Attached files
file | filename |
---|---|
10-K - 2009 FORM 10 K - First Advantage Bancorp | fabk_2009.htm |
EX-32 - 906 CERT - First Advantage Bancorp | ex32.htm |
EX-21.1 - SUBS - First Advantage Bancorp | ex21_1.htm |
EX-31.2 - CFO - First Advantage Bancorp | ex31_2.htm |
EX-23.1 - CONSENT - First Advantage Bancorp | ex23_1.htm |
EX-31.1 - CEO - First Advantage Bancorp | ex31_1.htm |
First
Advantage Bancorp
Reports
of Independent Registered Public Accounting
Firms and
Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
Contents
|
Page
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated
Financial Statements
|
|
Consolidated
Balance Sheets at December 31, 2009 and 2008
|
F-2
|
Consolidated
Statements of Operations for the years ended December 31, 2009 and
2008
|
F-3
|
Consolidated
Statements of Changes in Stockholders' Equity for the years ended
December
31, 2009 and 2008
|
F-4
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2009 and
2008
|
F-5
|
Notes
to Consolidated Financial Statements
|
F-6
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
First
Advantage Bancorp
Clarksville,
Tennessee
We have
audited the consolidated balance sheet of First Advantage Bancorp and
subsidiaries (the "Company") as of December 31, 2009 and 2008, and the related
consolidated statement of operations, changes in stockholders' equity and cash
flows for the years ended December 31, 2009 and 2008. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 2009 and 2008, and the results of its operations and its cash flows for the
year ended in conformity with accounting principles generally accepted in the
United States of America.
We were
not engaged to examine management's assessment of the effectiveness of the
Company's internal control over financial reporting as of December 31, 2009,
included in the accompanying Management's Report on Internal Control over
Financial Reporting and, accordingly, we do no express an opinion
thereon.
Jackson,
Tennessee
March 4,
2010
F -
1
First
Advantage Bancorp
|
||||||||
Consolidated
Balance Sheets
|
||||||||
(Dollars
in thousands, except per share data)
|
||||||||
December
31,
|
||||||||
2009
|
2008
|
|||||||
Assets
|
||||||||
Cash
and due from banks
|
$ | 9,204 | $ | 7,991 | ||||
Interest-bearing
deposits at other banks
|
1,686 | 4,243 | ||||||
Federal
funds sold
|
975 | 9 | ||||||
Cash
and cash equivalents
|
11,865 | 12,243 | ||||||
Available-for-sale
securities, at fair value
|
98,739 | 129,076 | ||||||
Loans
held for sale
|
2,265 | 866 | ||||||
Loans,
net of allowance for loan losses of $2,813 and $2,175 at
December 31, 2009 and 2008, respectively
|
211,137 | 176,412 | ||||||
Premises
and equipment, net
|
7,903 | 8,186 | ||||||
Other
real estate owned
|
301 | - | ||||||
Federal
Home Loan Bank stock
|
2,988 | 2,988 | ||||||
Accrued
interest receivable
|
1,457 | 1,702 | ||||||
Income
taxes receivable
|
2,529 | 709 | ||||||
Deferred
tax asset
|
2,421 | 5,238 | ||||||
Other
assets
|
2,619 | 984 | ||||||
Total
assets
|
$ | 344,224 | $ | 338,404 | ||||
Liabilities
and Shareholders' Equity
|
||||||||
Liabilities
|
||||||||
Deposits
|
||||||||
Demand
|
$ | 19,426 | $ | 15,493 | ||||
Savings,
checking and money market
|
109,706 | 82,163 | ||||||
Time
certificates
|
87,108 | 89,151 | ||||||
Total
deposits
|
216,240 | 186,807 | ||||||
Securities
sold under agreement to repurchase
|
6,883 | 5,047 | ||||||
Federal
Home Loan Bank advances
|
13,000 | 38,550 | ||||||
Borrowing
with other banks
|
35,000 | 35,000 | ||||||
Interest
payable and other liablilities
|
2,575 | 2,739 | ||||||
Total
liabilities
|
273,698 | 268,143 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Shareholders'
Equity
|
||||||||
Preferred
stock, $0.01 par value, 10,000,000 shares authorized, no shares
issued or outstanding at December 31, 2009 or 2008
|
- | - | ||||||
Common
stock, $0.01 par value, 50,000,000 shares authorized,
5,171,395
shares issued and 4,470,984 outstanding at December
31, 2009;
5,264,683 issued and 4,541,514 outstanding at December
31, 2008
|
52 | 53 | ||||||
Additional
paid in capital
|
51,915 | 52,258 | ||||||
Common
stock acquired by benefit plan:
|
||||||||
Restricted
stock
|
(837 | ) | (1,043 | ) | ||||
Unallocated
common stock held by:
|
||||||||
Employee
Stock Ownership Plan trust
|
(3,496 | ) | (3,778 | ) | ||||
Benefit
plans
|
(2,773 | ) | (2,923 | ) | ||||
Retained
earnings
|
23,210 | 23,872 | ||||||
Accumulated
other comprehensive income
|
2,455 | 1,822 | ||||||
Total
shareholders' equity
|
70,526 | 70,261 | ||||||
Total
liabilities and shareholders' equity
|
$ | 344,224 | $ | 338,404 |
F -
2
First
Advantage Bancorp
|
||||||||
Consolidated
Statements of Operations
|
||||||||
(Dollars
in thousands)
|
||||||||
Years
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Interest
and Dividend Income
|
||||||||
Loans
|
$ | 11,371 | $ | 9,169 | ||||
Investment
securities
|
5,585 | 7,720 | ||||||
Other
|
276 | 396 | ||||||
Total
interest and dividend income
|
17,232 | 17,285 | ||||||
Interest
Expense
|
||||||||
Deposits
|
4,518 | 4,754 | ||||||
Securities
sold under agreements to repurchase and
other short-term borrowings
|
127 | 162 | ||||||
Federal
Home Loan Bank advances
|
418 | 814 | ||||||
Borrowings
with other banks
|
1,304 | 872 | ||||||
Total
interest expense
|
6,367 | 6,602 | ||||||
Net
Interest Income
|
10,865 | 10,683 | ||||||
Provision
for loan losses
|
868 | 685 | ||||||
Net
Interest Income After Provision for Loan Losses
|
9,997 | 9,998 | ||||||
Non-interest
Income
|
||||||||
Customer
service and other fees
|
1,277 | 1,201 | ||||||
Loan
servicing and other fees
|
74 | 49 | ||||||
Net
gains on sales of loan held for sale
|
1,213 | 608 | ||||||
Net
realized gain (loss) on sales of available-for-sale
securities
|
7 | (2,656 | ) | |||||
Other-than-temporary
impairment on available-for-sale securities
|
(1,091 | ) | (13,577 | ) | ||||
Net
realized gain on sales of other assets held-for-sale
|
- | 295 | ||||||
Commissions
on insurance and brokerage
|
158 | 292 | ||||||
Net
loss on premises and equipment
|
(17 | ) | (37 | ) | ||||
Other
|
28 | 29 | ||||||
Total
non-interest income
|
1,649 | (13,796 | ) | |||||
Non-interest
Expense
|
||||||||
Salaries
and employee benefits
|
5,951 | 5,825 | ||||||
Net
occupancy expense
|
635 | 512 | ||||||
Equipment
expense
|
671 | 598 | ||||||
Data
processing fees
|
863 | 784 | ||||||
Professional
fees
|
424 | 601 | ||||||
Marketing
expense
|
285 | 288 | ||||||
Office
expense
|
328 | 271 | ||||||
Loan
collection and repossession expense
|
19 | 4 | ||||||
Insurance
expense
|
80 | 86 | ||||||
Mortgage
loan outsourced servicing
|
31 | 38 | ||||||
Other
|
1,864 | 1,138 | ||||||
Total
non-interest expense
|
11,151 | 10,145 | ||||||
Income
(Loss) Before Income Taxes
|
495 | (13,943 | ) | |||||
Provision
(Credit) for Income Taxes
|
135 | (5,848 | ) | |||||
Net
Income (Loss)
|
$ | 360 | $ | (8,095 | ) |
F -
3
First
Advantage Bancorp
|
||||||||||||||||||||||||||||||||
Consolidated
Statements of Changes in Stockholders' Equity
|
||||||||||||||||||||||||||||||||
Years
Ended December 31, 2009 and 2008
|
||||||||||||||||||||||||||||||||
(Dollars
in thousands, except per share amounts)
|
||||||||||||||||||||||||||||||||
Common
|
Accumulated
|
|||||||||||||||||||||||||||||||
Additional
|
Stock
|
Other
|
Total
|
|||||||||||||||||||||||||||||
Common
Stock
|
Comprehensive
|
Paid-in
|
Retained
|
Acquired
by
|
Comprehensive
|
Stockholders'
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Income
(Loss)
|
Capital
|
Earnings
|
Benefit
Plans
|
Income
(Loss)
|
Equity
|
|||||||||||||||||||||||||
Balance
at January 1, 2008
|
5,264,683 | $ | 53 | $ | 51,596 | $ | 32,230 | $ | (5,512 | ) | $ | 1,138 | $ | 79,505 | ||||||||||||||||||
Comprehensive
Income, net of tax:
|
||||||||||||||||||||||||||||||||
Net
loss
|
- | - | $ | (8,095 | ) | - | (8,095 | ) | - | - | (8,095 | ) | ||||||||||||||||||||
Change
in unrealized appreciation of
available-for-sale
securities, net of tax
|
- | - | 684 | - | - | - | 684 | 684 | ||||||||||||||||||||||||
Total
comprehensive loss
|
- | - | (7,411 | ) | - | - | - | - | ||||||||||||||||||||||||
Dividends
paid ($0.05 per common share)
|
- | - | - | (263 | ) | - | (263 | ) | ||||||||||||||||||||||||
Release
of Employee Stock Ownership Plan (ESOP) shares
|
- | - | - | 234 | - | 221 | - | 455 | ||||||||||||||||||||||||
Purchase
and release of restricted stock plan shares, net
|
- | - | - | 428 | - | (2,453 | ) | - | (2,025 | ) | ||||||||||||||||||||||
Balance
at December 31, 2008
|
5,264,683 | 53 | 52,258 | 23,872 | (7,744 | ) | 1,822 | 70,261 | ||||||||||||||||||||||||
Cumulative
effect of change in accounting
principle,
adoption new accounting rule
|
- | -- | - | 22 | - | (22 | ) | - | ||||||||||||||||||||||||
Comprehensive
income, net of tax:
|
||||||||||||||||||||||||||||||||
Net
income
|
- | - | $ | 360 | - | 360 | - | - | 360 | |||||||||||||||||||||||
Change
in unrealized appreciation of
available-for-sale
securities, net of tax
|
- | - | 655 | - | - | - | 655 | 655 | ||||||||||||||||||||||||
Total
comprehensive loss
|
- | - | 1,015 | - | - | - | - | |||||||||||||||||||||||||
Treasury
stock purchase/retire
|
(93,288 | ) | (1 | ) | (894 | ) | (895 | ) | ||||||||||||||||||||||||
Dividends
paid ($0.05 per common share)
|
- | - | - | (1,044 | ) | - | - | (1,044 | ) | |||||||||||||||||||||||
Release
of Employee Stock Ownership Plan (ESOP)
shares
|
- | - | - | 207 | - | 283 | - | 490 | ||||||||||||||||||||||||
Purchase
and release of restricted stock plan shares, net
|
- | - | - | 344 | - | 355 | - | 699 | ||||||||||||||||||||||||
Balance
at December 31, 2009
|
5,171,395 | $ | 52 | - | $ | 51,915 | $ | 23,210 | $ | (7,106 | ) | $ | 2,455 | $ | 70,526 |
F -
4
First
Advantage Bancorp
|
||||||||
Consolidated
Statements of Cash Flows
|
||||||||
(Dollars
in thousands)
|
||||||||
Years
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Operating
Activities
|
||||||||
Net
income (loss)
|
$ | 360 | $ | (8,095 | ) | |||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Provision
for loan losses
|
868 | 685 | ||||||
Depreciation,
amortization and accretion
|
942 | 252 | ||||||
Deferred
income taxes
|
2,425 | (5,690 | ) | |||||
Funding
of mortgage loans held for sale
|
(53,801 | ) | (30,263 | ) | ||||
Proceeds
from sales of mortgage loans held for sale
|
53,615 | 31,478 | ||||||
Net
gains on sales of mortgage loans held for sale
|
(1,213 | ) | (608 | ) | ||||
Net
realized (gain) loss on available for sale securities
|
(7 | ) | 2,656 | |||||
Other-than-temporary
impairment on available for sale securities
|
1,091 | 13,577 | ||||||
Net
loss on sale of premises and equipment
|
17 | 37 | ||||||
Net
gain on assets held for sale
|
- | (295 | ) | |||||
Stock-based
compensation
|
1,190 | 838 | ||||||
Federal
Home Loan Bank stock dividends
|
- | (116 | ) | |||||
Decrease
in other assets
|
(867 | ) | (475 | ) | ||||
(Decrease)
increase in other liabilities
|
(1,988 | ) | 487 | |||||
Net
cash provided by operating activities
|
2,632 | 4,468 | ||||||
Investing
Activities
|
||||||||
Purchases
of securities available for sale
|
(34,872 | ) | (111,096 | ) | ||||
Proceeds
from call/maturities and repayments of securities
available-for-sale
|
51,992 | 27,484 | ||||||
Proceeds
from sales of securities available for sale
|
12,800 | 52,388 | ||||||
Net
increase in loans
|
(35,966 | ) | (61,138 | ) | ||||
Purchase
of premises and equipment
|
(828 | ) | (1,558 | ) | ||||
Proceeds
from sales of premises and equipment
|
3 | - | ||||||
Purchase
of other assets held for sale
|
- | (159 | ) | |||||
Proceeds
from sale of other assets
|
- | 835 | ||||||
Proceeds
from the sale of other real estate owned
|
81 | - | ||||||
Net
cash used in investing activities
|
(6,790 | ) | (93,244 | ) | ||||
Financing
Activities
|
||||||||
Net
increase in demand deposits, money market, checking and savings
accounts
|
31,476 | 18,047 | ||||||
Net
decrease in time deposits
|
(2,043 | ) | (1,094 | ) | ||||
Net
increase in repurchase agreements and other short-term
borrowings
|
1,836 | 4,156 | ||||||
Proceeds
from Federal Home Loan Bank advances, net
|
(25,550 | ) | 25,550 | |||||
Proceeds
from long term Federal Home Loan Bank advances
|
- | 13,000 | ||||||
Proceeds
from long term debt with other banks
|
- | 35,000 | ||||||
Cash
paid for dividends
|
(1,044 | ) | (263 | ) | ||||
Stock
repurchased/retired - repurchase program
|
(895 | ) | - | |||||
Stock
purchased - restricted stock compensation plans
|
- | (2,453 | ) | |||||
Net
cash provided by financing activities
|
3,780 | 91,943 | ||||||
(Decrease)
Increase in Cash and Cash Equivalents
|
(378 | ) | 3,167 | |||||
Cash
and Cash Equivalents, Beginning of Period
|
12,243 | 9,076 | ||||||
Cash
and Cash Equivalents, End of Period
|
$ | 11,865 | $ | 12,243 | ||||
Supplemental
Cash Flow Information
|
||||||||
Interest
Paid
|
$ | 6,567 | $ | 5,496 | ||||
Income
taxes paid (net of refunds)
|
$ | (195 | ) | $ | 191 | |||
Other
real estate owned acquired through foreclosure of real estate
loans
|
$ | 373 | $ | - | ||||
Transfer
of premises and equipment to assets held for sale
|
$ | 532 | $ | - |
F -
5
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Note
1:
|
Nature
of Operations and Summary of Significant Accounting
Policies
|
Conversion
and Change of Corporate Form
First
Advantage Bancorp (the “Company”), a Tennessee corporation, was formed by First
Federal Savings Bank (the “Bank”) in June 2007 to become the Bank’s stock
holding company upon completion of the Bank’s conversion from the mutual to the
stock form of organization (the “Conversion”). In connection with the
Conversion, which was completed on November 29, 2007, the Company issued
5,264,683 shares of common stock in a subscription offering, and raised net
proceeds of $51,195.
Nature
of Operations
First
Advantage Bancorp (the “Company”), a Tennessee corporation, is a holding company
whose principal activity is the ownership and management of its wholly owned
subsidiary, First Federal Savings Bank (the “Bank”). The Bank has one inactive
wholly owned subsidiary, First Financial Mortgage Corp. The Bank is a
savings bank primarily engaged in providing a full range of banking and
financial services to individual and corporate customers in Clarksville,
Tennessee and surrounding areas. The Bank is subject to the
regulation of the Office of Thrift Supervision and Federal Deposit Insurance
Corporation and undergoes periodic examinations by those regulatory
authorities.
Basis
of Presentation
In the
opinion of management, the audited consolidated financial statements include all
adjustments, which consist of normal recurring accruals, necessary to present
fairly the consolidated statements of financial condition as of December 31,
2009 and 2008, and the results of operations and cash flows for the years then
ended. The accounting and financial reporting policies the Company
follows conform, in all material respects, to accounting principles generally
accepted in the United States of America.
Certain
items in prior period financial statements have been reclassified to conform to
the current presentation. The Company has evaluated subsequent events
for potential recognition and/or disclosure through March 4, 2010, and has
determined that no significant events occurred after December 31, 2009, but
prior to the issuance of these financial statements, that would have a material
impact on its consolidated financial statements.
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and the
Bank and its wholly owned subsidiary First Financial Mortgage Corporation
(collectively referred to as the “Company”). All significant
inter-company accounts and transactions have been eliminated in
consolidation. First Financial Mortgage Corporation is an inactive
subsidiary and, therefore, its operations are not material to the consolidated
financial statements.
F -
6
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Material
estimates that are particularly susceptible to significant change relate to the
determination of the allowance for loan losses, the valuation of real estate
acquired in connection with foreclosures or in satisfaction of loans, the fair
value of stock-based compensation awards, the fair values of financial
instruments, income taxes and other-than-temporary impairment of
investments.
Cash
Equivalents
The
Company considers all liquid investments with maturities of three months or less
to be cash equivalents.
Securities
Available-for-sale
securities, which include any security for which the Company has no immediate
plan to sell but which may be sold in the future, are carried at fair
value. Unrealized gains and losses are recorded, net of related
income tax effects, in other comprehensive income. The Company does not hold any
held-to-maturity securities, which would include any security for which the
Company has the positive intent and ability to hold until maturity. Management
determines the appropriate classification of securities at the time of
purchase. Securities with limited marketability, such as stock in the
Federal Home Loan Bank, are carried at cost.
Interest
income includes amortization of purchase premiums and
discounts. Realized gains and losses are derived from the amortized
cost of the security sold. Declines in fair value of
available-for-sale securities below their cost that are deemed to be
other-than-temporary are reflected in earnings as realized losses. In
estimating other-than-temporary impairment losses, management considers, among
other things, (i) the length of time and the extent to which the fair value has
been less than cost, (ii) the financial condition and near-term prospects of the
issuer, and (iii) the intent and ability of the Company to retain its investment
in the issuer for a period of time sufficient to allow for any anticipated
recovery in fair value.
Loans
Held for Sale
Mortgage
loans originated and intended for sale in the secondary market are carried at
the lower of cost or fair value in the aggregate. Net unrealized
losses, if any, are recognized through a valuation allowance by charges to
income. Gains and losses are realized at the time consideration is
received and all other criteria for sales treatment have been met.
Loans
Loans
that management has the intent and ability to hold for the foreseeable future,
or until maturity or payoffs, are reported at
their outstanding principal balances and adjusted for any charge-offs, the
allowance for loan losses, any deferred fees or costs on originated loans and
unamortized premiums or discounts on purchased loans. Interest income
is reported on the interest method and includes amortization of net deferred
loan fees and costs over the loan term. The accrual of interest on
loans is discontinued when, in management’s opinion, the borrower may be unable
to meet payment obligations as they become due, as well as when required by
regulatory provisions. When interest accrual is discontinued, all
unpaid accrued interest is reversed. Interest income is subsequently
recognized only to the extent cash payments are received in excess of principal
due. Loans are returned to accrual status when all principal and
interest amounts contractually due are brought current and future payments are
reasonably assured.
Prior to
2004, the Bank sold mortgage loans to the Government National Mortgage
Association (GNMA) in the normal course of business and retained the servicing
rights. The GNMA programs under which the loans were sold allowed us to
repurchase individual delinquent loans that meet certain criteria from the
securitized loan pool. At the Bank’s option, and without GNMA's prior
authorization, the Bank may repurchase a delinquent loan for an amount equal to
100% of the remaining principal balance on the loan. Once the Bank has the
unconditional ability to repurchase a delinquent loan, the Bank is deemed to
have regained effective control over the loan and the Bank is required to
recognize the loan on the balance sheet and record an offsetting liability,
regardless of the intent to repurchase the loan. At December 31, 2009
residential real estate portfolio loans included $538 of loans available for
repurchase under the GNMA optional repurchase programs with the offsetting
liability recorded within other short-term borrowings.
Mortgage
loans serviced for others are not included in the accompanying consolidated
balance sheets. The unpaid principal balances of mortgage loans
serviced for others were $25,973 and $31,872 at December 31, 2009 and December
31, 2008, respectively.
F -
7
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Allowance
for Loan Losses
The
allowance for loan losses is established as losses are estimated to have been
incurred through a provision for loan losses charged to income. Loan
losses are charged against the allowance when management believes the
uncollectibility of a loan balance is confirmed through
charge-off. Subsequent recoveries, if any, are credited to the
allowance.
The
allowance for loan losses is evaluated on a regular basis by management and
represents management’s best estimate of probable losses inherent in the loan
portfolio. The allowance is based upon management’s periodic review of the
collectibility of the loans in light of historical experience, the nature and
volume of the loan portfolio, adverse situations that may affect the borrower’s
ability to repay, estimated value of any underlying collateral and prevailing
economic conditions. This evaluation is inherently subjective as it
requires estimates that are susceptible to significant revision as more
information becomes available.
A loan is
considered impaired when, based on current information and events, it is
probable that the Bank will be unable to collect the scheduled payments of
principal and interest when due according to the contractual terms of the loan
agreement. Factors considered by management in determining impairment
include payment status, collateral value and the probability of collecting
scheduled principal and interest payments when due. Loans that
experience insignificant payment delays and payment shortfalls are not
classified as impaired. Management determines the significance of
payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower,
including the length of the delay, the reasons for the delay, the borrower’s
prior payment record and the amount of the shortfall in relation to the
principal and interest owed. Impairment is measured on a loan-by-loan
basis for commercial and construction loans by either the present value of
expected future cash flows discounted at the
loan’s effective interest rate, the loan’s obtainable market price or the fair
value of the collateral if the loan is collateral dependent.
Large
groups of smaller balance homogenous loans are collectively evaluated for
impairment. Accordingly, the Bank does not separately identify
individual consumer and residential loans for impairment
measurements.
Premises
and Equipment
Land is
carried at cost. Building and improvements, and furniture and
equipment are carried at cost, less accumulated depreciation. Depreciation is
charged to expense using the straight-line method over the estimated useful
lives of the assets.
Federal
Home Loan Bank Stock
Federal
Home Loan Bank (“FHLB”) stock is a required investment for institutions that are
members of the FHLB system. The required investment in the common
stock is based on a predetermined formula. The Bank reports its
investment in the FHLB stock at cost.
Other
Real Estate Owned
Other
real estate owned which is acquired through, or in lieu of, foreclosure is held
for sale and is initially recorded at the lower of cost or fair
value, less estimated selling cost when acquired, establishing a new cost
basis. Costs after acquisition are generally expensed. Any
changes in fair value of the asset are recorded through expense. The
valuation of other real estate owned is subjective in nature and may be adjusted
in the future because of changes in economic conditions.
F -
8
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Securities
Sold Under Agreements to Repurchase
The
Company sells certain securities under agreements to repurchase. The
agreements are treated as collateralized financing transactions and the
obligations to repurchase securities sold are reflected as a liability in the
accompanying consolidated balance sheets. The dollar amount of
the securities underlying the agreements remains in the asset
accounts.
Advertising
and Marketing Expenses
Advertising
and marketing costs are expensed as incurred and were $285 and $288 for the
years ended December 31, 2009 and 2008, respectively.
Income
Taxes
Income
tax expense (benefit) is the total of the current year’s income tax due or
refundable and the change in deferred tax assets and liabilities (excluding
components of other comprehensive income). Deferred tax assets and
liabilities are the expected future tax amounts for the temporary differences
between carrying amounts and tax bases of assets and liabilities, computed using
enacted tax rates. A valuation allowance, if needed, reduces deferred
tax assets to the expected amount most likely to be
realized. Realization of deferred tax assets is dependent upon the
generation of a sufficient level of future taxable income and recoverable taxes
paid in prior years. Although realization is not assured, management
believes it is more likely than not that all of the deferred tax assets will be
realized. The Company and its subsidiaries file separate income tax
returns.
Employee
Stock Ownership Plan (“ESOP”)
The
Company accounts for its Employee Stock Ownership Plan (“ESOP”) in accordance
with the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) (See Note 14). ESOP shares are considered to be outstanding
for the computation of EPS as they are committed to be released.
The
Company established a rabbi trust to
fund certain benefit plans. The Company accounts for these plans in accordance
with FASB’s ASC 718 “Share-Based.” Until the plan benefits are paid, creditors
may make claims against the assets if the Company becomes
insolvent.
Stock-Based
Compensation
The
Company accounts for its stock-based compensation plans in accordance with
FASB’s ASC 718 “Share-Based Payment.” Compensation expense for stock
options, non-vested stock awards and restricted stock is based on the fair value
of the award on the measurement date, which, for the Company, is the date of the
grant and is recognized ratably over the service period of the
award. The fair value of stock options granted is estimated using the
Black-Scholes option-pricing model. The fair value of non-vested
stock awards and restricted stock is generally the market price of the Company’s
stock on the date of grant.
Comprehensive
Income
Comprehensive
income includes all changes in shareholders’ equity during a period, except
those resulting from transactions with shareholders. Besides net
income, other components of the Company’s comprehensive income include after tax
effect of changes in the net unrealized gain/loss on securities available for
sale.
F -
9
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Bank
Owned Life Insurance
The
Company has purchased single-premium life insurance policies on certain former
directors of the Company. The net cash surrender value of those
polices is classified in other assets. Changes in the value of the
insurance policies are classified in non-interest income.
Fair
Value Measurements
FASB’s
ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value
measurements. In general, fair values of financial instruments are
based upon quoted market prices, where available. If such quoted
market prices are not available, fair value is primarily determined by matrix
pricing, and in some cases, fair value is determined by an independent third
party. Valuation adjustments may be made to ensure that financial
statements are recorded at fair value. These adjustments may include
amounts to reflect counterparty credit quality as well as unobservable
parameters. Any such valuation adjustments are applied consistently
over time.
Earnings
Per Common Share
Basic
earnings per share (“EPS”) is calculated by dividing net income available to
common stockholders by the weighted-average number of shares of common stock
outstanding during the period. Diluted EPS is computed in a manner similar to
that of basic EPS except that the weighted-average number of common shares
outstanding is increased to include the number of incremental common shares
(computed using the treasury stock method) that would have been outstanding if
all potentially dilutive common stock equivalents (such as stock options and
unvested restricted stock) were vested during the period. The weighted
average common shares outstanding equals the gross number of common
shares issued less unallocated shares held by the First Federal
Savings Bank Employee Stock Ownership Plan (“ESOP”), nonvested restricted stock
awards under the Company’s 2007 Deferred Compensation Plan and nonvested
restricted stock awards under the Company’s 2008 Equity Incentive
Plan. Diluted earnings per share reflect additional common shares
that would have been outstanding if dilutive potential common shares had been
issued. Potential common shares to be issued include any restricted
shares authorized under the Company’s 2007 Deferred Compensation Plan and the
2008 Equity Incentive Plan. Unallocated common shares held by the
ESOP are shown as a reduction in stockholders’ equity and are included in the
weighted-average number of common shares outstanding for diluted EPS
calculations as they are committed to be released.
At
December 31, 2008, there were 569,802 potentially dilutive shares; however,
because the Company recorded a net loss for the year ended December 31, 2008,
all potentially dilutive shares were anti-dilutive and basic and diluted loss
per share were the same as basic loss per share in that period.
Recently
Issued Accounting Standards
In June
2009, the FASB issued Statement of Financial Accounting Standards (“Statement”)
No. 168, “The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles” (“Statement No. 168”). Statement No.
168 replaces FASB Statement No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”. Statement
No. 168 defines the new hierarchy for U.S. GAAP and establishes the FASB
Codification as the sole source for all authoritative accounting guidance. The
FASB will not issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue
Accounting Standards Updates. In addition, the FASB will not consider Accounting
Standards Updates as authoritative in their own right; rather, Accounting
Standards Updates will serve only to update the Codification, provide background
information about the guidance, and provide the bases for conclusions on the
change(s) in the Codification. The Codification is effective for interim
and annual periods ending after September 15, 2009. The adoption of the
Codification did not have a material impact on the Company’s financial
statements.
In
December 2008, the FASB issued authoritative guidance codified in ASC 715,
“Compensation - Retirement Benefits.” This update requires further
disclosures about the fair value measurements of an employer’s benefit plan
assets, including disclosures about the following: how investment
allocation decisions are made, including the factors material to an
understanding of investment policies and strategies; major categories of plan
assets; information about inputs and valuation techniques, including the fair
value hierarchy classifications, as defined by ASC 820, “Fair Value Measurements
and Disclosures,” of the major categories of plan assets; the effect of fair
value measurements using significant unobservable inputs (Level 3 inputs) on
changes in plan assets; and significant concentrations of risk within plan
assets. This update is effective for fiscal years beginning on or after December
15, 2009, with early adoption permitted. The Company is currently in the
process of evaluating the impact of adopting this update on its financial
statements.
In
January 2009, the FASB issued authoritative guidance codified in ASC 325,
“Investments – Other,” which amends the existing guidance to achieve a more
consistent determination of whether an other-than-temporary impairment has
occurred. This update also retains and emphasizes the objective of an
other-than-temporary impairment assessment and the related disclosure
requirements. This update was effective for interim and annual reporting
periods ending after December 15, 2008, and was to be applied
prospectively. Retroactive application was not permitted. The Company
adopted this update on December 31, 2008, with no material impact on its
financial statements.
F -
10
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
In April
2009, the FASB issued authoritative guidance codified in ASC 805, “Business
Combinations.” This update amends and clarifies existing guidance to address the
initial recognition and measurement of an asset acquired or a liability assumed
in a business combination that arises from a contingency provided the asset or
liability's fair value on the date of acquisition can be determined. When the
fair value, at the acquisition date, of an asset acquired or liability assumed
cannot be determined, this update requires using the guidance under ASC 450,
“Contingencies”. This update is effective for assets or liabilities
arising from contingencies in business combinations that occur following the
start of the first annual reporting period beginning on or after December 15,
2008. The adoption of this update will impact the Company’s accounting for
and reporting of acquisitions completed after January 1, 2009.
In April
2009, the FASB issued authoritative guidance codified in ASC 820, “Fair Value
Measurements and Disclosures.” This update relates to determining fair values
when there is no active market or where the price inputs being used represent
distressed sales. It reaffirms the objective of fair value measurement: to
reflect how much an asset or liability would be sold for in an orderly
transaction (as opposed to a distressed or forced transaction) at the date of
the financial statements under current market conditions. Specifically, it
reaffirms the need to use judgment to ascertain if a formerly active market has
become inactive and in determining fair values when markets have become
inactive. The Company adopted this update as of June 30, 2009 with no material
impact on its financial statements.
In April
2009, the FASB issued authoritative guidance codified in ASC 320, “Investments –
Debt and Equity Securities.” This update is intended to bring greater
consistency to the timing of impairment recognition and provide greater clarity
to investors about the credit and noncredit components of impaired debt
securities that are not expected to be sold. The measure of impairment in
comprehensive income remains fair value. This update also requires increased and
more frequent disclosures regarding expected cash flows, credit losses, and an
aging of securities with unrealized losses. The adoption of this
update did not have a material impact on the Company’s consolidated financial
statements.
In April
2009, the FASB issued authoritative guidance codified in ASC 825, “Financial
Instruments.” (Staff Position No. 107-1 and Accounting Principles Board Opinion
No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments”). This
update amends existing authoritative accounting literature to require
quantitative and qualitative disclosures about fair value of financial
instruments for both annual and interim reporting periods of publicly traded
companies. This update is effective for interim reporting periods ending
after June 15, 2009, with early adoption permitted. The adoption this update did
not have a material impact on the Company’s consolidated financial
statements.
F -
11
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
In May
2009, the FASB issued authoritative guidance codified in ASC 855, “Subsequent
Events.” The objective of this update is to establish general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued.
This update sets forth the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, and the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. This update was effective for the
Company beginning with its Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2009. The adoption of this update had no material
impact on the Company’s financial statements.
In August
2009, the FASB issued Accounting Standards Update 2009-05 “Measuring Liabilities
at Fair Value” (“ASU 2009-05”). ASU 2009-05 provides further guidance on how to
measure the fair value of a liability. This update provides clarification that
in circumstances in which a quoted price in an active market for an identical
liability is not available, an entity is required to measure fair value using a
valuation technique that uses the quoted price of an identical liability when
traded as an asset, quoted prices for similar liabilities or similar liabilities
when traded as assets, or another valuation technique that is consistent with
the principles of ASC 820, “Fair Value Measurements and Disclosures”. This
update is effective for the first reporting period beginning on or after the
date of issuance of the update, which was August 26, 2009. The Company
does not expect the adoption of this update will have a material impact on its
financial statements.
Note
2:
|
Earnings
Per Common Share
|
The
following table presents the calculation of basic and diluted earnings per
common share.
Year
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
|
||||||||
Net
income (loss)
|
$ | 360 | $ | (8,095 | ) | |||
Weighted-average
shares - Basic EPS
|
4,508,033 | 4,691,863 | ||||||
Weighted-average
restricted shares -
|
||||||||
2007
Deferred Compensation Plan
|
32,574 | - | ||||||
2008
Equity Incentive Plan
|
7,582 | - | ||||||
Weighted-average
shares -
|
||||||||
ESOP
committed to be released - diluted EPS
|
24,018 | - | ||||||
Weighted-average
shares - Diluted EPS
|
4,572,207 | 4,691,863 | ||||||
Basic
earnings (loss) per common share
|
$ | 0.08 | $ | (1.73 | ) | |||
Diluted
earnings (loss) per common share
|
$ | 0.08 | $ | (1.73 | ) |
Note
3:
|
Restriction
on Cash and Due From Banks
|
The Bank
is required to maintain reserve funds in cash and/or on deposits for certain
correspondent relationships. The reserve required at December 31,
2009 and 2008, was $2,717 and $258, respectively.
F -
12
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Note
4:
|
Securities
|
The
amortized cost and approximate fair values of securities as of December 31, 2009
and 2008 are summarized below:
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Approximate
Fair
Value
|
|||||||||||||
December 31, 2009
|
||||||||||||||||
U.S.
Treasury
|
$ | 4,765 | $ | 1,296 | $ | - | $ | 6,061 | ||||||||
U.S.
Government agencies
|
13,879 | 509 | (90 | ) | 14,298 | |||||||||||
Mortgage-backed
securities
|
62,825 | 2,337 | (76 | ) | 65,086 | |||||||||||
Collateralized
mortgage obligations
|
4,795 | - | (85 | ) | 4,710 | |||||||||||
State
and political subdivisions
|
8,466 | 178 | (90 | ) | 8,554 | |||||||||||
Corporate
debt securities
|
30 | - | - | 30 | ||||||||||||
Total
|
$ | 94,760 | $ | 4,320 | $ | (341 | ) | $ | 98,739 | |||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Approximate
Fair
Value
|
|||||||||||||
December 31, 2008
|
||||||||||||||||
U.S.
Treasury
|
$ | 4,798 | $ | 1,766 | $ | - | $ | 6,564 | ||||||||
U.S.
Government agencies
|
30,484 | 215 | (12 | ) | 30,687 | |||||||||||
Mortgage-backed
securities
|
79,765 | 1,779 | (34 | ) | 81,510 | |||||||||||
Collateralized
mortgage obligations
|
2,376 | - | (12 | ) | 2,364 | |||||||||||
State
and political subdivisions
|
7,631 | 22 | (259 | ) | 7,394 | |||||||||||
Corporate
debt securities
|
1,069 | - | (512 | ) | 557 | |||||||||||
Total
|
$ | 126,123 | $ | 3,782 | $ | (829 | ) | $ | 129,076 |
F -
13
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
The
mortgage-backed securities are backed by the Federal Home Loan Mortgage
Corporation (“Freddie Mac”), Federal National Mortgage Association (“Fannie
Mae”) and Government National Mortgage Association (“GNMA”). None of
the mortgage-backed securities are privately issued.
Collateralized
mortgage obligations (“CMOs”) are mortgage derivatives and the CMOs owned by the
Bank are classified as “low risk” under regulatory guidelines. CMOs
are subject to the effects of interest rate risk. The Bank does not
purchase CMOs at any significant premium over par value to limit certain
prepayment risks.
The
amortized cost and fair value of securities at December 31, 2009 and 2008,
by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties.
December
31, 2009
|
December
31, 2008
|
|||||||||||||||
Amortized
|
Fair
|
Amortized
|
Fair
|
|||||||||||||
Cost
|
Value
|
Cost
|
Value
|
|||||||||||||
Within
one year
|
$ | - | $ | - | $ | - | $ | - | ||||||||
One
to five years
|
- | - | - | - | ||||||||||||
Five
to 10 years
|
9,915 | 11,308 | 21,141 | 16,326 | ||||||||||||
After
10 years
|
22,020 | 22,345 | 25,217 | 31,240 | ||||||||||||
31,935 | 33,653 | 46,358 | 47,566 | |||||||||||||
Mortgage-backed
securities
|
62,825 | 65,086 | 79,765 | 81,510 | ||||||||||||
Total
|
$ | 94,760 | $ | 98,739 | $ | 126,123 | $ | 129,076 |
The
carrying value of securities pledged as collateral to secure public deposits,
borrowings and for other purposes, was $80,045 at December 31, 2009, and
$115,283 at December 31, 2008.
Gross
gains of $7 and $502 and gross losses of -0- and $3,158 resulting from sales of
securities were realized for the years ended December 31, 2009 and 2008,
respectively.
Declines
in fair value of available-for-sale securities below their cost that are deemed
to be other-than-temporary are reflected in earnings as realized
losses. In estimating other-than-temporary impairment losses,
management considers, among other things, (i) the length of time and the extent
to which the fair value has been less than cost, (ii) the financial condition
and near-term prospects of the issuer, and (iii) the intent and ability of the
Company to retain its investment in the issuer for a period of time sufficient
to allow for any anticipated recovery in fair value.
Based on
an evaluation of available evidence, including recent changes in market interest
rates, credit rating information and information obtained from regulatory
filings, management believes the declines in fair value of the Company’s U.S.
Government agencies, mortgage-backed securities, state and political
subdivisions and collateralized mortgage obligation investments are
temporary.
The
Company engaged an independent consulting firm to assist in the valuation of its
investment in pooled trust preferred securities as of December 31,
2009. The market for pooled trust preferred securities continues to
be non-existent with no new issuances in 2008 or 2009. Very few
trades of pooled trust preferred securities have occurred in
2009. Based on these trends, management determined that there is an
inactive and inefficient market in pooled trust preferred securities which has
contributed to the depressed pricing for these investments. After
careful analysis, management determined that it will not likely retain its
investment in the pooled trust preferred securities for a period of time
sufficient to allow for recovery in fair value. Therefore, during the
fourth quarter of 2009, the Company recognized non-cash other-than-temporary
impairment charges of $1,091 on its investment in pooled trust preferred
securities which reduced the Company’s book value on the securities to
approximately $30.
F -
14
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
During
the third quarter of 2008, the Company recognized $13,577 of
other-than-temporarily impairment charges, which consisted of $9,774 related to
investment grade perpetual callable preferred securities issued by Freddie Mac
and Fannie Mae, and $3,803 related to investments in pooled trust preferred
securities.
The
Company liquidated all of its Fannie Mae and Freddie Mac perpetual preferred
securities holdings during the third and fourth quarters of 2008, which resulted
in realized losses of $3,158. At December 31, 2009 and 2008 the
Company did not hold any investments in Fannie Mae and Freddie Mac perpetual
preferred securities.
The
Company continuously assesses individual securities as part of its ongoing
portfolio management, including the identification of other-than-temporary
declines in fair value. The other-than-temporary assessment includes
reviewing the extent and duration of declines in fair values of investments, the
seniority and duration of the securities, historical and projected company
financial performance, company-specific news and other developments, the outlook
for industry sectors, credit ratings and macro-economic changes, including
government policy initiatives.
Certain
investments in debt and marketable equity securities are reported in the
financial statements at an amount less than their historical
cost. Total fair value of these investments at December 31, 2009
and 2008, was $17,223 and $16,335, respectively, which was approximately 17.4%
and 12.7%, respectively, of the Bank’s available-for-sale investment portfolio
at those dates.
As of
December 31, 2009, with the exception of the above mentioned investment in
pooled trust preferred securities, management does not have the intent to sell
any of the securities classified as available for sale in the table below and
believes that it is more likely than not that the Company will not have to sell
any such securities before recovery of fair value. The unrealized
losses are largely due to increases in market interest rates over yields
available at the time the underlying securities were purchased. The
fair value is expected to recover as the bonds approach their maturity date or
repricing date or if market yields for such investments
decline. Management does not believe any of the securities are
impaired due to reasons of credit quality. Accordingly, as of
December 31, 2009, management believes the impairments detailed in the table
below are temporary and no other-than-temporary impairment should be recorded in
the Company’s consolidated financial statements.
F -
15
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
The
following table shows the gross unrealized losses and fair value of securities,
aggregated by investment category and length of time that individual securities
have been in a continuous unrealized loss position, at December 31, 2009 and
2008:
December
31, 2009
|
||||||||||||||||||||||||
Less
than 12 Months
|
12
Months or More
|
Total
|
||||||||||||||||||||||
Description
of
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
||||||||||||||||||
Securities
|
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
||||||||||||||||||
U.
S. Government agencies
|
$ | 4,910 | $ | (90 | ) | $ | - | $ | - | $ | 4,910 | $ | (90 | ) | ||||||||||
Collaterized
mortgage obligations
|
4,710 | (85 | ) | - | - | 4,710 | (85 | ) | ||||||||||||||||
Mortgage-backed
securities
|
5,975 | (76 | ) | - | - | 5,975 | (76 | ) | ||||||||||||||||
State
and political subdivisions
|
1,083 | (21 | ) | 545 | (69 | ) | 1,628 | (90 | ) | |||||||||||||||
Corporate
debt securities
|
- | - | - | - | - | - | ||||||||||||||||||
Total
|
$ | 16,678 | $ | (272 | ) | $ | 545 | $ | (69 | ) | $ | 17,223 | $ | (341 | ) | |||||||||
December 31, 2008
|
||||||||||||||||||||||||
Less
than 12 Months
|
12
Months or More
|
Total
|
||||||||||||||||||||||
Description
of
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
||||||||||||||||||
Securities
|
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
||||||||||||||||||
U.
S. Government agencies
|
$ | 3,922 | $ | (12 | ) | $ | - | $ | - | $ | 3,922 | $ | (12 | ) | ||||||||||
Collaterized
mortgage obligations
|
2,365 | (12 | ) | - | - | 2,365 | (12 | ) | ||||||||||||||||
Mortgage-backed
securities
|
4,014 | (34 | ) | - | - | 4,014 | (34 | ) | ||||||||||||||||
State
and political subdivisions
|
5,468 | (258 | ) | - | - | 5,468 | (258 | ) | ||||||||||||||||
Corporate
debt securities
|
- | - | 566 | (512 | ) | 566 | (512 | ) | ||||||||||||||||
Total
|
$ | 15,769 | $ | (316 | ) | $ | 566 | $ | (512 | ) | $ | 16,335 | $ | (828 | ) |
Note
5:
|
Loans
and Allowance for Loan Losses
|
December
31,
|
||||||||
2009
|
2008
|
|||||||
Real
estate
|
||||||||
One-to-four
family residential
|
$ | 44,582 | $ | 38,210 | ||||
Multi-family
residential
|
13,695 | 10,816 | ||||||
Construction
|
16,940 | 18,829 | ||||||
Nonresidential
real estate
|
63,910 | 54,375 | ||||||
Nonresidential
construction
|
9,941 | 5,410 | ||||||
Land
|
20,849 | 14,216 | ||||||
Consumer
and other (including home equity loans)
|
19,870 | 16,716 | ||||||
Commercial
|
24,069 | 20,105 | ||||||
Overdrafts
|
21 | 36 | ||||||
Total
loans
|
213,877 | 178,713 | ||||||
Less:
|
||||||||
Allowance
for loan losses
|
2,813 | 2,175 | ||||||
Net
deferred loan costs
|
73 | (126 | ) | |||||
Net
loans
|
$ | 211,137 | $ | 176,412 |
F -
16
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Activity
in the allowance for loan losses was as follows:
December
31,
|
||||||||
2009
|
2008
|
|||||||
Balance,
beginning of year
|
$ | 2,175 | $ | 1,510 | ||||
Provision
for loan losses
|
868 | 685 | ||||||
Losses
charged off, net of recoveries, of $32 and $69 for
2009 and 2008, respectively
|
(230 | ) | (20 | ) | ||||
Balance,
end of year
|
$ | 2,813 | $ | 2,175 |
Loans are
placed on non-accrual status when, in management’s opinion, the borrower may be
unable to meet payment obligations, which typically occurs when principal and
interest payments are 90 days past due. At December 31, 2009 and
2008, non-accruing loans were $1,403 and $830, respectively. Had
non-accrual loans performed in accordance with their original contract terms,
the Company would have recognized additional interest income, net of tax, of
approximately $20 in 2009 and $19 in 2008.
Impaired
loans totaled $948 at December 31, 2009 and primarily consisted of one-to-four
family residential loans. There were no loans classified as impaired
as of December 31, 2008. Interest of $21 and $22 was recognized on
average impaired loans of $951 and $245 for the years ended December 31, 2009
and 2008, respectively. No interest was recognized on impaired loans
on a cash basis during the years ended December 31, 2009 and 2008,
respectively.
Note
6:
|
Premises
and Equipment
|
Major
classifications of premises and equipment, stated at cost, were as
follows:
December
31,
|
|||||||||
Estimated
Useful
Lives
|
2009
|
2008
|
|||||||
Land
and land improvements
|
7
to 15 years
|
$ | 2,623 | $ | 3,010 | ||||
Buildings
and improvements
|
7
to 40 years
|
4,770 | 4,730 | ||||||
Furniture,
fixtures and equipment
|
3
to 10 years
|
3,561 | 3,173 | ||||||
Construction
in progress
|
18 | 601 | |||||||
10,972 | 11,514 | ||||||||
Less
accumulated depreciation and amortization
|
3,069 | 3,328 | |||||||
Net
premises and equipment
|
$ | 7,903 | $ | 8,186 |
Note
7:
|
Other
Assets Held for Sale
|
At
December 31, 2009 other assets held for sale totaled $532 and consisted of two
former branch locations. During July 2009 the Bank closed its
downtown drive-thru location and during February 2009 the new St. Bethlehem
Branch opened and the former location was closed concurrently. Both
properties were measured for impairment at the time of their respective closing
and reclassified to other assets held for sale. The Bank ceased
recording depreciation on both properties on their respective reclassification
dates.
F -
17
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Note
8:
|
Year-end
deposits were as follows:
December
31,
|
||||||||
2009
|
2008
|
|||||||
Non-interest
bearing demand deposits
|
$ | 19,426 | $ | 15,493 | ||||
Interest
bearing deposits:
|
||||||||
Savings
|
36,581 | 18,683 | ||||||
Checking
|
55,895 | 45,401 | ||||||
Money
market
|
17,230 | 18,079 | ||||||
Certificats
of deposit
|
87,108 | 89,151 | ||||||
Total
interest bearing deposits
|
196,814 | 171,314 | ||||||
Total
deposits
|
$ | 216,240 | $ | 186,807 |
Presented
below is a summary of interest expense by each significant category of
deposits:
December
31,
|
||||||||
2009
|
2008
|
|||||||
NOW
|
$ | 866 | $ | 446 | ||||
Money
market
|
238 | 408 | ||||||
Savings
|
411 | 377 | ||||||
Time
deposits
|
3,003 | 3,523 | ||||||
Total
interest expense
|
$ | 4,518 | $ | 4,754 |
At
December 31, 2009, the scheduled maturities of certificates of deposit were as
follows:
2010
|
$ | 68,406 | ||
2011
|
14,880 | |||
2012
|
3,496 | |||
2013
|
220 | |||
2014
|
106 | |||
$ | 87,108 |
Scheduled
maturities of time deposits in amounts of $100,000 or more, at December 31,
2009, were as follows:
Due
within three months or less
|
$ | 10,478 | ||
Due
after three months and within six months
|
5,014 | |||
Due
after six months and within twelve months
|
11,883 | |||
Due
after twelve months
|
6,742 | |||
$ | 34,117 |
F -
18
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Note
9:
|
Borrowed
Funds
|
Short- term
borrowings. Short-term borrowings consist of Federal Home Loan
Bank (“FHLB”) overnight advances and federal funds purchased are short-term
borrowings that typically mature within one to ninety days and reprice
daily. There were no federal funds purchased at December 31, 2009 or
2008. Securities sold under agreements to repurchase consist of
customer funds that are invested overnight in mortgage-related
securities. The following table shows the distribution of
short-term borrowings, the weighted average interest rates thereon and the
maximum month-end balance at the end of each of the last two years.
Short-term
borrowings
|
||||||||
FHLB
Short Term Advances
|
December
31, 2009
|
December
31, 2008
|
||||||
Balance
at Year End
|
$ | - | $ | 25,550 | ||||
Weighted
Avg Rate at Year End
|
- | 0.34 | % | |||||
Average
Balance During the Year
|
13,855 | 22,655 | ||||||
Weighted
Avg Rate During the Year
|
0.21 | % | 1.94 | % | ||||
Maximum
month-end Balance
|
20,000 | 34,605 | ||||||
Fed
Funds Purchased
|
||||||||
Balance
at Year End
|
$ | - | $ | - | ||||
Weighted
Avg Rate at Year End
|
- | - | ||||||
Average
Balance During the Year
|
177 | 234 | ||||||
Weighted
Avg Rate During the Year
|
0.67 | % | 2.72 | % | ||||
Maximum
month-end Balance
|
225 | 15 | ||||||
Securities
Sold Under Agreements to Repurchase
|
||||||||
Balance
at Year End
|
$ | 6,883 | $ | 5,047 | ||||
Weighted
Avg Rate at Year End
|
2.01 | % | 3.63 | % | ||||
Average
Balance During the Year
|
6,297 | 4,563 | ||||||
Weighted
Avg Rate During the Year
|
1.99 | % | 3.40 | % | ||||
Maximum
month-end Balance
|
7,876 | 6,826 |
Other
short-term borrowings include our liability related to mortgage loans available
for repurchase under GNMA optional repurchase programs.
Federal Home Loan Bank Long Term
Borrowings. The Bank had fixed rate putable advances maturing
on January 14, 2015 in the amount of $13,000, putable on January 14, 2010 and
annually thereafter, with a weighted average rate of 2.99%. Pursuant
to collateral agreements with the FHLB, non-repurchase advances, and other
overnight facilities which the Bank utilizes, are secured by qualifying first
mortgage loans, commercial real estate, FHLB stock and interest-bearing demand
deposits with the FHLB. There were no outstanding FHLB repurchase
advances as of December 31, 2009.
Structured Repurchase
Agreements. In a leverage strategy, on April 30, 2008, the
Bank entered into two balance sheet leverage transactions whereby it borrowed a
total of $35,000 in multiple rate repurchase agreements with an initial average
cost of 3.67% and invested the proceeds in U. S. Agency pass-through Mortgage
Backed Securities (the “Securities”), which were pledged as
collateral. The Bank secured the borrowed funds by Securities valued
at 116% of the outstanding principal balance of the borrowings. The
borrowings have original maturity dates ranging from four to ten years, with a
weighted average maturity of 6.9 years and certain borrowings have a call option
starting with periods ranging from two to three years after origination and are
continuously callable after the initial call date. During the loan
term, any collateral that is subject to maturity or call is replaced with other
U. S. Agency instruments approved by the lender.
F -
19
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
A summary
of the material terms of each agreement is set forth below.
Four Year
Liability Side Structured Repurchase Agreement. The Bank agreed to transfer
approximately $10,900 of U. S. Agency pass-through Mortgage Backed Securities as
collateral for a $10,000 repurchase facility, bearing interest
at market rates. The termination for the repurchase
facility is April 30, 2012.
Ten Year
Non-Putable Three Year Liability Side Structured Repurchase
Agreement. The Bank agreed to transfer approximately $11,800 of U. S.
Agency pass-through Mortgage Backed Securities as collateral for a $10,000
repurchase facility, bearing interest at market rates. The
termination for the repurchase facility is April 30, 2018, subject to early
cancellation.
Ten Year
Non-Putable Two Year Liability Side Structured Repurchase
Agreement. The Bank agreed to transfer approximately $5,900 of U. S.
Agency pass-through Mortgage Backed Securities as collateral for a $5,000
repurchase facility, bearing interest at market rates. The
termination for the repurchase facility is April 30, 2018, subject to early
cancellation.
Five Year
Non-Putable Three Year Bermudan Structured Repurchase Agreement. The
Bank agreed to transfer approximately $11,800 of U. S. Agency pass-through
Mortgage Backed Securities as collateral for a $10,000 repurchase facility,
bearing interest at market rates. The termination for the repurchase
facility is April 30, 2013, subject to early cancellation.
Term Repurchase Agreements:
|
||||
Repurchase
agreement - rate 3.28%, due April 30, 2018, callable after April 30,
2011
|
$ | 10,000 | ||
Repurchase
agreement - rate 2.96%, due April 30, 2018, callable after April 30,
2010
|
5,000 | |||
Structured
repurchase agreement - rate 3.71%, due April 30, 2013, callable
after
April
30, 2011, with embedded interest cap at LIBOR of 3.50% starting April 30,
2010
|
10,000 | |||
Structured
repurchase agreement - rate 4.39%, due April 30, 2012, with
embedded
interest
cap at LIBOR of 3.50% starting April 30, 2010
|
10,000 | |||
$ | 35,000 |
Note
10:
|
Income
Taxes
|
The
Company files federal and Tennessee state income tax returns. With a few
exceptions, the Company is no longer subject to U.S. federal, state and local or
non-U.S. income tax examinations by tax authorities for years before
2006.
In
accordance with FASB ASC 740, “Income Taxes” the Company has
recorded the following changes in liabilities recorded for uncertain tax
positions:
Balance
at January 1, 2009
|
$ | 106 | ||
Additions
based on tax positions related to the current year
|
- | |||
Additions
for tax positions of prior years
|
- | |||
Reductions
for tax positions of prior years
|
(38 | ) | ||
Settlements
|
- | |||
Balance
at December 31, 2009
|
$ | 68 |
Income
tax expense (benefit) consists of the following:
December
31,
|
||||||||
2009
|
2008
|
|||||||
Current
income taxes
|
$ | (2,290 | ) | $ | (158 | ) | ||
Deferred
income taxes
|
2,425 | (5,690 | ) | |||||
Income
tax expense (benefit)
|
$ | 135 | $ | (5,848 | ) |
A
reconciliation of income tax expense at the statutory rate to the Bank’s actual
income tax expense is shown below:
December
31,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Dollars
|
%
|
Dollars
|
%
|
|||||||||||||
Computed
at the statutory rate (34%)
|
$ | 168 | 34.00 | % | $ | (4,741 | ) | (34.00 | ) % | |||||||
Increase
(decrease) resulting from
|
||||||||||||||||
State
income taxes, net of federal effect
|
23 | 4.62 | (598 | ) | (4.29 | ) | ||||||||||
Tax-exempt
interest income, net
|
(81 | ) | (16.35 | ) | (109 | ) | (0.05 | ) | ||||||||
Reduction
of FIN 48 reserve
|
(39 | ) | (7.82 | ) | (251 | ) | (1.80 | ) | ||||||||
Other
|
64 | 12.78 | (149 | ) | (1.79 | ) | ||||||||||
Income
tax expense (benefit)
|
$ | 135 | 27.23 | % | $ | (5,848 | ) | (41.93 | ) % |
The tax
effects of temporary differences related to deferred taxes shown on the balance
sheets were:
December
31,
|
|||
2009
|
2008
|
||
Deferred
tax assets
|
|||
Allowance
for loan losses
|
$ 1,053
|
$ 840
|
|
Deferred
compensation
|
1,005
|
663
|
|
Net
operating loss carryforward
|
899
|
4,040
|
|
Other-than-temporary
impairment
|
1,874
|
1,456
|
|
Other
|
361
|
438
|
|
5,192
|
7,437
|
||
Deferred
tax liabilities
|
|||
FHLB
dividends
|
(953)
|
(938)
|
|
Unrealized
gains on available-for-sale securities
|
(1,523)
|
(1,131)
|
|
Depreciation
|
(295)
|
(130)
|
|
(2,771)
|
(2,199)
|
||
Net
deferred tax asset
|
$ 2,421
|
$ 5,238
|
No
valuation allowance for deferred tax assets was recorded at December 31, 2009
and 2008 as management believes it is more likely than not that all of the
deferred tax assets will be realized through either recoverable taxes paid in
prior years or off-set of future earnings.
Retained
earnings at December 31, 2009 and 2008 includes approximately $3,633 of which no
provision for federal income taxes has been made. This amount represents
the tax bad debt reserve at December 31, 1987, defined as the base year reserve,
which pursuant to the Tax Reform Act of 1986 was not required to be recaptured
into taxable income. If this portion of retained earnings is used in
the future for any other purpose than to absorb bad debts, the amount used will
be added to future taxable income. The deferred tax liability on the above
amount at December 31, 2009 and 2008, if recorded, would be approximately
$1,224.
As of
December 31, 2009, the Company had federal and state net operating loss
carry-forwards available to offset future taxable income. The net
operating losses begin to expire in 2023 if not utilized. On November
9, 2009, the Worker, Homeownership and Business Assistance Act was signed into
law. This act extended a five year net operating loss carryback that
had previously been available to only small businesses. The Company
has filed the appropriate return with the Internal Revenue Service to carryback
a federal 2008 net operating loss to 2005 resulting in the recognition of a
current tax benefit of $2,290.
F -
20
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Note
11:
|
Other
Comprehensive Income (Loss)
|
Total
comprehensive income (loss) is reported in the accompanying statements of
changes in shareholders’ equity. Information related to net other
comprehensive income (loss) is as follows:
December
31,
|
||||||||
2009
|
2008
|
|||||||
Net
income (loss)
|
$ | 360 | $ | (8,095 | ) | |||
Unrealized
gains (losses) on available-for-sale securities
|
1,068 | (1,534 | ) | |||||
Less
reclassification adjustment for realized gains (losses) included in
income
|
(7 | ) | 2,656 | |||||
Other
comprehensive gains (losses), before tax effect
|
1,061 | 1,122 | ||||||
Tax
benefit
|
406 | 438 | ||||||
Other
comprehensive income
|
655 | 684 | ||||||
Comprehensive
income (loss)
|
$ | 1,015 | $ | (7,411 | ) |
Note
12:
|
Regulatory
Matters
|
The Bank
is subject to various regulatory capital requirements administered by the
federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Bank’s financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank’s assets, liabilities and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Bank’s
capital amounts and classification are also subject to qualitative judgments by
the regulators about components, risk weightings and other factors.
The Bank
is subject to certain regulations on the amount of dividends it may declare
without the prior approval of the Office of Thrift Supervision, its primary
federal regulator. Under these regulations, the amount of dividends that
may be paid in any year is limited to that year's net profits, as defined,
combined with the retained net profits of the preceding two years, less
dividends declared during those periods. As of January 1, 2010, due to the
net loss of the Bank for the years ended December 31, 2008 and 2007, the Bank
would not have ability to pay dividends to the Company, without regulatory
approval.
Quantitative
measures established by regulation to ensure capital adequacy require the Bank
to maintain minimum capital amounts and ratios (set forth in the table
below). Management believes, as of December 31, 2009 and 2008, that
the Bank meets all capital adequacy requirements to which it is
subject.
As of
December 31, 2009 and 2008, the most recent notification from the regulatory
agencies categorized the Bank as well capitalized under the regulatory framework
for prompt corrective action. To be categorized as well capitalized,
the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I
leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the Bank’s
category.
F -
21
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
The
Bank’s actual capital amounts and ratios are presented in the
table.
Actual
|
For
Capital
Adequacy
Purposes
|
To
Be Well Capitalized
Under
Prompt Corrective
Action
Provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
As of December 31, 2009
|
||||||||||||||||||||||||
Total
risk-based capital
|
$ | 46,792 | 19.87 | % | $ | 18,842 | 8.00 | % | $ | 23,553 | 10.00 | |||||||||||||
(to
risk-weighted assets)
|
||||||||||||||||||||||||
Tier
I capital
|
44,681 | 18.96 | 9,421 | 4.00 | 14,132 | 6.00 | ||||||||||||||||||
(to
risk-weighted assets)
|
||||||||||||||||||||||||
Tier
I capital
|
44,681 | 13.08 | 13,665 | 4.00 | 17,081 | 5.00 | ||||||||||||||||||
(to
adjusted total assets)
|
||||||||||||||||||||||||
Tangible
capital
|
44,681 | 13.08 | 5,124 | 1.50 | N/A | N/A | ||||||||||||||||||
(to
adjusted tangible assets)
|
||||||||||||||||||||||||
As of December 31, 2008
|
||||||||||||||||||||||||
Total
risk-based capital
|
$ | 45,293 | 22.49 | % | $ | 16,113 | 8.00 | % | $ | 20,141 | 10.00 | |||||||||||||
(to
risk-weighted assets)
|
||||||||||||||||||||||||
Tier
I capital
|
43,118 | 21.41 | 8,056 | 4.00 | 12,084 | 6.00 | ||||||||||||||||||
(to
risk-weighted assets)
|
||||||||||||||||||||||||
Tier
I capital
|
43,118 | 12.86 | 13,407 | 4.00 | 16,758 | 5.00 | ||||||||||||||||||
(to
adjusted total assets)
|
||||||||||||||||||||||||
Tangible
capital
|
43,118 | 12.86 | 5,028 | 1.50 | N/A | N/A | ||||||||||||||||||
(to
adjusted tangible assets)
|
F -
22
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Below is
a reconciliation of GAAP and regulatory capital amounts:
December
31,
|
||||||||
2009
|
2008
|
|||||||
Total
equity per the Bank financial statements
|
$ | 47,136 | $ | 44,940 | ||||
Unrealized
gains on available-for-sale securities included
in accumulated other comprehensive income
|
(2,455 | ) | (1,822 | ) | ||||
Tier
1 capital
|
44,681 | 43,118 | ||||||
Allowance
for loan losses includable in Tier 2 capital
|
2,673 | 2,175 | ||||||
Equity
investments and other assets required to be deducted
|
(562 | ) | - | |||||
Total
risk-based capital
|
$ | 46,792 | $ | 45,293 |
Note
13:
|
Related-Party
Transactions
|
At
December 31, 2009 and 2008, the Bank had loans outstanding to executive
officers, directors and their related interests (related parties), in the amount
of $9,103 and $8,330,
respectively.
In
management’s opinion, such loans and other extensions of credit and deposits
were made in the ordinary course of business and were made on substantially the
same terms (including interest rates and collateral) as those prevailing at the
time for comparable transactions with other persons. Further, in
management’s opinion, these loans did not involve more than normal risk of
collectibility or present other unfavorable features.
December
31,
|
||||||||
2009
|
2008
|
|||||||
Beginning
balance
|
$ | 8,330 | $ | 6,529 | ||||
New
loans and advances
|
4,667 | 4,452 | ||||||
Repayments
|
(3,894 | ) | (2,651 | ) | ||||
Ending
balance
|
$ | 9,103 | $ | 8,330 |
Excluding
the holding company demand deposit account, deposits from related parties held
by the Bank, at December 31, 2009 and 2008, totaled $3,934 and $3,264,
respectively.
Note
14:
|
Employee
Benefits
|
First
Federal Savings Bank 401(k) and Profit Sharing Plan
The Bank
has a retirement savings 401(k) and profit-sharing plan covering substantially
all employees. Employees may contribute up to 100% of their
compensation, up to allowable limits, with the Bank matching up to three percent
on a discretionary basis (no required contributions) based on profitability and
other factors. Participants are fully vested in any deferrals and
vest in any employer contributions at a rate of 20% per year of service, with
full vesting after five years of service. Employer contributions
charged to expense for the years ended December 31, 2009 and 2008, were $125 and
$127, respectively. The plan was established in 2005.
First
Federal Savings Bank Deferred Compensation Plans
The Bank
has a nonqualified deferred compensation agreement with certain retired
directors. The agreement provides monthly payments of $6 through 2011
and $5 for 2012. The charge to expense related to the agreement was
$2 and $28 for the years ended December 31, 2009 and 2008,
respectively. Deferred compensation payable under this agreement
totaled $209 and $283 as of December 31, 2009 and 2008,
respectively.
F -
23
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
1998
Nonqualified Deferred Compensation Plan
The Bank
has a nonqualified deferred compensation plan for certain active and retired
directors and certain retired and active officers. The agreement
allowed the deferral of certain compensation to the plan. Interest
accrues on the deferred amounts at a rate tied to the rate paid by the Bank on
one year certificate accounts at the beginning of each plan
year. Participants must elect the term over which to receive payments
prior to the year the compensation would have been earned. During the
initial public offering, employees were given a one-time option to move from the
1998 Nonqualified Deferred Compensation Plan to the new Nonqualified Deferred
Compensation Plan. The charge to expense for the agreement was $14
and $25 for the years ended December 31, 2009 and 2008,
respectively. Deferred compensation payable for this plan totaled
$569 and $687 as of December 31, 2009 and 2008, respectively.
2007
Deferred Incentive Plan
On
January 1, 2007, the Bank implemented a nonqualified deferred compensation
agreement with certain executive officers, senior management and other key
employees. The agreement provides the Bank will make contributions to
the plan that will vest over a three to five year period. During the
initial public offering employees were given a one time option to move from the
2007 Deferred Incentive Plan to the new Nonqualified Deferred Compensation
Plan. All employees elected to participate in the stock
plan. The deferred incentive plan had no participants during the
years ended December 31, 2009 and 2008.
Nonqualified
Deferred Compensation Plan
Effective
October 1, 2007, the Bank implemented a deferral plan with certain directors,
executive officers, senior management and other key employees. The
plan allowed identified participants the option to convert other cash based
deferred compensation plan awards to the new Nonqualified Deferred Compensation
Plan and to purchase stock during the initial public
offering. Amounts transferred into the new Nonqualified Deferred
Compensation Plan from the Bank’s other deferred compensation plans, which were
approximately $1,500, were used by the plan to purchase shares of the Company’s
stock from its initial public offering. The provision of the
conversion was a one time event for previous plans. Additionally
directors can elect to contribute fees earned to the plan. The charge
to expense for this plan was $238 and $268 for 2009 and 2008,
respectively. Restricted stock recorded as a contra equity account
was $1,708 and $1,601 as of December 31, 2009 and 2008, respectively, of which
$837 and $352 was earned by participants as of December 31, 2009 and 2008,
respectively.
Number
of Shares
|
Weighted-Average
Grant
Date
Fair
Value
|
|||||||
Non-vested
restricted stock as of January 1, 2008
|
134,146 | $ | - | |||||
Purchased
|
7,980 | 10.00 | ||||||
Vested
|
7,323 | - | ||||||
Forfeited
|
- | - | ||||||
Non-vested
restricted stock as of December 31, 2008
|
134,803 | 10.00 | ||||||
Purchased
|
10,490 | 10.07 | ||||||
Vested
|
58,363 | - | ||||||
Forfeited
|
- | - | ||||||
Non-vested
restricted stock as of December 31, 2009
|
86,930 | $ | 10.07 |
Total
unrecognized compensation cost related to nonvested compensation arrangements
purchased under the Plan was $516 and $805 as of December 31, 2009 and 2008,
respectively. That cost is expected to be recognized over a
weighted-average period of two years.
F -
24
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
The
Nonqualified Deferred Compensation Plan provides for fixed payments or a lump
sum payment in shares of common stock of the Company after termination from
service as defined under Section 409A of the Internal Revenue
Code. The common stock purchased for this Nonqualified Deferred
Compensation Plan is maintained in a Rabbi Trust (“Trust”), on behalf of the
participants. The assets of the Trust are subject to the claims of
general creditors of the Company. Dividends payable on the common
stock held by the Trust are reinvested in additional shares of common stock of
the Company and held in the Trust for the benefit of the
participants. Since the Nonqualified Deferred Compensation Plan does
not provide for diversification of the Trust’s assets and can only be settled
with a fixed number of shares of the Company’s common stock, the deferred
compensation obligation is classified as a component of shareholders’
equity. Subsequent changes in the fair value of common stock are not
reflected in earnings or shareholders’ equity of the Company. The
obligations of the Company under the Nonqualified Deferred Compensation Plan,
and the shares held by the Trust, have no effect on net income.
Employee
Stock Ownership Plan (ESOP)
The
Company sponsors a leveraged ESOP that covers substantially all employees who
meet certain age and eligibility requirements. As part of the initial
public offering the ESOP purchased 421,174 shares, or approximately 8% of the
5,264,683 shares issued in the offering with the proceeds of a 20-year loan from
the Company which is payable in annual installments and bears interest at a rate
of 7.5% per annum.
The Bank
has committed to make contributions to the ESOP sufficient to support the debt
service of the loan. The loan is secured by the unallocated shares,
which are held in a suspense account, and are allocated among the participants
as the loan is repaid. Cash dividends paid on allocated shares are
distributed to the participants and cash dividends paid on unallocated shares
are used to repay the outstanding debt of the ESOP.
ESOP
shares are held by the plan trustee in a suspense account until allocated to
participant accounts. Shares released from the suspense account are
allocated to participants on the basis of their relative compensation in the
year of allocation. Participants become vested in the allocated
shares over a period not to exceed six years. Any forfeited shares
are allocated to other participants in the same proportion as
contributions. At December 31, 2009, the ESOP held 42,843 shares
allocated and 26,055 shares committed to be allocated. The Bank
is obligated at the option of each beneficiary to repurchase shares of the ESOP
upon the beneficiary’s termination or after retirement.
As ESOP
shares are earned by the participants, the Company recognizes compensation
expense equal to the fair value of the earned ESOP shares. Total
compensation expense for the years ended December 31, 2009 and 2008 was $207 and
$244, respectively. The ESOP shares as of December 31, 2009 and 2008
were as follows:
2009
|
2008
|
|||||||
Allocated
shares
|
43,321 | 21,059 | ||||||
Repurchased
shares of beneficiaries
|
478 | 49 | ||||||
Shares
released for allocation
|
- | - | ||||||
Shares
committed to be allocated
|
26,055 | 22,311 | ||||||
Unreleased
shares
|
351,749 | 377,804 | ||||||
Total
ESOP shares
|
420,647 | 421,125 | ||||||
Fair
value of unreleased shares at December 31
|
$ | 3,553 | $ | 3,872 |
2008
Equity Incentive Plan
The First
Advantage Bancorp 2008 Equity Incentive Plan (“the 2008 Plan”) was approved by
the Company’s stockholders at the annual meeting of stockholders held on June
11, 2008. Under the terms of the 2008 Plan, the Company may grant
stock awards and stock options to its employees, officers and
directors. The purpose of the 2008 Plan is to promote the success of
the Company by linking the personal interests of its employees, officers and
directors to the interests of the Company’s shareholders, and by providing
participants with an incentive for remarkable performance. All of the
Company’s employees, officers and directors are eligible to participate in the
2008 Plan. A committee appointed by the Board of Directors of the
Company (which consists of at least two disinterested directors) (the
“Committee”) serves as administrator of the 2008 Plan. The Committee
has sole authority to designate participants; determine the type or types of
awards to be granted to each participant and the number, terms and conditions of
awards; establish, adopt or revise any rules and regulations as it may deem
advisable to administer the 2008 Plan; and make all other decisions and
determinations that may be required under the 2008 Plan.
F -
25
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Under the
terms of the 2008 Plan, the Company granted shares of common stock in the form
of restricted stock and options to its directors, officers and employees on
August 11, 2008 and November 12, 2008.
The
restricted common stock awards vest at a rate of 20% per year from the date of
grant. The fair market value of the stock awards, based on the market
price at the date of grant, is recorded as recorded as a contra equity
account.
Both
incentive stock options and non-qualified stock options were granted under the
Plan. The exercise price for each option was equal to the market
price of the Company’s stock on the date of grant and the maximum term of each
option is ten years. The vesting period for all options is five years
from the date of grant. The Company recognizes compensation expense
over the vesting period, based on the grant-date fair value of the options
granted. The fair value of each option granted is estimated on the
date of grant using the Black-Scholes option-pricing model.
A summary
of the activity in the 2008 Plan as of December 31, 2009, is presented in the
following table:
Non-Vested
Stock
|
Stock
Options
|
|||||||||||||||||||
Awards
Outstanding
|
Outstanding
|
|||||||||||||||||||
Weighted-
|
Weighted-
|
|||||||||||||||||||
Shares
|
Average
|
Average
|
||||||||||||||||||
Available
|
Number
|
Grant-Date
|
Number
|
Exercise
|
||||||||||||||||
for
Grant
|
of
Shares
|
Fair
Value
|
of
Shares
|
Price
|
||||||||||||||||
Balance,
December 31, 2008
|
9,131 | 210,587 | 10.29 | 517,337 | 10.29 | |||||||||||||||
Granted
|
- | - | - | - | - | |||||||||||||||
Stock
options exercised
|
- | - | - | - | - | |||||||||||||||
Stock
awards vested
|
- | (42,117 | ) | 10.29 | - | - | ||||||||||||||
Forfeited
|
8,200 | (3,200 | ) | 10.29 | (5,000 | ) | 10.29 | |||||||||||||
Canceled
|
- | - | - | - | - | |||||||||||||||
Balance,
December 31, 2009
|
17,331 | 165,270 | $ | 10.29 | 512,337 | $ | 10.29 |
Other
information regarding options outstanding and exercisable as of December 31,
2009, is as follows:
Options
Outstanding
|
Options
Exercisable
|
||||
Weighted-
|
|||||
Average
|
|||||
Weighted-
|
Remaining
|
Weighted-
|
|||
Average
|
Contractual
|
Number
|
Average
|
||
Number
|
Exercise
|
Life
|
of
|
Exercise
|
|
Range
of Exercise Prices
|
of
Shares
|
Price
|
in
Years
|
Shares
|
Price
|
$10.03 - $10.30
|
512,337
|
$ 10.29
|
8.6 |
102,467
|
$ 10.29
|
F -
26
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
The fair
value of the 2008 Plan stock options granted is estimated on the measurement
date, which, for the Company, is the date of grant using the Black-Scholes
option-pricing model. The weighted-average assumptions used to
determine the fair value of options granted are detailed in the table
below:
Risk-free
interest rate
|
3.49 | % | ||
Dividend
yield
|
2.00 | % | ||
Expected
market price volatility
|
22.07 | % | ||
Expected
term
|
6.5
Years
|
The total
intrinsic value of vested stock options at December 31, 2009 was
$165.
The fair
value of non-vested restricted stock awards for the purposes of recognizing
stock-based compensation expense is the market price of the stock award on the
measurement date, which, for the Company, is the date of the award.
Stock-based
compensation expense totaled $668 in 2009 and $246 in
2008. Stock-based compensation is recognized ratably over the
requisite service period for all awards. The total income tax benefit
recognized in the accompanying consolidated statements of income related to
stock-based compensation was $256 in 2009 and $94 in
2008. Unrecognized stock-based compensation expense related to stock
options totaled $882 at December 31, 2009. At December 31, 2009, the
weighted-average period over which the unrecognized expense related to stock
options was expected to be recognized was 3.6 years. Unrecognized
stock-based compensation expense related to non-vested restricted awards was
$1,545 at December 31, 2009. At December 31, 2009, the
weighted-average period over which unrecognized expense related to restricted
stock awards was expected to be recognized was 3.6 years.
Note
15:
|
Disclosures
About Fair Value of Financial
Instruments
|
ASC Topic
820 “Fair Value Measurements and Disclosures,” establishes a fair value
hierarchy for valuation inputs that gives the highest priority to quoted prices
in active markets for identical assets or liabilities and the lowest priority to
unobservable inputs. The fair value hierarchy is as
follows:
·
|
Level 1
Inputs - Unadjusted quoted prices in active markets for identical assets
or liabilities that the reporting entity has the ability to access at the
measurement date.
|
·
|
Level 2
Inputs - Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly.
These might include quoted prices for similar assets or liabilities in
active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted
prices that are observable for the asset or liability (such as interest
rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that
are derived principally from or corroborated by market data by correlation
or other means.
|
·
|
Level 3
Inputs - Unobservable inputs for determining the fair values of assets or
liabilities that reflect an entity’s own assumptions about the assumptions
that market participants would use in pricing the assets or
liabilities.
|
A
description of the valuation methodologies used for instruments measured at fair
value, as well as the general classification of such instruments pursuant to the
valuation hierarchy, is set forth below. These valuation methodologies were
applied to all of the Company’s financial assets and financial liabilities
carried at fair value effective for all periods presented. If such quoted market
prices are not available, fair value is determined by matrix pricing, and in
some cases, fair value is determined by an independent third
party. Valuation adjustments may be made to ensure that financial
statements are recorded at fair value. These adjustments may include
amounts to reflect counterparty credit quality as well as unobservable
parameters. Any such valuation adjustments are applied consistently
over time.
The
Company’s valuation methodologies may produce a fair value calculation that may
not be indicative of net realizable value or reflective of future fair values.
While management believes the Company’s valuation methodologies are appropriate
and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different estimate of fair value at the reporting
date. Furthermore, the reported fair value amounts have not been comprehensively
revalued since the presentation dates, and therefore, estimates of fair value
after the balance sheet date may differ significantly from the amounts presented
herein.
F -
27
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Financial
assets and financial liabilities measured at fair value on a recurring basis
include the following:
Securities Available for
Sale
The fair
values of securities available for sale are determined by a matrix pricing,
which is a mathematical technique widely used in the industry to value debt
securities without relying exclusively on quoted prices for the specific
securities but rather by relying on the securities’ relationship to other
benchmark quoted securities. Level 2 securities include U. S. agency
securities, mortgage-backed agency securities, obligations of states and
political subdivisions, asset-backed and other securities. Level 3
securities include preferred term securities that are not traded in an active
market with a fair value determined by an independent third party.
Fair Value of Assets
Measured on a Recurring Basis
Assets
measured at fair value on a recurring basis are summarized below:
December
31, 2009
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Significant
Other Observable Inputs (Level 2)
|
Significant
Unobservable Inputs (Level 3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Available
for sale securities
|
$ | 98,739 | -- | $ | 98,709 | $ | 30 |
Balance,
January 1, 2009
|
$ | 1,069 | ||
Other-than-temporary
impairment charges included in non-interest
income
|
(1,091 | ) | ||
Payments
and settlements
|
52 | |||
Balance, December
31, 2009
|
$ | 30 |
Certain
assets may be recorded at fair value on a nonrecurring basis. These
nonrecurring fair value adjustments typically result from the application of
lower of cost or market accounting or a write-down occurring during the
period. The following methods and assumptions are used by the Company
to estimate the fair values of the Company’s financial assets and liabilities on
a nonrecurring basis:
Loans Held For
Sale
Loans
held for sale are carried at the lower of cost or market value and represent
loans that are awaiting delivery to a specific committed buyer. The
fair value of loans held for sale is based on specific prices committed to be
paid for each individual loan. As such, the Company classifies loans
held for sale subject to fair value adjustments as Level 2.
Other Assets Held for
Sale
Other
assets held for sale represents real
estate that is not intended for use in operations and recorded at lower of cost
or estimated fair value on a nonrecurring basis. Fair value is based upon
independent market prices, appraised values or management’s estimation of the
value. When the fair value is based on an observable market price or current
appraised value, the Company classifies the asset as Level 2.
F -
28
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Other Real Estate
Owned
Other
real estate owned is carried at lower of cost or estimated fair
value. The estimated fair vale of the real estate is determined
through current appraisals, or management’s best estimate of the value and
adjusted as necessary, by management, to reflect current market
conditions. As such, other real estate owned is generally classified
as Level 3.
Assets
and liabilities measured at fair value on a non-recurring basis at December 31,
2009 and 2008 are summarized below:
Fair
Value Measurements at December 31, 2009 Using
|
||||||||||||||||
December 31, 2009
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Significant
Other Observable Inputs (Level 2)
|
Significant
Unobservable Inputs (Level 3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Other
real estate owned
|
$ | 301 | -- | -- | $ | 301 | ||||||||||
Loans
held for sale
|
$ | 2,265 | -- | $ | 2,265 | -- | ||||||||||
Other
assets held for sale
|
$ | 532 | -- | $ | 532 | -- | ||||||||||
December 31, 2008:
|
||||||||||||||||
Assets:
|
||||||||||||||||
Loans
held for sale
|
$ | 866 | -- | $ | 866 | -- |
The “Fair
Value Measurement and Disclosures” topic of the FASB ASC requires disclosure of
the fair value of financial assets and financial liabilities, including those
financial assets and financial liabilities that are not measured and reported at
fair value on a recurring basis or non-recurring basis. The methodologies for
estimating the fair value of financial assets and financial liabilities that are
measured at fair value on a recurring or non-recurring basis are discussed
above. The estimated fair value approximates carrying value for cash and cash
equivalents, accrued interest and the cash surrender value of life insurance
policies. The methodologies for other financial assets and financial liabilities
are discussed below:
General
For
short-term financial instruments realizable in four months or less, the carrying
amount approximates fair value.
Cash
and Cash Equivalents and Interest Receivable
The
carrying amount approximates fair value, primarily due to their short-term
nature.
Federal
Home Loan Bank Stock
It is not
practicable to determine the fair value of Federal Home Loan Bank stock due to
restrictions placed on its transferability.
Available-for-Sale
Securities
Fair
values equal quoted market prices, if available. If quoted market
prices are not available, fair value is estimated based on quoted market prices
of similar securities.
Loans
Held for Sale
Loans
held for sale are carried at the lower of cost or market value and represent
loans that are awaiting delivery to a specific
committed buyer. The fair value of loans held for sale is based on
specific prices committed to be paid for each individual loan.
F -
29
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Loans
The fair
value of loans is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities. Loans with
similar characteristics were aggregated for purposes of the
calculations. The carrying amount of accrued interest approximates
its fair value.
Deposits
Deposits
include non-interest bearing checking accounts and interest bearing deposits,
including savings accounts, checking accounts and money market
deposits. The carrying amount for these deposits approximates fair
value. The fair value of fixed-maturity time deposits is estimated
using a discounted cash flow calculation that applies the rates currently
offered for deposits of similar remaining maturities.
Securities
Sold Under Agreement to Repurchase
The
carrying amount approximates fair value because of the short time between the
origination of the agreements and their expected realization.
Interest
Payable
The
carrying amount approximates fair value because of the short time between the
origination of the liability and its expected realization.
Federal
Home Loan Bank Advances
Rates
currently available to the Bank for debt with similar terms and remaining
maturities are used to estimate the fair value of existing debt.
Commitments
to Originate Loans, Forward Sale Commitments, Letters of Credit and Lines of
Credit
The fair
value of commitments to originate loans is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present creditworthiness of the
counterparties. For fixed-rate loan commitments, fair value also
considers the difference between current levels of interest rates and the
committed rates. The fair value of forward sale commitments is
estimated based on current market prices for loans of similar terms and credit
quality. The fair values of letters of credit and lines of credit are
based on fees currently charged for similar agreements or on the estimated cost
to terminate or otherwise settle the obligations with the counterparties at the
reporting date.
F -
30
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
The
year-end estimated fair values of financial instruments were as
follows:
Year
Ended December 31,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||
Financial
assets
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 11,865 | $ | 11,865 | $ | 12,243 | $ | 12,243 | ||||||||
Available-for-sale
securities
|
98,739 | 98,739 | 129,076 | 129,076 | ||||||||||||
Loans
held for sale
|
2,265 | 2,265 | 866 | 866 | ||||||||||||
Loans,
net of allowance for loan losses
|
211,137 | 211,223 | 176,412 | 178,210 | ||||||||||||
FHLB
stock
|
2,988 | 2,988 | 2,988 | 2,988 | ||||||||||||
Interest
receivable
|
1,457 | 1,457 | 1,702 | 1,702 | ||||||||||||
Forward
sale commitments
|
- | - | - | - | ||||||||||||
Financial
liabilities
|
||||||||||||||||
Deposits
|
$ | 216,240 | $ | 216,564 | $ | 186,807 | $ | 187,394 | ||||||||
Securities
sold under agreement to repurchase
|
6,883 | 6,883 | 5,047 | 5,047 | ||||||||||||
Interest
payable
|
511 | 511 | 716 | 716 | ||||||||||||
FHLB
advances
|
13,000 | 13,583 | 38,550 | 39,349 | ||||||||||||
Other
borrowings
|
35,000 | 37,187 | 35,000 | 38,297 | ||||||||||||
Unrecognized
financial instruments
|
||||||||||||||||
Loan
commitments
|
$ | - | $ | - | $ | - | $ | - |
Note
16:
|
Commitments
and Credit Risk
|
The Bank
grants agribusiness, commercial and residential loans to customers throughout
the state of Tennessee.
Commitments
to Originate Loans
Commitments
to originate loans are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Commitments
have fixed expiration dates or other termination clauses and may
require payment of a fee. Since a portion of the commitments may
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. Each customer’s creditworthiness
is evaluated on a case-by-case basis. The amount of collateral
obtained, if deemed necessary, is based on management’s credit evaluation of the
counterparty. Collateral held varies, but may include accounts
receivable, inventory, property, plant and equipment, commercial real estate and
residential real estate.
At
December 31, 2009 and 2008, the Bank had outstanding commitments to originate
loans aggregating $6,097 and $3,573, respectively. The commitments
extended over varying periods of time with the majority being disbursed within a
one-year period.
Mortgage
loans in the process of origination represent amounts that the Bank plans to
fund within a normal period of 60 to 90 days, and which are intended for sale to
investors in the secondary market. Total mortgage loans in the
process of origination amounted to approximately $1,577 and $1,096, and mortgage
loans held for sale amounted to $2,265 and $866 at December 31, 2009 and
2008, respectively.
The Bank
had recourse commitments on loans sold on the secondary market of approximately
$14,935 and $10,222 at December 31, 2009 and 2008,
respectively. Recourse provisions expire within one to six months
from the date of transfer.
F -
31
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Standby
Letters of Credit
Standby
letters of credit are irrevocable conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Financial
standby letters of credit are primarily issued to support public and private
borrowing arrangements, including commercial paper, bond financing and similar
transactions. Performance standby letters of credit are issued to
guarantee performance of certain customers under non-financial contractual
obligations. The credit risk involved in issuing standby letters of
credit is essentially the same as that involved in extending loans to
customers. Should the Bank be obligated to perform under the standby
letters of credit, the Bank may seek recourse from the customer for
reimbursement of amounts paid.
The Bank
had total outstanding standby letters of credit amounting to $215 and $122
December 31, 2009 and 2008, respectively, with terms generally ranging from
90 days to 13 months.
Lines
of Credit
Lines of
credit are agreements to lend to a customer as long as there is no violation of
any condition established in the contract. Lines of credit have fixed
expiration dates. Since a portion of the line may expire without
being drawn upon, the total unused lines do not necessarily represent future
cash requirements. Each customer’s creditworthiness is evaluated on a
case-by-case basis. The amount of collateral obtained, if deemed
necessary, is based on management’s credit evaluation of the
counterparty. Collateral held varies but may include accounts
receivable, inventory, property, plant and equipment, commercial real estate and
residential real estate. Management uses the same credit policies in
granting lines of credit as it does for on-balance-sheet
instruments.
At
December 31, 2009, the Bank had granted unused lines of credit to borrowers
aggregating approximately $33,164 and $11,499 for commercial lines and open-end
consumer lines, respectively. At December 31, 2008, the Bank had
granted unused lines of credit to borrowers aggregating approximately $32,003
and $10,411 on commercial lines and open-end consumer lines,
respectively.
Note
17:
|
Parent
Company Condensed Financial
Statements
|
First
Advantage Bancorp, which was incorporated under the laws of the state of
Tennessee on June 11, 2007, acquired all of the outstanding shares of First
Federal Savings Bank in connection with the Bank’s conversion to the stock form
of organization on November 29, 2007. The condensed year-end 2009 and
2008 financial statements, pertaining only to First Advantage Bancorp, are as
follows:
December
31,
|
||||||||
Balance Sheet
|
2009
|
2008
|
||||||
|
||||||||
Assets
|
||||||||
Cash
and cash equivalents
|
$ | 19,631 | $ | 21,303 | ||||
Investment
in subsidiaries
|
47,136 | 44,940 | ||||||
ESOP
trust loan receivable
|
3,553 | 3,735 | ||||||
Due
to/from First Federal Savings Bank subsidiary
|
- | 52 | ||||||
Income
tax receivable
|
30 | 31 | ||||||
Prepaid
and other assets
|
225 | 200 | ||||||
Total
Assets
|
$ | 70,575 | $ | 70,261 | ||||
Liabilities
and Stockholders’ Equity
|
||||||||
Other
liabilities
|
$ | 49 | $ | - | ||||
Stockholders’
equity
|
70,526 | 70,261 | ||||||
Total
Liabilities and Stockholder’s Equity
|
$ | 70,575 | $ | 70,261 |
F -
32
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Condensed Statement of Loss
|
December
31, 2009
|
December
31, 2008
|
||||||
|
||||||||
Income
|
||||||||
ESOP
loan interest
|
$ | 280 | $ | 290 | ||||
Interest
on reverse repurchase agreement
|
49 | 1 | ||||||
Total
income
|
329 | 291 | ||||||
Operating
expenses
|
328 | 341 | ||||||
Income
(loss) before equity in undistributed net loss
of subsidiaries
|
1 | (50 | ) | |||||
Equity
in undistributed net income (loss) of subsidiaries
|
359 | (8,045 | ) | |||||
Net
income (loss)
|
$ | 360 | $ | (8,095 | ) |
Statement of Cash Flows
|
December
31, 2009
|
December
31, 2008
|
||||||
|
||||||||
Operating
Activities
|
||||||||
Net
income (loss)
|
$ | 360 | $ | (8,095 | ) | |||
Items
not requiring (providing) cash
|
||||||||
Equity
in undistributed net (income) loss of subsidiaries
|
(359 | ) | 8,045 | |||||
Change
in other assets
|
35 | (165 | ) | |||||
Change in other liabilities
|
49 | - | ||||||
Net
cash provided (used) by operating activities
|
85 | (215 | ) | |||||
Investing
Activities
|
||||||||
Proceeds
from repayment of ESOP loan from subsidary
|
182 | 117 | ||||||
Net
cash provided in investing activities
|
182 | 117 | ||||||
Financing
Activities
|
||||||||
Purchase
of treasury stock
|
(895 | ) | ||||||
Dividends
paid
|
(1,044 | ) | (226 | ) | ||||
Net
cash used in financing activities
|
(1,939 | ) | (226 | ) | ||||
Decrease
in cash and cash equivalents
|
(1,672 | ) | (324 | ) | ||||
Cash
and cash equivalents, beginning of year
|
21,303 | 21,627 | ||||||
Cash
and cash equivalents, end of year
|
$ | 19,631 | $ | 21,303 |
F -
33
First
Advantage Bancorp
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2009 and 2008
(Dollars
in thousands, except per share amounts)
Note
18:
|
Quarterly
Financial Information
|
The
quarterly financial statements presented below reflect all adjustments which
are, in the opinion of management, necessary to fairly present results of
operations for the interim periods indicated:
Unaudited
|
Three
Months Ended
|
|||||||||||||||
2009
|
March
31
|
June
30
|
September
30
|
December
31
|
||||||||||||
|
||||||||||||||||
Interest
and dividend income
|
$ | 4,290 | $ | 4,212 | $ | 4,340 | $ | 4,390 | ||||||||
Interest
expense
|
1,690 | 1,629 | 1,559 | 1,489 | ||||||||||||
Net
interest income
|
2,600 | 2,583 | 2,781 | 2,901 | ||||||||||||
Provision
for loan losses
|
168 | 159 | 180 | 361 | ||||||||||||
Net
interest income after provision for loan losses
|
2,432 | 2,424 | 2,601 | 2,540 | ||||||||||||
Non-interest
income
|
608 | 777 | 671 | (407 | ) | |||||||||||
Non-interest
expense
|
2,805 | 2,971 | 2,665 | 2,710 | ||||||||||||
Income
(loss) before provision for income taxes
|
235 | 230 | 607 | (577 | ) | |||||||||||
Provision
(credit) for income taxes
|
66 | 89 | 217 | (237 | ) | |||||||||||
Net
income (loss)
|
$ | 169 | $ | 141 | $ | 390 | $ | (340 | ) | |||||||
Three
Months Ended
|
||||||||||||||||
2008
|
March
31
|
June
30
|
September
30
|
December
31
|
||||||||||||
Interest
and dividend income
|
$ | 3,840 | $ | 4,381 | $ | 4,625 | $ | 4,439 | ||||||||
Interest
expense
|
1,437 | 1,599 | 1,799 | 1,767 | ||||||||||||
Net
interest income
|
2,403 | 2,782 | 2,826 | 2,672 | ||||||||||||
Provision
for loan losses
|
277 | 80 | 193 | 135 | ||||||||||||
Net
interest income after provision for loan losses
|
2,126 | 2,702 | 2,633 | 2,537 | ||||||||||||
Non-interest
income
|
837 | 553 | (15,618 | ) | 432 | |||||||||||
Non-interest
expense
|
2,552 | 2,513 | 2,637 | 2,443 | ||||||||||||
Income
(loss) before provision for income taxes
|
411 | 742 | (15,622 | ) | 526 | |||||||||||
Provision
(credit) for income taxes
|
(178 | ) | 193 | (6,090 | ) | 227 | ||||||||||
Net
income (loss)
|
$ | 589 | $ | 549 | $ | (9,532 | ) | $ | 299 |
F -
34