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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Pennsylvania
(State or Other Jurisdiction of
Incorporation or Organization)
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23-2530374
(I.R.S. Employer
Identification No.)
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77 East King Street, P. O. Box 250, Shippensburg, Pennsylvania
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17257
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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Item 1.
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Item 2
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
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(Dollars in thousands, except per share data)
|
September 30,
2014 |
|
December 31,
2013 |
||||
Assets
|
|
|
|
||||
Cash and due from banks
|
$
|
15,524
|
|
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$
|
12,995
|
|
Interest bearing deposits with banks
|
20,213
|
|
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24,565
|
|
||
Cash and cash equivalents
|
35,737
|
|
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37,560
|
|
||
Restricted investments in bank stock
|
9,334
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|
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9,921
|
|
||
Securities available for sale
|
402,563
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|
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406,943
|
|
||
Loans held for sale
|
4,164
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|
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1,936
|
|
||
Loans
|
680,374
|
|
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671,037
|
|
||
Less: Allowance for loan losses
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(16,019
|
)
|
|
(20,965
|
)
|
||
Net loans
|
664,355
|
|
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650,072
|
|
||
Premises and equipment, net
|
25,293
|
|
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26,441
|
|
||
Cash surrender value of life insurance
|
26,432
|
|
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25,850
|
|
||
Intangible assets
|
465
|
|
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622
|
|
||
Accrued interest receivable
|
3,151
|
|
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3,400
|
|
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Other assets
|
11,898
|
|
|
15,067
|
|
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Total assets
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$
|
1,183,392
|
|
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$
|
1,177,812
|
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Liabilities
|
|
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|
||||
Deposits:
|
|
|
|
||||
Non-interest bearing
|
$
|
125,833
|
|
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$
|
116,371
|
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Interest bearing
|
863,401
|
|
|
884,019
|
|
||
Total deposits
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989,234
|
|
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1,000,390
|
|
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Short-term borrowings
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56,279
|
|
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59,032
|
|
||
Long-term debt
|
14,986
|
|
|
16,077
|
|
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Accrued interest and other liabilities
|
16,375
|
|
|
10,874
|
|
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Total liabilities
|
1,076,874
|
|
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1,086,373
|
|
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Shareholders’ Equity
|
|
|
|
||||
Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding
|
0
|
|
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0
|
|
||
Common stock, no par value - $ 0.05205 stated value per share 50,000,000 shares authorized; 8,264,548 and 8,107,274 shares issued; 8,263,737 and 8,106,463 shares outstanding
|
430
|
|
|
422
|
|
||
Additional paid - in capital
|
123,280
|
|
|
123,105
|
|
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Retained earnings (accumulated deficit)
|
(17,227
|
)
|
|
(27,255
|
)
|
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Accumulated other comprehensive income (loss)
|
55
|
|
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(4,813
|
)
|
||
Treasury stock - common, 811 shares, at cost
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(20
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)
|
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(20
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)
|
||
Total shareholders’ equity
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106,518
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|
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91,439
|
|
||
Total liabilities and shareholders’ equity
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$
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1,183,392
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$
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1,177,812
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Three Months Ended
|
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Nine Months Ended
|
||||||||||||
(Dollars in thousands, except per share data)
|
September 30,
2014 |
|
September 30,
2013 |
|
September 30,
2014 |
|
September 30,
2013 |
||||||||
Interest and dividend income
|
|
|
|
|
|
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|
||||||||
Interest and fees on loans
|
$
|
7,351
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|
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$
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7,739
|
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$
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22,084
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$
|
23,803
|
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Interest and dividends on investment securities
|
|
|
|
|
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|
||||||||
Taxable
|
2,054
|
|
|
904
|
|
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6,065
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|
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2,716
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|
||||
Tax-exempt
|
63
|
|
|
298
|
|
|
490
|
|
|
784
|
|
||||
Short-term investments
|
9
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|
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41
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|
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24
|
|
|
152
|
|
||||
Total interest and dividend income
|
9,477
|
|
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8,982
|
|
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28,663
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27,455
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|
||||
Interest expense
|
|
|
|
|
|
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||||||||
Interest on deposits
|
924
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|
|
1,073
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|
|
2,840
|
|
|
3,436
|
|
||||
Interest on short-term borrowings
|
33
|
|
|
19
|
|
|
96
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|
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33
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|
||||
Interest on long-term debt
|
73
|
|
|
124
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|
|
264
|
|
|
412
|
|
||||
Total interest expense
|
1,030
|
|
|
1,216
|
|
|
3,200
|
|
|
3,881
|
|
||||
Net interest income
|
8,447
|
|
|
7,766
|
|
|
25,463
|
|
|
23,574
|
|
||||
Provision for loan losses
|
(2,900
|
)
|
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0
|
|
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(2,900
|
)
|
|
(1,400
|
)
|
||||
Net interest income after provision for loan losses
|
11,347
|
|
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7,766
|
|
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28,363
|
|
|
24,974
|
|
||||
Noninterest income
|
|
|
|
|
|
|
|
||||||||
Service charges on deposit accounts
|
1,375
|
|
|
1,448
|
|
|
4,056
|
|
|
4,307
|
|
||||
Other service charges, commissions and fees
|
270
|
|
|
283
|
|
|
705
|
|
|
789
|
|
||||
Trust department income
|
1,172
|
|
|
1,273
|
|
|
3,599
|
|
|
3,551
|
|
||||
Brokerage income
|
575
|
|
|
426
|
|
|
1,592
|
|
|
1,502
|
|
||||
Mortgage banking activities
|
613
|
|
|
727
|
|
|
1,634
|
|
|
2,584
|
|
||||
Earnings on life insurance
|
238
|
|
|
241
|
|
|
710
|
|
|
721
|
|
||||
Other income (loss)
|
40
|
|
|
44
|
|
|
364
|
|
|
(38
|
)
|
||||
Investment securities gains
|
469
|
|
|
157
|
|
|
1,668
|
|
|
279
|
|
||||
Total noninterest income
|
4,752
|
|
|
4,599
|
|
|
14,328
|
|
|
13,695
|
|
||||
Noninterest expenses
|
|
|
|
|
|
|
|
||||||||
Salaries and employee benefits
|
5,902
|
|
|
5,584
|
|
|
17,593
|
|
|
16,717
|
|
||||
Occupancy expense
|
535
|
|
|
486
|
|
|
1,696
|
|
|
1,521
|
|
||||
Furniture and equipment
|
865
|
|
|
900
|
|
|
2,537
|
|
|
2,528
|
|
||||
Data processing
|
460
|
|
|
106
|
|
|
1,209
|
|
|
369
|
|
||||
Automated teller and interchange fees
|
254
|
|
|
282
|
|
|
660
|
|
|
811
|
|
||||
Advertising and bank promotions
|
204
|
|
|
231
|
|
|
847
|
|
|
716
|
|
||||
FDIC insurance
|
403
|
|
|
647
|
|
|
1,226
|
|
|
1,938
|
|
||||
Professional services
|
653
|
|
|
463
|
|
|
1,829
|
|
|
1,801
|
|
||||
Collection and problem loan
|
215
|
|
|
184
|
|
|
533
|
|
|
565
|
|
||||
Real estate owned expenses
|
201
|
|
|
55
|
|
|
261
|
|
|
115
|
|
||||
Taxes other than income
|
129
|
|
|
222
|
|
|
443
|
|
|
710
|
|
||||
Intangible asset amortization
|
52
|
|
|
52
|
|
|
157
|
|
|
157
|
|
||||
Other operating expenses
|
1,025
|
|
|
1,325
|
|
|
3,648
|
|
|
3,865
|
|
||||
Total noninterest expenses
|
10,898
|
|
|
10,537
|
|
|
32,639
|
|
|
31,813
|
|
||||
Income before income taxes
|
5,201
|
|
|
1,828
|
|
|
10,052
|
|
|
6,856
|
|
||||
Income tax expense (benefit)
|
24
|
|
|
(281
|
)
|
|
24
|
|
|
(221
|
)
|
||||
Net income
|
$
|
5,177
|
|
|
$
|
2,109
|
|
|
$
|
10,028
|
|
|
$
|
7,077
|
|
Per share information:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
0.64
|
|
|
$
|
0.26
|
|
|
$
|
1.24
|
|
|
$
|
0.87
|
|
Diluted earnings per share
|
0.64
|
|
|
0.26
|
|
|
1.24
|
|
|
0.87
|
|
||||
Dividends per share
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
September 30,
2014 |
|
September 30,
2013 |
|
September 30,
2014 |
|
September 30,
2013 |
||||||||
Net income
|
$
|
5,177
|
|
|
$
|
2,109
|
|
|
$
|
10,028
|
|
|
$
|
7,077
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) on securities available for sale arising during the period
|
(1,426
|
)
|
|
(688
|
)
|
|
9,155
|
|
|
(8,198
|
)
|
||||
Reclassification adjustment for gains realized in net income
|
(469
|
)
|
|
(157
|
)
|
|
(1,668
|
)
|
|
(279
|
)
|
||||
Net unrealized gains (losses)
|
(1,895
|
)
|
|
(845
|
)
|
|
7,487
|
|
|
(8,477
|
)
|
||||
Tax effect
|
665
|
|
|
296
|
|
|
(2,619
|
)
|
|
2,967
|
|
||||
Total other comprehensive income (loss), net of tax and reclassification adjustments
|
(1,230
|
)
|
|
(549
|
)
|
|
4,868
|
|
|
(5,510
|
)
|
||||
Total comprehensive income
|
$
|
3,947
|
|
|
$
|
1,560
|
|
|
$
|
14,896
|
|
|
$
|
1,567
|
|
|
Nine Months Ended September 30, 2014 and 2013
|
||||||||||||||||||||||
(Dollars in thousands, except per share data)
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
(Accumulated
Deficit)
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury
Stock
|
|
Total
Shareholders’
Equity
|
||||||||||||
Balance, January 1, 2013
|
$
|
421
|
|
|
$
|
122,724
|
|
|
$
|
(37,259
|
)
|
|
$
|
1,828
|
|
|
$
|
(20
|
)
|
|
$
|
87,694
|
|
Net income
|
0
|
|
|
0
|
|
|
7,077
|
|
|
0
|
|
|
0
|
|
|
7,077
|
|
||||||
Total other comprehensive income (loss), net of taxes
|
0
|
|
|
0
|
|
|
0
|
|
|
(5,510
|
)
|
|
0
|
|
|
(5,510
|
)
|
||||||
Stock-based compensation plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Issuance of stock (26,610 shares, including 1 treasury), including compensation expense of $125
|
1
|
|
|
373
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
374
|
|
||||||
Issuance of stock through dividend reinvestment plan (235 shares)
|
0
|
|
|
3
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
3
|
|
||||||
Balance, September 30, 2013
|
$
|
422
|
|
|
$
|
123,100
|
|
|
$
|
(30,182
|
)
|
|
$
|
(3,682
|
)
|
|
$
|
(20
|
)
|
|
$
|
89,638
|
|
Balance, January 1, 2014
|
$
|
422
|
|
|
$
|
123,105
|
|
|
$
|
(27,255
|
)
|
|
$
|
(4,813
|
)
|
|
$
|
(20
|
)
|
|
$
|
91,439
|
|
Net income
|
0
|
|
|
0
|
|
|
10,028
|
|
|
0
|
|
|
0
|
|
|
10,028
|
|
||||||
Total other comprehensive income, net of taxes
|
0
|
|
|
0
|
|
|
0
|
|
|
4,868
|
|
|
0
|
|
|
4,868
|
|
||||||
Stock-based compensation plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Issuance of stock (157,207 shares), including compensation expense of $79
|
8
|
|
|
174
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
182
|
|
||||||
Issuance of stock through dividend reinvestment plan (67 shares)
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
||||||
Balance, September 30, 2014
|
$
|
430
|
|
|
$
|
123,280
|
|
|
$
|
(17,227
|
)
|
|
$
|
55
|
|
|
$
|
(20
|
)
|
|
$
|
106,518
|
|
|
Nine Months Ended
|
||||||
(Dollars in thousands)
|
September 30,
2014 |
|
September 30,
2013 |
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
10,028
|
|
|
$
|
7,077
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Amortization of premiums on securities available for sale
|
4,894
|
|
|
5,996
|
|
||
Depreciation and amortization
|
2,069
|
|
|
2,076
|
|
||
Provision for loan losses
|
(2,900
|
)
|
|
(1,400
|
)
|
||
Stock based compensation
|
79
|
|
|
125
|
|
||
Net change in loans held for sale
|
(2,228
|
)
|
|
6,214
|
|
||
Net (gain) loss on disposal of other real estate owned
|
(269
|
)
|
|
144
|
|
||
Writedown of other real estate owned
|
154
|
|
|
29
|
|
||
Net loss on disposal of premises and equipment
|
41
|
|
|
0
|
|
||
Investment securities gains
|
(1,668
|
)
|
|
(279
|
)
|
||
Earnings on cash surrender value of life insurance
|
(710
|
)
|
|
(721
|
)
|
||
(Increase) decrease in accrued interest receivable
|
249
|
|
|
(118
|
)
|
||
Increase (decrease) in accrued interest payable and other liabilities
|
5,474
|
|
|
(253
|
)
|
||
Other, net
|
801
|
|
|
(2,579
|
)
|
||
Net cash provided by operating activities
|
16,014
|
|
|
16,311
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Proceeds from sales of available for sale securities
|
151,454
|
|
|
25,519
|
|
||
Maturities, repayments and calls of available for sale securities
|
32,201
|
|
|
68,080
|
|
||
Purchases of available for sale securities
|
(175,014
|
)
|
|
(155,841
|
)
|
||
Net change in restricted investments in bank stocks
|
587
|
|
|
1,767
|
|
||
Net (increase) decrease in loans
|
(19,344
|
)
|
|
19,214
|
|
||
Proceeds from sale of loans
|
5,743
|
|
|
0
|
|
||
Purchases of bank premises and equipment
|
(743
|
)
|
|
(1,218
|
)
|
||
Proceeds from disposal of other real estate owned
|
2,175
|
|
|
1,079
|
|
||
Net cash used in investing activities
|
(2,941
|
)
|
|
(41,400
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Net decrease in deposits
|
(11,156
|
)
|
|
(50,106
|
)
|
||
Net increase (decrease) in short term purchased funds
|
(2,753
|
)
|
|
15,670
|
|
||
Proceeds from long-term debt
|
10,000
|
|
|
0
|
|
||
Payments on long-term debt
|
(11,091
|
)
|
|
(21,039
|
)
|
||
Dividends paid
|
0
|
|
|
0
|
|
||
Net proceeds from issuance of common stock
|
104
|
|
|
252
|
|
||
Net cash used in financing activities
|
(14,896
|
)
|
|
(55,223
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(1,823
|
)
|
|
(80,312
|
)
|
||
Cash and cash equivalents at beginning of period
|
37,560
|
|
|
150,688
|
|
||
Cash and cash equivalents at end of period
|
$
|
35,737
|
|
|
$
|
70,376
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
3,262
|
|
|
$
|
3,974
|
|
Income taxes
|
0
|
|
|
0
|
|
||
Supplemental schedule of noncash investing activities:
|
|
|
|
||||
Other real estate acquired in settlement of loans
|
$
|
2,201
|
|
|
$
|
341
|
|
Security purchases not yet settled
|
0
|
|
|
34,578
|
|
(Dollars in thousands)
|
Amortized Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
||||||||
September 30, 2014
|
|
|
|
|
|
|
|
||||||||
U.S. Government Agencies
|
$
|
24,216
|
|
|
$
|
15
|
|
|
$
|
55
|
|
|
$
|
24,176
|
|
States and political subdivisions
|
52,658
|
|
|
726
|
|
|
1,370
|
|
|
52,014
|
|
||||
U.S. Government Sponsored Enterprises (GSE) residential mortgage-backed securities
|
178,817
|
|
|
1,456
|
|
|
487
|
|
|
179,786
|
|
||||
GSE residential collateralized mortgage obligations (CMOs)
|
81,584
|
|
|
788
|
|
|
388
|
|
|
81,984
|
|
||||
GSE commercial CMOs
|
65,156
|
|
|
466
|
|
|
1,082
|
|
|
64,540
|
|
||||
Total debt securities
|
402,431
|
|
|
3,451
|
|
|
3,382
|
|
|
402,500
|
|
||||
Equity securities
|
50
|
|
|
13
|
|
|
0
|
|
|
63
|
|
||||
Totals
|
$
|
402,481
|
|
|
$
|
3,464
|
|
|
$
|
3,382
|
|
|
$
|
402,563
|
|
December 31, 2013
|
|
|
|
|
|
|
|
||||||||
U.S. Government Agencies
|
$
|
25,610
|
|
|
$
|
34
|
|
|
$
|
193
|
|
|
$
|
25,451
|
|
U.S. Government Sponsored Enterprises (GSE)
|
14,431
|
|
|
5
|
|
|
722
|
|
|
13,714
|
|
||||
States and political subdivisions
|
75,494
|
|
|
417
|
|
|
4,367
|
|
|
71,544
|
|
||||
GSE residential mortgage-backed securities
|
198,449
|
|
|
895
|
|
|
725
|
|
|
198,619
|
|
||||
GSE residential collateralized mortgage obligations (CMOs)
|
40,502
|
|
|
251
|
|
|
221
|
|
|
40,532
|
|
||||
GSE commercial CMOs
|
59,812
|
|
|
0
|
|
|
2,798
|
|
|
57,014
|
|
||||
Total debt securities
|
414,298
|
|
|
1,602
|
|
|
9,026
|
|
|
406,874
|
|
||||
Equity securities
|
50
|
|
|
19
|
|
|
0
|
|
|
69
|
|
||||
Totals
|
$
|
414,348
|
|
|
$
|
1,621
|
|
|
$
|
9,026
|
|
|
$
|
406,943
|
|
|
Less Than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government Agencies
|
$
|
3,743
|
|
|
$
|
5
|
|
|
$
|
15,195
|
|
|
$
|
50
|
|
|
$
|
18,938
|
|
|
$
|
55
|
|
States and political subdivisions
|
0
|
|
|
0
|
|
|
35,529
|
|
|
1,370
|
|
|
35,529
|
|
|
1,370
|
|
||||||
GSE residential mortgage-backed securities
|
80,161
|
|
|
487
|
|
|
0
|
|
|
0
|
|
|
80,161
|
|
|
487
|
|
||||||
GSE residential collateralized mortgage obligations (CMOs)
|
28,728
|
|
|
388
|
|
|
0
|
|
|
0
|
|
|
28,728
|
|
|
388
|
|
||||||
GSE commercial CMOs
|
9,862
|
|
|
82
|
|
|
29,651
|
|
|
1,000
|
|
|
39,513
|
|
|
1,082
|
|
||||||
Total temporarily impaired securities
|
$
|
122,494
|
|
|
$
|
962
|
|
|
$
|
80,375
|
|
|
$
|
2,420
|
|
|
$
|
202,869
|
|
|
$
|
3,382
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government Agencies
|
$
|
17,454
|
|
|
$
|
193
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
17,454
|
|
|
$
|
193
|
|
U.S. Government Sponsored Enterprises (GSE)
|
12,049
|
|
|
722
|
|
|
0
|
|
|
0
|
|
|
12,049
|
|
|
722
|
|
||||||
States and political subdivisions
|
53,606
|
|
|
4,367
|
|
|
0
|
|
|
0
|
|
|
53,606
|
|
|
4,367
|
|
||||||
GSE residential mortgage-backed securities
|
125,468
|
|
|
716
|
|
|
7,447
|
|
|
9
|
|
|
132,915
|
|
|
725
|
|
||||||
GSE residential collateralized mortgage obligations (CMOs)
|
14,033
|
|
|
220
|
|
|
44
|
|
|
1
|
|
|
14,077
|
|
|
221
|
|
||||||
GSE commercial CMOs
|
38,298
|
|
|
1,248
|
|
|
18,716
|
|
|
1,550
|
|
|
57,014
|
|
|
2,798
|
|
||||||
Total temporarily impaired securities
|
$
|
260,908
|
|
|
$
|
7,466
|
|
|
$
|
26,207
|
|
|
$
|
1,560
|
|
|
$
|
287,115
|
|
|
$
|
9,026
|
|
|
Available for Sale
|
||||||
(Dollars in thousands)
|
Amortized Cost
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
365
|
|
|
$
|
366
|
|
Due after one year through five years
|
15
|
|
|
15
|
|
||
Due after five years through ten years
|
16,953
|
|
|
16,854
|
|
||
Due after ten years
|
59,541
|
|
|
58,955
|
|
||
Mortgage-backed securities and collateralized mortgage obligations
|
325,557
|
|
|
326,310
|
|
||
Total debt securities
|
402,431
|
|
|
402,500
|
|
||
Equity securities
|
50
|
|
|
63
|
|
||
|
$
|
402,481
|
|
|
$
|
402,563
|
|
(Dollars in thousands)
|
September 30, 2014
|
|
December 31, 2013
|
||||
Commercial real estate:
|
|
|
|
||||
Owner-occupied
|
$
|
97,401
|
|
|
$
|
111,290
|
|
Non-owner occupied
|
142,146
|
|
|
135,953
|
|
||
Multi-family
|
26,801
|
|
|
22,882
|
|
||
Non-owner occupied residential
|
48,559
|
|
|
55,272
|
|
||
Acquisition and development:
|
|
|
|
||||
1-4 family residential construction
|
5,297
|
|
|
3,338
|
|
||
Commercial and land development
|
15,480
|
|
|
19,440
|
|
||
Commercial and industrial
|
45,125
|
|
|
33,446
|
|
||
Municipal
|
62,385
|
|
|
60,996
|
|
||
Residential mortgage:
|
|
|
|
||||
First lien
|
126,552
|
|
|
124,728
|
|
||
Home equity - term
|
20,833
|
|
|
20,131
|
|
||
Home equity - lines of credit
|
83,673
|
|
|
77,377
|
|
||
Installment and other loans
|
6,122
|
|
|
6,184
|
|
||
|
$
|
680,374
|
|
|
$
|
671,037
|
|
(Dollars in thousands)
|
Pass
|
|
Special Mention
|
|
Non-Impaired Substandard
|
|
Impaired - Substandard
|
|
Doubtful
|
|
Total
|
||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Owner-occupied
|
$
|
84,959
|
|
|
$
|
3,367
|
|
|
$
|
5,915
|
|
|
$
|
3,160
|
|
|
$
|
0
|
|
|
$
|
97,401
|
|
Non-owner occupied
|
121,406
|
|
|
17,034
|
|
|
1,287
|
|
|
2,378
|
|
|
41
|
|
|
142,146
|
|
||||||
Multi-family
|
24,367
|
|
|
1,108
|
|
|
1,230
|
|
|
96
|
|
|
0
|
|
|
26,801
|
|
||||||
Non-owner occupied residential
|
38,590
|
|
|
6,117
|
|
|
2,212
|
|
|
1,640
|
|
|
0
|
|
|
48,559
|
|
||||||
Acquisition and development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
1-4 family residential construction
|
5,297
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
5,297
|
|
||||||
Commercial and land development
|
11,801
|
|
|
1,082
|
|
|
1,348
|
|
|
1,249
|
|
|
0
|
|
|
15,480
|
|
||||||
Commercial and industrial
|
41,568
|
|
|
1,742
|
|
|
1,121
|
|
|
575
|
|
|
119
|
|
|
45,125
|
|
||||||
Municipal
|
62,385
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
62,385
|
|
||||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First lien
|
121,583
|
|
|
0
|
|
|
0
|
|
|
4,936
|
|
|
33
|
|
|
126,552
|
|
||||||
Home equity - term
|
20,761
|
|
|
0
|
|
|
0
|
|
|
72
|
|
|
0
|
|
|
20,833
|
|
||||||
Home equity - lines of credit
|
83,132
|
|
|
315
|
|
|
184
|
|
|
42
|
|
|
0
|
|
|
83,673
|
|
||||||
Installment and other loans
|
6,105
|
|
|
0
|
|
|
0
|
|
|
17
|
|
|
0
|
|
|
6,122
|
|
||||||
|
$
|
621,954
|
|
|
$
|
30,765
|
|
|
$
|
13,297
|
|
|
$
|
14,165
|
|
|
$
|
193
|
|
|
$
|
680,374
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Owner-occupied
|
$
|
92,063
|
|
|
$
|
3,305
|
|
|
$
|
11,360
|
|
|
$
|
4,107
|
|
|
$
|
455
|
|
|
$
|
111,290
|
|
Non-owner occupied
|
107,113
|
|
|
6,904
|
|
|
14,819
|
|
|
7,117
|
|
|
0
|
|
|
135,953
|
|
||||||
Multi-family
|
20,091
|
|
|
2,132
|
|
|
337
|
|
|
322
|
|
|
0
|
|
|
22,882
|
|
||||||
Non-owner occupied residential
|
42,007
|
|
|
4,982
|
|
|
3,790
|
|
|
4,493
|
|
|
0
|
|
|
55,272
|
|
||||||
Acquisition and development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
1-4 family residential construction
|
3,292
|
|
|
0
|
|
|
46
|
|
|
0
|
|
|
0
|
|
|
3,338
|
|
||||||
Commercial and land development
|
14,118
|
|
|
1,433
|
|
|
712
|
|
|
3,177
|
|
|
0
|
|
|
19,440
|
|
||||||
Commercial and industrial
|
28,933
|
|
|
2,129
|
|
|
383
|
|
|
1,878
|
|
|
123
|
|
|
33,446
|
|
||||||
Municipal
|
60,996
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
60,996
|
|
||||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First lien
|
121,353
|
|
|
0
|
|
|
0
|
|
|
3,327
|
|
|
48
|
|
|
124,728
|
|
||||||
Home equity - term
|
20,024
|
|
|
0
|
|
|
0
|
|
|
94
|
|
|
13
|
|
|
20,131
|
|
||||||
Home equity - lines of credit
|
77,187
|
|
|
0
|
|
|
9
|
|
|
181
|
|
|
0
|
|
|
77,377
|
|
||||||
Installment and other loans
|
6,184
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
6,184
|
|
||||||
|
$
|
593,361
|
|
|
$
|
20,885
|
|
|
$
|
31,456
|
|
|
$
|
24,696
|
|
|
$
|
639
|
|
|
$
|
671,037
|
|
•
|
Original appraisal – if the original appraisal provides a strong loan-to-value ratio (generally
70%
or lower) and, after consideration of market conditions and knowledge of the property and area, it is determined by the Credit Administration staff that there has not been a significant deterioration in the collateral value, the original certified appraised value may be used. Discounts as deemed appropriate for selling costs are factored into the appraised value in arriving at fair value.
|
•
|
Discounted cash flows – in limited cases, discounted cash flows may be used on projects in which the collateral is liquidated to reduce the borrowings outstanding, and is used to validate collateral values derived from other approaches.
|
|
Impaired Loans with a Specific Allowance
|
|
Impaired Loans with No Specific Allowance
|
||||||||||||||||
(Dollars in thousands)
|
Recorded
Investment
(Book Balance)
|
|
Unpaid Principal
Balance
(Legal Balance)
|
|
Related
Allowance
|
|
Recorded
Investment
(Book Balance)
|
|
Unpaid Principal
Balance
(Legal Balance)
|
||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
||||||||||
Owner-occupied
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,160
|
|
|
$
|
4,345
|
|
Non-owner occupied
|
686
|
|
|
728
|
|
|
41
|
|
|
1,733
|
|
|
3,499
|
|
|||||
Multi-family
|
0
|
|
|
0
|
|
|
0
|
|
|
96
|
|
|
128
|
|
|||||
Non-owner occupied residential
|
222
|
|
|
243
|
|
|
28
|
|
|
1,418
|
|
|
1,846
|
|
|||||
Acquisition and development:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and land development
|
0
|
|
|
0
|
|
|
0
|
|
|
1,249
|
|
|
1,929
|
|
|||||
Commercial and industrial
|
0
|
|
|
0
|
|
|
0
|
|
|
694
|
|
|
766
|
|
|||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
||||||||||
First lien
|
851
|
|
|
851
|
|
|
134
|
|
|
4,118
|
|
|
4,707
|
|
|||||
Home equity - term
|
0
|
|
|
0
|
|
|
0
|
|
|
72
|
|
|
73
|
|
|||||
Home equity - lines of credit
|
0
|
|
|
0
|
|
|
0
|
|
|
42
|
|
|
43
|
|
|||||
Installment and other loans
|
0
|
|
|
0
|
|
|
0
|
|
|
17
|
|
|
39
|
|
|||||
|
$
|
1,759
|
|
|
$
|
1,822
|
|
|
$
|
203
|
|
|
$
|
12,599
|
|
|
$
|
17,375
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
||||||||||
Owner-occupied
|
$
|
615
|
|
|
$
|
1,099
|
|
|
$
|
552
|
|
|
$
|
3,947
|
|
|
$
|
4,575
|
|
Non-owner occupied
|
0
|
|
|
0
|
|
|
0
|
|
|
7,117
|
|
|
7,670
|
|
|||||
Multi-family
|
0
|
|
|
0
|
|
|
0
|
|
|
322
|
|
|
415
|
|
|||||
Non-owner occupied residential
|
0
|
|
|
0
|
|
|
0
|
|
|
4,493
|
|
|
4,836
|
|
|||||
Acquisition and development:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and land development
|
0
|
|
|
0
|
|
|
0
|
|
|
3,177
|
|
|
3,812
|
|
|||||
Commercial and industrial
|
0
|
|
|
0
|
|
|
0
|
|
|
2,001
|
|
|
2,143
|
|
|||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
||||||||||
First lien
|
48
|
|
|
48
|
|
|
48
|
|
|
3,327
|
|
|
3,619
|
|
|||||
Home equity - term
|
13
|
|
|
13
|
|
|
13
|
|
|
94
|
|
|
96
|
|
|||||
Home equity - lines of credit
|
0
|
|
|
0
|
|
|
0
|
|
|
181
|
|
|
183
|
|
|||||
|
$
|
676
|
|
|
$
|
1,160
|
|
|
$
|
613
|
|
|
$
|
24,659
|
|
|
$
|
27,349
|
|
|
Three Months Ended September 30,
|
||||||||||||||
|
2014
|
|
2013
|
||||||||||||
(Dollars in thousands)
|
Average
Impaired
Balance
|
|
Interest
Income
Recognized
|
|
Average
Impaired
Balance
|
|
Interest
Income
Recognized
|
||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
||||||||
Owner-occupied
|
$
|
3,681
|
|
|
$
|
1
|
|
|
$
|
4,249
|
|
|
$
|
41
|
|
Non-owner occupied
|
7,361
|
|
|
46
|
|
|
3,980
|
|
|
50
|
|
||||
Multi-family
|
98
|
|
|
0
|
|
|
168
|
|
|
16
|
|
||||
Non-owner occupied residential
|
1,905
|
|
|
0
|
|
|
5,108
|
|
|
45
|
|
||||
Acquisition and development:
|
|
|
|
|
|
|
|
||||||||
1-4 family residential construction
|
0
|
|
|
0
|
|
|
345
|
|
|
0
|
|
||||
Commercial and land development
|
1,286
|
|
|
9
|
|
|
2,613
|
|
|
0
|
|
||||
Commercial and industrial
|
1,263
|
|
|
0
|
|
|
1,875
|
|
|
0
|
|
||||
Residential mortgage:
|
|
|
|
|
|
|
|
||||||||
First lien
|
4,772
|
|
|
15
|
|
|
2,421
|
|
|
29
|
|
||||
Home equity - term
|
72
|
|
|
0
|
|
|
47
|
|
|
2
|
|
||||
Home equity - lines of credit
|
49
|
|
|
0
|
|
|
116
|
|
|
4
|
|
||||
Installment and other loans
|
10
|
|
|
1
|
|
|
1
|
|
|
0
|
|
||||
|
$
|
20,497
|
|
|
$
|
72
|
|
|
$
|
20,923
|
|
|
$
|
187
|
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2014
|
|
2013
|
||||||||||||
(Dollars in thousands)
|
Average
Impaired
Balance
|
|
Interest
Income
Recognized
|
|
Average
Impaired
Balance
|
|
Interest
Income
Recognized
|
||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
||||||||
Owner-occupied
|
$
|
3,965
|
|
|
$
|
9
|
|
|
$
|
3,270
|
|
|
$
|
99
|
|
Non-owner occupied
|
7,205
|
|
|
137
|
|
|
3,605
|
|
|
86
|
|
||||
Multi-family
|
234
|
|
|
0
|
|
|
89
|
|
|
16
|
|
||||
Non-owner occupied residential
|
2,603
|
|
|
2
|
|
|
4,875
|
|
|
60
|
|
||||
Acquisition and development:
|
|
|
|
|
|
|
|
||||||||
1-4 family residential construction
|
0
|
|
|
0
|
|
|
602
|
|
|
0
|
|
||||
Commercial and land development
|
1,787
|
|
|
20
|
|
|
2,967
|
|
|
2
|
|
||||
Commercial and industrial
|
1,676
|
|
|
2
|
|
|
1,724
|
|
|
65
|
|
||||
Residential mortgage:
|
|
|
|
|
|
|
|
||||||||
First lien
|
4,068
|
|
|
45
|
|
|
2,528
|
|
|
31
|
|
||||
Home equity - term
|
90
|
|
|
0
|
|
|
47
|
|
|
2
|
|
||||
Home equity - lines of credit
|
85
|
|
|
0
|
|
|
336
|
|
|
4
|
|
||||
Installment and other loans
|
5
|
|
|
1
|
|
|
1
|
|
|
0
|
|
||||
|
$
|
21,718
|
|
|
$
|
216
|
|
|
$
|
20,044
|
|
|
$
|
365
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||
(Dollars in thousands)
|
Number of
Contracts
|
|
Recorded
Investment
|
|
Number of
Contracts
|
|
Recorded
Investment
|
||||||
Accruing:
|
|
|
|
|
|
|
|
||||||
Commercial real estate:
|
|
|
|
|
|
|
|
||||||
Owner-occupied
|
0
|
|
|
$
|
0
|
|
|
1
|
|
|
$
|
200
|
|
Non-owner occupied
|
0
|
|
|
0
|
|
|
2
|
|
|
4,268
|
|
||
Acquisition and development:
|
|
|
|
|
|
|
|
||||||
Commercial and land development
|
2
|
|
|
917
|
|
|
2
|
|
|
1,071
|
|
||
Residential mortgage:
|
|
|
|
|
|
|
|
||||||
First lien
|
8
|
|
|
818
|
|
|
1
|
|
|
449
|
|
||
|
10
|
|
|
1,735
|
|
|
6
|
|
|
5,988
|
|
||
Nonaccruing:
|
|
|
|
|
|
|
|
||||||
Commercial real estate:
|
|
|
|
|
|
|
|
||||||
Owner-occupied
|
1
|
|
|
49
|
|
|
1
|
|
|
71
|
|
||
Non-owner occupied
|
1
|
|
|
686
|
|
|
1
|
|
|
694
|
|
||
Non-owner occupied residential
|
0
|
|
|
0
|
|
|
1
|
|
|
193
|
|
||
Commercial and industrial
|
0
|
|
|
0
|
|
|
2
|
|
|
310
|
|
||
Residential mortgage:
|
|
|
|
|
|
|
|
||||||
First lien
|
12
|
|
|
1,669
|
|
|
1
|
|
|
279
|
|
||
Consumer
|
1
|
|
|
14
|
|
|
0
|
|
|
0
|
|
||
|
15
|
|
|
2,418
|
|
|
6
|
|
|
1,547
|
|
||
|
25
|
|
|
$
|
4,153
|
|
|
12
|
|
|
$
|
7,535
|
|
|
2014
|
|
2013
|
||||||||||||||||||
(Dollars in thousands)
|
Number of
Contracts
|
|
Pre-
Modification
Recorded
Investment
|
|
Post
Modification
Recorded
Investment
|
|
Number of
Contracts
|
|
Pre-
Modification
Recorded
Investment
|
|
Post
Modification
Recorded
Investment
|
||||||||||
Three Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Owner occupied
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
2
|
|
|
$
|
150
|
|
|
$
|
150
|
|
Non-owner occupied
|
0
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|
3,457
|
|
|
3,457
|
|
||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
First lien
|
4
|
|
|
285
|
|
|
285
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Installment and other loans
|
1
|
|
|
36
|
|
|
14
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
5
|
|
|
$
|
321
|
|
|
$
|
299
|
|
|
4
|
|
|
$
|
3,607
|
|
|
$
|
3,607
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Owner occupied
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
2
|
|
|
$
|
150
|
|
|
$
|
150
|
|
Non-owner occupied
|
0
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|
3,457
|
|
|
3,457
|
|
||||
Acquisition and development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial and land development
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|
524
|
|
|
524
|
|
||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
First lien
|
18
|
|
|
1,808
|
|
|
1,741
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
Installment and other loans
|
1
|
|
|
36
|
|
|
14
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||
|
19
|
|
|
$
|
1,844
|
|
|
$
|
1,755
|
|
|
5
|
|
|
$
|
4,131
|
|
|
$
|
4,131
|
|
|
2014
|
|
2013
|
||||||||||
(Dollars in thousands)
|
Number of
Contracts
|
|
Recorded
Investment
|
|
Number of
Contracts
|
|
Recorded
Investment
|
||||||
Three Months Ended September 30,
|
|
|
|
|
|
|
|
||||||
Acquisition and development:
|
|
|
|
|
|
|
|
||||||
Commercial and land development
|
1
|
|
|
$
|
544
|
|
|
0
|
|
|
$
|
0
|
|
Residential mortgage:
|
|
|
|
|
|
|
|
||||||
First lien
|
2
|
|
|
180
|
|
|
0
|
|
|
0
|
|
||
|
3
|
|
|
$
|
724
|
|
|
0
|
|
|
$
|
0
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
||||||
Commercial real estate:
|
|
|
|
|
|
|
|
||||||
Non-owner occupied
|
1
|
|
|
$
|
3,495
|
|
|
0
|
|
|
$
|
0
|
|
Acquisition and development:
|
|
|
|
|
|
|
|
||||||
Commercial and land development
|
1
|
|
|
544
|
|
|
0
|
|
|
0
|
|
||
Residential mortgage:
|
|
|
|
|
|
|
|
||||||
First lien
|
2
|
|
|
180
|
|
|
0
|
|
|
0
|
|
||
|
4
|
|
|
$
|
4,219
|
|
|
0
|
|
|
$
|
0
|
|
|
|
|
Days Past Due
|
|
|
|
|
|
|
||||||||||||||||||
|
Current
|
|
30-59
|
|
60-89
|
|
90+
(still accruing)
|
|
Total
Past Due
|
|
Non-
Accrual
|
|
Total
Loans
|
||||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Owner-occupied
|
$
|
94,034
|
|
|
$
|
207
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
207
|
|
|
$
|
3,160
|
|
|
$
|
97,401
|
|
Non-owner occupied
|
139,612
|
|
|
115
|
|
|
0
|
|
|
0
|
|
|
115
|
|
|
2,419
|
|
|
142,146
|
|
|||||||
Multi-family
|
26,705
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
96
|
|
|
26,801
|
|
|||||||
Non-owner occupied residential
|
46,806
|
|
|
113
|
|
|
0
|
|
|
0
|
|
|
113
|
|
|
1,640
|
|
|
48,559
|
|
|||||||
Acquisition and development:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
1-4 family residential construction
|
5,297
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
5,297
|
|
|||||||
Commercial and land development
|
14,604
|
|
|
544
|
|
|
0
|
|
|
0
|
|
|
544
|
|
|
332
|
|
|
15,480
|
|
|||||||
Commercial and industrial
|
44,431
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
694
|
|
|
45,125
|
|
|||||||
Municipal
|
62,385
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
62,385
|
|
|||||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
First lien
|
121,750
|
|
|
626
|
|
|
25
|
|
|
0
|
|
|
651
|
|
|
4,151
|
|
|
126,552
|
|
|||||||
Home equity - term
|
20,651
|
|
|
110
|
|
|
0
|
|
|
0
|
|
|
110
|
|
|
72
|
|
|
20,833
|
|
|||||||
Home equity - lines of credit
|
83,516
|
|
|
115
|
|
|
0
|
|
|
0
|
|
|
115
|
|
|
42
|
|
|
83,673
|
|
|||||||
Installment and other loans
|
6,071
|
|
|
27
|
|
|
7
|
|
|
0
|
|
|
34
|
|
|
17
|
|
|
6,122
|
|
|||||||
|
$
|
665,862
|
|
|
$
|
1,857
|
|
|
$
|
32
|
|
|
$
|
0
|
|
|
$
|
1,889
|
|
|
$
|
12,623
|
|
|
$
|
680,374
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Owner-occupied
|
$
|
106,078
|
|
|
$
|
742
|
|
|
$
|
108
|
|
|
$
|
0
|
|
|
$
|
850
|
|
|
$
|
4,362
|
|
|
$
|
111,290
|
|
Non-owner occupied
|
132,913
|
|
|
191
|
|
|
0
|
|
|
0
|
|
|
191
|
|
|
2,849
|
|
|
135,953
|
|
|||||||
Multi-family
|
22,560
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
322
|
|
|
22,882
|
|
|||||||
Non-owner occupied residential
|
50,554
|
|
|
225
|
|
|
0
|
|
|
0
|
|
|
225
|
|
|
4,493
|
|
|
55,272
|
|
|||||||
Acquisition and development:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
1-4 family residential construction
|
3,338
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
3,338
|
|
|||||||
Commercial and land development
|
17,289
|
|
|
45
|
|
|
0
|
|
|
0
|
|
|
45
|
|
|
2,106
|
|
|
19,440
|
|
|||||||
Commercial and industrial
|
31,111
|
|
|
334
|
|
|
0
|
|
|
0
|
|
|
334
|
|
|
2,001
|
|
|
33,446
|
|
|||||||
Municipal
|
60,996
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
60,996
|
|
|||||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
First lien
|
119,845
|
|
|
1,380
|
|
|
577
|
|
|
0
|
|
|
1,957
|
|
|
2,926
|
|
|
124,728
|
|
|||||||
Home equity - term
|
19,966
|
|
|
56
|
|
|
2
|
|
|
0
|
|
|
58
|
|
|
107
|
|
|
20,131
|
|
|||||||
Home equity - lines of credit
|
76,982
|
|
|
214
|
|
|
0
|
|
|
0
|
|
|
214
|
|
|
181
|
|
|
77,377
|
|
|||||||
Installment and other loans
|
6,095
|
|
|
77
|
|
|
12
|
|
|
0
|
|
|
89
|
|
|
0
|
|
|
6,184
|
|
|||||||
|
$
|
647,727
|
|
|
$
|
3,264
|
|
|
$
|
699
|
|
|
$
|
0
|
|
|
$
|
3,963
|
|
|
$
|
19,347
|
|
|
$
|
671,037
|
|
|
Commercial
|
|
Consumer
|
|
|
|
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial
Real Estate
|
|
Acquisition
and
Development
|
|
Commercial
and
Industrial
|
|
Municipal
|
|
Total
|
|
Residential
Mortgage
|
|
Installment
and Other
|
|
Total
|
|
Unallocated
|
|
Total
|
||||||||||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Balance, beginning of period
|
$
|
14,053
|
|
|
$
|
852
|
|
|
$
|
993
|
|
|
$
|
178
|
|
|
$
|
16,076
|
|
|
$
|
2,362
|
|
|
$
|
186
|
|
|
$
|
2,548
|
|
|
$
|
1,801
|
|
|
$
|
20,425
|
|
Provision for loan losses
|
(2,593
|
)
|
|
(284
|
)
|
|
(387
|
)
|
|
9
|
|
|
(3,255
|
)
|
|
72
|
|
|
66
|
|
|
138
|
|
|
217
|
|
|
(2,900
|
)
|
||||||||||
Charge-offs
|
(1,840
|
)
|
|
(33
|
)
|
|
(1
|
)
|
|
0
|
|
|
(1,874
|
)
|
|
(286
|
)
|
|
(78
|
)
|
|
(364
|
)
|
|
0
|
|
|
(2,238
|
)
|
||||||||||
Recoveries
|
382
|
|
|
0
|
|
|
317
|
|
|
0
|
|
|
699
|
|
|
6
|
|
|
27
|
|
|
33
|
|
|
0
|
|
|
732
|
|
||||||||||
Balance, end of period
|
$
|
10,002
|
|
|
$
|
535
|
|
|
$
|
922
|
|
|
$
|
187
|
|
|
$
|
11,646
|
|
|
$
|
2,154
|
|
|
$
|
201
|
|
|
$
|
2,355
|
|
|
$
|
2,018
|
|
|
$
|
16,019
|
|
September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Balance, beginning of period
|
$
|
11,288
|
|
|
$
|
1,946
|
|
|
$
|
875
|
|
|
$
|
254
|
|
|
$
|
14,363
|
|
|
$
|
3,796
|
|
|
$
|
134
|
|
|
$
|
3,930
|
|
|
$
|
1,805
|
|
|
$
|
20,098
|
|
Provision for loan losses
|
3,495
|
|
|
(1,117
|
)
|
|
(2,651
|
)
|
|
(12
|
)
|
|
(285
|
)
|
|
2
|
|
|
11
|
|
|
13
|
|
|
272
|
|
|
0
|
|
||||||||||
Charge-offs
|
(1,767
|
)
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
|
(1,769
|
)
|
|
0
|
|
|
(46
|
)
|
|
(46
|
)
|
|
0
|
|
|
(1,815
|
)
|
||||||||||
Recoveries
|
45
|
|
|
267
|
|
|
2,530
|
|
|
0
|
|
|
2,842
|
|
|
100
|
|
|
27
|
|
|
127
|
|
|
0
|
|
|
2,969
|
|
||||||||||
Balance, end of period
|
$
|
13,061
|
|
|
$
|
1,094
|
|
|
$
|
754
|
|
|
$
|
242
|
|
|
$
|
15,151
|
|
|
$
|
3,898
|
|
|
$
|
126
|
|
|
$
|
4,024
|
|
|
$
|
2,077
|
|
|
$
|
21,252
|
|
|
Commercial
|
|
Consumer
|
|
|
|
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial
Real Estate
|
|
Acquisition
and
Development
|
|
Commercial
and
Industrial
|
|
Municipal
|
|
Total
|
|
Residential
Mortgage
|
|
Installment
and Other
|
|
Total
|
|
Unallocated
|
|
Total
|
||||||||||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Balance, beginning of period
|
$
|
13,215
|
|
|
$
|
670
|
|
|
$
|
864
|
|
|
$
|
244
|
|
|
$
|
14,993
|
|
|
$
|
3,780
|
|
|
$
|
124
|
|
|
$
|
3,904
|
|
|
$
|
2,068
|
|
|
$
|
20,965
|
|
Provision for loan losses
|
(1,210
|
)
|
|
(73
|
)
|
|
(552
|
)
|
|
(57
|
)
|
|
(1,892
|
)
|
|
(1,150
|
)
|
|
192
|
|
|
(958
|
)
|
|
(50
|
)
|
|
(2,900
|
)
|
||||||||||
Charge-offs
|
(2,514
|
)
|
|
(67
|
)
|
|
(64
|
)
|
|
0
|
|
|
(2,645
|
)
|
|
(495
|
)
|
|
(200
|
)
|
|
(695
|
)
|
|
0
|
|
|
(3,340
|
)
|
||||||||||
Recoveries
|
511
|
|
|
5
|
|
|
674
|
|
|
0
|
|
|
1,190
|
|
|
19
|
|
|
85
|
|
|
104
|
|
|
0
|
|
|
1,294
|
|
||||||||||
Balance, end of period
|
$
|
10,002
|
|
|
$
|
535
|
|
|
$
|
922
|
|
|
$
|
187
|
|
|
$
|
11,646
|
|
|
$
|
2,154
|
|
|
$
|
201
|
|
|
$
|
2,355
|
|
|
$
|
2,018
|
|
|
$
|
16,019
|
|
September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Balance, beginning of period
|
$
|
13,719
|
|
|
$
|
3,502
|
|
|
$
|
1,635
|
|
|
$
|
223
|
|
|
$
|
19,079
|
|
|
$
|
2,275
|
|
|
$
|
85
|
|
|
$
|
2,360
|
|
|
$
|
1,727
|
|
|
$
|
23,166
|
|
Provision for loan losses
|
3,653
|
|
|
(3,943
|
)
|
|
(3,309
|
)
|
|
19
|
|
|
(3,580
|
)
|
|
1,750
|
|
|
80
|
|
|
1,830
|
|
|
350
|
|
|
(1,400
|
)
|
||||||||||
Charge-offs
|
(4,444
|
)
|
|
(146
|
)
|
|
(114
|
)
|
|
0
|
|
|
(4,704
|
)
|
|
(263
|
)
|
|
(92
|
)
|
|
(355
|
)
|
|
0
|
|
|
(5,059
|
)
|
||||||||||
Recoveries
|
133
|
|
|
1,681
|
|
|
2,542
|
|
|
0
|
|
|
4,356
|
|
|
136
|
|
|
53
|
|
|
189
|
|
|
0
|
|
|
4,545
|
|
||||||||||
Balance, end of period
|
$
|
13,061
|
|
|
$
|
1,094
|
|
|
$
|
754
|
|
|
$
|
242
|
|
|
$
|
15,151
|
|
|
$
|
3,898
|
|
|
$
|
126
|
|
|
$
|
4,024
|
|
|
$
|
2,077
|
|
|
$
|
21,252
|
|
|
Commercial
|
|
Consumer
|
|
|
|
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial
Real Estate
|
|
Acquisition
and
Development
|
|
Commercial
and
Industrial
|
|
Municipal
|
|
Total
|
|
Residential
Mortgage
|
|
Installment
and Other
|
|
Total
|
|
Unallocated
|
|
Total
|
||||||||||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Loans allocated by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
7,315
|
|
|
$
|
1,249
|
|
|
$
|
694
|
|
|
$
|
0
|
|
|
$
|
9,258
|
|
|
$
|
5,083
|
|
|
$
|
17
|
|
|
$
|
5,100
|
|
|
$
|
0
|
|
|
$
|
14,358
|
|
Collectively evaluated for impairment
|
307,592
|
|
|
19,528
|
|
|
44,431
|
|
|
62,385
|
|
|
433,936
|
|
|
225,975
|
|
|
6,105
|
|
|
232,080
|
|
|
0
|
|
|
666,016
|
|
||||||||||
|
$
|
314,907
|
|
|
$
|
20,777
|
|
|
$
|
45,125
|
|
|
$
|
62,385
|
|
|
$
|
443,194
|
|
|
$
|
231,058
|
|
|
$
|
6,122
|
|
|
$
|
237,180
|
|
|
$
|
0
|
|
|
$
|
680,374
|
|
Allowance for loan losses allocated by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
69
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
69
|
|
|
$
|
134
|
|
|
$
|
0
|
|
|
$
|
134
|
|
|
$
|
0
|
|
|
$
|
203
|
|
Collectively evaluated for impairment
|
9,933
|
|
|
535
|
|
|
922
|
|
|
187
|
|
|
11,577
|
|
|
2,020
|
|
|
201
|
|
|
2,221
|
|
|
2,018
|
|
|
15,816
|
|
||||||||||
|
$
|
10,002
|
|
|
$
|
535
|
|
|
$
|
922
|
|
|
$
|
187
|
|
|
$
|
11,646
|
|
|
$
|
2,154
|
|
|
$
|
201
|
|
|
$
|
2,355
|
|
|
$
|
2,018
|
|
|
$
|
16,019
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Loans allocated by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
16,494
|
|
|
$
|
3,177
|
|
|
$
|
2,001
|
|
|
$
|
0
|
|
|
$
|
21,672
|
|
|
$
|
3,663
|
|
|
$
|
0
|
|
|
$
|
3,663
|
|
|
$
|
0
|
|
|
$
|
25,335
|
|
Collectively evaluated for impairment
|
308,903
|
|
|
19,601
|
|
|
31,445
|
|
|
60,996
|
|
|
420,945
|
|
|
218,573
|
|
|
6,184
|
|
|
224,757
|
|
|
0
|
|
|
645,702
|
|
||||||||||
|
$
|
325,397
|
|
|
$
|
22,778
|
|
|
$
|
33,446
|
|
|
$
|
60,996
|
|
|
$
|
442,617
|
|
|
$
|
222,236
|
|
|
$
|
6,184
|
|
|
$
|
228,420
|
|
|
$
|
0
|
|
|
$
|
671,037
|
|
Allowance for loan losses allocated by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
552
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
552
|
|
|
$
|
61
|
|
|
$
|
0
|
|
|
$
|
61
|
|
|
$
|
0
|
|
|
$
|
613
|
|
Collectively evaluated for impairment
|
12,663
|
|
|
670
|
|
|
864
|
|
|
244
|
|
|
14,441
|
|
|
3,719
|
|
|
124
|
|
|
3,843
|
|
|
2,068
|
|
|
20,352
|
|
||||||||||
|
$
|
13,215
|
|
|
$
|
670
|
|
|
$
|
864
|
|
|
$
|
244
|
|
|
$
|
14,993
|
|
|
$
|
3,780
|
|
|
$
|
124
|
|
|
$
|
3,904
|
|
|
$
|
2,068
|
|
|
$
|
20,965
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(Dollars in thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Current year provision:
|
|
|
|
|
|
|
|
||||||||
Federal
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
60
|
|
State
|
24
|
|
|
(281
|
)
|
|
24
|
|
|
(281
|
)
|
||||
Deferred tax expense
|
1,534
|
|
|
532
|
|
|
2,372
|
|
|
1,320
|
|
||||
Valuation allowance on deferred taxes
|
(1,534
|
)
|
|
(532
|
)
|
|
(2,372
|
)
|
|
(1,320
|
)
|
||||
Net income tax expense
|
$
|
24
|
|
|
$
|
(281
|
)
|
|
$
|
24
|
|
|
$
|
(221
|
)
|
(Dollars in thousands)
|
September 30,
2014 |
|
December 31,
2013 |
||||
Deferred tax assets:
|
|
|
|
||||
Allowance for loan losses
|
$
|
6,358
|
|
|
$
|
7,776
|
|
Deferred compensation
|
517
|
|
|
510
|
|
||
Retirement plans and salary continuation
|
1,667
|
|
|
1,585
|
|
||
Stock compensation
|
214
|
|
|
191
|
|
||
Off balance sheet reserves
|
177
|
|
|
204
|
|
||
Nonaccrual loan interest
|
178
|
|
|
341
|
|
||
Net unrealized losses on securities available for sale
|
0
|
|
|
2,592
|
|
||
Goodwill
|
161
|
|
|
184
|
|
||
Low income housing credit carryforward
|
1,348
|
|
|
1,022
|
|
||
Alternative minimum tax credit carryforward
|
706
|
|
|
664
|
|
||
Charitable contribution carryforward
|
320
|
|
|
333
|
|
||
Net operating loss carryforward
|
6,850
|
|
|
8,169
|
|
||
Other
|
232
|
|
|
178
|
|
||
Total deferred tax assets
|
18,728
|
|
|
23,749
|
|
||
Valuation allowance
|
(16,592
|
)
|
|
(18,964
|
)
|
||
|
2,136
|
|
|
4,785
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
986
|
|
|
1,116
|
|
||
Net unrealized gains on securities available for sale
|
27
|
|
|
0
|
|
||
Purchase accounting adjustments
|
439
|
|
|
495
|
|
||
Other
|
711
|
|
|
582
|
|
||
Total deferred tax liabilities
|
2,163
|
|
|
2,193
|
|
||
Net deferred tax asset (liability)
|
$
|
(27
|
)
|
|
$
|
2,592
|
|
•
|
The Company has exhausted all of its carryback availability to 2010 – 2011, as we had recognized current federal income tax receivable which fully offset 2010 and 2011’s taxable income.
|
•
|
While improvement is evident, as of
September 30, 2014
and
December 31, 2013
, the Company was in a
three
-year cumulative loss position, representing negative evidence against the realizability of the deferred tax asset.
|
|
Shares
|
|
Weighted Average Exercise Price
|
|||
|
|
|
|
|||
Nonvested shares, beginning of year
|
5,000
|
|
|
$
|
10.43
|
|
Granted
|
150,500
|
|
|
15.69
|
|
|
Nonvested shares, at period end
|
155,500
|
|
|
$
|
15.52
|
|
|
Shares
|
|
Weighted Average Exercise Price
|
|||
|
|
|
|
|||
Outstanding at beginning of year
|
206,063
|
|
|
$
|
32.20
|
|
Forfeited
|
20,319
|
|
|
31.81
|
|
|
Expired
|
35,164
|
|
|
37.00
|
|
|
Options outstanding and exercisable, at year end
|
150,580
|
|
|
$
|
31.14
|
|
Range of Exercise Prices
|
Number Outstanding
|
|
Weighted Average Remaining Contractual Life (Years)
|
|
Weighted Average Exercise Price
|
|||
|
|
|
|
|
|
|||
$21.14 - $24.99
|
42,985
|
|
|
5.55
|
|
$
|
21.41
|
|
$25.00 - $29.99
|
2,792
|
|
|
5.51
|
|
25.76
|
|
|
$30.00 - $34.99
|
45,470
|
|
|
3.02
|
|
31.25
|
|
|
$35.00 - $39.99
|
29,567
|
|
|
2.56
|
|
36.54
|
|
|
$40.00 - $40.14
|
29,766
|
|
|
0.72
|
|
40.14
|
|
|
$21.14 - $40.14
|
150,580
|
|
|
3.24
|
|
$
|
31.14
|
|
|
Actual
|
|
Minimum Capital
Requirement
|
|
Minimum to Be Well
Capitalized Under Prompt
Corrective Action Provisions
|
|||||||||||||||
(Dollars in thousands)
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total capital to risk weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
$
|
114,826
|
|
|
16.4
|
%
|
|
$
|
56,122
|
|
|
8.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|
Orrstown Bank
|
113,533
|
|
|
16.2
|
%
|
|
56,090
|
|
|
8.0
|
%
|
|
$
|
70,113
|
|
|
10.0
|
%
|
||
Tier 1 capital to risk weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
105,963
|
|
|
15.1
|
%
|
|
28,061
|
|
|
4.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|||
Orrstown Bank
|
104,675
|
|
|
14.9
|
%
|
|
28,045
|
|
|
4.0
|
%
|
|
42,068
|
|
|
6.0
|
%
|
|||
Tier 1 capital to average assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
105,963
|
|
|
9.0
|
%
|
|
46,936
|
|
|
4.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|||
Orrstown Bank
|
104,675
|
|
|
8.9
|
%
|
|
46,919
|
|
|
4.0
|
%
|
|
58,649
|
|
|
5.0
|
%
|
|||
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total capital to risk weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
$
|
104,637
|
|
|
15.0
|
%
|
|
$
|
55,926
|
|
|
8.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|
Orrstown Bank
|
102,806
|
|
|
14.7
|
%
|
|
55,893
|
|
|
8.0
|
%
|
|
$
|
69,866
|
|
|
10.0
|
%
|
||
Tier 1 capital to risk weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
95,741
|
|
|
13.7
|
%
|
|
27,963
|
|
|
4.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|||
Orrstown Bank
|
93,915
|
|
|
13.4
|
%
|
|
27,947
|
|
|
4.0
|
%
|
|
41,920
|
|
|
6.0
|
%
|
|||
Tier 1 capital to average assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
95,741
|
|
|
8.1
|
%
|
|
47,058
|
|
|
4.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|||
Orrstown Bank
|
93,915
|
|
|
8.0
|
%
|
|
47,077
|
|
|
4.0
|
%
|
|
58,846
|
|
|
5.0
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
(In thousands, except per share data)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income
|
$
|
5,177
|
|
|
$
|
2,109
|
|
|
$
|
10,028
|
|
|
$
|
7,077
|
|
Weighted average shares outstanding (basic)
|
8,111
|
|
|
8,091
|
|
|
8,109
|
|
|
8,089
|
|
||||
Impact of common stock equivalents
|
11
|
|
|
0
|
|
|
4
|
|
|
0
|
|
||||
Weighted average shares outstanding (diluted)
|
8,122
|
|
|
8,091
|
|
|
8,113
|
|
|
8,089
|
|
||||
Per share information:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
0.64
|
|
|
$
|
0.26
|
|
|
$
|
1.24
|
|
|
$
|
0.87
|
|
Diluted earnings per share
|
0.64
|
|
|
0.26
|
|
|
1.24
|
|
|
0.87
|
|
|
Contract or Notional Amount
|
||||||
(Dollars in thousands)
|
September 30, 2014
|
|
December 31, 2013
|
||||
Commitments to fund:
|
|
|
|
||||
Revolving, open ended home equity loans
|
$
|
81,743
|
|
|
$
|
86,253
|
|
1-4 family residential construction loans
|
673
|
|
|
2,657
|
|
||
Commercial real estate, construction and land development loans
|
10,419
|
|
|
2,961
|
|
||
Commercial, industrial and other loans
|
64,854
|
|
|
45,629
|
|
||
Standby letters of credit
|
7,003
|
|
|
6,267
|
|
(Dollars in Thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair
Value
Measurements
|
||||||||
September 30, 2014
|
|
|
|
|
|
|
|
||||||||
Securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Government Agencies
|
$
|
0
|
|
|
$
|
24,176
|
|
|
$
|
0
|
|
|
$
|
24,176
|
|
States and political subdivisions
|
0
|
|
|
52,014
|
|
|
0
|
|
|
52,014
|
|
||||
U.S. Government Sponsored enterprises (GSE) residential mortgage-backed securities
|
0
|
|
|
179,786
|
|
|
0
|
|
|
179,786
|
|
||||
GSE residential collateralized mortgage obligations (CMOs)
|
0
|
|
|
81,984
|
|
|
0
|
|
|
81,984
|
|
||||
GSE commercial CMOs
|
0
|
|
|
64,540
|
|
|
0
|
|
|
64,540
|
|
||||
Total debt securities
|
0
|
|
|
402,500
|
|
|
0
|
|
|
402,500
|
|
||||
Equity securities - financial services
|
0
|
|
|
63
|
|
|
0
|
|
|
63
|
|
||||
Total securities
|
$
|
0
|
|
|
$
|
402,563
|
|
|
$
|
0
|
|
|
$
|
402,563
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair
Value Measurements |
||||||||
December 31, 2013
|
|
|
|
|
|
|
|
||||||||
Securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. Government Agencies
|
$
|
0
|
|
|
$
|
25,451
|
|
|
$
|
0
|
|
|
$
|
25,451
|
|
U.S. Government Sponsored Enterprises (GSE)
|
0
|
|
|
13,714
|
|
|
0
|
|
|
13,714
|
|
||||
States and political subdivisions
|
0
|
|
|
71,544
|
|
|
0
|
|
|
71,544
|
|
||||
GSE residential mortgage-backed securities
|
0
|
|
|
198,619
|
|
|
0
|
|
|
198,619
|
|
||||
GSE residential collateralized mortgage obligations (CMOs)
|
0
|
|
|
40,532
|
|
|
0
|
|
|
40,532
|
|
||||
GSE commercial CMOs
|
0
|
|
|
57,014
|
|
|
0
|
|
|
57,014
|
|
||||
Total debt securities
|
0
|
|
|
406,874
|
|
|
0
|
|
|
406,874
|
|
||||
Equity securities - financial services
|
0
|
|
|
69
|
|
|
0
|
|
|
69
|
|
||||
Total securities
|
$
|
0
|
|
|
$
|
406,943
|
|
|
$
|
0
|
|
|
$
|
406,943
|
|
(Dollars in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Fair Value
Measurements
|
||||||||
September 30, 2014
|
|
|
|
|
|
|
|
||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
||||||||
Owner-occupied
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,389
|
|
|
$
|
1,389
|
|
Non-owner occupied
|
0
|
|
|
0
|
|
|
350
|
|
|
350
|
|
||||
Multi-family
|
0
|
|
|
0
|
|
|
96
|
|
|
96
|
|
||||
Non-owner occupied residential
|
0
|
|
|
0
|
|
|
1,087
|
|
|
1,087
|
|
||||
Acquisition and development:
|
|
|
|
|
|
|
|
||||||||
Commercial and land development
|
0
|
|
|
0
|
|
|
141
|
|
|
141
|
|
||||
Commercial and industrial
|
0
|
|
|
0
|
|
|
29
|
|
|
29
|
|
||||
Residential mortgage:
|
|
|
|
|
|
|
|
||||||||
First lien
|
0
|
|
|
0
|
|
|
1,689
|
|
|
1,689
|
|
||||
Installment and other loans
|
0
|
|
|
0
|
|
|
14
|
|
|
14
|
|
||||
Impaired loans, net
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,795
|
|
|
$
|
4,795
|
|
|
|
|
|
|
|
|
|
||||||||
Foreclosed real estate
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
718
|
|
|
$
|
718
|
|
December 31, 2013
|
|
|
|
|
|
|
|
||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
||||||||
Owner-occupied
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,031
|
|
|
$
|
1,031
|
|
Non-owner occupied
|
0
|
|
|
0
|
|
|
694
|
|
|
694
|
|
||||
Multi-family
|
0
|
|
|
0
|
|
|
322
|
|
|
322
|
|
||||
Non-owner occupied residential
|
0
|
|
|
0
|
|
|
1,662
|
|
|
1,662
|
|
||||
Acquisition and development:
|
|
|
|
|
|
|
|
||||||||
Commercial and land development
|
0
|
|
|
0
|
|
|
51
|
|
|
51
|
|
||||
Commercial and industrial
|
0
|
|
|
0
|
|
|
592
|
|
|
592
|
|
||||
Residential mortgage:
|
|
|
|
|
|
|
|
||||||||
First lien
|
0
|
|
|
0
|
|
|
599
|
|
|
599
|
|
||||
Impaired loans, net
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,951
|
|
|
$
|
4,951
|
|
|
|
|
|
|
|
|
|
||||||||
Foreclosed real estate
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
558
|
|
|
$
|
558
|
|
(Dollars in thousands)
|
Fair Value
Estimate
|
|
Valuation
Techniques
|
|
Unobservable Input
|
|
Range
|
||
September 30, 2014
|
|
|
|
|
|
|
|
||
Impaired loans
|
$
|
4,795
|
|
|
Appraisal of
collateral |
|
Management adjustments on appraisals for property type and recent activity
|
|
0%-30% discount
|
|
|
|
|
|
Management adjustments for liquidation expenses
|
|
5%-10% discount
|
||
Foreclosed real estate
|
718
|
|
|
Appraisal of
collateral |
|
Management adjustments on appraisals for property type and recent activity
|
|
0%-30% discount
|
|
|
|
|
|
|
Management adjustments for liquidation expenses
|
|
5%-25% discount
|
||
December 31, 2013
|
|
|
|
|
|
|
|
||
Impaired loans
|
$
|
4,951
|
|
|
Appraisal of
collateral |
|
Management adjustments on appraisals for property type and recent activity
|
|
0%-30% discount
|
|
|
|
|
|
Management adjustments for liquidation expenses
|
|
5%-10% discount
|
||
Foreclosed real estate
|
558
|
|
|
Appraisal of
collateral |
|
Management adjustments on appraisals for property type and recent activity
|
|
0%-30% discount
|
|
|
|
|
|
|
Management adjustments for liquidation expenses
|
|
5%-10% discount
|
(Dollars in thousands)
|
Carrying
Amount
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
$
|
15,524
|
|
|
$
|
15,524
|
|
|
$
|
15,524
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Interest bearing deposits with banks
|
20,213
|
|
|
20,213
|
|
|
20,213
|
|
|
0
|
|
|
0
|
|
|||||
Restricted investments in bank stock
|
9,334
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||
Securities available for sale
|
402,563
|
|
|
402,563
|
|
|
0
|
|
|
402,563
|
|
|
0
|
|
|||||
Loans held for sale
|
4,164
|
|
|
4,164
|
|
|
0
|
|
|
4,164
|
|
|
0
|
|
|||||
Loans, net of allowance for loan losses
|
664,355
|
|
|
670,934
|
|
|
0
|
|
|
0
|
|
|
670,934
|
|
|||||
Accrued interest receivable
|
3,151
|
|
|
3,151
|
|
|
0
|
|
|
1,554
|
|
|
1,597
|
|
|||||
Mortgage servicing rights
|
2,730
|
|
|
2,892
|
|
|
0
|
|
|
0
|
|
|
2,892
|
|
|||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
989,234
|
|
|
990,207
|
|
|
0
|
|
|
990,207
|
|
|
0
|
|
|||||
Short-term borrowings
|
56,279
|
|
|
56,127
|
|
|
0
|
|
|
56,127
|
|
|
0
|
|
|||||
Long-term debt
|
14,986
|
|
|
15,734
|
|
|
0
|
|
|
15,734
|
|
|
0
|
|
|||||
Accrued interest payable
|
271
|
|
|
271
|
|
|
0
|
|
|
271
|
|
|
0
|
|
|||||
Off-balance sheet instruments
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
December 31, 2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
$
|
12,995
|
|
|
$
|
12,995
|
|
|
$
|
12,995
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Interest bearing deposits with banks
|
24,565
|
|
|
24,565
|
|
|
24,565
|
|
|
0
|
|
|
0
|
|
|||||
Restricted investments in bank stock
|
9,921
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||
Securities available for sale
|
406,943
|
|
|
406,943
|
|
|
0
|
|
|
406,943
|
|
|
0
|
|
|||||
Loans held for sale
|
1,936
|
|
|
1,936
|
|
|
0
|
|
|
1,936
|
|
|
0
|
|
|||||
Loans, net of allowance for loan losses
|
650,072
|
|
|
655,122
|
|
|
0
|
|
|
0
|
|
|
655,122
|
|
|||||
Accrued interest receivable
|
3,400
|
|
|
3,400
|
|
|
0
|
|
|
1,902
|
|
|
1,498
|
|
|||||
Mortgage servicing rights
|
2,806
|
|
|
3,090
|
|
|
0
|
|
|
0
|
|
|
3,090
|
|
|||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
1,000,390
|
|
|
1,002,235
|
|
|
0
|
|
|
1,002,235
|
|
|
0
|
|
|||||
Short-term borrowings
|
59,032
|
|
|
59,032
|
|
|
0
|
|
|
59,032
|
|
|
0
|
|
|||||
Long-term debt
|
16,077
|
|
|
16,645
|
|
|
0
|
|
|
16,645
|
|
|
0
|
|
|||||
Accrued interest payable
|
333
|
|
|
333
|
|
|
0
|
|
|
333
|
|
|
0
|
|
|||||
Off-balance sheet instruments
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||
(Dollars in thousands)
|
Average
Balance
|
|
Tax
Equivalent
Interest
|
|
Tax
Equivalent
Rate
|
|
Average
Balance
|
|
Tax
Equivalent
Interest
|
|
Tax
Equivalent
Rate
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Federal funds sold & interest bearing bank balances
|
$
|
14,677
|
|
|
$
|
9
|
|
|
0.24
|
%
|
|
$
|
61,681
|
|
|
$
|
41
|
|
|
0.26
|
%
|
Securities
|
410,716
|
|
|
2,151
|
|
|
2.08
|
|
|
365,015
|
|
|
1,362
|
|
|
1.48
|
|
||||
Loans
|
686,644
|
|
|
7,646
|
|
|
4.42
|
|
|
676,849
|
|
|
8,048
|
|
|
4.72
|
|
||||
Total interest-earning assets
|
1,112,037
|
|
|
9,806
|
|
|
3.50
|
|
|
1,103,545
|
|
|
9,451
|
|
|
3.40
|
|
||||
Other assets
|
60,917
|
|
|
|
|
|
|
75,406
|
|
|
|
|
|
||||||||
Total
|
$
|
1,172,954
|
|
|
|
|
|
|
$
|
1,178,951
|
|
|
|
|
|
||||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest bearing demand deposits
|
$
|
492,131
|
|
|
$
|
212
|
|
|
0.17
|
|
|
$
|
481,533
|
|
|
$
|
171
|
|
|
0.14
|
|
Savings deposits
|
85,232
|
|
|
34
|
|
|
0.16
|
|
|
80,731
|
|
|
50
|
|
|
0.25
|
|
||||
Time deposits
|
290,936
|
|
|
678
|
|
|
0.92
|
|
|
340,271
|
|
|
852
|
|
|
0.99
|
|
||||
Short term borrowings
|
45,835
|
|
|
33
|
|
|
0.29
|
|
|
27,124
|
|
|
19
|
|
|
0.28
|
|
||||
Long term debt
|
15,200
|
|
|
73
|
|
|
1.91
|
|
|
25,981
|
|
|
124
|
|
|
1.89
|
|
||||
Total interest bearing liabilities
|
929,334
|
|
|
1,030
|
|
|
0.44
|
|
|
955,640
|
|
|
1,216
|
|
|
0.50
|
|
||||
Non-interest bearing demand deposits
|
128,876
|
|
|
|
|
|
|
125,907
|
|
|
|
|
|
||||||||
Other
|
11,544
|
|
|
|
|
|
|
10,320
|
|
|
|
|
|
||||||||
Total Liabilities
|
1,069,754
|
|
|
|
|
|
|
1,091,867
|
|
|
|
|
|
||||||||
Shareholders’ Equity
|
103,200
|
|
|
|
|
|
|
87,084
|
|
|
|
|
|
||||||||
Total
|
$
|
1,172,954
|
|
|
|
|
|
|
$
|
1,178,951
|
|
|
|
|
|
||||||
Net interest income (FTE)/net interest spread
|
|
|
8,776
|
|
|
3.06
|
%
|
|
|
|
8,235
|
|
|
2.89
|
%
|
||||||
Net interest margin
|
|
|
|
|
3.13
|
%
|
|
|
|
|
|
2.96
|
%
|
||||||||
Tax-equivalent adjustment
|
|
|
(329
|
)
|
|
|
|
|
|
(469
|
)
|
|
|
||||||||
Net interest income
|
|
|
$
|
8,447
|
|
|
|
|
|
|
$
|
7,766
|
|
|
|
NOTES:
|
Yields and interest income on tax-exempt assets have been computed on a fully taxable equivalent basis assuming a 35% tax rate.
|
•
|
The Company experienced a decline in service charges on deposits and other services charges from $1,448,000 for the three months ended
September 30, 2013
to $1,375,000 for the same period in
2014
. This decline reflects trends noted in more conservative consumer spending behavior.
|
•
|
Orrstown Financial Advisors revenues, which included trust and estate fees and brokerage income, totaled $1,747,000 for the three months ended
September 30, 2014
compared to $1,699,000 for the three months ended
September 30, 2013
, an increase of $48,000.
|
•
|
During the past several quarters, there has been a reduction in the number of customers refinancing their residential mortgages and home sales in the Company’s primary market area have decreased. These events have resulted in lower mortgage banking income, which totaled $613,000 for the three months ended
September 30, 2014
, a decline of 15.7% from $727,000 for the same period of
2013
. The higher interest rate environment positively impacted
2013
’s results as the fair value of our mortgage servicing rights improved, which allowed for the recovery of $280,000 of our impairment reserve in the third quarter of
2013
, with no similar recovery in the same period in
2014
.
|
•
|
As the Company began to introduce new product offerings, improve the effectiveness of alternate delivery channels and enter new markets, it experienced increased occupancy, furniture and equipment, and data processing expenses. For the three months ended
September 30, 2014
, these expenses totaled $1,860,000, an increase of $368,000 over the same period in
2013
. In December 2013, the Company outsourced its core processing system to a third party provider, to capitalize on additional products and services that the provider offers. In connection with the migration to the new platform, upgrades in certain equipment were also required. In the fourth quarter of 2013, the Company opened its financial services facility office in Lancaster, Pennsylvania, resulting in a full quarter of occupancy charges in the
third
quarter of
2014
, with no corresponding charge in the same period in
2013
. The Company also experienced increased costs in 2014 related to a newly created Borrowers Assistance Group, designed to help mortgage customers through periods of financial hardship.
|
•
|
Salaries and employee benefits totaled $5,902,000 for the three months ended
September 30, 2014
, an increase of 5.7% over the same period in
2013
. The increase in salaries and employee benefits for the three months ended September 30, 2014 over the same period in 2013 is primarily the result of additions to staff that were hired in the latter part of 2013, allowing for enhanced risk management processes and practices and greater depth in the information technology and operations departments, and less reliance on outside consultants. In addition, incremental share-based compensation expense of $53,000 for the three months ended September 30, 2014 compared to 2013, contributed to the increase.
|
•
|
Advertising and bank promotions were used to advance the Company's growth initiatives and the introduction of new products and services, including the Bank's first ever advertising on television and increased direct mail efforts that were launched in the first quarter of 2014. For the three months ended September 30, 2014, advertising and bank promotion expense totaled $204,000 compared to $231,000 for the same period in 2013.
|
•
|
Real estate owned expenses totaled $201,000 for the three months ended September 30, 2014, compared to $55,000 for the same period in 2013. The unfavorable variance is principally related to obtaining updated appraisals on four properties, and the resulting $145,000 write down that was required due to this updated information.
|
•
|
FDIC insurance expenses totaled $403,000 for the three months ended
September 30, 2014
, a 37.7% reduction from $647,000 for the same period in
2013
primarily because of a lower assessment rate, as the Company’s risk profile improved.
|
•
|
Professional service fees, consisting principally of auditing, accounting, consulting, and legal services, totaled $652,000 for the three months ended September 30, 2014, compared to $463,000 for the same period during 2013. During the third quarter of 2014, additional legal fees were incurred related to the class action lawsuit against the Company, as well as incremental costs associated with changing to an international accounting firm. Offsetting these unfavorable variances was a reduction in the use of outside consultants.
|
•
|
Taxes, other than income, decreased from $222,000 for the three months ended September 30, 2013, to $129,000 for the same period in
2014
, due to a lower assessment rate and methodology for state bank shares tax.
|
•
|
Other operating expenses totaled $1,025,000 for the three months ended September 30, 2014, compared to $1,325,000 for the same period in 2013. Consistent with the trends noted in the adequacy of the allowance for loan losses, a benefit of $245,000 was recognized for the three months ended September 30, 2014 in other expenses pertaining to the provision for off-balance sheet credit exposure, compared to an expense of $76,000 for the same period in 2013, which is the primary reason for the change in other expenses.
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||
(Dollars in thousands)
|
Average
Balance
|
|
Tax
Equivalent
Interest
|
|
Tax
Equivalent
Rate
|
|
Average
Balance
|
|
Tax
Equivalent
Interest
|
|
Tax
Equivalent
Rate
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Federal funds sold & interest bearing bank balances
|
$
|
13,324
|
|
|
$
|
24
|
|
|
0.24
|
%
|
|
$
|
78,107
|
|
|
$
|
152
|
|
|
0.26
|
%
|
Securities
|
418,663
|
|
|
6,819
|
|
|
2.18
|
|
|
359,338
|
|
|
3,922
|
|
|
1.46
|
|
||||
Loans
|
679,042
|
|
|
22,975
|
|
|
4.52
|
|
|
682,143
|
|
|
24,717
|
|
|
4.84
|
|
||||
Total interest-earning assets
|
1,111,029
|
|
|
29,818
|
|
|
3.59
|
|
|
1,119,588
|
|
|
28,791
|
|
|
3.44
|
|
||||
Other assets
|
61,040
|
|
|
|
|
|
|
72,855
|
|
|
|
|
|
||||||||
Total
|
$
|
1,172,069
|
|
|
|
|
|
|
$
|
1,192,443
|
|
|
|
|
|
||||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest bearing demand deposits
|
$
|
485,118
|
|
|
$
|
604
|
|
|
0.17
|
|
|
$
|
481,462
|
|
|
$
|
593
|
|
|
0.16
|
|
Savings deposits
|
83,478
|
|
|
101
|
|
|
0.16
|
|
|
78,393
|
|
|
99
|
|
|
0.17
|
|
||||
Time deposits
|
304,436
|
|
|
2,135
|
|
|
0.94
|
|
|
363,455
|
|
|
2,744
|
|
|
1.01
|
|
||||
Short term borrowings
|
46,929
|
|
|
96
|
|
|
0.27
|
|
|
18,151
|
|
|
33
|
|
|
0.24
|
|
||||
Long term debt
|
18,748
|
|
|
264
|
|
|
1.88
|
|
|
32,953
|
|
|
412
|
|
|
1.67
|
|
||||
Total interest bearing liabilities
|
938,709
|
|
|
3,200
|
|
|
0.46
|
|
|
974,414
|
|
|
3,881
|
|
|
0.53
|
|
||||
Non-interest bearing demand deposits
|
122,603
|
|
|
|
|
|
|
119,236
|
|
|
|
|
|
||||||||
Other
|
12,037
|
|
|
|
|
|
|
10,940
|
|
|
|
|
|
||||||||
Total Liabilities
|
1,073,349
|
|
|
|
|
|
|
1,104,590
|
|
|
|
|
|
||||||||
Shareholders’ Equity
|
98,720
|
|
|
|
|
|
|
87,853
|
|
|
|
|
|
||||||||
Total
|
$
|
1,172,069
|
|
|
|
|
|
|
$
|
1,192,443
|
|
|
|
|
|
||||||
Net interest income (FTE)/net interest spread
|
|
|
26,618
|
|
|
3.13
|
%
|
|
|
|
24,910
|
|
|
2.91
|
%
|
||||||
Net interest margin
|
|
|
|
|
3.20
|
%
|
|
|
|
|
|
2.98
|
%
|
||||||||
Tax-equivalent adjustment
|
|
|
(1,155
|
)
|
|
|
|
|
|
(1,336
|
)
|
|
|
||||||||
Net interest income
|
|
|
$
|
25,463
|
|
|
|
|
|
|
$
|
23,574
|
|
|
|
NOTES:
|
Yields and interest income on tax-exempt assets have been computed on a fully taxable equivalent basis assuming a 35% tax rate.
|
•
|
The Company experienced a decline in service charges on deposits and other services charges, including certain loan fees, from $4,307,000 for the nine months ended
September 30, 2013
to $4,056,000 for the same period in
2014
. This decline reflects trends noted in more conservative consumer spending behavior and lower loan balances.
|
•
|
During the past several quarters, mortgage interest rates have risen, leading to a reduction in the number of customers refinancing their residential mortgages and new mortgages related to home sales have decreased. These events have resulted in a $950,000 decline in mortgage banking revenues to $1,634,000 for the
nine
months ended
September 30, 2014
compared to the same period in
2013
. The high interest rate environment positively impacted
2013
’s results as the fair value of our mortgage servicing rights improved, which allowed for the recovery of $644,000 of our impairment reserve in the first
nine
months of
2013
, with no similar recovery in the same period in
2014
.
|
•
|
Other income of $364,000 for the
nine
months ended
September 30, 2013
was a $402,000 improvement on the $38,000 loss reported for the same period in
2013
. The primary reason for the increase was due to $269,000 in gains on sales of other real estate owned for the
nine
months ended
September 30, 2014
, compared to $144,000 in losses recorded for the same period in
2013
.
|
•
|
For the
nine
months ended
September 30, 2014
, furniture and equipment, data processing, and occupancy expenses totaled $5,442,000, an increase of 23.2% over the $4,418,000 for the same period in
2013
. In December 2013, the Company outsourced its core processing system to a third party provider, to capitalize on additional products and services that the outsourced solution offered. In connection with the migration to the new platform, upgrades in certain equipment were also required. In the fourth quarter of 2013, the Company opened its financial services facility office in Lancaster, Pennsylvania, resulting in a full
nine
months of occupancy charges in the first nine months of 2014, with no corresponding charge in the same period in 2013.
|
•
|
Salaries and employee benefits totaled $17,593,000 for the
nine
months ended
September 30, 2014
, compared to $16,717,000 for the
nine
months ended
September 30, 2013
, an increase of $876,000, or 5.2%. The increase in salaries and benefits is primarily the result of additions to staff that were hired in the latter part of
2013
, allowing for enhanced risk management processes and practices and greater depth in the information technology and operations departments, and less reliance on outside consultants.
|
•
|
Advertising and bank promotions expense increased $131,000 to $847,000 for the
nine
months ended
September 30, 2014
from $716,000 for the same period in
2013
. Advertising and bank promotions were used to advance the Company’s growth initiatives and introduction of new products and services, including the Bank’s first ever advertising on television and increased direct mail efforts that were launched in the first quarter of 2014.
|
•
|
FDIC insurance expense decreased $712,000 to $1,226,000 for the
nine
months ended
September 30, 2014
compared to $1,938,000 for the same period in
2013
. The 36.7% decrease is primarily the result of a lower assessment rate, as the Company’s risk profile improved.
|
•
|
Real estate owned expenses totaled $261,000 for the nine months ended September 30, 2014, compared to $115,000 for the same period in 2013. This unfavorable variance is principally related to obtaining updated appraisals on several properties, and the resulting $154,000 write down that was required due to this updated information for the nine months ended September 30, 2014 compared to $29,000 for the same period in 2013.
|
•
|
Taxes, other than income, decreased from $710,000 for the nine months ended
September 30, 2013
to $443,000 for the same period in
2014
, due to a change in the assessment rate and methodology for state bank shares tax.
|
•
|
Consistent with the trends noted in the adequacy of the allowance for loan losses, a benefit of $184,000 was recognized for the nine months ended September 30, 2014 in other expenses pertaining to the provision for off-balance sheet credit exposure, compared to a benefit of $70,000 for the same period in 2013, and is the primary reason for the decrease. Other operating expenses totaled $3,648,000 for the nine months ended September 30, 2014 compared to $3,865,000 for the same period in 2013.
|
(Dollars in thousands)
|
September 30,
2014 |
|
December 31,
2013 |
||||
Commercial real estate:
|
|
|
|
||||
Owner-occupied
|
$
|
97,401
|
|
|
$
|
111,290
|
|
Non-owner occupied
|
142,146
|
|
|
135,953
|
|
||
Multi-family
|
26,801
|
|
|
22,882
|
|
||
Non-owner occupied residential
|
48,559
|
|
|
55,272
|
|
||
Acquisition and development:
|
|
|
|
||||
1-4 family residential construction
|
5,297
|
|
|
3,338
|
|
||
Commercial and land development
|
15,480
|
|
|
19,440
|
|
||
Commercial and industrial
|
45,125
|
|
|
33,446
|
|
||
Municipal
|
62,385
|
|
|
60,996
|
|
||
Residential mortgage:
|
|
|
|
||||
First lien
|
126,552
|
|
|
124,728
|
|
||
Home equity - term
|
20,833
|
|
|
20,131
|
|
||
Home equity - Lines of credit
|
83,673
|
|
|
77,377
|
|
||
Installment and other loans
|
6,122
|
|
|
6,184
|
|
||
|
$
|
680,374
|
|
|
$
|
671,037
|
|
(Dollars in thousands)
|
September 30,
2014 |
|
December 31,
2013 |
|
September 30,
2013 |
||||||
Nonaccrual loans (cash basis)
|
$
|
12,623
|
|
|
$
|
19,347
|
|
|
$
|
16,813
|
|
Other real estate (OREO)
|
1,128
|
|
|
987
|
|
|
965
|
|
|||
Total nonperforming assets
|
13,751
|
|
|
20,334
|
|
|
17,778
|
|
|||
Restructured loans still accruing
|
1,735
|
|
|
5,988
|
|
|
5,289
|
|
|||
Loans past due 90 days or more and still accruing
|
0
|
|
|
0
|
|
|
20
|
|
|||
Total risk assets
|
$
|
15,486
|
|
|
$
|
26,322
|
|
|
$
|
23,087
|
|
Loans 30-89 days past due
|
$
|
1,889
|
|
|
$
|
3,963
|
|
|
$
|
4,059
|
|
Asset quality ratios:
|
|
|
|
|
|
||||||
Nonaccrual loans to loans
|
1.86
|
%
|
|
2.88
|
%
|
|
2.46
|
%
|
|||
Nonperforming assets to assets
|
1.16
|
%
|
|
1.73
|
%
|
|
1.47
|
%
|
|||
Total nonperforming assets to total loans and OREO
|
2.02
|
%
|
|
3.03
|
%
|
|
2.60
|
%
|
|||
Total risk assets to total loans and OREO
|
2.27
|
%
|
|
3.92
|
%
|
|
3.37
|
%
|
|||
Total risk assets to total assets
|
1.31
|
%
|
|
2.23
|
%
|
|
1.90
|
%
|
|||
Allowance for loan losses to total loans
|
2.35
|
%
|
|
3.12
|
%
|
|
3.11
|
%
|
|||
Allowance for loan losses to nonaccrual loans
|
126.90
|
%
|
|
108.36
|
%
|
|
126.40
|
%
|
|||
Allowance for loan losses to nonaccrual and restructured loans still accruing
|
111.57
|
%
|
|
82.75
|
%
|
|
96.15
|
%
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
(Dollars in thousands)
|
Nonaccrual
Loans
|
|
Restructured
Loans Still
Accruing
|
|
Total
|
|
Nonaccrual
Loans
|
|
Restructured
Loans Still
Accruing
|
|
Total
|
||||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Owner occupied
|
$
|
3,160
|
|
|
$
|
0
|
|
|
$
|
3,160
|
|
|
$
|
4,362
|
|
|
$
|
200
|
|
|
$
|
4,562
|
|
Non-owner occupied
|
2,419
|
|
|
0
|
|
|
2,419
|
|
|
2,849
|
|
|
4,268
|
|
|
7,117
|
|
||||||
Multi-family
|
96
|
|
|
0
|
|
|
96
|
|
|
322
|
|
|
0
|
|
|
322
|
|
||||||
Non-owner occupied residential
|
1,640
|
|
|
0
|
|
|
1,640
|
|
|
4,493
|
|
|
0
|
|
|
4,493
|
|
||||||
Acquisition and development
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial and land development
|
332
|
|
|
917
|
|
|
1,249
|
|
|
2,106
|
|
|
1,071
|
|
|
3,177
|
|
||||||
Commercial and industrial
|
694
|
|
|
0
|
|
|
694
|
|
|
2,001
|
|
|
0
|
|
|
2,001
|
|
||||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First lien
|
4,151
|
|
|
818
|
|
|
4,969
|
|
|
2,926
|
|
|
449
|
|
|
3,375
|
|
||||||
Home equity - term
|
72
|
|
|
0
|
|
|
72
|
|
|
107
|
|
|
0
|
|
|
107
|
|
||||||
Home equity - lines of credit
|
42
|
|
|
0
|
|
|
42
|
|
|
181
|
|
|
0
|
|
|
181
|
|
||||||
Installment and other loans
|
17
|
|
|
0
|
|
|
17
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
|
$
|
12,623
|
|
|
$
|
1,735
|
|
|
$
|
14,358
|
|
|
$
|
19,347
|
|
|
$
|
5,988
|
|
|
$
|
25,335
|
|
(Dollars in thousands)
|
# of
Loans
|
|
Recorded
Investment
|
|
Partial
Charge-offs
to Date
|
|
Specific
Reserves at
Period End
|
|||||||
September 30, 2014
|
|
|
|
|
|
|
|
|||||||
Relationships greater than $1,000,000
|
1
|
|
|
$
|
1,280
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Relationships greater than $500,000 but less than $1,000,000
|
4
|
|
|
2,359
|
|
|
0
|
|
|
41
|
|
|||
Relationships greater than $250,000 but less than $500,000
|
13
|
|
|
4,346
|
|
|
1,002
|
|
|
0
|
|
|||
Relationships less than $250,000
|
71
|
|
|
6,373
|
|
|
3,187
|
|
|
162
|
|
|||
|
89
|
|
|
$
|
14,358
|
|
|
$
|
4,189
|
|
|
$
|
203
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|||||||
Relationships greater than $1,000,000
|
6
|
|
|
$
|
13,014
|
|
|
$
|
543
|
|
|
$
|
0
|
|
Relationships greater than $500,000 but less than $1,000,000
|
6
|
|
|
3,664
|
|
|
120
|
|
|
0
|
|
|||
Relationships greater than $250,000 but less than $500,000
|
11
|
|
|
4,083
|
|
|
913
|
|
|
455
|
|
|||
Relationships less than $250,000
|
45
|
|
|
4,574
|
|
|
1,050
|
|
|
158
|
|
|||
|
68
|
|
|
$
|
25,335
|
|
|
$
|
2,626
|
|
|
$
|
613
|
|
(Dollars in thousands)
|
Pass
|
|
Special
Mention
|
|
Non-Impaired
Substandard
|
|
Impaired -
Substandard
|
|
Doubtful
|
|
Total
|
||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Owner-occupied
|
$
|
84,959
|
|
|
$
|
3,367
|
|
|
$
|
5,915
|
|
|
$
|
3,160
|
|
|
$
|
0
|
|
|
$
|
97,401
|
|
Non-owner occupied
|
121,406
|
|
|
17,034
|
|
|
1,287
|
|
|
2,378
|
|
|
41
|
|
|
142,146
|
|
||||||
Multi-family
|
24,367
|
|
|
1,108
|
|
|
1,230
|
|
|
96
|
|
|
0
|
|
|
26,801
|
|
||||||
Non-owner occupied residential
|
38,590
|
|
|
6,117
|
|
|
2,212
|
|
|
1,640
|
|
|
0
|
|
|
48,559
|
|
||||||
Acquisition and development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
1-4 family residential construction
|
5,297
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
5,297
|
|
||||||
Commercial and land development
|
11,801
|
|
|
1,082
|
|
|
1,348
|
|
|
1,249
|
|
|
0
|
|
|
15,480
|
|
||||||
Commercial and industrial
|
41,568
|
|
|
1,742
|
|
|
1,121
|
|
|
575
|
|
|
119
|
|
|
45,125
|
|
||||||
Municipal
|
62,385
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
62,385
|
|
||||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First lien
|
121,583
|
|
|
0
|
|
|
0
|
|
|
4,936
|
|
|
33
|
|
|
126,552
|
|
||||||
Home equity - term
|
20,761
|
|
|
0
|
|
|
0
|
|
|
72
|
|
|
0
|
|
|
20,833
|
|
||||||
Home equity - Lines of credit
|
83,132
|
|
|
315
|
|
|
184
|
|
|
42
|
|
|
0
|
|
|
83,673
|
|
||||||
Installment and other loans
|
6,105
|
|
|
0
|
|
|
0
|
|
|
17
|
|
|
0
|
|
|
6,122
|
|
||||||
|
$
|
621,954
|
|
|
$
|
30,765
|
|
|
$
|
13,297
|
|
|
$
|
14,165
|
|
|
$
|
193
|
|
|
$
|
680,374
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Owner-occupied
|
$
|
92,063
|
|
|
$
|
3,305
|
|
|
$
|
11,360
|
|
|
$
|
4,107
|
|
|
$
|
455
|
|
|
$
|
111,290
|
|
Non-owner occupied
|
107,113
|
|
|
6,904
|
|
|
14,819
|
|
|
7,117
|
|
|
0
|
|
|
135,953
|
|
||||||
Multi-family
|
20,091
|
|
|
2,132
|
|
|
337
|
|
|
322
|
|
|
0
|
|
|
22,882
|
|
||||||
Non-owner occupied residential
|
42,007
|
|
|
4,982
|
|
|
3,790
|
|
|
4,493
|
|
|
0
|
|
|
55,272
|
|
||||||
Acquisition and development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
1-4 family residential construction
|
3,292
|
|
|
0
|
|
|
46
|
|
|
0
|
|
|
0
|
|
|
3,338
|
|
||||||
Commercial and land development
|
14,118
|
|
|
1,433
|
|
|
712
|
|
|
3,177
|
|
|
0
|
|
|
19,440
|
|
||||||
Commercial and industrial
|
28,933
|
|
|
2,129
|
|
|
383
|
|
|
1,878
|
|
|
123
|
|
|
33,446
|
|
||||||
Municipal
|
60,996
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
60,996
|
|
||||||
Residential mortgage:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First lien
|
121,353
|
|
|
0
|
|
|
0
|
|
|
3,327
|
|
|
48
|
|
|
124,728
|
|
||||||
Home equity - term
|
20,024
|
|
|
0
|
|
|
0
|
|
|
94
|
|
|
13
|
|
|
20,131
|
|
||||||
Home equity - Lines of credit
|
77,187
|
|
|
0
|
|
|
9
|
|
|
181
|
|
|
0
|
|
|
77,377
|
|
||||||
Installment and other loans
|
6,184
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
6,184
|
|
||||||
|
$
|
593,361
|
|
|
$
|
20,885
|
|
|
$
|
31,456
|
|
|
$
|
24,696
|
|
|
$
|
639
|
|
|
$
|
671,037
|
|
|
Commercial
|
|
Consumer
|
|
|
|
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial
Real Estate
|
|
Acquisition
and
Development
|
|
Commercial
and
Industrial
|
|
Municipal
|
|
Total
|
|
Residential
Mortgage
|
|
Installment
and Other
|
|
Total
|
|
Unallocated
|
|
Total
|
||||||||||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Balance, beginning of period
|
$
|
14,053
|
|
|
$
|
852
|
|
|
$
|
993
|
|
|
$
|
178
|
|
|
$
|
16,076
|
|
|
$
|
2,362
|
|
|
$
|
186
|
|
|
$
|
2,548
|
|
|
$
|
1,801
|
|
|
$
|
20,425
|
|
Provision for loan losses
|
(2,593
|
)
|
|
(284
|
)
|
|
(387
|
)
|
|
9
|
|
|
(3,255
|
)
|
|
72
|
|
|
66
|
|
|
138
|
|
|
217
|
|
|
(2,900
|
)
|
||||||||||
Charge-offs
|
(1,840
|
)
|
|
(33
|
)
|
|
(1
|
)
|
|
0
|
|
|
(1,874
|
)
|
|
(286
|
)
|
|
(78
|
)
|
|
(364
|
)
|
|
0
|
|
|
(2,238
|
)
|
||||||||||
Recoveries
|
382
|
|
|
0
|
|
|
317
|
|
|
0
|
|
|
699
|
|
|
6
|
|
|
27
|
|
|
33
|
|
|
0
|
|
|
732
|
|
||||||||||
Balance, end of period
|
$
|
10,002
|
|
|
$
|
535
|
|
|
$
|
922
|
|
|
$
|
187
|
|
|
$
|
11,646
|
|
|
$
|
2,154
|
|
|
$
|
201
|
|
|
$
|
2,355
|
|
|
$
|
2,018
|
|
|
$
|
16,019
|
|
September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Balance, beginning of period
|
$
|
11,288
|
|
|
$
|
1,946
|
|
|
$
|
875
|
|
|
$
|
254
|
|
|
$
|
14,363
|
|
|
$
|
3,796
|
|
|
$
|
134
|
|
|
$
|
3,930
|
|
|
$
|
1,805
|
|
|
$
|
20,098
|
|
Provision for loan losses
|
3,495
|
|
|
(1,117
|
)
|
|
(2,651
|
)
|
|
(12
|
)
|
|
(285
|
)
|
|
2
|
|
|
11
|
|
|
13
|
|
|
272
|
|
|
0
|
|
||||||||||
Charge-offs
|
(1,767
|
)
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
|
(1,769
|
)
|
|
0
|
|
|
(46
|
)
|
|
(46
|
)
|
|
0
|
|
|
(1,815
|
)
|
||||||||||
Recoveries
|
45
|
|
|
267
|
|
|
2,530
|
|
|
0
|
|
|
2,842
|
|
|
100
|
|
|
27
|
|
|
127
|
|
|
0
|
|
|
2,969
|
|
||||||||||
Balance, end of period
|
$
|
13,061
|
|
|
$
|
1,094
|
|
|
$
|
754
|
|
|
$
|
242
|
|
|
$
|
15,151
|
|
|
$
|
3,898
|
|
|
$
|
126
|
|
|
$
|
4,024
|
|
|
$
|
2,077
|
|
|
$
|
21,252
|
|
|
Commercial
|
|
Consumer
|
|
|
|
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial
Real Estate
|
|
Acquisition
and
Development
|
|
Commercial
and
Industrial
|
|
Municipal
|
|
Total
|
|
Residential
Mortgage
|
|
Installment
and Other
|
|
Total
|
|
Unallocated
|
|
Total
|
||||||||||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Balance, beginning of period
|
$
|
13,215
|
|
|
$
|
670
|
|
|
$
|
864
|
|
|
$
|
244
|
|
|
$
|
14,993
|
|
|
$
|
3,780
|
|
|
$
|
124
|
|
|
$
|
3,904
|
|
|
$
|
2,068
|
|
|
$
|
20,965
|
|
Provision for loan losses
|
(1,210
|
)
|
|
(73
|
)
|
|
(552
|
)
|
|
(57
|
)
|
|
(1,892
|
)
|
|
(1,150
|
)
|
|
192
|
|
|
(958
|
)
|
|
(50
|
)
|
|
(2,900
|
)
|
||||||||||
Charge-offs
|
(2,514
|
)
|
|
(67
|
)
|
|
(64
|
)
|
|
0
|
|
|
(2,645
|
)
|
|
(495
|
)
|
|
(200
|
)
|
|
(695
|
)
|
|
0
|
|
|
(3,340
|
)
|
||||||||||
Recoveries
|
511
|
|
|
5
|
|
|
674
|
|
|
0
|
|
|
1,190
|
|
|
19
|
|
|
85
|
|
|
104
|
|
|
0
|
|
|
1,294
|
|
||||||||||
Balance, end of period
|
$
|
10,002
|
|
|
$
|
535
|
|
|
$
|
922
|
|
|
$
|
187
|
|
|
$
|
11,646
|
|
|
$
|
2,154
|
|
|
$
|
201
|
|
|
$
|
2,355
|
|
|
$
|
2,018
|
|
|
$
|
16,019
|
|
September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Balance, beginning of period
|
$
|
13,719
|
|
|
$
|
3,502
|
|
|
$
|
1,635
|
|
|
$
|
223
|
|
|
$
|
19,079
|
|
|
$
|
2,275
|
|
|
$
|
85
|
|
|
$
|
2,360
|
|
|
$
|
1,727
|
|
|
$
|
23,166
|
|
Provision for loan losses
|
3,653
|
|
|
(3,943
|
)
|
|
(3,309
|
)
|
|
19
|
|
|
(3,580
|
)
|
|
1,750
|
|
|
80
|
|
|
1,830
|
|
|
350
|
|
|
(1,400
|
)
|
||||||||||
Charge-offs
|
(4,444
|
)
|
|
(146
|
)
|
|
(114
|
)
|
|
0
|
|
|
(4,704
|
)
|
|
(263
|
)
|
|
(92
|
)
|
|
(355
|
)
|
|
0
|
|
|
(5,059
|
)
|
||||||||||
Recoveries
|
133
|
|
|
1,681
|
|
|
2,542
|
|
|
0
|
|
|
4,356
|
|
|
136
|
|
|
53
|
|
|
189
|
|
|
0
|
|
|
4,545
|
|
||||||||||
Balance, end of period
|
$
|
13,061
|
|
|
$
|
1,094
|
|
|
$
|
754
|
|
|
$
|
242
|
|
|
$
|
15,151
|
|
|
$
|
3,898
|
|
|
$
|
126
|
|
|
$
|
4,024
|
|
|
$
|
2,077
|
|
|
$
|
21,252
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Ratio of annualized net charge-offs to average loans outstanding
|
0.87
|
%
|
|
(0.68
|
)%
|
|
0.40
|
%
|
|
0.10
|
%
|
|
Commercial
|
|
Consumer
|
|
|
|
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial
Real Estate
|
|
Acquisition
and
Development
|
|
Commercial
and
Industrial
|
|
Municipal
|
|
Total
|
|
Residential
Mortgage
|
|
Installment
and Other
|
|
Total
|
|
Unallocated
|
|
Total
|
||||||||||||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Loans allocated by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
7,315
|
|
|
$
|
1,249
|
|
|
$
|
694
|
|
|
$
|
0
|
|
|
$
|
9,258
|
|
|
$
|
5,083
|
|
|
$
|
17
|
|
|
$
|
5,100
|
|
|
$
|
0
|
|
|
$
|
14,358
|
|
Collectively evaluated for impairment
|
307,592
|
|
|
19,528
|
|
|
44,431
|
|
|
62,385
|
|
|
433,936
|
|
|
225,975
|
|
|
6,105
|
|
|
232,080
|
|
|
0
|
|
|
666,016
|
|
||||||||||
|
$
|
314,907
|
|
|
$
|
20,777
|
|
|
$
|
45,125
|
|
|
$
|
62,385
|
|
|
$
|
443,194
|
|
|
$
|
231,058
|
|
|
$
|
6,122
|
|
|
$
|
237,180
|
|
|
$
|
0
|
|
|
$
|
680,374
|
|
Allowance for loan losses allocated by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
69
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
69
|
|
|
$
|
134
|
|
|
$
|
0
|
|
|
$
|
134
|
|
|
$
|
0
|
|
|
$
|
203
|
|
Collectively evaluated for impairment
|
9,933
|
|
|
535
|
|
|
922
|
|
|
187
|
|
|
11,577
|
|
|
2,020
|
|
|
201
|
|
|
2,221
|
|
|
2,018
|
|
|
15,816
|
|
||||||||||
|
$
|
10,002
|
|
|
$
|
535
|
|
|
$
|
922
|
|
|
$
|
187
|
|
|
$
|
11,646
|
|
|
$
|
2,154
|
|
|
$
|
201
|
|
|
$
|
2,355
|
|
|
$
|
2,018
|
|
|
$
|
16,019
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Loans allocated by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
16,494
|
|
|
$
|
3,177
|
|
|
$
|
2,001
|
|
|
$
|
0
|
|
|
$
|
21,672
|
|
|
$
|
3,663
|
|
|
$
|
0
|
|
|
$
|
3,663
|
|
|
$
|
0
|
|
|
$
|
25,335
|
|
Collectively evaluated for impairment
|
308,903
|
|
|
19,601
|
|
|
31,445
|
|
|
60,996
|
|
|
420,945
|
|
|
218,573
|
|
|
6,184
|
|
|
224,757
|
|
|
0
|
|
|
645,702
|
|
||||||||||
|
$
|
325,397
|
|
|
$
|
22,778
|
|
|
$
|
33,446
|
|
|
$
|
60,996
|
|
|
$
|
442,617
|
|
|
$
|
222,236
|
|
|
$
|
6,184
|
|
|
$
|
228,420
|
|
|
$
|
0
|
|
|
$
|
671,037
|
|
Allowance for loan losses allocated by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Individually evaluated for impairment
|
$
|
552
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
552
|
|
|
$
|
61
|
|
|
$
|
0
|
|
|
$
|
61
|
|
|
$
|
0
|
|
|
$
|
613
|
|
Collectively evaluated for impairment
|
12,663
|
|
|
670
|
|
|
864
|
|
|
244
|
|
|
14,441
|
|
|
3,719
|
|
|
124
|
|
|
3,843
|
|
|
2,068
|
|
|
20,352
|
|
||||||||||
|
$
|
13,215
|
|
|
$
|
670
|
|
|
$
|
864
|
|
|
$
|
244
|
|
|
$
|
14,993
|
|
|
$
|
3,780
|
|
|
$
|
124
|
|
|
$
|
3,904
|
|
|
$
|
2,068
|
|
|
$
|
20,965
|
|
|
Actual
|
|
Minimum Capital
Requirement
|
|
Minimum to Be Well
Capitalized Under
Prompt Corrective
Action Provisions
|
|||||||||||||||
(Dollars in thousands)
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total capital to risk weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
$
|
114,826
|
|
|
16.4
|
%
|
|
$
|
56,122
|
|
|
8.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|
Orrstown Bank
|
113,533
|
|
|
16.2
|
%
|
|
56,090
|
|
|
8.0
|
%
|
|
$
|
70,113
|
|
|
10.0
|
%
|
||
Tier 1 capital to risk weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
105,963
|
|
|
15.1
|
%
|
|
28,061
|
|
|
4.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|||
Orrstown Bank
|
104,675
|
|
|
14.9
|
%
|
|
28,045
|
|
|
4.0
|
%
|
|
42,068
|
|
|
6.0
|
%
|
|||
Tier 1 capital to average assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
105,963
|
|
|
9.0
|
%
|
|
46,936
|
|
|
4.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|||
Orrstown Bank
|
104,675
|
|
|
8.9
|
%
|
|
46,919
|
|
|
4.0
|
%
|
|
58,649
|
|
|
5.0
|
%
|
|||
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total capital to risk weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
$
|
104,637
|
|
|
15.0
|
%
|
|
$
|
55,926
|
|
|
8.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|
Orrstown Bank
|
102,806
|
|
|
14.7
|
%
|
|
55,893
|
|
|
8.0
|
%
|
|
$
|
69,866
|
|
|
10.0
|
%
|
||
Tier 1 capital to risk weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
95,741
|
|
|
13.7
|
%
|
|
27,963
|
|
|
4.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|||
Orrstown Bank
|
93,915
|
|
|
13.4
|
%
|
|
27,947
|
|
|
4.0
|
%
|
|
41,920
|
|
|
6.0
|
%
|
|||
Tier 1 capital to average assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Orrstown Financial Services, Inc.
|
95,741
|
|
|
8.1
|
%
|
|
47,058
|
|
|
4.0
|
%
|
|
n/a
|
|
|
n/a
|
|
|||
Orrstown Bank
|
93,915
|
|
|
8.0
|
%
|
|
47,077
|
|
|
4.0
|
%
|
|
58,846
|
|
|
5.0
|
%
|
•
|
4.5% CET1 to risk-weighted assets;
|
•
|
6.0% Tier 1 capital to risk-weighted assets; and
|
•
|
8.0% Total capital to risk-weighted assets.
|
•
|
Applying a 150% risk weight for certain high volatility commercial real estate acquisition, development and construction loans, compared to 100% risk weight currently in place;
|
•
|
Assigning a 150% risk weight to exposures (other than residential mortgage exposures) that are 90 days past due or in nonaccrual status, compared to 100% risk weight currently in place; and
|
•
|
Providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable, compared to 0% currently in place.
|
|
Interest Sensitivity Period
|
||||||||||||||||||
(Dollars in thousands)
|
Within 3
Months
|
|
After 3 Within 6
Months
|
|
After 6 Within 12
Months
|
|
After 1 Year
|
|
Total
|
||||||||||
Rate Sensitive Assets (RSA)
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans
|
$
|
248,017
|
|
|
$
|
37,909
|
|
|
$
|
69,487
|
|
|
$
|
329,125
|
|
|
$
|
684,538
|
|
Investment securities
|
80,741
|
|
|
9,382
|
|
|
19,261
|
|
|
293,179
|
|
|
402,563
|
|
|||||
Other earning assets
|
35,737
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
35,737
|
|
|||||
Total RSA
|
364,495
|
|
|
47,291
|
|
|
88,748
|
|
|
622,304
|
|
|
1,122,838
|
|
|||||
Rate Sensitive Liabilities (RSL)
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest bearing deposits
|
675,720
|
|
|
47,553
|
|
|
52,778
|
|
|
87,350
|
|
|
863,401
|
|
|||||
Short term borrowings
|
26,279
|
|
|
20,000
|
|
|
10,000
|
|
|
0
|
|
|
56,279
|
|
|||||
Long-term debt
|
175
|
|
|
78
|
|
|
10,158
|
|
|
4,575
|
|
|
14,986
|
|
|||||
Total RSL
|
702,174
|
|
|
67,631
|
|
|
72,936
|
|
|
91,925
|
|
|
934,666
|
|
|||||
Rate Sensitive GAP
|
|
|
|
|
|
|
|
|
|
||||||||||
Period
|
(337,679
|
)
|
|
(20,340
|
)
|
|
15,812
|
|
|
530,379
|
|
|
188,172
|
|
|||||
Cumulative
|
(337,679
|
)
|
|
(358,019
|
)
|
|
(342,207
|
)
|
|
188,172
|
|
|
|
||||||
GAP as a Percent of Total Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Period
|
-29
|
%
|
|
-2
|
%
|
|
1
|
%
|
|
45
|
%
|
|
|
||||||
Cumulative
|
-29
|
%
|
|
-30
|
%
|
|
-29
|
%
|
|
16
|
%
|
|
|
||||||
RSA/RSL cumulative
|
0.52
|
|
|
0.53
|
|
|
0.59
|
|
|
1.20
|
|
|
|
|
Within 6
Months
|
|
Within 12
Months
|
|
Within 24
Months
|
|
Within 36
Months
|
||||
September 30, 2014
|
0.53
|
|
|
0.59
|
|
|
0.71
|
|
|
0.78
|
|
June 30, 2014
|
0.64
|
|
|
0.70
|
|
|
0.80
|
|
|
0.85
|
|
December 31, 2013 (Revised) **
|
0.51
|
|
|
0.55
|
|
|
0.60
|
|
|
0.66
|
|
**
|
For the quarter ended June 30, 2014, the Company revised the methodology for calculating the rate sensitive liabilities. Previously, the Company had included some non-maturity deposits in the over 36 month bucket. With the revision, the Company moved the non-maturity deposits into the less than three month bucket as these deposits have the ability to reprice in that time frame. While they have the ability to reprice within a three month time frame, the Company would expect that some portion of these accounts will reprice with a delay and with a magnitude that is not one for one with interest rate changes.
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Changes in Internal Control Over Financial Reporting
|
|
3.1
|
|
Articles of Incorporation as amended, incorporated by reference to Exhibit 3.1 of the Registrant’s Report on Form 8-K filed on January 29, 2010.
|
|
|
|
|
|
3.2
|
|
By-laws as amended, incorporated by reference to Exhibit 3.1 to the Registrant’s Report on Form 8-K filed March 1, 2013.
|
|
|
|
|
|
4.1
|
|
Specimen Common Stock Certificate, incorporated by reference to the Registrant’s Registration Statement on Form S-3 filed February 8, 2010 (File No. 333-164780).
|
|
|
|
|
|
10.1
|
|
Form of Restricted Stock Share Grant Agreement, issued to certain employees on August 15, 2014.
|
|
|
|
|
|
31.1
|
|
Rule 13a – 14(a)/15d-14(a) Certification (Principal Executive Officer)
|
|
|
|
|
|
31.2
|
|
Rule 13a – 14(a)/15d-14(a) Certifications (Principal Financial Officer)
|
|
|
|
|
|
32.1
|
|
Section 1350 Certifications (Principal Executive Officer)
|
|
|
|
|
|
32.2
|
|
Section 1350 Certifications (Principal Financial Officer)
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase *
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase *
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document *
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema *
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase *
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase *
|
*
|
Attached as Exhibit 101 to this Form 10-Q are documents formatted in XBRL (Extensive Business Reporting Language).
|
|
/s/ Thomas R. Quinn, Jr.
|
|
Thomas R. Quinn, Jr.
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
|
/s/ David P. Boyle
|
|
David P. Boyle
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
|
|
Date: November 7, 2014
|
3.1
|
|
Articles of Incorporation as amended, incorporated by reference to Exhibit 3.1 of the Registrant’s Report on Form 8-K filed on January 29, 2010.
|
|
|
|
3.2
|
|
By-laws as amended, incorporated by reference to Exhibit 3.1 to the Registrant’s Report on Form 8-K filed March 1, 2013.
|
|
|
|
4.1
|
|
Specimen Common Stock Certificate, incorporated by reference to the Registrant’s Registration Statement on
Form S-3 filed February 8, 2010 (File No. 333-164780).
|
|
|
|
10.1
|
|
Form of Restricted Stock Share Grant Agreement, issued to certain employees on August 15, 2014.
|
|
|
|
31.1
|
|
Rule 13a – 14(a)/15d-14(a) Certification (Principal Executive Officer)
|
|
|
|
31.2
|
|
Rule 13a – 14(a)/15d-14(a) Certifications (Principal Financial Officer)
|
|
|
|
32.1
|
|
Section 1350 Certifications (Principal Executive Officer)
|
|
|
|
32.2
|
|
Section 1350 Certifications (Principal Financial Officer)
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase *
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase *
|
|
|
|
101.INS
|
|
XBRL Instance Document *
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema *
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase *
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase *
|
*
|
Attached as Exhibits 101 to this Form 10-Q are documents formatted in XBRL (Extensive Business Reporting Language).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
|
Date
|
|
Participant
|
Date of Grant
|
Restricted Stock Shares
|
Vesting Date
|
|
|
|
|
|
|
|
8/1/2019
|
Date: November 7, 2014
|
By:
|
|
/s/ Thomas R. Quinn, Jr.
|
|
|
|
Thomas R. Quinn, Jr.
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
Date: November 7, 2014
|
By:
|
|
/s/ David P. Boyle
|
|
|
|
David P. Boyle
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
Date: November 7, 2014
|
/s/ Thomas R. Quinn, Jr.
|
|
Thomas R. Quinn, Jr.
|
|
President and Chief Executive Officer
|
Date: November 7, 2014
|
/s/ David P. Boyle
|
|
David P. Boyle
|
|
Executive Vice President and
|
|
Chief Financial Officer
|