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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

__________

FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

¨TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT

For the transition period from ______ to ______

__________


Commission file number: 0-50765

VILLAGE BANK AND TRUST FINANCIAL CORP.
(Exact name of registrant as specified in its charter)

Virginia
(State or other jurisdiction
of incorporation)
 
16-1694602
(IRS Employer
Identification No.)
     
 
15521 Midlothian Turnpike, Midlothian, Virginia
(Address of principal executive offices)
 
23113
(Zip Code)

804-897-3900
(Registrant’s telephone number, including area code)

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  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).  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 o
Accelerated Filer o
Non-Accelerated Filer o (Do not check if smaller reporting company)
Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
 
4,243,378 shares of common stock, $4.00 par value, outstanding as of May 8, 2011

 


 

 
Village Bank and Trust Financial Corp.
Form 10-Q

TABLE OF CONTENTS

Part I – Financial Information
 
 
Item 1.  Financial Statements
 
     
 
Consolidated Balance Sheets
 
 
March 31, 2011 (unaudited) and December 31, 2010
3
     
 
Consolidated Statements of Income
 
 
For the Three Months Ended
 
 
March 31, 2011 and 2010 (unaudited)
4
     
 
Consolidated Statements of Stockholders’ Equity
 
 
For the Three Months Ended
 
 
March 31, 2011 and 2010 (unaudited)
5
     
 
Consolidated Statements of Cash Flows
 
 
For the Three Months Ended
 
 
March 31, 2011 and 2010 (unaudited)
6
     
 
Notes to Condensed Consolidated Financial Statements (unaudited)
7
     
 
Item 2.  Management’s Discussion and Analysis of Financial Condition
 
 
and Results of Operations
21
     
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
41
     
 
Item 4. Controls and Procedures
41
     
Part II – Other Information
 
     
 
Item 1.  Legal Proceedings
42
     
 
Item 1A.  Risk Factors
42
     
 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
42
     
 
Item 3.  Defaults Upon Senior Securities
42
     
 
Item 4.  (Removed and Reserved)
42
     
 
Item 5.  Other Information
42
     
 
Item 6.  Exhibits
42
     
Signatures
43


 
2

 

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

Village Bank and Trust Financial Corp. and Subsidiary
 
Consolidated Balance Sheets
 
March 31, 2011 and December 31, 2010
 
             
   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(Unaudited)
       
Assets
           
Cash and due from banks
  $ 12,765,062     $ 9,390,377  
Federal funds sold
    8,751,212       2,621,934  
Investment securities available for sale
    81,810,230       53,597,174  
Loans held for sale
    8,629,602       19,871,787  
Loans
               
Outstandings
    442,720,243       453,242,950  
Allowance for loan losses
    (7,434,283 )     (7,311,712 )
Deferred fees and costs
    666,247       623,851  
      435,952,207       446,555,089  
Premises and equipment, net
    27,416,915       27,437,452  
Accrued interest receivable
    2,536,961       2,347,211  
Bank owned life insurance
    5,917,952       5,871,765  
Other real estate owned
    13,505,097       12,028,111  
Other assets
    10,978,196       12,058,315  
                 
    $ 608,263,434     $ 591,779,215  
                 
Liabilities and Stockholders' Equity
               
Liabilities
               
Deposits
               
Noninterest bearing
  $ 46,035,898     $ 41,036,262  
Interest bearing
    458,923,419       457,975,931  
  Total deposits
    504,959,317       499,012,193  
Federal Home Loan Bank advances
    38,750,000       28,750,000  
Long-term debt - trust preferred securities
    8,764,000       8,764,000  
Other borrowings
    5,241,499       4,165,430  
Accrued interest payable
    454,712       404,801  
Other liabilities
    1,934,474       2,362,597  
Total liabilities
    560,104,002       543,459,021  
                 
Stockholders' equity
               
Preferred stock, $4 par value, $1,000 liquidation preference,
               
  1,000,000 shares authorized, 14,738 shares issued and outstanding
    58,952       58,952  
Common stock, $4 par value - 10,000,000 shares authorized
               
  4,243,378 shares issued and oustanding at March 31, 2011
               
  4,238,416 shares issued and outstanding at December 31,2010
    16,973,512       16,953,664  
Additional paid-in capital
    40,643,345       40,633,581  
Retained earnings (deficit)
    (9,327,890 )     (9,192,552 )
Common stock warrant
    732,479       732,479  
Discount on preferred stock
    (456,099 )     (492,456 )
Accumulated other comprehensive loss
    (464,867 )     (373,474 )
Total stockholders' equity
    48,159,432       48,320,194  
                 
    $ 608,263,434     $ 591,779,215  
                 
See accompanying notes to consolidated financial statements
               


 
3

 


Village Bank and Trust Financial Corp. and Subsidiary
 
Consolidated Statements of Income
 
Three Months Ended March 31, 2011 and 2010
 
(Unaudited)
 
             
             
   
Three Months Ended March 31,
 
   
2011
   
2010
 
Interest income
           
Loans
  $ 7,040,768     $ 7,089,244  
Investment securities
    300,326       357,120  
Federal funds sold
    18,323       14,232  
Total interest income
    7,359,417       7,460,596  
                 
Interest expense
               
Deposits
    2,038,876       2,510,967  
Borrowed funds
    282,691       533,820  
Total interest expense
    2,321,567       3,044,787  
                 
Net interest income
    5,037,850       4,415,809  
Provision for loan losses
    1,003,000       500,000  
Net interest income after provision for loan losses
    4,034,850       3,915,809  
                 
Noninterest income
               
Service charges and fees
    372,950       407,689  
Gain on sale of loans
    1,372,678       1,171,954  
Gain on sale of assets
    63,125       242,936  
Rental income
    151,937       103,671  
Other
    94,518       227,720  
Total noninterest income
    2,055,208       2,153,970  
                 
Noninterest expense
               
Salaries and benefits
    3,050,116       2,767,389  
Occupancy
    493,224       509,918  
Equipment
    220,070       217,724  
Supplies
    116,159       134,362  
Professional and outside services
    566,354       522,809  
Advertising and marketing
    122,839       89,626  
Expenses related to foreclosed real estate
    462,316       209,828  
FDIC insurance premium
    333,208       292,168  
Other operating expense
    533,652       586,805  
Total noninterest expense
    5,897,938       5,330,629  
                 
Net income before income taxes
    192,120       739,150  
Income tax expense
    109,400       251,311  
                 
Net income
    82,720       487,839  
                 
Preferred stock dividends and accretion of discount
    218,058       217,688  
                 
Net income (loss) available to common shareholders
  $ (135,338 )   $ 270,151  
                 
Earnings (loss) per share, basic
  $ (0.03 )   $ 0.06  
Earnings (loss) per share, diluted
  $ (0.03 )   $ 0.06  
                 
See accompanying notes to consolidated financial statements
               


 
4

 


Village Bank and Trust Financial Corp. and Subsidiary
 
Consolidated Statements of Stockholders' Equity
 
and Comprehensive Income
 
Three Months Ended March 31, 2011 and 2010
 
(Unaudited)
 
                                                 
                                       
Accumulated
       
               
Additional
   
Retained
         
Discount on
   
Other
       
   
Preferred
   
Common
   
Paid-in
   
Earnings
         
Preferred
   
Comprehensive
       
   
Stock
   
Stock
   
Capital
   
(Deficit)
   
Warrant
   
Stock
   
Income (loss)
   
Total
 
                                                 
Balance, December 31, 2010
  $ 58,952     $ 16,953,664     $ 40,633,581     $ (9,192,552 )   $ 732,479     $ (492,456 )   $ (373,474 )   $ 48,320,194  
Amortization of preferred stock
                                                    -       -  
discount
    -                       (36,357 )     -       36,357               -  
Preferred stock dividend
    -       -               (181,701 )     -       -       -       (181,701 )
Issuance of common stock
    -       19,848       (19,848 )     -       -       -       -       -  
Stock based compensation
                    29,612                                       29,612  
Minimum pension adjustment
                                                               
(net of income taxes of $1,105)
    -       -       -       -       -       -       2,145       2,145  
Net income
    -       -       -       82,720       -       -       -       82,720  
Change in unrealized gain on
                                                               
investment securities available-for-sale,
                                                               
net of reclassification and tax effect
    -       -       -       -       -       -       (93,538 )     (93,538 )
Total comprehensive income
    -       -       -       -       -       -       -       (8,673 )
                                                                 
Balance, March 31, 2011
  $ 58,952     $ 16,973,512     $ 40,643,345     $ (9,327,890 )   $ 732,479     $ (456,099 )   $ (464,867 )   $ 48,159,432  
                                                                 
Balance, December 31, 2009
  $ 58,952     $ 16,922,512     $ 40,568,771     $ (8,647,731 )   $ 732,479     $ (636,959 )   $ (56,205 )   $ 48,941,819  
Amortization of preferred stock
                                                    -       -  
discount
    -       -               (35,988 )     -       35,988               -  
Preferred stock dividend
    -       -               (181,700 )     -       -       -       (181,700 )
Issuance of common stock
    -       -               -       -       -       -       -  
Stock based compensation
                    30,044                                       30,044  
Minimum pension adjustment
                                                            -  
(net of income taxes of $1,105)
    -       -       -       -       -       -       2,145       2,145  
Net income
    -       -       -       487,839       -       -       -       487,839  
Change in unrealized gain on
                                                               
investment securities available-for-sale,
                                                               
net of reclassification and tax effect
    -       -       -       -       -       -       80,871       80,871  
Total comprehensive income
    -       -       -       -       -       -       -       570,855  
                                                                 
Balance, March 31, 2010
  $ 58,952     $ 16,922,512     $ 40,598,815     $ (8,377,580 )   $ 732,479     $ (600,971 )   $ 26,811     $ 49,361,018  
                                                                 
See accompanying notes to consolidated financial statements.
                                                 


 
5

 


Village Bank and Trust Financial Corp. and Subsidiary
 
Consolidated Statements of Cash Flows
 
Three Months Ended March 31, 2011 and 2010
 
(Unaudited)
 
             
   
2011
   
2010
 
Cash Flows from Operating Activities
           
Net income
  $ 82,720     $ 487,839  
Adjustments to reconcile net income to net
               
cash provided by operating activities:
               
Depreciation and amortization
    350,499       315,000  
Deferred income taxes
    (3,710,085 )     (4,046,825 )
Provision for loan losses
    1,003,000       500,000  
Write-down of other real estate owned
    362,237       43,000  
Gain on securities sold
    (63,125 )     (108,213 )
Gain on loans sold
    (1,372,678 )     (1,171,954 )
(Gain) loss on sale of premises and equipment
    -       (242,936 )
Gain on sale of other real estate owned
    (6,467 )     (68,475 )
Stock compensation expense
    29,612       30,044  
Proceeds from sale of other real estate owned
    555,152       1,568,051  
Proceeds from sale of mortgage loans
    55,513,663       49,053,958  
Origination of mortgage loans for sale
    (42,898,800 )     (50,901,191 )
Amortization of premiums and accrection of discounts on securities, net
    26,737       209,813  
(Increase) decrease in interest receivable
    (189,750 )     834,122  
Increase in bank owned life insurance
    (46,187 )     (57,250 )
(Increase) decrease  in other assets
    4,840,536       4,326,703  
Increase (decrease) in interest payable
    49,911       (17,501 )
Decrease in other liabilities
    (428,122 )     (274,734 )
Net cash used in operating activities
    14,098,853       479,451  
                 
Cash Flows from Investing Activities
               
Purchases of available for sale securities
    (54,960,337 )     (2,950,740 )
Proceeds from the sale of calls of available for sale securities
    803,100       299,054  
Proceeds from maturities and principal payments of  available for sale securities
    25,838,844       16,162,000  
Net increase in loans
    7,211,973       154,043  
Purchases of premises and equipment
    (329,962 )     (335,423 )
Proceeds from sale of premises and equipment
    -       377,321  
Net cash (used in) provided by investing activities
    (21,436,382 )     13,706,255  
                 
Cash Flows from Financing Activities
               
Net increase (decrease)  in deposits
    5,947,124       12,692,158  
Net increase (decrease) in federal home loan bank advances
    10,000,000          
Net increase (decrease) in other borrowings
    1,076,069       (358,791 )
Dividends on preferred stock
    (181,701 )     (181,700 )
Net cash provided by financing activities
    16,841,492       12,151,667  
                 
Net increase in cash and cash equivalents
    9,503,963       26,337,373  
Cash and cash equivalents, beginning of period
    12,012,311       20,661,820  
                 
Cash and cash equivalents, end of period
   $ 21,516,274     $ 46,999,193  
                 
Supplemental Schedule of Non Cash Activities
               
Real estate owned assets acquired in settlement of loans
   $ 2,387,908     $ 978,635  
                 
See accompanying notes to consolidated financial statements.
               
                 


 
6

 


Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 - Principles of presentation

Village Bank and Trust Financial Corp. (the “Company”) is the holding company of Village Bank (the “Bank”).  The consolidated financial statements include the accounts of the Company, the Bank and the Bank’s three wholly-owned subsidiaries, Village Bank Mortgage Company, Village Insurance Agency, Inc., and Village Financial Services Company.  All material intercompany balances and transactions have been eliminated in consolidation.

The Company’s financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) which, effective for all interim and annual periods ending after September 15, 2009, principally consist of the Financial Accounting Standards Board Accounting Standards Codification (“FASB Codification”). FASB Codification Topic 105: Generally Accepted Accounting Principles establishes the FASB codification as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative guidance for SEC registrants. All guidance contained in the FASB Codification carries an equal level of authority. All non-grandfathered, non-SEC accounting literature not included in the FASB Codification is superseded and deemed non-authoritative.

In the opinion of management, the accompanying condensed consolidated financial statements of the Company have been prepared on the accrual basis in accordance with generally accepted accounting principles for interim financial information.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  However, all adjustments that are, in the opinion of management, necessary for a fair presentation have been included.  The results of operations for the three month period ended March 31, 2011 is not necessarily indicative of the results to be expected for the full year ending December 31, 2011.  The unaudited interim financial statements should be read in conjunction with the audited financial statements and notes to financial statements that are presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the Securities and Exchange Commission.

Note 2 - Use of estimates

The preparation of consolidated 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 as of the date of the statements of financial condition and revenues and expenses during the reporting period.  Actual results could differ significantly from those estimates.  A material estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for loan losses.

Note 3 – Earnings (loss) per common share

The following table presents the basic and diluted earnings per share computations:

 
7

 


   
Three Months Ended March 31,
 
   
2011
   
2010
 
Numerator
           
Net income (loss) - basic and diluted
  $ 82,720     $ 487,839  
Preferred stock dividend and accretion
    218,058       217,689  
Net income (loss) available to common
               
shareholders
  $ (135,338 )   $ 270,150  
                 
Denominator
               
Weighted average shares outstanding - basic
    4,241,945       4,230,628  
Dilutive effect of common stock options and
               
      restricted stock awards
    -       -  
                 
Weighted average shares outstanding - diluted
    4,241,945       4,230,628  
                 
Earnings (loss) per share - basic and diluted
               
Earnings (loss) per share - basic
  $ (0.03 )   $ 0.06  
Effect of dilutive common stock options
    -       -  
                 
Earnings (loss) per share - diluted
  $ (0.03 )   $ 0.06  
                 

Outstanding options and warrants to purchase common stock were considered in the computation of diluted earnings per share for the periods presented.  Stock options for 310,205 and 336,005 shares of common stock were not included in computing diluted earnings per share for the three months ended March 31, 2011 and 2010, respectively, because their effects were anti-dilutive.  Warrants for 499,029 shares of common stock were not included in computing earnings per share in 2011 and 2010 because their effects were also anti-dilutive.

Note 4 – Loans and Allowance for Loan Losses

The following table presents the composition of our loan portfolio (excluding mortgage loans held for sale) at the dates indicated.

Loan Portfolio, Net
 
(In thousands)
 
                         
   
March 31, 2011
   
December 31, 2010
 
   
Amount
   
%
   
Amount
   
%
 
                         
Commercial
  $ 35,415       8.0 %   $ 37,228       8.2 %
Real estate - Construction, land development & other loans
    87,933       19.9 %     90,773       20.0 %
Real estate - Commercial
    166,207       37.5 %     173,227       38.2 %
Real estate - 1-4 Residential
    147,696       33.4 %     146,647       32.4 %
Consumer
    5,469       1.2 %     5,368       1.2 %
                                 
Total loans
    442,720       100.0 %     453,243       100.0 %
Deferred loan cost (unearned income), net
    666               624          
Less: Allowance for loan losses
    (7,434 )             (7,312 )        
                                 
Total loans, net
  $ 435,952             $ 446,555          
                                 

The Company assigns risk rating classifications to its loans.  These risk ratings are divided into the following groups:

 
8

 


·  
Risk rated 1 to 4 loans are considered of sufficient quality to preclude an adverse rating.  1-4 assets generally are well protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral;
·  
Risk rated 5 loans are defined as having potential weaknesses that deserve management’s close attention;
·  
Risk rated 6 loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any, and;
·  
Risk rated 7 loans have all the weaknesses inherent in substandard loans, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

   
Risk Rated
   
Risk Rated
   
Risk Rated
   
Risk Rated
   
Total
 
     1-4      5      6      7    
Loans
 
                                       
Commercial
  $ 28,477,734     $ 2,927,082     $ 3,486,526     $ 523,868     $ 35,415,210  
Real estate - Construction, land development & other loans
    59,664,988       3,750,564       24,516,852       -       87,932,404  
Real estate - Commercial
    116,749,553       23,635,110       25,629,443       193,251       166,207,357  
Real estate - 1-4 Residential
    131,407,250       5,892,408       10,232,721       163,825       147,696,204  
Consumer
    4,313,495       745,905       302,702       106,966       5,469,068  
                                         
Total loans
  $ 340,613,020     $ 36,951,069     $ 64,168,244     $ 987,910     $ 442,720,243  
                                         

The following table presents the aging of the recorded investment in past due loans and leases as of March 31, 2011:

                                       
Recorded
 
               
Greater
                     
Investment >
 
   
30-59 Days
   
60-89 Days
   
Than
   
Total Past
         
Total
   
90 Days and
 
   
Past Due
   
Past Due
   
90 Days
   
Due
   
Current
   
Loans
   
Accruing
 
                                           
Commercial
  $ 381,958     $ 381,974     $ 11,926     $ 775,858     $ 34,639,352     $ 35,415,210     $ 11,926  
Real estate - Construction, land development & other loans
    4,017,664       196,564       -       4,214,228       83,718,176       87,932,404       -  
Real estate - Commercial
    3,517,265       268,443       173,213       3,958,921       162,248,436       166,207,357       173,213  
Real estate - 1-4 Residential
    5,503,828       1,625,973       228,175       7,357,976       140,338,228       147,696,204       228,175  
Consumer
    106,659       -       26,574       133,233       5,335,835       5,469,068       26,574  
                                                         
     Total
  $ 13,527,374     $ 2,472,954     $ 439,888     $ 16,440,216     $ 426,280,027     $ 442,720,243     $ 439,888  
                                                         
 

Loans are considered impaired when, based on current information and events it is probably the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments.  Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans.  If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.  Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.  Impaired loans, or portions thereof, are charged off when deemed uncollectible.  Impaired loans at March 31, 2011 are set forth in the following table.

 
9

 
         
Recorded Investment
             
   
Unpaid
               
Recorded
             
   
Contractual
   
Total
   
Recorded
   
Investment
         
Recorded
 
   
Principal
   
Recorded
   
Investment
   
With No
   
Related
   
Average
 
Description of Loans
 
Balance
   
Investment
   
with Allowance
   
Allowance
   
Allowance
   
Investment
 
                                     
Commercial
  $ 3,128,283     $ 2,936,225           $ 2,936,225           $ 2,342,004  
Real estate - Construction, land development & other loans
    7,937,685       6,793,373     $ 372,155       6,421,218     $ 50,000       5,726,924  
Real estate - Commercial
    2,032,248       1,603,604               1,603,604               5,589,010  
Real estate - 1-4 Residential
    7,096,355       6,080,588       236,991       5,843,597       41,500       5,153,596  
Consumer
    155,854       153,782       -       153,782       -       117,295  
                                                 
    $ 20,350,425     $ 17,567,572     $ 609,146     $ 16,958,426     $ 91,500     $ 18,928,829  

Activity in the allowance for loan losses is as follows (in thousands):

         
Real estate
                         
         
Construction,
                         
         
land development
   
Real estate
   
Real estate
             
   
Commercial
   
and other
   
Commercial
   
1-4 Residential
   
Consumer
   
Total
 
                                     
Balance December 31, 2011
    819       2,265       2,899       1,090       239       7,312  
      Charge-offs
    (474 )     (83 )     (327 )     -       -       (884 )
      Recoveries
    2       -               1       -       3  
      Provision
    300       500       203                       1,003  
                                                 
March 31, 2011
    647       2,682       2,775       1,091       239       7,434  
                                                 
                                                 
                                                 
                                                 
Balance December 31, 2009
    710       3,500       4,442       355       1,515       10,522  
      Charge-offs
    (183 )     (1,881 )     (5,067 )     (191 )     (1,044 )     (8,366 )
      Recoveries
    2       121       187       2       2       314  
      Provision
    290       1,159       2,703       73       617       4,842  
                                                 
December 31, 2011
    819       2,899       2,265       239       1,090       7,312  


Note 5 – Investment securities

At March 31, 2011 and December 31, 2010, all of our securities were classified as available-for-sale.  The following table presents the composition of our investment portfolio at the dates indicated.

 
10

 


Investment Securities Available-for-Sale
 
(Dollars in thousands)
 
                                     
               
Gross
   
Gross
   
Estimated
       
   
Par
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
   
Average
 
   
Value
   
Cost
   
Gains
   
Losses
   
Value
   
Yield
 
March 31, 2011
                                   
US Treasuries
                                   
One to five years
  $ 36,000     $ 36,016       -     $ (67 )   $ 35,949       0.17 %
                                                 
US Government Agencies
                                               
Five to ten years
    6,000       5,998       1       (111 )     5,888       2.62 %
                                                 
Mortgage-backed securities
                                               
One to five years
    192       203       -       (7 )     196       2.68 %
Five to ten years
    1,964       2,002       -       (27 )     1,975       2.47 %
More than ten years
    30,489       30,893       169       (208 )     30,854       2.89 %
Total
    32,645       33,098       169       (242 )     33,025       2.86 %
                                                 
Municipals
                                               
More than ten years
    6,000       6,059       -       (290 )     5,769       4.69 %
                                                 
Other investments
                                               
More than ten years
    1,178       1,178       1               1,179       0.67 %
                                                 
Total investment securities
  $ 81,823     $ 82,349     $ 171     $ (710 )   $ 81,810       1.76 %
                                                 
December 31, 2010
                                               
US Treasuries
                                               
One to five years
  $ 28,000     $ 28,017     $ -     $ -     $ 28,017       0.22 %
                                                 
US Government Agencies
                                               
Five to ten years
    3,000       3,000               (111 )     3,000       2.00 %
                                                 
Mortgage-backed securities
                                               
One to five years
    686       703       31       (10 )     734       4.90 %
More than ten years
    14,410       14,796       91       (58 )     14,887       2.86 %
Total
    15,096       15,499       122       (68 )     15,621       5.39 %
                                                 
Municipals
                                               
More than ten years
    6,000       6,060       -       (337 )     6,060       4.69 %
                                                 
Other investments
                                               
More than ten years
    1,418       1,418       -       (3 )     1,418       0.69 %
                                                 
Total investment securities
  $ 53,514     $ 53,994     $ 122     $ (519 )   $ 54,116       2.32 %
                                                 


Investment securities available for sale that have an unrealized loss position at March 31, 2011 and December 31, 2010 are detailed below.

 
11

 
   
Securities in a loss
   
Securities in a loss
             
   
Position for less than
   
Position for more than
             
   
12 Months
   
12 Months
   
Total
 
   
Fair
   
Unrealized
   
Fair Value
   
Unrealized
   
Fair
   
Unrealized
 
March 31, 2011
 
Value
   
Losses
   
(Loss)
   
Losses
   
Value
   
Losses
 
   
(in thousands)
 
Investment Securities
                                   
available for sale
                                   
                                     
US Government Agencies
  $ 40,337     $ (178 )   $ -     $ -     $ 40,337     $ (178 )
Mortgage-backed securities
    19,598       (230 )     396       (11 )     19,994       (241 )
Municipals
    5,769       (290 )                                
                                                 
Total
  $ 65,704     $ (698 )   $ 396     $ (11 )   $ 60,331     $ (419 )
                                                 
                                                 
                                                 
   
Securities in a loss
   
Securities in a loss
                 
   
Position for less than
   
Position for more than
                 
   
12 Months
   
12 Months
   
Total
 
   
Fair
   
Unrealized
   
Fair Value
   
Unrealized
   
Fair
   
Unrealized
 
   
Value
   
Losses
   
(Loss)
   
Losses
   
Value
   
Losses
 
December 31, 2010
 
(in thousands)
 
                                                 
Investment Securities
                                               
available for sale
                                               
                                                 
US Treasuries
  $ 30,286     $ (114 )   $ -     $ -     $ 30,286     $ (114 )
Mortgage-backed securities
    7,079       (68 )                     7,079       (68 )
Municipals
    5,723       (337 )     -       -       5,723       (337 )
                                                 
Total
  $ 43,088     $ (519 )   $ -     $ -     $ 43,088     $ (519 )
                                                 

 
Management does not believe that any individual unrealized loss as of March 31, 2011 and December 31, 2010 is other than a temporary impairment.  These unrealized losses are primarily attributable to changes in interest rates.  As of March 31, 2011, management does not have the intent to sell any of the securities classified as available for sale and management believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost.

Note 6 – Deposits

Deposits as of March 31, 2011 and December 31, 2010 were as follows:

   
March 31, 2011
   
December 31, 2010
 
   
Amount
   
%
   
Amount
   
%
 
                         
Noninterest bearing demand
  $ 46,035,898       9.12 %   $ 41,036,262       8.22 %
Interest checking accounts
    36,973,233       7.32 %