The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2012, 2011 and 2010
Note 1 Summary of Significant Accounting Policies
Description of Business and Basis of Presentation
TriCo Bancshares is a California corporation organized to act as a bank holding company for Tri Counties Bank. The Bank is a state-chartered financial
institution that is engaged in the general commercial banking business in the California counties of Butte, Contra Costa, Del Norte, Fresno, Glenn, Kern, Lake, Lassen, Madera, Mendocino, Merced, Napa, Nevada, Placer, Sacramento, Shasta, Siskiyou,
Stanislaus, Sutter, Tehama, Tulare, Yolo and Yuba. Tri Counties Bank currently operates from 41 traditional branches and 22 in-store branches. The Company also formed two subsidiary business trusts, TriCo Capital Trust I and TriCo Capital Trust II
(collectively, the Trusts), to issue trust preferred securities.
The consolidated financial statements are prepared in accordance with accounting
policies generally accepted in the United States of America and general practices in the banking industry. The financial statements include the accounts of the Company. All inter-company accounts and transactions have been eliminated in
consolidation. For financial reporting purposes, the Companys investments in the Trusts of $1,238,000 are accounted for under the equity method and, accordingly, are not consolidated and are included in other assets on the consolidated balance
sheet. The subordinated debentures issued and guaranteed by the Company and held by the Trusts are reflected as debt on the Companys consolidated balance sheet.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires Management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. On an on-going basis, the Company evaluates its estimates, including those related to the adequacy of the allowance for loan losses, investments, intangible assets, income taxes and contingencies. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The allowance for loan losses, indemnification asset, foreclosed assets, goodwill and other intangible assets, income taxes, fair
value of assets acquired and liabilities assumed in business combinations, the valuation of securities available-for-sale, and the valuation of mortgage servicing rights are the only accounting estimates that materially affect the Companys
consolidated financial statements.
As described in Note 2, the Bank assumed the banking operations of two failed financial institutions from the FDIC
under whole bank purchase agreements. The acquired assets and assumed liabilities were measured at estimated fair value values under the acquisition method of accounting. The Company made significant estimates and exercised significant judgment in
accounting for the acquisitions. The Company determined loan fair values based on loan file reviews, loan risk ratings, appraised collateral values, expected cash flows and historical loss factors. Foreclosed assets were primarily valued based on
appraised values of the repossessed loan collateral. An identifiable intangible was also recorded representing the fair value of the core deposit customer base based on an evaluation of the cost of such deposits relative to alternative funding
sources. The fair value of time deposits and borrowings were determined based on the present value of estimated future cash flows using current rates as of the acquisition date.
Significant Group Concentration of Credit Risk
The
Company grants agribusiness, commercial, consumer, and residential loans to customers located throughout the northern San Joaquin Valley, the Sacramento Valley and northern mountain regions of California. The Company has a diversified loan portfolio
within the business segments located in this geographical area. The Company currently classifies all its operation into one business segment that it denotes as community banking.
Cash and Cash Equivalents
For purposes of the
consolidated statements of cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and federal funds sold. Net cash flows are reported for loan and deposit transactions and other borrowings.
Investment Securities
The Company classifies its debt
and marketable equity securities into one of three categories: trading, available for sale or held to maturity. Trading securities are bought and held principally for the purpose of selling in the near term. Held to maturity securities are those
securities which the Company has the ability and intent to hold until maturity. These securities are carried at cost adjusted for amortization of premium and accretion of discount, computed by the effective interest method over their contractual
lives. All other securities not included in trading or held to maturity are classified as available for sale. Available for sale securities are recorded at fair value. Unrealized gains and losses, net of the related tax effect, on available for sale
securities are reported as a separate component of other accumulated comprehensive income in shareholders equity until realized. Premiums and discounts are amortized or accreted over the life of the related investment security as an adjustment
to yield using the effective interest method. Dividend and interest income are recognized when earned. Realized gains and losses are derived from the amortized cost of the security sold. During the years ended December 31, 2013 and 2012, the
Company did not have any securities classified as trading. During the three months ended March 31, 2013, and the year ended December 31, 2012, the Company did not have any securities classified as held to maturity.
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The Company assesses other-than-temporary impairment (OTTI) based on whether it intends to sell a
security or if it is likely that the Company would be required to sell the security before recovery of the amortized cost basis of the investment, which may be maturity. For debt securities, if we intend to sell the security or it is likely that we
will be required to sell the security before recovering its cost basis, the entire impairment loss would be recognized in earnings as an OTTI. If we do not intend to sell the security and it is not likely that we will be required to sell the
security but we do not expect to recover the entire amortized cost basis of the security, only the portion of the impairment loss representing credit losses would be recognized in earnings. The credit loss on a security is measured as the difference
between the amortized cost basis and the present value of the cash flows expected to be collected. Projected cash flows are discounted by the original or current effective interest rate depending on the nature of the security being measured for
potential OTTI. The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to other comprehensive income (OCI).
Impairment losses related to all other factors are presented as separate categories within OCI. The accretion of the amount recorded in OCI increases the carrying value of the investment and does not affect earnings. If there is an indication of
additional credit losses the security is re-evaluated according to the procedures described above. No OTTI losses were recognized during the years ended December 31, 2013 and 2012.
Restricted Equity Securities
Restricted equity
securities represent the Companys investment in the stock of the Federal Home Loan Bank of San Francisco (FHLB) and are carried at par value, which reasonably approximates its fair value. While technically these are considered
equity securities, there is no market for the FHLB stock. Therefore, the shares are considered as restricted investment securities. Management periodically evaluates FHLB stock for other-than-temporary impairment. Managements determination of
whether these investments are impaired is based on its assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is
influenced by criteria such as (1) the significance of any decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make
payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, (3) the impact of legislative and regulatory changes on institutions and, accordingly, the customer base of the FHLB,
and (4) the liquidity position of the FHLB.
As a member of the FHLB system, the Company is required to maintain a minimum level of investment in
FHLB stock based on specific percentages of its outstanding mortgages, total assets, or FHLB advances. The Company may request redemption at par value of any stock in excess of the minimum required investment. Stock redemptions are at the discretion
of the FHLB.
Loans Held for Sale
Loans originated
and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by aggregate outstanding commitments from investors of current investor yield requirements. Net unrealized losses are recognized
through a valuation allowance by charges to noninterest income.
Mortgage loans held for sale are generally sold with the mortgage servicing rights
retained by the Company. Gains or losses on the sale of loans that are held for sale are recognized at the time of the sale and determined by the difference between net sale proceeds and the net book value of the loans less the estimated fair value
of any retained mortgage servicing rights.
Loans and Allowance for Loan Losses
Loans originated by the Company, i.e., not purchased or acquired in a business combination, are referred to as originated loans. Originated loans that
management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal amount outstanding, net of deferred loan fees and costs. Loan origination and commitment fees and certain direct loan
origination costs are deferred, and the net amount is amortized as an adjustment of the related loans yield over the actual life of the loan. Originated loans on which the accrual of interest has been discontinued are designated as nonaccrual
loans.
Originated loans are placed in nonaccrual status when reasonable doubt exists as to the full, timely collection of interest or principal, or a
loan becomes contractually past due by 90 days or more with respect to interest or principal and is not well secured and in the process of collection. When an originated loan is placed on nonaccrual status, all interest previously accrued but not
collected is reversed. Income on such loans is then recognized only to the extent that cash is received and where the future collection of principal is probable. Interest accruals are resumed on such loans only when they are brought fully current
with respect to interest and principal and when, in the judgment of Management, the loan is estimated to be fully collectible as to both principal and interest.
An allowance for loan losses for originated loans is established through a provision for loan losses charged to expense. The allowance is maintained at a
level which, in Managements judgment, is adequate to absorb probable incurred credit losses inherent in the loan portfolio as of the balance sheet date. Originated loans and deposit related overdrafts are charged against the allowance for loan
losses when Management believes that the collectability of the principal is unlikely or, with respect to consumer installment loans, according to an established delinquency schedule. The allowance is an amount that Management believes will be
adequate to absorb probable losses inherent in existing loans and leases, based on evaluations of the collectability, impairment and prior loss experience of loans and leases. The evaluations take into consideration such factors as changes in the
nature and size of the portfolio, overall portfolio quality, loan concentrations, specific problem loans, and current economic conditions that may affect the borrowers ability to pay. The Company defines an originated loan as impaired when it
is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired originated loans are measured based on the present value of expected future cash flows discounted at the loans
original effective interest rate. As a practical expedient, impairment may be measured based on the loans observable market price or the fair value of the collateral if the loan is collateral dependent. When the measure of the impaired loan is
less than the recorded investment in the loan, the impairment is recorded through a valuation allowance.
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In situations related to originated loans where, for economic or legal reasons related to a borrowers
financial difficulties, the Company grants a concession for other than an insignificant period of time to the borrower that the Company would not otherwise consider, the related loan is classified as a troubled debt restructuring (TDR). The Company
strives to identify borrowers in financial difficulty early and work with them to modify to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment
forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. In cases where the Company grants the borrower new terms that result in the loan being classified as a TDR, the Company
measures any impairment on the restructuring as noted above for impaired loans. TDR loans are classified as impaired until they are fully paid off or charged off. Loans that are in nonaccrual status at the time they become TDR loans, remain in
nonaccrual status until the borrower demonstrates a sustained period of performance which the Company generally believes to be six consecutive months of payments, or equivalent. Otherwise, TDR loans are subject to the same nonaccrual and charge-off
policies as noted above with respect to their restructured principal balance.
Credit risk is inherent in the business of lending. As a result, the
Company maintains an allowance for loan losses to absorb losses inherent in the Companys originated loan portfolio. This is maintained through periodic charges to earnings. These charges are included in the Consolidated Statements of Income as
provision for loan losses. All specifically identifiable and quantifiable losses are immediately charged off against the allowance. However, for a variety of reasons, not all losses are immediately known to the Company and, of those that are known,
the full extent of the loss may not be quantifiable at that point in time. The balance of the Companys allowance for originated loan losses is meant to be an estimate of these unknown but probable losses inherent in the portfolio.
The Company formally assesses the adequacy of the allowance for originated loan losses on a quarterly basis. Determination of the adequacy is based on ongoing
assessments of the probable risk in the outstanding originated loan portfolio, and to a lesser extent the Companys originated loan commitments. These assessments include the periodic re-grading of credits based on changes in their individual
credit characteristics including delinquency, seasoning, recent financial performance of the borrower, economic factors, changes in the interest rate environment, growth of the portfolio as a whole or by segment, and other factors as warranted.
Loans are initially graded when originated. They are re-graded as they are renewed, when there is a new loan to the same borrower, when identified facts demonstrate heightened risk of nonpayment, or if they become delinquent. Re-grading of larger
problem loans occurs at least quarterly. Confirmation of the quality of the grading process is obtained by independent credit reviews conducted by consultants specifically hired for this purpose and by various bank regulatory agencies.
The Companys method for assessing the appropriateness of the allowance for originated loan losses includes specific allowances for impaired originated
loans and leases, formula allowance factors for pools of credits, and allowances for changing environmental factors (e.g., interest rates, growth, economic conditions, etc.). Allowance factors for loan pools were based on historical loss experience
by product type and prior risk rating.
During the three months ended March 31, 2012, management changed some of the assumptions utilized in the
Allowance for Loan Losses estimate calculation. These changes were intended to more accurately reflect the current risk in the loan portfolio and to better estimate the losses inherent but not yet quantifiable. These changes included the conversion
to a historical loss migration analysis intended to better determine the appropriate formula reserve ratio by loan category and risk rating, the addition of an environmental factor related to the delinquency rate of loans not classified as impaired
by loan category, the elimination of an unspecified reserve allocation previously intended to account for imprecision inherent in the overall calculation, and the reclassification of risk rating of certain consumer loans based on current credit
score in an attempt to better identify the risk in the portfolio. The financial effect of these changes resulted in a net reduction in the calculated Allowance for Loan Losses of $1,388,000 during the three months ended March 31, 2012.
Allowances for impaired loans are based on analysis of individual credits. Allowances for changing environmental factors are Managements best estimate of the probable impact these changes have had on the originated loan portfolio as a whole.
The allowance for originated loans is included in the allowance for loan losses.
During the three months ended March 31, 2013, the Company changed
the method it uses to estimate net sale proceeds from real estate collateral sales when calculating the allowance for loan losses associated with impaired real estate collateral dependent loans. Previously, the Company used the greater of fifteen
percent or actual estimated selling costs. Currently, the Company uses the actual estimated selling costs, and an adjustment to appraised value based on the age of the appraisal. These changes are intended to more accurately reflect the estimated
net sale proceeds from the sale of impaired collateral dependent real estate loans. This change in methodology resulted in the allowance for loan losses as of March 31, 2013 being $494,000 more than it would have been without this change in
methodology.
During the three months ended June 30, 2013, the Company modified its loss migration analysis methodology used to determine the formula
allowance factors. When the Company originally established its loss migration analysis methodology during the quarter ended March 31, 2012, it reviewed the loss experience of each rolling twelve month period over the previous three years in
order to calculate an annualized loss rate by loan category and risk rating. The use of three years of loss experience data was originally used because that was the extent of the detailed loss data, by loan category and risk rating that was
available at the time. This three year historical look-back period was used through the quarter ended March 31, 2013. Starting with the quarter ended June 30, 2013, the Company reviews all available detailed loss experience data, going
back to, and including, the twelve month period ended June 30, 2009, and does not limit the look-back period to the most recent three years of historical loss data. Using this data, the Company calculates loss factors for each quarter from the
quarter ended June 30, 2009 to the most recent quarter. The Company then calculates a weighted average formula allowance factor for each loan category and risk rating with the most recent quarterly loss factor being weighted 125%, the quarter
ended June 30, 2009 loss factor being weighted 75%, and the loss factors for all the quarters between the most recent quarter and the quarter ended June 30, 2009, being weighted on a linear scale from 75% to 125%. This change is intended
to more accurately reflect the risk inherent in the loan portfolio by considering historical loss data for all years as the data for new periods becomes available. This change in methodology resulted in the allowance for loan losses as of
June 30, 2013 being $1,314,000 more than it would have been without this change in methodology.
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During the three months ended September 30, 2013, the Company modified its methodology used to determine the
allowance for changing environmental factors. Previously, the Company compared the current value of each environmental factor to a fixed baseline value. The deviation of the current value from the baseline value was then multiplied by a conversion
factor to determine the required allowance related to each environmental factor. As of September 30, 2013, the Company replaced the fixed baseline values with average baseline values derived from historical averages, and adjusted the conversion
factors. This change is intended to more accurately reflect the risk inherent in the portfolio by recognizing that baseline, or normal, levels for environmental factors may change over time. This change in methodology resulted in the allowance for
loan losses as of September 30, 2013 being $1,665,000 more than it would have been without this change in methodology.
Loans purchased or acquired
in a business combination are referred to as acquired loans. Acquired loans are valued as of the acquisition date in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 805,
Business
Combinations
. Loans acquired with evidence of credit deterioration since origination for which it is probable that all contractually required payments will not be collected are referred to as purchased credit impaired (PCI) loans. PCI loans are
accounted for under FASB ASC Topic 310-30,
Loans and Debt Securities Acquired with Deteriorated Credit Quality
. Under FASB ASC Topic 805 and FASB ASC Topic 310-30, PCI loans are recorded at fair value at acquisition date, factoring in credit
losses expected to be incurred over the life of the loan. Accordingly, an allowance for loan losses is not carried over or recorded as of the acquisition date. Fair value is defined as the present value of the future estimated principal and interest
payments of the loan, with the discount rate used in the present value calculation representing the estimated effective yield of the loan. Default rates, loss severity, and prepayment speed assumptions are periodically reassessed and our estimate of
future payments is adjusted accordingly. The difference between contractual future payments and estimated future payments is referred to as the nonaccretable difference. The difference between estimated future payments and the present value of the
estimated future payments is referred to as the accretable yield. The accretable yield represents the amount that is expected to be recorded as interest income over the remaining life of the loan. If after acquisition, the Company determines that
the estimated future cash flows of a PCI loan are expected to be more than originally estimated, an increase in the discount rate (effective yield) would be made such that the newly increased accretable yield would be recognized, on a level yield
basis, over the remaining estimated life of the loan. If, after acquisition, the Company determines that the estimated future cash flows of a PCI loan are expected to be less than previously estimated, the discount rate would first be reduced until
the present value of the reduced cash flow estimate equals the previous present value however, the discount rate may not be lowered below its original level at acquisition. If the discount rate has been lowered to its original level and the present
value has not been sufficiently lowered, an allowance for loan loss would be established through a provision for loan losses charged to expense to decrease the present value to the required level. If the estimated cash flows improve after an
allowance has been established for a loan, the allowance may be partially or fully reversed depending on the improvement in the estimated cash flows. Only after the allowance has been fully reversed may the discount rate be increased. PCI loans are
put on nonaccrual status when cash flows cannot be reasonably estimated. PCI loans on nonaccrual status are accounted for using the cost recovery method or cash basis method of income recognition. PCI loans are charged off when evidence suggests
cash flows are not recoverable. Foreclosed assets from PCI loans are recorded in foreclosed assets at fair value with the fair value at time of foreclosure representing cash flow from the loan. ASC 310-30 allows PCI loans with similar risk
characteristics and acquisition time frame to be pooled and have their cash flows aggregated as if they were one loan. The Company elected to use the pooled method of ASC 310-30 for PCI other loans in the acquisition
of certain assets and liabilities of Granite Community Bank (Granite) and Citizens Bank of Northern California (Citizens).
Acquired loans that are not PCI loans are referred to as purchased not credit impaired (PNCI) loans. PNCI loans are accounted for under FASB ASC Topic 310-20,
Receivables Nonrefundable Fees and Other Costs,
in which interest income is accrued on a level-yield basis for performing loans. For income recognition purposes, this method assumes that all contractual cash flows will be collected,
and no allowance for loan losses is established at the time of acquisition. Post-acquisition date, an allowance for loan losses may need to be established for acquired loans through a provision charged to earnings for credit losses incurred
subsequent to acquisition. Under ASC 310-20, the loss would be measured based on the probable shortfall in relation to the contractual note requirements, consistent with our allowance for loan loss policy for similar loans.
Throughout these financial statements, and in particular in Note 4 and Note 5, when we refer to Loans or Allowance for loan losses we
mean all categories of loans, including Originated, PNCI, PCI cash basis, and PCI other. When we are not referring to all categories of loans, we will indicate which we are referring to Originated, PNCI, PCI cash basis, or
PCIother.
When referring to PNCI and PCI loans we will use the terms nonaccretable difference, accretable yield, or
purchase discount. Nonaccretable difference is the difference between undiscounted contractual cash flows due and undiscounted cash flows we expect to collect, or put another way, it is the undiscounted contractual cash flows we do not
expect to collect. Accretable yield is the difference between undiscounted cash flows we expect to collect and the value at which we have recorded the loan on our financial statements. On the date of acquisition, all purchased loans are recorded on
our consolidated financial statements at estimated fair value. Purchase discount is the difference between the estimated fair value of loans on the date of acquisition and the principal amount owed by the borrower, net of charge offs, on the date of
acquisition. We may also refer to discounts to principal balance of loans owed, net of charge-offs. Discounts to principal balance of loans owed, net of charge-offs is the difference between principal balance of loans owed, net of
charge-offs, and loans as recorded on our financial statements. Discounts to principal balance of loans owed, net of charge-offs arise from purchase discounts, and equal the purchase discount on the acquisition date.
Loans are also categorized as covered or noncovered. Covered loans refer to loans covered by a Federal Deposit Insurance Corporation
(FDIC) loss sharing agreement. Noncovered loans refer to loans not covered by a FDIC loss sharing agreement.
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Foreclosed Assets
Foreclosed assets include assets acquired through, or in lieu of, loan foreclosure. Foreclosed assets are held for sale and are initially recorded at fair
value less estimated costs to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, management periodically performs valuations and the assets are carried at the lower of carrying amount or fair value less cost
to sell. Revenue and expenses from operations and changes in the valuation allowance are included in other noninterest expense. Gain or loss on sale of foreclosed assets is included in noninterest income. Foreclosed assets that are not subject to a
FDIC loss-share agreement are referred to as noncovered foreclosed assets.
Foreclosed assets acquired through FDIC-assisted acquisitions that are subject
to a FDIC loss-share agreement, and all assets acquired via foreclosure of covered loans are referred to as covered foreclosed assets. Covered foreclosed assets are reported exclusive of expected reimbursement cash flows from the FDIC. Foreclosed
covered loan collateral is transferred into covered foreclosed assets at the loans carrying value, inclusive of the acquisition date fair value discount.
Covered foreclosed assets are initially recorded at estimated fair value less estimated costs to sell on the acquisition date based on similar market
comparable valuations less estimated selling costs. Any subsequent valuation adjustments due to declines in fair value will be charged to noninterest expense, and will be mostly offset by noninterest income representing the corresponding increase to
the FDIC indemnification asset for the offsetting loss reimbursement amount. Any recoveries of previous valuation adjustments will be credited to noninterest expense with a corresponding charge to noninterest income for the portion of the recovery
that is due to the FDIC.
Premises and Equipment
Land is carried at cost. Land improvements, buildings and equipment, including those acquired under capital lease, are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization expenses are computed using the straight-line method over the estimated useful lives of the related assets or lease terms. Asset lives range from 3-10 years for furniture and equipment and
15-40 years for land improvements and buildings.
Goodwill and Other Intangible Assets
Goodwill represents the excess of costs over fair value of net assets of businesses acquired. Goodwill and other intangible assets acquired in a purchase
business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to
their estimated residual values, and reviewed for impairment.
The Company has an identifiable intangible asset consisting of core deposit intangibles
(CDI). CDI are amortized over their respective estimated useful lives, and reviewed for impairment.
Impairment of Long-Lived Assets and Goodwill
Long-lived assets, such as premises and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets
to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held
for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet.
As of December 31 of each
year, goodwill is tested for impairment, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the
assets fair value. This determination is made at the reporting unit level. The Company may choose to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely
than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less
than its carrying amount, then goodwill is deemed not to be impaired. However, if the Company concludes otherwise, or if the Company elected not to first assess qualitative factors, then the Company performs the first step of a two-step impairment
test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. Second, if the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized for
any excess of the carrying amount of the reporting units goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a
purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Currently, and historically, the Company is comprised of only one reporting unit that operates within the business
segment it has identified as community banking. Goodwill was not impaired as of December 31, 2013 because the fair value of the reporting unit exceeded its carrying value.
Mortgage Servicing Rights
Mortgage servicing rights
(MSR) represent the Companys right to a future stream of cash flows based upon the contractual servicing fee associated with servicing mortgage loans. Our MSR arise from residential mortgage loans that we originate and sell, but retain the
right to service the loans. The net gain from the retention of the servicing right is included in gain on sale of loans in noninterest income when the loan is sold. Fair value is based on market prices for comparable mortgage servicing contracts,
when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net
servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. Servicing fees are recorded in noninterest income when earned.
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The Company accounts for MSR at fair value. The determination of fair value of our MSR requires management
judgment because they are not actively traded. The determination of fair value for MSR requires valuation processes which combine the use of discounted cash flow models and extensive analysis of current market data to arrive at an estimate of fair
value. The cash flow and prepayment assumptions used in our discounted cash flow model are based on empirical data drawn from the historical performance of our MSR, which we believe are consistent with assumptions used by market participants valuing
similar MSR, and from data obtained on the performance of similar MSR. The key assumptions used in the valuation of MSR include mortgage prepayment speeds and the discount rate. These variables can, and generally will, change from quarter to quarter
as market conditions and projected interest rates change. The key risks inherent with MSR are prepayment speed and changes in interest rates. The Company uses an independent third party to determine fair value of MSR.
Indemnification Asset
The Company accounts for amounts
receivable under its loss-share agreements entered into with the FDIC in connection with its purchase and assumption of certain assets and liabilities of Granite as indemnification assets in accordance with FASB ASC Topic 805,
Business
Combinations
. FDIC indemnification assets are initially recorded at fair value, based on the discounted value of expected future cash flows under the loss-share agreements. The difference between the fair value and the undiscounted cash flows
the Company expects to collect from the FDIC will be accreted into noninterest income over the life of the FDIC indemnification asset. FDIC indemnification assets are reviewed quarterly and adjusted for any changes in expected cash flows based on
recent performance and expectations for future performance of the covered portfolios. These adjustments are measured on the same basis as the related covered loans and covered other real estate owned. Any increases in cash flow of the covered assets
over those expected will reduce the FDIC indemnification asset and any decreases in cash flow of the covered assets under those expected will increase the FDIC indemnification asset. Increases and decreases to the FDIC indemnification asset are
recorded as adjustments to noninterest income.
Reserve for Unfunded Commitments
The reserve for unfunded commitments is established through a provision for losses unfunded commitments charged to noninterest expense. The reserve for
unfunded commitments is an amount that Management believes will be adequate to absorb probable losses inherent in existing commitments, including unused portions of revolving lines of credits and other loans, standby letters of credits, and unused
deposit account overdraft privilege. The reserve for unfunded commitments is based on evaluations of the collectability, and prior loss experience of unfunded commitments. The evaluations take into consideration such factors as changes in the nature
and size of the loan portfolio, overall loan portfolio quality, loan concentrations, specific problem loans and related unfunded commitments, and current economic conditions that may affect the borrowers or depositors ability to pay.
During the three months ended June 30, 2013, the Company modified the methodology employed to estimate potential losses on unfunded commitments.
Similar to the Allowance for Loan Losses, the Company performs a migration analysis of historical loss experience. Prior to this quarter, the loss experience of each quarter over the previous three years was reviewed in order to calculate an
annualized loss rate by loan category. Going forward, the Company has chosen to review all loss experience available since the conversion to a loss migration analysis. This change is intended to more accurately reflect the risk inherent in the
unfunded commitments and appropriately consider all losses incurred in prior years. This change in methodology resulted in the reserve for unfunded commitments as of June 30, 2013 being $335,000 more than it would have been without this change
in methodology.
Income Taxes
The Companys
accounting for income taxes is based on an asset and liability approach. The Company recognizes the amount of taxes payable or refundable for the current year, and deferred tax assets and liabilities for the future tax consequences that have been
recognized in its financial statements or tax returns. The measurement of tax assets and liabilities is based on the provisions of enacted tax laws. A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to
be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely
than not that all of the deferred tax assets will be realized. Interest and/or penalties related to income taxes are reported as a component of noninterest income.
Off-Balance Sheet Credit Related Financial Instruments
In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit card arrangements, commercial
letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded.
Geographical Descriptions
For the purpose of describing the geographical location of the Companys loans, the Company has defined northern California as that area of California
north of, and including, Stockton; central California as that area of the state south of Stockton, to and including, Bakersfield; and southern California as that area of the state south of Bakersfield.
Reclassifications
Certain amounts reported in previous
consolidated financial statements have been reclassified to conform to the presentation in this report. These reclassifications did not affect previously reported net income or total shareholders equity.
Recent Accounting Pronouncements
FASB issued Accounting
Standards Update (ASU) No. 2012-06,
Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial
Institution.
ASU 2012-06 requires that when a reporting entity recognizes an indemnification asset (in accordance with Subtopic 805-20) as a result of a government-assisted acquisition of a financial institution and subsequently a change in the
cash flows expected to be collected on the
63
indemnification asset occurs (as a result of a change in cash flows expected to be collected on the assets subject to indemnification), the reporting entity should subsequently account for the
change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that
is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). The Company adopted this Standard on January 1, 2013, and the adoption did not have a significant impact on the Companys
consolidated financial statements.
FASB issued ASU No. 2013-02,
Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of
Accumulated Other Comprehensive Income.
ASU 2013-02 amends recent guidance related to the reporting of comprehensive income to enhance the reporting of reclassifications out of accumulated other comprehensive income. The Company adopted
this Standard on January 1, 2013, and the adoption did not have a significant impact on the Companys consolidated financial statements.
FASB
issued ASU No. 2014-04,
Receivables (Topic 310): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.
ASU 2014-04 clarifies when an in substance repossession or foreclosure occurs, that is,
when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The
Update is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Update is not expected to have a significant impact on the Companys consolidated
financial statements.
Note 2 - Business Combinations
On January 21, 2014, TriCo announced that it had entered into an Agreement and Plan of Merger and Reorganization under which it would
acquire North Valley Bancorp. North Valley Bancorp shareholders will receive a fixed exchange ratio of 0.9433 shares of TriCo common stock for each share of North Valley Bancorp common stock, which would provide North Valley Bancorp shareholders
with aggregate ownership, on a pro forma basis, of approximately 28.6% of the common stock of the combined company. Based on TriCos closing stock price of $27.66 on January 17, 2014, North Valley Bancorp shareholders would have received
consideration valued at approximately $26.09 per share.
The merger will not be completed unless a number of customary closing conditions are met,
including, among others, approval of the merger by shareholders of both companies, the registration of the offering of the TriCo common stock to the North Valley Bancorp shareholders under the Securities Act of 1933, receipt of required regulatory
and other approvals and the expiration of applicable statutory waiting periods, the accuracy of specified representations and warranties of each party, the receipt of tax opinions confirming certain tax aspects of the merger, North Valley
Bancorps satisfaction of certain financial measures shortly prior to closing, and the absence of any injunctions or other legal restraints. If the Merger Agreement is terminated, under certain circumstances, TriCo could be required to pay a
termination fee to North Valley Bancorp equal to $3,800,000.
TriCo has agreed to appoint three North Valley Bancorp directors to TriCos board upon
closing of the merger. The merger is expected to be completed in the second or third quarter of 2014, subject to approval of the merger by shareholders of both companies, receipt of required regulatory and other approvals and satisfaction of
customary closing conditions.
North Valley Bancorp, headquartered in Redding, California, is the parent of North Valley Bank and had approximately $917.8
million in assets and 22 commercial banking offices in Shasta, Humboldt, Del Norte, Mendocino, Yolo, Sonoma, Placer and Trinity Counties in Northern California at December 31, 2013. In connection with the acquisition, North Valley Bank will
merge into Tri Counties Bank.
As of December 31, 2013, on a pro forma consolidated basis with North Valley Bancorp, TriCo would have had
approximately $3.61 billion in assets.
On September 23, 2011, the California Department of Financial Institutions closed Citizens Bank of Northern
California, Nevada City, California and appointed the FDIC as receiver. That same date, the Bank assumed the banking operations of Citizens from the FDIC under a whole bank purchase and assumption agreement without loss sharing. With this agreement,
the Bank added one administration building and seven traditional bank branches, including two in Grass Valley, and one in each of Nevada City, Penn Valley, Lake of the Pines, Truckee, and Auburn, California. This acquisition is consistent with the
Banks community banking expansion strategy and provides further opportunity to fill in the Banks market presence in the Northern California market.
The assets acquired and liabilities assumed for the Citizens acquisition have been accounted for under the acquisition method of accounting (formerly the
purchase method). The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the acquisition date. The fair values of the assets acquired and liabilities assumed were determined based on the
requirements of the Fair Value Measurements and Disclosures topic of the FASB ASC. The tax treatment of FDIC assisted acquisitions is complex and subject to interpretations that may result in future adjustments of deferred taxes as of the
acquisition date. The terms of the agreement provide for the FDIC to indemnify the Bank against claims with respect to liabilities of Citizens not assumed by the Bank and certain other types of claims identified in the agreement.
64
A summary of the net assets received in the Citizens acquisition, at their estimated fair values, is presented
below:
|
|
|
|
|
|
|
Citizens
|
|
(in thousands)
|
|
September 23, 2011
|
|
Asset acquired:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
80,707
|
|
Securities available-for-sale
|
|
|
9,353
|
|
Restricted equity securities
|
|
|
1,926
|
|
Loans
|
|
|
167,484
|
|
Core deposit intangible
|
|
|
898
|
|
Foreclosed assets
|
|
|
8,412
|
|
Other assets
|
|
|
1,524
|
|
|
|
|
|
|
Total assets acquired
|
|
$
|
270,304
|
|
|
|
|
|
|
Liabilities assumed:
|
|
|
|
|
Deposits
|
|
$
|
239,899
|
|
Other borrowings
|
|
|
22,038
|
|
Other liabilities
|
|
|
792
|
|
|
|
|
|
|
Total liabilities assumed
|
|
$
|
262,729
|
|
|
|
|
|
|
Net assets acquired/bargain purchase gain
|
|
$
|
7,575
|
|
|
|
|
|
|
In FDIC-assisted transactions, only certain assets and liabilities are transferred to the acquirer and, depending on the
nature and amount of the acquirers bid, the FDIC may be required to make a cash payment to the acquirer. In the Citizens acquisition, net assets with a cost basis of $26,682,000 were transferred to the Bank. In the Citizens acquisition, the
Company recorded a bargain purchase gain of $7,575,000 representing the excess of the estimated fair value of the assets acquired over the estimated fair value of the liabilities assumed.
A summary of the estimated fair value adjustments resulting in the bargain purchase gain in the Citizens acquisition are presented below:
|
|
|
|
|
|
|
Citizens
|
|
(in thousands)
|
|
September 23, 2011
|
|
Cost basis net assets acquired
|
|
$
|
26,682
|
|
Cash payment received from FDIC
|
|
|
44,140
|
|
Fair value adjustments:
|
|
|
|
|
Cash and cash equivalents
|
|
|
539
|
|
Loans
|
|
|
(57,745
|
)
|
Foreclosed assets
|
|
|
(5,609
|
)
|
Core deposit intangible
|
|
|
898
|
|
Deposits
|
|
|
(382
|
)
|
Borrowings
|
|
|
(28
|
)
|
Other
|
|
|
(920
|
)
|
|
|
|
|
|
Bargain purchase gain
|
|
$
|
7,575
|
|
|
|
|
|
|
The Bank acquired only certain assets and assumed certain liabilities of Citizens. A significant portion of
Citizenss operations, its facilities and its central operations and administrative functions were not retained by the Bank. Therefore, disclosure of supplemental pro forma financial information, especially prior period comparison is deemed
neither practical nor meaningful given the troubled nature of Citizens prior to the date of acquisition. The Bank did not immediately acquire all the banking facilities, furniture or equipment of Citizens as part of the purchase and assumption
agreement. However, the Bank had the option to lease the real estate and purchase the furniture and equipment from the FDIC. The term of this option expired 90 days from the acquisition date. Prior to the expiration of the option, The Bank agreed to
purchase essentially all of the furniture and equipment, and assume all of the property leases except for the administration building and Citizens Auburn branch. During the three months ended March 31, 2012, the Bank transferred the
operations of Citizens Auburn branch to the Banks existing branch in Auburn, and vacated the Citizens administration building.
The
Company identified the loans acquired in the Citizens acquisition as either PNCI or PCI loans. The Company identified certain of the Citizens PCI loans as having cash flows that were not reasonably estimable and elected to place these loans in
nonaccrual status under the cash basis method for income recognition (PCI cash basis loans). The Company elected to use the ASC 310-30 pooled method of accounting for all other Citizens PCI loans (PCI
other loans).
65
The following table presents a reconciliation of the undiscounted contractual cash flows, nonaccretable
difference, accretable yield, fair value, purchase discount, and principal balance of loans for the various categories of Citizens PNCI and PCI loans as of the acquisition date. For PCI loans, the purchase discount does not necessarily represent
cash flows to be collected as a portion of it is a nonaccretable difference:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Citizens Loans September 23, 2011
|
|
(in thousands)
|
|
PNCI
|
|
|
PCI -
other
|
|
|
PCI -
cash basis
|
|
|
Total
|
|
Undiscounted contractual cash flows
|
|
$
|
230,106
|
|
|
$
|
69,346
|
|
|
$
|
35,205
|
|
|
$
|
334,657
|
|
Undiscounted cash flows not expectedto be collected (nonaccretable difference)
|
|
|
|
|
|
|
(26,846
|
)
|
|
|
(24,517
|
)
|
|
|
(51,363
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undiscounted cash flows expected to be collected
|
|
|
230,106
|
|
|
|
42,500
|
|
|
|
10,688
|
|
|
|
283,295
|
|
Accretable yield at acquisition
|
|
|
(105,664
|
)
|
|
|
(10,146
|
)
|
|
|
|
|
|
|
(115,810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated fair value of loans acquired at acquisition
|
|
|
124,442
|
|
|
|
32,354
|
|
|
|
10,688
|
|
|
|
167,484
|
|
Purchase discount
|
|
|
20,364
|
|
|
|
23,207
|
|
|
|
14,174
|
|
|
|
57,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal balance loans acquired
|
|
$
|
144,806
|
|
|
$
|
55,561
|
|
|
$
|
24,862
|
|
|
$
|
225,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In estimating the fair value of Citizens PNCI loans at the acquisition date, the Company calculated the contractual amount and
timing of undiscounted principal and interest payments on an individual loan basis and then discounted those cash flows using an appropriate market rate of interest adjusted for liquidity and credit loss risks inherent in each loan. The Citizens
PNCI loans expected accretable yield above represents undiscounted interest, and along with the purchase discount, is accounted for using an effective interest method consistent with our accounting for originated loans.
In estimating the fair value of Citizens PCI cash basis loans at the acquisition date, the Company calculated the contractual amount and timing of
undiscounted principal and interest payments and estimated the amount of undiscounted expected principal recovery using historic loss rates or estimated collateral values if applicable. The difference between these two amounts represents the
nonaccretable difference. The Company used its estimate of the amount of undiscounted expected principal recovery as the fair value of the Citizens PCI cash basis loans, and placed these loans in nonaccrual status. Interest income and
principal reductions on these PCI cash basis loans are recorded only when they are received. At each financial reporting date, the carrying value of each PCI cash basis loan is compared to an updated estimate of expected principal
payment or recovery for each loan. To the extent that the loan carrying amount exceeds the updated expected principal payment or recovery, a provision for loan loss would be recorded as a charge to income and an allowance for loan loss established.
In estimating the fair value of Citizens PCI other loans at the acquisition date, the Company calculated the contractual amount and timing of
undiscounted principal and interest payments and estimated the amount and timing of undiscounted expected principal and interest payments. The difference between these two amounts represents the nonaccretable difference. On the acquisition date, the
amount by which the undiscounted expected cash flows exceed the estimated fair value of the acquired loans is the accretable yield. The accretable yield is then measured at each financial reporting date and represents the difference
between the remaining undiscounted expected cash flows and the current carrying value of the loans. For PCI loans the accretable yield is accreted into interest income over the life of the estimated remaining cash flows. For further information
regarding the accounting for PCI other loans, and acquired loans in general, see the discussion under the heading Loans and Allowance for Loan Losses in Note 1 above.
The operations of Citizens, included in the Companys operating results from September 23, 2011 to December 31, 2011, added approximately
$6,171,000 and $54,000 to interest income and interest expense, respectively, $1,462,000 to provision for loan losses, $8,029,000 to noninterest income, including a bargain purchase gain of $7,575,000, and $1,865,000 to noninterest expense. Included
in the $6,171,000 of Citizens related interest income recorded from September 23, 2011 to December 31, 2011, is $3,146,000 of interest income from fair value discount accretion. Citizens results of operations prior to the acquisition
are not included in the Companys operating results. As of December 31, 2011, nonrecurring expenses related to the Citizens acquisition were insignificant.
During the three months ended March 31, 2012, the Company completed the conversion of Citizens information and data processing systems to the
Banks systems, and consolidated the Citizens Auburn branch into the Banks existing Auburn branch. The operations of Citizens, included in the Companys operating results from January 1, 2012 to December 31, 2012, added
approximately $17,832,000 and ($20,000) to interest income and interest expense, respectively, $3,844,000 to provision for loan losses, $2,584,000 to noninterest income, and $5,785,000 to noninterest expense. Included in the $17,832,000 of Citizens
related interest income recorded from January 1, 2012 to December 31, 2012, is $7,572,000 of interest income from fair value discount accretion. Included in the $2,584,000 of Citizens related noninterest income recorded from
January 1, 2012 to December 31, 2012, is a $230,000 loss on disposal of fixed assets related to the system conversion noted above. Included in the $5,785,000 of Citizens related noninterest expense recorded from January 1, 2012 to
December 31, 2012, is $415,000 of outside data processing expenses related to the system conversion noted above. Such operating results are not necessarily indicative of future operating results.
66
Note 3Investment Securities
The amortized cost and estimated fair values of investments in debt and equity securities are summarized in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Estimated
Fair Value
|
|
|
|
(in thousands)
|
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and agencies
|
|
$
|
93,055
|
|
|
$
|
4,445
|
|
|
$
|
(357
|
)
|
|
$
|
97,143
|
|
Obligations of states and political subdivisions
|
|
|
5,513
|
|
|
|
77
|
|
|
|
(1
|
)
|
|
|
5,589
|
|
Corporate debt securities
|
|
|
1,877
|
|
|
|
38
|
|
|
|
|
|
|
|
1,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
100,445
|
|
|
$
|
4,560
|
|
|
$
|
(358
|
)
|
|
$
|
104,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and agencies
|
|
$
|
227,864
|
|
|
$
|
298
|
|
|
$
|
(5,540
|
)
|
|
$
|
222,622
|
|
Obligations of states and political subdivisions
|
|
|
12,640
|
|
|
|
|
|
|
|
(1,455
|
)
|
|
|
11,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities held to maturity
|
|
$
|
240,504
|
|
|
$
|
298
|
|
|
$
|
(6,995
|
)
|
|
$
|
233,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Estimated
Fair Value
|
|
|
|
(in thousands)
|
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and agencies
|
|
$
|
143,633
|
|
|
$
|
8,068
|
|
|
|
|
|
|
$
|
151,701
|
|
Obligations of states and political subdivisions
|
|
|
9,098
|
|
|
|
323
|
|
|
|
|
|
|
|
9,421
|
|
Corporate debt securities
|
|
|
1,862
|
|
|
|
43
|
|
|
|
|
|
|
|
1,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
154,593
|
|
|
$
|
8,434
|
|
|
|
|
|
|
$
|
163,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company had no investment securities held to maturity at December 31, 2012.
No investment securities were sold during 2013, 2012, or 2011. Investment securities with an aggregate carrying value of $62,064,000 and $66,911,000 at
December 31, 2013 and 2012, respectively, were pledged as collateral for specific borrowings, lines of credit and local agency deposits.
The
amortized cost and estimated fair value of debt securities at December 31, 2013 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties. At December 31, 2013, obligations of U.S. government corporations and agencies with a cost basis totaling $320,919,000 consist almost entirely of mortgage-backed securities whose contractual
maturity, or principal repayment, will follow the repayment of the underlying mortgages. For purposes of the following table, the entire outstanding balance of these mortgage-backed securities issued by U.S. government corporations and agencies is
categorized based on final maturity date. At December 31, 2013, the Company estimates the average remaining life of these mortgage-backed securities issued by U.S. government corporations and agencies to be approximately 5.6 years. Average
remaining life is defined as the time span after which the principal balance has been reduced by half.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Securities
|
|
Available for Sale
|
|
|
Held to Maturity
|
|
(In thousands)
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
Due in one year
|
|
$
|
505
|
|
|
$
|
536
|
|
|
|
|
|
|
|
|
|
Due after one year through five years
|
|
|
3,819
|
|
|
|
3,966
|
|
|
|
|
|
|
|
|
|
Due after five years through ten years
|
|
|
33,017
|
|
|
|
33,988
|
|
|
|
|
|
|
|
|
|
Due after ten years
|
|
|
63,104
|
|
|
|
66,157
|
|
|
$
|
240,504
|
|
|
$
|
233,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
100,445
|
|
|
$
|
104,647
|
|
|
$
|
240,504
|
|
|
$
|
233,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67
Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by
investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months
|
|
|
12 months or more
|
|
|
Total
|
|
December 31, 2013
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
|
|
(in thousands)
|
|
Securities Available for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and agencies
|
|
$
|
10,287
|
|
|
$
|
(357
|
)
|
|
|
|
|
|
|
|
|
|
$
|
10,287
|
|
|
$
|
(357
|
)
|
Obligations of states and political subdivisions
|
|
|
199
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
199
|
|
|
|
(1
|
)
|
Corporate debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available-for-sale
|
|
$
|
10,486
|
|
|
$
|
(358
|
)
|
|
|
|
|
|
|
|
|
|
$
|
10,486
|
|
|
$
|
(358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and agencies
|
|
$
|
188,218
|
|
|
$
|
(5,540
|
)
|
|
|
|
|
|
|
|
|
|
$
|
188,218
|
|
|
$
|
(5,540
|
)
|
Obligations of states and political subdivisions
|
|
|
11,185
|
|
|
|
(1,455
|
)
|
|
|
|
|
|
|
|
|
|
|
11,185
|
|
|
|
(1,455
|
)
|
Corporate debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available-for-sale
|
|
$
|
199,403
|
|
|
$
|
(6,995
|
)
|
|
|
|
|
|
|
|
|
|
$
|
199,403
|
|
|
$
|
(6,995
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012, the Company had no investment securities with gross unrealized losses.
Obligations of U.S. government corporations and agencies: Unrealized losses on investments in obligations of U.S. government corporations and
agencies are caused by interest rate increases. The contractual cash flows of these securities are guaranteed by U.S. Government Sponsored Entities (principally Fannie Mae and Freddie Mac). It is expected that the securities would not be settled at
a price less than the amortized cost of the investment. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell and more likely than not will not be
required to sell, these investments are not considered other-than-temporarily impaired. At December 31, 2013, 31 debt securities representing obligations of U.S. government corporations and agencies had unrealized losses with aggregate
depreciation of 2.89% from the Companys amortized cost basis.
Obligations of states and political subdivisions: The unrealized losses on
investments in obligations of states and political subdivisions were caused by increases in required yields by investors in these types of securities. It is expected that the securities would not be settled at a price less than the amortized cost of
the investment. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell and more likely than not will not be required to sell, these investments are not
considered other-than-temporarily impaired. At December 31, 2013, 14 debt securities representing obligations of states and political subdivisions had unrealized losses with aggregate depreciation of 11.34% from the Companys amortized
cost basis.
Corporate debt securities: At December 31, 2013, no corporate debt securities had unrealized losses.
68
Note 4 Loans
A summary of loan balances follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
|
|
Originated
|
|
|
PNCI
|
|
|
PCI -
Cash basis
|
|
|
PCI -
Other
|
|
|
Total
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
129,882
|
|
|
$
|
60,475
|
|
|
|
|
|
|
$
|
4,656
|
|
|
$
|
195,013
|
|
Commercial
|
|
|
824,912
|
|
|
|
57,678
|
|
|
|
|
|
|
|
30,260
|
|
|
|
912,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage loan on real estate
|
|
|
954,794
|
|
|
|
118,153
|
|
|
|
|
|
|
|
34,916
|
|
|
|
1,107,863
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines of credit
|
|
|
316,207
|
|
|
|
13,576
|
|
|
$
|
6,200
|
|
|
|
3,883
|
|
|
|
339,866
|
|
Home equity loans
|
|
|
13,849
|
|
|
|
253
|
|
|
|
|
|
|
|
486
|
|
|
|
14,588
|
|
Auto Indirect
|
|
|
946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
946
|
|
Other
|
|
|
25,608
|
|
|
|
2,074
|
|
|
|
|
|
|
|
81
|
|
|
|
27,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consumer loans
|
|
|
356,610
|
|
|
|
15,903
|
|
|
|
6,200
|
|
|
|
4,450
|
|
|
|
383,163
|
|
Commercial
|
|
|
124,650
|
|
|
|
693
|
|
|
|
19
|
|
|
|
6,516
|
|
|
|
131,878
|
|
Construction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
30,367
|
|
|
|
|
|
|
|
|
|
|
|
1,566
|
|
|
|
31,933
|
|
Commercial
|
|
|
17,125
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
|
|
17,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total construction
|
|
|
47,492
|
|
|
|
|
|
|
|
|
|
|
|
1,611
|
|
|
|
49,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of deferred loan fees and discounts
|
|
$
|
1,483,546
|
|
|
$
|
134,749
|
|
|
$
|
6,219
|
|
|
$
|
47,493
|
|
|
$
|
1,672,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total principal balance of loans owed, net of charge-offs
|
|
$
|
1,487,240
|
|
|
$
|
142,786
|
|
|
$
|
16,475
|
|
|
$
|
56,879
|
|
|
$
|
1,703,380
|
|
Unamortized net deferred loan fees
|
|
|
(3,694
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,694
|
)
|
Discounts to principal balance of loans owed, net of charge-offs
|
|
|
|
|
|
|
(8,037
|
)
|
|
|
(10,256
|
)
|
|
|
(9,386
|
)
|
|
|
(27,679
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of unamortized deferred loan fees and discounts
|
|
$
|
1,483,546
|
|
|
$
|
134,749
|
|
|
$
|
6,219
|
|
|
$
|
47,493
|
|
|
$
|
1,672,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncovered loans
|
|
$
|
1,483,546
|
|
|
$
|
134,749
|
|
|
$
|
6,219
|
|
|
$
|
19,581
|
|
|
$
|
1,644,095
|
|
Covered loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,912
|
|
|
|
27,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of unamortized deferred loan fees and discounts
|
|
$
|
1,483,546
|
|
|
$
|
134,749
|
|
|
$
|
6,219
|
|
|
$
|
47,493
|
|
|
$
|
1,672,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
$
|
(31,354
|
)
|
|
$
|
(2,850
|
)
|
|
$
|
(385
|
)
|
|
$
|
(3,656
|
)
|
|
$
|
(38,245
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69
A summary of loan balances follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
Originated
|
|
|
PNCI
|
|
|
PCI -
Cash basis
|
|
|
PCI -
Other
|
|
|
Total
|
|
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential 1-4 family
|
|
$
|
121,255
|
|
|
$
|
5,413
|
|
|
|
|
|
|
$
|
5,016
|
|
|
$
|
131,684
|
|
Commercial
|
|
|
775,124
|
|
|
|
72,090
|
|
|
$
|
1,289
|
|
|
|
29,943
|
|
|
|
878,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage loan on real estate
|
|
|
896,379
|
|
|
|
77,503
|
|
|
|
1,289
|
|
|
|
34,959
|
|
|
|
1,010,130
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity lines of credit
|
|
|
311,671
|
|
|
|
16,788
|
|
|
|
7,612
|
|
|
|
5,954
|
|
|
|
342,025
|
|
Home equity loans
|
|
|
13,011
|
|
|
|
342
|
|
|
|
49
|
|
|
|
155
|
|
|
|
13,557
|
|
Auto Indirect
|
|
|
3,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,816
|
|
Other
|
|
|
24,263
|
|
|
|
2,418
|
|
|
|
|
|
|
|
32
|
|
|
|
26,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consumer loans
|
|
|
352,761
|
|
|
|
19,548
|
|
|
|
7,661
|
|
|
|
6,141
|
|
|
|
386,111
|
|
Commercial
|
|
|
125,122
|
|
|
|
869
|
|
|
|
22
|
|
|
|
9,515
|
|
|
|
135,528
|
|
Construction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
11,877
|
|
|
|
|
|
|
|
|
|
|
|
6,582
|
|
|
|
18,459
|
|
Commercial
|
|
|
11,196
|
|
|
|
|
|
|
|
|
|
|
|
3,399
|
|
|
|
14,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total construction
|
|
|
23,073
|
|
|
|
|
|
|
|
|
|
|
|
9,981
|
|
|
|
33,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of deferred loan fees and discounts
|
|
$
|
1,397,335
|
|
|
$
|
97,920
|
|
|
$
|
8,972
|
|
|
$
|
60,596
|
|
|
$
|
1,564,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total principal balance of loans owed, net of charge-offs
|
|
$
|
1,400,147
|
|
|
$
|
111,286
|
|
|
$
|
20,621
|
|
|
$
|
75,277
|
|
|
$
|
1,607,331
|
|
Unamortized net deferred loan fees
|
|
|
(2,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,812
|
)
|
Discounts to principal balance of loans owed, net of charge-offs
|
|
|
|
|
|
|
(13,366
|
)
|
|
|
(11,649
|
)
|
|
|
(14,681
|
)
|
|
|
(39,696
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of unamortized deferred loan fees and discounts
|
|
$
|
1,397,335
|
|
|
$
|
97,920
|
|
|
$
|
8,972
|
|
|
$
|
60,596
|
|
|
$
|
1,564,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncovered loans
|
|
$
|
1,397,335
|
|
|
$
|
97,920
|
|
|
$
|
8,972
|
|
|
$
|
18,708
|
|
|
$
|
1,522,935
|
|
Covered loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,888
|
|
|
|
41,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of unamortized deferred loan fees and discounts
|
|
$
|
1,397,335
|
|
|
$
|
97,920
|
|
|
$
|
8,972
|
|
|
$
|
60,596
|
|
|
$
|
1,564,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
$
|
(35,769
|
)
|
|
$
|
(1,969
|
)
|
|
$
|
(1,054
|
)
|
|
$
|
(3,856
|
)
|
|
$
|
(42,648
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a summary of the change in accretable yield for PCI other loans during the periods indicated (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Change in accretable yield:
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
22,337
|
|
|
$
|
25,145
|
|
Acquisitions
|
|
|
|
|
|
|
|
|
Accretion to interest income
|
|
|
(6,305
|
)
|
|
|
(7,756
|
)
|
Reclassification (to) from nonaccretable difference
|
|
|
2,201
|
|
|
|
4,948
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
18,232
|
|
|
$
|
22,337
|
|
|
|
|
|
|
|
|
|
|
Note 4 Loans (continued)
70
Note 5 Allowance for Loan Losses
The following tables summarize the activity in the allowance for loan losses, and ending balance of loans, net of unearned fees for the
periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan LossesYear Ended December 31, 2013
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Beginning balance
|
|
$
|
3,523
|
|
|
$
|
8,782
|
|
|
$
|
21,367
|
|
|
$
|
1,155
|
|
|
$
|
243
|
|
|
$
|
696
|
|
|
$
|
4,703
|
|
|
$
|
1,400
|
|
|
$
|
779
|
|
|
$
|
42,648
|
|
Charge-offs
|
|
|
(46
|
)
|
|
|
(2,038
|
)
|
|
|
(2,651
|
)
|
|
|
(94
|
)
|
|
|
(68
|
)
|
|
|
(887
|
)
|
|
|
(1,599
|
)
|
|
|
(20
|
)
|
|
|
(140
|
)
|
|
|
(7,543
|
)
|
Recoveries
|
|
|
345
|
|
|
|
994
|
|
|
|
1,053
|
|
|
|
41
|
|
|
|
195
|
|
|
|
759
|
|
|
|
340
|
|
|
|
63
|
|
|
|
65
|
|
|
|
3,855
|
|
(Benefit) provision
|
|
|
(668
|
)
|
|
|
1,962
|
|
|
|
(3,394
|
)
|
|
|
106
|
|
|
|
(304
|
)
|
|
|
21
|
|
|
|
887
|
|
|
|
116
|
|
|
|
559
|
|
|
|
(715
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
3,154
|
|
|
$
|
9,700
|
|
|
$
|
16,375
|
|
|
$
|
1,208
|
|
|
$
|
66
|
|
|
$
|
589
|
|
|
$
|
4,331
|
|
|
$
|
1,559
|
|
|
$
|
1,263
|
|
|
$
|
38,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individ. evaluated for impairment
|
|
$
|
775
|
|
|
$
|
1,198
|
|
|
$
|
1,140
|
|
|
$
|
169
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
$
|
585
|
|
|
$
|
91
|
|
|
$
|
8
|
|
|
$
|
3,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans pooled for evaluation
|
|
$
|
2,039
|
|
|
$
|
7,815
|
|
|
$
|
14,749
|
|
|
$
|
1,039
|
|
|
$
|
65
|
|
|
$
|
581
|
|
|
$
|
2,402
|
|
|
$
|
751
|
|
|
$
|
789
|
|
|
$
|
30,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
340
|
|
|
$
|
687
|
|
|
$
|
486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,344
|
|
|
$
|
717
|
|
|
$
|
466
|
|
|
$
|
4,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of unearned fees As of December 31, 2013
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Ending balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
195,013
|
|
|
$
|
912,850
|
|
|
$
|
339,866
|
|
|
$
|
14,588
|
|
|
$
|
946
|
|
|
$
|
27,763
|
|
|
$
|
131,878
|
|
|
$
|
31,933
|
|
|
$
|
17,170
|
|
|
$
|
1,672,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individ. evaluated for impairment
|
|
$
|
7,342
|
|
|
$
|
59,936
|
|
|
$
|
6,918
|
|
|
$
|
778
|
|
|
$
|
60
|
|
|
$
|
90
|
|
|
$
|
3,177
|
|
|
$
|
2,756
|
|
|
$
|
178
|
|
|
$
|
81,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans pooled for evaluation
|
|
$
|
183,015
|
|
|
$
|
822,654
|
|
|
$
|
322,865
|
|
|
$
|
13,324
|
|
|
$
|
886
|
|
|
$
|
27,592
|
|
|
$
|
122,166
|
|
|
$
|
27,611
|
|
|
$
|
16,947
|
|
|
$
|
1,537,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
4,656
|
|
|
$
|
30,260
|
|
|
$
|
10,083
|
|
|
$
|
486
|
|
|
|
|
|
|
$
|
81
|
|
|
$
|
6,535
|
|
|
$
|
1,566
|
|
|
$
|
45
|
|
|
$
|
53,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71
Note 5 Allowance for Loan Losses (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan LossesYear Ended December 31, 2012
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Beginning balance
|
|
$
|
2,404
|
|
|
$
|
13,217
|
|
|
$
|
18,258
|
|
|
$
|
1,101
|
|
|
$
|
215
|
|
|
$
|
932
|
|
|
$
|
6,545
|
|
|
$
|
1,817
|
|
|
$
|
1,425
|
|
|
$
|
45,914
|
|
Charge-offs
|
|
|
(1,558
|
)
|
|
|
(3,457
|
)
|
|
|
(8,042
|
)
|
|
|
(385
|
)
|
|
|
(83
|
)
|
|
|
(1,202
|
)
|
|
|
(1,251
|
)
|
|
|
(406
|
)
|
|
|
(100
|
)
|
|
|
(16,484
|
)
|
Recoveries
|
|
|
147
|
|
|
|
1,020
|
|
|
|
398
|
|
|
|
100
|
|
|
|
215
|
|
|
|
860
|
|
|
|
643
|
|
|
|
412
|
|
|
|
|
|
|
|
3,795
|
|
Provision (benefit)
|
|
|
2,530
|
|
|
|
(1,998
|
)
|
|
|
10,753
|
|
|
|
339
|
|
|
|
(104
|
)
|
|
|
106
|
|
|
|
(1,234
|
)
|
|
|
(423
|
)
|
|
|
(546
|
)
|
|
|
9,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
3,523
|
|
|
$
|
8,782
|
|
|
$
|
21,367
|
|
|
$
|
1,155
|
|
|
$
|
243
|
|
|
$
|
696
|
|
|
$
|
4,703
|
|
|
$
|
1,400
|
|
|
$
|
779
|
|
|
$
|
42,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individ. evaluated for impairment
|
|
$
|
631
|
|
|
$
|
515
|
|
|
$
|
2,264
|
|
|
$
|
81
|
|
|
$
|
5
|
|
|
$
|
47
|
|
|
$
|
840
|
|
|
$
|
11
|
|
|
$
|
111
|
|
|
$
|
4,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans pooled for evaluation
|
|
$
|
2,526
|
|
|
$
|
8,026
|
|
|
$
|
17,862
|
|
|
$
|
995
|
|
|
$
|
238
|
|
|
$
|
649
|
|
|
$
|
2,342
|
|
|
$
|
430
|
|
|
$
|
165
|
|
|
$
|
33,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
366
|
|
|
$
|
241
|
|
|
$
|
1,241
|
|
|
$
|
79
|
|
|
|
|
|
|
|
|
|
|
$
|
1,521
|
|
|
$
|
959
|
|
|
$
|
503
|
|
|
$
|
4,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of unearned fees As of December 31, 2012
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Ending balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
131,684
|
|
|
$
|
878,446
|
|
|
$
|
342,025
|
|
|
$
|
13,557
|
|
|
$
|
3,816
|
|
|
$
|
26,713
|
|
|
$
|
135,528
|
|
|
$
|
18,459
|
|
|
$
|
14,595
|
|
|
$
|
1,564,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individ. evaluated for impairment
|
|
$
|
6,586
|
|
|
$
|
71,077
|
|
|
$
|
10,056
|
|
|
$
|
528
|
|
|
$
|
197
|
|
|
$
|
121
|
|
|
$
|
8,562
|
|
|
$
|
3,596
|
|
|
$
|
607
|
|
|
$
|
101,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans pooled for evaluation
|
|
$
|
120,082
|
|
|
$
|
776,137
|
|
|
$
|
318,403
|
|
|
$
|
12,825
|
|
|
$
|
3,619
|
|
|
$
|
26,560
|
|
|
$
|
117,429
|
|
|
$
|
8,281
|
|
|
$
|
10,589
|
|
|
$
|
1,393,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
5,016
|
|
|
$
|
31,232
|
|
|
$
|
13,566
|
|
|
$
|
204
|
|
|
|
|
|
|
$
|
32
|
|
|
$
|
9,537
|
|
|
$
|
6,582
|
|
|
$
|
3,399
|
|
|
$
|
69,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan LossesYear Ended December 31, 2011
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Beginning balance
|
|
$
|
3,007
|
|
|
$
|
12,700
|
|
|
$
|
15,054
|
|
|
$
|
795
|
|
|
$
|
1,229
|
|
|
$
|
701
|
|
|
$
|
5,991
|
|
|
$
|
1,824
|
|
|
$
|
1,270
|
|
|
$
|
42,571
|
|
Charge-offs
|
|
|
(1,655
|
)
|
|
|
(4,451
|
)
|
|
|
(9,746
|
)
|
|
|
(789
|
)
|
|
|
(427
|
)
|
|
|
(1,158
|
)
|
|
|
(2,534
|
)
|
|
|
(634
|
)
|
|
|
(653
|
)
|
|
|
(22,047
|
)
|
Recoveries
|
|
|
126
|
|
|
|
127
|
|
|
|
573
|
|
|
|
45
|
|
|
|
379
|
|
|
|
839
|
|
|
|
173
|
|
|
|
28
|
|
|
|
40
|
|
|
|
2,330
|
|
Provision (benefit)
|
|
|
926
|
|
|
|
4,841
|
|
|
|
12,377
|
|
|
|
1,050
|
|
|
|
(966
|
)
|
|
|
550
|
|
|
|
2,915
|
|
|
|
599
|
|
|
|
768
|
|
|
|
23,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
2,404
|
|
|
$
|
13,217
|
|
|
$
|
18,258
|
|
|
$
|
1,101
|
|
|
$
|
215
|
|
|
$
|
932
|
|
|
$
|
6,545
|
|
|
$
|
1,817
|
|
|
$
|
1,425
|
|
|
$
|
45,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individ. evaluated for impairment
|
|
$
|
460
|
|
|
$
|
1,620
|
|
|
$
|
2,365
|
|
|
$
|
73
|
|
|
$
|
29
|
|
|
$
|
24
|
|
|
$
|
193
|
|
|
$
|
258
|
|
|
$
|
971
|
|
|
$
|
5,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans pooled for evaluation
|
|
$
|
1,750
|
|
|
$
|
11,374
|
|
|
$
|
14,531
|
|
|
$
|
978
|
|
|
$
|
186
|
|
|
$
|
892
|
|
|
$
|
4,618
|
|
|
$
|
1,324
|
|
|
$
|
57
|
|
|
$
|
35,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
194
|
|
|
$
|
223
|
|
|
$
|
1,362
|
|
|
$
|
50
|
|
|
|
|
|
|
$
|
16
|
|
|
$
|
1,734
|
|
|
$
|
235
|
|
|
$
|
397
|
|
|
$
|
4,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of unearned fees As of December 31, 2011
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Ending balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
139,586
|
|
|
$
|
826,336
|
|
|
$
|
357,305
|
|
|
$
|
14,844
|
|
|
$
|
10,821
|
|
|
$
|
23,360
|
|
|
$
|
139,131
|
|
|
$
|
22,122
|
|
|
$
|
17,527
|
|
|
$
|
1,551,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individ. evaluated for impairment
|
|
$
|
10,167
|
|
|
$
|
71,893
|
|
|
$
|
9,388
|
|
|
$
|
661
|
|
|
$
|
571
|
|
|
$
|
109
|
|
|
$
|
9,526
|
|
|
$
|
5,627
|
|
|
$
|
6,899
|
|
|
$
|
114,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans pooled for evaluation
|
|
$
|
122,903
|
|
|
$
|
721,217
|
|
|
$
|
333,348
|
|
|
$
|
14,026
|
|
|
$
|
10,250
|
|
|
$
|
23,202
|
|
|
$
|
115,765
|
|
|
$
|
8,281
|
|
|
$
|
5,845
|
|
|
$
|
1,354,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans acquired with deteriorated credit quality
|
|
$
|
6,516
|
|
|
$
|
33,226
|
|
|
$
|
14,569
|
|
|
$
|
157
|
|
|
|
|
|
|
$
|
49
|
|
|
$
|
13,840
|
|
|
$
|
8,214
|
|
|
$
|
4,783
|
|
|
$
|
81,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As part of the on-going monitoring of the credit quality of the Companys loan portfolio, management tracks certain
credit quality indicators including, but not limited to, trends relating to (i) the level of criticized and classified loans, (ii) net charge-offs, (iii) non-performing loans, and (iv) delinquency within the portfolio.
72
The Company utilizes a risk grading system to assign a risk grade to each of its loans. Loans are graded on a
scale ranging from Pass to Loss. A description of the general characteristics of the risk grades is as follows:
|
|
|
Pass
This grade represents loans ranging from acceptable to very little or no credit risk. These loans typically meet most if not all policy standards in regard to: loan amount as a percentage of
collateral value, debt service coverage, profitability, leverage, and working capital.
|
|
|
|
Special Mention
This grade represents Other Assets Especially Mentioned in accordance with regulatory guidelines and includes loans that display some potential weaknesses which, if left
unaddressed, may result in deterioration of the repayment prospects for the asset or may inadequately protect the Companys position in the future. These loans warrant more than normal supervision and attention.
|
|
|
|
Substandard
This grade represents Substandard loans in accordance with regulatory guidelines. Loans within this rating typically exhibit weaknesses that are well defined to the point that
repayment is jeopardized. Loss potential is, however, not necessarily evident. The underlying collateral supporting the credit appears to have sufficient value to protect the Company from loss of principal and accrued interest, or the loan has been
written down to the point where this is true. There is a definite need for a well defined workout/rehabilitation program.
|
|
|
|
Doubtful
This grade represents Doubtful loans in accordance with regulatory guidelines. An asset classified as Doubtful has all the weaknesses inherent in a loan classified Substandard with the
added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Pending factors include proposed merger, acquisition, or
liquidation procedures, capital injection, perfecting liens on additional collateral, and financing plans.
|
|
|
|
Loss
This grade represents Loss loans in accordance with regulatory guidelines. A loan classified as Loss is considered uncollectible and of such little value that its continuance as a bankable
asset is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan, even though some recovery may be affected in the
future. The portion of the loan that is graded loss should be charged off no later than the end of the quarter in which the loss is identified.
|
The following tables present ending loan balances by loan category and risk grade for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality Indicators As of December 31, 2013
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Originated loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
121,969
|
|
|
$
|
768,596
|
|
|
$
|
203,232
|
|
|
$
|
12,284
|
|
|
$
|
717
|
|
|
$
|
24,653
|
|
|
$
|
121,580
|
|
|
$
|
25,836
|
|
|
$
|
16,571
|
|
|
$
|
1,394,438
|
|
Special mention
|
|
|
1,265
|
|
|
|
15,862
|
|
|
|
4,529
|
|
|
|
504
|
|
|
|
118
|
|
|
|
756
|
|
|
|
938
|
|
|
|
96
|
|
|
|
343
|
|
|
|
24,411
|
|
Substandard
|
|
|
6,648
|
|
|
|
40,454
|
|
|
|
9,446
|
|
|
|
1,061
|
|
|
|
111
|
|
|
|
196
|
|
|
|
2,122
|
|
|
|
4,435
|
|
|
|
211
|
|
|
|
64,684
|
|
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total originated
|
|
$
|
129,882
|
|
|
$
|
824,912
|
|
|
$
|
316,207
|
|
|
$
|
13,849
|
|
|
$
|
946
|
|
|
$
|
25,608
|
|
|
$
|
124,650
|
|
|
$
|
30,367
|
|
|
$
|
17,125
|
|
|
$
|
1,483,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNCI loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
59,798
|
|
|
$
|
48,548
|
|
|
$
|
12,716
|
|
|
$
|
253
|
|
|
|
|
|
|
$
|
2,020
|
|
|
$
|
380
|
|
|
|
|
|
|
|
|
|
|
$
|
123,715
|
|
Special mention
|
|
|
|
|
|
|
5,810
|
|
|
|
195
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
313
|
|
|
|
|
|
|
|
|
|
|
|
6,336
|
|
Substandard
|
|
|
677
|
|
|
|
3,320
|
|
|
|
665
|
|
|
|
|
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,698
|
|
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total PNCI
|
|
$
|
60,475
|
|
|
$
|
57,678
|
|
|
$
|
13,576
|
|
|
$
|
253
|
|
|
|
|
|
|
$
|
2,074
|
|
|
$
|
693
|
|
|
|
|
|
|
|
|
|
|
$
|
134,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans
|
|
$
|
4,656
|
|
|
$
|
30,260
|
|
|
$
|
10,083
|
|
|
$
|
486
|
|
|
|
|
|
|
$
|
81
|
|
|
$
|
6,535
|
|
|
$
|
1,566
|
|
|
$
|
45
|
|
|
$
|
53,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
195,013
|
|
|
$
|
912,850
|
|
|
$
|
339,866
|
|
|
$
|
14,588
|
|
|
$
|
946
|
|
|
$
|
27,763
|
|
|
$
|
131,878
|
|
|
$
|
31,933
|
|
|
$
|
17,170
|
|
|
$
|
1,672,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality Indicators As of December 31, 2012
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Originated loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
108,946
|
|
|
$
|
686,593
|
|
|
$
|
291,701
|
|
|
$
|
11,892
|
|
|
$
|
2,949
|
|
|
$
|
23,154
|
|
|
$
|
113,595
|
|
|
$
|
7,744
|
|
|
$
|
10,221
|
|
|
$
|
1,256,795
|
|
Special mention
|
|
|
3,122
|
|
|
|
21,184
|
|
|
|
6,955
|
|
|
|
555
|
|
|
|
531
|
|
|
|
958
|
|
|
|
3,224
|
|
|
|
285
|
|
|
|
356
|
|
|
|
37,170
|
|
Substandard
|
|
|
9,187
|
|
|
|
67,347
|
|
|
|
13,015
|
|
|
|
564
|
|
|
|
336
|
|
|
|
151
|
|
|
|
8,303
|
|
|
|
3,848
|
|
|
|
619
|
|
|
|
103,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total originated
|
|
$
|
121,255
|
|
|
$
|
775,124
|
|
|
$
|
311,671
|
|
|
$
|
13,011
|
|
|
$
|
3,816
|
|
|
$
|
24,263
|
|
|
$
|
125,122
|
|
|
$
|
11,877
|
|
|
$
|
11,196
|
|
|
$
|
1,397,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNCI loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
4,968
|
|
|
$
|
64,917
|
|
|
$
|
15,915
|
|
|
$
|
342
|
|
|
|
|
|
|
$
|
2,240
|
|
|
$
|
848
|
|
|
|
|
|
|
|
|
|
|
$
|
89,230
|
|
Special mention
|
|
|
|
|
|
|
5,249
|
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
104
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
5,567
|
|
Substandard
|
|
|
436
|
|
|
|
1,924
|
|
|
|
680
|
|
|
|
|
|
|
|
|
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,114
|
|
Loss
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total PNCI
|
|
$
|
5,413
|
|
|
$
|
72,090
|
|
|
$
|
16,788
|
|
|
$
|
342
|
|
|
|
|
|
|
$
|
2,418
|
|
|
$
|
869
|
|
|
|
|
|
|
|
|
|
|
$
|
97,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCI loans
|
|
$
|
5,016
|
|
|
$
|
31,232
|
|
|
$
|
13,566
|
|
|
$
|
204
|
|
|
|
|
|
|
$
|
32
|
|
|
$
|
9,537
|
|
|
$
|
6,582
|
|
|
$
|
3,399
|
|
|
$
|
69,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
131,684
|
|
|
$
|
878,446
|
|
|
$
|
342,025
|
|
|
$
|
13,557
|
|
|
$
|
3,816
|
|
|
$
|
26,713
|
|
|
$
|
135,528
|
|
|
$
|
18,459
|
|
|
$
|
14,595
|
|
|
$
|
1,564,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73
Consumer loans, whether unsecured or secured by real estate, automobiles, or other personal property, are
susceptible to three primary risks; non-payment due to income loss, over-extension of credit and, when the borrower is unable to pay, shortfall in collateral value. Typically non-payment is due to loss of job and will follow general economic trends
in the marketplace driven primarily by rises in the unemployment rate. Loss of collateral value can be due to market demand shifts, damage to collateral itself or a combination of the two.
Problem consumer loans are generally identified by payment history of the borrower (delinquency). The Bank manages its consumer loan portfolios by monitoring
delinquency and contacting borrowers to encourage repayment, suggest modifications if appropriate, and, when continued scheduled payments become unrealistic, initiate repossession or foreclosure through appropriate channels. Collateral values may be
determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value information (blue book values for autos), sales invoices, or other appropriate means. Appropriate valuations are obtained
at initiation of the credit and periodically (every 3-12 months depending on collateral type) once repayment is questionable and the loan has been classified.
Commercial real estate loans generally fall into two categories, owner-occupied and non-owner occupied. Loans secured by owner occupied real estate are
primarily susceptible to changes in the business conditions of the related business. This may be driven by, among other things, industry changes, geographic business changes, changes in the individual fortunes of the business owner, and general
economic conditions and changes in business cycles. These same risks apply to commercial loans whether secured by equipment or other personal property or unsecured. Losses on loans secured by owner occupied real estate, equipment, or other personal
property generally are dictated by the value of underlying collateral at the time of default and liquidation of the collateral. When default is driven by issues related specifically to the business owner, collateral values tend to provide better
repayment support and may result in little or no loss. Alternatively, when default is driven by more general economic conditions, underlying collateral generally has devalued more and results in larger losses due to default. Loans secured by
non-owner occupied real estate are primarily susceptible to risks associated with swings in occupancy or vacancy and related shifts in lease rates, rental rates or room rates. Most often these shifts are a result of changes in general economic or
market conditions or overbuilding and resultant over-supply. Losses are dependent on value of underlying collateral at the time of default. Values are generally driven by these same factors and influenced by interest rates and required rates of
return as well as changes in occupancy costs.
Construction loans, whether owner occupied or non-owner occupied commercial real estate loans or
residential development loans, are not only susceptible to the related risks described above but the added risks of construction itself including cost over-runs, mismanagement of the project, or lack of demand or market changes experienced at time
of completion. Again, losses are primarily related to underlying collateral value and changes therein as described above.
Problem C&I loans are
generally identified by periodic review of financial information which may include financial statements, tax returns, rent rolls and payment history of the borrower (delinquency). Based on this information the Bank may decide to take any of several
courses of action including demand for repayment, additional collateral or guarantors, and, when repayment becomes unlikely through borrowers income and cash flow, repossession or foreclosure of the underlying collateral.
Collateral values may be determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value
information (blue book values for autos), sales invoices, or other appropriate means. Appropriate valuations are obtained at initiation of the credit and periodically (every 3-12 months depending on collateral type) once repayment is questionable
and the loan has been classified.
Once a loan becomes delinquent and repayment becomes questionable, a Bank collection officer will address collateral
shortfalls with the borrower and attempt to obtain additional collateral. If this is not forthcoming and payment in full is unlikely, the Bank will estimate its probable loss, using a recent valuation as appropriate to the underlying collateral less
estimated costs of sale, and charge the loan down to the estimated net realizable amount. Depending on the length of time until ultimate collection, the Bank may revalue the underlying collateral and take additional charge-offs as warranted.
Revaluations may occur as often as every 3-12 months depending on the underlying collateral and volatility of values. Final charge-offs or recoveries are taken when collateral is liquidated and actual loss is known. Unpaid balances on loans after or
during collection and liquidation may also be pursued through lawsuit and attachment of wages or judgment liens on borrowers other assets.
The
following table shows the ending balance of current, past due, and nonaccrual originated loans by loan category as of the date indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis of Past Due and Nonaccrual Originated Loans As of December 31, 2013
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Originated loan balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past due:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
|
|
$
|
2,272
|
|
|
$
|
2,304
|
|
|
$
|
3,121
|
|
|
$
|
264
|
|
|
$
|
24
|
|
|
$
|
40
|
|
|
$
|
296
|
|
|
|
|
|
|
|
|
|
|
$
|
8,321
|
|
60-89 Days
|
|
|
284
|
|
|
|
|
|
|
|
1,070
|
|
|
|
16
|
|
|
|
1
|
|
|
|
16
|
|
|
|
76
|
|
|
|
|
|
|
$
|
198
|
|
|
|
1,661
|
|
> 90 Days
|
|
|
447
|
|
|
|
2,213
|
|
|
|
1,050
|
|
|
|
312
|
|
|
|
33
|
|
|
|
7
|
|
|
|
749
|
|
|
|
13
|
|
|
|
|
|
|
|
4,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total past due
|
|
$
|
3,003
|
|
|
$
|
4,517
|
|
|
$
|
5,241
|
|
|
$
|
592
|
|
|
$
|
58
|
|
|
$
|
63
|
|
|
$
|
1,121
|
|
|
$
|
13
|
|
|
$
|
198
|
|
|
$
|
14,806
|
|
Current
|
|
|
126,879
|
|
|
|
820,395
|
|
|
|
310,966
|
|
|
|
13,257
|
|
|
|
888
|
|
|
|
25,545
|
|
|
|
123,529
|
|
|
|
30,354
|
|
|
|
16,927
|
|
|
|
1,468,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total orig. loans
|
|
$
|
129,882
|
|
|
$
|
824,912
|
|
|
$
|
316,207
|
|
|
$
|
13,849
|
|
|
$
|
946
|
|
|
|
25,608
|
|
|
$
|
124,650
|
|
|
$
|
30,367
|
|
|
$
|
17,125
|
|
|
$
|
1,483,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> 90 Days and still accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans
|
|
$
|
4,697
|
|
|
$
|
30,732
|
|
|
$
|
4,972
|
|
|
$
|
719
|
|
|
$
|
54
|
|
|
$
|
26
|
|
|
$
|
1,280
|
|
|
$
|
2,473
|
|
|
$
|
178
|
|
|
$
|
45,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74
The following table shows the ending balance of current, past due, and nonaccrual PNCI loans by loan category as
of the date indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis of Past Due and Nonaccrual PNCI Loans As of December 31, 2013
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
PNCI loan balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past due:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
|
|
$
|
799
|
|
|
$
|
512
|
|
|
$
|
313
|
|
|
|
|
|
|
|
|
|
|
$
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,673
|
|
60-89 Days
|
|
|
|
|
|
|
352
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
390
|
|
> 90 Days
|
|
|
|
|
|
|
217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total past due
|
|
$
|
799
|
|
|
$
|
1,081
|
|
|
$
|
351
|
|
|
|
|
|
|
|
|
|
|
$
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,280
|
|
Current
|
|
|
59,676
|
|
|
|
56,597
|
|
|
|
13,225
|
|
|
$
|
253
|
|
|
|
|
|
|
|
2,025
|
|
|
$
|
693
|
|
|
|
|
|
|
|
|
|
|
|
132,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total PNCI loans
|
|
$
|
60,475
|
|
|
$
|
57,678
|
|
|
$
|
13,576
|
|
|
$
|
253
|
|
|
|
|
|
|
$
|
2,074
|
|
|
$
|
693
|
|
|
|
|
|
|
|
|
|
|
$
|
134,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> 90 Days and still accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans
|
|
$
|
262
|
|
|
$
|
1,139
|
|
|
$
|
429
|
|
|
|
|
|
|
|
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the ending balance of current, past due, and nonaccrual originated loans by loan category as of the
date indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis of Past Due and Nonaccrual Originated Loans As of December 31, 2012
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Originated loan balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past due:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
|
|
$
|
1,702
|
|
|
$
|
2,695
|
|
|
$
|
3,371
|
|
|
$
|
67
|
|
|
$
|
77
|
|
|
$
|
67
|
|
|
$
|
1,848
|
|
|
$
|
309
|
|
|
|
|
|
|
$
|
10,136
|
|
60-89 Days
|
|
|
278
|
|
|
|
1,578
|
|
|
|
819
|
|
|
|
33
|
|
|
|
40
|
|
|
|
40
|
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
|
2,926
|
|
> 90 Days
|
|
|
674
|
|
|
|
13,829
|
|
|
|
3,395
|
|
|
|
217
|
|
|
|
79
|
|
|
|
14
|
|
|
|
4,782
|
|
|
|
42
|
|
|
$
|
94
|
|
|
|
23,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total past due
|
|
$
|
2,654
|
|
|
$
|
18,102
|
|
|
$
|
7,585
|
|
|
$
|
317
|
|
|
$
|
196
|
|
|
$
|
121
|
|
|
$
|
6,768
|
|
|
$
|
351
|
|
|
$
|
94
|
|
|
$
|
36,188
|
|
Current
|
|
|
118,601
|
|
|
|
757,022
|
|
|
|
304,086
|
|
|
|
12,694
|
|
|
|
3,620
|
|
|
|
24,142
|
|
|
|
118,354
|
|
|
|
11,526
|
|
|
|
11,102
|
|
|
|
1,361,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total orig. loans
|
|
$
|
121,255
|
|
|
$
|
775,124
|
|
|
$
|
311,671
|
|
|
$
|
13,011
|
|
|
$
|
3,816
|
|
|
$
|
24,263
|
|
|
$
|
125,122
|
|
|
$
|
11,877
|
|
|
$
|
11,196
|
|
|
$
|
1,397,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> 90 Days and still accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans
|
|
$
|
4,781
|
|
|
$
|
37,220
|
|
|
$
|
8,486
|
|
|
$
|
465
|
|
|
$
|
174
|
|
|
$
|
49
|
|
|
$
|
6,750
|
|
|
$
|
3,312
|
|
|
$
|
532
|
|
|
$
|
61,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the ending balance of current, past due, and nonaccrual PNCI loans by loan category as of the date
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis of Past Due and Nonaccrual PNCI Loans As of December 31, 2012
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
PNCI loan balance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past due:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
|
|
$
|
1,024
|
|
|
$
|
500
|
|
|
$
|
124
|
|
|
|
|
|
|
|
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,679
|
|
60-89 Days
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
> 90 Days
|
|
|
43
|
|
|
|
148
|
|
|
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total past due
|
|
$
|
1,067
|
|
|
$
|
648
|
|
|
$
|
344
|
|
|
|
|
|
|
|
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,090
|
|
Current
|
|
|
4,346
|
|
|
|
71,442
|
|
|
|
16,444
|
|
|
$
|
342
|
|
|
|
|
|
|
|
2,387
|
|
|
$
|
869
|
|
|
|
|
|
|
|
|
|
|
|
95,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total PNCI loans
|
|
$
|
5,413
|
|
|
$
|
72,090
|
|
|
$
|
16,788
|
|
|
$
|
342
|
|
|
|
|
|
|
$
|
2,418
|
|
|
$
|
869
|
|
|
|
|
|
|
|
|
|
|
$
|
97,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> 90 Days and still accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans
|
|
$
|
113
|
|
|
$
|
1,218
|
|
|
$
|
403
|
|
|
|
|
|
|
|
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75
Impaired originated loans are those where management has concluded that it is probable that the borrower will be
unable to pay all amounts due under the contractual terms. The following tables show the recorded investment (financial statement balance), unpaid principal balance, average recorded investment, and interest income recognized for impaired Originated
and PNCI loans, segregated by those with no related allowance recorded and those with an allowance recorded for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Originated Loans As of December 31, 2013
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
$
|
4,366
|
|
|
$
|
53,352
|
|
|
$
|
3,710
|
|
|
$
|
552
|
|
|
$
|
55
|
|
|
$
|
16
|
|
|
$
|
1,648
|
|
|
$
|
2,473
|
|
|
$
|
69
|
|
|
$
|
66,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
$
|
6,489
|
|
|
$
|
58,894
|
|
|
$
|
7,299
|
|
|
$
|
1,249
|
|
|
$
|
123
|
|
|
$
|
21
|
|
|
$
|
1,665
|
|
|
$
|
6,611
|
|
|
$
|
138
|
|
|
$
|
82,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
4,123
|
|
|
$
|
58,205
|
|
|
$
|
4,410
|
|
|
$
|
463
|
|
|
$
|
93
|
|
|
$
|
18
|
|
|
$
|
2,154
|
|
|
$
|
1,567
|
|
|
$
|
83
|
|
|
$
|
71,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized
|
|
$
|
336
|
|
|
$
|
3,361
|
|
|
$
|
352
|
|
|
$
|
36
|
|
|
$
|
12
|
|
|
$
|
1
|
|
|
$
|
113
|
|
|
$
|
108
|
|
|
$
|
7
|
|
|
$
|
4,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
$
|
2,630
|
|
|
$
|
5,296
|
|
|
$
|
2,779
|
|
|
$
|
226
|
|
|
$
|
4
|
|
|
$
|
10
|
|
|
$
|
1,517
|
|
|
$
|
284
|
|
|
$
|
109
|
|
|
$
|
12,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
$
|
2,689
|
|
|
$
|
5,659
|
|
|
$
|
3,053
|
|
|
$
|
291
|
|
|
$
|
6
|
|
|
$
|
10
|
|
|
$
|
1,616
|
|
|
$
|
284
|
|
|
$
|
288
|
|
|
$
|
13,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related allowance
|
|
$
|
648
|
|
|
$
|
1,084
|
|
|
$
|
968
|
|
|
$
|
169
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
585
|
|
|
$
|
91
|
|
|
$
|
7
|
|
|
$
|
3,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
2,245
|
|
|
$
|
6,077
|
|
|
$
|
3,064
|
|
|
$
|
141
|
|
|
$
|
12
|
|
|
$
|
7
|
|
|
$
|
1,817
|
|
|
$
|
1,499
|
|
|
$
|
188
|
|
|
$
|
15,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
$
|
124
|
|
|
$
|
287
|
|
|
$
|
146
|
|
|
$
|
18
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
95
|
|
|
$
|
19
|
|
|
$
|
15
|
|
|
$
|
707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired PNCI Loans As of December 31, 2013
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
$
|
148
|
|
|
$
|
1,139
|
|
|
$
|
227
|
|
|
|
|
|
|
|
|
|
|
$
|
36
|
|
|
$
|
12
|
|
|
|
|
|
|
|
|
|
|
$
|
1,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
$
|
158
|
|
|
$
|
3,323
|
|
|
$
|
287
|
|
|
|
|
|
|
|
|
|
|
$
|
45
|
|
|
$
|
12
|
|
|
|
|
|
|
|
|
|
|
$
|
3,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
37
|
|
|
$
|
1,005
|
|
|
$
|
333
|
|
|
|
|
|
|
|
|
|
|
$
|
39
|
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
$
|
1,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
$
|
11
|
|
|
$
|
233
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
$
|
5
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
$
|
271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
$
|
198
|
|
|
$
|
149
|
|
|
$
|
203
|
|
|
|
|
|
|
|
|
|
|
$
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
$
|
207
|
|
|
$
|
149
|
|
|
$
|
215
|
|
|
|
|
|
|
|
|
|
|
$
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related allowance
|
|
$
|
128
|
|
|
$
|
114
|
|
|
$
|
172
|
|
|
|
|
|
|
|
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
275
|
|
|
$
|
250
|
|
|
$
|
162
|
|
|
|
|
|
|
|
|
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
$
|
12
|
|
|
$
|
9
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Originated Loans As of December 31, 2012
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
$
|
3,520
|
|
|
$
|
66,031
|
|
|
$
|
4,241
|
|
|
$
|
361
|
|
|
$
|
163
|
|
|
$
|
19
|
|
|
$
|
4,238
|
|
|
$
|
3,554
|
|
|
$
|
284
|
|
|
$
|
82,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
$
|
5,349
|
|
|
$
|
70,709
|
|
|
$
|
6,691
|
|
|
$
|
781
|
|
|
$
|
311
|
|
|
$
|
40
|
|
|
$
|
4,613
|
|
|
$
|
8,227
|
|
|
$
|
484
|
|
|
$
|
97,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
6,329
|
|
|
$
|
61,299
|
|
|
$
|
4,311
|
|
|
$
|
329
|
|
|
$
|
263
|
|
|
$
|
42
|
|
|
$
|
7,500
|
|
|
$
|
3,505
|
|
|
$
|
517
|
|
|
$
|
84,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
$
|
71
|
|
|
$
|
2,513
|
|
|
$
|
58
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
|
|
|
|
$
|
73
|
|
|
$
|
20
|
|
|
$
|
10
|
|
|
$
|
2,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
$
|
2,867
|
|
|
$
|
3,258
|
|
|
$
|
5,412
|
|
|
$
|
167
|
|
|
$
|
34
|
|
|
$
|
30
|
|
|
$
|
4,324
|
|
|
$
|
42
|
|
|
$
|
323
|
|
|
$
|
16,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
$
|
3,432
|
|
|
$
|
3,556
|
|
|
$
|
7,103
|
|
|
$
|
396
|
|
|
$
|
51
|
|
|
$
|
32
|
|
|
$
|
4,992
|
|
|
$
|
42
|
|
|
$
|
523
|
|
|
$
|
20,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related allowance
|
|
$
|
603
|
|
|
$
|
352
|
|
|
$
|
2,237
|
|
|
$
|
81
|
|
|
$
|
5
|
|
|
$
|
12
|
|
|
$
|
840
|
|
|
$
|
11
|
|
|
$
|
111
|
|
|
$
|
4,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
3,890
|
|
|
$
|
7,841
|
|
|
$
|
6,331
|
|
|
$
|
317
|
|
|
$
|
102
|
|
|
$
|
49
|
|
|
$
|
2,800
|
|
|
$
|
1,543
|
|
|
$
|
6,570
|
|
|
$
|
29,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
$
|
67
|
|
|
$
|
129
|
|
|
$
|
103
|
|
|
$
|
16
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
100
|
|
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired PNCI Loans As of December 31, 2012
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
|
|
|
|
$
|
1,468
|
|
|
$
|
365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
|
|
|
|
$
|
3,452
|
|
|
$
|
586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
16
|
|
|
$
|
2,097
|
|
|
$
|
308
|
|
|
$
|
11
|
|
|
|
|
|
|
$
|
31
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
$
|
2,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
|
|
|
|
$
|
133
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
$
|
199
|
|
|
$
|
320
|
|
|
$
|
38
|
|
|
|
|
|
|
|
|
|
|
$
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
$
|
225
|
|
|
$
|
331
|
|
|
$
|
41
|
|
|
|
|
|
|
|
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related allowance
|
|
$
|
28
|
|
|
$
|
163
|
|
|
$
|
27
|
|
|
|
|
|
|
|
|
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
213
|
|
|
$
|
121
|
|
|
$
|
148
|
|
|
|
|
|
|
|
|
|
|
$
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
$
|
9
|
|
|
$
|
12
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Originated Loans As of December 31, 2011
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
$
|
6,921
|
|
|
$
|
61,205
|
|
|
$
|
5,101
|
|
|
$
|
224
|
|
|
$
|
424
|
|
|
$
|
39
|
|
|
$
|
8,473
|
|
|
$
|
1,809
|
|
|
$
|
571
|
|
|
$
|
84,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
$
|
8,663
|
|
|
$
|
72,408
|
|
|
$
|
8,519
|
|
|
$
|
528
|
|
|
$
|
777
|
|
|
$
|
56
|
|
|
$
|
9,229
|
|
|
$
|
2,857
|
|
|
$
|
916
|
|
|
$
|
103,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
6,557
|
|
|
$
|
53,346
|
|
|
$
|
5,228
|
|
|
$
|
458
|
|
|
$
|
569
|
|
|
$
|
44
|
|
|
$
|
6,687
|
|
|
$
|
3,942
|
|
|
$
|
3,590
|
|
|
$
|
80,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
$
|
58
|
|
|
$
|
2,235
|
|
|
$
|
99
|
|
|
$
|
7
|
|
|
$
|
15
|
|
|
$
|
2
|
|
|
$
|
381
|
|
|
|
|
|
|
$
|
4
|
|
|
$
|
2,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
$
|
3,246
|
|
|
$
|
10,688
|
|
|
$
|
4,177
|
|
|
$
|
350
|
|
|
$
|
147
|
|
|
$
|
70
|
|
|
$
|
964
|
|
|
$
|
3,818
|
|
|
$
|
6,328
|
|
|
$
|
29,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
$
|
3,760
|
|
|
$
|
11,094
|
|
|
$
|
4,977
|
|
|
$
|
666
|
|
|
$
|
193
|
|
|
$
|
75
|
|
|
$
|
1,040
|
|
|
$
|
8,698
|
|
|
$
|
6,330
|
|
|
$
|
36,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related allowance
|
|
$
|
460
|
|
|
$
|
1,613
|
|
|
$
|
2,365
|
|
|
$
|
73
|
|
|
$
|
29
|
|
|
$
|
24
|
|
|
$
|
200
|
|
|
$
|
258
|
|
|
$
|
971
|
|
|
$
|
5,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
$
|
4,611
|
|
|
$
|
10,019
|
|
|
$
|
4,770
|
|
|
$
|
215
|
|
|
$
|
407
|
|
|
$
|
52
|
|
|
$
|
1,023
|
|
|
$
|
2,334
|
|
|
$
|
3,578
|
|
|
$
|
27,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
$
|
77
|
|
|
$
|
588
|
|
|
$
|
122
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
36
|
|
|
$
|
(16
|
)
|
|
$
|
387
|
|
|
$
|
1,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired PNCI Loans As of December 31, 2011
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
|
|
|
|
|
|
|
|
$
|
110
|
|
|
$
|
87
|
|
|
|
|
|
|
|
|
|
|
$
|
89
|
|
|
|
|
|
|
|
|
|
|
$
|
286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
|
|
|
|
|
|
|
|
$
|
126
|
|
|
$
|
89
|
|
|
|
|
|
|
|
|
|
|
$
|
98
|
|
|
|
|
|
|
|
|
|
|
$
|
313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
|
|
|
|
|
|
|
|
$
|
55
|
|
|
$
|
44
|
|
|
|
|
|
|
|
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
$
|
144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
|
|
|
|
|
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid principal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related allowance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average recorded Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income Recognized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013, $56,739,000 of Originated loans were TDRs and classified as impaired. The Company had obligations
to lend $25,000 of additional funds on these TDRs as of December 31, 2013. At December 31, 2013, $901,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of
December 31, 2013.
At December 31, 2012, $57,223,000 of Originated loans were TDRs and classified as impaired. The Company had obligations to
lend $137,000 of additional funds on these TDRs as of December 31, 2012. At December 31, 2012, $950,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of
December 31, 2012.
At December 31, 2011, $66,160,000 of Originated loans were TDRs and classified as impaired. The Company had obligations to
lend $258,000 of additional funds on these TDRs as of December 31, 2011. At December 31, 2011, $176,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of
December 31, 2011.
78
The following tables show certain information regarding Troubled Debt Restructurings (TDRs) that occurred during
the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TDR Information for the Year Ended December 31, 2013
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Number
|
|
|
9
|
|
|
|
11
|
|
|
|
12
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
42
|
|
Pre-mod outstanding principal balance
|
|
$
|
2,173
|
|
|
$
|
13,145
|
|
|
$
|
1,546
|
|
|
$
|
251
|
|
|
|
|
|
|
|
|
|
|
$
|
274
|
|
|
|
|
|
|
|
|
|
|
$
|
17,389
|
|
Post-mod outstanding principal balance
|
|
$
|
2,177
|
|
|
$
|
13,146
|
|
|
$
|
1,557
|
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
|
$
|
275
|
|
|
|
|
|
|
|
|
|
|
$
|
17,408
|
|
Financial impact due to TDR taken as additional provision
|
|
$
|
148
|
|
|
$
|
27
|
|
|
$
|
340
|
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
$
|
88
|
|
|
|
|
|
|
|
|
|
|
$
|
602
|
|
Number that defaulted during the period
|
|
|
4
|
|
|
|
8
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
1
|
|
|
|
|
|
|
|
21
|
|
Recorded investment of TDRs that defaulted during the period
|
|
$
|
443
|
|
|
$
|
1,702
|
|
|
$
|
150
|
|
|
$
|
15
|
|
|
|
|
|
|
|
|
|
|
$
|
1,363
|
|
|
$
|
73
|
|
|
|
|
|
|
$
|
3,746
|
|
Financial impact due to the default of previous TDR taken as charge-offs or additional provisions
|
|
$
|
(3
|
)
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
|
|
|
|
$
|
12
|
|
The following tables show certain information regarding Troubled Debt Restructurings (TDRs) that occurred during the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TDR Information for the Year Ended December 31, 2012
|
|
|
|
RE Mortgage
|
|
|
Home Equity
|
|
|
Auto
Indirect
|
|
|
Other
Consum.
|
|
|
C&I
|
|
|
Construction
|
|
|
Total
|
|
(in thousands)
|
|
Resid.
|
|
|
Comm.
|
|
|
Lines
|
|
|
Loans
|
|
|
|
|
|
Resid.
|
|
|
Comm.
|
|
|
Number
|
|
|
4
|
|
|
|
15
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
9
|
|
|
|
3
|
|
|
|
|
|
|
|
43
|
|
Pre-mod outstanding principal balance
|
|
$
|
822
|
|
|
$
|
3,220
|
|
|
$
|
1,598
|
|
|
|
|
|
|
|
|
|
|
$
|
38
|
|
|
$
|
1,105
|
|
|
$
|
317
|
|
|
|
|
|
|
$
|
7,100
|
|
Post-mod outstanding principal balance
|
|
$
|
842
|
|
|
$
|
3,402
|
|
|
$
|
1,678
|
|
|
|
|
|
|
|
|
|
|
$
|
38
|
|
|
$
|
1,105
|
|
|
$
|
328
|
|
|
|
|
|
|
$
|
7,394
|
|
Financial impact due to TDR taken as additional provision
|
|
$
|
(11
|
)
|
|
$
|
212
|
|
|
$
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
317
|
|
|
|
|
|
|
|
|
|
|
$
|
578
|
|
Number that defaulted during the period
|
|
|
1
|
|
|
|
13
|
|
|
|
5
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
2
|
|
|
|
3
|
|
|
|
28
|
|
Recorded investment of TDRs that defaulted during the period
|
|
$
|
112
|
|
|
$
|
8,904
|
|
|
$
|
500
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
$
|
1,238
|
|
|
$
|
139
|
|
|
$
|
256
|
|
|
$
|
11,915
|
|
Financial impact due to the default of previous TDR taken as charge-offs or additional provisions
|
|
|
|
|
|
|
|
|
|
$
|
(13
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
$
|
50
|
|
|
|
|
|
|
|
|
|
|
$
|
36
|
|
Modifications classified as Troubled Debt Restructurings can include one or a combination of the following: rate
modifications, term extensions, interest only modifications, either temporary or long-term, payment modifications, and collateral substitutions/additions.
For all new Troubled Debt Restructurings, an impairment analysis is conducted. If the loan is determined to be collateral dependent, any additional amount of
impairment will be calculated based on the difference between estimated collectible value and the current carrying balance of the loan. This difference could result in an increased provision and is typically charged off. If the asset is determined
not to be collateral dependent, the impairment is measured on the net present value difference between the expected cash flows of the restructured loan and the cash flows which would have been received under the original terms. The effect of this
could result in a requirement for additional provision to the reserve. The effect of these required provisions for the period are indicated above.
Typically if a TDR defaults during the period, the loan is then considered collateral dependent and, if it was not already considered collateral dependent, an
appropriate provision will be reserved or charge will be taken. The additional provisions required resulting from default of previously modified TDRs are noted above.
79
Note 6 Foreclosed Assets
A summary of the activity in the balance of foreclosed assets follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2013
|
|
|
Year ended December 31, 2012
|
|
|
|
Noncovered
|
|
|
Covered
|
|
|
Total
|
|
|
Noncovered
|
|
|
Covered
|
|
|
Total
|
|
Beginning balance, net
|
|
$
|
5,957
|
|
|
$
|
1,541
|
|
|
$
|
7,498
|
|
|
$
|
13,268
|
|
|
$
|
3,064
|
|
|
$
|
16,332
|
|
Acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions/transfers from loans
|
|
|
11,224
|
|
|
|
493
|
|
|
|
11,717
|
|
|
|
8,732
|
|
|
|
633
|
|
|
|
9,365
|
|
Dispositions/sales
|
|
|
(10,992
|
)
|
|
|
(1,279
|
)
|
|
|
(12,271
|
)
|
|
|
(14,776
|
)
|
|
|
(1,695
|
)
|
|
|
(16,471
|
)
|
Valuation adjustments
|
|
|
(601
|
)
|
|
|
(81
|
)
|
|
|
(682
|
)
|
|
|
(1,267
|
)
|
|
|
(461
|
)
|
|
|
(1,728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance, net
|
|
$
|
5,588
|
|
|
$
|
674
|
|
|
$
|
6,262
|
|
|
$
|
5,957
|
|
|
$
|
1,541
|
|
|
$
|
7,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending valuation allowance
|
|
$
|
(414
|
)
|
|
|
|
|
|
$
|
(414
|
)
|
|
$
|
(1,357
|
)
|
|
$
|
(666
|
)
|
|
$
|
(2,023
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of foreclosed assets
|
|
|
28
|
|
|
|
4
|
|
|
|
32
|
|
|
|
34
|
|
|
|
5
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of foreclosed assets
|
|
$
|
12,483
|
|
|
$
|
1,427
|
|
|
$
|
13,910
|
|
|
$
|
15,319
|
|
|
$
|
1,938
|
|
|
$
|
17,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of foreclosed assets
|
|
$
|
1,492
|
|
|
$
|
148
|
|
|
$
|
1,640
|
|
|
$
|
543
|
|
|
$
|
243
|
|
|
$
|
786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 7Premises and Equipment
Premises and equipment were comprised of:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
|
(In thousands)
|
|
Land & land improvements
|
|
$
|
5,975
|
|
|
$
|
5,929
|
|
Buildings
|
|
|
30,103
|
|
|
|
23,090
|
|
Furniture and equipment
|
|
|
27,881
|
|
|
|
25,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,959
|
|
|
|
54,896
|
|
Less: Accumulated depreciation
|
|
|
(32,397
|
)
|
|
|
(32,101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
31,562
|
|
|
|
22,795
|
|
Construction in progress
|
|
|
50
|
|
|
|
4,190
|
|
|
|
|
|
|
|
|
|
|
Total premises and equipment
|
|
$
|
31,612
|
|
|
$
|
26,985
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense for premises and equipment amounted to $3,635,000, $3,250,000, and $2,561,000 in 2013, 2012, and 2011,
respectively.
Note 8 Cash Value of Life Insurance
A summary of the activity in the balance of cash value of life insurance follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Beginning balance
|
|
$
|
50,582
|
|
|
$
|
50,403
|
|
Increase in cash value of life insurance
|
|
|
1,727
|
|
|
|
1,820
|
|
Gain on life insurance death benefit
|
|
|
|
|
|
|
675
|
|
Death benefit
|
|
|
|
|
|
|
(2,316
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
52,309
|
|
|
$
|
50,582
|
|
|
|
|
|
|
|
|
|
|
End of period death benefit
|
|
$
|
95,513
|
|
|
$
|
94,754
|
|
Number of policies owned
|
|
|
133
|
|
|
|
133
|
|
Insurance companies used
|
|
|
6
|
|
|
|
6
|
|
Current and former employees and directors covered
|
|
|
36
|
|
|
|
36
|
|
As of December 31, 2013, the Bank was the owner and beneficiary of 133 life insurance policies, issued by six life
insurance companies, covering 36 current and former employees and directors. These life insurance policies are recorded on the Companys financial statements at their reported cash (surrender) values. As a result of current tax law and the
nature of these policies, the Bank records any increase in cash value of these policies as nontaxable noninterest income. If the Bank decided to surrender any of the policies prior to the death of the insured, such surrender may result in a tax
expense related to the life-to-date cumulative increase in cash value of the policy. If the Bank retains such policies until the death of the insured, the Bank would receive nontaxable proceeds from the insurance company equal to the death benefit
of the policies. The Bank has entered into Joint Beneficiary Agreements (JBAs) with certain of the insured that for certain of the policies provide some level of sharing of the death benefit, less the cash surrender value, among the Bank and the
beneficiaries of the insured upon the receipt of death benefits. See Note 15 of these consolidated financial statements for additional information on JBAs.
80
Note 9Goodwill and Other Intangible Assets
The following table summarizes the Companys goodwill intangible as of December 31, 2013 and 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar in Thousands)
|
|
December 31,
2013
|
|
|
Additions
|
|
|
Reductions
|
|
|
December 31,
2012
|
|
Goodwill
|
|
$
|
15,519
|
|
|
|
|
|
|
|
|
|
|
$
|
15,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the Companys core deposit intangibles as of December 31, 2013 and 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar in Thousands)
|
|
December 31,
2013
|
|
|
Additions
|
|
|
Reductions/
Amortization
|
|
|
Fully
Depreciated
|
|
|
December 31,
2012
|
|
Core deposit intangibles
|
|
$
|
1,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,460
|
|
Accumulated amortization
|
|
|
(577
|
)
|
|
|
|
|
|
$
|
(209
|
)
|
|
|
|
|
|
|
(368
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core deposit intangibles, net
|
|
$
|
883
|
|
|
|
|
|
|
$
|
(209
|
)
|
|
|
|
|
|
$
|
1,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company recorded additions to CDI of $898,000 in conjunction with the Citizens acquisition on September 23, 2011 and
$562,000 in conjunction with the Granite acquisition on May 28, 2010. The following table summarizes the Companys estimated core deposit intangible amortization (dollars in thousands):
|
|
|
|
|
Years Ended
|
|
Estimated Core Deposit
Intangible Amortization
|
|
2014
|
|
$
|
209
|
|
2015
|
|
|
209
|
|
2016
|
|
|
209
|
|
2017
|
|
|
209
|
|
2018
|
|
$
|
47
|
|
Thereafter
|
|
|
|
|
Note 10Mortgage Servicing Rights
The following tables summarize the activity in, and the main assumptions we used to determine the fair value of mortgage servicing rights
for the periods indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Balance at beginning of period
|
|
$
|
4,552
|
|
|
$
|
4,603
|
|
|
$
|
4,605
|
|
Additions
|
|
|
1,360
|
|
|
|
1,965
|
|
|
|
1,105
|
|
Change in fair value
|
|
|
253
|
|
|
|
(2,016
|
)
|
|
|
(1,107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
6,165
|
|
|
$
|
4,552
|
|
|
$
|
4,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractually specified servicingfees, late fees and ancillary fees earned
|
|
$
|
1,774
|
|
|
$
|
1,666
|
|
|
$
|
1,495
|
|
Balance of loans serviced at:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
$
|
666,512
|
|
|
$
|
598,185
|
|
|
$
|
573,300
|
|
End of period
|
|
$
|
680,197
|
|
|
$
|
666,512
|
|
|
$
|
598,185
|
|
Weighted-average prepayment speed (CPR)
|
|
|
10.3
|
%
|
|
|
20.3
|
%
|
|
|
19.3
|
%
|
Weighted-average discount rate
|
|
|
10.0
|
%
|
|
|
10.0
|
%
|
|
|
9.0
|
%
|
The changes in fair value of MSRs that occurred during 2013 and 2012 were mainly due to changes in principal balances and
changes in estimate life of the MSRs.
Note 11Indemnification Asset
A summary of the activity in the balance of indemnification asset follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Beginning balance
|
|
$
|
1,997
|
|
|
$
|
4,405
|
|
|
$
|
5,640
|
|
Effect of actual covered losses and change in estimated future covered losses
|
|
|
(1,419
|
)
|
|
|
(245
|
)
|
|
|
2,059
|
|
Reimbursable (revenue) expenses incurred
|
|
|
(159
|
)
|
|
|
69
|
|
|
|
393
|
|
Payments received
|
|
|
(213
|
)
|
|
|
(2,232
|
)
|
|
|
(3,687
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
206
|
|
|
$
|
1,997
|
|
|
$
|
4,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81
Note 12 Other Assets
Other assets were comprised of (in thousands):
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Deferred tax asset, net (Note 22)
|
|
$
|
26,781
|
|
|
$
|
28,935
|
|
Prepaid expense
|
|
|
2,131
|
|
|
|
3,455
|
|
Software
|
|
|
1,318
|
|
|
|
1,550
|
|
Life insurance proceeds receivable
|
|
|
|
|
|
|
706
|
|
Advanced compensation
|
|
|
1,175
|
|
|
|
1,440
|
|
TriCo Capital Trust I & II
|
|
|
1,238
|
|
|
|
1,238
|
|
Miscellaneous other assets
|
|
|
3,237
|
|
|
|
1,283
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
$
|
35,880
|
|
|
$
|
38,607
|
|
|
|
|
|
|
|
|
|
|
Note 13Deposits
A summary of the balances of deposits follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Noninterest-bearing demand
|
|
$
|
789,458
|
|
|
$
|
684,833
|
|
Interest-bearing demand
|
|
|
533,351
|
|
|
|
503,465
|
|
Savings
|
|
|
798,986
|
|
|
|
762,924
|
|
Time certificates, $100,000 and over
|
|
|
157,647
|
|
|
|
180,195
|
|
Other time certificates
|
|
|
131,041
|
|
|
|
158,285
|
|
|
|
|
|
|
|
|
|
|
Total deposits
|
|
$
|
2,410,483
|
|
|
$
|
2,289,702
|
|
|
|
|
|
|
|
|
|
|
Certificate of deposit balances of $5,000,000 and $5,000,000 from the State of California were included in time certificates,
$100,000 and over, at December 31, 2013 and 2012, respectively. The Bank participates in a deposit program offered by the State of California whereby the State may make deposits at the Banks request subject to collateral and credit
worthiness constraints. The negotiated rates on these State deposits are generally more favorable than other wholesale funding sources available to the Bank. Overdrawn deposit balances of $1,212,000 and $1,408,000 were classified as consumer loans
at December 31, 2013 and 2012, respectively.
At December 31, 2013, the scheduled maturities of time deposits were as follows (in thousands):
|
|
|
|
|
|
|
Scheduled
Maturities
|
|
2014
|
|
$
|
216,444
|
|
2015
|
|
|
38,803
|
|
2016
|
|
|
18,253
|
|
2017
|
|
|
10,709
|
|
2018
|
|
|
4,477
|
|
Thereafter
|
|
|
2
|
|
|
|
|
|
|
Total
|
|
$
|
288,688
|
|
|
|
|
|
|
Note 14 Reserve for Unfunded Commitments
The following tables summarize the activity in reserve for unfunded commitments for the periods indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Balance at beginning of period
|
|
$
|
3,615
|
|
|
$
|
2,740
|
|
|
$
|
2,640
|
|
Provision for losses Unfunded commitments
|
|
|
(1,200
|
)
|
|
|
875
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
2,415
|
|
|
$
|
3,615
|
|
|
$
|
2,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 15 Other Liabilities
Other liabilities were comprised of (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Deferred compensation
|
|
$
|
7,357
|
|
|
$
|
7,738
|
|
Pension liability
|
|
|
14,634
|
|
|
|
16,345
|
|
Joint beneficiary agreements
|
|
|
2,623
|
|
|
|
2,736
|
|
Accrued legal settlement
|
|
|
|
|
|
|
2,090
|
|
Miscellaneous other liabilities
|
|
|
7,097
|
|
|
|
6,213
|
|
|
|
|
|
|
|
|
|
|
Total other liabilities
|
|
$
|
31,711
|
|
|
$
|
35,122
|
|
|
|
|
|
|
|
|
|
|
82
Note 16 - Other Borrowings
A summary of the balances of other borrowings follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Other collateralized borrowings, fixed rate, as of December 31, 2013 of 0.05%, payable on January 2, 2014
|
|
$
|
6,335
|
|
|
$
|
9,197
|
|
|
|
|
|
|
|
|
|
|
Total other borrowings
|
|
$
|
6,335
|
|
|
$
|
9,197
|
|
|
|
|
|
|
|
|
|
|
During August 2007, the Company entered into a security repurchase agreement with principal balance of $50,000,000 that
matured and paid on August 30, 2012. The Company did not enter into any other repurchase agreements during 2013 or 2012. The average balance of repurchase agreements for 2013 and 2012 was $0 and $33,333,000, respectively, with an average rate
of 4.72% during 2012.
The Company had $6,335,000 and $9,197,000 of other collateralized borrowings at December 31, 2013 and December 31, 2012,
respectively. Other collateralized borrowings are generally overnight maturity borrowings from non-financial institutions that are collateralized by securities owned by the Company. As of December 31, 2013, the Company has pledged as collateral
and sold under agreements to repurchase investment securities with fair value of $17,774,000 under these other collateralized borrowings.
The Company
maintains a collateralized line of credit with the Federal Home Loan Bank of San Francisco. Based on the FHLB stock requirements at December 31, 2013, this line provided for maximum borrowings of $575,654,000 of which none was outstanding,
leaving $575,654,000 available. As of December 31, 2013, the Company has designated loans totaling $1,076,291,000 as potential collateral under this collateralized line of credit with the FHLB.
The Company maintains a collateralized line of credit with the Federal Reserve Bank of San Francisco. As of December 31, 2013, this line provided for
maximum borrowings of $106,856,000 of which none was outstanding, leaving $106,856,000 available. As of December 31, 2013, the Company has designated investment securities with fair value of $46,000 and loans totaling $137,205,000 as potential
collateral under this collateralized line of credit with the FRB.
The Company has available unused correspondent banking lines of credit from commercial
banks totaling $10,000,000 for federal funds transactions at December 31, 2013.
Note 17 Junior Subordinated Debt
On July 31, 2003, the Company formed a subsidiary business trust, TriCo Capital Trust I, to issue trust preferred securities.
Concurrently with the issuance of the trust preferred securities, the trust issued 619 shares of common stock to the Company for $1,000 per share or an aggregate of $619,000. In addition, the Company issued a Junior Subordinated Debenture to the
Trust in the amount of $20,619,000. The terms of the Junior Subordinated Debenture are materially consistent with the terms of the trust preferred securities issued by TriCo Capital Trust I. Also on July 31, 2003, TriCo Capital Trust I
completed an offering of 20,000 shares of cumulative trust preferred securities for cash in an aggregate amount of $20,000,000. The trust preferred securities are mandatorily redeemable upon maturity on October 7, 2033 with an interest rate
that resets quarterly at three-month LIBOR plus 3.05%. TriCo Capital Trust I has the right to redeem the trust preferred securities on or after October 7, 2008. The trust preferred securities were issued through an underwriting syndicate to
which the Company paid underwriting fees of $7.50 per trust preferred security or an aggregate of $150,000. The net proceeds of $19,850,000 were used to finance the opening of new branches, improve bank services and technology, repurchase shares of
the Companys common stock under its repurchase plan and increase the Companys capital.
The $20,619,000 of junior subordinated debentures
issued by TriCo Capital Trust I are reflected as junior subordinated debt in the consolidated balance sheets. The common stock issued by TriCo Capital Trust I are recorded in other assets in the consolidated balance sheets. As of December 31,
2013, The TriCo Capital Trust I debentures carried an interest rate of 3.29%.
On June 22, 2004, the Company formed a second subsidiary business
trust, TriCo Capital Trust II, to issue trust preferred securities. Concurrently with the issuance of the trust preferred securities, the trust issued 619 shares of common stock to the Company for $1,000 per share or an aggregate of $619,000. In
addition, the Company issued a Junior Subordinated Debenture to the Trust in the amount of $20,619,000. The terms of the Junior Subordinated Debenture are materially consistent with the terms of the trust preferred securities issued by TriCo Capital
Trust II. Also on June 22, 2004, TriCo Capital Trust II completed an offering of 20,000 shares of cumulative trust preferred securities for cash in an aggregate amount of $20,000,000. The trust preferred securities are mandatorily redeemable
upon maturity on July 23, 2034 with an interest rate that resets quarterly at three-month LIBOR plus 2.55%. TriCo Capital Trust II has the right to redeem the trust preferred securities on or after July 23, 2009. The trust preferred
securities were issued through an underwriting syndicate to which the Company paid underwriting fees of $2.50 per trust preferred security or an aggregate of $50,000. The net proceeds of $19,950,000 were used to finance the opening of new branches,
improve bank services and technology, repurchase shares of the Companys common stock under its repurchase plan and increase the Companys capital.
The $20,619,000 of junior subordinated debentures issued by TriCo Capital Trust II are reflected as junior subordinated debt in the consolidated balance
sheets. The common stock issued by TriCo Capital Trust II is recorded in other assets in the consolidated balance sheets. As of December 31, 2013, The TriCo Capital Trust II debentures carried an interest rate of 2.79%.
83
The debentures issued by TriCo Capital Trust I and TriCo Capital Trust II, less the common securities of TriCo
Capital Trust I and TriCo Capital Trust II, continue to qualify as Tier 1 or Tier 2 capital under interim guidance issued by the Board of Governors of the Federal Reserve System.
Note 18 - Commitments and Contingencies
Restricted Cash Balances
Reserves (in the form of deposits with the San Francisco Federal Reserve Bank) of $38,359,000 and
$31,594,000 were maintained to satisfy Federal regulatory requirements at December 31, 2013 and 2012. These reserves are included in cash and due from banks in the accompanying consolidated balance sheets.
Lease Commitments
The Company leases 43 sites under non-cancelable operating leases. The leases contain various provisions for increases in
rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule. Substantially all of the leases provide the Company with the option to extend the lease term one or more times following expiration
of the initial term. The Company currently does not have any capital leases.
At December 31, 2013, future minimum commitments under non-cancelable
operating leases with initial or remaining terms of one year or more are as follows:
|
|
|
|
|
|
|
Operating
Leases
|
|
|
|
(in thousands)
|
|
2014
|
|
$
|
2,452
|
|
2015
|
|
|
1,706
|
|
2016
|
|
|
1,154
|
|
2017
|
|
|
791
|
|
2018
|
|
|
429
|
|
Thereafter
|
|
|
1,235
|
|
|
|
|
|
|
Future minimum lease payments
|
|
$
|
7,767
|
|
|
|
|
|
|
Rent expense under operating leases was $4,300,000 in 2013, $4,332,000 in 2012, and $3,810,000 in 2011. Rent expense was
offset by rent income of $216,000 in 2013, $138,000 in 2012, and $32,000 in 2011.
Financial Instruments with Off-Balance-Sheet Risk
The
Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit, and
deposit account overdraft privilege. Those instruments involve, to varying degrees, elements of risk in excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Company has
in particular classes of financial instruments.
The Companys exposure to loss in the event of nonperformance by the other party to the financial
instrument for commitments to extend credit and standby letters of credit written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does
for on-balance sheet instruments. The Companys exposure to loss in the event of nonperformance by the other party to the financial instrument for deposit account overdraft privilege is represented by the overdraft privilege amount disclosed to
the deposit account holder.
The following table presents a summary of the Banks commitments and contingent liabilities:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
(in thousands)
|
|
|
|
|
|
|
Financial instruments whose amounts represent risk:
|
|
|
|
|
|
|
|
|
Commitments to extend credit:
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
$
|
136,986
|
|
|
$
|
123,517
|
|
Consumer loans
|
|
|
360,194
|
|
|
|
369,467
|
|
Real estate mortgage loans
|
|
|
35,309
|
|
|
|
27,959
|
|
Real estate construction loans
|
|
|
22,897
|
|
|
|
36,311
|
|
Standby letters of credit
|
|
|
2,601
|
|
|
|
2,905
|
|
Deposit account overdraft privilege
|
|
|
68,932
|
|
|
|
69,675
|
|
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed expiration dates of one year or less or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customers credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon
extension of credit, is based on Managements credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, residential properties, and income-producing commercial
properties.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.
Those guarantees are primarily issued to support private borrowing arrangements. Most standby letters of credit are issued for one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in
extending loan facilities to customers. Collateral requirements vary, but in general follow the requirements for other loan facilities.
84
Deposit account overdraft privilege amount represents the unused overdraft privilege balance available to the
Companys deposit account holders who have deposit accounts covered by an overdraft privilege. The Company has established an overdraft privilege for certain of its deposit account products whereby all holders of such accounts who bring their
accounts to a positive balance at least once every thirty days receive the overdraft privilege. The overdraft privilege allows depositors to overdraft their deposit account up to a predetermined level. The predetermined overdraft limit is set by the
Company based on account type.
Legal Proceedings
The Bank owns 10,214 shares of Class B common stock of Visa Inc. which are convertible into
Class A common stock at a conversion ratio of 0.4206 per Class A share. As of December 31, 2013, the value of the Class A shares was $222.68 per share. Utilizing the conversion ratio, the value of unredeemed Class A
equivalent shares owned by the Bank was $957,000 as of December 31, 2013, and has not been reflected in the accompanying financial statements. The shares of Visa Class B common stock are restricted and may not be transferred. Visa Member Banks
are required to fund an escrow account to cover settlements, resolution of pending litigation and related claims. If the funds in the escrow account are insufficient to settle all the covered litigation, Visa may sell additional Class A shares,
use the proceeds to settle litigation, and further reduce the conversion ratio. If funds remain in the escrow account after all litigation is settled, the Class B conversion ratio will be increased to reflect that surplus.
On September 27, 2012, the Company announced that the Bank entered into a tentative settlement with a former employee who filed a class action lawsuit
against the Bank in the Superior Court of California, Kern County on behalf of herself and a putative class of current and former Bank employees serving as assistant branch managers seeking undisclosed damages, alleging that the Bank improperly
classified its assistant branch managers as exempt employees under California laws. The lawsuit alleges claims for: failure to pay overtime compensation; failure to provide meal periods; failure to provide rest periods; failure to provide accurate
wage statements; failure to provide suitable seating; declaratory relief; accounting; and unfair business practices in violation of California Business and Professions Code section 17200. On September 26, 2012, after efforts to
mediate the claim, the Bank and the former employee agreed to settle the case in an amount ranging from $2,039,500 to $2,500,000, depending primarily on the number of class participants who file claims, and pending final approval by the court,
including determination of the method to allocate settlement payments among current and former employees who are members of the defined settlement class, and the portion of the total settlement allocable to attorneys fees and costs to
plaintiffs counsel. On September 26, 2012, the Bank recorded a $2,090,000 expense and accrued liability in anticipation of approval of this settlement by the court and estimated related payroll taxes. On May 7, 2013, the court
preliminariy approved the settlement. On August 27, 2013, the court approved a final settlement agreement for $2,429,000, and the Bank recorded an additional $339,000 expense and accrued liability related to this matter. During September 2013,
the Bank paid the settlement amount.
On January 24, 2014, a putative shareholder class action lawsuit was filed against TriCo, North Valley Bancorp
and certain other defendants in connection with TriCo entering into the merger agreement with North Valley Bancorp. The lawsuit, which was filed in the Shasta County, California Superior Court, alleges that the members of the North Valley Bancorp
board of directors breached their fiduciary duties to North Valley Bancorp shareholders by approving the proposed merger for inadequate consideration; approving the transaction in order receive benefits not equally shared by other North Valley
Bancorp shareholders; entering into the merger agreement containing preclusive deal protection devices; and failing to take steps to maximize the value to be paid to the North Valley Bancorp shareholders. The lawsuit alleges claims against TriCo for
aiding and abetting these alleged breaches of fiduciary duties. The plaintiff seeks, among other things, declaratory and injunctive relief concerning the alleged breaches of fiduciary duties injunctive relief prohibiting consummation of the merger,
rescission, attorneys of the merger agreement, fees and costs, and other and further relief. At this stage, TriCo is unable to predict the outcome of the proceedings or their impact on TriCo or North Valley Bancorp.
The Bank is named as defendant in a lawsuit filed by a former employee seeking undisclosed damages, alleging that the Bank improperly terminated his
employment under California law. The Bank denies all allegations and is vigorously defending the suit.
Neither the Company nor its subsidiaries, are
party to any other material pending legal proceeding, nor is their property the subject of any material pending legal proceeding, except routine legal proceedings arising in the ordinary course of their business. None of these proceedings is
expected to have a material adverse impact upon the Companys business, consolidated financial position or results of operations.
Other
Commitments and Contingencies
The Company has entered into employment agreements or change of control agreements with certain officers of the Company providing severance payments and accelerated vesting of benefits under supplemental
retirement agreements to the officers in the event of a change in control of the Company and termination for other than cause or after a substantial and material change in the officers title, compensation or responsibilities.
Mortgage loans sold to investors may be sold with servicing rights retained, with only the standard legal representations and warranties regarding recourse to
the Bank. Management believes that any liabilities that may result from such recourse provisions are not significant.
85
Note 19 Shareholders Equity
Dividends Paid
The Bank paid to the
Company cash dividends in the aggregate amounts of $8,175,000, $8,522,000, and $7,185,000, in 2013, 2012, and 2011, respectively. The Bank is regulated by the Federal Deposit Insurance Corporation (FDIC) and the State of California Department of
Business Oversight. Absent approval from the Commissioner of Department of Business Oversight, California banking laws generally limit the Banks ability to pay dividends to the lesser of (1) retained earnings or (2) net income for
the last three fiscal years, less cash distributions paid during such period. Under this law, at December 31, 2013, the Bank may pay dividends of $44,548,000.
Shareholders Rights Plan
On June 25, 2001,
the Company announced that its Board of Directors adopted and entered into a Shareholder Rights Plan designed to protect and maximize shareholder value and to assist the Board of Directors in ensuring fair and equitable benefit to all shareholders
in the event of a hostile bid to acquire the Company.
The Company adopted this Rights Plan to protect shareholders from coercive or otherwise unfair
takeover tactics. In general terms, the Rights Plan imposes a significant penalty upon any person or group that acquires 15% or more of the Companys outstanding common stock without approval of the Companys Board of Directors. The Rights
Plan was not adopted in response to any known attempt to acquire control of the Company.
Under the Rights Plan, a dividend of one Preferred Stock
Purchase Right was declared for each common share held of record as of the close of business on July 10, 2001. No separate certificates evidencing the Rights will be issued unless and until they become exercisable.
The Rights generally will not become exercisable unless an acquiring entity accumulates or initiates a tender offer to purchase 15% or more of the
Companys common stock. In that event, each Right will entitle the holder, other than the unapproved acquirer and its affiliates, to purchase either the Companys common stock or shares in an acquiring entity at one-half of market value.
The Rights initial exercise price, which is subject to adjustment, is $49.00 per Right. The Companys Board of Directors generally will be
entitled to redeem the Rights at a redemption price of $.01 per Right until an acquiring entity acquires a 15% position. The Rights were scheduled to expire on July 10, 2011, but on July 8, 2011, the Company extended the expiration date to
July 10, 2021.
Stock Repurchase Plan
On
August 21, 2007, the Board of Directors adopted a plan to repurchase, as conditions warrant, up to 500,000 shares of the Companys common stock on the open market. The timing of purchases and the exact number of shares to be purchased will
depend on market conditions. The 500,000 shares authorized for repurchase under this stock repurchase plan represented approximately 3.2% of the Companys 15,814,662 outstanding common shares as of August 21, 2007. This stock repurchase
plan has no expiration date. As of December 31, 2013, the Company had repurchased 166,600 shares under this plan.
Stock Repurchased Under Equity
Compensation Plans
During the years ended December 31, 2013, 2012, and 2011, employees tendered 172,941, 14,120, and 177,430 shares,
respectively, of the Companys common stock with market value of $3,490,000, $224,000, and $2,745,000, respectively, in lieu of cash to exercise options to purchase shares of the Companys stock and to pay income taxes related to such
exercises as permitted by the Companys shareholder-approved equity compensation plans. The tendered shares were retired. The market value of tendered shares is the last market trade price at closing on the day an option is exercised. Stock
repurchased under equity incentive plans are not counted in the total of stock repurchased under the stock repurchase plan announced August 21, 2007.
Note 20 - Stock Options and Other Equity-Based Incentive Instruments
In March 2009, the Companys Board of Directors adopted the TriCo Bancshares 2009 Equity Incentive Plan (2009 Plan) covering officers,
employees, directors of, and consultants to, the Company. The 2009 Plan was approved by the Companys shareholders in May 2009. The 2009 Plan allows for the granting of the following types of stock awards (Awards): incentive stock
options, nonstatutory stock options, performance awards, restricted stock, restricted stock unit awards and stock appreciation rights. In May 2013, the Companys shareholders approved an amendment to the 2009 Plan increasing the maximum
aggregate number of shares of TriCos common stock which may be issued pursuant to or subject to Awards from 650,000 to 1,650,000. The number of shares available for issuance under the 2009 Plan is reduced by: (i) one share for each share
of common stock issued pursuant to a stock option or a Stock Appreciation Right and (ii) two shares for each share of common stock issued pursuant to a Performance Award, a Restricted Stock Award or a Restricted Stock Unit Award. When Awards
made under the 2009 Plan expire or are forfeited or cancelled, the underlying shares will become available for future Awards under the 2009 Plan. To the extent that a share of common stock pursuant to an Award that counted as two shares against the
number of shares again becomes available for issuance under the 2009 Plan, the number of shares of common stock available for issuance under the 2009 Plan shall increase by two shares. Shares awarded and delivered under the 2009 Plan may be
authorized but unissued, or reacquired shares. As of December 31, 2013, 700,500 options for the purchase of common shares remain outstanding, and 937,500 remain available for grant, under the 2009 Plan.
In May 2001, the Company adopted the TriCo Bancshares 2001 Stock Option Plan (2001 Plan) covering officers, employees, directors of, and consultants to, the
Company. Under the 2001 Plan, the option exercise price cannot be less than the fair market value of the Common Stock at the date of grant except in the case of substitute options. Options for the 2001 Plan expire on the tenth anniversary of the
grant date. Vesting schedules under the 2001 Plan are determined individually for each grant. As of December 31, 2013, 545,870 options for the purchase of common shares remain outstanding under the 2001 Plan. As of May 2009, as a result of the
shareholder approval of the 2009 Plan, no new options may be granted under the 2001 Plan.
86
Stock option activity during 2013 is summarized in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares
|
|
|
Option Price
per Share
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average Fair
Value on
Date of Grant
|
|
Outstanding at December 31, 2012
|
|
|
1,393,935
|
|
|
$
|
12.60
|
|
|
|
to
|
|
|
$
|
25.91
|
|
|
$
|
17.07
|
|
|
|
|
|
Options granted
|
|
|
144,500
|
|
|
$
|
16.59
|
|
|
|
to
|
|
|
$
|
19.46
|
|
|
$
|
19.31
|
|
|
$
|
8.91
|
|
Options exercised
|
|
|
(248,765
|
)
|
|
$
|
12.60
|
|
|
|
to
|
|
|
$
|
20.58
|
|
|
$
|
13.03
|
|
|
|
|
|
Options forfeited
|
|
|
(43,300
|
)
|
|
$
|
17.38
|
|
|
|
to
|
|
|
$
|
25.91
|
|
|
$
|
19.95
|
|
|
|
|
|
Outstanding at December 31, 2013
|
|
|
1,246,370
|
|
|
$
|
12.63
|
|
|
|
to
|
|
|
$
|
25.91
|
|
|
$
|
18.04
|
|
|
|
|
|
The following table shows the number, weighted-average exercise price, intrinsic value, and weighted average remaining
contractual life of options exercisable, options not yet exercisable and total options outstanding as of December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currently
Exercisable
|
|
|
Currently Not
Exercisable
|
|
|
Total
Outstanding
|
|
Number of options
|
|
|
826,270
|
|
|
|
420,100
|
|
|
|
1,246,370
|
|
Weighted average exercise price
|
|
$
|
18.68
|
|
|
$
|
16.78
|
|
|
$
|
18.04
|
|
Intrinsic value (in thousands)
|
|
$
|
8,808
|
|
|
$
|
4,869
|
|
|
$
|
12,877
|
|
Weighted average remaining contractual term (yrs.)
|
|
|
4.1
|
|
|
|
8.3
|
|
|
|
5.5
|
|
The 420,100 options that are currently not exercisable as of December 31, 2013 are expected to vest, on a
weighted-average basis, over the next 3.0 years, and the Company is expected to recognize $2,604,000 of pre-tax compensation costs related to these options as they vest. The Company did not modify any option grants during 2013 or 2012.
The following table shows the total intrinsic value of options exercised, the total fair value of options vested, total compensation costs for options
recognized in income, and total tax benefit recognized in income related to compensation costs for options during the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Intrinsic value of options exercised
|
|
$
|
1,777,000
|
|
|
$
|
138,000
|
|
|
$
|
2,087,000
|
|
Fair value of options that vested
|
|
$
|
1,150,000
|
|
|
$
|
1,083,000
|
|
|
$
|
830,000
|
|
Total compensation costs for options recognized in income
|
|
$
|
1,150,000
|
|
|
$
|
1,083,000
|
|
|
$
|
830,000
|
|
Total tax benefit recognized in income related to compensation costs for options
|
|
$
|
484,000
|
|
|
$
|
455,000
|
|
|
$
|
349,000
|
|
Weighted average fair value of grants (per option)
|
|
$
|
8.91
|
|
|
$
|
6.63
|
|
|
$
|
6.27
|
|
The fair value of the Companys stock option grants is estimated on the measurement date, which, for the Company, is the
date of grant. The fair value of stock options is estimated using the Black-Scholes option-pricing model. The Company estimated expected market price volatility and expected term of the options based on historical data and other factors. The
weighted-average assumptions used to determine the fair value of options granted are detailed in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Assumptions used to value option grants:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average expected terms (years)
|
|
|
7.0
|
|
|
|
8.8
|
|
|
|
8.8
|
|
Volatility
|
|
|
56.2
|
%
|
|
|
51.5
|
%
|
|
|
51.2
|
%
|
Annual rate of dividends
|
|
|
1.87
|
%
|
|
|
2.36
|
%
|
|
|
2.48
|
%
|
Discount rate
|
|
|
1.26
|
%
|
|
|
1.49
|
%
|
|
|
1.70
|
%
|
87
Note 21Noninterest Income and Expense
The components of other noninterest income were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Service charges on deposit accounts
|
|
$
|
12,716
|
|
|
$
|
14,290
|
|
|
$
|
14,776
|
|
ATM and interchange fees
|
|
|
8,370
|
|
|
|
7,762
|
|
|
|
7,058
|
|
Other service fees
|
|
|
2,144
|
|
|
|
2,223
|
|
|
|
1,722
|
|
Mortgage banking service fees
|
|
|
1,774
|
|
|
|
1,666
|
|
|
|
1,495
|
|
Change in value of mortgage servicing rights
|
|
|
253
|
|
|
|
(2,016
|
)
|
|
|
(1,107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total service charges and fees
|
|
|
25,257
|
|
|
|
23,925
|
|
|
|
23,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of loans
|
|
|
5,602
|
|
|
|
6,810
|
|
|
|
3,037
|
|
Commissions on sale of non-deposit investment products
|
|
|
2,983
|
|
|
|
3,209
|
|
|
|
2,105
|
|
Increase in cash value of life insurance
|
|
|
1,727
|
|
|
|
1,820
|
|
|
|
1,885
|
|
Change in indemnification asset
|
|
|
(1,649
|
)
|
|
|
(286
|
)
|
|
|
2,059
|
|
Gain on sale of foreclosed assets
|
|
|
1,640
|
|
|
|
786
|
|
|
|
680
|
|
Bargain purchase gain
|
|
|
|
|
|
|
|
|
|
|
7,575
|
|
Sale of customer checks
|
|
|
377
|
|
|
|
346
|
|
|
|
271
|
|
Lease brokerage income
|
|
|
337
|
|
|
|
276
|
|
|
|
248
|
|
Loss on disposal of fixed assets
|
|
|
(39
|
)
|
|
|
(420
|
)
|
|
|
(15
|
)
|
Commission rebates
|
|
|
|
|
|
|
(56
|
)
|
|
|
(58
|
)
|
Gain on life insurance death benefit
|
|
|
|
|
|
|
675
|
|
|
|
789
|
|
Other
|
|
|
594
|
|
|
|
895
|
|
|
|
293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other noninterest income
|
|
|
11,572
|
|
|
|
14,055
|
|
|
|
18,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income
|
|
$
|
36,829
|
|
|
$
|
37,980
|
|
|
$
|
42,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loan servicing fees, net of change in fair value of mortgage loan servicing rights, totaling $2,027,000, ($350,000),
and $388,000 were recorded in service charges and fees noninterest income for the years ended December 31, 2013, 2012, and 2011, respectively.
The
components of noninterest expense were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Base salaries, net of deferred loan origination costs
|
|
$
|
34,404
|
|
|
$
|
33,093
|
|
|
$
|
29,753
|
|
Incentive compensation
|
|
|
4,694
|
|
|
|
5,138
|
|
|
|
3,735
|
|
Benefits and other compensation costs
|
|
|
12,838
|
|
|
|
11,721
|
|
|
|
10,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total salaries and benefits expense
|
|
|
51,936
|
|
|
|
49,952
|
|
|
|
44,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
|
7,405
|
|
|
|
7,263
|
|
|
|
6,198
|
|
Equipment
|
|
|
4,162
|
|
|
|
4,444
|
|
|
|
3,770
|
|
Data processing and software
|
|
|
4,844
|
|
|
|
4,793
|
|
|
|
3,980
|
|
Assessments
|
|
|
2,248
|
|
|
|
2,393
|
|
|
|
2,491
|
|
ATM network charges
|
|
|
2,480
|
|
|
|
2,390
|
|
|
|
1,939
|
|
Advertising
|
|
|
1,981
|
|
|
|
2,876
|
|
|
|
2,649
|
|
Professional fees
|
|
|
3,019
|
|
|
|
2,879
|
|
|
|
2,004
|
|
Telecommunications
|
|
|
2,449
|
|
|
|
2,250
|
|
|
|
1,875
|
|
Postage
|
|
|
786
|
|
|
|
920
|
|
|
|
935
|
|
Courier service
|
|
|
988
|
|
|
|
1,013
|
|
|
|
953
|
|
Foreclosed assets expense
|
|
|
514
|
|
|
|
1,474
|
|
|
|
755
|
|
Intangible amortization
|
|
|
209
|
|
|
|
209
|
|
|
|
177
|
|
Operational losses
|
|
|
618
|
|
|
|
787
|
|
|
|
600
|
|
Provision for foreclosed asset losses
|
|
|
682
|
|
|
|
1,728
|
|
|
|
1,984
|
|
Change in reserve for unfunded commitments
|
|
|
(1,200
|
)
|
|
|
875
|
|
|
|
100
|
|
Legal settlement
|
|
|
339
|
|
|
|
2,090
|
|
|
|
|
|
Other
|
|
|
10,144
|
|
|
|
9,662
|
|
|
|
8,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other noninterest expense
|
|
|
41,668
|
|
|
|
48,046
|
|
|
|
38,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense
|
|
$
|
93,604
|
|
|
$
|
97,998
|
|
|
$
|
82,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
Note 22 Income Taxes
The components of consolidated income tax expense are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Current tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
11,618
|
|
|
$
|
9,895
|
|
|
$
|
9,645
|
|
State
|
|
|
4,261
|
|
|
|
3,425
|
|
|
|
3,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,879
|
|
|
|
13,320
|
|
|
|
12,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
1,976
|
|
|
|
(235
|
)
|
|
|
(1,298
|
)
|
State
|
|
|
550
|
|
|
|
(148
|
)
|
|
|
(393
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,526
|
|
|
|
(383
|
)
|
|
|
(1,691
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tax expense
|
|
$
|
18,405
|
|
|
$
|
12,937
|
|
|
$
|
11,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A deferred tax asset or liability is recognized for the tax consequences of temporary differences in the recognition of
revenue and expense for financial and tax reporting purposes. The net change during the year in the deferred tax asset or liability results in a deferred tax expense or benefit.
Taxes recorded directly to shareholders equity are not included in the preceding table. These taxes (benefits) relating to changes in unfunded status of
the supplemental retirement plans amounting to $1,269,000 in 2013, ($2,000) in 2012, and $828,000 in 2011, taxes (benefits) related to unrealized gains and losses on available-for-sale investment securities amounting to ($1,780,000) in 2013,
($880,000) in 2012, and $1,090,000 in 2011, taxes (benefits) related to employee stock options of $138,000 in 2013, $13,000 in 2012, and $114,000 in 2011, and taxes (benefits) related to changes in joint beneficiary agreement liability of $0 in
2013, $64,000 in 2012, and ($105,000) in 2011, were recorded directly to shareholders equity.
The temporary differences, tax effected, which give
rise to the Companys net deferred tax asset recorded in other assets are as follows as of December 31 for the years indicated:
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Allowance for losses
|
|
$
|
17,096
|
|
|
$
|
19,073
|
|
Deferred compensation
|
|
|
3,093
|
|
|
|
3,254
|
|
Accrued pension liability
|
|
|
5,817
|
|
|
|
5,272
|
|
Accrued bonus
|
|
|
1,037
|
|
|
|
980
|
|
Other accrued expenses
|
|
|
|
|
|
|
879
|
|
Unfunded status of the supplemental retirement plans
|
|
|
331
|
|
|
|
1,600
|
|
State taxes
|
|
|
1,390
|
|
|
|
1,297
|
|
Stock option expense
|
|
|
2,225
|
|
|
|
1,879
|
|
Nonaccrual interest
|
|
|
1,840
|
|
|
|
1,889
|
|
Acquisition cost basis
|
|
|
699
|
|
|
|
482
|
|
OREO write downs
|
|
|
331
|
|
|
|
1,103
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
33,859
|
|
|
|
37,708
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Securities income
|
|
|
(986
|
)
|
|
|
(1,038
|
)
|
Unrealized gain on securities
|
|
|
(1,767
|
)
|
|
|
(3,547
|
)
|
Depreciation
|
|
|
(392
|
)
|
|
|
(344
|
)
|
Merger related fixed asset valuations
|
|
|
(379
|
)
|
|
|
(379
|
)
|
Securities accretion
|
|
|
(256
|
)
|
|
|
(150
|
)
|
Mortgage servicing rights valuation
|
|
|
(2,416
|
)
|
|
|
(1,641
|
)
|
Indemnification asset
|
|
|
(87
|
)
|
|
|
(840
|
)
|
Prepaid expenses and other
|
|
|
(795
|
)
|
|
|
(834
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liability
|
|
|
(7,078
|
)
|
|
|
(8,773
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
26,781
|
|
|
$
|
28,935
|
|
|
|
|
|
|
|
|
|
|
The Company believes that a valuation allowance is not needed to reduce the deferred tax assets as it is more likely than not
that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.
89
The Company had no unrecognized tax benefits at December 31, 2013, 2012 or 2011. During the year ended
December 31, 2013, the Company recognized no interest and penalties related to taxes. During the year ended December 31, 2012, the Company recognized interest and penalties related to taxes of $22,000 and $5,000, respectively. During the
year ended December 31, 2011 the Company recognized no interest and penalties related to taxes. The Company files income tax returns in the U.S. federal jurisdiction, and California. With few exceptions, the Company is no longer subject to
U.S. federal and state/local income tax examinations by tax authorities for years before 2010 and 2009, respectively.
The provisions for income taxes
applicable to income before taxes for the years ended December 31, 2013, 2012 and 2011 differ from amounts computed by applying the statutory Federal income tax rates to income before taxes. The effective tax rate and the statutory federal
income tax rate are reconciled as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Federal statutory income tax rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
State income taxes, net of federal tax benefit
|
|
|
6.8
|
|
|
|
6.7
|
|
|
|
6.2
|
|
Tax-exempt interest on municipal obligations
|
|
|
(0.4
|
)
|
|
|
(0.5
|
)
|
|
|
(0.6
|
)
|
Tax-exempt life insurance related income
|
|
|
(1.3
|
)
|
|
|
(2.0
|
)
|
|
|
(3.1
|
)
|
Non-deductible joint beneficiary agreement expense
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
|
|
Other
|
|
|
(0.1
|
)
|
|
|
1.0
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax Rate
|
|
|
40.2
|
%
|
|
|
40.5
|
%
|
|
|
37.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 23 Earnings Per Share
Basic earnings per share represents income available to common shareholders divided by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustments to income that would result from assumed
issuance. Potential common shares that may be issued by the Company relate solely from outstanding stock options, and are determined using the treasury stock method. Earnings per share have been computed based on the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Net income (in thousands)
|
|
$
|
27,399
|
|
|
$
|
18,994
|
|
|
$
|
18,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(number of shares in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding
|
|
|
16,045
|
|
|
|
15,988
|
|
|
|
15,935
|
|
Effect of dilutive stock options
|
|
|
152
|
|
|
|
64
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding used to calculate diluted earnings per share
|
|
|
16,197
|
|
|
|
16,052
|
|
|
|
16,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on an average of quarterly computations, there were 407,985, 967,120, and 831,095, options excluded from the computation
of annual diluted earnings per share for the years ended December 31, 2013, 2012 and 2011, respectively, because the effect of these options was antidilutive.
90
Note 24 Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain
changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of
comprehensive income. The components of other comprehensive income and related tax effects are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Unrealized holding (losses) gains on available for sale securities before reclassifications
|
|
$
|
(4,232
|
)
|
|
$
|
(2,096
|
)
|
|
$
|
2,594
|
|
Amounts reclassified out of accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding (losses) gains on available for sale securities after reclassifications
|
|
|
(4,232
|
)
|
|
|
(2,096
|
)
|
|
|
2,594
|
|
Tax effect
|
|
|
1,780
|
|
|
|
880
|
|
|
|
(1,090
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding (losses) gains on available for sale securities, net of tax
|
|
|
(2,452
|
)
|
|
|
(1,216
|
)
|
|
|
1,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unfunded status of the supplemental retirement plans before reclassifications
|
|
|
2,575
|
|
|
|
(445
|
)
|
|
|
1,429
|
|
Amounts reclassified out of accumulated other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior service cost
|
|
|
153
|
|
|
|
153
|
|
|
|
153
|
|
Amortization of actuarial losses
|
|
|
291
|
|
|
|
288
|
|
|
|
386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amounts reclassified out of accumulated other comprehensive income
|
|
|
444
|
|
|
|
441
|
|
|
|
539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unfunded status of the supplemental retirement plans after reclassifications
|
|
|
3,019
|
|
|
|
(4
|
)
|
|
|
1,968
|
|
Tax effect
|
|
|
(1,269
|
)
|
|
|
2
|
|
|
|
(828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unfunded status of the supplemental retirement plans, net of tax
|
|
|
1,750
|
|
|
|
(2
|
)
|
|
|
1,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in joint beneficiary agreement liability before reclassifications
|
|
|
400
|
|
|
|
(370
|
)
|
|
|
(248
|
)
|
Amounts reclassified out of accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in joint beneficiary agreement liability after reclassifications
|
|
|
400
|
|
|
|
(370
|
)
|
|
|
(248
|
)
|
Tax effect
|
|
|
|
|
|
|
(64
|
)
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in joint beneficiary agreement liability, net of tax
|
|
|
400
|
|
|
|
(434
|
)
|
|
|
(143
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive (loss) income
|
|
$
|
(302
|
)
|
|
$
|
(1,652
|
)
|
|
$
|
2,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of accumulated other comprehensive income, included in shareholders equity, are as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Net unrealized gains on available for sale securities
|
|
$
|
4,202
|
|
|
$
|
8,434
|
|
Tax effect
|
|
|
(1,767
|
)
|
|
|
(3,547
|
)
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains on available for sale securities, net of tax
|
|
|
2,435
|
|
|
|
4,887
|
|
|
|
|
|
|
|
|
|
|
Unfunded status of the supplemental retirement plans
|
|
|
(787
|
)
|
|
|
(3,806
|
)
|
Tax effect
|
|
|
331
|
|
|
|
1,600
|
|
|
|
|
|
|
|
|
|
|
Unfunded status of the supplemental retirement plans, net of tax
|
|
|
(456
|
)
|
|
|
(2,206
|
)
|
|
|
|
|
|
|
|
|
|
Joint beneficiary agreement liability
|
|
|
(122
|
)
|
|
|
(522
|
)
|
Tax effect
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint beneficiary agreement liability, net of tax
|
|
|
(122
|
)
|
|
|
(522
|
)
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
$
|
1,857
|
|
|
$
|
2,159
|
|
|
|
|
|
|
|
|
|
|
Note 25 - Retirement Plans
401(k) Plan
The Company sponsors a
401(k) Plan whereby substantially all employees age 21 and over with 90 days of service may participate. Participants may contribute a portion of their compensation subject to certain limits based on federal tax laws. The Company does not contribute
to the 401(k) Plan. The Company did not incur any material expenses attributable to the 401(k) Plan during 2013, 2012, and 2011.
Employee Stock
Ownership Plan
Substantially all employees with at least one year of service are covered by a discretionary employee stock ownership plan (ESOP).
Contributions are made to the plan at the discretion of the Board of Directors. Contributions to the plan totaling $1,648,000 in 2013, $1,229,000 in 2012, and $1,084,000 in 2011, are included in salary expense. Company shares owned by the ESOP are
paid dividends and included in the calculation of earnings per share exactly as other common shares outstanding.
Deferred Compensation Plans
The Company has deferred compensation plans for certain directors and key executives, which allow certain directors and key executives designated by the Board
of Directors of the Company to defer a portion of their compensation. The Company has purchased insurance on the lives of the participants and intends to hold these policies until death as a cost recovery of the Companys deferred compensation
obligations of $7,357,000 and $7,738,000 at December 31, 2013 and 2012, respectively. Earnings credits on deferred balances totaling $568,000 in 2013, $599,000 in 2012, and $649,000 in 2011, are included in noninterest expense.
91
Supplemental Retirement Plans
The Company has supplemental retirement plans for certain directors and key executives. These plans are non-qualified defined benefit plans and are unsecured
and unfunded. The Company has purchased insurance on the lives of the participants and intends to hold these policies until death as a cost recovery of the Companys retirement obligations. The cash values of the insurance policies purchased to
fund the deferred compensation obligations and the supplemental retirement obligations were $52,309,000 and $50,582,000 at December 31, 2013 and 2012, respectively.
The Company recorded in other liabilities the unfunded status of the supplemental retirement plans of $787,000 and $3,806,000 related to the supplemental
retirement plans as of December 31, 2013 and 2012, respectively. These amounts represent the amount by which the projected benefit obligations for these retirement plans exceeded the fair value of plan assets plus amounts previously accrued
related to the plans. The projected benefit obligation is recorded in other liabilities.
At December 31, 2013 and 2012, the unfunded status of the
supplemental retirement plans of $787,000 and $3,806,000 were offset by a reduction of shareholders equity accumulated other comprehensive loss of $456,000 and $2,206,000, respectively, representing the after-tax impact of the unfunded status
of the supplemental retirement plans, and the related deferred tax asset of $331,000 and $1,600,000, respectively. Amounts recognized as a component of accumulated other comprehensive loss as of year-end that have not been recognized as a component
of the combined net period benefit cost of the Companys defined benefit pension plans are presented in the following table. The Company expects to recognize approximately $32,000 of the net actuarial loss reported in the following table as of
December 31, 2013 as a component of net periodic benefit cost during 2014.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
(in thousands)
|
|
2013
|
|
|
2012
|
|
Transition obligation
|
|
$
|
11
|
|
|
$
|
13
|
|
Prior service cost
|
|
|
(35
|
)
|
|
|
118
|
|
Net actuarial loss
|
|
|
811
|
|
|
|
3,675
|
|
|
|
|
|
|
|
|
|
|
Amount included in accumulated other comprehensive loss
|
|
|
787
|
|
|
|
3,806
|
|
Deferred tax benefit
|
|
|
(331
|
)
|
|
|
(1,600
|
)
|
|
|
|
|
|
|
|
|
|
Amount included in accumulated other comprehensive loss, net of tax
|
|
$
|
456
|
|
|
$
|
2,206
|
|
|
|
|
|
|
|
|
|
|
Information pertaining to the activity in the supplemental retirement plans, using a measurement date of December 31, is
as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in thousands)
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
(16,345
|
)
|
|
$
|
(15,002
|
)
|
Service cost
|
|
|
(742
|
)
|
|
|
(680
|
)
|
Interest cost
|
|
|
(643
|
)
|
|
|
(687
|
)
|
Actuarial (loss)/gain
|
|
|
2,573
|
|
|
|
(447
|
)
|
Benefits paid
|
|
|
523
|
|
|
|
471
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
$
|
(14,634
|
)
|
|
$
|
(16,345
|
)
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(14,634
|
)
|
|
$
|
(16,345
|
)
|
Unrecognized net obligation existing at January 1, 1986
|
|
|
11
|
|
|
|
13
|
|
Unrecognized net actuarial loss
|
|
|
811
|
|
|
|
3,675
|
|
Unrecognized prior service cost
|
|
|
(35
|
)
|
|
|
118
|
|
Accumulated other comprehensive income
|
|
|
(787
|
)
|
|
|
(3,806
|
)
|
|
|
|
|
|
|
|
|
|
Accrued benefit cost
|
|
$
|
(14,634
|
)
|
|
$
|
(16,345
|
)
|
|
|
|
|
|
|
|
|
|
Accumulated benefit obligation
|
|
$
|
(12,954
|
)
|
|
$
|
(14,285
|
)
|
92
The following table sets forth the net periodic benefit cost recognized for the supplemental retirement plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Net pension cost included the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost-benefits earned during the period
|
|
$
|
743
|
|
|
$
|
680
|
|
|
$
|
657
|
|
Interest cost on projected benefit obligation
|
|
|
643
|
|
|
|
687
|
|
|
|
840
|
|
Amortization of net obligation at transition
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
Amortization of prior service cost
|
|
|
153
|
|
|
|
153
|
|
|
|
153
|
|
Recognized net actuarial loss
|
|
|
291
|
|
|
|
288
|
|
|
|
386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
1,832
|
|
|
$
|
1,810
|
|
|
$
|
2,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth assumptions used in accounting for the plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Discount rate used to calculate benefit obligation
|
|
|
4.85
|
%
|
|
|
4.00
|
%
|
|
|
4.65
|
%
|
Discount rate used to calculate net periodic pension cost
|
|
|
4.85
|
%
|
|
|
4.00
|
%
|
|
|
4.65
|
%
|
Average annual increase in executive compensation
|
|
|
2.50
|
%
|
|
|
2.50
|
%
|
|
|
4.00
|
%
|
Average annual increase in director compensation
|
|
|
2.50
|
%
|
|
|
2.50
|
%
|
|
|
2.50
|
%
|
The following table sets forth the expected benefit payments to participants and estimated contributions to be made by the
Company under the supplemental retirement plans for the years indicated:
|
|
|
|
|
|
|
|
|
Years Ended
|
|
Expected Benefit
Payments to
Participants
|
|
|
Estimated
Company
Contributions
|
|
|
|
(in thousands)
|
|
2014
|
|
$
|
569
|
|
|
$
|
569
|
|
2015
|
|
|
569
|
|
|
|
569
|
|
2016
|
|
|
583
|
|
|
|
583
|
|
2017
|
|
|
571
|
|
|
|
571
|
|
2018
|
|
|
584
|
|
|
|
584
|
|
2019-2023
|
|
$
|
6,196
|
|
|
$
|
6,196
|
|
Note 26 - Related Party Transactions
Certain directors, officers, and companies with which they are associated were customers of, and had banking transactions with, the Company
or the Bank in the ordinary course of business.
The following table summarizes the activity in these loans for 2013 and 2012 (in thousands):
|
|
|
|
|
Balance December 31, 2011
|
|
$
|
1,764
|
|
Advances/new loans
|
|
|
1,568
|
|
Removed/payments
|
|
|
(964
|
)
|
|
|
|
|
|
Balance December 31, 2012
|
|
$
|
2,368
|
|
Advances/new loans
|
|
|
1,154
|
|
Removed/payments
|
|
|
(886
|
)
|
|
|
|
|
|
Balance December 31, 2013
|
|
$
|
2,636
|
|
|
|
|
|
|
Director Chrysler is a principal owner and CEO of Modern Building Inc. Modern Building Inc. provided construction services to
the Company related to new and existing Bank facilities for aggregate payments of $4,261,000, $3,587,000, and $754,000 during 2013, 2012 and 2011, respectively.
Note 27 - Fair Value Measurement
The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value
disclosures. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, income approach, and/or the cost approach. Inputs to valuation techniques include the assumptions that market participants
would use in pricing an asset or liability including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset and the risk of nonperformance. Securities available-for-sale
and mortgage servicing rights are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as loans held for sale, loans held for
investment and certain other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or impairment write-downs of individual assets.
93
The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets
and liabilities are traded and the observable nature of the assumptions used to determine fair value. These levels are:
|
|
|
Level 1 -
|
|
Valuation is based upon quoted prices for identical instruments traded in active markets.
|
Level 2 -
|
|
Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant
assumptions are observable in the market.
|
Level 3 -
|
|
Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in
pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
|
Securities available for sale
- Securities available for sale are recorded at fair value on a recurring basis. Fair
value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows,
adjusted for the securitys credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities
that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. The
Company had no securities classified as Level 3 during any of the periods covered in these financial statements.
Loans held for sale
Loans
held for sale are carried at the lower of cost or fair value. The fair value of loans held for sale is based on what secondary markets are currently offering for loans with similar characteristics. As such, we classify those loans subjected to
nonrecurring fair value adjustments as Level 2.
Impaired originated and PNCI loans
Originated and PNCI loans are not recorded at fair value
on a recurring basis. However, from time to time, an originated or PNCI loan is considered impaired and an allowance for loan losses is established. Originated and PNCI loans for which it is probable that payment of interest and principal will not
be made in accordance with the contractual terms of the loan agreement are considered impaired. The fair value of an impaired originated or PNCI loan is estimated using one of several methods, including collateral value, fair value of similar debt,
enterprise value, liquidation value and discounted cash flows. Those impaired originated and PNCI loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in
such loans. Impaired originated and PNCI loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price
or a current appraised value which uses substantially observable data, the Company records the impaired originated or PNCI loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the
collateral is further impaired below the appraised value, or the appraised value contains a significant unobservable assumption, such as deviations from comparable sales, and there is no observable market price, the Company records the impaired
originated or PNCI loan as nonrecurring Level 3.
Foreclosed assets
- Foreclosed assets include assets acquired through, or in lieu of, loan
foreclosure. Foreclosed assets are held for sale and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, management periodically performs valuations and the assets are carried at
the lower of carrying amount or fair value less cost to sell. When the fair value of foreclosed assets is based on an observable market price or a current appraised value which uses substantially observable data, the Company records the impaired
originated loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value, or the appraised value contains a significant unobservable
assumption, such as deviations from comparable sales, and there is no observable market price, the Company records the foreclosed asset as nonrecurring Level 3. Revenue and expenses from operations and changes in the valuation allowance are included
in other noninterest expense.
Mortgage servicing rights
- Mortgage servicing rights are carried at fair value. A valuation model, which utilizes a
discounted cash flow analysis using a discount rate and prepayment speed assumptions is used in the computation of the fair value measurement. While the prepayment speed assumption is currently quoted for comparable instruments, the discount rate
assumption currently requires a significant degree of management judgment and is therefore considered an unobservable input. As such, the Company classifies mortgage servicing rights subjected to recurring fair value adjustments as Level 3.
Additional information regarding mortgage servicing rights can be found in Note 10 in the consolidated financial statements at Item 1 of this report.
The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at December 31, 2013
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and agencies
|
|
$
|
97,143
|
|
|
|
|
|
|
$
|
97,143
|
|
|
|
|
|
Obligations of states and political subdivisions
|
|
|
5,589
|
|
|
|
|
|
|
|
5,589
|
|
|
|
|
|
Corporate debt securities
|
|
|
1,915
|
|
|
|
|
|
|
|
1,915
|
|
|
|
|
|
Mortgage servicing rights
|
|
|
6,165
|
|
|
|
|
|
|
|
|
|
|
|
6,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
$
|
110,812
|
|
|
|
|
|
|
$
|
104,647
|
|
|
$
|
6,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at December 31, 2012
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and agencies
|
|
$
|
151,701
|
|
|
|
|
|
|
$
|
151,701
|
|
|
|
|
|
Obligations of states and political subdivisions
|
|
|
9,421
|
|
|
|
|
|
|
|
9,421
|
|
|
|
|
|
Corporate debt securities
|
|
|
1,905
|
|
|
|
|
|
|
|
1,905
|
|
|
|
|
|
Mortgage servicing rights
|
|
|
4,552
|
|
|
|
|
|
|
|
|
|
|
|
4,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
$
|
167,579
|
|
|
|
|
|
|
$
|
163,027
|
|
|
$
|
4,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94
Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or
circumstances that caused the transfer, which generally corresponds with the Companys quarterly valuation process. There were no transfers between any levels during 2013 or 2012.
The following table provides a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring
basis during the years ended December 31, 2013 and 2012. Had there been any transfer into or out of Level 3 during 2013 or 2012, the amount included in the Transfers into (out of) Level 3 column would represent the beginning balance
of an item in the period (interim quarter) during which it was transferred (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
Beginning
Balance
|
|
|
Transfers
into (out of)
Level 3
|
|
|
Change
Included
in Earnings
|
|
|
Issuances
|
|
|
Ending
Balance
|
|
2013: Mortgage servicing rights
|
|
$
|
4,552
|
|
|
|
|
|
|
$
|
253
|
|
|
$
|
1,360
|
|
|
$
|
6,165
|
|
2012: Mortgage servicing rights
|
|
$
|
4,603
|
|
|
|
|
|
|
$
|
(2,016
|
)
|
|
$
|
1,965
|
|
|
$
|
4,552
|
|
The Companys method for determining the fair value of mortgage servicing rights is described in Note 1. The key
unobservable inputs used in determining the fair value of mortgage servicing rights are mortgage prepayment speeds and the discount rate used to discount cash projected cash flows. Generally, any significant increases in the mortgage prepayment
speed and discount rate utilized in the fair value measurement of the mortgage servicing rights will result in a negative fair value adjustments (and decrease in the fair value measurement). Conversely, a decrease in the mortgage prepayment speed
and discount rate will result in a positive fair value adjustment (and increase in the fair value measurement). Note 10 contains additional information regarding mortgage servicing rights.
The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
(in thousands)
|
|
|
Valuation Technique
|
|
Unobservable Inputs
|
|
Range, Weighted Average
|
Mortgage Servicing Rights
|
|
$
|
6,165
|
|
|
Discounted cash flow
|
|
Constant prepayment rate
|
|
6.3%-33.0%, 10.3%
|
|
|
|
|
|
|
|
|
Discount rate
|
|
10.0%-12.0%, 10.0%
|
The tables below present the recorded amount of assets and liabilities measured at fair value on a nonrecurring basis, as of
the dates indicated, that had a write-down or an additional allowance provided during the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2013
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Gains
(Losses)
|
|
Fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Originated & PNCI loans
|
|
$
|
20,334
|
|
|
|
|
|
|
|
|
|
|
$
|
20,334
|
|
|
$
|
(2,539
|
)
|
Foreclosed assets
|
|
|
948
|
|
|
|
|
|
|
|
|
|
|
|
948
|
|
|
|
(397
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
$
|
21,282
|
|
|
|
|
|
|
|
|
|
|
$
|
21,282
|
|
|
$
|
(2,936
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Gains
(Losses)
|
|
Fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Originated & PNCI loans
|
|
$
|
29,584
|
|
|
|
|
|
|
|
|
|
|
$
|
29,584
|
|
|
$
|
(2,890
|
)
|
Foreclosed assets
|
|
|
2,910
|
|
|
|
|
|
|
|
|
|
|
|
2,910
|
|
|
|
(842
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
$
|
32,494
|
|
|
|
|
|
|
|
|
|
|
$
|
32,494
|
|
|
$
|
(3,732
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The impaired Originated and PNCI loan amount above represents impaired, collateral dependent loans that have been adjusted to
fair value. When we identify a collateral dependent loan as impaired, we measure the impairment using the current fair value of the collateral, less selling costs. Depending on the characteristics of a loan, the fair value of collateral is
generally estimated by obtaining external appraisals. If we determine that the value of the impaired loan is less than the recorded investment in the loan, we recognize this impairment and adjust the carrying value of the loan to fair value
through the allowance for loan and lease losses. The loss represents charge-offs or impairments on collateral dependent loans for fair value adjustments based on the fair value of collateral. The carrying value of loans fully charged-off is
zero.
95
The foreclosed assets amount above represents impaired real estate that has been adjusted to fair
value. Foreclosed assets represent real estate which the Bank has taken control of in partial or full satisfaction of loans. At the time of foreclosure, other real estate owned is recorded at the lower of the carrying amount of the loan or fair
value less costs to sell, which becomes the propertys new basis. Any write-downs based on the assets fair value at the date of acquisition are charged to the allowance for
loan and lease losses. After foreclosure, management periodically performs valuations such that the real estate is carried at the lower of its new cost basis
or fair value, net of estimated costs to sell. Fair value adjustments on other real estate owned are recognized within net loss on real estate owned. The loss represents impairments on non-covered other real estate owned for fair value adjustments
based on the fair value of the real estate.
The Companys property appraisals are primarily based on the sales comparison approach and income
approach methodologies, which consider recent sales of comparable properties, including their income generating characteristics, and then make adjustments to reflect the general assumptions that a market participant would make when analyzing the
property for purchase. These adjustments may increase or decrease an appraised value and can vary significantly depending on the location, physical characteristics and income producing potential of each property. Additionally, the quality and volume
of market information available at the time of the appraisal can vary from period to period and cause significant changes to the nature and magnitude of comparable sale adjustments. Given these variations, comparable sale adjustments are generally
not a reliable indicator for how fair value will increase or decrease from period to period. Under certain circumstances, management discounts are applied based on specific characteristics of an individual property.
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring
basis at December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
Fair Value
(in thousands)
|
|
Valuation Technique
|
|
Unobservable Inputs
|
|
Range, Weighted Average
|
Impaired Originated & PNCI loans
|
|
$20,334
|
|
Sales comparison
approach
Income approach
|
|
Adjustment for differences
between comparable sales
|
|
(5.0)%-(56.4)%, (10.4)%
|
|
|
|
|
|
|
Capitalization rate
|
|
7.75%-9.25 %, 8.91%
|
Foreclosed assets
|
|
$948
|
|
Sales comparison
approach
|
|
Adjustment for differences
between comparable sales
|
|
(6.5)%-(16.7)%, (8.9)%
|
In addition to the methods and assumptions used to estimate the fair value of each class of financial instrument noted above,
the following methods and assumptions were used to estimate the fair value of other classes of financial instruments for which it is practical to estimate the fair value.
Short-term Instruments
- Cash and due from banks, fed funds purchased and sold, interest receivable and payable, and short-term borrowings are
considered short-term instruments. For these short-term instruments their carrying amount approximates their fair value.
Securities held to
maturity
- The fair value of securities held to maturity is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as
the present value of future cash flows, adjusted for the securitys credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York
Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds
and corporate debt securities. The Company had no securities held to maturity classified as Level 3 during any of the periods covered in these financial statements.
Restricted Equity Securities
- The carrying value of restricted equity securities approximates fair value as the shares can only be redeemed by the
issuing institution at par.
Originated and PNCI loans
- The fair value of variable rate originated and PNCI loans is the current carrying value.
The interest rates on these originated and PNCI loans are regularly adjusted to market rates. The fair value of other types of fixed rate originated and PNCI loans is estimated by discounting the future cash flows using current rates at which
similar loans would be made to borrowers with similar credit ratings for the same remaining maturities. The allowance for loan losses is a reasonable estimate of the valuation allowance needed to adjust computed fair values for credit quality of
certain originated and PNCI loans in the portfolio.
PCI Loans
PCI loans are measured at estimated fair value on the date of acquisition.
Carrying value is calculated as the present value of expected cash flows and approximates fair value.
FDIC Indemnification Asset
The fair
value of the FDIC indemnification asset is based on the discounted value of expected future cash flows under the loss-share agreement.
Deposit
Liabilities
- The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. These values do not consider the estimated fair value of the Companys core deposit
intangible, which is a significant unrecognized asset of the Company. The fair value of time deposits and other borrowings is based on the discounted value of contractual cash flows.
Other Borrowings
- The fair value of other borrowings is calculated based on the discounted value of the contractual cash flows using current rates at
which such borrowings can currently be obtained.
96
Junior Subordinated Debentures
The fair value of junior subordinated debentures is estimated using a
discounted cash flow model. The future cash flows of these instruments are extended to the next available redemption date or maturity date as appropriate based upon the spreads of recent issuances or quotes from brokers for comparable bank holding
companies compared to the contractual spread of each junior subordinated debenture measured at fair value.
Commitments to Extend Credit and Standby
Letters of Credit
The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit worthiness of the counter
parties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on
the estimated cost to terminate them or otherwise settle the obligation with the counter parties at the reporting date.
Fair values for financial
instruments are managements estimates of the values at which the instruments could be exchanged in a transaction between willing parties. These estimates are subjective and may vary significantly from amounts that would be realized in actual
transactions. In addition, other significant assets are not considered financial assets including, any mortgage banking operations, deferred tax assets, and premises and equipment. Further, the tax ramifications related to the realization of the
unrealized gains and losses can have a significant effect on the fair value estimates and have not been considered in any of these estimates.
The
estimated fair values of financial instruments that are reported at amortized cost in the Corporations consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value,
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
|
Carrying
Amount
|
|
|
Fair
Value
|
|
|
Carrying
Amount
|
|
|
Fair
Value
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
76,915
|
|
|
$
|
76,915
|
|
|
$
|
81,086
|
|
|
$
|
81,086
|
|
Cash at Federal Reserve and other banks
|
|
|
521,453
|
|
|
|
521,453
|
|
|
|
667,813
|
|
|
|
667,813
|
|
Level 2 inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity
|
|
|
240,504
|
|
|
|
233,807
|
|
|
|
|
|
|
|
|
|
Restricted equity securities
|
|
|
9,163
|
|
|
|
9,163
|
|
|
|
9,647
|
|
|
|
9,647
|
|
Loans held for sale
|
|
|
2,270
|
|
|
|
2,270
|
|
|
|
12,053
|
|
|
|
12,053
|
|
Level 3 inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net
|
|
|
1,672,007
|
|
|
|
1,760,274
|
|
|
|
1,522,175
|
|
|
|
1,607,044
|
|
Indemnification asset
|
|
|
206
|
|
|
|
206
|
|
|
|
1,997
|
|
|
|
1,997
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2 inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
2,410,483
|
|
|
|
2,411,402
|
|
|
|
2,289,702
|
|
|
|
2,291,841
|
|
Other borrowings
|
|
|
6,335
|
|
|
|
6,335
|
|
|
|
9,197
|
|
|
|
9,197
|
|
Junior subordinated debt
|
|
|
41,238
|
|
|
|
25,774
|
|
|
|
41,238
|
|
|
|
28,042
|
|
|
|
|
|
|
Off-balance sheet:
|
|
Contract
Amount
|
|
|
Fair
Value
|
|
|
Contract
Amount
|
|
|
Fair
Value
|
|
Level 3 inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
$
|
555,386
|
|
|
$
|
5,554
|
|
|
$
|
557,254
|
|
|
$
|
5,573
|
|
Standby letters of credit
|
|
|
2,601
|
|
|
|
26
|
|
|
|
2,905
|
|
|
|
29
|
|
Overdraft privilege commitments
|
|
|
68,932
|
|
|
|
689
|
|
|
|
69,675
|
|
|
|
697
|
|
97
Note 28 - TriCo Bancshares Condensed Financial Statements (Parent Only)
Condensed Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Assets
|
|
(in thousands)
|
|
Cash and Cash equivalents
|
|
$
|
2,520
|
|
|
$
|
2,511
|
|
Investment in Tri Counties Bank
|
|
|
288,746
|
|
|
|
267,118
|
|
Other assets
|
|
|
1,280
|
|
|
|
1,238
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
292,546
|
|
|
$
|
270,867
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders equity
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
$
|
362
|
|
|
$
|
270
|
|
Junior subordinated debt
|
|
|
41,238
|
|
|
|
41,238
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
41,600
|
|
|
|
41,508
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
Common stock, no par value: authorized 50,000,000 shares; issued and outstanding 16,076,662 and 16,000,838 shares,
respectively
|
|
|
89,356
|
|
|
|
85,561
|
|
Retained earnings
|
|
|
159,733
|
|
|
|
141,639
|
|
Accumulated other comprehensive loss, net
|
|
|
1,857
|
|
|
|
2,159
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
250,946
|
|
|
|
229,359
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
292,546
|
|
|
$
|
270,867
|
|
|
|
|
|
|
|
|
|
|
Condensed Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Interest expense
|
|
$
|
(1,247
|
)
|
|
$
|
(1,325
|
)
|
|
$
|
(1,259
|
)
|
Administration expense
|
|
|
(862
|
)
|
|
|
(669
|
)
|
|
|
(582
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before equity in net income of Tri Counties Bank
|
|
|
(2,109
|
)
|
|
|
(1,994
|
)
|
|
|
(1,841
|
)
|
Equity in net income of Tri Counties Bank:
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributed
|
|
|
8,175
|
|
|
|
8,522
|
|
|
|
7,185
|
|
Undistributed
|
|
|
20,446
|
|
|
|
11,632
|
|
|
|
12,470
|
|
Income tax benefit
|
|
|
887
|
|
|
|
834
|
|
|
|
776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
27,399
|
|
|
$
|
18,994
|
|
|
$
|
18,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
|
(in thousands)
|
|
Net income
|
|
$
|
27,399
|
|
|
$
|
18,994
|
|
|
$
|
18,590
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding (losses) gains on securities arising during the period
|
|
|
(2,452
|
)
|
|
|
(1,216
|
)
|
|
|
1,504
|
|
Change in minimum pension liability
|
|
|
1,750
|
|
|
|
(2
|
)
|
|
|
1,140
|
|
Change in joint beneficiary agreement liability
|
|
|
400
|
|
|
|
(434
|
)
|
|
|
(143
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income
|
|
|
(302
|
)
|
|
|
(1,652
|
)
|
|
|
2,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
27,097
|
|
|
$
|
17,342
|
|
|
$
|
21,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Operating activities:
|
|
(in thousands)
|
|
Net income
|
|
$
|
27,399
|
|
|
$
|
18,994
|
|
|
$
|
18,590
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Undistributed equity in earnings of Tri Counties Bank
|
|
|
(20,446
|
)
|
|
|
(11,632
|
)
|
|
|
(12,470
|
)
|
Stock option vesting expense
|
|
|
1,151
|
|
|
|
1,083
|
|
|
|
830
|
|
Stock option excess tax benefits
|
|
|
(356
|
)
|
|
|
(44
|
)
|
|
|
(296
|
)
|
Net change in other assets and liabilities
|
|
|
(1,100
|
)
|
|
|
(1,089
|
)
|
|
|
(818
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
6,648
|
|
|
|
7,312
|
|
|
|
5,836
|
|
Investing activities: None
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock through option exercise
|
|
|
251
|
|
|
|
206
|
|
|
|
436
|
|
Stock option excess tax benefits
|
|
|
356
|
|
|
|
44
|
|
|
|
296
|
|
Repurchase of common stock
|
|
|
(501
|
)
|
|
|
|
|
|
|
(753
|
)
|
Cash dividends paid common
|
|
|
(6,745
|
)
|
|
|
(5,757
|
)
|
|
|
(5,742
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(6,639
|
)
|
|
|
(5,507
|
)
|
|
|
(5,763
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
9
|
|
|
|
1,805
|
|
|
|
73
|
|
Cash and cash equivalents at beginning of year
|
|
|
2,511
|
|
|
|
706
|
|
|
|
633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
2,520
|
|
|
$
|
2,511
|
|
|
$
|
706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98
Note 29 - Regulatory Matters
The Company is subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Companys consolidated financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Companys assets, liabilities and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Companys capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of December 31, 2013, that the Company meets all capital adequacy requirements to which it is subject.
As of December 31, 2013, the Bank was well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized
the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that date that Management believes have changed the institutions category.
The Banks actual capital amounts and ratios are also presented in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
Minimum Capital
Requirement
|
|
|
Minimum To Be
Well Capitalized
Under Prompt
Corrective Action
Provisions
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
As of December 31, 2013:
|
|
(dollars in thousands)
|
|
Total Capital (to Risk Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
297,429
|
|
|
|
14.77
|
%
|
|
$
|
161,064
|
|
|
|
8.0
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Tri Counties Bank
|
|
$
|
295,212
|
|
|
|
14.67
|
%
|
|
$
|
160,961
|
|
|
|
8.0
|
%
|
|
$
|
201,201
|
|
|
|
10.0
|
%
|
Tier 1 Capital (to Risk Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
272,071
|
|
|
|
13.51
|
%
|
|
$
|
80,532
|
|
|
|
4.0
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Tri Counties Bank
|
|
$
|
269,870
|
|
|
|
13.41
|
%
|
|
$
|
80,480
|
|
|
|
4.0
|
%
|
|
$
|
120,720
|
|
|
|
6.0
|
%
|
Tier 1 Capital (to Average Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
272,071
|
|
|
|
10.17
|
%
|
|
$
|
107,017
|
|
|
|
4.0
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Tri Counties Bank
|
|
$
|
269,870
|
|
|
|
10.09
|
%
|
|
$
|
106,965
|
|
|
|
4.0
|
%
|
|
$
|
133,706
|
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
As of December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
273,979
|
|
|
|
14.53
|
%
|
|
$
|
150,896
|
|
|
|
8.0
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Tri Counties Bank
|
|
$
|
271,723
|
|
|
|
14.42
|
%
|
|
$
|
150,796
|
|
|
|
8.0
|
%
|
|
$
|
188,495
|
|
|
|
10.0
|
%
|
Tier 1 Capital (to Risk Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
250,133
|
|
|
|
13.27
|
%
|
|
$
|
75,448
|
|
|
|
4.0
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Tri Counties Bank
|
|
$
|
247,892
|
|
|
|
13.16
|
%
|
|
$
|
75,398
|
|
|
|
4.0
|
%
|
|
$
|
113,097
|
|
|
|
6.0
|
%
|
Tier 1 Capital (to Average Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
250,133
|
|
|
|
9.82
|
%
|
|
$
|
101,918
|
|
|
|
4.0
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Tri Counties Bank
|
|
$
|
247,892
|
|
|
|
9.73
|
%
|
|
$
|
101,866
|
|
|
|
4.0
|
%
|
|
$
|
127,333
|
|
|
|
5.0
|
%
|
99
Note 30 - Summary of Quarterly Results of Operations (unaudited)
The following table sets forth the results of operations for the four quarters of 2013 and 2012, and is unaudited; however, in the opinion
of Management, it reflects all adjustments (which include only normal recurring adjustments) necessary to present fairly the summarized results for such periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Quarters Ended
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
(dollars in thousands, except per share data)
|
|
Interest and dividend income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount accretion PCI cash basis
|
|
$
|
255
|
|
|
$
|
140
|
|
|
$
|
129
|
|
|
$
|
167
|
|
Discount accretion PCI other
|
|
|
893
|
|
|
|
898
|
|
|
|
732
|
|
|
|
597
|
|
Discount accretion PNCI
|
|
|
568
|
|
|
|
1,115
|
|
|
|
815
|
|
|
|
766
|
|
All other loan interest income
|
|
|
22,754
|
|
|
|
22,970
|
|
|
|
22,207
|
|
|
|
22,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loan interest income
|
|
|
24,470
|
|
|
|
25,123
|
|
|
|
23,883
|
|
|
|
24,072
|
|
Debt securities, dividends and interest bearing cash at Banks (not FTE)
|
|
|
2,992
|
|
|
|
2,413
|
|
|
|
1,873
|
|
|
|
1,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
|
27,462
|
|
|
|
27,536
|
|
|
|
25,756
|
|
|
|
25,806
|
|
Interest expense
|
|
|
1,123
|
|
|
|
1,169
|
|
|
|
1,167
|
|
|
|
1,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
26,339
|
|
|
|
26,367
|
|
|
|
24,589
|
|
|
|
24,569
|
|
Provision for (benefit from) loan losses
|
|
|
172
|
|
|
|
(393
|
)
|
|
|
614
|
|
|
|
(1,108
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
26,167
|
|
|
|
26,760
|
|
|
|
23,975
|
|
|
|
25,677
|
|
Noninterest income
|
|
|
7,353
|
|
|
|
9,127
|
|
|
|
10,131
|
|
|
|
10,218
|
|
Noninterest expense
|
|
|
24,878
|
|
|
|
23,616
|
|
|
|
23,509
|
|
|
|
21,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
8,642
|
|
|
|
12,271
|
|
|
|
10,597
|
|
|
|
14,294
|
|
Income tax expense
|
|
|
3,406
|
|
|
|
4,910
|
|
|
|
4,272
|
|
|
|
5,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
5,236
|
|
|
$
|
7,361
|
|
|
$
|
6,325
|
|
|
$
|
8,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (diluted)
|
|
$
|
0.32
|
|
|
$
|
0.45
|
|
|
$
|
0.39
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 Quarters Ended
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
(dollars in thousands, except per share data)
|
|
Interest and dividend income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount accretion PCI cash basis
|
|
$
|
42
|
|
|
$
|
24
|
|
|
$
|
108
|
|
|
$
|
18
|
|
Discount accretion PCI other
|
|
|
979
|
|
|
|
1,192
|
|
|
|
886
|
|
|
|
776
|
|
Discount accretion PNCI
|
|
|
841
|
|
|
|
591
|
|
|
|
1,391
|
|
|
|
1,286
|
|
All other loan interest income
|
|
|
22,383
|
|
|
|
23,723
|
|
|
|
23,407
|
|
|
|
22,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loan interest income
|
|
|
24,245
|
|
|
|
25,530
|
|
|
|
25,792
|
|
|
|
24,929
|
|
Debt securities, dividends and interest bearing cash at Banks (not FTE)
|
|
|
1,898
|
|
|
|
1,935
|
|
|
|
2,152
|
|
|
|
2,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
|
26,143
|
|
|
|
27,465
|
|
|
|
27,944
|
|
|
|
27,164
|
|
Interest expense
|
|
|
1,372
|
|
|
|
1,834
|
|
|
|
2,010
|
|
|
|
2,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
24,771
|
|
|
|
25,631
|
|
|
|
25,934
|
|
|
|
25,036
|
|
Provision for loan losses
|
|
|
1,524
|
|
|
|
532
|
|
|
|
3,371
|
|
|
|
3,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
23,247
|
|
|
|
25,099
|
|
|
|
22,563
|
|
|
|
21,040
|
|
Noninterest income
|
|
|
10,011
|
|
|
|
9,127
|
|
|
|
10,577
|
|
|
|
8,265
|
|
Noninterest expense
|
|
|
25,126
|
|
|
|
25,590
|
|
|
|
24,367
|
|
|
|
22,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
8,132
|
|
|
|
8,636
|
|
|
|
8,773
|
|
|
|
6,390
|
|
Income tax expense
|
|
|
3,410
|
|
|
|
3,616
|
|
|
|
3,452
|
|
|
|
2,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
4,722
|
|
|
$
|
5,020
|
|
|
$
|
5,321
|
|
|
$
|
3,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (diluted)
|
|
$
|
0.29
|
|
|
$
|
0.31
|
|
|
$
|
0.33
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
Note 31 Subsequent Event
On January 21, 2014, the Company and North Valley Bancorp announced that they entered into an Agreement and Plan of Merger and
Reorganization under which North Valley will merge with and into TriCo Bancshares, with TriCo Bancshares as the surviving corporation. North Valley Bancorp shareholders will receive a fixed exchange ratio of 0.9433 shares of TriCo Bancshares common
stock for each share of North Valley common stock. The merger is expected to be completed in the second or third quarter of 2014, subject to approval of the merger by shareholders of both companies, receipt of required regulatory and other approvals
and satisfaction of customary closing conditions.
MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of TriCo Bancshares is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting
principles.
Under the supervision and with the participation of management, including the principal executive officer and principal financial officer,
the Company conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in the 1992 Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation under the framework in the 1992 Internal Control Integrated Framework, management of the Company has concluded the Company maintained effective internal control over financial reporting, as such term is
defined in Securities Exchange Act of 1934 Rules 13a-15(f), as of December 31, 2013.
Internal control over financial reporting cannot provide
absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and
breakdowns resulting from human failures. Internal control over financial reporting can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented
or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though
not eliminate, this risk.
Management is also responsible for the preparation and fair presentation of the consolidated financial statements and other
financial information contained in this report. The accompanying consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles and include, as necessary, best estimates and judgments by management.
Crowe Horwath LLP, an independent registered public accounting firm, has audited the Companys consolidated financial statements as of and for the
year ended December 31, 2013, and the Companys effectiveness of internal control over financial reporting as of December 31, 2013, as stated in its report, which is included herein.
|
/s/ Richard P. Smith
|
Richard P. Smith
|
President and Chief Executive Officer
|
|
/s/ Thomas J. Reddish
|
Thomas J. Reddish
|
Executive Vice President and Chief Financial Officer
|
March 6, 2014
101