x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Kentucky
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61-1142247
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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2500 Eastpoint Parkway, Louisville, Kentucky
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40223
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, no par value
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NASDAQ Global Market
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Page No.
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1
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1
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11
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22
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22
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22
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22
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23
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23
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25
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26
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55
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57
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100
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100
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101
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101
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101
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101
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102
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102
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102
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103
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103
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104
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105
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Business
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§
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Louisville/Jefferson, Bullitt and Henry Counties:
Our headquarters are in Louisville, the largest city in Kentucky and the twenty-seventh largest city in the United States. The Louisville metropolitan area includes the consolidated Louisville/Jefferson County and 12 surrounding Kentucky and Southern Indiana counties with an estimated 1.3 million residents in 2011. We also have banking offices in Bullitt County, south of Louisville, and Henry County, east of Louisville. Our six banking offices in these counties also serve the contiguous counties of Spencer, Shelby and Oldham to the east and northeast of Louisville. The area’s employers are diversified across many industries and include the air hub for United Parcel Service (“UPS”), two Ford assembly plants, General Electric’s Consumer and Industrial division, Humana, Norton Healthcare, Brown-Forman and YUM! Brands.
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Lexington/Fayette County:
Lexington, located in Fayette County, is the second largest city in Kentucky with an estimated countywide population of over 302,000 in 2011. Lexington is the financial, educational, retail, healthcare and cultural hub for Central and Eastern Kentucky. It is known worldwide for its Bluegrass horse farms and Keeneland Race Track, and proudly boasts of itself as “The Horse Capital of the World.” It is also the home of the University of Kentucky and Transylvania University. The area’s employers include Toyota, Lexmark, IBM Global Services and Valvoline.
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Southern Kentucky:
This market includes Bowling Green, the third largest city in Kentucky, located about 60 miles north of Nashville, Tennessee. Bowling Green, located in Warren County, is the home of Western Kentucky University and is the economic hub of the area.
This market also includes thriving communities in the contiguous Barren County, including the city of Glasgow. The combined population of Warren and Barren counties was approximately 158,000 in 2011. Major employers in Barren and Warren Counties include GM’s Corvette plant and several other automotive facilities and R.R. Donnelley’s regional printing facility.
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Owensboro/Daviess County:
Owensboro, located on the banks of the Ohio River, is Kentucky’s fourth largest city. Daviess County had an estimated countywide population of approximately 97,000 in 2011. The city is called a festival city, with over 20 annual community celebrations that attract visitors from around the world, including its world famous Bar-B-Q Festival which attracts over 80,000 visitors giving Owensboro recognition as “The Bar-B-Q Capital of the World”. It is an industrial, medical, retail and cultural hub for Western Kentucky and the area employers include Owensboro Medical System, Texas Gas, US Bank Home Mortgage and Toyotetsu.
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§
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South Central Kentucky:
South of the Louisville metropolitan area, we have banking offices in Butler, Edmonson, Green, Hart, and Ohio Counties, which had a combined population of approximately 78,000 in 2011. This region includes stable community markets comprised primarily of agricultural and service-based businesses. Each of our banking offices in these markets has a stable customer and core deposit base.
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•
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requiring a capital restoration plan;
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•
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placing limits on asset growth and restriction on activities;
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•
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requiring the bank to issue additional voting or other capital stock or to be acquired;
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•
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placing restrictions on transactions with affiliates;
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•
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restricting the interest rate the bank may pay on deposits;
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•
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ordering a new election of the bank’s board of directors;
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requiring that certain senior executive officers or directors be dismissed;
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•
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prohibiting the bank from accepting deposits from correspondent banks;
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•
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requiring the bank to divest certain subsidiaries;
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•
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prohibiting the payment of principal or interest on subordinated debt; and
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•
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ultimately, appointing a receiver for the bank.
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A decrease in the demand for loans and other products and services offered by us;
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A decrease in the value of collateral securing our loans;
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An impairment of certain intangible assets, such as core deposit intangibles; and
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An increase in the number of customers who become delinquent, file for protection under bankruptcy laws or default on their loans.
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a majority of its board of directors consists of “independent directors,” which the NASDAQ rules define as persons who are not either officers or employees of the company and have no relationships that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors;
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decisions regarding the compensation paid to executive officers are made either by a compensation committee composed entirely of independent directors or by a majority of the independent directors; and
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nominations for election to the board of directors are made either by a nominating committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities or by a majority of the independent directors.
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offer higher interest rates on deposits and lower interest rates on loans than we can;
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offer a broader range of services than we do;
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maintain more branch locations than we do; and
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mount extensive promotional and advertising campaigns.
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new requirements on banking, derivative and investment activities, including the repeal of the prohibition on the payment of interest on business demand accounts, and debit card interchange fee requirements;
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the creation of a new Consumer Financial Protection Bureau (“CFPB”) with supervisory authority, including the power to conduct examinations and take enforcement actions with respect to financial institutions with assets of $10 billion or more and implement regulations that will affect all financial institutions;
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provisions affecting corporate governance and executive compensation of all companies subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended; and
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a provision that would require bank regulators to set minimum capital levels for bank holding companies that are as strong as those required for their insured depository subsidiaries, subject to a grandfather clause for holding companies with less than $15 billion in assets as of December 31, 2009.
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Properties
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Markets
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Square Footage
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Owned/Leased
|
|||
Louisville/Jefferson, Bullitt and Henry Counties
|
|||||
Main Office: 2500 Eastpoint Parkway, Louisville
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30,000 |
Owned
|
|||
Eminence Office: 645 Elm Street, Eminence
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1,500 |
Owned
|
|||
Hillview Office: 11998 Preston Highway, Hillview
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3,500 |
Owned
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|||
Pleasureville Office: 5440 Castle Highway, Pleasureville
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10,000 |
Owned
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|||
Shepherdsville Office: 340 South Buckman Street, Shepherdsville
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10,000 |
Owned
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|||
Conestoga Office: 155 Conestoga Parkway, Shepherdsville
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3,900 |
Owned
|
|||
Lexington/Fayette County
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|||||
Lexington Office: 2424 Harrodsburg Road, Suite 100, Lexington
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8,500 |
Leased
|
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South Central Kentucky
|
|||||
Brownsville Office: 113 East Main, Brownsville
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8,500 |
Owned
|
|||
Greensburg Office: 202-04 North Main Street, Greensburg
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11,000 |
Owned
|
|||
Horse Cave Office: 210 East Main Street, Horse Cave
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5,000 |
Owned
|
|||
Morgantown Office: 112 West Logan Street, Morgantown
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7,500 |
Owned
|
|||
Munfordville Office: 949 South Dixie Highway, Munfordville
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9,000 |
Owned
|
|||
Northside Office: 1300 North Main Street, Beaver Dam
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3,200 |
Owned
|
|||
Wal-Mart Office: 1701 North Main Street, Beaver Dam
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500 |
Leased
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Owensboro/Daviess County
|
|||||
Owensboro Office: 1819 Frederica Street, Owensboro
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3,000 |
Owned
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Southern Kentucky
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|||||
Fairview Office: 1042 Fairview Avenue, Suite A, Bowling Green
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3,000 |
Leased
|
|||
Campbell Lane Office: 751 Campbell Lane, Bowling Green
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7,500 |
Owned
|
|||
Glasgow Office: 1006 West Main Street, Glasgow
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12,000 |
Owned
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Other Properties
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|||||
Office Building: 701 Columbia Avenue, Glasgow
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19,000 |
Owned
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Legal Proceedings
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Mine Safety Disclosures
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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2012
|
||||||||||||
Market Value
|
||||||||||||
Quarter Ended
|
High
|
Low
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Dividend
|
|||||||||
Fourth Quarter
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$
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1.99
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$
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0.70
|
$
|
0.00
|
||||||
Third Quarter
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2.25
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1.48
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0.00
|
|||||||||
Second Quarter
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2.40
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1.50
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0.00
|
|||||||||
First Quarter
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3.05
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1.69
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0.00
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2011
|
||||||||||||
Market Value
|
||||||||||||
Quarter Ended
|
High
|
Low
|
Dividend
|
|||||||||
Fourth Quarter
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$
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3.50
|
$
|
1.95
|
$
|
0.00
|
||||||
Third Quarter
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5.01
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2.96
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0.00
|
|||||||||
Second Quarter
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8.17
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4.72
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0.01
|
|||||||||
First Quarter
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10.72
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7.89
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0.01
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Selected Financial Data
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As of and for the Years Ended December 31,
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||||||||||||||||||||
(Dollars in thousands except per share data)
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2012
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2011
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2010
|
2009
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2008
|
|||||||||||||||
Income Statement Data:
|
||||||||||||||||||||
Interest income
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$
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57,729
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$
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73,554
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$
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86,407
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$
|
94,466
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$
|
100,107
|
||||||||||
Interest expense
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15,774
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22,039
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28,841
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40,412
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52,881
|
|||||||||||||||
Net interest income
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41,955
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51,515
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57,566
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54,054
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47,226
|
|||||||||||||||
Provision for loan losses
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40,250
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62,600
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30,100
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14,200
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5,400
|
|||||||||||||||
Non-interest income
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9,590
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7,833
|
11,582
|
7,094
|
6,868
|
|||||||||||||||
Non-interest expense
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44,292
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104,273
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46,478
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30,456
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27,757
|
|||||||||||||||
Income (loss) before income taxes
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(32,997
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)
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(107,525
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)
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(7,430
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)
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16,492
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20,937
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||||||||||||
Income tax expense (benefit)
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(65
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)
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(218
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)
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(3,046
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)
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5,424
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6,927
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||||||||||||
Net income (loss)
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(32,932
|
)
|
(107,307
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)
|
(4,384
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)
|
11,068
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14,010
|
||||||||||||
Less:
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||||||||||||||||||||
Dividends on preferred stock
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(1,750
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)
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(1,750
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)
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(1,810
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)
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(1,750
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)
|
(194
|
)
|
||||||||||
Accretion on Series A preferred stock
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(179
|
)
|
(177
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)
|
(177
|
)
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(176
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)
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(20
|
)
|
||||||||||
(Earnings) loss allocated to participating securities
|
1,429
|
4,080
|
184
|
(97
|
)
|
(94
|
)
|
|||||||||||||
Net income (loss) available to common
|
$
|
(33,432
|
)
|
$
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(105,154
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)
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$
|
(6,187
|
)
|
$
|
9,045
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$
|
13,702
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|||||||
Common Share Data (1):
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||||||||||||||||||||
Basic earnings (loss) per common share
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$
|
(2.85
|
)
|
$
|
(8.98
|
)
|
$
|
(0.60
|
)
|
$
|
1.00
|
$
|
1.51
|
|||||||
Diluted earnings (loss) per common share
|
(2.85
|
)
|
(8.98
|
)
|
(0.60
|
)
|
1.00
|
1.51
|
||||||||||||
Cash dividends declared per common share
|
0.00
|
0.02
|
0.49
|
0.76
|
0.73
|
|||||||||||||||
Book value per common share
|
0.74
|
3.74
|
12.76
|
14.61
|
14.14
|
|||||||||||||||
Tangible book value per common share
|
0.58
|
3.54
|
10.33
|
11.44
|
11.18
|
|||||||||||||||
Balance Sheet Data (at period end):
|
||||||||||||||||||||
Total assets
|
$
|
1,162,631
|
$
|
1,455,424
|
$
|
1,723,952
|
$
|
1,835,090
|
$
|
1,647,857
|
||||||||||
Debt obligations:
|
||||||||||||||||||||
FHLB advances
|
5,604
|
7,116
|
15,022
|
82,980
|
142,776
|
|||||||||||||||
Junior subordinated debentures
|
25,000
|
25,000
|
25,000
|
25,000
|
25,000
|
|||||||||||||||
Subordinated capital note
|
6,975
|
7,650
|
8,550
|
9,000
|
9,000
|
|||||||||||||||
Average Balance Data:
|
||||||||||||||||||||
Average assets
|
$
|
1,341,565
|
$
|
1,659,959
|
$
|
1,747,648
|
$
|
1,714,131
|
$
|
1,572,599
|
||||||||||
Average loans
|
1,033,320
|
1,243,474
|
1,353,295
|
1,371,034
|
1,324,658
|
|||||||||||||||
Average deposits
|
1,217,083
|
1,434,462
|
1,459,041
|
1,385,572
|
1,250,614
|
|||||||||||||||
Average FHLB advances
|
6,325
|
15,315
|
47,800
|
106,259
|
138,954
|
|||||||||||||||
Average junior subordinated debentures
|
25,000
|
25,000
|
25,000
|
25,000
|
25,000
|
|||||||||||||||
Average subordinated capital note
|
7,309
|
8,208
|
8,941
|
9,000
|
4,525
|
|||||||||||||||
Average stockholders’ equity
|
75,679
|
159,434
|
188,015
|
168,752
|
131,706
|
|||||||||||||||
(1)
|
Common share data has been adjusted to reflect
5% stock dividends effective December 14, 2010, November 19, 2009 and November 10, 2008
.
|
|
●
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John T. Taylor joined the management team in July as President of Porter Bancorp and CEO of PBI Bank. Mr. Taylor is a seasoned banking veteran with deep and broad experience in our Kentucky markets, community banking, and problem asset resolution. Additionally, John R. Davis joined the management team in August and was appointed Chief Credit Officer of PBI Bank with responsibility for establishing and executing the credit quality policies and overseeing credit administration for the organization.
|
|
●
|
In October 2012, PBI Bank entered into a new Consent Order with the FDIC and KDFI. Under the new order, the Bank agreed to maintain the capital levels required by the June 2011 order and also agreed should the capital levels not be reached, and if directed in writing by the FDIC, the Bank would develop a plan to immediately raise sufficient capital, or to sell or merge itself into another FDIC insured institution. The new Consent Order also requires the Bank to continue to adhere to the plans implemented in response to the June 2011 Consent Order, and includes the substantive provisions of the June 2011 order.
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●
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In order to comply with the capital requirements of the Consent Order, management and the Board of Directors are evaluating appropriate strategies for increasing the Company’s capital. These include, among other things, a possible public offering or private placement of common stock to new and existing shareholders. We have engaged Sandler O’Neill & Partners, LP to act as our financial advisor and to assist our Board in this evaluation and
to assist in evaluating our options for the redemption of our Series A preferred stock issued to the US Treasury in 2008 under the Capital Purchase Program.
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●
|
Total assets decreased 20.1% to $1.2 billion at December 31, 2012 compared with $1.5 billion at the 2011 year-end.
|
|
●
|
Loans decreased 20.9% to $899.1 million compared with $1.1 billion at December 31, 2011.
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|
●
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Deposits declined 19.5% to $1.1 billion compared with $1.3 billion at December 31, 2011. Certificate of deposit balances declined $263.8 million to $760.6 million at December 31, 2012, from $1.0 billion at December 31, 2011. Loan proceeds received from the repayment of our commercial real estate and construction and development loans were used primarily to redeem maturing certificates of deposit during the year. Demand deposits increased 2.9% to $114.3 million during 2012 compared with $111.1 million at December 31, 2011.
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|
●
|
Net interest margin decreased to 3.31% for 2012 compared with 3.40% for 2011. The decrease in margin between periods was due primarily to a reduction in interest earning assets, primarily loans, coupled with lower rates on those assets and elevated non-accrual loan levels. Average loans decreased 16.9% to $1.0 billion in 2012 compared with $1.2 billion in 2011.
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●
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Non-performing loans increased $1.2 million to $94.6 million at December 31, 2012, compared with $93.4 million at December 31, 2011. The increase was primarily in the commercial real estate segment of our portfolio, partially offset by decreases in the construction and development, and 1-4 family residential real estate segments. Non-performing assets increased from $134.8 million at December 31, 2011, to $138.3 million at December 31, 2012.
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|
●
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Provision for loan losses decreased $22.4 million in 2012 compared with 2011 as the result of shrinking the loan portfolio and lower net loan charge-offs of $36.1 million, or 3.50% of average loans for 2012, compared with $44.3 million, or 3.56% of average loans for 2011. Although lower than the prior year, our provision for loan losses was elevated in 2012 by a strategy change during the third quarter of 2012 related to classified loans which we expect to more quickly remediate by litigation or foreclosure. For loans subject to this expectation, we applied an additional fair value discount ranging from 10% to 33% to the underlying collateral in our impairment analysis estimates as resolution of this nature generally results in receiving lower values for real estate collateral in a more aggressive sales environment. This resulted in a provision for loan loss of approximately $5.1 million related to these loans. Additionally, the provision for loan losses was negatively impacted by the high level of loan charge-offs in our historical loss experience factors, which we use to estimate the general component of our allowance for loan losses as well as additional downgrades within the loan portfolio.
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|
●
|
We continue to execute on our strategy to reduce our commercial real estate and construction and development loans. We reduced construction and development loans by $31.2 million to $70.3 million, or 82% of total risk-based capital, at December 31, 2012 compared with $101.5 million, or 85% of total risk-based capital, at December 31, 2011. Non-owner occupied commercial real estate loans, construction and development loans, and multi-family residential real estate loans as a group were reduced by $103.5 million to $311.1 million, or 362% of total risk-based capital, at December 31, 2012 compared with $414.6 million, or 349% of total risk-based capital, at December 31, 2011.
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|
●
|
Loans past due 30-59 days increased from $17.3 million at December 31, 2011 to $38.2 million at December 31, 2012 and loans past due 60-89 days increased from $3.9 million at December 31, 2011, to $20.3 million at December 31, 2012. These increases were primarily in the commercial real estate, construction and development, and multi-family residential real estate segments of our portfolio.
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|
●
|
Foreclosed properties were $43.7 million at December 31, 2012, compared with $41.4 million at December 31, 2011. The Company acquired $33.5 million of OREO and sold $24.2 million of OREO during 2012. In addition, fair value write-downs of $7.7 million were recorded during 2012 to reflect declining values as evidenced by new appraisals and reduced marketing prices in connection with our sales strategies. Our ratio of non-performing assets to total assets increased to 11.9% at December 31, 2012, compared with 9.3% at December 31, 2011.
|
|
●
|
Increasing capital through a possible public offering or private placement of common stock to new and existing shareholders. We have engaged Sandler O’Neill & Partners, LP to act as our financial advisor and to assist our Board in this evaluation and
to assist in evaluating our options for the redemption of our Series A preferred stock issued to the US Treasury in 2008 under the Capital Purchase Program.
|
|
●
|
Continuing to operate the Company and Bank in a safe and sound manner. This strategy will require us to reduce our lending concentrations, remediate non-performing loans, and reduce other noninterest expense through the disposition of OREO.
|
|
●
|
Continuing with succession planning and adding resources to the management team. John T. Taylor was named President and CEO for PBI Bank and appointed to our board of directors in July 2012. Additionally, John R. Davis was appointed Chief Credit Officer of PBI Bank in August 2012, with responsibility for establishing and executing the credit quality policies and overseeing credit administration for the organization.
|
|
●
|
Evaluating our internal processes and procedures, distribution of labor, and work-flow to ensure we have adequately and appropriately deployed resources in an efficient manner in the current environment. To this end, we believe the opportunity exists for the centralization of key processes which will lead to improved execution and cost savings.
|
|
●
|
Executing on our commitment to improve credit quality and reduce loan concentrations and balance sheet risk.
|
|
o
|
We have reduced the size of our loan portfolio significantly from $1.3 billion at December 31, 2010 to $1.1 billion at December 31, 2011, and $899.1 million at December 31, 2012.
We have significantly improved our staffing in the commercial lending area which is now led by John R. Davis, who joined the management team in August 2012 and now serves as Chief Credit Officer.
|
|
o
|
Our Consent Order calls for us to
reduce our construction and development loans to not more than 75% of total risk-based capital. We were not in compliance at December 31, 2012 with construction and development loans representing 82% of total risk-based capital. These loans totaled $70.3 million, or 82% of total risk-based capital, at December 31, 2012 and $101.5 million, or 85% of total risk-based capital, at December 31, 2011.
|
|
o
|
Our Consent Order also requires us to reduce non-owner occupied commercial real estate loans, construction and development loans, and multi-family residential real estate loans as a group, to not more than 250% of total risk-based capital. While we have made significant improvements over the last year, we were not in compliance with this concentration limit at December 31, 2012. These loans totaled $311.1 million, or 362% of total risk-based capital, at December 31, 2012 compared with $414.6 million, or 349% of total risk-based capital, at December 31, 2011.
|
|
o
|
We are working to reduce non-owner occupied commercial real estate loans, construction and development loans, and multi-family residential real estate loans by curtailing new construction and development lending and new non-owner occupied commercial real estate lending. We are also receiving principal reductions from amortizing credits and pay-downs from our customers who sell properties built for resale. We have reduced the construction loan portfolio from $199.5 million at December 31, 2010 to $70.3 million at December 31, 2012. Our non-owner occupied commercial real estate loans declined from $293.3 million at December 31, 2010 to $189.8 million at December 31, 2012.
|
|
●
|
Executing on our commitment to sell other real estate owned and reinvest in quality income producing assets.
|
|
o
|
The remediation process for loans secured by real estate has led the Bank to acquire significant levels of OREO in 2012, 2011, and 2010. The Bank acquired $33.5 million, $41.9 million, and $90.8 million of OREO during 2012, 2011, and 2010, respectively.
|
|
o
|
We have incurred significant losses in disposing of OREO. We incurred losses totaling $9.3 million, $42.8 million, and $13.9 million in 2012, 2011, and 2010, respectively, from sales and fair value write-downs attributable to declining valuations as evidenced by new appraisals and from changes in our sales strategies.
|
|
o
|
To ensure that we maximize the value we receive upon the sale of OREO, we continue to evaluate sales opportunities and channels. We are targeting multiple sales opportunities and channels through internal marketing and the use of brokers, auctions, and technology sales platforms. Proceeds from the sale of OREO totaled $22.5 million during 2012, $26.0 in 2011, and $25.0 million in 2010.
|
|
o
|
At December 31, 2011, the OREO portfolio consisted of 75% construction, development, and land assets. At December 31, 2012, this concentration had declined to 51%. This is consistent with our reduction of construction, development and other land loans, which have declined to $70.3 million at December 31, 2012, compared to $101.5 million at December 31, 2011. Over the past year, the composition of our OREO portfolio has shifted to be more heavily weighted towards commercial real estate properties with a cash flow opportunity and 1-4 family residential properties, which we have found to be more liquid than construction, development, and land assets. Commercial real estate properties represent 35% of the OREO portfolio at December 31, 2012, compared with 15% at December 31, 2011. 1-4 family residential properties represent 12% of the OREO portfolio at December 31, 2012, compared with 7% at December 31, 2011.
|
|
●
|
Evaluating other strategic alternatives, such as the sale of assets or branches.
|
For the
Years Ended December 31,
|
Change from Prior Period
|
|||||||||||||||
2012
|
2011
|
Amount
|
Percent
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Gross interest income
|
$
|
57,729
|
$
|
73,554
|
$
|
(15,825
|
)
|
(21.5
|
)%
|
|||||||
Gross interest expense
|
15,774
|
22,039
|
(6,265
|
)
|
(28.4
|
)
|
||||||||||
Net interest income
|
41,955
|
51,515
|
(9,560
|
)
|
(18.6
|
)
|
||||||||||
Provision for credit losses
|
40,250
|
62,600
|
(22,350
|
)
|
(35.7
|
)
|
||||||||||
Non-interest income
|
6,354
|
6,766
|
(412
|
)
|
(6.1
|
)
|
||||||||||
Gains on sale of securities, net
|
3,236
|
1,108
|
2,128
|
192.1
|
||||||||||||
Other than temporary impairment on securities
|
—
|
(41
|
)
|
41
|
(100.0
|
)
|
||||||||||
Non-interest expense
|
44,292
|
104,273
|
(59,981
|
)
|
(57.5
|
)
|
||||||||||
Net income (loss) before taxes
|
(32,997
|
)
|
(107,525
|
)
|
74,528
|
(69.3
|
)
|
|||||||||
Income tax expense (benefit)
|
(65
|
)
|
(218
|
)
|
153
|
(70.2
|
)
|
|||||||||
Net income (loss)
|
(32,932
|
)
|
(107,307
|
)
|
74,375
|
(69.3
|
)
|
|||||||||
Dividends on preferred stock
|
(1,750
|
)
|
(1,750
|
)
|
—
|
—
|
||||||||||
Accretion on Series A preferred stock
|
(179
|
)
|
(177
|
)
|
(2
|
)
|
1.1
|
|||||||||
Earnings allocated to participating securities
|
1,429
|
4,080
|
(2,651
|
)
|
(65.0
|
)
|
||||||||||
Net income (loss) available to common shareholders
|
(33,432
|
)
|
(105,154
|
)
|
71,722
|
(68.2
|
)
|
For the
Years Ended December 31,
|
Change from Prior Period
|
|||||||||||||||
2011
|
2010
|
Amount
|
Percent
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Gross interest income
|
$
|
73,554
|
$
|
86,407
|
$
|
(12,853
|
)
|
(14.9
|
)%
|
|||||||
Gross interest expense
|
22,039
|
28,841
|
(6,802
|
)
|
(23.6
|
)
|
||||||||||
Net interest income
|
51,515
|
57,566
|
(6,051
|
)
|
(10.5
|
)
|
||||||||||
Provision for credit losses
|
62,600
|
30,100
|
32,500
|
108.0
|
||||||||||||
Non-interest income
|
6,766
|
7,027
|
(261
|
)
|
(3.7
|
)
|
||||||||||
Gains on sale of securities, net
|
1,108
|
5,152
|
(4,044
|
)
|
(78.5
|
)
|
||||||||||
Other than temporary impairment on securities
|
(41
|
)
|
(597
|
)
|
556
|
(93.1
|
)
|
|||||||||
Non-interest expense
|
104,273
|
46,478
|
57,795
|
124.3
|
||||||||||||
Net income (loss) before taxes
|
(107,525
|
)
|
(7,430
|
)
|
(100,095
|
)
|
1347.2
|
|||||||||
Income tax expense (benefit)
|
(218
|
)
|
(3,046
|
)
|
2,828
|
(92.8
|
)
|
|||||||||
Net income (loss)
|
(107,307
|
)
|
(4,384
|
)
|
(102,923
|
)
|
2347.7
|
|||||||||
Dividends on preferred stock
|
(1,750
|
)
|
(1,810
|
)
|
60
|
(3.3
|
)
|
|||||||||
Accretion on Series A preferred stock
|
(177
|
)
|
(177
|
)
|
—
|
—
|
||||||||||
Earnings allocated to participating securities
|
4,080
|
184
|
3,896
|
2117.4
|
||||||||||||
Net income (loss) available to common shareholders
|
(105,154
|
)
|
(6,187
|
)
|
(98,967
|
)
|
1599.6
|
(1)
|
Includes loan fees in both interest income and the calculation of yield on loans.
|
(2)
|
Calculations include non-accruing loans in average loan amounts outstanding.
|
(3)
|
Taxable equivalent yields are calculated assuming a 35% federal income tax rate.
|
(1)
|
Includes loan fees in both interest income and the calculation of yield on loans.
|
(2)
|
Calculations include non-accruing loans in average loan amounts outstanding.
|
(3)
|
Taxable equivalent yields are calculated assuming a 35% federal income tax rate.
|
Year Ended December 31, 2012 vs. 2011
|
Year Ended December 31, 2011 vs. 2010
|
|||||||||||||||||||||||
Increase (decrease)
due to change in
|
Increase (decrease)
due to change in
|
|||||||||||||||||||||||
Rate
|
Volume
|
Net
Change
|
Rate
|
Volume
|
Net
Change
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loan receivables
|
$
|
(3,824
|
)
|
$
|
(10,937
|
)
|
$
|
(14,761
|
)
|
$
|
(3,782
|
)
|
$
|
(6,098
|
)
|
$
|
(9,880
|
)
|
||||||
U.S. Treasury and agencies
|
(14
|
)
|
(109
|
)
|
(123
|
)
|
(58
|
)
|
18
|
(40
|
)
|
|||||||||||||
Mortgage-backed securities
|
(1,401
|
)
|
420
|
(981
|
)
|
(2,190
|
)
|
(689
|
)
|
(2,879
|
)
|
|||||||||||||
State and political subdivision securities
|
(243
|
)
|
398
|
155
|
(55
|
)
|
335
|
280
|
||||||||||||||||
Corporate bonds
|
(54
|
)
|
84
|
30
|
(86
|
)
|
(337
|
)
|
(423
|
)
|
||||||||||||||
FHLB stock
|
19
|
—
|
19
|
(13
|
)
|
—
|
(13
|
)
|
||||||||||||||||
Other debt securities
|
—
|
—
|
—
|
9
|
(9
|
)
|
—
|
|||||||||||||||||
Other equity securities
|
9
|
(1
|
)
|
8
|
8
|
(7
|
)
|
1
|
||||||||||||||||
Federal funds sold
|
—
|
(1
|
)
|
(1
|
)
|
(6
|
)
|
(7
|
)
|
(13
|
)
|
|||||||||||||
Interest-bearing deposits in other financial institutions
|
(21
|
)
|
(150
|
)
|
(171
|
)
|
5
|
109
|
114
|
|||||||||||||||
Total increase (decrease) in interest income
|
(5,529
|
)
|
(10,296
|
)
|
(15,825
|
)
|
(6,168
|
)
|
(6,685
|
)
|
(12,853
|
)
|
||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Certificates of deposit and other time deposits
|
(1,402
|
)
|
(3,238
|
)
|
(4,640
|
)
|
(4,238
|
)
|
(709
|
)
|
(4,947
|
)
|
||||||||||||
NOW and money market accounts
|
(670
|
)
|
(140
|
)
|
(810
|
)
|
(324
|
)
|
59
|
(265
|
)
|
|||||||||||||
Savings accounts
|
(86
|
)
|
12
|
(74
|
)
|
(41
|
)
|
8
|
(33
|
)
|
||||||||||||||
Federal funds purchased and repurchase agreements
|
(231
|
)
|
(202
|
)
|
(433
|
)
|
7
|
(51
|
)
|
(44
|
)
|
|||||||||||||
FHLB advances
|
(34
|
)
|
(296
|
)
|
(330
|
)
|
(293
|
)
|
(1,185
|
)
|
(1,478
|
)
|
||||||||||||
Junior subordinated debentures
|
46
|
(24
|
)
|
22
|
(15
|
)
|
(20
|
)
|
(35
|
)
|
||||||||||||||
Total increase (decrease) in interest expense
|
(2,377
|
)
|
(3,888
|
)
|
(6,265
|
)
|
(4,904
|
)
|
(1,898
|
)
|
(6,802
|
)
|
||||||||||||
Increase (decrease) in net interest income
|
$
|
(3,152
|
)
|
$
|
(6,408
|
)
|
$
|
(9,560
|
)
|
$
|
(1,264
|
)
|
$
|
(4,787
|
)
|
$
|
(6,051
|
)
|
For the Years Ended
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Service charges on deposit accounts
|
$
|
2,239
|
$
|
2,609
|
$
|
2,984
|
||||||
Income from fiduciary activities
|
1,177
|
993
|
987
|
|||||||||
Bank card interchange fees
|
727
|
668
|
606
|
|||||||||
Other real estate owned rental income
|
420
|
200
|
121
|
|||||||||
Secondary market brokerage fees
|
94
|
219
|
327
|
|||||||||
Gain on sales of loans originated for sale
|
338
|
713
|
554
|
|||||||||
Gain on sales of investment securities, net
|
3,236
|
1,108
|
5,152
|
|||||||||
Other-than-temporary impairment on securities
|
—
|
(41
|
)
|
(597
|
)
|
|||||||
Other
|
1,359
|
1,364
|
1,448
|
|||||||||
Total non-interest income
|
$
|
9,590
|
$
|
7,833
|
$
|
11,582
|
For the Years Ended
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Salary and employee benefits
|
$
|
16,648
|
$
|
15,218
|
$
|
14,903
|
||||||
Occupancy and equipment
|
3,642
|
3,729
|
4,095
|
|||||||||
Goodwill impairment charge
|
—
|
23,794
|
—
|
|||||||||
Other real estate owned expense
|
10,549
|
47,525
|
16,254
|
|||||||||
FDIC insurance
|
2,835
|
3,470
|
2,971
|
|||||||||
Loan collection expense
|
2,442
|
2,509
|
908
|
|||||||||
State franchise tax
|
2,174
|
2,228
|
2,172
|
|||||||||
Professional fees
|
1,985
|
1,392
|
1,067
|
|||||||||
Communications
|
710
|
678
|
737
|
|||||||||
Borrowing prepayment fees
|
—
|
486
|
—
|
|||||||||
Postage and delivery
|
454
|
485
|
722
|
|||||||||
Office supplies
|
357
|
352
|
388
|
|||||||||
Advertising
|
154
|
314
|
408
|
|||||||||
Other
|
2,342
|
2,093
|
1,853
|
|||||||||
Total non-interest expense
|
$
|
44,292
|
$
|
104,273
|
$
|
46,478
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
Net loss on sales
|
$
|
1,672
|
$
|
8,889
|
||||
Provision to allowance for sales strategy change
|
—
|
25,613
|
||||||
Provision to allowance for declining market values
|
7,154
|
9,261
|
||||||
Operating expense
|
1,723
|
3,762
|
||||||
Total
|
$
|
10,549
|
$
|
47,525
|
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Net loss on sales
|
$
|
8,889
|
$
|
565
|
||||
Provision to allowance for sales strategy change
|
25,613
|
—
|
||||||
Provision to allowance for declining market values
|
9,261
|
14,062
|
||||||
Operating expense
|
3,762
|
1,627
|
||||||
Total
|
$
|
47,525
|
$
|
16,254
|
Market Value to Book Value Ratio:
|
||||||||||||
Book Value
Per Share
|
Market
Price Per
Share
|
Market to
Book
Ratio
|
||||||||||
12/31/2010
|
$
|
12.76
|
$
|
10.31
|
81
|
%
|
||||||
3/31/2011
|
$
|
12.79
|
$
|
7.89
|
62
|
%
|
||||||
6/30/2011
|
$
|
9.47
|
$
|
4.98
|
53
|
%
|
As of December 31,
|
||||||||||||
2012
|
2011
|
|||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||
(dollars in thousands)
|
||||||||||||
Commercial
|
$
|
52,567
|
5.85
|
% |
|
$
|
71,216
|
6.27
|
%
|
|||
Commercial Real Estate:
|
||||||||||||
Construction
|
70,284
|
7.82
|
101,471
|
8.93
|
||||||||
Farmland
|
80,825
|
8.99
|
90,958
|
8.01
|
||||||||
Other
|
322,687
|
35.89
|
423,844
|
37.31
|
||||||||
Residential Real Estate:
|
||||||||||||
Multi-family
|
50,986
|
5.67
|
60,410
|
5.31
|
||||||||
1-4 Family
|
278,273
|
30.95
|
337,350
|
29.70
|
||||||||
Consumer
|
20,383
|
2.27
|
26,011
|
2.29
|
||||||||
Agriculture
|
22,317
|
2.48
|
23,770
|
2.09
|
||||||||
Other
|
770
|
0.08
|
993
|
0.09
|
||||||||
Total loans
|
$
|
899,092
|
100.00
|
%
|
|
$
|
1,136,023
|
100.00
|
%
|
As of December 31,
|
||||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Commercial
|
$
|
90,290
|
6.93
|
%
|
$
|
89,903
|
6.36
|
%
|
$
|
90,978
|
6.74
|
%
|
||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
Construction
|
199,524
|
15.32
|
304,230
|
21.53
|
371,301
|
27.50
|
||||||||||||||||||
Farmland
|
85,523
|
6.56
|
83,898
|
5.94
|
77,504
|
5.74
|
||||||||||||||||||
Other
|
441,844
|
33.92
|
451,945
|
31.99
|
377,130
|
27.94
|
||||||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||||||
Multi-family
|
74,919
|
5.75
|
65,043
|
4.60
|
56,350
|
4.17
|
||||||||||||||||||
1-4 Family
|
353,418
|
27.13
|
354,358
|
25.08
|
319,734
|
23.68
|
||||||||||||||||||
Consumer
|
31,913
|
2.45
|
36,989
|
2.62
|
37,783
|
2.80
|
||||||||||||||||||
Agriculture
|
24,177
|
1.86
|
25,064
|
1.77
|
16,181
|
1.20
|
||||||||||||||||||
Other
|
1,060
|
0.08
|
1,488
|
0.11
|
3,145
|
0.23
|
||||||||||||||||||
Total loans
|
$
|
1,302,668
|
100.00
|
%
|
$
|
1,412,918
|
100.00
|
%
|
$
|
1,350,106
|
100.00
|
%
|
As of December 31, 2012
|
||||||||||||||||
Maturing
Within
One Year
|
Maturing
1 through
5 Years
|
Maturing
Over 5
Years
|
Total
Loans
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Loans with fixed rates:
|
||||||||||||||||
Commercial
|
$
|
11,176
|
$
|
13,616
|
$
|
2,201
|
$
|
26,993
|
||||||||
Commercial Real Estate:
|
||||||||||||||||
Construction
|
13,383
|
10,684
|
1,289
|
25,356
|
||||||||||||
Farmland
|
11,654
|
22,442
|
6,089
|
40,185
|
||||||||||||
Other
|
99,897
|
114,421
|
8,808
|
223,126
|
||||||||||||
Residential Real Estate:
|
||||||||||||||||
Multi-family
|
9,923
|
31,596
|
2,857
|
44,376
|
||||||||||||
1-4 Family
|
53,511
|
98,419
|
67,452
|
219,382
|
||||||||||||
Consumer
|
4,442
|
12,879
|
1,826
|
19,147
|
||||||||||||
Agriculture
|
3,014
|
1,420
|
129
|
4,563
|
||||||||||||
Other
|
219
|
—
|
—
|
219
|
||||||||||||
Total fixed rate loans
|
$
|
207,219
|
$
|
305,477
|
$
|
90,651
|
$
|
603,347
|
||||||||
Loans with floating rates:
|
||||||||||||||||
Commercial
|
$
|
14,725
|
$
|
6,330
|
$
|
4,519
|
$
|
25,574
|
||||||||
Commercial Real Estate:
|
||||||||||||||||
Construction
|
22,222
|
13,748
|
8,958
|
44,928
|
||||||||||||
Farmland
|
8,685
|
4,685
|
27,270
|
40,640
|
||||||||||||
Other
|
26,714
|
35,326
|
37,521
|
99,561
|
||||||||||||
Residential Real Estate:
|
||||||||||||||||
Multi-family
|
579
|
1,290
|
4,741
|
6,610
|
||||||||||||
1-4 Family
|
10,716
|
14,192
|
33,983
|
58,891
|
||||||||||||
Consumer
|
613
|
401
|
222
|
1,236
|
||||||||||||
Agriculture
|
11,774
|
5,332
|
648
|
17,754
|
||||||||||||
Other
|
—
|
524
|
27
|
551
|
||||||||||||
Total floating rate loans
|
$
|
96,028
|
$
|
81,828
|
$
|
117,889
|
$
|
295,745
|
As of December 31,
|
||||||||||||||||||||
2012 |
|
2011 |
|
2010 |
|
2009 |
|
2008
|
||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
Past due 90 days or more still on accrual
|
$
|
86
|
$
|
1,350
|
$
|
594
|
$
|
5,968
|
$
|
11,598
|
||||||||||
Loans on non-accrual status
|
94,517
|
92,020
|
59,799
|
78,888
|
9,725
|
|||||||||||||||
Total non-performing loans
|
94,603
|
93,370
|
60,393
|
84,856
|
21,323
|
|||||||||||||||
Real estate acquired through foreclosure
|
43,671
|
41,449
|
67,635
|
14,548
|
7,839
|
|||||||||||||||
Other repossessed assets
|
—
|
5
|
52
|
80
|
96
|
|||||||||||||||
Total non-performing assets
|
$
|
138,274
|
$
|
134,824
|
$
|
128,080
|
$
|
99,484
|
$
|
29,258
|
||||||||||
Non-performing loans to total loans
|
10.52
|
%
|
8.22
|
%
|
4.63
|
%
|
6.00
|
%
|
1.58
|
%
|
||||||||||
Non-performing assets to total assets
|
11.89
|
%
|
9.26
|
%
|
7.43
|
%
|
5.42
|
%
|
1.78
|
%
|
||||||||||
Allowance for non-performing loans
|
$
|
13,250
|
$
|
11,382
|
$
|
7,977
|
$
|
7,266
|
$
|
2,363
|
||||||||||
Allowance for non-performing loans to non-performing loans
|
14.0
|
%
|
12.2
|
%
|
13.2
|
%
|
8.6
|
%
|
11.1
|
%
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
Commercial Real Estate:
|
||||||||
Construction
|
$
|
22,323
|
$
|
31,280
|
||||
Farmland
|
602
|
715
|
||||||
Other
|
15,175
|
6,364
|
||||||
Residential Real Estate:
|
||||||||
Multi-family
|
195
|
—
|
||||||
1-4 Family
|
5,376
|
3,090
|
||||||
$
|
43,671
|
$
|
41,449
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
OREO Activity
|
||||||||
OREO as of January 1
|
$
|
41,449
|
$
|
67,635
|
||||
Real estate acquired
|
33,528
|
41,917
|
||||||
Valuation adjustments for sales strategy change
|
—
|
(25,613
|
)
|
|||||
Valuation adjustments for declining market values
|
(7,154
|
)
|
(9,261
|
)
|
||||
Improvements
|
1
|
1,650
|
||||||
Loss on sale
|
(1,672
|
)
|
(8,889
|
)
|
||||
Proceeds from sale of properties
|
(22,481
|
)
|
(25,990
|
)
|
||||
OREO as of December 31
|
$
|
43,671
|
$
|
41,449
|
As of December 31,
|
||||||||||||||||||||
2012 |
|
2011 |
|
2010 |
|
2009 |
|
2008
|
||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
Balances at beginning of period
|
$
|
52,579
|
$
|
34,285
|
$
|
26,392
|
$
|
19,652
|
$
|
16,342
|
||||||||||
Loans charged-off:
|
||||||||||||||||||||
Real estate
|
31,437
|
38,538
|
19,261
|
6,519
|
2,711
|
|||||||||||||||
Commercial
|
3,784
|
4,197
|
2,675
|
301
|
347
|
|||||||||||||||
Consumer
|
1,130
|
1,070
|
496
|
875
|
749
|
|||||||||||||||
Agriculture
|
1,164
|
841
|
29
|
36
|
27
|
|||||||||||||||
Total charge-offs
|
37,515
|
44,646
|
22,461
|
7,731
|
3,834
|
|||||||||||||||
Recoveries:
|
||||||||||||||||||||
Real estate
|
1,040
|
184
|
114
|
133
|
145
|
|||||||||||||||
Commercial
|
129
|
69
|
28
|
55
|
85
|
|||||||||||||||
Consumer
|
125
|
87
|
104
|
76
|
85
|
|||||||||||||||
Agriculture
|
72
|
—
|
8
|
7
|
8
|
|||||||||||||||
Total recoveries
|
1,366
|
340
|
254
|
271
|
323
|
|||||||||||||||
Net charge-offs
|
36,149
|
44,306
|
22,207
|
7,460
|
3,511
|
|||||||||||||||
Provision for loan losses
|
40,250
|
62,600
|
30,100
|
14,200
|
5,400
|
|||||||||||||||
Balance acquired in bank acquisition
|
—
|
—
|
—
|
—
|
1,421
|
|||||||||||||||
Balance at end of period
|
$
|
56,680
|
$
|
52,579
|
$
|
34,285
|
$
|
26,392
|
$
|
19,652
|
||||||||||
Allowance for loan losses to period-end loans
|
6.30
|
%
|
4.63
|
%
|
2.63
|
%
|
1.87
|
%
|
1.46
|
%
|
||||||||||
Net charge-offs to average loans
|
3.50
|
%
|
3.56
|
%
|
1.64
|
%
|
0.54
|
%
|
0.27
|
%
|
||||||||||
Allowance for loan losses to non-performing loans
|
59.91
|
%
|
56.31
|
%
|
56.77
|
%
|
31.10
|
%
|
92.16
|
%
|
As of December 31,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
Amount of
Allowance
|
Percent of
Loans to
Total
Loans
|
Amount of
Allowance
|
Percent of
Loans to
Total
Loans
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Commercial
|
$
|
4,402
|
5.85
|
%
|
$
|
4,207
|
6.27
|
%
|
||||||||
Commercial Real Estate:
|
||||||||||||||||
Construction
|
5,989
|
7.82
|
13,920
|
8.93
|
||||||||||||
Farmland
|
2,600
|
8.99
|
2,023
|
8.01
|
||||||||||||
Other
|
26,179
|
35.89
|
17,081
|
37.31
|
||||||||||||
Residential Real Estate:
|
||||||||||||||||
Multi-family
|
2,464
|
5.67
|
1,797
|
5.31
|
||||||||||||
1-4 Family
|
13,771
|
30.95
|
12,420
|
29.70
|
||||||||||||
Consumer
|
857
|
2.27
|
792
|
2.29
|
||||||||||||
Agriculture
|
403
|
2.48
|
325
|
2.09
|
||||||||||||
Other
|
15
|
0.08
|
14
|
0.09
|
||||||||||||
Total
|
$
|
56,680
|
100.00
|
%
|
$
|
52,579
|
100.00
|
%
|
As of December 31,
|
||||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
Amount of
Allowance
|
Percent of
Loans to
Total
Loans
|
Amount of
Allowance
|
Percent of
Loans to
Total
Loans
|
Amount of
Allowance
|
Percent of
Loans to
Total
Loans
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Commercial
|
$
|
2,147
|
6.93
|
%
|
$
|
2,040
|
6.36
|
%
|
$
|
1,623
|
6.74
|
%
|
||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
Construction
|
11,164
|
15.32
|
8,215
|
21.53
|
5,907
|
27.50
|
||||||||||||||||||
Farmland
|
702
|
6.56
|
643
|
5.94
|
882
|
5.74
|
||||||||||||||||||
Other
|
12,209
|
33.92
|
9,266
|
31.99
|
6,770
|
27.94
|
||||||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||||||
Multi-family
|
517
|
5.75
|
578
|
4.60
|
590
|
4.17
|
||||||||||||||||||
1-4 Family
|
6,707
|
27.13
|
4,662
|
25.08
|
2,271
|
23.68
|
||||||||||||||||||
Consumer
|
701
|
2.45
|
538
|
2.62
|
603
|
2.80
|
||||||||||||||||||
Agriculture
|
134
|
1.86
|
163
|
1.77
|
238
|
1.20
|
||||||||||||||||||
Other
|
4
|
0.08
|
5
|
0.11
|
26
|
0.23
|
||||||||||||||||||
Unallocated
|
—
|
—
|
282
|
—
|
742
|
—
|
||||||||||||||||||
Total
|
$
|
34,285
|
100.00
|
%
|
$
|
26,392
|
100.00
|
%
|
$
|
19,652
|
100.00
|
%
|
December 31, 2012
|
December 31, 2011
|
|||||||||||||||||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Securities available-for-sale
|
||||||||||||||||||||||||||||||||
U.S. Treasury and agencies
|
$
|
5,603
|
$
|
530
|
$
|
—
|
$
|
6,133
|
$
|
10,494
|
$
|
1,149
|
$
|
—
|
$
|
11,643
|
||||||||||||||||
Agency mortgage-backed: residential
|
94,298
|
1,141
|
(257
|
)
|
95,182
|
97,286
|
2,211
|
(22
|
)
|
99,475
|
||||||||||||||||||||||
State and municipal
|
52,485
|
2,335
|
(87
|
)
|
54,733
|
35,456
|
2,610
|
(4
|
)
|
38,062
|
||||||||||||||||||||||
Corporate
|
18,851
|
1,150
|
(37
|
)
|
19,964
|
7,259
|
315
|
(242
|
)
|
7,332
|
||||||||||||||||||||||
Other debt
|
572
|
46
|
—
|
618
|
572
|
34
|
—
|
606
|
||||||||||||||||||||||||
Equity
|
1,359
|
487
|
—
|
1,846
|
1,359
|
356
|
—
|
1,715
|
||||||||||||||||||||||||
Total
|
$
|
173,168
|
$
|
5,689
|
$
|
(381
|
)
|
$
|
178,476
|
$
|
152,426
|
$
|
6,675
|
$
|
(268
|
)
|
$
|
158,833
|
Due Within
One Year
|
After One Year
But Within
Five Years
|
After Five Years
But Within
Ten Years
|
After Ten Years
|
Total
|
||||||||||||||||||||||||||
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
|||||||||||||||||||||
U.S. Treasury and agencies
|
$
|
—
|
—
|
%
|
$
|
3,525
|
2.59
|
%
|
$
|
2,608
|
3.39
|
%
|
$
|
—
|
—
|
%
|
$
|
6,133
|
2.92
|
%
|
||||||||||
Agency mortgage-backed
|
—
|
—
|
828
|
4.76
|
802
|
5.17
|
93,552
|
1.60
|
95,182
|
1.65
|
||||||||||||||||||||
State and municipal
|
930
|
6.51
|
3,004
|
5.62
|
22,729
|
3.90
|
28,070
|
3.75
|
54,733
|
3.96
|
||||||||||||||||||||
Corporate bonds
|
—
|
—
|
7,235
|
6.21
|
1,123
|
5.14
|
11,606
|
2.33
|
19,964
|
3.77
|
||||||||||||||||||||
Other debt
|
—
|
—
|
—
|
—
|
—
|
—
|
618
|
6.50
|
618
|
6.50
|
||||||||||||||||||||
Total
|
$
|
930
|
6.51
|
%
|
$
|
14,592
|
5.08
|
%
|
$
|
27,262
|
3.94
|
%
|
$
|
133,846
|
2.12
|
%
|
$
|
176,630
|
2.65
|
%
|
||||||||||
Equity
|
1,846
|
|||||||||||||||||||||||||||||
Total
|
$
|
178,476
|
For the Years Ended December 31,
|
||||||||||||||||||||||||
2012
|
2011
|
2010
|
||||||||||||||||||||||
Average
Balance
|
Average
Rate
|
Average
Balance
|
Average
Rate
|
Average
Balance
|
Average
Rate
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Demand
|
$
|
113,325
|
$
|
106,769
|
$
|
102,383
|
||||||||||||||||||
Interest Checking
|
89,820
|
0.37
|
%
|
89,103
|
0.74
|
%
|
83,111
|
0.85
|
%
|
|||||||||||||||
Money Market
|
63,212
|
0.49
|
81,925
|
0.96
|
81,430
|
1.24
|
||||||||||||||||||
Savings
|
38,665
|
0.40
|
36,511
|
0.62
|
35,393
|
0.74
|
||||||||||||||||||
Certificates of Deposit
|
912,061
|
1.52
|
1,120,154
|
1.65
|
1,156,724
|
2.02
|
||||||||||||||||||
Total Deposits
|
$
|
1,217,083
|
$
|
1,434,462
|
$
|
1,459,041
|
||||||||||||||||||
Weighted Average Rate
|
1.20
|
%
|
1.40
|
%
|
1.74
|
%
|
For the Years Ended December 31,
|
||||||||||||||||||||||||
2012
|
2011
|
2010
|
||||||||||||||||||||||
Average
Balance
|
Average
Rate
|
Average
Balance
|
Average
Rate
|
Average
Balance
|
Average
Rate
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Certificates of Deposit
|
||||||||||||||||||||||||
Less than $100,000
|
$
|
478,502
|
1.40
|
%
|
$
|
569,667
|
1.59
|
%
|
$
|
579,978
|
2.00
|
%
|
||||||||||||
$100,000 or more
|
433,559
|
1.64
|
550,487
|
1.71
|
576,746
|
2.05
|
||||||||||||||||||
Total
|
$
|
912,061
|
1.52
|
%
|
$
|
1,120,154
|
1.65
|
%
|
$
|
1,156,724
|
2.02
|
%
|
Maturity Period
|
Retail
|
Brokered
|
Total
|
|||||||||
(in thousands)
|
||||||||||||
Three months or less
|
$
|
40,770
|
$
|
—
|
$
|
40,770
|
||||||
Three months through six months
|
38,900
|
15,000
|
53,900
|
|||||||||
Six months through twelve months
|
64,762
|
—
|
64,762
|
|||||||||
Over twelve months
|
160,095
|
—
|
160,095
|
|||||||||
Total
|
$
|
304,527
|
$
|
15,000
|
$
|
319,527
|
December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
(dollars in thousands)
|
||||||||||||
Average balance outstanding
|
$
|
6,325
|
$
|
15,315
|
$
|
47,800
|
||||||
Maximum amount outstanding at any month-end during the period
|
7,015
|
38,937
|
110,763
|
|||||||||
End of period balance
|
5,604
|
7,116
|
15,022
|
|||||||||
Weighted average interest rate:
|
||||||||||||
At end of period
|
3.21
|
%
|
3.31
|
%
|
3.87
|
%
|
||||||
During the period
|
3.27
|
%
|
3.51
|
%
|
4.22
|
%
|
Description
|
Liquidation
Amount
Trust
Preferred
Securities
|
Issuance Date
|
Optional Prepayment
Date (2)
|
Interest Rate (1)
|
Junior
Subordinated
Debt and
Investment
in Trust
|
Maturity Date
|
||||||||||
(dollars in thousands)
|
(dollars in thousands)
|
|||||||||||||||
Porter Statutory Trust II
|
$
|
5,000
|
2/13/2004
|
3/17/2009
|
3-month LIBOR + 2.85%
|
$
|
5,155
|
2/13/2034
|
||||||||
Porter Statutory Trust III
|
3,000
|
4/15/2004
|
6/17/2009
|
3-month LIBOR + 2.79%
|
3,093
|
4/15/2034
|
||||||||||
Porter Statutory Trust IV
|
14,000
|
12/14/2006
|
3/1/2012
|
3-month LIBOR + 1.67%
|
14,434
|
3/1/2037
|
||||||||||
Asencia Statutory Trust I
|
3,000
|
2/13/2004
|
3/17/2009
|
3-month LIBOR + 2.85%
|
3,093
|
2/13/2034
|
||||||||||
$
|
25,000
|
$
|
25,775
|
(1)
|
As of December 31, 2012, the 3-month LIBOR was 0.31%.
|
(2)
|
The debentures are callable on or after the optional prepayment date at their principal amount plus accrued interest.
|
Three months or less
|
$
|
—
|
||
Three months through six months
|
15,000
|
|||
Six months through twelve months
|
—
|
|||
Over twelve months
|
—
|
|||
Total
|
$
|
15,000
|
Regulatory
Minimums
|
Well-
Capitalized
Minimums
|
Minimum
Capital
Ratios Under
Consent Order
|
Porter
Bancorp
|
PBI
Bank
|
||||||||||||||||
Tier 1 Capital
|
4.0
|
%
|
6.0
|
%
|
N/A
|
6.46
|
%
|
7.71
|
%
|
|||||||||||
Total risk-based capital
|
8.0
|
10.0
|
12.0
|
%
|
9.81
|
9.82
|
||||||||||||||
Tier 1 leverage ratio
|
4.0
|
5.0
|
9.0
|
4.50
|
5.37
|
One year
or less
|
More than 1
year but less
than 3 years
|
3 years or
more but less
than 5 years
|
5 years
or more
|
Total
|
||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
Commitments to extend credit
|
$
|
25,418
|
$
|
11,356
|
$
|
1,993
|
$
|
14,104
|
$
|
52,871
|
||||||||||
Standby letters of credit
|
2,261
|
—
|
—
|
—
|
2,261
|
|||||||||||||||
Total
|
$
|
27,679
|
$
|
11,356
|
$
|
1,993
|
$
|
14,104
|
$
|
55,132
|
One year
or less
|
More than 1
year but less
than 3 years
|
3 years or
more but less
than 5 years
|
5 years or
more
|
Total
|
|||||||||||||||||
(dollars in thousands)
|
|||||||||||||||||||||
Time deposits
|
$
|
409,593
|
$
|
326,027
|
$
|
24,868
|
$
|
85
|
$
|
760,573
|
|||||||||||
FHLB borrowing (1)
|
1,125
|
1,398
|
1,184
|
1,897
|
5,604
|
||||||||||||||||
Subordinated capital note
|
900
|
1,800
|
1,800
|
2,475
|
6,975
|
||||||||||||||||
Junior subordinated debentures
|
—
|
—
|
—
|
25,000
|
25,000
|
||||||||||||||||
Total
|
$
|
411,618
|
$
|
329,225
|
$
|
27,852
|
$
|
29,457
|
$
|
798,152
|
|||||||||||
(1)
|
Fixed rate mortgage-matched borrowings with rates ranging from 0% to 5.25%, and maturities ranging from 2013 through 2033,
averaging 3.21%.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Change in Future
Net Interest Income
|
||||||||
Change in Interest Rates
|
Dollar Change
|
Percentage Change
|
||||||
(dollars in thousands)
|
||||||||
+ 200 basis points
|
$
|
2,883
|
8.11
|
%
|
||||
+ 100 basis points
|
1,460
|
4.11
|
Volume Subject to Repricing Within
|
|||||||||||||||||||||||||||
0 – 90
Days
|
91 – 181
Days
|
182 – 365
Days
|
1 – 5
Years
|
Over 5
Years
|
Non-
Interest
Sensitive
|
Total
|
|||||||||||||||||||||
(dollars in thousands)
|
|||||||||||||||||||||||||||
Assets:
|
|||||||||||||||||||||||||||
Federal funds sold and short-term investments
|
$
|
41,161
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
41,161
|
|||||||||||||
Investment securities
|
23,607
|
7,647
|
11,291
|
56,537
|
65,459
|
13,935
|
178,476
|
||||||||||||||||||||
FHLB stock
|
10,072
|
—
|
—
|
—
|
—
|
—
|
10,072
|
||||||||||||||||||||
Loans held for sale
|
507
|
—
|
—
|
—
|
—
|
—
|
507
|
||||||||||||||||||||
Loans, net of allowance
|
334,552
|
94,144
|
120,496
|
246,679
|
103,221
|
(56,680
|
)
|
842,412
|
|||||||||||||||||||
Fixed and other assets
|
—
|
—
|
—
|
—
|
—
|
90,003
|
90,003
|
||||||||||||||||||||
Total assets
|
$
|
409,899
|
$
|
101,791
|
$
|
131,787
|
$
|
303,216
|
$
|
168,680
|
$
|
47,258
|
$
|
1,162,631
|
|||||||||||||
Liabilities and Stockholders’ Equity
|
|||||||||||||||||||||||||||
Interest-bearing checking, savings, and money market
accounts
|
$
|
190,176
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
190,176
|
|||||||||||||
Certificates of deposit
|
113,009
|
128,822
|
164,875
|
352,434
|
1,433
|
—
|
760,573
|
||||||||||||||||||||
Borrowed funds
|
34,897
|
273
|
459
|
3,062
|
1,522
|
—
|
40,213
|
||||||||||||||||||||
Other liabilities
|
—
|
—
|
—
|
—
|
—
|
124,479
|
124,479
|
||||||||||||||||||||
Stockholders’ equity
|
—
|
—
|
—
|
—
|
—
|
47,190
|
47,190
|
||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$
|
338,082
|
$
|
129,095
|
$
|
165,334
|
$
|
355,496
|
$
|
2,955
|
$
|
171,669
|
$
|
1,162,631
|
|||||||||||||
Period gap
|
$
|
71,817
|
$
|
(27,304
|
)
|
$
|
(33,547
|
)
|
$
|
(52,280
|
)
|
$
|
165,725
|
||||||||||||||
Cumulative gap
|
$
|
71,817
|
$
|
44,513
|
$
|
10,966
|
$
|
(41,314
|
)
|
$
|
124,411
|
||||||||||||||||
Period gap to total assets
|
6.18
|
%
|
(2.35
|
%)
|
(2.89
|
%)
|
(4.50
|
%)
|
14.25
|
%
|
|||||||||||||||||
Cumulative gap to total assets
|
6.18
|
%
|
3.83
|
%
|
0.94
|
%
|
(3.55
|
%)
|
10.40
|
%
|
|||||||||||||||||
Cumulative interest-earning assets to cumulative
interest-bearing liabilities
|
121.24
|
%
|
109.53
|
%
|
101.73
|
%
|
95.82
|
%
|
112.55
|
%
|
Financial Statements and Supplementary Data
|
/s/ Maria L. Bouvette
|
/s/ Phillip W. Barnhouse
|
|
Maria L. Bouvette
Chairman and
Chief Executive Officer
|
Phillip W. Barnhouse
Chief Financial Officer
|
2012
|
2011
|
|||||||
Assets
|
||||||||
Cash and due from financial institutions
|
$
|
46,512
|
$
|
104,680
|
||||
Federal funds sold
|
3,060
|
1,282
|
||||||
Cash and cash equivalents
|
49,572
|
105,962
|
||||||
Securities available for sale
|
178,476
|
158,833
|
||||||
Mortgage loans held for sale
|
507
|
694
|
||||||
Loans, net of allowance of $56,680 and $52,579, respectively
|
842,412
|
1,083,444
|
||||||
Premises and equipment
|
20,805
|
21,541
|
||||||
Other real estate owned
|
43,671
|
41,449
|
||||||
Federal Home Loan Bank stock
|
10,072
|
10,072
|
||||||
Bank owned life insurance
|
8,398
|
8,106
|
||||||
Accrued interest receivable and other assets
|
8,718
|
25,323
|
||||||
Total assets
|
$
|
1,162,631
|
$
|
1,455,424
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Deposits
|
||||||||
Non-interest bearing
|
$
|
114,310
|
$
|
111,118
|
||||
Interest bearing
|
950,749
|
1,212,645
|
||||||
Total deposits
|
1,065,059
|
1,323,763
|
||||||
Repurchase agreements
|
2,634
|
1,738
|
||||||
Federal Home Loan Bank advances
|
5,604
|
7,116
|
||||||
Accrued interest payable and other liabilities
|
10,169
|
7,628
|
||||||
Subordinated capital note
|
6,975
|
7,650
|
||||||
Junior subordinated debentures
|
25,000
|
25,000
|
||||||
Total liabilities
|
1,115,441
|
1,372,895
|
||||||
Commitments and contingent liabilities (Note 18)
|
—
|
—
|
||||||
Stockholders’ equity
|
||||||||
Preferred stock, no par, 1,000,000 shares authorized
|
||||||||
Series A - 35,000 issued and outstanding; Liquidation preference of
$35 million at December 31, 2012
|
34,840
|
34,661
|
||||||
Series C – 317,042 issued and outstanding; Liquidation preference of
$3.6 million at December 31, 2012
|
3,283
|
3,283
|
||||||
Common stock, no par, 86,000,000 shares authorized, 12,002,421 and
11,824,472 shares issued and outstanding, respectively
|
112,236
|
112,236
|
||||||
Additional paid-in capital
|
20,283
|
19,841
|
||||||
Retained deficit
|
(126,517
|
)
|
(91,656
|
)
|
||||
Accumulated other comprehensive income
|
3,065
|
4,164
|
||||||
Total stockholders' equity
|
47,190
|
82,529
|
||||||
Total liabilities and stockholders’ equity
|
$
|
1,162,631
|
$
|
1,455,424
|
2012
|
2011
|
2010
|
||||||||||
Interest income
|
||||||||||||
Loans, including fees
|
$
|
52,918
|
$
|
67,679
|
$
|
77,559
|
||||||
Taxable securities
|
3,333
|
4,008
|
7,338
|
|||||||||
Tax exempt securities
|
887
|
1,123
|
854
|
|||||||||
Federal funds sold and other
|
591
|
744
|
656
|
|||||||||
57,729
|
73,554
|
86,407
|
||||||||||
Interest expense
|
||||||||||||
Deposits
|
14,623
|
20,147
|
25,392
|
|||||||||
Federal Home Loan Bank advances
|
207
|
537
|
2,015
|
|||||||||
Junior subordinated debentures
|
671
|
632
|
639
|
|||||||||
Subordinated capital note
|
266
|
283
|
311
|
|||||||||
Federal funds purchased and other
|
7
|
440
|
484
|
|||||||||
15,774
|
22,039
|
28,841
|
||||||||||
Net interest income
|
41,955
|
51,515
|
57,566
|
|||||||||
Provision for loan losses
|
40,250
|
62,600
|
30,100
|
|||||||||
Net interest income (loss) after provision for loan losses
|
1,705
|
(11,085
|
)
|
27,466
|
||||||||
Non-interest income
|
||||||||||||
Service charges on deposit accounts
|
2,239
|
2,609
|
2,984
|
|||||||||
Income from fiduciary activities
|
1,177
|
993
|
987
|
|||||||||
Bank card interchange fees
|
727
|
668
|
606
|
|||||||||
Other real estate owned rental income
|
420
|
200
|
121
|
|||||||||
Secondary market brokerage fees
|
94
|
219
|
327
|
|||||||||
Net gain on sales of loans originated for sale
|
338
|
713
|
554
|
|||||||||
Net gain on sales of securities
|
3,236
|
1,108
|
5,152
|
|||||||||
Other-than-temporary impairment loss
|
||||||||||||
Total impairment loss
|
—
|
(41
|
)
|
(597
|
)
|
|||||||
Loss recognized in other comprehensive income
|
—
|
—
|
—
|
|||||||||
Net impairment loss recognized in earnings
|
—
|
(41
|
)
|
(597
|
)
|
|||||||
Other
|
1,359
|
1,364
|
1,448
|
|||||||||
9,590
|
7,833
|
11,582
|
||||||||||
Non-interest expense
|
||||||||||||
Salaries and employee benefits
|
16,648
|
15,218
|
14,903
|
|||||||||
Occupancy and equipment
|
3,642
|
3,729
|
4,095
|
|||||||||
Goodwill impairment
|
—
|
23,794
|
—
|
|||||||||
Other real estate owned expense
|
10,549
|
47,525
|
16,254
|
|||||||||
FDIC insurance
|
2,835
|
3,470
|
2,971
|
|||||||||
Loan collection expense
|
2,442
|
2,509
|
908
|
|||||||||
State franchise tax
|
2,174
|
2,228
|
2,172
|
|||||||||
Professional fees
|
1,985
|
1,392
|
1,067
|
|||||||||
Communications
|
710
|
678
|
737
|
|||||||||
Borrowing prepayment fees
|
—
|
486
|
—
|
|||||||||
Postage and delivery
|
454
|
485
|
722
|
|||||||||
Advertising
|
154
|
314
|
408
|
|||||||||
Other
|
2,699
|
2,445
|
2,241
|
|||||||||
44,292
|
104,273
|
46,478
|
||||||||||
Loss before income taxes
|
(32,997
|
)
|
(107,525
|
)
|
(7,430
|
)
|
||||||
Income tax expense (benefit)
|
(65
|
)
|
(218
|
)
|
(3,046
|
)
|
||||||
Net loss
|
(32,932
|
)
|
(107,307
|
)
|
(4,384
|
)
|
||||||
Less:
|
||||||||||||
Dividends on preferred stock
|
(1,750
|
)
|
(1,750
|
)
|
(1,810
|
)
|
||||||
Accretion on Series A preferred stock
|
(179
|
)
|
(177
|
)
|
(177
|
)
|
||||||
(Earnings) loss allocated to participating securities
|
1,429
|
4,080
|
184
|
|||||||||
Net loss attributable to common shareholders
|
$
|
(33,432
|
)
|
$
|
(105,154
|
)
|
$
|
(6,187
|
)
|
|||
Basic loss per common share
|
$
|
(2.85
|
)
|
$
|
(8.98
|
)
|
$
|
(0.60
|
)
|
|||
Diluted loss per common share
|
$
|
(2.85
|
)
|
$
|
(8.98
|
)
|
$
|
(0.60
|
)
|
2012
|
2011
|
2010
|
||||||||||
Net loss
|
$
|
(32,932
|
)
|
$
|
(107,307
|
)
|
$
|
(4,384
|
)
|
|||
Other comprehensive income (loss):
|
||||||||||||
Unrealized gain (loss) on securities:
|
||||||||||||
Unrealized gain (loss) arising during the period
|
1,545
|
4,162
|
4,553
|
|||||||||
Reclassification of other than temporary impairment
|
—
|
41
|
597
|
|||||||||
Reclassification of amount realized through sales
|
(3,236
|
)
|
(1,108
|
)
|
(5,152
|
)
|
||||||
Included in net loss
|
(1,691
|
)
|
3,095
|
(2
|
)
|
|||||||
Tax effect
|
592
|
(1,083
|
)
|
1
|
||||||||
Net of tax
|
(1,099
|
)
|
2,012
|
(1
|
)
|
|||||||
Comprehensive loss
|
$
|
(34,031
|
)
|
$
|
(105,295
|
)
|
$
|
(4,385
|
)
|
Shares
|
|
Amount |
|
||||||||||||||||||||||||||||||||||
Common
|
Series A
Preferred
|
Series B
Preferred
|
Series C
Preferred
|
Common |
Series A
Preferred
|
Series B Preferred |
Series C
Preferred
|
Additional
Paid-In
Capital
|
Retained
(Deficit)
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total | ||||||||||||||||||||||||||
Balances, January 1, 2010
|
8,756,440
|
35,000
|
—
|
—
|
$
|
83,104
|
$
|
34,307
|
$ |
—
|
$
|
—
|
$ |
14,959
|
$ |
34,811
|
$
|
2,153
|
$
|
169,334
|
|||||||||||||||||
Issuance of stock and warrants in private placement
|
1,820,531
|
—
|
597,000
|
365,080
|
17,429
|
—
|
6,182
|
3,780
|
3,149
|
—
|
—
|
30,540
|
|||||||||||||||||||||||||
Conversion of Series B preferred to common
|
597,000
|
—
|
(597,000
|
)
|
—
|
6,182
|
—
|
(6,182
|
)
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||
Conversion of Series C preferred to common
|
48,038
|
—
|
—
|
(48,038
|
)
|
497
|
—
|
—
|
(497
|
)
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||
Issuance of unvested stock
|
69,182
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||
Forfeited unvested stock
|
(9,566
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
482
|
—
|
—
|
482
|
|||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(4,384
|
)
|
—
|
(4,384
|
)
|
|||||||||||||||||||||||
Changes in accumulated other comprehensive income, net of taxes
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1
|
)
|
(1
|
)
|
|||||||||||||||||||||||
Dividends 5% on Series A preferred stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1,750
|
)
|
—
|
(1,750
|
)
|
|||||||||||||||||||||||
Dividends on Series B preferred stock ($0.10 per share)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(60
|
)
|
—
|
(60
|
)
|
|||||||||||||||||||||||
Dividends on Series C preferred stock ($0.10 per share)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(40
|
)
|
—
|
(40
|
)
|
|||||||||||||||||||||||
Accretion of Series A preferred stock discount
|
—
|
—
|
—
|
—
|
—
|
177
|
—
|
—
|
—
|
(177
|
)
|
—
|
—
|
||||||||||||||||||||||||
Cash dividends declared ($0.49 per share)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(4,706
|
)
|
—
|
(4,706
|
)
|
|||||||||||||||||||||||
5% stock dividend declared
|
564,482
|
—
|
—
|
—
|
5,024
|
—
|
—
|
—
|
848
|
(5,872
|
)
|
—
|
—
|
||||||||||||||||||||||||
Balances, December 31, 2010
|
11,846,107
|
35,000
|
—
|
317,042
|
|
112,236
|
|
34,484
|
—
|
3,283
|
|
19,438
|
|
17,822
|
|
2,152
|
189,415
|
||||||||||||||||||||
Issuance of unvested stock
|
2,800
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||
Forfeited unvested stock
|
(24,435
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
403
|
—
|
—
|
403
|
|||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(107,307
|
)
|
—
|
(107,307
|
)
|
|||||||||||||||||||||||
Changes in accumulated other comprehensive income, net of taxes
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
2,012
|
2,012
|
|||||||||||||||||||||||||
Dividends 5% on Series A preferred stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1,750
|
)
|
—
|
(1,750
|
)
|
|||||||||||||||||||||||
Dividends on Series C preferred stock ($0.02 per share)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(7
|
)
|
—
|
(7
|
)
|
|||||||||||||||||||||||
Accretion of Series A preferred stock discount
|
—
|
—
|
—
|
—
|
—
|
177
|
—
|
—
|
—
|
(177
|
)
|
—
|
—
|
||||||||||||||||||||||||
Cash dividends declared ($0.02 per share)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(237
|
)
|
—
|
(237
|
)
|
|||||||||||||||||||||||
Balances, December 31, 2011
|
11,824,472
|
35,000
|
—
|
317,042
|
|
112,236
|
34,661
|
—
|
3,283
|
19,841
|
(91,656
|
)
|
4,164
|
82,529
|
|||||||||||||||||||||||
Issuance of unvested stock
|
191,140
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||
Forfeited unvested stock
|
(13,191
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
442
|
—
|
—
|
442
|
|||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(32,932
|
)
|
—
|
(32,932
|
)
|
|||||||||||||||||||||||
Changes in accumulated other comprehensive income, net of taxes
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1,099
|
)
|
(1,099
|
)
|
|||||||||||||||||||||||
Dividends 5% on Series A preferred stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1,750
|
)
|
—
|
(1,750
|
)
|
|||||||||||||||||||||||
Accretion of Series A preferred stock discount
|
—
|
—
|
—
|
—
|
—
|
179
|
—
|
—
|
—
|
(179
|
)
|
—
|
—
|
||||||||||||||||||||||||
Balances, December 31, 2012
|
12,002,421
|
35,000
|
—
|
317,042
|
$
|
112,236
|
$
|
34,840
|
$ |
—
|
$
|
3,283
|
$
|
20,283
|
$
|
(126,517
|
)
|
$
|
3,065
|
$
|
47,190
|
2012
|
2011
|
2010
|
||||||||||
Cash flows from operating activities
|
||||||||||||
Net loss
|
$
|
(32,932
|
)
|
$
|
(107,307
|
)
|
$
|
(4,384
|
)
|
|||
Adjustments to reconcile net loss to net cash from operating activities
|
||||||||||||
Depreciation and amortization
|
2,288
|
2,389
|
2,926
|
|||||||||
Provision for loan losses
|
40,250
|
62,600
|
30,100
|
|||||||||
Net amortization (accretion) on securities
|
3,335
|
1,552
|
(9
|
)
|
||||||||
Goodwill impairment charge
|
—
|
23,794
|
—
|
|||||||||
Stock-based compensation expense
|
442
|
436
|
467
|
|||||||||
Deferred income taxes (benefit)
|
—
|
12,958
|
(7,898
|
)
|
||||||||
Net gain on sales of loans originated for sale
|
(338
|
)
|
(713
|
)
|
(554
|
)
|
||||||
Loans originated for sale
|
(16,365
|
)
|
(24,881
|
)
|
(28,165
|
)
|
||||||
Proceeds from sales of loans originated for sale
|
16,827
|
24,649
|
28,467
|
|||||||||
Net loss on sales of other real estate owned
|
1,672
|
8,889
|
565
|
|||||||||
Net write-down of other real estate owned
|
7,154
|
34,874
|
14,062
|
|||||||||
Net realized gain on sales of investment securities
|
(3,236
|
)
|
(1,067
|
)
|
(4,555
|
)
|
||||||
Earnings on bank owned life insurance
|
(292
|
)
|
(301
|
)
|
(296
|
)
|
||||||
Net change in accrued interest receivable and other assets
|
16,150
|
(7,062
|
)
|
3,667
|
||||||||
Net change in accrued interest payable and other liabilities
|
791
|
(575
|
)
|
(485
|
)
|
|||||||
Net cash from operating activities
|
35,746
|
30,235
|
33,908
|
|||||||||
Cash flows from investing activities
|
||||||||||||
Purchases of available-for-sale securities
|
(162,840
|
)
|
(123,609
|
)
|
(55,750
|
)
|
||||||
Sales of available-for-sale securities
|
93,199
|
50,318
|
96,808
|
|||||||||
Maturities and prepayments of available-for-sale securities
|
48,800
|
23,378
|
25,917
|
|||||||||
Proceeds from sale of other real estate owned
|
21,940
|
14,142
|
15,284
|
|||||||||
Improvements to other real estate owned
|
(1
|
)
|
(1,650
|
)
|
(1,947
|
)
|
||||||
Loan originations and payments, net
|
167,272
|
92,190
|
6,160
|
|||||||||
Purchases of premises and equipment, net
|
(511
|
)
|
(332
|
)
|
(368
|
)
|
||||||
Net cash from investing activities
|
167,859
|
54,437
|
86,104
|
|||||||||
Cash flows from financing activities
|
||||||||||||
Net change in deposits
|
(258,704
|
)
|
(143,905
|
)
|
(62,428
|
)
|
||||||
Net change in repurchase agreements
|
896
|
(9,878
|
)
|
99
|
||||||||
Repayment of Federal Home Loan Bank advances
|
(1,512
|
)
|
(32,906
|
)
|
(307,958
|
)
|
||||||
Advances from Federal Home Loan Bank
|
—
|
25,000
|
240,000
|
|||||||||
Repayment of subordinated capital note
|
(675
|
)
|
(900
|
)
|
(450
|
)
|
||||||
Issuance of preferred stock and warrants, net
|
—
|
—
|
11,064
|
|||||||||
Issuance of common stock and warrants, net
|
—
|
—
|
19,476
|
|||||||||
Cash dividends paid on preferred stock
|
—
|
(1,319
|
)
|
(1,847
|
)
|
|||||||
Cash dividends paid on common stock
|
—
|
(237
|
)
|
(4,706
|
)
|
|||||||
Net cash from financing activities
|
(259,995
|
)
|
(164,145
|
)
|
(106,750
|
)
|
||||||
Net change in cash and cash equivalents
|
(56,390
|
)
|
(79,473
|
)
|
13,262
|
|||||||
Beginning cash and cash equivalents
|
105,962
|
185,435
|
172,173
|
|||||||||
Ending cash and cash equivalents
|
$
|
49,572
|
$
|
105,962
|
$
|
185,435
|
||||||
Supplemental cash flow information:
|
||||||||||||
Interest paid
|
$
|
15,402
|
$
|
22,218
|
$
|
29,637
|
||||||
Income taxes paid (refunded)
|
(12,726
|
)
|
2,000
|
4,850
|
||||||||
Supplemental non-cash disclosure:
|
||||||||||||
Transfer from loans to other real estate
|
$
|
33,528
|
$
|
41,917
|
$
|
90,787
|
||||||
Financed sales of other real estate owned
|
541
|
11,848
|
9,736
|
|||||||||
5% Stock dividend
|
—
|
—
|
5,872
|
|
●
|
Commercial loans are dependent on the strength of the industries of the related borrowers and the success of their businesses. Commercial loans are advances for equipment purchases, or to provide working capital, or to meet other financing needs of business enterprises. These loans may be secured by accounts receivable, inventory, equipment or other business assets. Financial information is obtained from the borrowers to evaluate their ability to repay the loans.
|
|
●
|
Commercial real estate loans are affected by the local commercial real estate market and the local economy. Commercial real estate loans include loans on properties occupied by the borrowers and on properties for commercial purposes. Construction and development loans are a component of this segment. These loans are generally secured by land under development or homes and commercial buildings under construction. Appraisals are obtained to support the loan amount. Financial information is obtained from the borrowers and/or the individual project to evaluate cash flows sufficiency to service the debt.
|
|
●
|
Residential real estate loans are affected by the local residential real estate market, local economy, and, for variable rate mortgages, movement in indices tied to these loans. For owner occupied residential loans, the borrowers’ repayment ability is evaluated through a review of credit scores and debt to income ratios. For non-owner occupied residential loans, such as rental real estate, financial information is obtained from the borrowers and/or the individual project to evaluate cash flows sufficiency to service the debt. Appraisals are obtained to support the loan amount.
|
|
●
|
Consumer loans are dependent on local economies. Consumer loans are generally secured by consumer assets, but may be unsecured. We evaluate the borrowers’ repayment ability through a review of credit scores and an evaluation of debt to income ratios.
|
|
●
|
Agriculture loans are dependent on the industries tied to these loans and are generally secured by livestock, crops, and/or equipment, but may be unsecured. We evaluate the borrowers’ repayment ability through a review of credit scores and an evaluation of debt to income ratios.
|
|
●
|
Other loans include loans to municipalities, loans secured by stock, and overdrafts. For municipal loans, we evaluate the borrowers’ revenue streams as well as ability to repay form general funds. For loans secured by stock, we evaluate the market value of the stock securing the loan in relation to the loan amount. Overdrafts are funded based on pre-established criteria related to the deposit account relationship.
|
|
●
|
Increasing capital through a possible public offering or private placement of common stock to new and existing shareholders. We have engaged Sandler O’Neill & Partners, LP to act as our financial advisor and to assist our Board in this evaluation and
to assist in evaluating our options for the redemption of our Series A preferred stock issued to the US Treasury in 2008 under the Capital Purchase Program.
|
|
●
|
Continuing to operate the Company and Bank in a safe and sound manner. This strategy will require us to reduce our lending concentrations, remediate non-performing loans, and reduce other noninterest expense through the disposition of OREO.
|
|
●
|
Continuing with succession planning and adding resources to the management team. John T. Taylor was named President and CEO for PBI Bank and appointed to the board of directors in July 2012. Additionally, John R. Davis was appointed Chief Credit Officer of PBI Bank in August 2012, with responsibility for establishing and executing the credit quality policies and overseeing credit administration for the organization.
|
|
●
|
Evaluating our internal processes and procedures, distribution of labor, and work-flow to ensure we have adequately and appropriately deployed resources in an efficient manner in the current environment. To this end, we believe the opportunity exists for the centralization of key processes which will lead to improved execution and cost savings.
|
|
●
|
Executing on our commitment to improve credit quality and reduce loan concentrations and balance sheet risk.
|
|
o
|
We have reduced the size of our loan portfolio significantly from $1.3 billion at December 31, 2010 to $1.1 billion at December 31, 2011, and $899.1 million at December 31, 2012.
We have significantly improved our staffing in the commercial lending area which is now led by John R. Davis, who joined the management team in August 2012 and now serves as Chief Credit Officer.
|
|
o
|
Our Consent Order calls for us to
reduce our construction and development loans to not more than 75% of total risk-based capital. We were not in compliance at December 31, 2012 with construction and development loans representing 82% of total risk-based capital. These loans totaled $70.3 million, or 82% of total risk-based capital, at December 31, 2012 and $101.5 million, or 85% of total risk-based capital, at December 31, 2011.
|
|
o
|
Our Consent Order also requires us to reduce non-owner occupied commercial real estate loans, construction and development loans, and multi-family residential real estate loans as a group, to not more than 250% of total risk-based capital. While we have made significant improvements over the last year, we were not in compliance with this concentration limit at December 31, 2012. These loans totaled $311.1 million, or 362% of total risk-based capital, at December 31, 2012 compared with $414.6 million, or 349% of total risk-based capital, at December 31, 2011.
|
|
o
|
We are working to reduce non-owner occupied commercial real estate loans, construction and development loans, and multi-family residential real estate loans by curtailing new construction and development lending and new non-owner occupied commercial real estate lending. We are also receiving principal reductions from amortizing credits and pay-downs from our customers who sell properties built for resale. We have reduced the construction loan portfolio from $199.5 million at December 31, 2010 to $70.3 million at December 31, 2012. Our non-owner occupied commercial real estate loans declined from $293.3 million at December 31, 2010 to $189.8 million at December 31, 2012.
|
|
●
|
Executing on our commitment to sell other real estate owned and reinvest in quality income producing assets.
|
|
o
|
The remediation process for loans secured by real estate has led the Bank to acquire significant levels of OREO in 2012, 2011, and 2010. The Bank acquired $33.5 million, $41.9 million, and $90.8 million of OREO during 2012, 2011, and 2010, respectively.
|
|
o
|
We have incurred significant losses in disposing of OREO. We incurred losses totaling $9.3 million, $42.8 million, and $13.9 million in 2012, 2011, and 2010, respectively, from sales and fair value write-downs attributable to declining valuations as evidenced by new appraisals and from changes in our sales strategies.
|
|
o
|
To ensure that we maximize the value we receive upon the sale of OREO, we continue to evaluate sales opportunities and channels. We are targeting multiple sales opportunities and channels through internal marketing and the use of brokers, auctions, and technology sales platforms. Proceeds from the sale of OREO totaled $22.5 million during 2012, $26.0 in 2011, and $25.0 million in 2010.
|
|
o
|
At December 31, 2011, the OREO portfolio consisted of 75% construction, development, and land assets. At December 31, 2012, this concentration had declined to 51%. This is consistent with our reduction of construction, development and other land loans, which have declined to $70.3 million at December 31, 2012, compared to $101.5 million at December 31, 2011. Over the past year, the composition of our OREO portfolio has shifted to be more heavily weighted towards commercial real estate properties with a cash flow opportunity and 1-4 family residential properties, which we have found to be more liquid than construction, development, and land assets. Commercial real estate properties represents 35% of the OREO portfolio at December 31, 2012 compared with 15% at December 31, 2011. 1-4 family residential properties represent 12% of the OREO portfolio at December 31, 2012 compared with 7% at December 31, 2011.
|
|
●
|
Evaluating other strategic alternatives, such as the sale of assets or branches.
|
Amortized Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
|||||||||||||
(in thousands)
|
||||||||||||||||
December 31, 2012
|
||||||||||||||||
U.S. Government and federal agency
|
$
|
5,603
|
$
|
530
|
$
|
—
|
$
|
6,133
|
||||||||
Agency mortgage-backed: residential
|
94,298
|
1,141
|
(257
|
)
|
95,182
|
|||||||||||
State and municipal
|
52,485
|
2,335
|
(87
|
)
|
54,733
|
|||||||||||
Corporate bonds
|
18,851
|
1,150
|
(37
|
)
|
19,964
|
|||||||||||
Other debt securities
|
572
|
46
|
—
|
618
|
||||||||||||
Total debt securities
|
171,809
|
5,202
|
(381
|
)
|
176,630
|
|||||||||||
Equity
|
1,359
|
487
|
—
|
1,846
|
||||||||||||
Total
|
$
|
173,168
|
$
|
5,689
|
$
|
(381
|
)
|
$
|
178,476
|
|||||||
December 31, 2011
|
||||||||||||||||
U.S. Government and federal agency
|
$
|
10,494
|
$
|
1,149
|
$
|
—
|
$
|
11,643
|
||||||||
Agency mortgage-backed: residential
|
97,286
|
2,211
|
(22
|
)
|
99,475
|
|||||||||||
State and municipal
|
35,456
|
2,610
|
(4
|
)
|
38,062
|
|||||||||||
Corporate bonds
|
7,259
|
315
|
(242
|
)
|
7,332
|
|||||||||||
Other debt securities
|
572
|
34
|
—
|
606
|
||||||||||||
Total debt securities
|
151,067
|
6,319
|
(268
|
)
|
157,118
|
|||||||||||
Equity
|
1,359
|
356
|
—
|
1,715
|
||||||||||||
Total
|
$
|
152,426
|
$
|
6,675
|
$
|
(268
|
)
|
$
|
158,833
|
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Proceeds
|
$
|
93,199
|
$
|
50,318
|
$
|
96,808
|
||||||
Gross gains
|
3,543
|
1,108
|
6,079
|
|||||||||
Gross losses
|
307
|
—
|
927
|
December 31, 2012
|
||||||||
Amortized
Cost
|
Fair
Value
|
|||||||
(in thousands)
|
||||||||
Maturity
|
||||||||
Available-for-sale
|
||||||||
Within one year
|
$
|
12,656
|
$
|
12,713
|
||||
One to five years
|
14,582
|
16,102
|
||||||
Five to ten years
|
41,119
|
43,112
|
||||||
Beyond ten years
|
9,154
|
9,521
|
||||||
Agency mortgage-backed: residential
|
94,298
|
95,182
|
||||||
Total
|
$
|
171,809
|
$
|
176,630
|
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Description of Securities
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
2012
|
||||||||||||||||||||||||
Agency mortgage-backed: residential
|
$
|
23,375
|
$
|
(257
|
)
|
$
|
—
|
$
|
—
|
$
|
23,375
|
$
|
(257
|
)
|
||||||||||
State and municipal
|
7,961
|
(87
|
)
|
—
|
—
|
7,961
|
(87
|
)
|
||||||||||||||||
Corporate bonds
|
3,777
|
(37
|
)
|
—
|
—
|
3,777
|
(37
|
)
|
||||||||||||||||
Equity securities
|
2
|
—
|
—
|
—
|
2
|
—
|
||||||||||||||||||
Total temporarily impaired
|
$
|
35,115
|
$
|
(381
|
)
|
$
|
—
|
$
|
—
|
$
|
35,115
|
$
|
(381
|
)
|
||||||||||
2011
|
||||||||||||||||||||||||
Agency mortgage-backed: residential
|
$
|
2,159
|
$
|
(22
|
)
|
$
|
—
|
$
|
—
|
$
|
2,159
|
$
|
(22
|
)
|
||||||||||
State and municipal
|
508
|
(4
|
)
|
—
|
—
|
508
|
(4
|
)
|
||||||||||||||||
Corporate bonds
|
2,805
|
(242
|
)
|
—
|
—
|
2,805
|
(242
|
)
|
||||||||||||||||
Total temporarily impaired
|
$
|
5,472
|
$
|
(268
|
)
|
$
|
—
|
$
|
—
|
$
|
5,472
|
$
|
(268
|
)
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
Commercial
|
$
|
52,567
|
$
|
71,216
|
||||
Commercial Real Estate:
|
||||||||
Construction
|
70,284
|
101,471
|
||||||
Farmland
|
80,825
|
90,958
|
||||||
Other
|
322,687
|
423,844
|
||||||
Residential Real Estate:
|
||||||||
Multi-family
|
50,986
|
60,410
|
||||||
1-4 Family
|
278,273
|
337,350
|
||||||
Consumer
|
20,383
|
26,011
|
||||||
Agriculture
|
22,317
|
23,770
|
||||||
Other
|
770
|
993
|
||||||
Subtotal
|
899,092
|
1,136,023
|
||||||
Less: Allowance for loan losses
|
(56,680
|
)
|
(52,579
|
)
|
||||
Loans, net
|
$
|
842,412
|
$
|
1,083,444
|
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Beginning balance
|
$
|
52,579
|
$
|
34,285
|
$
|
26,392
|
||||||
Provision for loan losses
|
40,250
|
62,600
|
30,100
|
|||||||||
Loans charged-off
|
(37,515
|
)
|
(44,646
|
)
|
(22,461
|
)
|
||||||
Loan recoveries
|
1,366
|
340
|
254
|
|||||||||
Ending balance
|
$
|
56,680
|
$
|
52,579
|
$
|
34,285
|
Commercial
|
Commercial
Real Estate
|
Residential
Real Estate
|
Consumer
|
Agriculture
|
Other
|
Total
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Beginning balance
|
$
|
4,207
|
$
|
33,024
|
$
|
14,217
|
$
|
792
|
$
|
325
|
$
|
14
|
$
|
52,579
|
||||||||||||||
Provision for loan losses
|
3,850
|
23,275
|
10,884
|
1,070
|
1,170
|
1
|
40,250
|
|||||||||||||||||||||
Loans charged off
|
(3,784
|
)
|
(22,366
|
)
|
(9,071
|
)
|
(1,130
|
)
|
(1,164
|
)
|
–
|
(37,515
|
)
|
|||||||||||||||
Recoveries
|
129
|
835
|
205
|
125
|
72
|
–
|
1,366
|
|||||||||||||||||||||
Ending balance
|
$
|
4,402
|
$
|
34,768
|
$
|
16,235
|
$
|
857
|
$
|
403
|
$
|
15
|
$
|
56,680
|
Commercial
|
Commercial
Real Estate
|
Residential
Real Estate
|
Consumer
|
Agriculture
|
Other
|
Total
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Beginning balance
|
$
|
2,147
|
$
|
24,075
|
$
|
7,224
|
$
|
701
|
$
|
134
|
$
|
4
|
$
|
34,285
|
||||||||||||||
Provision for loan losses
|
6,188
|
34,043
|
20,253
|
1,074
|
1,032
|
10
|
62,600
|
|||||||||||||||||||||
Loans charged off
|
(4,197
|
)
|
(25,243
|
)
|
(13,295
|
)
|
(1,070
|
)
|
(841
|
)
|
–
|
(44,646
|
)
|
|||||||||||||||
Recoveries
|
69
|
149
|
35
|
87
|
–
|
–
|
340
|
|||||||||||||||||||||
Ending balance
|
$
|
4,207
|
$
|
33,024
|
$
|
14,217
|
$
|
792
|
$
|
325
|
$
|
14
|
$
|
52,579
|
Commercial
|
Commercial
Real Estate
|
Residential
Real Estate
|
Consumer
|
Agriculture
|
Other
|
Total
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
263
|
$
|
16,046
|
$
|
4,641
|
$
|
68
|
$
|
5
|
$
|
11
|
$
|
21,034
|
||||||||||||||
Collectively evaluated for impairment
|
4,139
|
18,722
|
11,594
|
789
|
398
|
4
|
35,646
|
|||||||||||||||||||||
Total ending allowance balance
|
$
|
4,402
|
$
|
34,768
|
$
|
16,235
|
$
|
857
|
$
|
403
|
$
|
15
|
$
|
56,680
|
||||||||||||||
Loans:
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
5,296
|
$
|
125,922
|
$
|
56,799
|
$
|
212
|
$
|
55
|
$
|
524
|
$
|
188,808
|
||||||||||||||
Loans collectively evaluated for impairment
|
47,271
|
347,874
|
272,460
|
20,171
|
22,262
|
246
|
710,284
|
|||||||||||||||||||||
Total ending loans balance
|
$
|
52,567
|
$
|
473,796
|
$
|
329,259
|
$
|
20,383
|
$
|
22,317
|
$
|
770
|
$
|
899,092
|
Commercial
|
Commercial
Real Estate
|
Residential
Real Estate
|
Consumer
|
Agriculture
|
Other
|
Total
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
554
|
$
|
9,580
|
$
|
2,172
|
$
|
—
|
$
|
—
|
$
|
8
|
$
|
12,314
|
||||||||||||||
Collectively evaluated for impairment
|
3,653
|
23,444
|
12,045
|
792
|
325
|
6
|
40,265
|
|||||||||||||||||||||
Total ending allowance balance
|
$
|
4,207
|
$
|
33,024
|
$
|
14,217
|
$
|
792
|
$
|
325
|
$
|
14
|
$
|
52,579
|
||||||||||||||
Loans:
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
5,032
|
$
|
116,676
|
$
|
27,848
|
$
|
—
|
$
|
631
|
$
|
540
|
$
|
150,727
|
||||||||||||||
Loans collectively evaluated for impairment
|
66,184
|
499,598
|
369,911
|
26,011
|
23,139
|
453
|
985,296
|
|||||||||||||||||||||
Total ending loans balance
|
$
|
71,216
|
$
|
616,274
|
$
|
397,759
|
$
|
26,011
|
$
|
23,770
|
$
|
993
|
$
|
1,136,023
|
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Average of impaired loans during the year
|
$
|
175,828
|
$
|
95,331
|
$
|
69,167
|
||||||
Interest income recognized during impairment
|
3,976
|
2,594
|
1,358
|
|||||||||
Cash basis interest income recognized
|
355
|
412
|
115
|
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance
For Loan
Losses
Allocated
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Cash
Basis
Income
Recognized
|
||||||||||||||||||
(in thousands)
|
|||||||||||||||||||||||
With No Related Allowance Recorded:
|
|||||||||||||||||||||||
Commercial
|
$
|
1,460
|
$
|
1,234
|
$
|
—
|
$
|
1,637
|
$
|
5
|
$
|
4
|
|||||||||||
Commercial real estate:
|
|||||||||||||||||||||||
Construction
|
1,155
|
1,109
|
—
|
1,745
|
2
|
2
|
|||||||||||||||||
Farmland
|
4,448
|
4,448
|
—
|
4,706
|
57
|
57
|
|||||||||||||||||
Other
|
2,134
|
1,892
|
—
|
3,436
|
3
|
3
|
|||||||||||||||||
Residential real estate:
|
|||||||||||||||||||||||
Multi-family
|
643
|
643
|
—
|
910
|
—
|
—
|
|||||||||||||||||
1-4 Family
|
13,539
|
13,158
|
—
|
11,291
|
56
|
56
|
|||||||||||||||||
Consumer
|
70
|
70
|
—
|
219
|
8
|
5
|
|||||||||||||||||
Agriculture
|
45
|
45
|
—
|
366
|
2
|
—
|
|||||||||||||||||
Other
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||
With An Allowance Recorded:
|
|||||||||||||||||||||||
Commercial
|
4,108
|
4,062
|
263
|
3,964
|
169
|
27
|
|||||||||||||||||
Commercial real estate:
|
|||||||||||||||||||||||
Construction
|
26,645
|
25,455
|
1,543
|
19,514
|
348
|
5
|
|||||||||||||||||
Farmland
|
8,557
|
6,456
|
734
|
5,794
|
43
|
2
|
|||||||||||||||||
Other
|
97,699
|
86,562
|
13,769
|
83,087
|
2,011
|
185
|
|||||||||||||||||
Residential real estate:
|
|||||||||||||||||||||||
Multi-family
|
14,906
|
14,906
|
1,643
|
11,187
|
468
|
—
|
|||||||||||||||||
1-4 Family
|
31,021
|
28,092
|
2,998
|
27,404
|
787
|
9
|
|||||||||||||||||
Consumer
|
142
|
142
|
68
|
29
|
—
|
—
|
|||||||||||||||||
Agriculture
|
10
|
10
|
5
|
6
|
—
|
—
|
|||||||||||||||||
Other
|
524
|
524
|
11
|
533
|
17
|
—
|
|||||||||||||||||
Total
|
$
|
207,106
|
$
|
188,808
|
$
|
21,034
|
$
|
175,828
|
$
|
3,976
|
$
|
355
|
Unpaid
Principal
Balance
|
Recorded
Investment
|
Allowance
For Loan
Losses
Allocated
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Cash
Basis
Income
Recognized
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
With No Related Allowance Recorded:
|
||||||||||||||||||||||||
Commercial
|
$
|
1,868
|
$
|
1,825
|
$
|
—
|
$
|
1,984
|
$
|
26
|
$
|
26
|
||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Construction
|
1,121
|
1,193
|
—
|
7,584
|
7
|
5
|
||||||||||||||||||
Farmland
|
3,302
|
3,218
|
—
|
2,218
|
36
|
36
|
||||||||||||||||||
Other
|
6,039
|
5,640
|
—
|
12,114
|
169
|
99
|
||||||||||||||||||
Residential real estate:
|
||||||||||||||||||||||||
Multi-family
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
1-4 Family
|
—
|
—
|
—
|
1,351
|
34
|
—
|
||||||||||||||||||
Consumer
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Agriculture
|
637
|
631
|
—
|
253
|
5
|
5
|
||||||||||||||||||
Other
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
With An Allowance Recorded:
|
||||||||||||||||||||||||
Commercial
|
3,207
|
3,207
|
554
|
2,630
|
189
|
90
|
||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Construction
|
23,175
|
20,174
|
4,275
|
6,090
|
143
|
—
|
||||||||||||||||||
Farmland
|
7,303
|
6,862
|
574
|
6,487
|
322
|
—
|
||||||||||||||||||
Other
|
85,535
|
79,859
|
4,731
|
36,583
|
899
|
148
|
||||||||||||||||||
Residential real estate:
|
||||||||||||||||||||||||
Multi-family
|
4,795
|
4,316
|
558
|
2,824
|
150
|
—
|
||||||||||||||||||
1-4 Family
|
26,225
|
23,262
|
1,614
|
15,105
|
614
|
3
|
||||||||||||||||||
Consumer
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Agriculture
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Other
|
540
|
540
|
8
|
108
|
—
|
—
|
||||||||||||||||||
Total
|
$
|
163,747
|
$
|
150,727
|
$
|
12,314
|
$
|
95,331
|
$
|
2,594
|
$
|
412
|
TDRs
Performing to
Modified Terms
|
TDRs Not
Performing to
Modified Terms
|
Total
TDRs
|
||||||||||
(in thousands)
|
||||||||||||
December 31, 2012
|
||||||||||||
Commercial
|
||||||||||||
Rate reduction
|
$
|
1,972
|
$
|
—
|
$
|
1,972
|
||||||
Principal deferral
|
887
|
—
|
887
|
|||||||||
Interest only payments
|
—
|
958
|
958
|
|||||||||
Commercial Real Estate:
|
||||||||||||
Construction
|
||||||||||||
Rate reduction
|
4,834
|
4,459
|
9,293
|
|||||||||
Farmland
|
||||||||||||
Rate reduction
|
150
|
—
|
150
|
|||||||||
Principal deferral
|
725
|
2,438
|
3,163
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
36,515
|
22,631
|
59,146
|
|||||||||
Principal deferral
|
1,195
|
—
|
1,195
|
|||||||||
Interest only payments
|
2,466
|
2,107
|
4,573
|
|||||||||
Residential Real Estate:
|
||||||||||||
Multi-family
|
||||||||||||
Rate reduction
|
13,087
|
—
|
13,087
|
|||||||||
Interest only payments
|
652
|
—
|
652
|
|||||||||
1-4 Family
|
||||||||||||
Rate reduction
|
14,323
|
7,871
|
22,194
|
|||||||||
Consumer
|
||||||||||||
Rate reduction
|
14
|
—
|
14
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
524
|
—
|
524
|
|||||||||
Total TDRs
|
$
|
77,344
|
$
|
40,464
|
$
|
117,808
|
||||||
December 31, 2011
|
||||||||||||
Commercial
|
||||||||||||
Rate reduction
|
$
|
1,231
|
$
|
—
|
$
|
1,231
|
||||||
Principal deferral
|
898
|
—
|
898
|
|||||||||
Commercial Real Estate:
|
||||||||||||
Construction
|
||||||||||||
Rate reduction
|
11,155
|
3,767
|
14,922
|
|||||||||
Interest only payments
|
—
|
1,404
|
1,404
|
|||||||||
Farmland
|
||||||||||||
Rate reduction
|
182
|
—
|
182
|
|||||||||
Principal deferral
|
746
|
5,101
|
5,847
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
42,946
|
20,446
|
63,392
|
|||||||||
Interest only payments
|
1,288
|
—
|
1,288
|
|||||||||
Residential Real Estate:
|
||||||||||||
Multi-family
|
||||||||||||
Rate reduction
|
2,247
|
1,413
|
3,660
|
|||||||||
Interest only payments
|
656
|
—
|
656
|
|||||||||
1-4 Family
|
||||||||||||
Rate reduction
|
12,255
|
7,176
|
19,431
|
|||||||||
Principal deferral
|
—
|
247
|
247
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
540
|
—
|
540
|
|||||||||
Total TDRs
|
$
|
74,144
|
$
|
39,554
|
$
|
113,698
|
TDRs
Performing to
Modified Terms
|
TDRs Not
Performing to
Modified Terms
|
Total
TDRs
|
||||||||||
(in thousands)
|
||||||||||||
December 31, 2012
|
||||||||||||
Commercial
|
||||||||||||
Rate reduction
|
$
|
1,972
|
$
|
—
|
$
|
1,972
|
||||||
Interest only payments
|
—
|
958
|
958
|
|||||||||
Commercial Real Estate:
|
||||||||||||
Construction
|
||||||||||||
Rate reduction
|
—
|
831
|
831
|
|||||||||
Farmland
|
||||||||||||
Rate reduction
|
150
|
—
|
150
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
16,468
|
1,089
|
17,557
|
|||||||||
Principal deferral
|
1,194
|
—
|
1,194
|
|||||||||
Interest only payments
|
2,466
|
2,107
|
4,573
|
|||||||||
Residential Real Estate:
|
||||||||||||
Multi-family
|
||||||||||||
Rate reduction
|
12,805
|
—
|
12,805
|
|||||||||
1-4 Family
|
||||||||||||
Rate reduction
|
7,514
|
—
|
7,514
|
|||||||||
Consumer
|
||||||||||||
Rate reduction
|
14
|
—
|
14
|
|||||||||
Total TDRs
|
$
|
42,583
|
$
|
4,985
|
$
|
47,568
|
||||||
December 31, 2011
|
||||||||||||
Commercial
|
||||||||||||
Rate reduction
|
$
|
1,231
|
$
|
—
|
$
|
1,231
|
||||||
Commercial Real Estate:
|
||||||||||||
Construction
|
||||||||||||
Rate reduction
|
11,155
|
3,367
|
14,522
|
|||||||||
Interest only payments
|
—
|
1,404
|
1,404
|
|||||||||
Farmland
|
||||||||||||
Rate reduction
|
182
|
—
|
182
|
|||||||||
Principal deferral
|
746
|
—
|
746
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
41,682
|
20,446
|
62,128
|
|||||||||
Residential Real Estate:
|
||||||||||||
Multi-family
|
||||||||||||
Rate reduction
|
2,247
|
—
|
2,247
|
|||||||||
Interest only payments
|
656
|
—
|
656
|
|||||||||
1-4 Family
|
||||||||||||
Rate reduction
|
7,968
|
1,651
|
9,619
|
|||||||||
Principal deferral
|
—
|
247
|
247
|
|||||||||
Other
|
||||||||||||
Rate reduction
|
540
|
—
|
540
|
|||||||||
Total TDRs
|
$
|
66,407
|
$
|
27,115
|
$
|
93,522
|
Nonaccrual
|
Loans Past
Due 90 Days
And Over Still
Accruing
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Commercial
|
$
|
2,437
|
$
|
2,903
|
$
|
36
|
$
|
109
|
||||||||
Commercial Real Estate:
|
||||||||||||||||
Construction
|
7,808
|
13,564
|
—
|
—
|
||||||||||||
Farmland
|
10,030
|
9,152
|
—
|
26
|
||||||||||||
Other
|
46,036
|
35,154
|
—
|
918
|
||||||||||||
Residential Real Estate:
|
||||||||||||||||
Multi-family
|
1,516
|
2,921
|
—
|
—
|
||||||||||||
1-4 Family
|
26,501
|
27,375
|
50
|
265
|
||||||||||||
Consumer
|
135
|
320
|
—
|
—
|
||||||||||||
Agriculture
|
54
|
631
|
—
|
32
|
||||||||||||
Other
|
—
|
—
|
—
|
—
|
||||||||||||
Total
|
$
|
94,517
|
$
|
92,020
|
$
|
86
|
$
|
1,350
|
30 – 59
Days
Past Due
|
60 – 89
Days
Past Due
|
90 Days
And Over
Past Due
|
Non-accrual
|
Total
Past Due
And
Non-accrual
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
December 31, 2012
|
||||||||||||||||||||
Commercial
|
$
|
1,279
|
$
|
90
|
$
|
36
|
$
|
2,437
|
$
|
3,842
|
||||||||||
Commercial Real Estate:
|
||||||||||||||||||||
Construction
|
10,510
|
5,815
|
—
|
7,808
|
24,133
|
|||||||||||||||
Farmland
|
922
|
58
|
—
|
10,030
|
11,010
|
|||||||||||||||
Other
|
5,138
|
13,037
|
—
|
46,036
|
64,211
|
|||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||
Multi-family
|
8,762
|
—
|
—
|
1,516
|
10,278
|
|||||||||||||||
1-4 Family
|
11,145
|
1,221
|
50
|
26,501
|
38,917
|
|||||||||||||||
Consumer
|
310
|
75
|
—
|
135
|
520
|
|||||||||||||||
Agriculture
|
153
|
7
|
—
|
54
|
214
|
|||||||||||||||
Other
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Total
|
$
|
38,219
|
$
|
20,303
|
$
|
86
|
$
|
94,517
|
$
|
153,125
|
30 – 59
Days
Past Due
|
60 – 89
Days
Past Due
|
90 Days
And Over
Past Due
|
Non-accrual
|
Total
Past Due
And
Non-accrual
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
December 31, 2011
|
||||||||||||||||||||
Commercial
|
$
|
2,792
|
$
|
91
|
$
|
109
|
$
|
2,903
|
$
|
5,895
|
||||||||||
Commercial Real Estate:
|
||||||||||||||||||||
Construction
|
20
|
—
|
—
|
13,564
|
13,584
|
|||||||||||||||
Farmland
|
1,353
|
305
|
26
|
9,152
|
10,836
|
|||||||||||||||
Other
|
4,555
|
756
|
918
|
35,154
|
41,383
|
|||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||
Multi-family
|
442
|
135
|
—
|
2,921
|
3,498
|
|||||||||||||||
1-4 Family
|
7,568
|
2,511
|
265
|
27,375
|
37,719
|
|||||||||||||||
Consumer
|
593
|
149
|
—
|
320
|
1,062
|
|||||||||||||||
Agriculture
|
23
|
—
|
32
|
631
|
686
|
|||||||||||||||
Other
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Total
|
$
|
17,346
|
$
|
3,947
|
$
|
1,350
|
$
|
92,020
|
$
|
114,663
|
Pass
|
Watch
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
December 31, 2012
|
||||||||||||||||||||||||
Commercial
|
$
|
27,085
|
$
|
10,153
|
$
|
6,495
|
$
|
8,772
|
$
|
62
|
$
|
52,567
|
||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
Construction
|
26,085
|
21,713
|
3,647
|
18,839
|
—
|
70,284
|
||||||||||||||||||
Farmland
|
47,017
|
13,461
|
3,532
|
16,815
|
—
|
80,825
|
||||||||||||||||||
Other
|
122,603
|
66,223
|
14,955
|
118,635
|
271
|
322,687
|
||||||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||||||
Multi-family
|
18,387
|
14,637
|
—
|
17,962
|
—
|
50,986
|
||||||||||||||||||
1-4 Family
|
159,975
|
47,030
|
5,167
|
66,101
|
—
|
278,273
|
||||||||||||||||||
Consumer
|
17,232
|
2,211
|
35
|
842
|
63
|
20,383
|
||||||||||||||||||
Agriculture
|
19,256
|
1,467
|
869
|
725
|
—
|
22,317
|
||||||||||||||||||
Other
|
246
|
524
|
—
|
—
|
—
|
770
|
||||||||||||||||||
Total
|
$
|
437,886
|
$
|
177,419
|
$
|
34,700
|
$
|
248,691
|
$
|
396
|
$
|
899,092
|
Pass
|
Watch
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
December 31, 2011
|
||||||||||||||||||||||||
Commercial
|
$
|
53,223
|
$
|
9,357
|
$
|
3,237
|
$
|
5,300
|
$
|
99
|
$
|
71,216
|
||||||||||||
Commercial Real Estate:
|
||||||||||||||||||||||||
Construction
|
45,407
|
13,132
|
7,777
|
35,155
|
—
|
101,471
|
||||||||||||||||||
Farmland
|
69,880
|
4,955
|
2,688
|
13,236
|
199
|
90,958
|
||||||||||||||||||
Other
|
213,406
|
80,149
|
30,787
|
99,502
|
—
|
423,844
|
||||||||||||||||||
Residential Real Estate:
|
||||||||||||||||||||||||
Multi-family
|
37,807
|
4,619
|
2,100
|
15,884
|
—
|
60,410
|
||||||||||||||||||
1-4 Family
|
247,423
|
28,734
|
2,276
|
58,891
|
26
|
337,350
|
||||||||||||||||||
Consumer
|
23,721
|
1,418
|
43
|
762
|
67
|
26,011
|
||||||||||||||||||
Agriculture
|
22,502
|
343
|
14
|
911
|
—
|
23,770
|
||||||||||||||||||
Other
|
453
|
540
|
—
|
—
|
—
|
993
|
||||||||||||||||||
Total
|
$
|
713,822
|
$
|
143,247
|
$
|
48,922
|
$
|
229,641
|
$
|
391
|
$
|
1,136,023
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
Land and buildings
|
$
|
24,860
|
$
|
23,493
|
||||
Furniture and equipment
|
18,074
|
19,086
|
||||||
42,934
|
42,579
|
|||||||
Accumulated depreciation
|
(22,129
|
)
|
(21,038
|
)
|
||||
$
|
20,805
|
$
|
21,541
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
Commercial Real Estate:
|
||||||||
Construction
|
$
|
22,912
|
$
|
32,538
|
||||
Farmland
|
618
|
744
|
||||||
Other
|
15,577
|
6,620
|
||||||
Residential Real Estate:
|
||||||||
Multi-family
|
200
|
—
|
||||||
1-4 Family
|
5,518
|
3,214
|
||||||
44,825
|
43,116
|
|||||||
Valuation allowance
|
(1,154
|
)
|
(1,667
|
)
|
||||
$
|
43,671
|
$
|
41,449
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
OREO Valuation Allowance Activity:
|
||||||||
Beginning balance
|
$
|
1,667
|
$
|
700
|
||||
Provision to allowance
|
7,154
|
34,874
|
||||||
Write-downs
|
(7,667
|
)
|
(33,907
|
)
|
||||
Ending balance
|
$
|
1,154
|
$
|
1,667
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
OREO Activity
|
||||||||
OREO as of January 1
|
$
|
43,116
|
$
|
68,335
|
||||
Real estate acquired
|
33,528
|
41,917
|
||||||
Valuation adjustments for sales strategy change
|
—
|
(25,613
|
)
|
|||||
Valuation adjustments for declining market values
|
(7,667
|
)
|
(8,294
|
)
|
||||
Improvements
|
1
|
1,650
|
||||||
Loss on sale
|
(1,672
|
)
|
(8,889
|
)
|
||||
Proceeds from sale of properties
|
(22,481
|
)
|
(25,990
|
)
|
||||
OREO as of December 31
|
$
|
44,825
|
$
|
43,116
|
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Net loss on sales
|
$
|
1,672
|
$
|
8,889
|
$
|
565
|
||||||
Provision to allowance
|
7,154
|
34,874
|
14,062
|
|||||||||
Operating expense
|
1,723
|
3,762
|
1,627
|
|||||||||
Total
|
$
|
10,549
|
$
|
47,525
|
$
|
16,254
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
Beginning of year
|
$
|
—
|
$
|
23,794
|
||||
Acquired goodwill
|
—
|
—
|
||||||
Impairment
|
—
|
(23,794
|
)
|
|||||
End of year
|
$
|
—
|
$
|
—
|
2012
|
2011
|
|||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Amortized intangible assets:
|
||||||||||||||||
Core deposit intangibles
|
$
|
4,183
|
$
|
2,581
|
$
|
4,183
|
$
|
2,124
|
||||||||
Trust account intangibles
|
100
|
53
|
100
|
43
|
2013
|
$
|
437
|
||
2014
|
407
|
|||
2015
|
345
|
|||
2016
|
344
|
|||
2017
|
117
|
December 31,
2012 |
December 31,
2011
|
|||||||
(in thousands)
|
||||||||
Non-interest bearing
|
$
|
114,310
|
$
|
111,118
|
||||
Interest checking
|
87,234
|
87,653
|
||||||
Money market
|
63,715
|
64,302
|
||||||
Savings
|
39,227
|
36,357
|
||||||
Certificates of deposit
|
760,573
|
1,024,333
|
||||||
Total
|
$
|
1,065,059
|
$
|
1,323,763
|
Retail
|
Brokered
|
Total
|
||||||||||
2013
|
$
|
394,593
|
$
|
15,000
|
$
|
409,593
|
||||||
2014
|
173,311
|
—
|
173,311
|
|||||||||
2015
|
152,716
|
—
|
152,716
|
|||||||||
2016
|
13,974
|
—
|
13,974
|
|||||||||
2017
|
10,894
|
—
|
10,894
|
|||||||||
Thereafter
|
85
|
—
|
85
|
|||||||||
$
|
745,573
|
$
|
15,000
|
$
|
760,573
|
2012
|
2011
|
||||||
(in thousands)
|
|||||||
Balance at year-end
|
$
|
2,634
|
$
|
1,738
|
|||
Average daily balance during the year
|
$
|
2,088
|
$
|
10,451
|
|||
Average interest rate during the year
|
0.35
|
%
|
4.20
|
%
|
|||
Maximum month-end balance during the year
|
$
|
2,634
|
$
|
11,672
|
|||
Weighted average interest rate at year-end
|
0.23
|
%
|
2.26
|
%
|
|||
Fair value of securities sold under agreements to repurchase at year-end
|
$
|
2,634
|
$
|
1,738
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
Monthly amortizing advances with fixed rates from 0.00% to 5.25% and maturities ranging from 2013 through 2033, averaging 3.21% for 2012
|
$
|
5,604
|
$
|
7,116
|
||||
Total
|
$
|
5,604
|
$
|
7,116
|
Advances
|
||||
2013
|
$
|
1,125
|
||
2014
|
729
|
|||
2015
|
669
|
|||
2016
|
634
|
|||
2017
|
550
|
|||
Thereafter
|
1,897
|
|||
$
|
5,604
|
Description
|
Issuance
Date
|
Optional
Prepayment
Date (2)
|
Interest Rate (1)
|
Junior
Subordinated
Debt Owed
to
Trust
|
Maturity
Date
|
||||||||||||
Porter Statutory Trust II
|
02-13-2004
|
03-17-2009
|
3-month LIBOR + 2.85%
|
$
|
5,000,000
|
02-13-2034
|
|||||||||||
Porter Statutory Trust III
|
04-15-2004
|
06-17-2009
|
3-month LIBOR + 2.79%
|
3,000,000
|
04-15-2034
|
||||||||||||
Porter Statutory Trust IV
|
12-14-2006
|
03-01-2012
|
3-month LIBOR + 1.67%
|
14,000,000
|
03-01-2037
|
||||||||||||
Asencia Statutory Trust I
|
02-13-2004
|
03-17-2009
|
3-month LIBOR + 2.85%
|
3,000,000
|
02-13-2034
|
||||||||||||
$
|
25,000,000
|
||||||||||||||||
(1)
|
As of December 31, 2012 the 3-month LIBOR was 0.31%.
|
(2)
|
The debentures are callable on or after the optional prepayment date at their principal amount plus accrued interest.
|
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Current
|
$
|
(65
|
)
|
$
|
(12,093
|
)
|
$
|
4,852
|
||||
Deferred
|
754
|
(17,403
|
)
|
(7,898
|
)
|
|||||||
Net operating loss
|
(12,581
|
)
|
(2,439
|
)
|
—
|
|||||||
Establishment of valuation allowance
|
—
|
31,717
|
—
|
|||||||||
Change in valuation allowance
|
11,827
|
—
|
—
|
|||||||||
$
|
(65
|
)
|
$
|
(218
|
)
|
$
|
(3,046
|
)
|
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Federal statutory rate times financial statement income (loss)
|
$
|
(11,549
|
)
|
$
|
(37,634
|
)
|
$
|
(2,600
|
)
|
|||
Effect of:
|
||||||||||||
Establishment of valuation allowance
|
—
|
31,717
|
—
|
|||||||||
Change in valuation allowance
|
11,827
|
—
|
—
|
|||||||||
Goodwill impairment charge
|
—
|
6,169
|
—
|
|||||||||
Tax-exempt income
|
(314
|
)
|
(392
|
)
|
(302
|
)
|
||||||
Nontaxable life insurance income
|
(102
|
)
|
(105
|
)
|
(104
|
)
|
||||||
Federal tax credits
|
—
|
(45
|
)
|
(45
|
)
|
|||||||
Other, net
|
73
|
72
|
5
|
|||||||||
Total
|
$
|
(65
|
)
|
$
|
(218
|
)
|
$
|
(3,046
|
)
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$
|
19,838
|
$
|
18,403
|
||||
Other real estate owned write-down
|
10,408
|
12,905
|
||||||
Net operating loss carry-forward
|
15,051
|
2,470
|
||||||
New market tax credit carry-forward
|
208
|
208
|
||||||
Alternative minimum tax credit carry-forward
|
692
|
685
|
||||||
Net assets from acquisitions
|
592
|
543
|
||||||
Other than temporary impairment on securities
|
374
|
374
|
||||||
Amortization of non-compete agreements
|
19
|
27
|
||||||
Other
|
936
|
827
|
||||||
48,118
|
36,442
|
|||||||
Deferred tax liabilities:
|
||||||||
Fixed assets
|
409
|
445
|
||||||
Net unrealized gain on securities available for sale
|
1,858
|
2,242
|
||||||
FHLB stock dividends
|
1,276
|
1,276
|
||||||
Originated mortgage servicing rights
|
98
|
103
|
||||||
Other
|
549
|
659
|
||||||
4,190
|
4,725
|
|||||||
Net deferred tax asset before valuation allowance
|
43,928
|
31,717
|
||||||
Valuation allowance
|
(43,928
|
)
|
(31,717
|
)
|
||||
Net deferred tax asset
|
$
|
—
|
$
|
—
|
Beginning balance
|
$
|
1,376
|
||
New loans
|
30
|
|||
Repayments
|
(173
|
)
|
||
Ending balance
|
$
|
1,233
|
December 31, 2012
|
December 31, 2011
|
|||||||||||||||||||||||||||
Regulatory
Minimums
|
Well-
Capitalized
Minimums
|
Minimum
Capital
Ratios Under
Consent
Order
|
Porter
Bancorp
|
PBI
Bank
|
Porter
Bancorp
|
PBI
Bank
|
||||||||||||||||||||||
Tier 1 Capital
|
4.0
|
%
|
6.0
|
%
|
N/A
|
6.46
|
%
|
7.71
|
%
|
9.23
|
%
|
8.86
|
%
|
|||||||||||||||
Total risk-based capital
|
8.0
|
10.0
|
12.0
|
%
|
9.81
|
9.82
|
11.22
|
10.86
|
||||||||||||||||||||
Tier 1 leverage ratio
|
4.0
|
5.0
|
9.0
|
4.50
|
5.37
|
6.53
|
6.23
|
2012
|
2011
|
|||||||||||||||
Fixed
Rate
|
Variable
Rate
|
Fixed
Rate
|
Variable
Rate
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Commitments to make loans
|
$
|
2,490
|
$
|
3,546
|
$
|
4,413
|
$
|
9,458
|
||||||||
Unused lines of credit
|
11,910
|
34,925
|
13,485
|
49,312
|
||||||||||||
Standby letters of credit
|
1,085
|
1,176
|
746
|
2,707
|
Fair Value Measurements at December 31, 2012 Using
|
|||||||||||||||
(in thousands)
|
|||||||||||||||
Description
|
Carrying
Value
|
Quoted Prices In
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||
Available-for-sale securities
|
|||||||||||||||
U.S. Government and
|
|||||||||||||||
federal agency
|
$
|
6,133
|
$
|
—
|
$
|
6,133
|
$
|
—
|
|||||||
Agency mortgage-backed: residential
|
95,182
|
—
|
95,182
|
—
|
|||||||||||
State and municipal
|
54,733
|
—
|
54,733
|
—
|
|||||||||||
Corporate bonds
|
19,964
|
—
|
19,964
|
—
|
|||||||||||
Other debt securities
|
618
|
—
|
—
|
618
|
|||||||||||
Equity securities
|
1,846
|
1,846
|
—
|
—
|
|||||||||||
Total
|
$
|
178,476
|
$
|
1,846
|
$
|
176,012
|
$
|
618
|
Fair Value Measurements at December 31, 2011 Using
|
|||||||||||||||
(in thousands)
|
|||||||||||||||
Description
|
Carrying
Value
|
Quoted Prices In
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||
Available-for-sale securities
|
|||||||||||||||
U.S. Government and
|
|||||||||||||||
federal agency
|
$
|
11,643
|
$
|
—
|
$
|
11,643
|
$
|
—
|
|||||||
Agency mortgage-backed: residential
|
99,475
|
—
|
99,475
|
—
|
|||||||||||
State and municipal
|
38,062
|
—
|
36,889
|
1,173
|
|||||||||||
Corporate bonds
|
7,332
|
—
|
7,332
|
—
|
|||||||||||
Other debt securities
|
606
|
—
|
—
|
606
|
|||||||||||
Equity securities
|
1,715
|
1,715
|
—
|
—
|
|||||||||||
Total
|
$
|
158,833
|
$
|
1,715
|
$
|
155,339
|
$
|
1,779
|
State and Municipal
Securities
|
Other Debt
Securities
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Balances of recurring Level 3 assets at January 1
|
$
|
1,173
|
$
|
—
|
$
|
606
|
$
|
572
|
||||||||
Total gain (loss) for the period:
|
||||||||||||||||
Included in other comprehensive income (loss)
|
—
|
—
|
12
|
34
|
||||||||||||
Transfers into Level 3
|
—
|
1,173
|
—
|
—
|
||||||||||||
Sales
|
(1,173
|
)
|
—
|
—
|
—
|
|||||||||||
Balance of recurring Level 3 assets at September 30
|
$
|
—
|
$
|
1,173
|
$
|
618
|
$
|
606
|
Fair Value Measurements at December 31, 2012 Using
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
Quoted Prices In
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||
Carrying
Value
|
||||||||||||||||
Description
|
||||||||||||||||
Impaired loans:
|
||||||||||||||||
Commercial
|
$ | 3,799 | $ | — | $ | — | $ | 3,799 | ||||||||
Commercial real estate:
|
||||||||||||||||
Construction
|
23,912 | — | — | 23,912 | ||||||||||||
Farmland
|
5,722 | — | — | 5,722 | ||||||||||||
Other
|
72,793 | — | — | 72,793 | ||||||||||||
Residential real estate:
|
||||||||||||||||
Multi-family
|
13,263 | — | — | 13,263 | ||||||||||||
1-4 Family
|
25,094 | — | — | 25,094 | ||||||||||||
Consumer
|
74 | — | — | 74 | ||||||||||||
Agriculture
|
5 | — | — | 5 | ||||||||||||
Other
|
513 | — | — | 513 | ||||||||||||
Other real estate owned, net:
|
||||||||||||||||
Commercial real estate:
|
||||||||||||||||
Construction
|
22,323 | — | — | 22,323 | ||||||||||||
Farmland
|
602 | — | — | 602 | ||||||||||||
Other
|
15,175 | — | — | 15,175 | ||||||||||||
Residential real estate:
|
||||||||||||||||
Multi-family
|
195 | — | — | 195 | ||||||||||||
1-4 Family
|
5,376 | — | — | 5,376 |
Fair Value Measurements at December 31, 2011 Using
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
Description
|
Carrying
Value
|
Quoted Prices In
Active Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
Impaired loans:
|
||||||||||||||||
Commercial
|
$
|
2,653
|
$
|
—
|
$
|
—
|
$
|
2,653
|
||||||||
Commercial real estate:
|
||||||||||||||||
Construction
|
15,899
|
—
|
—
|
15,899
|
||||||||||||
Farmland
|
6,288
|
—
|
—
|
6,288
|
||||||||||||
Other
|
75,128
|
—
|
—
|
75,128
|
||||||||||||
Residential real estate:
|
||||||||||||||||
Multi-family
|
3,758
|
—
|
—
|
3,758
|
||||||||||||
1-4 Family
|
21,648
|
—
|
—
|
21,648
|
||||||||||||
Other
|
532
|
—
|
—
|
532
|
||||||||||||
Other real estate owned, net:
|
||||||||||||||||
Commercial real estate:
|
||||||||||||||||
Construction
|
31,280
|
—
|
—
|
31,280
|
||||||||||||
Farmland
|
715
|
—
|
—
|
715
|
||||||||||||
Other
|
6,364
|
—
|
—
|
6,364
|
||||||||||||
Residential real estate:
|
||||||||||||||||
1-4 Family
|
3,090
|
—
|
—
|
3,090
|
Fair Value
|
Valuation
Technique(s)
|
Unobservable Input(s)
|
Range (Weighted
Average)
|
||||||
(in thousands)
|
|||||||||
Impaired loans – C
ommercial
|
$
|
3,799
|
Market value approach
|
Adjustment for receivables and inventory discounts
|
16% - 32% (24%)
|
||||
Impaired loans – Commercial real estate
|
$
|
89,461
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0% - 69% (19%)
|
||||
Impaired loans – Residential real estate
|
$
|
38,357
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0% - 38% (15%)
|
||||
Other real estate owned – Commercial real estate
|
$
|
38,100
|
Sales comparison approach Income approach
|
Adjustment for differences between the comparable sales
Discount or capitalization rate
|
3% - 50% (18%)
9% - 16% (12%)
|
||||
Other real estate owned – Residential real estate
|
$
|
5,571
|
Sales comparison approach
|
Adjustment for differences between the comparable sales
|
0% - 30% (9%)
|
Fair Value Measurements at December 31, 2012 Using
|
||||||||||||||||||||
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
49,572
|
$
|
41,938
|
$
|
7,634
|
$
|
—
|
$
|
49,572
|
||||||||||
Securities available for sale
|
178,476
|
1,846
|
176,012
|
618
|
178,476
|
|||||||||||||||
Federal Home Loan Bank stock
|
10,072
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||
Mortgage loans held for sale
|
507
|
—
|
507
|
—
|
507
|
|||||||||||||||
Loans, net
|
842,412
|
—
|
—
|
853,996
|
853,996
|
|||||||||||||||
Accrued interest receivable
|
5,138
|
—
|
1,150
|
3,988
|
5,138
|
|||||||||||||||
Financial liabilities
|
||||||||||||||||||||
Deposits
|
$
|
1,065,059
|
$
|
114,310
|
$
|
955,216
|
$
|
—
|
$
|
1,069,526
|
||||||||||
Securities sold under agreements to repurchase
|
2,634
|
—
|
2,634
|
—
|
2,634
|
|||||||||||||||
Federal Home Loan Bank advances
|
5,604
|
—
|
5,607
|
—
|
5,607
|
|||||||||||||||
Subordinated capital notes
|
6,975
|
—
|
—
|
6,599
|
6,599
|
|||||||||||||||
Junior subordinated debentures
|
25,000
|
—
|
—
|
13,821
|
13,821
|
|||||||||||||||
Accrued interest payable
|
2,104
|
—
|
1,173
|
931
|
2,104
|
Fair Value Measurements at December 31, 2011 Using
|
||||||||||||||||||||
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
105,962
|
$
|
93,877
|
$
|
12,085
|
$
|
—
|
$
|
105,962
|
||||||||||
Securities available for sale
|
158,833
|
1,715
|
155,339
|
1,779
|
158,833
|
|||||||||||||||
Federal Home Loan Bank stock
|
10,072
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||
Mortgage loans held for sale
|
694
|
—
|
694
|
—
|
694
|
|||||||||||||||
Loans, net
|
1,083,444
|
—
|
—
|
1,093,456
|
1,093,456
|
|||||||||||||||
Accrued interest receivable
|
6,682
|
—
|
970
|
5,712
|
6,682
|
|||||||||||||||
Financial liabilities
|
||||||||||||||||||||
Deposits
|
$
|
1,323,763
|
$
|
111,118
|
$
|
1,221,015
|
$
|
—
|
$
|
1,332,133
|
||||||||||
Securities sold under agreements to repurchase
|
1,738
|
—
|
1,738
|
—
|
1,738
|
|||||||||||||||
Federal Home Loan Bank advances
|
7,116
|
—
|
7,015
|
—
|
7,015
|
|||||||||||||||
Subordinated capital notes
|
7,650
|
—
|
—
|
7,110
|
7,110
|
|||||||||||||||
Junior subordinated debentures
|
25,000
|
—
|
—
|
19,765
|
19,765
|
|||||||||||||||
Accrued interest payable
|
1,732
|
—
|
1,510
|
222
|
1,732
|
December 31, 2012
|
||||||||
Unvested
Shares
|
Weighted
Average
Grant
Price
|
|||||||
Outstanding, beginning
|
100,226
|
$
|
13.21
|
|||||
Granted
|
191,140
|
1.69
|
||||||
Vested
|
(44,781
|
)
|
8.89
|
|||||
Forfeited
|
(13,191
|
)
|
15.22
|
|||||
Outstanding, ending
|
233,394
|
$
|
4.49
|
December 31, 2012
|
||||||||
Options
|
Weighted
Average
Exercise
Price
|
|||||||
Outstanding, beginning
|
29,530
|
$
|
19.88
|
|||||
Forfeited
|
—
|
—
|
||||||
Expired
|
(29,530
|
)
|
19.88
|
|||||
Outstanding, ending
|
—
|
$
|
—
|
2013
|
$ | 400 | ||
2014
|
300 | |||
2015
|
157 | |||
2016
|
57 | |||
2017 & thereafter
|
22 |
2012
|
2011
|
2010
|
||||||||||
(in thousands, except share and per share data)
|
||||||||||||
Net loss
|
$
|
(32,932
|
)
|
$
|
(107,307
|
)
|
$
|
(4,384
|
)
|
|||
Less:
|
||||||||||||
Preferred stock dividends
|
(1,750
|
)
|
(1,750
|
)
|
(1,810
|
)
|
||||||
Accretion of Series A preferred stock discount
|
(179
|
)
|
(177
|
)
|
(177
|
)
|
||||||
Loss attributable to unvested shares
|
482
|
1,092
|
81
|
|||||||||
Loss attributable to Series C preferred
|
947
|
2,988
|
103
|
|||||||||
Net loss attributable to common shareholders, basic and diluted
|
$
|
(33,432
|
)
|
$
|
(105,154
|
)
|
$
|
(6,187
|
)
|
|||
Basic
|
||||||||||||
Weighted average common shares including unvested common shares and Series C Preferred outstanding
|
12,248,936
|
12,169,987
|
10,640,872
|
|||||||||
Less: Weighted average unvested common shares
|
(169,323
|
)
|
(121,632
|
)
|
(135,757
|
)
|
||||||
Less: Weighted average Series C preferred shares
|
(332,894
|
)
|
(332,894
|
)
|
(171,616
|
)
|
||||||
Weighted average common shares outstanding
|
11,746,719
|
11,715,461
|
10,333,499
|
|||||||||
Basic loss per common share
|
$
|
(2.85
|
)
|
$
|
(8.98
|
)
|
$
|
(0.60
|
)
|
|||
Diluted
|
||||||||||||
Add: Dilutive effects of assumed exercises of common and Preferred Series C stock warrants
|
—
|
—
|
—
|
|||||||||
Weighted average common shares and potential common shares
|
11,746,719
|
11,715,461
|
10,333,499
|
|||||||||
Diluted loss per common share
|
$
|
(2.85
|
)
|
$
|
(8.98
|
)
|
$
|
(0.60
|
)
|
2012
|
2011
|
|||||||
(in thousands)
|
||||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
995
|
$
|
2,564
|
||||
Securities available-for-sale
|
2,464
|
2,321
|
||||||
Investment in banking subsidiary
|
71,711
|
103,083
|
||||||
Investment in and advances to other subsidiaries
|
776
|
776
|
||||||
Other assets
|
535
|
550
|
||||||
Total assets
|
$
|
76,481
|
$
|
109,294
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Debt
|
$
|
25,775
|
$
|
25,775
|
||||
Accrued expenses and other liabilities
|
3,516
|
990
|
||||||
Shareholders’ equity
|
47,190
|
82,529
|
||||||
Total liabilities and shareholders’ equity
|
$
|
76,481
|
$
|
109,294
|
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Interest income
|
$
|
114
|
$
|
215
|
$
|
609
|
||||||
Dividends from subsidiaries
|
21
|
20
|
20
|
|||||||||
Other income
|
72
|
1,272
|
1,787
|
|||||||||
Interest expense
|
(692
|
)
|
(652
|
)
|
(659
|
)
|
||||||
Other expense
|
(1,453
|
)
|
(3,614
|
)
|
(3,420
|
)
|
||||||
Income (loss) before income tax and undistributed subsidiary income
|
(1,938
|
)
|
(2,759
|
)
|
(1,663
|
)
|
||||||
Income tax expense (benefit)
|
864
|
468
|
(592
|
)
|
||||||||
Equity in undistributed subsidiary income (loss)
|
(30,130
|
)
|
(104,080
|
)
|
(3,313
|
)
|
||||||
Net income (loss)
|
$
|
(32,932
|
)
|
$
|
(107,307
|
)
|
$
|
(4,384
|
)
|
2012
|
2011
|
2010
|
||||||||||
(in thousands)
|
||||||||||||
Cash flows from operating activities
|
||||||||||||
Net income (loss)
|
$
|
(32,932
|
)
|
$
|
(107,307
|
)
|
$
|
(4,384
|
)
|
|||
Adjustments:
|
||||||||||||
Equity in undistributed subsidiary (income) loss
|
30,130
|
104,080
|
3,313
|
|||||||||
Income tax valuation allowance
|
—
|
1,095
|
—
|
|||||||||
Loss on sale of assets
|
—
|
—
|
84
|
|||||||||
Change in other assets
|
(21
|
)
|
157
|
(219
|
)
|
|||||||
Change in other liabilities
|
776
|
(273
|
)
|
225
|
||||||||
Other
|
478
|
1,404
|
445
|
|||||||||
Net cash (used in) from operating activities
|
(1,569
|
)
|
(844
|
)
|
(536
|
)
|
||||||
Cash flows from investing activities
|
||||||||||||
Investments in subsidiaries
|
—
|
(13,100
|
)
|
(21,000
|
)
|
|||||||
Purchase of securities
|
—
|
—
|
(514
|
)
|
||||||||
Sales of securities
|
—
|
—
|
6,117
|
|||||||||
Net cash used in investing activities
|
—
|
(13,100
|
)
|
(15,397
|
)
|
|||||||
Cash flows from financing activities
|
||||||||||||
Proceeds from sale of preferred stock, net
|
—
|
—
|
11,064
|
|||||||||
Proceeds from sale of common stock, net
|
—
|
—
|
19,476
|
|||||||||
Repurchase of common stock, net
|
—
|
—
|
—
|
|||||||||
Dividends paid on preferred stock
|
—
|
(1,319
|
)
|
(1,847
|
)
|
|||||||
Dividends paid on common stock
|
—
|
(237
|
)
|
(4,706
|
)
|
|||||||
Net cash from (used in) financing activities
|
—
|
(1,556
|
)
|
23,987
|
||||||||
Net change in cash and cash equivalents
|
(1,569
|
)
|
(15,500
|
)
|
8,054
|
|||||||
Beginning cash and cash equivalents
|
2,564
|
18,064
|
10,010
|
|||||||||
Ending cash and cash equivalents
|
$
|
995
|
$
|
2,564
|
$
|
18,064
|
Earnings (Loss)
Per Common Share
|
|||||||||||||||||||||||||||||
Interest
Income
|
Net Interest
Income
|
Provision
For
Loan Losses
|
OREO
Expense
|
Net
Income
(Loss)
|
Basic
|
Diluted
|
|||||||||||||||||||||||
(in thousands, except per share data)
|
|||||||||||||||||||||||||||||
2012
|
|||||||||||||||||||||||||||||
First quarter
|
$
|
15,755
|
$
|
11,454
|
$
|
3,750
|
$
|
1,257
|
$
|
1,502
|
$
|
0.08
|
$
|
0.08
|
|||||||||||||||
Second quarter
|
14,812
|
10,795
|
4,000
|
1,205
|
151
|
(0.03
|
)
|
(0.03
|
)
|
||||||||||||||||||||
Third quarter
|
13,987
|
10,132
|
25,500
|
5,204
|
(27,732
|
)
|
(1)
|
(2.29
|
)
|
(2.29
|
)
|
||||||||||||||||||
Fourth quarter
|
13,175
|
9,574
|
7,000
|
2,883
|
(6,853
|
)
|
(0.59
|
)
|
(0.59
|
)
|
|||||||||||||||||||
2011
|
|||||||||||||||||||||||||||||
First quarter
|
$
|
19,616
|
$
|
13,768
|
$
|
5,100
|
$
|
1,367
|
$
|
799
|
$
|
0.03
|
$
|
0.03
|
|||||||||||||||
Second quarter
|
19,198
|
13,441
|
13,700
|
22,109
|
(39,989
|
)
|
(2)
|
(3.33
|
)
|
(3.33
|
)
|
||||||||||||||||||
Third quarter
|
18,103
|
12,655
|
8,000
|
17,029
|
(12,162
|
)
|
(3)
|
(1.04
|
)
|
(1.04
|
)
|
||||||||||||||||||
Fourth quarter
|
16,637
|
11,651
|
35,800
|
7,020
|
(55,955
|
)
|
(4)
|
(4.64
|
)
|
(4.64
|
)
|
||||||||||||||||||
(1) Third quarter net income was lower than the previous quarter due to increased provision for loan losses expense during the quarter as a result of the continued decline in credit trends in our portfolio. The provision was also negatively impacted by a strategy change related to classified loans which we expected to more quickly remediate by litigation or foreclosure.
|
|||||||||||||||||||||||||||||
(2) Second quarter net income was lower than the previous quarter due to increased provision for loan losses expense during the quarter, higher fair value write-down adjustments on OREO, and a goodwill impairment charge of $23.8 million.
|
|||||||||||||||||||||||||||||
(3) Third quarter net income was affected by OREO write-downs to prepare for a bulk sale of OREO.
|
|||||||||||||||||||||||||||||
(4) Fourth quarter net income was lower than previous quarters due to increased provision for loan losses expense during the quarter and the establishment of a deferred tax asset valuation allowance of $31.7 million.
|
|
●
|
Completion of additional independent internal and external loan reviews of the portfolio to ensure accurate grading from March 2012 through December 2012.
|
|
●
|
Review of the portfolio by assigned loan officer for proper grading.
|
|
●
|
Analytical review of the portfolio by management based upon payment performance.
|
|
●
|
Retention of John R. Davis to serve as Chief Credit Officer overseeing credit administration and credit quality policy and procedures.
|
|
●
|
Implementation of a centralized loan administration and analysis team within the credit department to ensure more timely and regular review of grading, performance metrics, financial information, and collateral.
|
|
●
|
Implemented reporting on risk rating changes to the Bank’s loan committee weekly and to the Board of Directors monthly.
|
|
●
|
Ensured the risk rating assessment is a common discussion during the adjudication of any committee level loan request.
|
|
●
|
Grade changes arising from specific file reviews or those recommended by the loan officer are routed to the loan review department manager to ensure accurate, consistent, and timely update.
|
(a) 1.
|
The following financial statements are included in this Form 10-K:
|
Consolidated Balance Sheets as of December 31, 2012 and 2011
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011, and 2010
|
|
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2012, 2011 and 2010
|
|
Consolidated Statements of Change in Stockholders’ Equity for the Years Ended December 31, 2012, 2011, and 2010
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011, and 2010
|
|
Notes to Consolidated Financial Statements
|
|
Report of Independent Registered Public Accounting Firm
|
(a) 2.
|
List of Financial Statement Schedules
|
Financial statement schedules are omitted because the information is not applicable.
|
|
(a) 3.
|
List of Exhibits
|
The Exhibit Index of this report is incorporated by reference. The compensatory plans or arrangement required to be filed as exhibits to this Form 10-K pursuant to Item 15(c) are noted with an asterisk in the Exhibit Index.
|
PORTER BANCORP, INC.
|
||
February 28, 2013
|
By:
|
/s/ Maria L. Bouvette
|
Maria L. Bouvette
|
||
Chairman & Chief Executive Officer
|
/s/ Maria L. Bouvette
|
Chairman and Chief Executive Officer
|
February 28, 2013
|
Maria L. Bouvette
|
||
/s/ John T. Taylor
|
President
|
February 28, 2013
|
John T. Taylor
|
||
/s/ Phillip W. Barnhouse
|
Chief Financial Officer
|
February 28, 2013
|
Phillip W. Barnhouse
|
||
/s/ David L. Hawkins
|
Director
|
February 28, 2013
|
David L. Hawkins
|
||
/s/ W. Glenn Hogan
|
Director
|
February 28, 2013
|
W. Glenn Hogan
|
||
/s/ Sidney L. Monroe
|
Director
|
February 28, 2013
|
Sidney L. Monroe
|
||
/s/ William G. Porter
|
Director
|
February 28, 2013
|
William G. Porter
|
||
/s/ Stephen A. Williams
|
Director
|
February 28, 2013
|
Stephen A. Williams
|
||
/s/ W. Kirk Wycoff
|
Director
|
February 28, 2013
|
W. Kirk Wycoff
|
Exhibit No. (1)
|
Description
|
|
3.1
|
Amended and Restated Articles of Incorporation of Registrant, dated December 7, 2005. Exhibit 3.1 to Form S-1 Registration Statement (Reg. No. 333-133198) filed April 11, 2006 is hereby incorporated by reference.
|
|
3.2
|
Articles of Amendment to the Amended and Restated Articles of Incorporation, dated November 18, 2008. Exhibit 3.1 to Form 8-K filed November 24, 2008 is hereby incorporated by reference.
|
|
3.3
|
Articles of Amendment to the Amended and Restated Articles of Incorporation, dated June 29, 2010. Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 is hereby incorporated by reference.
|
|
3.4
|
Articles of Amendment to the Amended and Restated Articles of Incorporation, dated June 30, 2010. Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 is hereby incorporated by reference.
|
|
3.5
|
Articles of Amendment to the Amended and Restated Articles of Incorporation, dated October 22, 2010. Exhibit 4.8 to Form S-3 Registration Statement (Reg. No. 333-170678) filed November 18, 2010 is hereby incorporated by reference.
|
|
3.6
|
Bylaws of the Registrant, dated November 30, 2005. Exhibit 3.2 to Form S-1 Registration Statement (Reg. No. 333-133198) filed April 11, 2006 is hereby incorporated by reference.
|
|
4.1
|
Warrant to purchase up to 299,829 shares. Exhibit 4.1 to Form 8-K filed November 24, 2008 is hereby incorporated by reference.
|
|
4.2
|
Securities Purchase Agreement between the Registrant and the Purchasers thereto, dated as of June 30, 2010. Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 is hereby incorporated by reference.
|
|
4.3
|
Registration Rights Agreement between the Registrant and the Purchasers thereto, dated as of June 30, 2010. Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 is hereby incorporated by reference.
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4.4
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Letter Agreement between the Registrant and SBAV LP, dated as of July 23, 2010. Exhibit 10 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2010 is hereby incorporated by reference.
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10.1+
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Porter Bancorp, Inc. Amended and Restated 2006 Stock Incentive Plan. Exhibit 10.2 to Form S-1 Registration Statement (Reg. No. 333-133198) filed April 11, 2006 is hereby incorporated by reference.
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10.2+
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Form of Porter Bancorp, Inc. Stock Option Award Agreement. Exhibit 10.3 to Form S-1 Registration Statement (Reg. No. 333-133198) filed April 11, 2006 is hereby incorporated by reference.
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10.3+
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Form of Porter Bancorp, Inc. Restricted Stock Award Agreement. Exhibit 10.4 to Form S-1 Registration Statement (Reg. No. 333-133198) filed April 11, 2006 is hereby incorporated by reference.
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10.4+
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Form of Ascencia Bank (now known as PBI Bank) Supplemental Executive Retirement Plan. Exhibit 10.5 to Form S-1 Registration Statement (Reg. No. 333-133198) filed April 11, 2006 is hereby incorporated by reference.
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10.5+
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Form of Amendment to PBI Bank Supplemental Executive Retirement Plan.
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10.6+
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Porter Bancorp, Inc. 2006 Non-Employee Directors Stock Ownership Incentive Plan, as amended May 22, 2008. Annex A Definitive Proxy Statement filed April 17, 2008 is hereby incorporated by reference.
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10.7+
|
Amendment to Porter Bancorp, Inc. 2006 Non-Employee Directors Stock Ownership Incentive Plan, as amended May 22, 2008.
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10.8
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Promissory Installment Note of Maria L. Bouvette and J. Chester Porter, as borrowers, to David L. Hawkins, as lender. Exhibit 10.7 to Form S-1/A Registration Statement (Reg. No. 333-133198) filed May 24, 2006 is hereby incorporated by reference.
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10.9
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Letter Agreement, dated November 21, 2008 including the Securities Purchase Agreement – Standard Terms incorporated by reference therein, between the Company and the U.S. Treasury. Exhibit 10.1 to Form 8-K filed November 24, 2008 is hereby incorporated by reference.
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Exhibit No. (1)
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Description
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10.10
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Form of Waiver of Senior Executive Officers. Exhibit 10.2 to Form 8-K filed November 24, 2008 is hereby incorporated by reference.
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10.11+
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Porter Bancorp, Inc. 2011 Incentive Compensation Bonus Plan (incorporated by reference to Exhibit 10.14 to 2011 Form 10K).
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10.12
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Consent with Federal Deposit Insurance Corporation and Kentucky Department of Financial Institutions dated June 24, 2011. Exhibit 99.1 to Form 8-K filed June 30, 2011.
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21.1
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List of Subsidiaries of Porter Bancorp, Inc.
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23.1
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Consent of Crowe Horwath LLP, Independent Registered Public Accounting Firm
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31.1
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Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14 or 15d-14
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31.2
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Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14 or 15d-14
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32.1
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Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350
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32.2
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Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(b) or 15d-14(b) and U.S.C. Section 1350
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99.1
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Certification of Principal Executive Officer pursuant to Section 30.15 of the U.S. Treasury’s Interim Final Rule on TARP Standards for Compensation and Corporate Governance.
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99.2
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Certification of Principal Executive Officer pursuant to Section 30.15 of the U.S. Treasury’s Interim Final Rule on TARP Standards for Compensation and Corporate Governance.
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101
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The following financial statements from the Company’s Annual Report on Form 10K for the year ended December 31, 2012, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements.
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+
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Management contract or compensatory plan or arrangement.
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(1)
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The Company has other long-term debt agreements that meet the exclusion set forth in Section 601(b)(4)(iii)(A) of Regulation S-K. The Company hereby agrees to furnish a copy of such agreements to the Securities and Exchange Commission upon request.
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