,505 | ||||||||||||||||||||||
Provision
for income taxes
|
(1,500 | ) | 58 | 19 | 94 | (738 | ) | 306 | 526 | 505 | ||||||||||||||||||||||
Net
income (loss)
|
$ | (32,049 | ) | $ | 637 | $ | 574 | $ | 611 | $ | (766 | ) | $ | 746 | $ | 1,031 | $ | 1,000 | ||||||||||||||
Efective
dividend on preferred stock
|
(604 | ) | (422 | ) | (422 | ) | (168 | ) | - | - | - | - | ||||||||||||||||||||
Net
income (loss) for common shares
|
$ | (32,653 | ) | $ | 215 | $ | 152 | $ | 443 | $ | (766 | ) | $ | 746 | $ | 1,031 | $ | 1,000 | ||||||||||||||
|
||||||||||||||||||||||||||||||||
Securities
gains/(losses)
|
$ | 563 | $ | 110 | $ | (219 | ) | $ | (188 | ) | $ | - | $ | - | $ | 15 | $ | - | ||||||||||||||
Per
Share Data:
|
||||||||||||||||||||||||||||||||
Earnings
(loss) per share- basic
|
$ | (3.41 | ) | $ | 0.02 | $ | 0.02 | $ | 0.05 | $ | (0.08 | ) | $ | 0.08 | $ | 0.11 | $ | 0.19 | ||||||||||||||
Earnings
(loss) per share - diluted
|
(3.41 | ) | 0.02 | 0.02 | 0.05 | (0.08 | ) | 0.08 | 0.11 | 0.18 |
Page No.
|
|
Report
of Independent Registered Public Accounting Firm
|
47
|
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
48
|
Consolidated
Statements of Operations for the years ended December 31, 2009, 2008 and
2007
|
49
|
Consolidated
Statements of Comprehensive Income (Loss) for the years ended December 31,
2009, 2008 and 2007
|
50
|
Consolidated
Statements of Changes in Stockholders’ Equity for the years ended December
31, 2009, 2008 and 2007
|
51
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2009, 2008 and
2007
|
53
|
Notes
to Consolidated Financial Statements
|
55
|
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Cash
and due from banks
|
$ | 9,285,386 | $ | 9,917,277 | ||||
Interest-earning
deposits with banks
|
4,616,722 | 266,512 | ||||||
Federal
funds sold
|
17,825,000 | 99,000 | ||||||
Investment
securities available for sale, at fair value (Note C)
|
193,122,891 | 105,648,618 | ||||||
Loans
(Note D)
|
759,348,341 | 785,377,283 | ||||||
Allowance
for loan losses (Note D)
|
(17,567,000 | ) | (12,585,000 | ) | ||||
NET
LOANS
|
741,781,341 | 772,792,283 | ||||||
Accrued
interest receivable
|
4,260,258 | 3,341,258 | ||||||
Federal
Home Loan Bank stock, at cost
|
11,776,500 | 7,264,000 | ||||||
Bank
premises and equipment (Note E)
|
11,861,158 | 10,845,049 | ||||||
Investment
in life insurance
|
17,658,386 | 16,811,918 | ||||||
Goodwill
(Note F)
|
- | 30,233,049 | ||||||
Other
assets
|
20,617,367 | 11,091,784 | ||||||
TOTAL
ASSETS
|
$ | 1,032,805,009 | $ | 968,310,748 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Deposits:
|
||||||||
Demand
|
$ | 61,041,955 | $ | 63,945,717 | ||||
Savings
|
58,086,102 | 58,833,876 | ||||||
Money
market and NOW
|
165,994,207 | 130,542,569 | ||||||
Time
(Note G)
|
437,512,354 | 461,560,593 | ||||||
TOTAL
DEPOSITS
|
722,634,618 | 714,882,755 | ||||||
Short-term
borrowings (Note H)
|
74,000,000 | 37,706,000 | ||||||
Long-term
debt (Note H)
|
142,748,000 | 116,748,000 | ||||||
Accrued
expenses and other liabilities
|
3,902,185 | 3,882,385 | ||||||
TOTAL
LIABILITIES
|
943,284,803 | 873,219,140 | ||||||
Commitments
(Notes D, I and O)
|
||||||||
Stockholders’
Equity (Note Q)
|
||||||||
Preferred
stock, no par value, 5,000,000 shares authorized, 24,900 shares issued and
outstanding on December 31, 2009
|
22,935,514 | - | ||||||
Common
stock, $1 par value, 20,000,000 shares authorized; 9,626,559 shares issued
and outstanding at both December 31, 2009 and 2008
|
9,626,559 | 9,626,559 | ||||||
Common
stock warrant
|
2,367,368
|
- | ||||||
Additional
paid-in capital
|
74,529,894
|
74,349,299
|
||||||
Retained
earnings (deficit)
|
(21,354,080 | ) | 10,488,628 | |||||
Accumulated
other comprehensive income
|
1,414,951 | 627,122 | ||||||
TOTAL
STOCKHOLDERS’ EQUITY
|
89,520,206 | 95,091,608 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ | 1,032,805,009 | $ | 968,310,748 |
2009
|
2008
|
2007
|
||||||||||
INTEREST
AND FEE INCOME
|
||||||||||||
Loans
|
$ | 47,989,636 | $ | 49,478,663 | $ | 50,022,082 | ||||||
Investment
securities available for sale
|
8,202,708 | 4,842,624 | 4,453,955 | |||||||||
Interest-earning
deposits with banks
|
8,227 | 10,653 | 38,161 | |||||||||
Federal
funds sold
|
5,827 | 72,878 | 357,878 | |||||||||
TOTAL
INTEREST AND FEE INCOME
|
56,206,398 | 54,404,818 | 54,872,076 | |||||||||
INTEREST
EXPENSE
|
||||||||||||
Money
market, NOW and savings deposits
|
2,900,719 | 4,059,475 | 6,860,622 | |||||||||
Time
deposits
|
16,969,642 | 19,002,942 | 16,568,529 | |||||||||
Short-term
borrowings
|
1,704,511 | 656,549 | 830,302 | |||||||||
Long-term
debt
|
5,045,638 | 5,351,459 | 3,957,782 | |||||||||
TOTAL
INTEREST EXPENSE
|
26,620,510 | 29,070,425 | 28,217,235 | |||||||||
NET
INTEREST INCOME
|
29,585,888 | 25,334,393 | 26,654,841 | |||||||||
PROVISION
FOR LOAN LOSSES (Note D)
|
11,526,066 | 6,484,543 | 1,684,219 | |||||||||
NET
INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES
|
18,059,822 | 18,849,850 | 24,970,622 | |||||||||
NON-INTEREST
INCOME
|
||||||||||||
Mortgage
origination revenue
|
922,615 | 718,433 | 512,152 | |||||||||
Fees
on deposit accounts
|
1,662,949 | 1,606,062 | 1,360,301 | |||||||||
Earnings
on life insurance
|
885,858 | 735,770 | 379,927 | |||||||||
Gain
on sale of available for sale securities
|
870,072 | 15,535 | - | |||||||||
Gain
on sale of loans
|
74,595 | - | - | |||||||||
Loss
on sale or disposal of assets
|
(3,024 | ) | (1,346 | ) | (7,341 | ) | ||||||
Impairment
of marketable equity security
|
(197,575 | ) | - | - | ||||||||
Impairment
of nonmarketable equity security
|
(406,802 | ) | - | - | ||||||||
Other
(Note K)
|
519,474 | 730,219 | 434,163 | |||||||||
TOTAL
NON-INTEREST INCOME
|
4,328,162 | 3,804,673 | 2,679,202 | |||||||||
NON-INTEREST
EXPENSE
|
||||||||||||
Salaries
and employee benefits
|
11,834,747 | 11,110,281 | 9,875,748 | |||||||||
Occupancy
and equipment
|
3,542,206 | 2,726,669 | 2,295,675 | |||||||||
Data
processing
|
1,418,308 | 1,081,290 | 1,055,640 | |||||||||
FDIC
insurance premiums
|
1,918,712 | 402,158 | 210,675 | |||||||||
Foreclosed
asset related expenses, net
|
498,572 | 148,150 | 83,100 | |||||||||
Goodwill
impairment
|
30,233,049 | - | - | |||||||||
Other
(Note K)
|
4,497,041 | 4,576,456 | 4,360,030 | |||||||||
TOTAL
NON-INTEREST EXPENSE
|
53,942,635 | 20,045,004 | 17,880,868 | |||||||||
INCOME
(LOSS) BEFORE INCOME TAXES
|
(31,554,651 | ) | 2,609,519 | 9,768,956 | ||||||||
INCOME
TAXES (Note J)
|
(1,328,700 | ) | 598,700 | 3,520,200 | ||||||||
NET
INCOME (LOSS)
|
(30,225,951 | ) | 2,010,819 | 6,248,756 | ||||||||
Effective
dividend on preferred stock (Note G)
|
1,616,757 | - | - | |||||||||
Net
income available (loss attributed) to common shareholders
|
$ | (31,842,708 | ) | $ | 2,010,819 | $ | 6,248,756 | |||||
NET
INCOME (LOSS) PER COMMON SHARE
|
||||||||||||
Basic
|
$ | (3.33 | ) | $ | 0.21 | $ | 0.68 | |||||
Diluted
|
$ | (3.33 | ) | $ | 0.21 | $ | 0.65 | |||||
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING
|
||||||||||||
Basic
|
9,569,290 | 9,500,103 | 9,211,779 | |||||||||
Diluted
|
9,569,290 | 9,680,484 | 9,635,694 |
2009
|
2008
|
2007
|
||||||||||
Net
(loss) income
|
$ | (30,225,951 | ) | $ | 2,010,819 | $ | 6,248,756 | |||||
Other
comprehensive income:
|
||||||||||||
Securities
available for sale:
|
||||||||||||
Unrealized
holding gains on available for
sale securities
|
2,249,496 | 973,930 | 881,765 | |||||||||
Tax
effect
|
(867,181 | ) | (375,451 | ) | (342,629 | ) | ||||||
Reclassification
of losses recognized due to
impairment in net income
|
197,575 | - | - | |||||||||
Tax
effect
|
(76,165 | ) | - | - | ||||||||
Reclassification
of gains recognized in net
income
|
(870,072 | ) | (15,535 | ) | - | |||||||
Tax
effect
|
335,413 | 5,989 | - | |||||||||
Net
of tax amount
|
969,066 | 588,933 | 539,136 | |||||||||
Cash
flow hedging activities:
|
||||||||||||
Unrealized
holding loss on cash flow hedging activities
|
(294,934 | ) | - | - | ||||||||
Tax
effect
|
113,697 | - | - | |||||||||
Net
of tax amount
|
(181,237 | ) | - | - | ||||||||
Total
other comprehensive income
|
787,829 | 588,933 | 539,136 | |||||||||
COMPREHENSIVE
INCOME (LOSS)
|
$ | (29,438,122 | ) | $ | 2,599,752 | $ | 6,787,892 |
Accumulated
|
||||||||||||||||||||||||||||||||||||
Common
|
Additional
|
Retained
|
other
|
Total
|
||||||||||||||||||||||||||||||||
Preferred stock
|
Common stock
|
stock
|
paid-in
|
earnings
|
comprehensive
|
stockholders’
|
||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
warrants
|
capital
|
(deficit)
|
income (loss)
|
equity
|
||||||||||||||||||||||||||||
Balance
at December 31,
2006
|
- | $ | - | 8,265,136 | $ | 8,265,136 | $ | - | $ | 62,659,201 | $ | 12,610,588 | $ | (500,947 | ) | $ | 83,033,978 | |||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | - | 6,248,756 | - | 6,248,756 | |||||||||||||||||||||||||||
Net
unrealized holding gain on available for sale securities
|
- | - | - | - | - | - | - | 539,136 | 539,136 | |||||||||||||||||||||||||||
Total
comprehensive income
|
6,787,892 | |||||||||||||||||||||||||||||||||||
Common
stock issued pursuant to:
|
||||||||||||||||||||||||||||||||||||
Stock
options exercised
|
- | - | 292,790 | 292,790 | - | 920,948 | - | - | 1,213,738 | |||||||||||||||||||||||||||
Stock
option related tax benefits
|
- | - | - | - | - | 451,950 | - | - | 451,950 | |||||||||||||||||||||||||||
Expense
recognized in connection with stock options and restricted
stock
|
- | - | - | - | - | 178,940 | - | - | 178,940 | |||||||||||||||||||||||||||
Issuance
of restricted stock, net of deferred compensation
|
- | - | 17,050 | 17,050 | - | (17,050 | ) | - | - | - | ||||||||||||||||||||||||||
Forfeiture
of restricted stock
|
- | - | (3,406 | ) | (3,406 | ) | - | 3,406 | - | - | - | |||||||||||||||||||||||||
Ten
percent stock dividend with net cash paid for fractional
shares
|
- | - | 833,009 | 833,009 | - | 9,399,032 | (10,239,727 | ) | - | (7,686 | ) | |||||||||||||||||||||||||
Balance
at December 31, 2007
|
- | - | 9,404,579 | 9,404,579 | - | 73,596,427 | 8,619,617 | 38,189 | 91,658,812 | |||||||||||||||||||||||||||
Cumulative
adjustment for split dollar pursuant to adoption of EITF
06-04
|
- | - | - | - | - | - | (141,808 | ) | - | (141,808 | ) | |||||||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | - | 2,010,819 | - | 2,010,819 | |||||||||||||||||||||||||||
Net
unrealized holding gain on available for sale securities
|
- | - | - | - | - | - | - | 588,933 | 588,933 | |||||||||||||||||||||||||||
Total
comprehensive income
|
2,599,752 | |||||||||||||||||||||||||||||||||||
Common
stock issued pursuant to:
|
||||||||||||||||||||||||||||||||||||
Stock
options exercised
|
- | - | 186,480 | 186,480 | - | 483,774 | - | - | 670,254 | |||||||||||||||||||||||||||
Stock
option related tax benefits
|
- | - | - | - | - | 95,500 | - | - | 95,500 | |||||||||||||||||||||||||||
Expense
recognized in connection with stock options and restricted
stock
|
- | - | - | - | - | 209,098 | - | - | 209,098 | |||||||||||||||||||||||||||
Issuance
of restricted stock, net of deferred compensation
|
- | - | 35,500 | 35,500 | - | (35,500 | ) | - | - | - | ||||||||||||||||||||||||||
Balance
at December 31, 2008
|
- | $ | - | 9,626,559 | $ | 9,626,559 | $ | - | $ | 74,349,299 | $ | 10,488,628 | $ | 627,122 | $ | 95,091,608 |
Accumulated
|
||||||||||||||||||||||||||||||||||||
Common
|
Additional
|
Retained
|
other
|
Total
|
||||||||||||||||||||||||||||||||
Preferred stock
|
Common stock
|
stock
|
paid-in
|
earnings
|
comprehensive
|
stockholders’
|
||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
warrant
|
capital
|
(deficit)
|
income (loss)
|
equity
|
||||||||||||||||||||||||||||
Balance
at December 31,
2008
|
- | $ | - | 9,626,559 | $ | 9,626,559 | $ | - | $ | 74,349,299 | $ | 10,488,628 | $ | 627,122 | $ | 95,091,608 | ||||||||||||||||||||
Net
loss
|
- | - | - | - | - | - | (30,225,951 | ) | - | (30,225,951 | ) | |||||||||||||||||||||||||
Other
comprehensive income
|
- | - | - | - | - | - | - | 787,829 | 787,829 | |||||||||||||||||||||||||||
Expense
recognized in connection with stock options and restricted
stock
|
- | - | - | - | - | 180,595 | - | - | 180,595 | |||||||||||||||||||||||||||
Preferred
stock transaction:
|
||||||||||||||||||||||||||||||||||||
Issuance
of preferred stock
|
24,900 | 24,900,000 | - | - | - | - | - | - | 24,900,000 | |||||||||||||||||||||||||||
Issuance
of warrant
|
- | (2,367,368 | ) | - | - | 2,367,368 | - | - | - | - | ||||||||||||||||||||||||||
Accretion
of discount on warrant
|
- | 402,882 | - | - | - | - | (402,882 | ) | - | - | ||||||||||||||||||||||||||
Preferred
stock dividend
|
- | - | - | - | - | - | (1,213,875 | ) | - | (1,213,875 | ) | |||||||||||||||||||||||||
Balance
at December 31, 2009
|
24,900 | $ | 22,935,514 | 9,626,559 | $ | 9,626,559 | $ | 2,367,368 | $ | 74,529,894 | $ | (21,354,080 | ) | $ | 1,414,951 | $ | 89,520,206 |
2009
|
2008
|
2007
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
income (loss)
|
$ | (30,225,951 | ) | $ | 2,010,819 | $ | 6,248,756 | |||||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||||||
Depreciation
|
938,178 | 786,668 | 694,559 | |||||||||
Provision
for loan losses
|
11,526,066 | 6,484,543 | 1,684,219 | |||||||||
Amortization
of core deposit intangible
|
133,349 | 133,349 | 133,349 | |||||||||
Accretion
of fair value discount on loans
|
(285,593 | ) | (439,820 | ) | (439,820 | ) | ||||||
Amortization
of fair value premium on deposits
|
109,730 | 185,550 | 406,277 | |||||||||
Deferred
income taxes
|
(2,077,407 | ) | (1,788,197 | ) | (502,749 | ) | ||||||
Loss
on impairment of marketable equity security
|
197,575 | - | - | |||||||||
Loss
on impairment of nonmarketable equity security
|
406,802 | - | - | |||||||||
Loss
on impairment of goodwill
|
30,233,049 | - | - | |||||||||
Loss
on disposition of assets
|
3,024 | 74,032 | 65,685 | |||||||||
Gain
on sale of available for sale securities
|
(870,072 | ) | (15,535 | ) | - | |||||||
Net
gain on disposal of foreclosed assets
|
(3,741 | ) | - | - | ||||||||
Valuation
adjustments related to foreclosed assets
|
48,349 | - | - | |||||||||
Net
(accretion of discounts) amortization of premiums on available for sale
securities
|
970,221 | (80,314 | ) | (98,609 | ) | |||||||
Net
increase in cash surrender value life insurance
|
(846,468 | ) | (689,221 | ) | (339,204 | ) | ||||||
Stock
based compensation
|
180,595 | 209,098 | 178,940 | |||||||||
Purchase
of loan to be held for sale
|
(3,651,505 | ) | - | - | ||||||||
Proceeds
from sale of loan held for sale
|
3,726,100 | - | - | |||||||||
Gain
on sale of loan
|
(74,595 | ) | - | - | ||||||||
Change
in assets and liabilities:
|
||||||||||||
(Increase)
decrease in accrued interest receivable
|
(919,000 | ) | 420,342 | (715,760 | ) | |||||||
Increase
in other assets
|
(4,006,862 | ) | (1,621,319 | ) | (303,339 | ) | ||||||
Increase
(decrease) in accrued interest payable
|
(483,216 | ) | 275,916 | 444,620 | ||||||||
Increase
(decrease) in accrued expenses and other liabilities
|
166,153 | 17,730 | (292,252 | ) | ||||||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
5,194,781 | 5,963,641 | 7,164,672 | |||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Purchase
of investment securities available for sale
|
(167,674,519 | ) | (28,064,996 | ) | (14,360,641 | ) | ||||||
Proceeds
from maturities and repayments of investment securities available for
sale
|
38,659,372 | 12,685,891 | 9,305,441 | |||||||||
Proceeds
from sale of securities available for sale
|
42,820,152 | 1,543,197 | - | |||||||||
Loan
originations and principal collections, net
|
9,964,259 | (113,399,801 | ) | (126,014,080 | ) | |||||||
Purchases
of premises and equipment
|
(1,957,311 | ) | (3,538,541 | ) | (2,947,101 | ) | ||||||
Proceeds
from disposals of premises and equipment
|
- | - | 20,050 | |||||||||
Proceeds
from sales of foreclosed assets
|
5,172,202 | 727,648 | 247,996 | |||||||||
Purchases
of Federal Home Loan Bank stock
|
(4,512,500 | ) | (473,300 | ) | (3,207,900 | ) | ||||||
Investment
in life insurance
|
- | (7,000,000 | ) | (3,100,000 | ) | |||||||
Net
cash paid in business combination
|
- | - | (7,500 | ) | ||||||||
NET
CASH USED BY INVESTING ACTIVITIES
|
(77,528,345 | ) | (137,519,902 | ) | (140,063,735 | ) |
2009
|
2008
|
2007
|
||||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Net
increase in deposits accounts
|
$ | 7,642,133 | $ | 109,265,892 | $ | 63,143,356 | ||||||
Net
increase (decrease) in short-term borrowings
|
36,294,000 | 23,951,000 | (10,696,000 | ) | ||||||||
Net
increase (decrease) in long-term debt
|
26,000,000 | (4,500,000 | ) | 76,000,000 | ||||||||
Proceeds
from stock options exercised
|
- | 670,254 | 1,213,738 | |||||||||
Proceeds
from issuance of preferred stock and common stock warrant
|
24,900,000 | - | - | |||||||||
Dividends
paid on preferred stock
|
(1,058,250 | ) | - | - | ||||||||
Net
cash paid for fractional shares
|
- | - | (7,687 | ) | ||||||||
Excess
tax benefits from stock options exercised
|
- | 95,500 | 451,950 | |||||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
93,777,883 | 129,482,646 | 130,105,357 | |||||||||
NET
INCERASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
21,444,319 | (2,073,615 | ) | (2,793,706 | ) | |||||||
CASH
AND CASH EQUIVALENTS, BEGINNING
|
10,282,789 | 12,356,404 | 15,150,110 | |||||||||
CASH
AND CASH EQUIVALENTS, ENDING
|
$ | 31,727,108 | $ | 10,282,789 | $ | 12,356,404 |
2009
|
2008
|
2007
|
||||||||||
Weighted
average number of common shares used in computing basic net income per
share
|
9,569,290 | 9,500,103 | 9,211,779 | |||||||||
Effect
of dilutive stock options
|
- | 174,540 | 400,665 | |||||||||
Effects
of restricted stock
|
- | 5,841 | 23,250 | |||||||||
Weighted average number of common
shares and dilutive potential common shares used in computing
diluted net income per share
|
9,569,290 | 9,680,484 | 9,635,694 |
December 31, 2009
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Amortized
|
unrealized
|
unrealized
|
Fair
|
|||||||||||||
cost
|
gains
|
losses
|
value
|
|||||||||||||
Securities
available for sale:
|
||||||||||||||||
U.S.
government securities and obligations of U.S. government
agencies
|
$ | 12,235,041 | $ | 448,086 | $ | - | $ | 12,683,127 | ||||||||
Mortgage-backed
securities
|
58,766,929 | 1,562,514 | 126,356 | 60,203,087 | ||||||||||||
Collateralized
mortgage obligations
|
70,300,750 | 948,641 | 386,219 | 70,863,172 | ||||||||||||
Municipals
|
48,820,579 | 673,223 | 465,397 | 49,028,405 | ||||||||||||
Marketable
equity
|
402,050 | - | 56,950 | 345,100 | ||||||||||||
$ | 190,525,349 | $ | 3,632,464 | $ | 1,034,922 | $ | 193,122,891 | |||||||||
December 31, 2008
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Amortized
|
unrealized
|
unrealized
|
Fair
|
|||||||||||||
cost
|
gains
|
losses
|
value
|
|||||||||||||
Securities
available for sale:
|
||||||||||||||||
U.S.
government securities and obligations of U.S. government
agencies
|
$ | 10,664,833 | $ | 169,315 | $ | 2,313 | $ | 10,831,835 | ||||||||
Mortgage-backed
securities
|
67,308,567 | 1,707,655 | 39,863 | 68,976,359 | ||||||||||||
Municipals
|
26,089,420 | 177,788 | 917,537 | 25,349,671 | ||||||||||||
Marketable
equity
|
565,255 | 4,989 | 79,491 | 490,753 | ||||||||||||
$ | 104,628,075 | $ | 2,059,747 | $ | 1,039,204 | $ | 105,648,618 |
December 31, 2009
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
value
|
losses
|
value
|
losses
|
value
|
losses
|
|||||||||||||||||||
Securities
available for sale:
|
||||||||||||||||||||||||
Mortgage-backed
|
$ | 10,253,608 | $ | 126,356 | $ | - | $ | - | $ | 10,253,608 | $ | 126,356 | ||||||||||||
Collateralized
mortgage obligations
|
26,940,754 | 386,219 | - | - | 26,940,754 | 386,219 | ||||||||||||||||||
Municipals
|
17,081,421 | 244,125 | 2,858,321 | 221,272 | 19,939,742 | 465,397 | ||||||||||||||||||
Marketable
equity
|
- | - | 345,100 | 56,950 | 345,100 | 56,950 | ||||||||||||||||||
Total
temporarily impaired securities
|
$ | 54,275,783 | $ | 756,700 | $ | 3,203,421 | $ | 278,222 | $ | 57,479,204 | $ | 1,034,922 | ||||||||||||
December 31, 2008
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
value
|
losses
|
value
|
losses
|
value
|
losses
|
|||||||||||||||||||
Securities
available for sale:
|
||||||||||||||||||||||||
U.S.
government securities and obligations of U.S. government
agencies
|
$ | 972,624 | $ | 2,313 | $ | - | $ | - | $ | 972,624 | $ | 2,313 | ||||||||||||
Mortgage-backed
|
1,768,974 | 22,558 | 1,097,179 | 17,305 | 2,866,153 | 39,863 | ||||||||||||||||||
Municipals
|
13,246,896 | 755,550 | 986,586 | 161,987 | 14,233,482 | 917,537 | ||||||||||||||||||
Marketable
equity
|
- | - | 206,366 | 79,491 | 206,366 | 79,491 | ||||||||||||||||||
Total
temporarily impaired securities
|
$ | 15,988,494 | $ | 780,421 | $ | 2,290,131 | $ | 258,783 | $ | 18,278,625 | $ | 1,039,204 |
Amortized
|
Fair
|
|||||||
cost
|
value
|
|||||||
Due
within one year
|
$ | 18,311,207 | $ | 18,698,363 | ||||
Due
after one year through five years
|
91,833,128 | 93,371,396 | ||||||
Due
after five years through ten years
|
47,642,887 | 48,110,466 | ||||||
Due
after ten years
|
32,336,077 | 32,597,566 | ||||||
Other
equity securities
|
402,050 | 345,100 | ||||||
$ | 190,525,349 | $ | 193,122,891 |
Repricing or Maturing
|
||||||||||||||||||||
Less than
|
One to
|
Five to
|
Over ten
|
|||||||||||||||||
one year
|
five years
|
ten years
|
years
|
Total
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Securities available for sale:
|
||||||||||||||||||||
U.
S. government agencies
|
||||||||||||||||||||
Balance
|
$ | - | $ | 6,961 | $ | 5,274 | $ | - | $ | 12,235 | ||||||||||
Weighted
average yield
|
- | % | 4.63 | % | 4.66 | % | - | % | 4.64 | % | ||||||||||
Mortgage-backed
securities
|
||||||||||||||||||||
Balance
|
$ | 12,213 | $ | 27,340 | $ | 12,871 | $ | 6,343 | $ | 58,767 | ||||||||||
Weighted
average yield
|
4.30 | % | 4.35 | % | 4.40 | % | 4.66 | % | 4.38 | % | ||||||||||
Collateralized
mortgage obligations
|
||||||||||||||||||||
Balance
|
$ | 6,098 | $ | 51,786 | $ | 12,406 | $ | 11 | $ | 70,301 | ||||||||||
Weighted
average yield
|
2.52 | % | 3.59 | % | 4.04 | % | 6.00 | % | 3.58 | % | ||||||||||
Municipal
securities
|
||||||||||||||||||||
Balance
|
$ | - | $ | 5,746 | $ | 17,092 | $ | 25,982 | $ | 48,820 | ||||||||||
Weighted
average yield
|
- | % | 3.93 | % | 4.39 | % | 4.53 | % | 4.41 | % | ||||||||||
Marketable
equity
|
||||||||||||||||||||
Balance
|
$ | - | $ | - | $ | - | $ | 402 | $ | 402 | ||||||||||
Weighted
average yield
|
- | % | - | % | - | % | - | % | - | % | ||||||||||
Total
|
||||||||||||||||||||
Balance
|
$ | 18,311 | $ | 91,833 | $ | 47,643 | $ | 32,738 | $ | 190,525 | ||||||||||
Weighted
average yield
|
3.70 | % | 3.92 | % | 4.33 | % | 4.55 | % | 4.11 | % |
2009
|
2008
|
|||||||
Real
estate - commercial
|
$ | 359,450,529 | $ | 305,808,295 | ||||
Real
estate - residential
|
96,730,537 | 89,872,388 | ||||||
Construction
loans
|
179,227,518 | 242,771,248 | ||||||
Commercial
and industrial loans
|
55,360,111 | 81,000,300 | ||||||
Home
equity loans and lines of credit
|
64,484,524 | 63,772,120 | ||||||
Loans
to individuals
|
4,965,873 | 3,198,606 | ||||||
Total
loans
|
760,219,092 | 786,422,957 | ||||||
Less:
|
||||||||
Deferred
loan fees
|
(870,751 | ) | (1,045,674 | ) | ||||
Allowance
for loan losses
|
(17,567,000 | ) | (12,585,000 | ) | ||||
Total
|
$ | 741,781,341 | $ | 772,792,283 |
Loans
to directors and officers as a group at December 31, 2008
|
$ | 43,180,789 | ||
Net
payments during the year-ended December 31, 2009
|
(389,140 | ) | ||
Loans
to directors and officers as a group at December 31, 2009
|
$ | 42,791,649 |
2009
|
2008
|
2007
|
||||||||||
Balance
at beginning of year
|
$ | 12,585,000 | $ | 8,273,000 | $ | 6,945,000 | ||||||
Provision
for loan losses
|
11,526,066 | 6,484,543 | 1,684,219 | |||||||||
Charge-offs
|
(6,940,583 | ) | (2,187,104 | ) | (362,363 | ) | ||||||
Recoveries
|
396,517 | 14,561 | 6,144 | |||||||||
Net
charge-offs
|
(6,544,066 | ) | (2,172,543 | ) | (356,219 | ) | ||||||
Balance
at end of year
|
$ | 17,567,000 | $ | 12,585,000 | $ | 8,273,000 |
2009
|
2008
|
|||||||
Land
|
$ | 4,280,213 | $ | 4,280,213 | ||||
Buildings
and leasehold improvements
|
7,014,872 | 4,940,581 | ||||||
Furniture
and equipment
|
5,155,849 | 5,354,601 | ||||||
Less
accumulated depreciation
|
(4,589,776 | ) | (3,730,346 | ) | ||||
Total
|
$ | 11,861,158 | $ | 10,845,049 |
2009
|
2008
|
|||||||
Goodwill,
beginning of year
|
$ | 30,233,049 | $ | 30,233,049 | ||||
Goodwill
impairment write-off
|
30,233,049 | - | ||||||
Goodwill,
end of year
|
$ | - | $ | 30,233,049 | ||||
Other
intangibles – gross
|
$ | 1,333,493 | $ | 1,333,493 | ||||
Less
accumulated amortization
|
507,201 | 373,852 | ||||||
Other
intangibles – net
|
$ | 826,292 | $ | 959,641 |
Estimated Amortization Expense
|
||||
For
the Year Ending December 31:
|
||||
2010
|
$ | 133,349 | ||
2011
|
133,349 | |||
2012
|
133,349 | |||
2013
|
126,383 | |||
2014
|
112,448 | |||
Thereafter
|
187,414 | |||
$ | 826,292 |
Less than
|
$100,000
|
|||||||||||
$100,000
|
or more
|
Total
|
||||||||||
Three
months or less
|
$ | 17,432,487 | $ | 73,378,094 | $ | 90,810,581 | ||||||
Over
three months through one year
|
33,653,542 | 146,451,842 | 180,105,384 | |||||||||
Over
one year through three years
|
16,077,254 | 110,817,186 | 126,894,440 | |||||||||
Over
three years to five years
|
12,959,296 | 26,692,653 | 39,651,949 | |||||||||
Over
five years
|
50,000 | - | 50,000 | |||||||||
Total
|
$ | 80,172,579 | $ | 357,339,775 | $ | 437,512,354 |
2009
|
2008
|
|||||||
Short-term
borrowings:
|
||||||||
Federal
funds purchased
|
$ | - | $ | 8,706,000 | ||||
Federal
Reserve Bank discount window
|
50,000,000 | - | ||||||
Federal
Home Loan Bank advances maturing within one year
|
24,000,000 | 29,000,000 | ||||||
Total
short-term borrowings
|
$ | 74,000,000 | $ | 37,706,000 | ||||
Long-term
debt:
|
||||||||
Federal
Home Loan Bank advances maturing beyond one year
|
$ | 127,000,000 | $ | 99,000,000 | ||||
Junior
subordinated debentures
|
8,248,000 | 8,248,000 | ||||||
Subordinated
term loan
|
7,500,000 | 7,500,000 | ||||||
Holding
company line of credit
|
- | 2,000,000 | ||||||
Total
long-term debt
|
$ | 142,748,000 | $ | 116,748,000 |
For the Year Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
(Dollars in thousands)
|
||||||||
Short-term
borrowings:
|
||||||||
Federal
funds purchased:
|
||||||||
Balance
outstanding at end of year
|
$ | - | $ | 8,706 | ||||
Maximum
amount outstanding at any month end during the year
|
101,222 | 20,894 | ||||||
Average
balance outstanding during the year
|
16,037 | 4,010 | ||||||
Weighted-average
interest rate during the year
|
0.61 | % | 2.87 | % | ||||
Weighted-average
interest rate at end of year
|
0 | % | 1.00 | % | ||||
Federal
Reserve Bank discount window:
|
||||||||
Balance
outstanding at end of year
|
$ | 50,000 | $ | - | ||||
Maximum
amount outstanding at any month end during the year
|
75,000 | - | ||||||
Average
balance outstanding during the year
|
48,039 | - | ||||||
Weighted-average
interest rate during the year
|
0.42 | % | - | |||||
Weighted-average
interest rate at end of year
|
0.25 | % | - |
Maturity
|
Interest Rate
|
Rate Type
|
2009
|
2008
|
|||||||||||
August
21, 2009
|
4.71 | % |
Fixed
|
$ | - | $ | 10,000,000 | ||||||||
September
10, 2009
|
4.62 | % |
Fixed
|
- | 10,000,000 | ||||||||||
October
21, 2009
|
4.72 | % |
Fixed
|
- | 9,000,000 | ||||||||||
January
7, 2010
|
1.11 | % |
Fixed
|
10,000,000 | - | ||||||||||
April
12, 2010
|
4.58 | % |
Fixed
|
7,000,000 | 7,000,000 | ||||||||||
June
9, 2010
|
3.58 | % |
Fixed
|
7,000,000 | 7,000,000 | ||||||||||
January
12, 2011
|
1.75 | % |
Fixed
|
7,000,000 | - | ||||||||||
June
9, 2011
|
3.94 | % |
Fixed
|
8,000,000 | 8,000,000 | ||||||||||
February
10, 2012
|
1.68 | % |
Fixed
|
5,000,000 | - | ||||||||||
March
9, 2012
|
4.29 | % |
Convertible
|
10,000,000 | 10,000,000 | ||||||||||
May
18, 2012
|
4.49 | % |
Convertible
|
20,000,000 | 20,000,000 | ||||||||||
July
16, 2012
|
3.84 | % |
Convertible
|
5,000,000 | 5,000,000 | ||||||||||
August
29, 2012
|
4.00 | % |
Convertible
|
15,000,000 | 15,000,000 | ||||||||||
December
6, 2012
|
4.22 | % |
Fixed
|
5,000,000 | 5,000,000 | ||||||||||
February
11, 2013
|
2.29 | % |
Fixed
|
5,000,000 | - | ||||||||||
April
22, 2013
|
2.55 | % |
Fixed
|
6,000,000 | - | ||||||||||
March
21, 2014
|
2.76 | % |
Fixed
|
5,000,000 | - | ||||||||||
August
21, 2014
|
2.90 | % |
Fixed
|
5,000,000 | - | ||||||||||
October
21, 2014
|
2.91 | % |
Fixed
|
9,000,000 | - | ||||||||||
January
28, 2019
|
3.90 | % |
Fixed
|
12,000,000 | 12,000,000 | ||||||||||
March
25, 2019
|
4.26 | % |
Fixed
|
10,000,000 | 10,000,000 | ||||||||||
Totals
|
$ | 151,000,000 | $ | 128,000,000 |
2010
|
$ | 1,922,000 | ||
2011
|
1,945,000 | |||
2012
|
1,824,000 | |||
2013
|
1,775,000 | |||
2014
|
1,711,000 | |||
Thereafter
|
8,296,000 | |||
Total
|
$ | 17,473,000 |
2009
|
2008
|
2007
|
||||||||||
Current
tax provision:
|
||||||||||||
Federal
|
$ | 499,168 | $ | 1,910,369 | $ | 3,246,706 | ||||||
State
|
249,539 | 476,528 | 776,243 | |||||||||
748,707 | 2,386,897 | 4,022,949 | ||||||||||
Deferred
tax provision (benefit):
|
||||||||||||
Federal
|
(1,717,793 | ) | (1,473,490 | ) | (404,347 | ) | ||||||
State
|
(359,614 | ) | (314,707 | ) | (98,402 | ) | ||||||
(2,077,407 | ) | (1,788,197 | ) | (502,749 | ) | |||||||
Provision
for income taxes (benefit)
|
$ | (1,328,700 | ) | $ | 598,700 | $ | 3,520,200 |
2009
|
2008
|
2007
|
||||||||||
Tax
computed at statutory rate of 34%
|
$ | (10,728,581 | ) | $ | 887,237 | $ | 3,321,445 | |||||
Effect
of state income taxes
|
(72,649 | ) | 106,802 | 447,375 | ||||||||
Non-taxable
interest income
|
(501,847 | ) | (279,751 | ) | (256,218 | ) | ||||||
Non-taxable
bank owned life insurance
|
(287,799 | ) | (234,335 | ) | (115,329 | ) | ||||||
Goodwill
impairment
|
10,279,235 | - | - | |||||||||
Other
|
(17,059 | ) | 118,747 | 122,927 | ||||||||
$ | (1,328,700 | ) | $ | 598,700 | $ | 3,520,200 |
2009
|
2008
|
|||||||
Deferred
tax assets:
|
||||||||
Allowance
for loan losses
|
$ | 6,522,001 | $ | 4,792,148 | ||||
Premises
and equipment
|
41,051 | 180,587 | ||||||
Rent
abatement
|
- | 3,711 | ||||||
Fair
value adjustments
|
54,425 | 110,567 | ||||||
Unrealized
loss on hedges
|
113,697 | - | ||||||
Deferred
compensation
|
632,559 | 475,521 | ||||||
Other
|
418,835 | 155,802 | ||||||
Net
deferred tax assets
|
7,782,568 | 5,718,336 | ||||||
Deferred
tax liabilities:
|
||||||||
Intangible
assets
|
(318,568 | ) | (369,980 | ) | ||||
Deferred
loan costs
|
- | (76,280 | ) | |||||
Unrealized
gain on securities
|
(1,001,457 | ) | (393,420 | ) | ||||
Prepaid
expenses
|
(164,037 | ) | (163,217 | ) | ||||
Net
deferred tax liabilities
|
(1,484,062 | ) | (1,002,897 | ) | ||||
Net
deferred tax asset included in other assets
|
$ | 6,298,506 | $ | 4,715,439 |
2009
|
2008
|
2007
|
||||||||||
Brokerage
referral fees
|
$ | 163,858 | $ | 172,159 | $ | 164,665 | ||||||
Other
|
355,616 | 558,060 | 269,498 | |||||||||
Total
|
$ | 519,474 | $ | 730,219 | $ | 434,163 |
2009
|
2008
|
2007
|
||||||||||
Postage,
printing and office supplies
|
$ | 620,467 | $ | 560,192 | $ | 550,724 | ||||||
Advertising,
marketing and business development
|
613,456 | 639,129 | 606,667 | |||||||||
Professional
fees and services
|
1,465,114 | 1,620,339 | 1,511,404 | |||||||||
Loan
servicing and collection expenses
|
226,490 | 255,105 | 222,989 | |||||||||
Other
|
1,571,514 | 1,501,691 | 1,468,246 | |||||||||
Total
|
$ | 4,497,041 | $ | 4,576,456 | $ | 4,360,030 |
Minimum to be well
|
||||||||||||||||||||||||
Minimum for capital
|
capitalized under prompt
|
|||||||||||||||||||||||
Actual
|
adequacy purposes
|
corrective action provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Crescent
State Bank
|
||||||||||||||||||||||||
As
of December 31, 2009:
|
||||||||||||||||||||||||
Total
Capital (to Risk-Weighted Assets)
|
$ | 111,463 | 13.32 | % | $ | 66,945 | 8.00 | % | $ | 83,682 | 10.00 | % | ||||||||||||
Tier
I Capital (to Risk-Weighted Assets)
|
93,415 | 11.16 | % | 33,473 | 4.00 | % | 50,209 | 6.00 | % | |||||||||||||||
Tier
I Capital (to Average Assets)
|
93,415 | 8.86 | % | 42,170 | 4.00 | % | 52,712 | 5.00 | % | |||||||||||||||
As
of December 31, 2008:
|
||||||||||||||||||||||||
Total
Capital (to Risk-Weighted Assets)
|
$ | 90,644 | 10.87 | % | $ | 66,740 | 8.00 | % | $ | 83,425 | 10.00 | % | ||||||||||||
Tier
I Capital (to Risk-Weighted Assets)
|
72,693 | 8.71 | % | 33,370 | 4.00 | % | 50,055 | 6.00 | % | |||||||||||||||
Tier
I Capital (to Average Assets)
|
72,693 | 7.83 | % | 37,122 | 4.00 | % | 46,402 | 5.00 | % |
December 31, 2009
|
|||||||||
Estimated Fair
|
|||||||||
Balance Sheet
|
Notional
|
Value of
|
|||||||
Location
|
Asset(Liability)
|
Amount
|
|||||||
Trust
preferred securities:
|
|||||||||
Interest
rate swap
|
Other
liabilities
|
$ | 4,000,000 | $ | (67,847 | ) | |||
Interest
rate swap
|
Other
liabilities
|
4,000,000 | (83,652 | ) | |||||
Subordinated
term loan agreements:
|
|||||||||
Interest
rate swap
|
Other
liabilities
|
3,750,000 | (64,216 | ) | |||||
Interest
rate swap
|
Other
liabilities
|
3,750,000 | (79,219 | ) | |||||
$ | 15,500,000 | $ | (294,934 | ) |
December 31, 2009
|
||||
Accumulated
OCI resulting from interest rate swaps as of January 1, 2009, net of
tax
|
$ | - | ||
Other
comprehensive loss recognized, net of tax
|
(181,237 | ) | ||
Accumulated
OCI resulting from interest rate swaps as of December 31, 2009, net of
tax
|
$ | (181,237 | ) |
Financial
instruments whose contract amounts represent credit risk:
|
||||
Commitments
to extend credit
|
$ | 91,452 | ||
Undisbursed
equity lines of credit
|
35,706 | |||
Financial
standby letters of credit
|
4,111 | |||
Commitment
to invest in Small Business Investment Corporation
|
363 |
Fair Value Measurements at
|
||||||||||||||||
December 31, 2009, Using
|
||||||||||||||||
Quoted Prices
|
Significant
|
|||||||||||||||
Assets/(Liabilities)
|
in Active
|
Other
|
Significant
|
|||||||||||||
Measured at
|
Markets for
|
Observable
|
Unobservable
|
|||||||||||||
Fair Value
|
Identical Assets
|
Inputs
|
Inputs
|
|||||||||||||
Description
|
12/31/2009
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
Securities
available for sale:
|
||||||||||||||||
U.S.
Government obligations and agency
|
$ | 12,683,127 | $ | - | $ | 12,683,127 | $ | - | ||||||||
Mortgage-backed
|
60,203,087 | - | 60,203,087 | - | ||||||||||||
Collateralized
mortgage obligations
|
70,863,172 | - | 70,863,172 | - | ||||||||||||
Municipals
|
49,028,405 | - | 49,028,405 | - | ||||||||||||
Marketable
equity
|
345,100 | 345,100 | - | - | ||||||||||||
Foreclosed
assets
|
6,305,617 | - | - | 6,305,617 | ||||||||||||
Impaired
loans
|
26,258,018 | - | 23,434,441 | 2,823,577 | ||||||||||||
Derivative
liabilities
|
(294,934 | ) | - | (294,934 | ) | - | ||||||||||
Fair Value Measurements at
|
||||||||||||||||
December 31, 2008, Using
|
||||||||||||||||
Quoted Prices
|
Significant
|
|||||||||||||||
Assets/(Liabilities)
|
in Active
|
Other
|
Significant
|
|||||||||||||
Measured at
|
Markets for
|
Observable
|
Unobservable
|
|||||||||||||
Fair Value
|
Identical Assets
|
Inputs
|
Inputs
|
|||||||||||||
Description
|
12/31/2009
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
Securities
available for sale
|
$ | 105,648,618 | $ | 490,753 | $ | 105,157,865 | $ | - | ||||||||
Foreclosed
assets
|
1,716,207 | - | - | 1,716,207 | ||||||||||||
Impaired
loans
|
7,556,644 | - | 6,787,739 | 768,905 |
2009
|
2008
|
|||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
amount
|
fair value
|
amount
|
fair value
|
|||||||||||||
Financial
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 13,902,108 | $ | 13,902,108 | $ | 10,282,789 | $ | 10,282,789 | ||||||||
Investment
securities
|
193,122,891 | 193,122,891 | 105,648,618 | 105,648,618 | ||||||||||||
Federal
Home Loan Bank stock
|
11,776,500 | 11,776,500 | 7,264,000 | 7,264,000 | ||||||||||||
Loans,
net
|
741,781,341 | 701,738,000 | 772,792,283 | 784,667,000 | ||||||||||||
Investment
in life insurance
|
17,658,386 | 17,658,386 | 16,811,918 | 16,811,918 | ||||||||||||
Accrued
interest receivable
|
4,260,258 | 4,260,258 | 3,341,258 | 3,341,258 | ||||||||||||
Financial
liabilities:
|
||||||||||||||||
Deposits
|
722,634,618 | 742,001,000 | 714,882,755 | 718,590,000 | ||||||||||||
Short-term
borrowings
|
74,000,000 | 74,260,000 | 37,706,000 | 39,925,000 | ||||||||||||
Long-term
borrowings
|
142,748,000 | 139,457,000 | 116,748,000 | 121,748,000 | ||||||||||||
Interest
rate swaps
|
294,934 | 294,934 | - | - | ||||||||||||
Accrued
interest payable
|
1,475,128 | 1,475,128 | 1,958,344 | 1,958,344 |
Outstanding Options
|
Exercisable Options
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Option
|
Option
|
|||||||||||||||
Number
|
Price
|
Number
|
Price
|
|||||||||||||
Options
outstanding, beginning of year
|
543,352 | $ | 5.55 | 528,904 | $ | 5.45 | ||||||||||
Granted/vested
|
22,500 | 4.40 | 5,625 | 4.40 | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Expired
|
125,899 | 3.94 | 125,899 | 3.94 | ||||||||||||
Forfeited
|
9,835 | 8.13 | 9,629 | 8.04 | ||||||||||||
Options
outstanding, end of year
|
430,118 | $ | 5.90 | 405,712 | $ | 5.91 |
Range of Exercise Prices
|
Stock Options Outstanding
|
Stock Options Exercisable
|
||||||||
$ | 3.94 - $ 6.13 | 344,845 | 326,470 | |||||||
$ | 6.14 - $ 8.32 | 26,570 | 23,570 | |||||||
$ | 8.33 - $ 10.51 | 8,001 | 8,001 | |||||||
$ | 10.52 - $ 12.71 | 50,702 | 47,671 | |||||||
430,118 | 405,712 |
2009
|
2008
|
2007
|
||||||||||
Assumptions
in estimating option values:
|
||||||||||||
Risk-free
interest rate
|
2.50 | % | 3.12 | % | 4.68 | % | ||||||
Dividend
yield
|
0 | % | 0 | % | 0 | % | ||||||
Volatility
|
37.23 | % | 26.80 | % | 31.63 | % | ||||||
Expected
life
|
7
years
|
7
years
|
7
years
|
|||||||||
The
weighted average grant date fair value of options
|
$ | 1.90 | $ | 2.44 | $ | 4.88 |
Weighted
|
||||||||
average
|
||||||||
grant date
|
||||||||
Shares
|
fair value
|
|||||||
Non-vested
– December 31, 2008
|
57,269 | $ | 10.19 | |||||
Granted
|
- | - | ||||||
Vested
|
- | - | ||||||
Forfeited
|
- | - | ||||||
Non-vested
– December 31, 2009
|
57,269 | $ | 10.19 |
Risk-free
interest rate
|
2.49 | % | ||
Expected
life of warrants
|
10 years
|
|||
Expected
dividend yield
|
0.00 | % | ||
Expected
volatility
|
37.27 | % |
|
2009
|
2008
|
||||||
ASSETS
|
||||||||
Cash
and due from banks
|
$ | 2,052,005 | $ | 550,126 | ||||
Investment
in subsidiaries
|
96,054,355 | 104,840,989 | ||||||
Other
assets
|
79,208 | 124,558 | ||||||
TOTAL
ASSETS
|
$ | 98,185,568 | $ | 105,515,673 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Liabilities:
|
||||||||
Accrued
interest payable
|
$ | 110,238 | $ | 170,972 | ||||
Due
to former Centennial Shareholders
|
- | 5,093 | ||||||
Accrued
expenses and other liabilities
|
307,124 | 2,000,000 | ||||||
Subordinated
debentures
|
8,248,000 | 8,248,000 | ||||||
TOTAL
LIABILITIES
|
8,665,362 | 10,424,065 | ||||||
Stockholders'
equity:
|
||||||||
Preferred
stock
|
22,935,514 | - | ||||||
Common
stock
|
9,626,559 | 9,626,559 | ||||||
Warrant
|
2,367,368 | - | ||||||
Additional
paid-in capital
|
74,529,894 | 74,349,299 | ||||||
Retained
earnings (deficit)
|
(21,354,080 | ) | 10,488,628 | |||||
Accumulated
other comprehensive income
|
1,414,951 | 627,122 | ||||||
TOTAL
STOCKHOLDERS’ EQUITY
|
89,520,206 | 95,091,608 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ | 98,185,568 | $ | 105,515,673 |
2009
|
2008
|
2007
|
||||||||||
Equity
in earnings (loss) of subsidiaries
|
$ | (30,205,191 | ) | $ | 2,467,201 | $ | 6,688,256 | |||||
Interest
income
|
498,375 | 39,808 | 169,130 | |||||||||
Dividend
income
|
9,873 | 17,026 | 21,200 | |||||||||
Other
miscellaneous income
|
13 | 5,024 | - | |||||||||
Interest
expense
|
(416,833 | ) | (623,487 | ) | (738,485 | ) | ||||||
Other
operating expenses
|
(114,288 | ) | (132,853 | ) | (118,245 | ) | ||||||
Income
tax benefit
|
2,100 | 238,100 | 226,900 | |||||||||
Net
income (loss)
|
$ | (30,225,951 | ) | $ | 2,010,819 | $ | 6,248,756 |
2009
|
2008
|
2007
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income (loss)
|
$ | (30,225,951 | ) | $ | 2,010,819 | $ | 6,248,756 | |||||
Adjustments
to reconcile net income to net cash provided (used) by operating
activities:
|
||||||||||||
Amortization
|
- | 22,266 | 33,400 | |||||||||
Stock
based compensation
|
180,595 | 209,098 | 178,940 | |||||||||
Equity
in earnings of Crescent State Bank
|
30,205,191 | (2,467,201 | ) | (6,688,256 | ) | |||||||
Changes
in assets and liabilities:
|
||||||||||||
(Increase)
decrease in other assets
|
45,350 | (50,779 | ) | (55,752 | ) | |||||||
Increase
(decrease) in accrued interest payable
|
(60,734 | ) | 6,595 | (2,586 | ) | |||||||
Increase
(decrease) in accrued expenses and other liabilities
|
(1,853,594 | ) | 1,989,619 | (16,292 | ) | |||||||
Net
cash provided (used) by operating activities
|
(1,709,143 | ) | 1,720,418 | (301,790 | ) | |||||||
Cash
flows from investing activities:
|
||||||||||||
Investment
in Subsidiaries
|
(20,630,728 | ) | (3,411,798 | ) | (4,098,938 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from issuance of preferred stock and common stock warrant
|
24,900,000 | - | - | |||||||||
Dividends
paid on preferred stock
|
(1,058,250 | ) | - | - | ||||||||
Proceeds
from exercise of stock options
|
- | 670,254 | 1,213,738 | |||||||||
Excess
tax benefits from stock options exercised
|
- | 95,500 | 451,950 | |||||||||
Cash
paid in lieu of fractional shares
|
- | - | (7,686 | ) | ||||||||
Net
cash provided by financing activities
|
23,841,750 | 765,754 | 1,658,002 | |||||||||
Net
increase (decrease) in cash and cash equivalents
|
1,501,879 | (925,627 | ) | (2,742,726 | ) | |||||||
Cash
and cash equivalents, beginning
|
550,126 | 1,475,753 | 4,218,479 | |||||||||
Cash
and cash equivalents, ending
|
$ | 2,052,005 | $ | 550,126 | $ | 1,475,753 |
2009
|
2008
|
2007
|
||||||||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||||||
Cash
paid during the year for:
|
||||||||||||
Interest
|
$ | 27,103,726 | $ | 28,794,509 | $ | 27,772,615 | ||||||
Income
taxes
|
$ | 923,000 | $ | 2,559,000 | $ | 3,928,000 | ||||||
Supplemental
Disclosure of Noncash Investing
|
||||||||||||
Activities:
|
||||||||||||
Transfer
of loans to foreclosed assets
|
$ | 9,806,211 | $ | 2,206,023 | $ | 479,814 | ||||||
Increase
in fair value of securities
|
||||||||||||
available
for sale, net of tax
|
$ | 969,066 | $ | 588,933 | $ | 539,136 | ||||||
Decrease
in fair value of cash flow hedge, net of tax
|
$ | (181,237 | ) | $ | - | $ | - |
2009
|
2008
|
2007
|
||||||||||
Supplemental
Disclosure of Noncash Investing Activities:
|
||||||||||||
Decrease
in fair value of cash flow hedge, net of tax
|
$ | (93,096 | ) | $ | - | $ | - |
|
·
|
pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of
assets;
|
|
·
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting
principles generally accepted in the United States of
America;
|
|
·
|
provide
reasonable assurance that receipts and expenditures are being made only in
accordance with management and director authorization;
and
|
|
·
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of assets that could have a
material effect on the consolidated financial
statements.
|
EQUITY COMPENSATION PLAN INFORMATION
|
||||||||||||
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants, and rights
|
Weighted-average exercise
price of outstanding
options, warrants, and
rights
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
|
|||||||||
Plan Category
|
(a)
|
(b)
|
(c)
|
|||||||||
Equity
compensation plans approved by security holders
|
430,118 | $ | 5.90 | 236,379 | ||||||||
Equity
compensation plans not approved by security holders
|
None
|
None
|
None
|
|||||||||
Total
|
430,118 | $ | 5.90 | 236,379 |
|
·
|
Consolidated
Balance Sheets as of December 31, 2009 and December 31,
2008
|
|
·
|
Consolidated
Statements of Operations for the years ended December 31, 2009, 2008 and
2007
|
|
·
|
Consolidated
Statements of Comprehensive Income (Loss) for the years ended December 31,
2009, 2008 and 2007
|
|
·
|
Consolidated
Statements of Changes in Stockholders’ Equity for the years ended December
31, 2009, 2008 and 2007
|
|
·
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2009, 2008 and
2007
|
|
·
|
Notes
to Consolidated Financial
Statements
|
|
·
|
Report
of Independent Registered Public Accounting
Firm
|
|
·
|
1999
Incentive Stock Option Plan
|
|
·
|
1999
Nonqualified Stock Option Plan for
Directors
|
|
·
|
Form
of Employment Agreement between the Registrant and Michael G.
Carlton
|
|
·
|
Form
of Employment Agreement between the Registrant and Bruce W.
Elder
|
|
·
|
Form
of Employment Agreement between the Registrant and Thomas E. Holder,
Jr.
|
|
·
|
Form
of Employment Agreement between the Registrant and Ray D.
Vaughn
|
|
·
|
Form
of Employment Agreement between the Registrant and W. Keith
Betts
|
|
·
|
Form
of Salary Continuation Agreement with Michael G.
Carlton
|
|
·
|
Salary
Continuation Agreement with Bruce W.
Elder
|
|
·
|
Salary
Continuation Agreement with Thomas E. Holder,
Jr.
|
|
·
|
Form
of Salary Continuation Agreement with Ray D.
Vaughn
|
|
·
|
Salary
Continuation Agreement with W. Keith
Betts
|
|
·
|
Endorsement
Split Dollar Agreement with Michael G.
Carlton
|
|
·
|
Endorsement
Split Dollar Agreement with Bruce W.
Elder
|
|
·
|
Endorsement
Split Dollar Agreement with Thomas E. Holder,
Jr.
|
|
·
|
Endorsement
Split Dollar Agreement with Ray D.
Vaughn
|
|
·
|
Endorsement
Split Dollar Agreement with W. Keith
Betts
|
|
·
|
Crescent
State Bank Directors’ Compensation
Plan
|
|
·
|
2006
Omnibus Stock Ownership and Long Term Incentive
Plan
|
|
·
|
Form
of Executive Compensation Modification
Agreement
|
CRESCENT FINANCIAL
CORPORATION
|
||
Registrant
|
||
By:
|
/s/ Michael G. Carlton
|
|
Michael
G. Carlton
|
||
Date:
March 31, 2010
|
President
and Chief Executive Officer
|
/s/ Michael G.
Carlton
|
March
31, 2010
|
Michael
G. Carlton, President and Chief Executive Officer, Director (Principle
Executive Officer)
|
|
/s/ Bruce W.
Elder
|
March
31, 2010
|
Bruce
W. Elder, Vice President
|
|
(Principal
Financial Officer and Principle Accounting Officer)
|
|
/s/ Brent D.
Barringer
|
March
31, 2010
|
Brent
D. Barringer, Director
|
|
/s/ William H.
Cameron
|
March
31, 2010
|
William
H. Cameron, Director
|
|
/s/ Bruce I. Howell
|
March
31, 2010
|
Bruce
I. Howell, Director
|
|
/s/ James A. Lucas
|
March
31, 2010
|
James
A. Lucas, Director
|
|
/s/ Kenneth A. Lucas
|
March
31, 2010
|
Kenneth
A. Lucas, Director
|
|
_/s/ Sheila Hale Ogle
|
March
31, 2010
|
Sheila
Hale Ogle, Director
|
|
/s/ Charles A. Paul
|
March
31, 2010
|
Charles
A. Paul, Director
|
|
/s/ Francis R. Quis,
Jr.
|
March
31, 2010
|
Francis
R. Quis, Jr., Director
|
|
/s/ Jon S. Rufty
|
March
31, 2010
|
Jon
S. Rufty, Director
|
|
/s/ Stephen K.
Zaytoun
|
March
31, 2010
|
Stephen
K. Zaytoun, Director
|
Exhibit Number
|
Exhibit
|
|
3(i)
|
Articles
of Incorporation, as amended(11)
|
|
3(ii)
|
Bylaws(1)
|
|
4
|
Form
of Common Stock Certificate(1)
|
|
4(ii)
|
Form
of Stock Certificate for Series A Preferred Stock(11)
|
|
4(iii)
|
Warrant
to Purchase Common Stock(11)
|
|
10(i)
|
1999
Incentive Stock Option Plan(2)
|
|
10(ii)
|
1999
Nonqualified Stock Option Plan(2)
|
|
10(iii)
|
Employment
Agreement Michael G. Carlton(10)
|
|
10(iv)
|
Employment
Agreement of Bruce W. Elder (10)
|
|
10(v)
|
Employment
Agreement of Thomas E. Holder, Jr. (10)
|
|
10(vi)
|
Amended
and Restated Trust Agreement of Crescent Financial Capital Trust I(3)
|
|
10(vii)
|
Indenture(3)
|
|
10(viii)
|
Junior
Subordinated Debenture(3)
|
|
10(ix)
|
Guarantee
Agreement(3)
|
|
10(x)
|
Salary
Continuation Agreement with Michael G. Carlton (10)
|
|
10(xi)
|
Salary
Continuation Agreement with Bruce W. Elder(6)
|
|
10(xii)
|
Salary
Continuation Agreement with Thomas E. Holder, Jr.(6)
|
|
10(xiii)
|
Endorsement
Split Dollar Agreement with Michael G. Carlton(3)
|
|
10(xiv)
|
Endorsement
Split Dollar Agreement with Bruce W. Elder(3)
|
|
10(xv)
|
Endorsement
Split Dollar Agreement with Thomas E. Holder, Jr.(3)
|
|
10(xvi)
|
Crescent
State Bank Directors’ Compensation Plan(4)
|
|
10(xvii)
|
Salary
Continuation Agreement with Ray D. Vaughn (10)
|
|
10(xviii)
|
Salary
Continuation Agreement with W. Keith Betts(7)
|
|
10(xix)
|
Employment
Agreement with Ray D. Vaughn (10)
|
|
10(xx)
|
Employment
Agreement of W. Keith Betts(7)
|
|
10(xxi)
|
Endorsement
Split Dollar Agreement with Ray D. Vaughn(6)
|
10(xxii)
|
Endorsement
Split Dollar Agreement with W. Keith Betts(6)
|
|
10(xxiii)
|
Subordinated
Term Loan Agreement dated September 26, 2008, by and between Crescent
State Bank and United Community Bank(8)
|
|
10(xxiv)
|
2006
Omnibus Stock Ownership and Long Term Incentive Plan(9)
|
|
10(xxv)
|
Form
of Executive Compensation Modification Agreement(11)
|
|
21
|
Subsidiaries
(Filed herewith)
|
|
23
|
Consent
of Dixon Hughes PLLC (Filed herewith)
|
|
31(i)
|
Certification
of Principal Executive Officer Pursuant to Section 302 of the Sarbanes
Oxley Act (Filed herewith)
|
|
31(ii)
|
Certification
of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes
Oxley Act (Filed herewith)
|
|
32(i)
|
Certification
of Principal Executive Officer Pursuant to Section 906 of the Sarbanes
Oxley Act (Filed herewith)
|
|
32(ii)
|
Certification
of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes
Oxley Act (Filed herewith)
|
|
99(i)
|
Registrant’s
Proxy Statement for the 2010 Annual Meeting of Shareholders(5)
|
|
99(ii)
|
Certification
pursuant to Emergency Economic Stabilization Act of 2008, as amended
(Filed herewith)
|
|
99(iii)
|
Certification
pursuant to Emergency Economic Stabilization Act of 2008, as amended
(Filed herewith)
|
|
1.
|
Incorporated
by reference to the Registrant’s 10-KSB for the year ended December 31,
2001, as filed with the Securities and Exchange Commission on March 27,
2002.
|
|
2.
|
Incorporated
by reference to the Registrant’s Registration Statement on Form S-8 as
filed with the Securities and Exchange Commission on September 5,
2001.
|
|
3.
|
Incorporated
by reference from Annual Report on Form 10-KSB filed with the Securities
and Exchange Commission on March 30,
2004.
|
|
4.
|
Incorporated
by reference from Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 28,
2006.
|
|
5.
|
Filed
with the Securities and Exchange Commission pursuant to Rule
14a-6.
|
|
6.
|
Incorporated
by reference from Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 11,
2008.
|
|
7.
|
Incorporated
by reference from the Registrant’s Current Report on Form 8-K filed with
the Securities and Exchange Commission on December 31,
2008.
|
|
8.
|
Incorporated
by reference from the Registrant’s Current Report on Form 8-K filed with
the Securities and Exchange Commission on September 30,
2008.
|
|
9.
|
Incorporated
by reference from Exhibit 99.1 to the Registration Statement on Form S-8,
filed with the Securities and Exchange Commission on August 11,
2006.
|
|
10.
|
Incorporated
by reference from Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 27,
2009.
|
|
11.
|
Incorporated
by reference from Current Report on Form 8-K filed with the Securities and
Exchange Commission on January 14,
2009.
|