Attached files
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EX-31.I - EXHIBIT 31(I) - NATIONAL BANKSHARES INC | ex31i.htm |
EX-32.I - EXHIBIT 32(I) - NATIONAL BANKSHARES INC | ex32i.htm |
EX-31.II - EXHIBIT 31(II) - NATIONAL BANKSHARES INC | ex31ii.htm |
EX-32.II - EXHIBIT 32(II) - NATIONAL BANKSHARES INC | ex32ii.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[x]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31, 2011
|
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ________ to ________
Commission File Number 0-15204
NATIONAL BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of incorporation or organization)
|
54-1375874
(I.R.S. Employer Identification No.)
|
101 Hubbard Street
P. O. Box 90002
Blacksburg, VA
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24062-9002
|
(Address of principal executive offices)
|
(Zip Code)
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(540) 951-6300
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [x] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [x] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b–2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [x] Non-accelerated filer [ ] Smaller reporting company [ ]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act).
[ ] Yes [x] No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Common Stock, $1.25 Par Value
|
Outstanding at May 1, 2011
6,935,974
|
(This report contains 42 pages)
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
Form 10-Q
Index
Page
|
||
Item 1
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3
|
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3 - 4
|
||
5 - 6
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||
7
|
||
|
||
8 - 9
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||
|
||
10 - 26
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||
Item 2
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27 - 36
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Item 3
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36
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|
Item 4
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36
|
|
Item 1
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36
|
|
Item 1A
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36
|
|
Item 2
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36
|
|
Item 3
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36
|
|
|
||
Item 4
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36
|
|
|
||
Item 5
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37
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Item 6
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37
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37
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38 – 39
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||
40 - 42
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2
Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
|
(Unaudited)
|
|||||||
March 31,
|
December 31,
|
|||||||
$ in thousands, except per share data
|
2011
|
2010
|
||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
11,800
|
$
|
9,858
|
||||
Interest-bearing deposits
|
55,674
|
69,400
|
||||||
Securities available for sale, at fair value
|
190,844
|
184,907
|
||||||
Securities held to maturity (fair value approximates $133,858 at March 31, 2011 and $129,913 at December 31, 2010)
|
132,669
|
131,000
|
||||||
Mortgage loans held for sale
|
---
|
2,460
|
||||||
Loans:
|
||||||||
Real estate construction loans
|
48,671
|
46,169
|
||||||
Real estate mortgage loans
|
173,785
|
173,533
|
||||||
Commercial and industrial loans
|
280,607
|
269,818
|
||||||
Loans to individuals
|
85,816
|
87,868
|
||||||
Total loans
|
588,879
|
577,388
|
||||||
Less unearned income and deferred fees
|
(977
|
)
|
(945
|
)
|
||||
Loans, net of unearned income and deferred fees
|
587,902
|
576,443
|
||||||
Less allowance for loan losses
|
(8,245
|
)
|
(7,664
|
)
|
||||
Loans, net
|
579,657
|
568,779
|
||||||
Premises and equipment, net
|
10,366
|
10,470
|
||||||
Accrued interest receivable
|
6,514
|
6,016
|
||||||
Other real estate owned, net
|
2,222
|
1,723
|
||||||
Intangible assets and goodwill
|
11,272
|
11,543
|
||||||
Other assets
|
25,540
|
26,082
|
||||||
Total assets
|
$
|
1,026,558
|
$
|
1,022,238
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Noninterest-bearing demand deposits
|
$
|
136,769
|
$
|
131,540
|
||||
Interest-bearing demand deposits
|
372,470
|
365,040
|
||||||
Savings deposits
|
58,273
|
55,800
|
||||||
Time deposits
|
318,383
|
332,203
|
||||||
Total deposits
|
885,895
|
884,583
|
||||||
Accrued interest payable
|
260
|
257
|
||||||
Other liabilities
|
6,738
|
8,211
|
||||||
Total liabilities
|
892,893
|
893,051
|
||||||
Commitments and contingencies
|
---
|
---
|
3
Stockholders' Equity
|
||||||||
Preferred stock, no par value, 5,000,000 shares authorized; none issued and outstanding
|
$
|
---
|
$
|
---
|
||||
Common stock of $1.25 par value.
|
||||||||
Authorized 10,000,000 shares; issued and outstanding 6,935,974 shares at March 31, 2011 and 6,933,474 shares at December 31, 2010
|
8,670
|
8,667
|
||||||
Retained earnings
|
127,218
|
123,161
|
||||||
Accumulated other comprehensive loss, net
|
(2,223
|
)
|
(2,641
|
)
|
||||
Total stockholders' equity
|
133,665
|
129,187
|
||||||
Total liabilities and stockholders' equity
|
$
|
1,026,558
|
$
|
1,022,238
|
See accompanying notes to consolidated financial statements.
4
Consolidated Statements of Income
Three Months Ended March 31, 2011 and 2010
(Unaudited)
March 31,
|
March 31,
|
|||||||
$ in thousands, except per share data
|
2011
|
2010
|
||||||
Interest Income
|
||||||||
Interest and fees on loans
|
$
|
9,095
|
$
|
9,176
|
||||
Interest on interest-bearing deposits
|
32
|
19
|
||||||
Interest on securities – taxable
|
1,662
|
1,443
|
||||||
Interest on securities – nontaxable
|
1,676
|
1,602
|
||||||
Total interest income
|
12,465
|
12,240
|
||||||
Interest Expense
|
||||||||
Interest on time deposits of $100,000 or more
|
561
|
946
|
||||||
Interest on other deposits
|
1,818
|
2,033
|
||||||
Total interest expense
|
2,379
|
2,979
|
||||||
Net interest income
|
10,086
|
9,261
|
||||||
Provision for loan losses
|
800
|
647
|
||||||
Net interest income after provision for loan losses
|
9,286
|
8,614
|
||||||
Noninterest Income
|
||||||||
Service charges on deposit accounts
|
612
|
714
|
||||||
Other service charges and fees
|
58
|
47
|
||||||
Credit card fees
|
733
|
666
|
||||||
Trust income
|
246
|
269
|
||||||
BOLI income
|
184
|
185
|
||||||
Other income
|
91
|
104
|
||||||
Realized securities gains (losses), net
|
10
|
(14
|
)
|
|||||
Total noninterest income
|
1,934
|
1,971
|
||||||
Noninterest Expense
|
||||||||
Salaries and employee benefits
|
2,904
|
2,856
|
||||||
Occupancy and furniture and fixtures
|
423
|
491
|
||||||
Data processing and ATM
|
444
|
357
|
||||||
FDIC assessment
|
346
|
263
|
||||||
Credit card processing
|
586
|
508
|
||||||
Intangible assets amortization
|
271
|
271
|
||||||
Net costs of other real estate owned
|
134
|
33
|
||||||
Franchise taxes
|
242
|
239
|
||||||
Other operating expenses
|
734
|
766
|
||||||
Total noninterest expense
|
6,084
|
5,784
|
||||||
Income before income taxes
|
5,136
|
4,801
|
||||||
Income tax expense
|
1,112
|
1,032
|
||||||
Net Income
|
$
|
4,024
|
$
|
3,769
|
5
Basic net income per share
|
$
|
0.58
|
$
|
0.54
|
||||
Fully diluted net income per share
|
$
|
0.58
|
$
|
0.54
|
||||
Weighted average number of commonshares outstanding – basic
|
6,933,780
|
6,933,474
|
||||||
Weighted average number of commonshares outstanding – diluted
|
6,957,450
|
6,952,812
|
||||||
Dividends declared per share
|
$
|
---
|
$
|
---
|
See accompanying notes to consolidated financial statements.
6
Consolidated Statements of Changes in Stockholders’ Equity
Three Months Ended March 31, 2011 and 2010
(Unaudited)
$ in thousands
|
Common Stock
|
Retained Earnings
|
Accumulated Other Comprehensive Income (Loss)
|
Comprehensive Income
|
Total
|
|||||||||||||||
Balances at December 31, 2009
|
$ | 8,667 | $ | 113,901 | $ | (492 | ) |
|
$ | 122,076 | ||||||||||
Net income
|
--- | 3,769 | --- | $ | 3,769 | 3,769 | ||||||||||||||
Other comprehensive income, net of tax:
|
||||||||||||||||||||
Unrealized gain on securities available for sale, net of income tax $350
|
--- | --- | --- | 650 | --- | |||||||||||||||
Reclass adjustment, net of tax $5
|
--- | --- | --- | 9 | --- | |||||||||||||||
Other comprehensive income, net of tax $355
|
--- | --- | 659 | 659 | 659 | |||||||||||||||
Comprehensive income
|
--- | --- | --- | $ | 4,428 | --- | ||||||||||||||
Balances at March 31, 2010
|
$ | 8,667 | $ | 117,670 | $ | 167 | $ | 126,504 | ||||||||||||
Balances at December 31, 2010
|
$ | 8,667 | $ | 123,161 | $ | (2,641 | ) | $ | 129,187 | |||||||||||
Net income
|
--- | 4,024 | --- | $ | 4,024 | 4,024 | ||||||||||||||
Stock options exercised
|
3 | 33 | --- | 36 | ||||||||||||||||
Other comprehensive income, net of tax:
|
||||||||||||||||||||
Unrealized gains on securities available for sale, net of income tax $228
|
--- | --- | --- | 423 | --- | |||||||||||||||
Reclass adjustment, net of tax $(3)
|
--- | --- | --- | (5 | ) | --- | ||||||||||||||
Other comprehensive income, net of tax $225
|
--- | --- | 418 | 418 | 418 | |||||||||||||||
Comprehensive income
|
--- | --- | --- | $ | 4,442 | --- | ||||||||||||||
Balances at March 31, 2011
|
$ | 8,670 | $ | 127,218 | $ | (2,223 | ) | $ | 133,665 |
See accompanying notes to consolidated financial statements.
7
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2011 and 2010
(Unaudited)
March 31,
|
March 31,
|
|||||||
$ in thousands
|
2011
|
2010
|
||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$ | 4,024 | $ | 3,769 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provision for loan losses
|
800 | 647 | ||||||
Depreciation of bank premises and equipment
|
209 | 223 | ||||||
Amortization of intangibles
|
271 | 271 | ||||||
Amortization of premiums and accretion of discounts, net
|
61 | 79 | ||||||
(Gains) losses on sales and calls of securities available for sale, net
|
(8 | ) | 14 | |||||
(Gains) on calls of securities held to maturity, net
|
(2 | ) | --- | |||||
Losses and write-downs on other real estate owned
|
100 | 29 | ||||||
Net change in:
|
||||||||
Mortgage loans held for sale
|
2,460 | (1,232 | ) | |||||
Accrued interest receivable
|
(498 | ) | 64 | |||||
Other assets
|
228 | (63 | ) | |||||
Accrued interest payable
|
3 | 56 | ||||||
Other liabilities
|
(1,368 | ) | 740 | |||||
Net cash provided by operating activities
|
6,280 | 4,597 | ||||||
Cash Flows from Investing Activities
|
||||||||
Net change interest-bearing deposits
|
13,726 | (22,976 | ) | |||||
Proceeds from calls, principal payments, sales and maturities of securities available for sale
|
10,659 | 13,782 | ||||||
Proceeds from calls, principal payments and maturities of securities held to maturity
|
5,449 | 9,833 | ||||||
Purchases of securities available for sale
|
(16,000 | ) | (6,359 | ) | ||||
Purchases of securities held to maturity
|
(7,138 | ) | (6,030 | ) | ||||
Collections of loan participations
|
25 | 66 | ||||||
Loan originations and principal collections, net
|
(12,622 | ) | 671 | |||||
Proceeds from disposal of other real estate owned
|
295 | 210 | ||||||
Recoveries on loans charged off
|
25 | 24 | ||||||
Additions to bank premises and equipment
|
(105 | ) | (324 | ) | ||||
Net cash used in investing activities
|
(5,686 | ) | (11,103 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Net change in time deposits
|
(13,820 | ) | (5,188 | ) | ||||
Net change in other deposits
|
15,132 | 10,544 | ||||||
Stock options exercised
|
36 | --- | ||||||
Net cash provided by financing activities
|
1,348 | 5,356 | ||||||
Net change in cash and due from banks
|
1,942 | (1,150 | ) | |||||
Cash and due from banks at beginning of period
|
9,858 | 12,894 | ||||||
Cash and due from banks at end of period
|
$ | 11,800 | $ | 11,744 |
8
Supplemental Disclosures of Cash Flow Information
|
||||||||
Interest paid on deposits and borrowed funds
|
$ | 2,376 | $ | 2,923 | ||||
Income taxes paid
|
$ | --- | $ | 576 | ||||
Supplemental Disclosure of Noncash Activities
|
||||||||
Loans charged against the allowance for loan losses
|
$ | 243 | $ | 456 | ||||
Loans transferred to other real estate owned
|
$ | 894 | $ | 680 | ||||
Unrealized gains on securities available for sale
|
$ | 643 | $ | 1,014 |
See accompanying notes to consolidated financial statements.
9
Notes to Consolidated Financial Statements
March 31, 2011
(Unaudited)
$ in thousands, except per share data and % data
Note 1: General
The consolidated financial statements of National Bankshares, Inc. (“NBI”) and its wholly-owned subsidiaries, The National Bank of Blacksburg (“NBB”) and National Bankshares Financial Services, Inc. (“NBFS”) (collectively, the “Company”), conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. The accompanying interim period consolidated financial statements are unaudited; however, in the opinion of management, all adjustments consisting of normal recurring adjustments, which are necessary for a fair presentation of the consolidated financial statements, have been included. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of results of operations for the full year or any other interim period. The interim period consolidated financial statements and financial information included in this Form 10-Q should be read in conjunction with the notes to consolidated financial statements included in the Company’s 2010 Form 10-K. The Company posts all reports required to be filed under the Securities and Exchange Act of 1934 on its web site at www.nationalbankshares.com.
Subsequent events have been considered through the date when the Form 10-Q was issued.
Note 2: Stock-Based Compensation
The Company had a stock option plan, the 1999 Stock Option Plan, that was adopted in 1999 and that was terminated on March 9, 2009. From 1999 to 2005, incentive stock options were granted annually to key employees of NBI and its subsidiaries. None have been granted since 2005. All of the outstanding stock options are vested. Because there have been no options granted in 2011 and all options were fully vested at December 31, 2008, there is no expense included in net income for the periods presented.
Options
|
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding at January 1, 2011
|
109,500 | $ | 22.14 | |||||||||||||
Exercised
|
2,500 | 14.825 | ||||||||||||||
Forfeited or expired
|
--- | --- | ||||||||||||||
Outstanding March 31, 2011
|
107,000 | $ | 22.31 | 4.28 | $ | 706 | ||||||||||
Exercisable at March 31, 2011
|
107,000 | $ | 22.31 | 4.28 | $ | 706 |
During the three months ended March 31, 2011, there were 2,500 shares exercised with an intrinsic value of $35. During the first three months of 2010, there were no stock options exercised.
Note 3: Allowance for Loan Losses, Nonperforming Assets and Impaired Loans
The allowance for loan losses methodology incorporates individual evaluation of impaired loans and collective evaluation of groups of non-impaired loans. The Company performs ongoing analysis of the loan portfolio to determine credit quality and identify impaired loans. Credit quality is rated based on the loan’s payment history, the borrower’s current financial situation and value of the underlying collateral.
Impaired loans are those loans that have been modified in a troubled debt restructure and larger, non-homogeneous loans that are in nonaccrual or exhibit payment history or financial status that indicate the probability that collection will not occur according to the loan’s terms. Generally, impaired loans are risk rated “classified” or “other assets especially mentioned.” Impaired loans are measured at the lower of the invested amount or the fair market value. Impaired loans with an impairment loss are designated nonaccrual. Please refer to Note 1 of the 10-K, “Summary of Significant Accounting Policies” for additional information on evaluation of impaired loans and associated specific reserves, and policies regarding nonaccruals, past due status and charge-offs.
Using a risk-based perspective, the Company determined five major categories, called segments, within the non-impaired portfolio. Characteristics of loans within portfolio segments are further analyzed to determine sub-groups. These characteristics include collateral type, repayment sources, and (if applicable) the borrower’s business model. Subgroups with total balances exceeding 5% of Tier I and Tier II Capital are designated as loan classes.
10
The Company’s segments consist of real estate-secured consumer loans, non-real estate-secured consumer loans, commercial real estate, commercial and industrial loans and construction, development and land loans. Consumer real estate is composed of loans to purchase or build a primary residence as well as equity lines secured by a primary residence. Consumer non-real estate contains credit cards, automobile and other installment loans, and deposit overdrafts. Commercial real estate is composed of all commercial loans that are secured by real estate. The commercial and industrial segment is commercial loans that are not secured by real estate. Construction, development and other land loans are composed of loans to developers of residential and commercial properties.
The Company’s segments and classes are as follows:
Consumer Real Estate
Equity lines
Closed-end consumer real estate
Consumer construction
Consumer, Non-Real Estate
Credit cards
Consumer, general
Consumer overdraft
Commercial & Industrial
Commercial & industrial
Construction, Development and Land
Residential
Commercial
|
Commercial Real Estate
College housing
Office/Retail space
Nursing homes
Hotels
Municipalities
Medical professionals
Religious organizations
Convenience stores
Entertainment and sports
Nonprofits
Restaurants
General contractors
Other commercial real estate
|
Risk factors are analyzed for each class to estimate collective reserves. Factors include allocations for the historical charge-off percentage and changes in national and local economic and business conditions, in the nature and volume of the portfolio, in loan officers’ experience and in loan quality. Increased allocations for the risk factors applied to each class are made for special mention and classified loans. The Company allocates additional reserves for “high risk” loans, determined to be junior lien mortgages, high loan-to-value loans and interest-only loans.
An analysis of the allowance for loan losses follows:
Three Months ended
March 31,
|
Year ended
December 31,
|
|||||||||||
2011
|
2010
|
2010
|
||||||||||
Balance at beginning of period
|
$ | 7,664 | $ | 6,926 | $ | 6,926 | ||||||
Provision for loan losses
|
800 | 647 | 3,409 | |||||||||
Loans charged off
|
(244 | ) | (456 | ) | (2,810 | ) | ||||||
Recoveries of loans previously charged off
|
25 | 24 | 139 | |||||||||
Balance at the end of period
|
$ | 8,245 | $ | 7,141 | $ | 7,664 | ||||||
Ratio of allowance for loan losses to the end of period loans, net of unearned income and deferred fees
|
1.40 | % | 1.21 | % | 1.33 | % | ||||||
Ratio of net charge-offs to average loans, net of unearned income and deferred fees(1)
|
0.15 | % | 0.30 | % | 0.46 | % | ||||||
Ratio of allowance for loan losses to nonperforming loans(2)
|
96.58 | % | 92.23 | % | 91.01 | % |
(1)
|
Net charge-offs are on an annualized basis.
|
(2)
|
The Company defines nonperforming loans as total nonaccrual and restructured loans. Loans 90 days past due and still accruing are excluded.
|
11
A detailed analysis showing the allowance roll-forward by portfolio segment follows:
March 31, 2011
Consumer Real Estate
|
Consumer Non-Real Estate
|
Commercial Real Estate
|
Commercial & Industrial
|
Construction, Development & Other Land
|
Unallocated
|
Total
|
||||||||||||||||||||||
Allowance for Loan Losses
|
||||||||||||||||||||||||||||
Beginning Balance
|
$ | 1,059 | $ | 586 | $ | 4,033 | $ | 1,108 | $ | 749 | $ | 129 | $ | 7,664 | ||||||||||||||
Charge-offs
|
(36 | ) | (90 | ) | (118 | ) | --- | --- | --- | (244 | ) | |||||||||||||||||
Recoveries
|
7 | 18 | --- | --- | --- | --- | 25 | |||||||||||||||||||||
Provision for loan losses
|
72 | (50 | ) | 740 | 113 | (59 | ) | (16 | ) | 800 | ||||||||||||||||||
Ending Balance
|
$ | 1,102 | $ | 464 | $ | 4,655 | $ | 1,221 | $ | 690 | $ | 113 | $ | 8,245 |
December 31, 2010
Consumer Real Estate
|
Consumer Non-Real Estate
|
Commercial Real Estate
|
Commercial & Industrial
|
Construction, Development & Land
|
Unallocated
|
Total
|
||||||||||||||||||||||
Allowance for Loan Losses
|
||||||||||||||||||||||||||||
Beginning Balance
|
$ | 249 | $ | 1,049 | $ | 4,321 | $ | 459 | $ | 562 | $ | 286 | $ | 6,926 | ||||||||||||||
Charge-offs
|
(89 | ) | (358 | ) | (1,021 | ) | (927 | ) | (415 | ) | --- | (2,810 | ) | |||||||||||||||
Recoveries
|
10 | 67 | 61 | 1 | --- | --- | 139 | |||||||||||||||||||||
Provision for loan losses
|
889 | (172 | ) | 672 | 1,575 | 602 | (157 | ) | 3,409 | |||||||||||||||||||
Ending Balance
|
$ | 1,059 | $ | 586 | $ | 4,033 | $ | 1,108 | $ | 749 | $ | 129 | $ | 7,664 |
An analysis of the components of the ending balance of the allowance for loan losses by portfolio segment follows:
March 31, 2011
Consumer Real Estate
|
Consumer Non-Real Estate
|
Commercial Real Estate
|
Commercial & Industrial
|
Construction, Development & Other Land
|
Unallocated
|
Total
|
||||||||||||||||||||||
Allowance for loans individually evaluated for impairment
|
$ | 30 | $ | --- | $ | 626 | $ | 558 | $ | 42 | $ | --- | $ | 1,256 | ||||||||||||||
Allowance for loans collectively evaluated for impairment
|
1,072 | 464 | 4,029 | 663 | 648 | 113 | 6,989 | |||||||||||||||||||||
Total allowance for loan losses
|
$ | 1,102 | $ | 464 | $ | 4,655 | $ | 1,221 | $ | 690 | $ | 113 | $ | 8,245 |
12
December 31, 2010
Consumer Real Estate
|
Consumer Non-Real Estate
|
Commercial Real Estate
|
Commercial & Industrial
|
Construction, Development & Other Land
|
Unallocated
|
Total
|
||||||||||||||||||||||
Allowance for loans individually evaluated for impairment
|
$ | 27 | $ | --- | $ | 565 | $ | 508 | $ | 100 | $ | --- | $ | 1,200 | ||||||||||||||
Allowance for loans collectively evaluated for impairment
|
1,032 | 586 | 3,468 | 600 | 649 | 129 | 6,464 | |||||||||||||||||||||
Total allowance for loan losses
|
$ | 1,059 | $ | 586 | $ | 4,033 | $ | 1,108 | $ | 749 | $ | 129 | $ | 7,664 |
The ending balance of loans associated with the components of the allowance for loan losses follows:
March 31, 2011
Consumer Real Estate
|
Consumer Non-Real Estate
|
Commercial Real Estate
|
Commercial & Industrial
|
Construction, Development & Other Land
|
Unallocated
|
Total
|
||||||||||||||||||||||
Loans individually evaluated for impairment
|
$ | 614 | $ | --- | $ | 5,172 | $ | 608 | $ | 1,536 | $ | --- | $ | 7,930 | ||||||||||||||
Loans collectively evaluated for impairment
|
115,438 | 30,566 | 350,893 | 38,597 | 44,478 | --- | 579,972 | |||||||||||||||||||||
Total loans
|
$ | 116,052 | $ | 30,566 | $ | 356,065 | $ | 39,205 | $ | 46,014 | $ | --- | $ | 587,902 |
December 31, 2010
Consumer Real Estate
|
Consumer Non-Real Estate
|
Commercial Real Estate
|
Commercial & Industrial
|
Construction, Development & Other Land
|
Unallocated
|
Total
|
||||||||||||||||||||||
Loans individually evaluated for impairment
|
$ | 505 | $ | --- | $ | 5,151 | $ | 698 | $ | 2,437 | $ | --- | $ | 8,791 | ||||||||||||||
Loans collectively evaluated for impairment
|
108,855 | 35,679 | 343,780 | 36,374 | 42,964 | --- | 567,652 | |||||||||||||||||||||
Total loans
|
$ | 109,360 | $ | 35,679 | $ | 348,931 | $ | 37,072 | $ | 45,401 | $ | --- | $ | 576,443 |
A summary of nonperforming assets follows:
March 31,
|
December 31,
|
|||||||||||
2011
|
2010
|
2010
|
||||||||||
Nonperforming assets:
|
||||||||||||
Nonaccrual loans
|
$ | 7,653 | $ | 7,743 | $ | 1,938 | ||||||
Restructured loans not in nonaccrual
|
884 | --- | 6,483 | |||||||||
Total nonperforming loans
|
8,537 | 7,743 | 8,421 | |||||||||
Other real estate owned, net
|
2,222 | 2,567 | 1,723 | |||||||||
Total nonperforming assets
|
$ | 10,759 | $ | 10,310 | $ | 10,144 | ||||||
Ratio of nonperforming assets to loans, net of unearned income and deferred fees, plus other real estate owned
|
1.83 | % | 1.75 | % | 1.75 | % |
13
A summary of loans past due 90 days or more and impaired loans follows:
March 31,
|
December 31,
|
|||||||||||
2011
|
2010
|
2010
|
||||||||||
Loans past due 90 days or more and still accruing
|
$ | 1,078 | $ | 2,217 | $ | 1,336 | ||||||
Ratio of loans past due 90 days or more and still accruing to loans, net of unearned income and deferred fees
|
0.18 | % | 0.38 | % | 0.23 | % | ||||||
Impaired loans:
|
||||||||||||
Total impaired loans
|
$ | 7,930 | $ | 7,743 | $ | 8,791 | ||||||
Impaired loans with a valuation allowance
|
$ | 7,084 | $ | 7,693 | $ | 7,676 | ||||||
Valuation allowance
|
1,256 | 2,438 | 1,200 | |||||||||
Impaired loans, net of allowance
|
$ | 5,828 | $ | 5,255 | $ | 6,476 | ||||||
Impaired loans with no valuation allowance
|
$ | 846 | $ | 50 | $ | 1,115 | ||||||
Average recorded investment in impaired loans(1)
|
$ | 7,690 | $ | 7,712 | $ | 7,526 | ||||||
Income recognized on impaired loans
|
$ | 20 | $ | --- | $ | 17 | ||||||
Amount of income recognized on a cash basis
|
$ | --- | $ | --- | $ | --- |
(1) Recorded investment includes principle and accrued interest.
A detailed analysis of investment in impaired loans, associated reserves and interest income recognized, segregated by loan class follows:
March 31, 2011
Average Recorded Investment in Impaired
Loans
|
Unpaid Principal Balance of Impaired Loans
|
(A)
Total Recorded Investment in Impaired Loans
|
Recorded Investment in (A) for Which There is No Related Allowance
|
Recorded Investment in (A) for Which There is a Related Allowance
|
Related Allowance for Impaired Loans
|
Interest Income Recognized
|
||||||||||||||||||||||
Consumer Real Estate
|
||||||||||||||||||||||||||||
Closed-end Consumer Real Estate
|
$ | 542 | $ | 614 | $ | 614 | $ | 75 | $ | 539 | $ | 30 | $ | 1 | ||||||||||||||
Commercial Real Estate
|
||||||||||||||||||||||||||||
Hotels
|
3,496 | 3,502 | 3,502 | 285 | 3,217 | 113 | --- | |||||||||||||||||||||
Medical Professionals
|
52 | 79 | 79 | --- | 79 | 79 | 5 | |||||||||||||||||||||
College Housing
|
121 | 82 | 82 | --- | 82 | --- | --- | |||||||||||||||||||||
Undeveloped Land
|
254 | 252 | 254 | 254 | --- | --- | 3 | |||||||||||||||||||||
Other Commercial Real Estate
|
1,159 | 1,257 | 1,259 | --- | 1,259 | 434 | 10 | |||||||||||||||||||||
Commercial & Industrial
|
||||||||||||||||||||||||||||
Commercial & Industrial
|
608 | 608 | 608 | --- | 608 | 558 | --- | |||||||||||||||||||||
Construction, Development and Land
|
||||||||||||||||||||||||||||
Residential
|
1,458 | 1,536 | 1,536 | 358 | 1,178 | 42 | 1 | |||||||||||||||||||||
Total
|
$ | 7,690 | $ | 7,930 | $ | 7,934 | $ | 972 | $ | 6,962 | $ | 1,256 | $ | 20 |
14
December 31, 2010
Average Recorded Investment in Impaired
Loans
|
Unpaid Principal Balance of Impaired Loans
|
(A)
Total Recorded Investment in Impaired Loan
|
Recorded Investment in (A) for Which There is No Related Allowance
|
Recorded Investment in (A) for Which There is a Related Allowance
|
Related Allowance for Impaired Loans
|
Interest Income Recognized
|
||||||||||||||||||||||
Consumer Real Estate
|
||||||||||||||||||||||||||||
Closed-end Consumer Real Estate
|
$ | 337 | $ | 505 | $ | 505 | $ | --- | $ | 505 | $ | 26 | $ | --- | ||||||||||||||
Commercial Real Estate
|
||||||||||||||||||||||||||||
Office & Retail
|
253 | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||
Hotel
|
2,767 | 3,509 | 3,509 | 287 | 3,222 | 267 | --- | |||||||||||||||||||||
Convenience stores
|
49 | 577 | 592 | 592 | --- | --- | 15 | |||||||||||||||||||||
Other commercial real estate
|
337 | 1,065 | 1,066 | --- | 1,066 | 299 | 1 | |||||||||||||||||||||
Commercial & Industrial
|
||||||||||||||||||||||||||||
Commercial & Industrial
|
1,183 | 698 | 698 | --- | 698 | 508 | --- | |||||||||||||||||||||
Construction, Development and Land
|
||||||||||||||||||||||||||||
Residential
|
2,579 | 2,185 | 2,185 | --- | 2,185 | 100 | --- | |||||||||||||||||||||
Commercial
|
21 | 252 | 253 | 253 | --- | --- | 1 | |||||||||||||||||||||
Total
|
$ | 7,526 | $ | 8,791 | $ | 8,808 | $ | 1,132 | $ | 7,676 | $ | 1,200 | $ | 17 |
Note: Only classes with impaired loans are shown.
The Company collects and discloses data in compliance with accounting guidance in effect for the year disclosed. The table above and the following tables disclose information only for December 31, 2010 and March 31, 2011, following accounting guidance adopted during 2010. Information for periods prior to December 31, 2010 was collected according to guidance in effect at that time and is not available in the format adopted in 2010.
15
An analysis of past due and nonaccrual loans follows:
March 31, 2011
|
||||||||||||||||
30 – 89 Days Past Due
|
90 or More Days Past Due
|
90 Days Past Due and Still Accruing
|
Nonaccruals (Including Impaired Nonaccruals)
|
|||||||||||||
Consumer Real Estate
|
||||||||||||||||
Equity Lines
|
$ | 30 | $ | --- | $ | --- | $ | --- | ||||||||
Closed-ended Consumer Real Estate
|
948 | 1,514 | 321 | 1,193 | ||||||||||||
Consumer Construction
|
--- | --- | --- | --- | ||||||||||||
Consumer, Non-Real Estate
|
||||||||||||||||
Credit Cards
|
24 | 28 | 28 | --- | ||||||||||||
Consumer General
|
246 | 65 | 65 | --- | ||||||||||||
Consumer Overdraft
|
--- | --- | --- | --- | ||||||||||||
Commercial Real Estate
|
||||||||||||||||
College Housing
|
681 | 182 | --- | 182 | ||||||||||||
Office/Retail
|
--- | --- | --- | --- | ||||||||||||
Nursing Homes
|
--- | --- | --- | --- | ||||||||||||
Hotels
|
624 | 526 | --- | 3,502 | ||||||||||||
Municipalities
|
--- | --- | --- | --- | ||||||||||||
Medical Professionals
|
--- | --- | --- | --- | ||||||||||||
Religious Organizations
|
--- | --- | --- | --- | ||||||||||||
Convenience Stores
|
38 | --- | --- | --- | ||||||||||||
Entertainment and Sports
|
--- | --- | --- | --- | ||||||||||||
Nonprofits
|
--- | --- | --- | --- | ||||||||||||
Restaurants
|
332 | --- | --- | --- | ||||||||||||
General Contractors
|
--- | 66 | 43 | 163 | ||||||||||||
Other Commercial Real Estate
|
1,159 | 1,191 | 582 | 609 | ||||||||||||
Commercial and Industrial
|
||||||||||||||||
Commercial and Industrial
|
14 | 507 | 39 | 468 | ||||||||||||
Construction, Development and Land
|
||||||||||||||||
Residential
|
--- | 1,301 | --- | 1,536 | ||||||||||||
Commercial
|
--- | --- | --- | --- | ||||||||||||
Total
|
$ | 4,096 | $ | 5,380 | $ | 1,078 | $ | 7,653 |
16
December 31, 2010
|
||||||||||||||||
30 – 89 Days Past Due
|
90 or More Days Past Due
|
90 Days Past Due and Still Accruing
|
Nonaccruals (Including Impaired Nonaccruals)
|
|||||||||||||
Consumer Real Estate
|
||||||||||||||||
Equity Lines
|
$ | 69 | $ | --- | $ | --- | $ | --- | ||||||||
Closed-ended Consumer Real Estate
|
1,868 | 1,178 | 612 | 783 | ||||||||||||
Consumer Construction
|
--- | --- | --- | --- | ||||||||||||
Consumer, Non-Real Estate
|
||||||||||||||||
Credit Cards
|
67 | 42 | 29 | --- | ||||||||||||
Consumer General
|
518 | 45 | 37 | --- | ||||||||||||
Consumer Overdraft
|
--- | --- | --- | --- | ||||||||||||
Commercial Real Estate
|
||||||||||||||||
College Housing
|
224 | 262 | --- | --- | ||||||||||||
Office/Retail
|
--- | --- | --- | --- | ||||||||||||
Nursing Homes
|
--- | --- | --- | --- | ||||||||||||
Hotels
|
--- | 802 | --- | 3,509 | ||||||||||||
Municipalities
|
--- | --- | --- | --- | ||||||||||||
Medical Professionals
|
--- | 181 | --- | --- | ||||||||||||
Religious Organizations
|
--- | --- | --- | --- | ||||||||||||
Convenience Stores
|
9 | 577 | 577 | --- | ||||||||||||
Entertainment and Sports
|
--- | --- | --- | --- | ||||||||||||
Nonprofits
|
--- | --- | --- | --- | ||||||||||||
Restaurants
|
--- | --- | --- | --- | ||||||||||||
General Contractors
|
--- | 85 | --- | --- | ||||||||||||
Other Commercial Real Estate
|
792 | 136 | --- | 715 | ||||||||||||
Commercial and Industrial
|
||||||||||||||||
Commercial and Industrial
|
740 | 609 | 81 | 879 | ||||||||||||
Construction, Development and Land
|
||||||||||||||||
Residential
|
--- | 2,185 | --- | 2,185 | ||||||||||||
Commercial
|
25 | --- | --- | --- | ||||||||||||
Total
|
$ | 4,312 | $ | 6,102 | $ | 1,336 | $ | 8,071 |
Nonaccrual loans that meet the Company’s balance thresholds are designated as impaired. Total nonaccrual loans at March 31, 2011 were $7,653, of which $6,794 were impaired, compared with $7,743 in nonaccruals at March 31, 2010, all of which were impaired. As of December 31, 2010 nonaccruals totaled $8,071, of which $7,612 were impaired. No interest income was recognized on nonaccrual loans for the three months ended March 31, 2011 or March 31, 2010.
Loans past due greater than 90 days that continue to accrue interest totaled $1,078 at March 31, 2011, compared with $1,336 at December 31, 2010, and $2,217 at March 31, 2010.
The estimate of credit risk for non-impaired loans is obtained by applying allocations for internal and external factors. The allocations are increased for loans that exhibit greater credit quality risk.
17
Credit quality indicators, which the Company terms risk grades, are assigned through the Company’s credit review function for larger loans and selective review of loans that fall below credit review thresholds. Loans that do not indicate heightened risk are graded as “pass.” Loans that appear to have elevated credit risk because of frequent or persistent past due status, which is less than 75 days, or that show weakness in the borrower’s financial condition are risk graded “special mention.” Loans with frequent or persistent delinquency exceeding 75 days or that have a higher level of weakness in the borrower’s financial condition are graded “classified.” Classified loans have regulatory risk ratings of “substandard” and “doubtful.” Allocations are increased by 50% and by 100% for loans with grades of “special mention” and “classified,” respectively.
Determination of risk grades was completed for the portfolio as of March 31, 2011 and 2010.
The following displays non-impaired loans by credit quality indicator:
March 31, 2011
Pass
|
Special Mention
|
Classified
(Excluding Impaired)
|
||||||||||
Consumer Real Estate
|
||||||||||||
Equity Lines
|
$ | 16,286 | $ | 20 | $ | 25 | ||||||
Closed-end Consumer Real Estate
|
93,083 | 620 | 2,413 | |||||||||
Consumer Construction
|
2,991 | --- | --- | |||||||||
Consumer, Non-Real Estate
|
||||||||||||
Credit Cards
|
6,418 | --- | 24 | |||||||||
Consumer General
|
23,594 | 89 | 165 | |||||||||
Consumer Overdraft
|
276 | --- | --- | |||||||||
Commercial Real Estate
|