Pennsylvania
(State or Other Jurisdiction
of Incorporation or Organization)
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6021
(Primary Standard Industrial
Classification Code Number) |
23-2222567
(I.R.S. Employer
Identification Number)
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4 Brandywine Avenue
Downingtown, PA 19335
(610) 269-1040
(Address, Including ZIP Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)
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Gerald F. Sopp
Executive Vice President and Chief Financial Officer
DNB Financial Corporation
4 Brandywine Avenue
Downingtown, PA 19335
(484) 359-3138
(Name, Address, Including ZIP Code, and Telephone Number, Including Area Code, of Agent for Service)
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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(Do not check if a smaller reporting company)
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Smaller reporting company
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ý
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Title of each class of
securities to be registered
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Amount
to be
registered
(1)
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Proposed
maximum
offering price
per share
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Proposed
maximum
aggregate
offering price
(2)
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Amount of
registration fee
(3)
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Common Stock, par value $1.00
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1,368,611
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N/A
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$25,529,523
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$2,571
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(1)
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Represents the maximum number of shares of DNB Financial Corporation common stock estimated to be issuable upon completion of the merger described in the joint proxy statement/prospectus. This number is based on an exchange ratio of 0.6562 of a share of DNB Financial Corporation common stock per share of East River Bank common stock up to a maximum of 2,085,662 shares of East River Bank common stock that will be exchanged for shares of DNB Financial Corporation common stock, pursuant to the terms of the Agreement and Plan of Merger, dated as of April 4, 2016, by and between DNB Financial Corporation and East River Bank, which is attached to the joint proxy statement/prospectus as Annex A.
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(2)
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Pursuant to Rule 457(f)(2) under the Securities Act, and estimated solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price represents the product of (i) $12.67, the book value per share of East River Bank common stock to be exchanged in the merger as of March 31, 2016, the latest practicable date prior to the date of filing of this registration statement, and (ii) 2,694,911, the estimated maximum number of shares of common stock of East River Bank, including shares underlying outstanding stock options, that may be exchanged upon completion of the merger, less the $8,615,000 cash consideration to be paid by DNB Financial Corporation in connection with the merger.
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(3)
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Computed based on a rate of $100.70 per $1,000,000 of the proposed maximum aggregate offering price.
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DNB FINANCIAL CORPORATION
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EAST RIVER BANK
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Proxy Statement and Prospectus of
DNB Financial Corporation |
Proxy Statement of
East River Bank |
DNB Common Stock |
Implied Value of
One Share of ERB Common Stock |
Value of the Cash
Consideration for One Share of ERB Common Stock |
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At April 1, 2016
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$
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29.50
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$
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19.36
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$
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18.65
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At [ ], 2016
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$
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[ ]
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$
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[ ]
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$
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18.65
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[SIGNATURE]
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William J. Hieb
President and Chief Executive Officer
DNB Financial Corporation
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Christopher P. McGill
President and Chief Executive Officer
East River Bank
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1.
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A proposal to approve the issuance of shares of DNB common stock to holders of East River Bank common stock in connection with the merger, as contemplated by the Agreement and Plan of Merger, dated as of April 4, 2016, by and between DNB and East River Bank.
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2.
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A proposal to authorize the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the special meeting to approve the proposal to issue shares of DNB common stock to holders of East River Bank common stock in connection with the merger.
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BY ORDER OF THE BOARD OF DIRECTORS,
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Gerald F. Sopp, Corporate Secretary
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1.
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A proposal to approve and adopt the Agreement and Plan of Merger, dated as of April 4, 2016 (the "merger agreement"), by and between DNB Financial Corporation and East River Bank, which, among other matters, provides for: (i) the merger of East River Bank with and into DNB First, N.A., a wholly owned subsidiary of DNB, with DNB First, N.A., as the surviving entity, and (ii) upon consummation of the merger, the exchange of each outstanding share of ERB common stock (other than shares the holders of which perfect dissenters' rights of appraisal), subject to the election, proration and adjustment procedures provided in the merger agreement, for 0.6562 of a share of DNB common stock or $18.65 in cash.
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2.
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A proposal to authorize the adjournment of the ERB special meeting, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the special meeting to approve and adopt the merger agreement.
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BY ORDER OF THE ERB BOARD OF DIRECTORS,
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Jerry L. Cotlov, Corporate Secretary
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DNB Financial Corporation
4 Brandywine Avenue
Downingtown, PA 19335
(484) 359-3138
Attention: Gerald F. Sopp
Executive Vice President and Chief Financial Officer
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE MERGER AND SPECIAL MEETINGS
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1
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SUMMARY
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7
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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
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15
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SELECTED FINANCIAL AND OTHER DATA OF DNB
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16
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SELECTED FINANCIAL AND OTHER DATA OF ERB
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17
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UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL DATA
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18
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RISK FACTORS
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24
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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40
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF DNB
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42
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF ERB
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43
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DNB SPECIAL MEETING
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45
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DNB PROPOSALS
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47
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ERB SPECIAL MEETING
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48
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ERB PROPOSALS
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50
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THE MERGER
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51
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THE MERGER AGREEMENT
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79
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ACCOUNTING TREATMENT
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92
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
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93
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DIRECTORS AND OFFICERS OF DNB AND RELATED MATTERS
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96
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INFORMATION ABOUT DNB
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111
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INFORMATION ABOUT ERB
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144
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MARKET PRICE AND DIVIDENDS
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163
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DESCRIPTION OF DNB CAPITAL STOCK
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164
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COMPARISON OF DNB AND ERB SHAREHOLDERS' RIGHTS
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169
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LEGAL MATTERS
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174
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EXPERTS
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174
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OTHER MATTERS
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174
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SOLICITATION OF PROXIES | 174 | |||
DEADLINES FOR SUBMITTING SHAREHOLDER PROPOSALS | 174 | |||
WHERE YOU CAN FIND MORE INFORMATION
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175
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INDEX TO DNB CONSOLIDATED FINANCIAL STATEMENTS
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F-1
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INDEX TO ERB CONSOLIDATED FINANCIAL STATEMENTS
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F-67
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Annex A
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Agreement and Plan of Merger dated April 4, 2016 between DNB Financial Corporation and East River Bank.
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Annex B
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Opinion of Ambassador Financial Group, Inc.
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Annex C
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Opinion of Griffin Financial Group, LLC.
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Annex D
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Pennsylvania Statutory Provisions Relating to Dissenters' Rights
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Q:
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What is the merger?
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A:
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On April 4, 2016, DNB and ERB entered into an Agreement and Plan of Merger, which we refer to as the merger agreement. Pursuant to the merger agreement, ERB will merge with and into DNB First, with DNB First surviving the merger. We refer to this transaction as the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A and is incorporated by reference herein.
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Q:
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Why am I receiving this joint proxy statement/prospectus?
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A:
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We are delivering this document to you because it is a joint proxy statement being used by both the DNB board of directors and the ERB board of directors to solicit proxies from each entity's respective shareholders in connection with approval of the proposals described herein.
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In order to consider and approve the proposals, DNB has called a special meeting of its shareholders, which we refer to as the DNB special meeting, and ERB has called a special meeting of its shareholders, which we refer to as the ERB special meeting. This document serves as a joint proxy statement for both the DNB special meeting and the ERB special meeting and describes the proposals to be presented and voted on at each of the special meetings.
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This document also is a prospectus that is being delivered by DNB to ERB shareholders because DNB is offering shares of its common stock to ERB shareholders in connection with the merger.
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Q:
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What proposals are DNB shareholders being asked to vote on?
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A:
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DNB shareholders are being asked to approve the issuance of shares of DNB common stock to ERB shareholders in connection with the merger.
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In addition, DNB shareholders are being asked to approve a proposal to adjourn the DNB special meeting, if necessary or appropriate, to solicit additional proxies in favor of the issuance of the shares of DNB common stock in connection with the merger.
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Q:
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What proposals are ERB shareholders being asked to vote on?
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ERB's shareholders are being asked to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger.
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In addition, ERB shareholders are being asked to approve a proposal to adjourn the ERB special meeting, if necessary or appropriate, to solicit additional proxies in favor of the approval and adoption of the merger agreement.
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Q:
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What will ERB shareholders receive in the merger?
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A:
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If the merger is completed, ERB shareholders will be entitled to elect to receive, for each share of ERB common stock they own, subject to the election and adjustment procedures described in greater detail herein, 0.6562 of a share of DNB common stock or $18.65 in cash. The election of shares of DNB common stock or cash will be subject to proration such that 2,085,662 shares of ERB common stock, or approximately 85.3% of the currently outstanding ERB shares, will be exchanged for shares of DNB common stock, with the remaining ERB shares to be exchanged for cash.
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Q:
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What will DNB shareholders receive in the merger?
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A:
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If the merger is completed, DNB shareholders will not receive any merger consideration and will continue to hold the shares of DNB common stock that they currently hold.
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Q:
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If I am an ERB shareholder, when must I elect the type of merger consideration that I wish to receive?
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A:
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If you are an ERB shareholder and wish to elect the type of merger consideration you wish to receive in the merger, you should carefully review and follow the instructions to be set forth in an election form. Between 40 business days and 20 business days prior to the election deadline, DNB will initially make available and mail an election form to ERB shareholders under separate cover. You will need to sign, date and complete the election form and transmittal materials and return them to the exchange agent at the address provided in the transmittal materials. The deadline for electing the type of merger consideration you wish to receive will be the date that is the later of (i) the date of the special meeting of shareholders of ERB and (ii) the date which DNB and ERB agree is five business days before the date that the merger will be completed. Because of the way the election and proration procedures work, even if you submit a properly completed and signed election form, it is still possible that you may not receive exactly the type of merger consideration you have elected. If you do not submit a properly completed and signed election form to the exchange agent by the election deadline, you will have no control over the type of merger consideration you will receive and, as a result, you may receive only cash, only shares of DNB common stock or a combination of cash and shares of DNB common stock in the merger.
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If you hold shares in "street name" through a bank, broker, nominee or other holder of record you will have to follow the instructions provided by the bank, broker, nominee or other holder of record to make an election.
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Q:
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If I am an ERB shareholder, am I guaranteed to receive the type of merger consideration that I elect?
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A:
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No. If more ERB shareholders make valid elections to receive either shares of DNB common stock or cash than is available as either stock or cash consideration pursuant to the terms of the merger agreement, ERB shareholders electing the over-subscribed form of merger consideration will have the over-subscribed consideration proportionately reduced and substituted with the other form of consideration. Please see "The Merger Agreement – Consideration to be Received in the Merger" and "The Merger Agreement – Proration Procedures" beginning on page 79 and page 80, respectively for additional information about the allocation and proration procedures that will be followed in the event of over-subscriptions.
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Q:
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Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed?
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A:
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Although the amount of cash payable by DNB and the number of shares of DNB common stock that ERB shareholders will receive in connection with the merger is fixed, the value of the merger consideration consisting of shares of DNB common stock will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger based upon the market price of DNB common stock. Any fluctuation in the market price of DNB common stock after the date of this joint proxy statement/prospectus will change the value of the shares of DNB common stock that ERB shareholders may receive.
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Q:
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How will the merger affect holders of options to purchase shares of ERB common stock?
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A:
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If the merger is completed, options to purchase ERB common stock outstanding at the effective time of the merger will be exchanged for a cash payment equal to the difference between the per share cash consideration payable by DNB pursuant to the merger agreement and the corresponding exercise price of each such outstanding option.
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Q:
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Who will be the directors and executive officers of the combined company following the merger?
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A:
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Following completion of the merger, the then-current directors and executive officers of DNB will continue in office. In addition, John F. McGill, Jr., who currently serves as chairman of ERB, will be appointed as a DNB director and will serve as Vice Chairman, and Charles A. Murray and Daniel O'Donnell, who currently serve as directors of ERB, will be appointed as DNB directors. Christopher P. McGill, who currently serves as president and chief executive officer of ERB, will become DNB's executive vice president and chief business development officer and Jerry L. Cotlov, who currently serves as executive vice president and chief lending officer of ERB, will assume the position of DNB senior vice president and assistant chief commercial lending officer.
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Q:
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What are the federal income tax consequences of the merger?
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A:
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The merger has been structured to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the Internal Revenue Code. It is a condition to the completion of the merger that each of DNB and ERB receive a written opinion from its respective legal counsel to the effect that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. The federal tax consequences of the merger to shareholders of ERB will depend primarily on whether they exchange their shares of ERB common stock solely for shares of DNB common stock, solely for cash or for a combination of shares of DNB common stock and cash. It is expected that ERB shareholders will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their shares of ERB common stock for shares of DNB common stock pursuant to the merger, except with respect to any cash received by an ERB shareholder in exchange for shares of common stock or in lieu of fractional shares of DNB common stock. ERB shareholders who exchange their shares solely for cash should recognize gain or loss on the exchange. ERB shareholders who exchange their shares for a combination of DNB common stock and cash should recognize gain, but not any loss, on the exchange. The actual federal income tax consequences to ERB shareholders of electing to receive cash, shares of DNB common stock or a combination of cash and stock will not be ascertainable at the time ERB shareholders make their election because it will not be known at that time how, or to what extent, the allocation and proration procedures will apply, nor will the fair market value of the DNB common stock be known at that time.
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This tax treatment may not apply to all ERB shareholders. Determining the actual tax consequences of the merger to ERB shareholders can be complicated. ERB shareholders should consult their own tax advisor for a full understanding of the merger's tax consequences that are particular to them.
Please see "Material United States Federal Income Tax Consequences of the Merger" beginning on page 93 for further discussion of the material U.S. federal income tax consequences of the merger.
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Q:
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Does DNB's board of directors recommend that DNB shareholders approve the issuance of the shares of DNB common stock in connection with the merger?
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A:
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Yes. DNB's board of directors recommends that DNB's shareholders vote "FOR" approval of the issuance of the shares of DNB common stock in connection with the merger at the DNB special meeting. Please see "The Merger – DNB's Reasons for the Merger; Recommendation of DNB's Board of Directors" beginning on page 53 for a more detailed discussion regarding the information and factors considered by DNB's board of directors in making its recommendation.
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Q:
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Does ERB's board of directors recommend that ERB shareholders approve and adopt the merger agreement?
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A:
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Yes. ERB's board of directors has approved and determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are in the best interests of ERB's shareholders. ERB's board of directors unanimously recommends that ERB's shareholders vote "FOR" approval and adoption of the merger agreement at the ERB special meeting. Please see "The Merger – ERB's Reasons for the Merger; Recommendation of ERB's Board of Directors" beginning on page 63 for a more detailed discussion regarding the information and factors considered by ERB's board of directors in approving the merger and making its recommendation.
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In connection with ERB's entry into the merger agreement, ERB's directors and executive officers entered into voting agreements that require, among other things, the directors and executive officers to vote in favor of the approval and adoption of the merger agreement at the ERB special meeting. As of the record date for the ERB special meeting, these directors and executive officers of ERB had the right to vote [ ] shares of ERB common stock, or approximately [ ]% of the outstanding ERB common stock entitled to be voted at the ERB special meeting.
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Q:
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When and where are the special meetings of DNB and ERB?
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A:
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DNB
– The DNB special meeting will be held at [ ] on [ ] 2016, at [ ] local time.
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ERB
– The ERB special meeting will be held at [ ] on [ ] 2016, at [ ] local time.
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Q:
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Who can vote at the DNB and ERB special meetings?
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A:
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DNB
– Only holders of record of DNB common stock at the close of business on [ ] 2016 , the record date for the DNB special meeting, will be entitled to vote at the DNB special meeting.
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ERB
– Only holders of record of ERB common stock at the close of business on [ ] 2016 , the record date for the ERB special meeting, will be entitled to vote at the ERB special meeting.
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Q:
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What do I need to do now?
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A:
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After you have carefully read this joint proxy statement/prospectus, including the Annexes hereto, and have decided how you wish to vote your shares, please vote your shares promptly. If you hold common stock in your name as a shareholder of record, please vote by completing, signing, dating and returning the enclosed proxy card as soon as possible in the enclosed postage-paid envelope,
by calling the toll-free telephone number or by using the Internet as described in the instructions included with your proxy card
. If you hold your stock in "street name" through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker.
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Q:
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Why is my vote important?
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A:
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In order to complete the merger, shareholders of DNB must approve the issuance of shares of DNB common stock to ERB shareholders in connection with the merger and shareholders of ERB must approve and adopt the merger agreement. If you do not vote by proxy or vote in person at the DNB or ERB special meeting, as applicable, it will be more difficult to obtain the necessary quorums to hold the DNB and ERB special meetings and approve the proposals to be voted upon at the special meetings.
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Q:
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What constitutes a quorum for the DNB and ERB special meetings?
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A:
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DNB
– The presence, in person or by proxy, at the DNB special meeting of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast on each proposal at the special meeting, will constitute a quorum for each respective proposal. Abstentions are counted as present for the purpose of determining whether a quorum is present, while broker non-votes are not counted as present unless instructions have been provided by the beneficial owner to the applicable bank, brokerage firm or nominee with respect to at least one proposal.
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ERB
– The presence, in person or by proxy, at the ERB special meeting of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast on each proposal at the special meeting, will constitute a quorum for each respective proposal. Abstentions are counted as present for the purpose of determining whether a quorum is present, while broker non-votes are not counted as present unless instructions have been provided by the beneficial owner to the applicable bank, brokerage firm or nominee with respect to at least one proposal.
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Q:
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What is the vote required to approve each proposal at the DNB special meeting?
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A:
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Approval of the issuance of the shares of DNB common stock in connection with the merger requires the affirmative vote of the holders of a majority of the votes cast by holders of DNB common stock entitled to vote at the DNB special meeting. A failure to vote by a DNB shareholder entitled to vote, an abstention from voting or a broker non-vote will have no effect on the outcome of the vote to approve the issuance of the shares of DNB common stock in connection with the merger.
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Approval of the DNB adjournment proposal requires the affirmative vote of the holders of a majority of the votes cast by holders of DNB common stock entitled to vote at the DNB special meeting. A failure to vote by a DNB shareholder entitled to vote, an abstention from voting or a broker non-vote will have no effect on the outcome of the vote to approve the adjournment proposal.
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Please note that if you make no specification on your proxy card as to how you want your DNB shares voted before
signing and returning it, your proxy will be voted as recommended by the board of directors of DNB.
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Q:
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What is the vote required to approve each proposal at the ERB special meeting?
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A:
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Approval and adoption of the merger agreement requires the affirmative vote of the holders of at least two-thirds of the outstanding shares of ERB common stock entitled to vote at the ERB special meeting. A failure to vote, or a failure to instruct your broker, bank or other nominee to vote, your shares of ERB common stock, an abstention from voting or a broker non-vote, each will have the same effect as a vote "AGAINST" the approval and adoption of the merger agreement.
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Approval of the ERB adjournment proposal requires the affirmative vote of a majority of the votes cast by all shareholders present at the ERB special meeting and entitled to vote. A failure to vote by an ERB shareholder entitled to vote and an abstention from voting will have the same effect as a vote "AGAINST" the adjournment proposal. A broker non-vote will have no effect on the outcome of the vote to approve the adjournment proposal.
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Please note that if you make no specification on your proxy card as to how you want your ERB shares voted before signing and returning it, your proxy will be voted as recommended by the board of directors of ERB.
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Q:
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If my shares of common stock are held in "street name" by my broker, bank or other nominee, will my broker, bank or other nominee automatically vote my shares for me?
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A:
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No. If you own your shares in "street name," your broker, bank or other nominee cannot vote your shares without instructions from you. You should instruct your broker, bank or other nominee as to how to vote your shares, following the directions your broker, bank or other nominee provides to you. Please check the voting form used by your broker, bank or other nominee.
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Q:
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Can I attend the special meeting and vote my shares in person?
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A:
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DNB
– Yes. All DNB shareholders who hold shares as of the record date for the DNB special meeting, including DNB shareholders of record and DNB shareholders who hold their shares in "street name" through banks, brokers, nominees or any other holder of record, may attend the DNB special meeting. Holders of record of DNB common stock may attend the special meeting in person and also may cast their votes as the special meeting. If you are not a DNB shareholder of record, you must obtain a proxy or letter, executed in your favor, from the record holder of your shares of common stock (such as your broker, bank or other nominee), to be able to vote in person at the DNB special meeting. If you plan to attend the DNB special meeting, you must hold your shares of common stock in your own name or have a proxy or letter from the record holder of your shares of common stock confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted.
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ERB
– Yes. All ERB shareholders who hold shares as of the record date for the ERB special meeting, including ERB shareholders of record and ERB shareholders who hold their shares through banks, brokers, nominees or any other holder of record, may attend the ERB special meeting. Holders of record of ERB common stock may attend the special meeting in person and also may cast their votes as the special meeting. If you are not an ERB shareholder of record, you must obtain a proxy or letter, executed in your favor, from the record holder of your shares of common stock (such as your broker, bank or other nominee), to be able to vote in person at the ERB special meeting. If you plan to attend the ERB special meeting, you must hold your shares of common stock in your own name or have a proxy or letter from the record holder of your shares of common stock confirming your ownership and you must bring a form of personal photo identification with you in order to be admitted.
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Q:
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Can I change my vote?
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A:
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DNB
– Yes. A DNB shareholder who has submitted a proxy may revoke it at any time before its exercise at the DNB special meeting by (i) giving written notice of revocation to DNB's Corporate Secretary, (ii) properly submitting to DNB a duly executed proxy bearing a later date or (iii) attending the DNB special meeting and voting in person. Any DNB shareholder entitled to vote in person at the DNB special meeting may vote in person regardless of whether a proxy has been previously given, and such vote will revoke any previous proxy. Please note, however, that simply attending the DNB special meeting will not revoke a previously-given proxy – you must cast a new vote at the DNB special meeting in order to revoke your prior vote.
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All written notices of revocation and other communications with respect to revocation of DNB proxies should be addressed to DNB as follows: Gerald F. Sopp, DNB Financial Corporation, 4 Brandywine Avenue, Downingtown, PA 19335.
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ERB
– Yes. An ERB shareholder who has submitted a proxy may revoke it at any time before its exercise at the ERB special meeting by (i) giving written notice of revocation to ERB's Corporate Secretary, (ii) properly submitting to ERB a duly executed proxy bearing a later date or (iii) attending the ERB special meeting and voting in person. Any ERB shareholder entitled to vote in person at the ERB special meeting may vote in person regardless of whether a proxy has been previously given, and such vote will revoke any previous proxy. Please note, however, that simply attending the ERB special meeting will not revoke a previously-given proxy – you must cast a new vote at the ERB special meeting in order to revoke your prior vote.
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All written notices of revocation and other communications with respect to revocation of ERB proxies should be addressed to ERB as follows: Charles T. Field, Senior Vice President and Chief Financial Officer, East River Bank, 4341 Ridge Avenue, Philadelphia, PA 19129.
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Q:
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What should I do if I receive more than one set of voting materials?
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A:
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Shareholders may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of shares and your shares are registered in more than one name, you will receive more than one proxy card. In addition, if you are a holder of both DNB common stock and ERB common stock, you will receive one or more separate proxy cards or voting instruction cards for each company. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this joint proxy statement/prospectus to ensure that you vote every share of DNB and/or ERB common stock that you own.
|
|
Q:
|
Do I have appraisal or dissenters' rights?
|
|
A:
|
DNB
– No. DNB shareholders are not entitled to appraisal or dissenters' rights.
|
|
ERB
– Yes. Under Pennsylvania law, ERB shareholders have the right to dissent from the merger and receive a payment in cash for the "fair value" of their shares of ERB common stock as determined by an appraisal process. This value may be more or less than the value you would receive in the merger if you do not dissent. If you dissent, you will receive a cash payment for the value of your shares that will be fully taxable to you. Pennsylvania law requires dissenting shareholders to follow certain statutory procedures in order to perfect your dissenters' rights. Please see "The Merger – Dissenters' Rights" beginning on page 76 and the Pennsylvania statutory provisions provided in Annex D.
|
||
Q:
|
When do you expect to complete the merger?
|
|
A:
|
DNB and ERB expect to complete the merger in early fourth quarter 2016. However, we cannot assure you when or if the merger will be completed. Among other things, we cannot complete the merger until we obtain the approvals being sought from both DNB and ERB shareholders at the special meetings and until we obtain certain regulatory approvals.
|
|
Q:
|
What happens if the merger is not completed?
|
|
A:
|
If the merger is not completed, holders of ERB common stock will not receive any consideration for their shares in connection with the merger, and ERB will remain an independent, privately-held company.
|
|
If the merger is not completed, DNB will remain an independent public company and its common stock will continue to be listed and traded on the NASDAQ.
|
||
If the merger agreement is terminated in certain circumstances, a termination fee may be required to be paid by ERB. Please see "The Merger Agreement – Termination Fee" beginning on page 92 for a complete discussion of the circumstances under which a termination fee will be required to be paid.
|
||
Q:
|
If I am an ERB shareholder, should I send my ERB share certificates with my proxy card or before the ERB special meeting?
|
|
A:
|
No. You should
NOT
send your ERB share certificates with your proxy card or at any time prior to the ERB special meeting. DNB, through its appointed exchange agent, will send ERB shareholders instructions for exchanging ERB share certificates for the merger consideration.
|
|
Q:
|
Whom may I contact if I cannot locate my ERB share certificate(s)?
|
|
A:
|
If you are unable to locate your original ERB share certificate(s), you should contact Charles T. Field, Senior Vice President and Chief Financial Officer, East River Bank, 4341 Ridge Avenue, Philadelphia, PA 19129.
|
|
Q:
|
Whom should I call with questions about the special meetings, the proposals or the merger?
|
|
A:
|
DNB
– DNB shareholders may contact Gerald F. Sopp, DNB's Executive Vice President and Chief Financial Officer, at (484) 359-3138 or
GSOPP@DNBFIRST.COM
with any questions about the DNB special meeting, the share issuance proposal or related matters.
|
|
ERB
– ERB shareholders may contact Charles T. Field, ERB's Senior Vice President and Chief Financial Officer, at (267) 295-6420 or
cfield@eastriverbank.com
. with any questions about the ERB special meeting, the merger or related matters.
|
|
DNB
Common Stock
|
|
ERB Common Stock
(Book Value Per Share)
|
|
Implied Value of One
Share of ERB Common Stock
|
At April 1, 2016
|
$29.50
|
|
$12.67
(1)
|
|
$19.36
|
At , 2016
|
[ ]
|
|
[ ]
|
|
[ ]
|
•
|
the approval by the requisite vote of DNB shareholders of the issuance of shares of DNB common stock in connection with the merger;
|
|
•
|
the approval and adoption of the merger agreement by the requisite vote of ERB shareholders;
|
|
•
|
the receipt of all regulatory consents and approvals required to consummate the transactions contemplated by the merger agreement, without conditions (excluding standard conditions that are normally imposed in bank merger transactions) that would, in the good faith reasonable judgment of the DNB board of directors, materially and adversely affect the business, operations, financial condition, property or assets of the combined enterprise of DNB and ERB or materially impair the value of ERB to DNB;
|
|
•
|
the receipt by each of DNB and ERB of a legal opinion with respect to certain United States federal income tax consequences of the merger;
|
|
•
|
the absence of any law, statute, rule, regulation, order, decree, injunction or other order by any court or other governmental entity, which enjoins or prohibits completion of the transactions contemplated by the merger agreement;
|
•
|
the effectiveness of the registration statement of which this joint proxy statement/prospectus is a part with respect to the DNB common stock to be issued in connection with the merger under the Securities Act and the absence of any stop order or proceedings initiated or threatened by the SEC or any state securities commissioner (with respect to any applicable state securities laws) for that purpose;
|
|
•
|
the authorization for listing on the NASDAQ of the shares of DNB common stock to be issued in connection with the merger;
|
|
•
|
the exercise of dissenters' rights by holders of ERB common stock not exceeding 15% of the issued and outstanding shares of ERB;
|
|
•
|
the absence of any change that individually or in the aggregate has a material adverse effect with respect to DNB or ERB;
|
•
|
the truth and correctness of the representations and warranties of each other party in the merger agreement, subject to the materiality standards provided in the merger agreement; and
|
|
•
|
the performance by each party in all material respects of their obligations under the merger agreement and the receipt by each party of certificates from the other party to that effect.
|
•
|
if the other party breaches the merger agreement in a way that would entitle the party seeking to terminate the agreement not to consummate the merger, unless the breach is capable of being cured by November 30, 2016 (the termination date of the merger agreement), and is actually cured within 30 days of notice of the breach;
|
|
•
|
if the merger has not been completed by the termination date of November 30, 2016, unless the failure to complete the merger by that date is due to the breach of the merger agreement by the party seeking to terminate the merger agreement;
|
|
•
|
if DNB's shareholders fail to approve the issuance of shares of DNB common stock in connection with the merger at the DNB special meeting;
|
|
•
|
if ERB's shareholders fail to approve and adopt the merger agreement at the ERB special meeting; or
|
|
•
|
if there is any final, non-appealable order permanently enjoining or prohibiting the completion of the merger or any consent, registration, approval, permit or authorization is denied such that the regulatory approval condition to the merger cannot be satisfied as of the closing date.
|
•
|
if the merger agreement is terminated by DNB because ERB has received a "superior proposal" and ERB's board of directors has (1) entered into an acquisition agreement with respect to the superior proposal or (2) withdrawn its recommendation regarding the merger, failed to make its recommendation or modified or qualified its recommendation in a manner adverse to DNB;
|
|
•
|
if the merger agreement is terminated by ERB because ERB has received a "superior proposal" and ERB's board of directors has made a determination to accept the superior proposal; or
|
|
•
|
if ERB enters into a definitive agreement relating to an acquisition proposal within 12 months after the occurrence of any of the following: (1) the termination of the merger agreement by DNB due to ERB's willful breach, subject to the materiality standards provided in the merger agreement, of its representations, warranties, covenants or agreements under the merger agreement, or (2) the failure of ERB's shareholders to approve and adopt the merger agreement after the public disclosure or public awareness of an acquisition proposal.
|
|
DNB
Historical |
ERB
Historical |
Pro
Forma Combined |
Per
Equivalent ERB Share |
||||||||||||
For the quarter ended March 31, 2016:
|
||||||||||||||||
Earnings Per Share
|
||||||||||||||||
Basic earnings per share
|
$
|
0.55
|
$
|
0.22
|
$
|
0.58
|
$
|
0.38
|
||||||||
Diluted earnings per share
|
0.54
|
0.22
|
0.58
|
0.38
|
||||||||||||
Cash Dividends Per Share
|
$
|
0.07
|
$
|
0.00
|
$
|
0.07
|
$
|
0.05
|
||||||||
Book Value per common share as of March 31, 2016
|
$
|
20.45
|
$
|
12.67
|
$
|
22.20
|
$
|
14.57
|
|
DNB
Historical |
ERB
Historical |
Pro
Forma Combined |
Per
Equivalent ERB Share |
||||||||||||
For the year ended December 31, 2015:
|
||||||||||||||||
Earnings Per Share
|
||||||||||||||||
Basic earnings per share
|
$
|
1.82
|
$
|
0.92
|
$
|
1.88
|
$
|
1.23
|
||||||||
Diluted earnings per share
|
1.79
|
0.91
|
1.84
|
1.21
|
||||||||||||
Cash Dividends Per Share
|
$
|
0.28
|
$
|
0.00
|
$
|
0.28
|
$
|
0.18
|
||||||||
Book Value per common share as of December 31, 2015
|
$
|
19.65
|
$
|
12.43
|
$
|
22.02
|
$
|
14.45
|
Three Months ended
|
At or For the Year Ended December 31
|
|||||||||||||||||||||||||||
March 31, 2016
|
March 31, 2015
|
|||||||||||||||||||||||||||
(Dollars in thousands, except share data)
|
(unaudited)
|
(unaudited)
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||||||||
RESULTS OF OPERATIONS
|
||||||||||||||||||||||||||||
Interest income
|
$
|
6,105
|
$
|
5,996
|
$
|
24,478
|
$
|
23,596
|
$
|
23,212
|
$
|
25,729
|
$
|
26,174
|
||||||||||||||
Interest expense
|
650
|
606
|
2,712
|
2,311
|
2,888
|
3,755
|
4,644
|
|||||||||||||||||||||
Net interest income
|
5,455
|
5,390
|
21,766
|
21,285
|
20,324
|
21,974
|
21,530
|
|||||||||||||||||||||
Provision for credit losses
|
330
|
300
|
1,105
|
1,130
|
2,530
|
1,455
|
1,480
|
|||||||||||||||||||||
Non-interest income
|
2,329
|
1,335
|
5,009
|
4,958
|
4,795
|
4,528
|
3,666
|
|||||||||||||||||||||
Non-interest expense
|
5,418
|
4,824
|
19,029
|
18,632
|
17,450
|
17,702
|
16,748
|
|||||||||||||||||||||
Income before income taxes
|
2,036
|
1,601
|
6,641
|
6,481
|
5,139
|
7,345
|
6,968
|
|||||||||||||||||||||
Income tax expense
|
480
|
349
|
1,503
|
1,677
|
1,220
|
2,106
|
2,066
|
|||||||||||||||||||||
Net income
|
$
|
1,556
|
$
|
1,252
|
$
|
5,138
|
$
|
4,804
|
$
|
3,919
|
$
|
5,239
|
$
|
4,902
|
||||||||||||||
Preferred stock dividends & accretion of
|
||||||||||||||||||||||||||||
discount
|
-
|
26
|
50
|
135
|
148
|
332
|
779
|
|||||||||||||||||||||
Net income available to common stockholders
|
$
|
1,556
|
$
|
1,226
|
$
|
5,088
|
$
|
4,669
|
$
|
3,771
|
$
|
4,907
|
$
|
4,123
|
||||||||||||||
PER SHARE DATA
|
||||||||||||||||||||||||||||
Basic earnings
|
$
|
0.55
|
$
|
0.44
|
$
|
1.82
|
$
|
1.69
|
$
|
1.38
|
$
|
1.81
|
$
|
1.54
|
||||||||||||||
Diluted earnings
|
0.54
|
0.43
|
1.79
|
1.66
|
1.36
|
1.79
|
1.53
|
|||||||||||||||||||||
Cash dividends
|
0.07
|
0.07
|
0.28
|
0.28
|
0.28
|
0.20
|
0.12
|
|||||||||||||||||||||
Book value
|
20.45
|
18.91
|
19.65
|
18.33
|
16.55
|
16.08
|
14.14
|
|||||||||||||||||||||
Weighted average
|
||||||||||||||||||||||||||||
Common shares outstanding - basic
|
2,832,521
|
2,786,012
|
2,801,881
|
2,766,723
|
2,742,417
|
2,710,819
|
2,674,716
|
|||||||||||||||||||||
FINANCIAL CONDITION
|
||||||||||||||||||||||||||||
Total assets
|
$
|
761,440
|
$
|
748,440
|
$
|
748,818
|
$
|
723,330
|
$
|
661,473
|
$
|
639,568
|
$
|
607,099
|
||||||||||||||
Loans, gross
|
489,366
|
464,100
|
481,758
|
455,603
|
415,354
|
396,498
|
403,684
|
|||||||||||||||||||||
Allowance for credit losses
|
5,172
|
5,190
|
4,935
|
4,906
|
4,623
|
6,838
|
6,164
|
|||||||||||||||||||||
Deposits
|
637,055
|
627,261
|
606,275
|
605,083
|
558,747
|
530,424
|
497,545
|
|||||||||||||||||||||
Borrowings
|
61,144
|
59,840
|
81,909
|
49,005
|
39,674
|
46,864
|
53,647
|
|||||||||||||||||||||
Stockholders' equity
|
58,180
|
56,173
|
55,488
|
63,908
|
58,583
|
56,705
|
51,056
|
|||||||||||||||||||||
SELECTED RATIOS
|
||||||||||||||||||||||||||||
Return on average stockholders' equity
|
10.94
|
%
|
8.32
|
%
|
8.72
|
%
|
7.78
|
%
|
6.75
|
%
|
9.61
|
%
|
10.01
|
%
|
||||||||||||||
Return on average assets
|
0.84
|
0.71
|
0.69
|
0.71
|
0.60
|
0.84
|
0.80
|
|||||||||||||||||||||
Average equity to average assets
|
7.67
|
8.49
|
7.95
|
9.12
|
8.87
|
8.75
|
7.99
|
|||||||||||||||||||||
Loans to deposits
|
76.82
|
73.99
|
79.46
|
75.30
|
74.34
|
74.75
|
81.14
|
|||||||||||||||||||||
Dividend payout ratio
|
12.91
|
16.17
|
15.67
|
16.87
|
20.65
|
11.17
|
7.84
|
Three Months Ended
March 31,
(Unaudited)
|
Year Ended December 31,
|
|||||||||||||||||||||||||||
2016
|
2015
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||
Operating Data:
|
||||||||||||||||||||||||||||
Interest income
|
$
|
3,683
|
$
|
3,270
|
$
|
13,507
|
$
|
12,008
|
$
|
11,600
|
$
|
11,458
|
$
|
11,543
|
||||||||||||||
Interest expense
|
669
|
588
|
2,506
|
2,053
|
2,307
|
2,560
|
3,140
|
|||||||||||||||||||||
Net interest income
|
3,014
|
2,682
|
11,001
|
9,955
|
9,293
|
8,898
|
8,403
|
|||||||||||||||||||||
Provision for loan losses
|
184
|
64
|
408
|
192
|
550
|
1,075
|
1,229
|
|||||||||||||||||||||
Net interest income after
provision for loan losses
|
2,830
|
2,618
|
10,593
|
9,763
|
8,743
|
7,823
|
7,174
|
|||||||||||||||||||||
Non-interest income
|
250
|
96
|
556
|
856
|
829
|
527
|
258
|
|||||||||||||||||||||
Non-interest expenses
|
2,188
|
1,967
|
7,774
|
7,778
|
7,008
|
6,539
|
5,910
|
|||||||||||||||||||||
Income tax expense
|
355
|
259
|
1,162
|
986
|
877
|
622
|
572
|
|||||||||||||||||||||
Net income
|
$
|
537
|
$
|
488
|
$
|
2,213
|
$
|
1,855
|
$
|
1,687
|
$
|
1,189
|
$
|
950
|
At March 31,
(Unaudited)
|
At December 31,
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||||||
Total assets
|
$
|
311,426
|
$
|
310,716
|
$
|
271,372
|
$
|
247,598
|
$
|
237,537
|
$
|
222,892
|
||||||||||||
Cash and cash equivalents
|
12,344
|
18,727
|
8,876
|
10,968
|
11,992
|
13,977
|
||||||||||||||||||
Investment securities available for
sale
|
6,715
|
6,958
|
7,468
|
12,427
|
8,790
|
12,054
|
||||||||||||||||||
Investment securities held to
maturity
|
313
|
314
|
--
|
--
|
14,932
|
20,735
|
||||||||||||||||||
Loans, net
|
285,252
|
278,646
|
247,539
|
208,489
|
191,059
|
169,777
|
||||||||||||||||||
Investment in stock of
correspondent banks
|
2,178
|
2,062
|
1,764
|
1,165
|
1,256
|
1,272
|
||||||||||||||||||
Bank premises and equipment, net
|
459
|
471
|
576
|
802
|
817
|
743
|
||||||||||||||||||
Total deposits
|
228,864
|
230,240
|
200,487
|
205,639
|
197,719
|
184,745
|
||||||||||||||||||
Short-term borrowings
|
8,742
|
2,823
|
955
|
850
|
500
|
--
|
||||||||||||||||||
Long-term debt
|
39,895
|
42,936
|
38,268
|
12,350
|
13,200
|
13,700
|
||||||||||||||||||
Total liabilities
|
280,460
|
280,324
|
244,381
|
222,493
|
214,301
|
200,819
|
||||||||||||||||||
Retained earnings (accumulated
deficit)
|
6,748
|
6,211
|
3,998
|
2,143
|
456
|
(732
|
)
|
|||||||||||||||||
Accumulated other comprehensive
income
|
92
|
75
|
122
|
221
|
38
|
63
|
||||||||||||||||||
Total stockholders' equity
|
$
|
30,966
|
$
|
30,392
|
$
|
26,991
|
$
|
25,105
|
$
|
23,236
|
$
|
22,073
|
As of March 31, 2016*
|
|||||||||||||||||
DNB Historical
|
ERB Historical
|
Pro Forma Adjustments
|
Pro Forma Combined
|
||||||||||||||
(In Thousands)
|
|||||||||||||||||
Assets
|
|||||||||||||||||
Cash and cash equivalents
|
$
|
38,740
|
$
|
12,344
|
$
|
(12,201
|
)
|
(1) |
$
|
38,883
|
|||||||
Investment securities
|
207,023
|
8,498
|
(129
|
)
|
(2) |
215,392
|
|||||||||||
Loans held for sale
|
359
|
-
|
359
|
||||||||||||||
Loans receivable
|
489,366
|
288,816
|
(2,462
|
)
|
(3) |
775,720
|
|||||||||||
Allowance for credit losses
|
(5,172
|
)
|
(3,564
|
)
|
3,564
|
(3) |
(5,172
|
)
|
|||||||||
Net loans
|
484,194
|
285,252
|
1,102
|
(3) |
770,548
|
||||||||||||
Restricted stock
|
3,166
|
2,178
|
5,344
|
||||||||||||||
Office property and equipment, net
|
7,817
|
459
|
8,276
|
||||||||||||||
Accrued interest receivable
|
2,569
|
1,034
|
3,603
|
||||||||||||||
Other real estate owned & other rep. property
|
2,612
|
417
|
3,029
|
||||||||||||||
Bank owned life insurance (BOLI)
|
9,381
|
-
|
9,381
|
||||||||||||||
Core deposit intangible
|
63
|
-
|
2,013
|
(4) |
2,076
|
||||||||||||
Net deferred taxes
|
2,946
|
645
|
41
|
(5) |
3,632
|
||||||||||||
Goodwill
|
-
|
-
|
14,735
|
(6) |
14,735
|
||||||||||||
Other assets
|
2,570
|
599
|
3,169
|
||||||||||||||
Total assets
|
$
|
761,440
|
$
|
311,426
|
$
|
5,561
|
$
|
1,078,427
|
|||||||||
Liabilities
|
|||||||||||||||||
Non-interest-bearing deposits
|
$
|
131,951
|
$
|
21,546
|
$ |
$
|
153,497
|
||||||||||
Interest-bearing deposits
|
505,104
|
207,318
|
721
|
(7) |
713,143
|
||||||||||||
Total deposits
|
637,055
|
228,864
|
721
|
866,640
|
|||||||||||||
Federal Home Loan Bank advances
|
20,000
|
48,637
|
359
|
(8) |
68,996
|
||||||||||||
Repurchase agreements
|
21,661
|
-
|
21,661
|
||||||||||||||
Junior subordinated debentures
|
9,279
|
-
|
9,279
|
||||||||||||||
Subordinated debt
|
9,750
|
-
|
9,750
|
||||||||||||||
Other borrowings
|
454
|
949
|
1,403
|
||||||||||||||
Accrued interest payable
|
313
|
129
|
442
|
||||||||||||||
Other liabilities
|
4,748
|
1,881
|
56
|
(10) |
6,685
|
||||||||||||
Total liabilities
|
703,260
|
280,460
|
1,136
|
984,856
|
|||||||||||||
Stockholders' Equity
|
|||||||||||||||||
Preferred stock
|
-
|
-
|
-
|
-
|
|||||||||||||
Common equity
|
58,180
|
30,966
|
4,425
|
(9) |
93,571
|
||||||||||||
Total stockholders' equity
|
58,180
|
30,966
|
4,425
|
93,571
|
|||||||||||||
Total liabilities and stockholders' equity
|
$
|
761,440
|
$
|
311,426
|
$
|
5,561
|
$
|
1,078,427
|
|||||||||
*Assumes that the merger was completed as of March 31, 2016 utilizing the acquisition method of accounting. Estimated fair value adjustments for loans, investment securities, core deposit intangible, deposits and borrowed funds were determined by the management of DNB and of ERB. Actual fair value adjustments, where appropriate, will be determined by a specialist, engaged by management, as of the merger completion date.
|
|||||||||||||||||
(1) The adjustment includes cash consideration of $6.7 million paid to ERB stockholders, $1.9 million paid to holders of the in-the-money ERB stock options and $1.2 million paid to ERB executives in connection with change of control arrangements. Additionally, it is assumed that cash and cash equivalents will be used to pay $347,000 for after tax one-time merger expenses of ERB and $2.1 million for after tax one-time merger expenses of DNB.
|
|||||||||||||||||
(2) Represents the fair value adjustment to the carrying value of ERB's investment securities.
|
(3) The pro forma adjustment of $2.5 million includes a negative $4.6 million credit component and a positive $2.1 million interest component. The weighted average rate on ERB's loans was 4.69%. The existing ERB allowance for loan losses of $3.6 million is prohibited to be carried over according to GAAP.
|
(4) Represents the recognition of the fair value of the core deposit intangible asset, which is assumed to be 1.60% of core deposit liabilities assumed. Core deposits are defined as total deposits less time deposits. The Core Deposit intangible has a weighted average remaining useful life of 10 years and is being amortized into income using the level yield method.
|
(5) Represents adjustments in the net deferred tax assets resulting from the fair value adjustments related to the acquired assets and assumed liabilities, identifiable intangibles and other deferred tax items. The $651,000 represents the estimated tax benefit on the $1.9 million cash consideration paid for ERB's options. The fair value adjustment of the net deferred tax asset assumes an effective tax rate of 34% and was estimated to be $610,000.
|
(6) Calculated to reflect the acquisition accounting adjustments related to the merger. The consideration paid to acquire ERB consists of cash of $8.6 million and the issuance of 1,368,611 shares of DNB common stock based upon the fixed exchange rate of 0.6562 applied to 2,085,662 of the 2,444,911 shares of ERB common stock outstanding. The $28.52 value of DNB common stock is based upon the closing stock price of $28.52 as of March 31, 2016. Acquisition accounting adjustments assume that ERB's stockholders' equity is eliminated and the purchase price, goodwill and intangible assets are reflected on the DNB's financial statements pursuant to the application of acquisition accounting.
|
Value of DNB's common stock to be issued
|
|
$
|
39,033
|
||||
ERB's stockholders equity
|
|
(30,966)
|
|||||
Change in control related expenses | (1,223) | ||||||
ERB merger expenses
|
|
(347)
|
|||||
DNB merger expenses
|
|
(2,072)
|
|||||
Total
|
|
$
|
4,425
|
(10) Represents the liability payable to holders of ERB stock options, due to the acceleration of vesting.
|
For the Three Months Ended March 31, 2016 (1)
|
|||||||||||||||||
(Dollars in thousands, Except Per Share Data)
|
|||||||||||||||||
DNB
Historical
|
ERB
Historical
|
Pro Forma Adjustments
|
Pro Forma Combined
|
||||||||||||||
Interest Income:
|
|||||||||||||||||
Interest and fees on loans
|
$
|
5,068
|
$
|
3,598
|
$
|
189
|
|
(2) |
$
|
8,855
|
|||||||
Interest and dividends on investment securities
|
1,016
|
65
|
1,081
|
||||||||||||||
Interest on cash and cash equivalents
|
21
|
20
|
41
|
||||||||||||||
Total interest and dividend income
|
6,105
|
3,683
|
189
|
|
9,977
|
||||||||||||
Interest Expense:
|
|||||||||||||||||
Deposits
|
343
|
466
|
(45
|
)
|
(2) |
764
|
|||||||||||
Borrowings
|
307
|
203
|
(22
|
)
|
(2) |
488
|
|||||||||||
Total interest expense
|
650
|
669
|
(67
|
)
|
1,252
|
||||||||||||
Net interest income
|
5,455
|
3,014
|
256
|
8,725
|
|||||||||||||
Provision for credit losses
|
330
|
184
|
514
|
||||||||||||||
Net interest income after provision for credit losses
|
5,125
|
2,830
|
256
|
8,211
|
|||||||||||||
Non-interest Income:
|
|||||||||||||||||
Service charges and other fees
|
625
|
85
|
710
|
||||||||||||||
Wealth management
|
397
|
-
|
397
|
||||||||||||||
Mortgage banking
|
32
|
6
|
38
|
||||||||||||||
Increase in cash surrender value of BOLI
|
55
|
-
|
55
|
||||||||||||||
Gain on sale of investment securities, net
|
31
|
-
|
31
|
||||||||||||||
Gain on sale of loans
|
39
|
159
|
198
|
||||||||||||||
Gains from insurance proceeds
|
1,150
|
-
|
1,150
|
||||||||||||||
Total non-interest income
|
2,329
|
250
|
2,579
|
||||||||||||||
Non-interest Expense:
(3)
|
|||||||||||||||||
Salaries and employee benefits
|
3,126
|
1,030
|
4,156
|
||||||||||||||
Occupancy
|
797
|
154
|
951
|
||||||||||||||
Professional and consulting
|
309
|
146
|
455
|
||||||||||||||
Advertising and marketing
|
183
|
105
|
288
|
||||||||||||||
FDIC insurance
|
129
|
46
|
175
|
||||||||||||||
PA shares tax
|
162
|
-
|
162
|
||||||||||||||
Telecommunications
|
61
|
36
|
97
|
||||||||||||||
Amortization of Core Deposit Intangible
|
4
|
-
|
92
|
(2) |
96
|
||||||||||||
Due diligence and merger-related expenses
|
188
|
175
|
(363
|
)
|
(6) |
-
|
|||||||||||
Other expenses
|
459
|
496
|
955
|
||||||||||||||
Total non-interest expense
|
5,418
|
2,188
|
(271
|
) |
7,335
|
||||||||||||
Income before income tax expense
|
2,036
|
892
|
527
|
|
3,455
|
||||||||||||
Income tax expense
|
480
|
355
|
179
|
|
(5) |
1,014
|
|||||||||||
Net income
|
$
|
1,556
|
$
|
537
|
$
|
348
|
|
$
|
2,441
|
||||||||
Preferred stock dividends and accretion of discount
|
-
|
-
|
-
|
||||||||||||||
Net income available to common shareholders
|
$
|
1,556
|
$
|
537
|
$
|
348
|
|
$
|
2,441
|
||||||||
Earnings per common share:
(4)
|
|||||||||||||||||
Basic
|
$
|
0.55
|
$
|
0.22
|
$
|
0.58
|
|||||||||||
Diluted
|
$
|
0.54
|
$
|
0.22
|
$
|
0.58
|
|||||||||||
Weighted average common shares outstanding: (4)
|
|||||||||||||||||
Basic
|
2,833
|
2,445
|
4,201
|
||||||||||||||
Diluted
|
2,869
|
2,474
|
4,238
|
For the Year Ended December 31, 2015 (1)
|
|||||||||||||||||
(Dollars in thousands, Except Per Share Data)
|
|||||||||||||||||
DNB
Historical
|
ERB
Historical
|
Pro Forma Adjustments
|
Pro Forma
Combined
|
||||||||||||||
Interest Income:
|
|||||||||||||||||
Interest and fees on loans
|
$
|
20,082
|
$
|
13,178
|
$
|
757
|
|
(2) |
$
|
34,017
|
|||||||
Interest and dividends on investment securities
|
4,354
|
272
|
4,626
|
||||||||||||||
Interest on cash and cash equivalents
|
42
|
57
|
99
|
||||||||||||||
Total interest and dividend income
|
24,478
|
13,507
|
757
|
|
38,742
|
||||||||||||
Interest Expense:
|
|||||||||||||||||
Deposits
|
1,165
|
1,708
|
(180
|
)
|
(2) |
2,693
|
|||||||||||
Borrowings
|
1,547
|
798
|
(90
|
)
|
(2) |
2,255
|
|||||||||||
Total interest expense
|
2,712
|
2,506
|
(270
|
)
|
4,948
|
||||||||||||
Net interest income
|
21,766
|
11,001
|
1,027
|
33,794
|
|||||||||||||
Provision for credit losses
|
1,105
|
408
|
1,513
|
||||||||||||||
Net interest income after provision for credit losses
|
20,661
|
10,593
|
1,027
|
32,281
|
|||||||||||||
Non-interest Income:
(3)
|
|||||||||||||||||
Service charges and other fees
|
2,443
|
333
|
2,776
|
||||||||||||||
Wealth management
|
1,485
|
-
|
1,485
|
||||||||||||||
Mortgage banking
|
171
|
118
|
289
|
||||||||||||||
Increase in cash surrender value of BOLI
|
228
|
-
|
228
|
||||||||||||||
Gain on sale of investment securities, net
|
78
|
-
|
78
|
||||||||||||||
Gain on sale of loans
|
484
|
105
|
589
|
||||||||||||||
Gains from insurance proceeds
|
120
|
-
|
120
|
||||||||||||||
Total non-interest income
|
5,009
|
556
|
5,565
|
||||||||||||||
Non-interest Expense:
|
|||||||||||||||||
Salaries and employee benefits
|
10,551
|
4,161
|
|
14,712
|
|||||||||||||
Occupancy
|
3,158
|
724
|
3,882
|
||||||||||||||
Professional and consulting
|
1,185
|
538
|
1,723
|
||||||||||||||
Advertising and marketing
|
631
|
391
|
1,022
|
||||||||||||||
FDIC insurance
|
497
|
177
|
674
|
||||||||||||||
PA shares tax
|
602
|
-
|
602
|
||||||||||||||
Telecommunications
|
245
|
127
|
372
|
||||||||||||||
Loss on sale or write down of OREO, net
|
134
|
-
|
134
|
||||||||||||||
Amortization of Core Deposit Intangible
|
16
|
-
|
366
|
(2) |
382
|
||||||||||||
Due diligence and merger-related expenses
|
-
|
-
|
-
|
||||||||||||||
Other expenses
|
2,010
|
1,656
|
3,666
|
||||||||||||||
Total non-interest expense
|
19,029
|
7,774
|
366
|
(3) |
27,169
|
||||||||||||
Income (loss)before income tax expense
|
6,641
|
3,375
|
661
|
|
10,677
|
||||||||||||
Income tax expense
|
1,503
|
1,162
|
225
|
|
(5) |
2,890
|
|||||||||||
Net income
|
$
|
5,138
|
$
|
2,213
|
$
|
436
|
|
$
|
7,787
|
||||||||
Preferred stock dividends and accretion of discount
|
50
|
-
|
50
|
||||||||||||||
Net income available to common shareholders
|
$
|
5,088
|
$
|
2,213
|
$
|
436
|
|
$
|
7,737
|
||||||||
Earnings per common share:
(4)
|
|||||||||||||||||
Basic
|
$
|
1.82
|
$
|
0.92
|
$
|
1.88
|
|||||||||||
Diluted
|
$
|
1.79
|
$
|
0.91
|
$
|
1.84
|
|||||||||||
Weighted average common shares outstanding: (4)
|
|||||||||||||||||
Basic
|
2,802
|
2,394
|
4,120
|
||||||||||||||
Diluted
|
2,847
|
2,423
|
4,195
|
(1) Assumes that the merger was completed as of the beginning of the period presented utilizing the acquisition method of accounting. Estimated fair value adjustments for investment securities, loans, core deposit intangible, time deposits and borrowed funds were determined by the management of DNB and of ERB.
|
(2) The resulting premiums and discounts for purposes of the unaudited combined condensed consolidated pro forma financial data, are being amortized and accreted into income over the estimated remaining lives of the respective assets and liabilities using the level yield method. The estimated weighted average remaining useful lives of loans, time deposits and FHLB advances is 4 years and the weighted average remaining useful life of the core deposit intangible is 10 years.
|
(4) Basic and diluted weighted average common shares outstanding were determined by adding the number of shares issuable to ERB's stockholders to DNB's historical weighted average basic and diluted outstanding common shares. The stock consideration paid to ERB's stockholders consists of the issuance of 1,368,611 shares of DNB's common stock based upon the fixed exchange rate of 0.6562 applied to 2,085,662 of the 2,444,911 shares of ERB common stock outstanding. The share amounts above do not reflect the impact related to the payout of 250,000 existing in-the-money stock options owned by directors and employees of ERB. The anticipated payout of these options totals $1,915,000.
|
(5) Reflects the tax impact of the pro forma acquisition adjustments at DNB's statutory income tax rate of 34%.
|
(6) Represents elimination of the actual, out of pocket, due diligence and merger-related expenses totaling $363,000, primarily professional fees incurred in the first quarter of 2016 by DNB totaling $188,000 and $175,000 for ERB.
|
|||||||||
•
|
changes in laws and regulations affecting banks or thrift institutions or their holding companies generally, or interpretations thereof by courts or governmental entities, if such changes do not have a disproportionate impact on the affected company;
|
|
•
|
changes in GAAP or regulatory accounting principles generally applicable to financial institutions and their holding companies, if such changes do not have a disproportionate impact on the affected company;
|
|
•
|
actions and omissions of DNB or ERB with the prior written consent of the other party;
|
|
•
|
changes or effects from the announcement of the merger agreement and the transactions contemplated thereby, and compliance by the parties with the merger agreement on the business, financial condition or results of operations of the parties;
|
•
|
changes in national or international political or social conditions including the engagement by the United States in hostilities, the occurrence of any military or terrorist attack upon or within the United States, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, if such changes do not have a disproportionate impact on the affected company;
|
|
•
|
changes in economic, financial market, or geographic conditions in general, including changes in economic or financial markets or changes in interest rates; if such changes do not have a disproportionate impact on the affected company;
|
|
•
|
any legal action asserted or other actions initiated by any ERB or DNB shareholder arising out of or related to this Agreement; and
|
|
•
|
any failure, in and of itself, of DNB or ERB to meet any internal projections, forecasts or revenue or earnings projections.
|
•
|
the financial condition and cash flows of the borrowers and/or the projects being financed;
|
|
•
|
the changes and uncertainties as to the future value of the collateral, in the case of collateralized loans;
|
|
•
|
the duration of the loans in the portfolio;
|
|
•
|
the credit history of the particular borrowers; and
|
|
•
|
changes in economic and industry conditions.
|
•
|
continue to implement and improve its processes and systems, including credit underwriting, financial, accounting and enterprise risk management;
|
|
•
|
comply with an increasing number of new laws, rules and regulations governing its business, and changes to existing laws, rules and regulations;
|
|
•
|
scale its information technology systems; and
|
|
•
|
maintain appropriate staffing levels.
|
•
|
the time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, including the diversion of management resources from the operation of DNB's existing business;
|
|
•
|
the time and expense necessary to integrate the operations and personnel of the acquired company; and
|
|
•
|
difficulties relating to the conversion of operational, financial, accounting and customer data of the acquired company onto its systems.
|
•
|
changes to regulatory capital requirements;
|
|
•
|
exclusion of hybrid securities, including trust preferred securities, issued on or after May 19, 2010 from Tier 1 capital;
|
|
•
|
creation of new government regulatory agencies, such as the Financial Stability Oversight Council and the Consumer Financial Protection Bureau;
|
|
•
|
potential limitations on federal preemption;
|
|
•
|
changes to deposit insurance assessments;
|
|
•
|
regulation of debit interchange fees DNB earns;
|
|
•
|
changes in retail banking regulations, including potential limitations on certain fees DNB may charge; and
|
|
•
|
changes in regulation of consumer mortgage loan origination and risk retention.
|
•
|
DNB's financial condition, performance, creditworthiness and prospects;
|
|
•
|
DNB's past and future dividend practice;
|
|
•
|
operating results that vary from the expectations of management, securities analysts and investors;
|
|
•
|
quarterly variations in DNB's operating results or in the quality of DNB's assets;
|
|
•
|
operating results and securities price performance of companies that investors believe are comparable to us;
|
|
•
|
the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally;
|
|
•
|
future sales of DNB's equity or equity-related securities; and
|
|
•
|
changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, stock, commodity or real estate valuations or volatility and other geopolitical, regulatory or judicial events.
|
•
|
the ability to obtain regulatory approvals and satisfy other closing conditions to the merger, including approval by shareholders of DNB and ERB;
|
|
•
|
delay in closing the merger;
|
|
•
|
difficulties and delays in integrating the ERB business or fully realizing anticipated cost savings and other benefits of the merger;
|
|
•
|
business disruptions following the merger;
|
|
•
|
revenues following the merger may be lower than expected;
|
|
•
|
deposit attrition, operating costs, customer loss and business disruption following the merger, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected;
|
|
•
|
the strength of the United States economy in general and the strength of the local economies in which DNB and ERB conduct their operations;
|
|
•
|
the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
|
|
•
|
the downgrade, and any future downgrades, in the credit rating of the U.S. Government and federal agencies;
|
|
•
|
inflation, interest rate, market and monetary fluctuations;
|
|
•
|
the timely development of and acceptance of new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services;
|
|
•
|
the willingness of users to substitute competitors' products and services for DNB's products and services;
|
|
•
|
the success of DNB in gaining regulatory approval of its products and services, when required;
|
|
•
|
the impact of changes in laws and regulations applicable to financial institutions (including laws concerning taxes, banking, securities and insurance) ;
|
|
•
|
technological changes;
|
•
|
additional acquisitions;
|
|
•
|
changes in consumer spending and saving habits;
|
|
•
|
the nature, extent, and timing of governmental actions and reforms, including the implementation of Basel III, which may be changed unilaterally and retroactively by legislative or regulatory actions; and
|
|
•
|
the success of DNB at managing the risks involved in the foregoing.
|
•
|
each person, group or company that, to our knowledge, beneficially owns more than 5% of the outstanding shares of DNB common stock; and
|
|
•
|
each of DNB's directors and named executive officers; and
|
|
•
|
all of DNB's executive officers and directors as a group.
|
Amount and Nature of Beneficial Ownership
|
||||||||||||||||
Name of
Beneficial Owner(5) |
Total
Beneficial Ownership (1,2,3) |
Sole
Voting and Investment Power (2) |
Shared
Voting and Investment Power (3) |
Percent
of Class (4) |
||||||||||||
James R. Biery
|
11,415
|
11,415
|
—
|
0.40
|
%
|
|||||||||||
Thomas A. Fillippo
|
44,897
|
25,679
|
19,218
|
1.53
|
%
|
|||||||||||
Gerard F. Griesser
|
22,699
|
22,699
|
—
|
0.79
|
%
|
|||||||||||
William J. Hieb
|
56,191
|
53,884
|
2,307
|
1.92
|
%
|
|||||||||||
Mildred C. Joyner
|
19,716
|
19,716
|
—
|
0.67
|
%
|
|||||||||||
James J. Koegel
|
57,063
|
24,382
|
32,681
|
1.95
|
%
|
|||||||||||
Mary D. Latoff
|
44
|
44
|
—
|
0.00
|
%
|
|||||||||||
Gerald F. Sopp
|
29,615
|
29,615
|
—
|
1.01
|
%
|
|||||||||||
James H. Thornton
|
29,350
|
29,350
|
—
|
1.00
|
%
|
|||||||||||
DNB First Investment Management & Trust
|
20,025
|
9,295
|
10,730
|
0.70
|
%
|
|||||||||||
DNB First 401(k) Plan
|
140,186
|
140,186
|
—
|
4.92
|
%
|
|||||||||||
Directors & Executive Officers
as a group (12 Persons)
|
541,226
|
487,020
|
54,206
|
18.48
|
%
|
|||||||||||
The Estate of William S. Latoff (6)
|
245,625
|
__
|
245,625
|
8.62
|
%
|
|||||||||||
C/O Vincent Donohue, Esquire
24 E. Market Street, P. O. Box 565
West Chester, PA 19381
|
||||||||||||||||
Elizabeth Park Capital Advisors, Ltd.
|
164,978
|
164,978
|
—
|
5.79
|
%
|
|||||||||||
29525 Chagrin Blvd., Suite 318, Pepper Pike, OH 44122
|
||||||||||||||||
Wellington Management Co., LLP
|
278,181
|
—
|
278,181
|
9.76
|
%
|
|||||||||||
280 Congress Street, Boston, MA 02210
|
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership as of ____ __, 2016(1)(2)
|
Percent of
Common Stock
|
||||||
George W. Connell
3 Radnor Corporate Center
Suite 450
Radnor, Pennsylvania 19087
|
223,750
|
9.2
|
%
|
|||||
Directors and Certain Officers:
|
||||||||
Jerry L. Cotlov
|
103,910
|
(3)
|
4.2
|
|||||
James C. Hellauer
|
26,125
|
1.1
|
||||||
Christopher P. McGill, Jr.
|
132,375
|
(4)
|
5.3
|
|||||
John F. McGill, Jr.
|
180,194
|
(5)
|
7.3
|
|||||
John E. McGovern
|
26,813
|
(6)
|
1.1
|
|||||
Charles A. Murray
|
208,310
|
(7)
|
8.5
|
|||||
G. Daniel O'Donnell
|
55,975
|
(8)
|
2.3
|
|||||
Charles T. Field
|
--
|
--
|
||||||
Directors and executive officers of ERB as a group (eight persons)
|
773,702
|
27.9
|
%
|
(1)
|
Pursuant to rules promulgated by the Securities and Exchange Commission (the "SEC") under the Exchange Act, a person or entity is considered to beneficially own shares of ERB common stock if the person or entity has or shares (i) voting power, which includes the power to vote or to direct the voting of the shares, or (ii) investment power, which includes the power to dispose or direct the disposition of the shares. Unless otherwise indicated, a person has sole voting power and sole investment power with respect to the indicated shares. Under applicable regulations, a person is deemed to have beneficial ownership of any shares of ERB common stock which may be acquired within 60 days of the ERB record date pursuant to the exercise of outstanding stock options or warrants or the conversion of shares of convertible preferred stock to ERB common stock. Shares of ERB common stock which are subject to exercisable stock options, warrants or convertible preferred stock are deemed to be outstanding for the purpose of computing the percentage of outstanding ERB common stock owned by such person or group but not deemed outstanding for the purpose of computing the percentage of ERB common stock owned by any other person or group
|
|
(2)
|
The indicated shares include stock options which are exercisable within 60 days of the ERB record date as follows:
|
Number of Stock Options
|
||||
Jerry L. Cotlov
|
50,000
|
|||
James C. Hellauer
|
12,500
|
|||
Christopher P. McGill, Jr.
|
65,000
|
|||
John F. McGill, Jr.
|
25,000
|
|||
John E. McGovern
|
12,500
|
|||
Charles A. Murray
|
12,500
|
|||
G. Daniel O'Donnell
|
12,500
|
|||
Charles T. Field
|
--
|
|||
All directors and executive officers as a group
|
190,000
|
(3)
|
Includes 19,700 shares of ERB common stock held in an individual retirement account ("IRA") for the benefit of Mr. Cotlov.
|
|
(4)
|
Includes 50 shares held by Mr. McGill as custodian for his son and 63,125 shares held in Mr. McGill's IRA.
|
|
(5)
|
Includes 100,119 shares of ERB common stock held in Mr. McGill's IRAs and 2,625 shares in the John F. McGill trust for which Mr. McGill is a trustee.
|
|
(6)
|
Includes 1,050 shares of ERB common stock held in an IRA by Mr. McGovern's spouse and 13,263 shares held in Mr. McGovern's IRA.
|
|
(7)
|
Includes 65,810 shares of ERB common stock held in trust for the benefit of Mr. Murray's children and 25,000 shares held in IRA's for Mr. Murray.
|
|
(8)
|
Includes 28,475 shares held by Penn Avenue Investments LLC, a limited liability company controlled by Mr. O'Donnell.
|
•
|
each of DNB's, ERB's, and the combined company's business, operations, financial condition, asset quality, earnings, and prospects generally;
|
|
•
|
the asset size of each of DNB and ERB, which would give the resulting combined company over $1.0 billion in assets;
|
|
•
|
the opportunity to further expand DNB's business generally in the southeastern Pennsylvania market in a relatively cost effective manner, including the complementary geographic locations of the DNB and ERB branch networks;
|
|
•
|
the opportunity to further expand DNB's Wealth Management operations through cross-selling to ERB customers;
|
|
•
|
the opportunity to enhance DNB's ability to generate non interest income through ERB's mortgage and SBA lending operations, which complement DNB's current mortgage and SBA operations;
|
|
•
|
the likelihood of a successful integration of ERB's business, operations and workforce with those of DNB and of successful operation of the combined company despite the challenges of such integration;
|
|
•
|
the likelihood that the transaction will provide value to DNB's shareholders, and in particular, management's belief that the transaction will be accretive to earnings per share, excluding merger costs, in the 12 month period following completion of the merger;
|
|
•
|
the participation of three current ERB directors and two current senior executive officers of ERB in the combined company, which enhances the likelihood that the strategic benefits that DNB expects to achieve as a result of the merger will be realized;
|
|
•
|
the fact that DNB's shareholders will have a chance to vote on the stock issuance in connection with the merger;
|
|
•
|
its review with its legal advisor, Stradley Ronon Stevens & Young and its financial advisor, Ambassador Financial Group, of the financial and other terms of the merger agreement, including the tax treatment, deal protection provisions and termination provisions; and
|
|
•
|
the oral opinion of Ambassador Financial Group, subsequently confirmed in writing, as to the fairness to the shareholders of DNB from a financial point of view, of DNB's acquisition of all of the outstanding and common stock of ERB, in exchange for DNB's common stock, which is fairly valued, and cash, as more fully described below in the section entitled "—Opinion DNB's Financial Advisor."
|
•
|
the potential risks associated with achieving the anticipated benefits of the merger, including business synergies and cost savings;
|
|
•
|
the possibility of encountering difficulties in successfully integrating ERB's business, operations, and workforce with those of DNB;
|
|
•
|
the diversion of management attention and resources from the operation of DNB's business towards the completion of the merger;
|
|
•
|
the costs that DNB will incur in connection with the merger even if it is not consummated; and
|
|
•
|
the regulatory and other approvals required in connection with the merger and the risk that such regulatory approvals will not be received in a timely manner or may impose unacceptable conditions.
|
•
|
Reviewed and analyzed the merger agreement.
|
|
•
|
Reviewed DNB's audited consolidated statements of financial condition as of December 31, 2015 and 2014 and related audited consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in stockholders' equity and consolidated statements of cash flows for the years ending December 31, 2015 and 2014.
|
|
•
|
Reviewed ERB's audited consolidated balance sheets as of December 31, 2015 and 2014 and related audited consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in shareholders' equity and consolidated statements of cash flows for the years ending December 31, 2015 and 2014.
|
|
•
|
Reviewed ERB and DNB's banking subsidiary's quarterly call reports for March 31, 2015, June 30, 2015, September 30, 2015, and December 31, 2015.
|
|
•
|
Reviewed and analyzed other publicly available information regarding ERB and DNB.
|
|
•
|
Reviewed certain non-public information, including business plans, financial projections and third party loan reviews regarding ERB.
|
|
•
|
Reviewed certain non-public information, including financial projections regarding DNB.
|
|
•
|
Reviewed with senior management of DNB, the pro forma financial impact of the merger on DNB, based on assumptions relating to transaction expenses, purchase accounting adjustments, cost savings and other synergies.
|
|
•
|
Reviewed recently reported stock prices and trading activity of DNB common stock.
|
|
•
|
Discussed past and current operations, financial condition and future prospects of each company with senior executives of DNB and ERB.
|
|
•
|
Reviewed and analyzed certain publicly available financial, transaction and stock market data of banking companies that Ambassador selected as relevant to its analysis.
|
|
•
|
Conducted other analyses and reviewed other information Ambassador considered necessary or appropriate.
|
|
•
|
Incorporated its assessment of the overall economic environment and market conditions, as well as its experience in mergers and acquisitions, bank stock valuations and other transactions.
|
Aggregate total deal consideration/last twelve months earnings
|
22.1X
|
Aggregate total deal consideration/tangible book value
|
161%
|
•
|
An analysis of comparable transactions nationwide and in the region.
|
|
•
|
A discounted dividend analysis with estimated cost savings.
|
|
•
|
Other analyses as deemed appropriate.
|
•
|
Acquisition metrics of 481 transactions in the United States announced from January 1, 2012 through April 1, 2016 with deal values in excess of $10 million, excluding mergers of equals ("Nationwide Pricing –Ranked by Announced Price-to-Tangible Book").
|
|
•
|
Acquisition metrics of 8 transactions in which the selling bank was based in Southeast Pennsylvania metropolitan area and transactions announced from January 1, 2014 through April 1, 2016, excluding mergers of mutual institutions and Section 363 bankruptcy transactions. ("Southeast Pennsylvania Transaction Pricing").
|
Deal Value/
|
Buyer's
|
Seller's
|
Seller's
|
Seller's
|
||||||||||||||||||||||||
Number
|
LTM
|
Tangible
|
Assets
|
Assets
|
LTM
|
NPA's
(2)
/
|
||||||||||||||||||||||
Year
|
of Deals
|
Earnings
|
Equity
|
in millions
|
in millions
|
ROE
|
Assets
|
|||||||||||||||||||||
Highest 3rd
|
||||||||||||||||||||||||||||
2016
(3)
|
9
|
18.5
|
X
|
174
|
%
|
$
|
2,605
|
$
|
732
|
7.93
|
%
|
.20
|
%
|
|||||||||||||||
2015
|
46
|
23.6
|
184
|
6,018
|
616
|
8.15
|
.95
|
|||||||||||||||||||||
2014
|
44
|
19.5
|
193
|
4,907
|
857
|
8.97
|
1.41
|
|||||||||||||||||||||
2013
|
32
|
16.7
|
175
|
5,721
|
757
|
8.73
|
1.41
|
|||||||||||||||||||||
2012
|
31
|
19.0
|
168
|
3,926
|
437
|
6.69
|
1.69
|
|||||||||||||||||||||
Middle 3
rd
|
||||||||||||||||||||||||||||
2016
(3)
|
9
|
30.1
|
X
|
130
|
%
|
$
|
1,978
|
$
|
261
|
5.16
|
%
|
1.54
|
%
|
|||||||||||||||
2015
|
45
|
22.8
|
143
|
2,852
|
385
|
6.13
|
1.35
|
|||||||||||||||||||||
2014
|
44
|
23.3
|
147
|
2,815
|
322
|
6.45
|
1.40
|
|||||||||||||||||||||
2013
|
32
|
19.7
|
130
|
1,781
|
242
|
6.05
|
1.41
|
|||||||||||||||||||||
2012
|
30
|
18.5
|
122
|
1,395
|
239
|
4.02
|
1.80
|
|||||||||||||||||||||
Lowest 3
rd
|
||||||||||||||||||||||||||||
2016
(3)
|
9
|
18.2
|
X
|
112
|
%
|
$
|
751
|
$
|
153
|
5.87
|
%
|
2.97
|
%
|
|||||||||||||||
2015
|
45
|
24.3
|
118
|
953
|
207
|
3.47
|
1.66
|
|||||||||||||||||||||
2014
|
43
|
24.2
|
112
|
1,301
|
228
|
3.74
|
2.38
|
|||||||||||||||||||||
2013
|
32
|
20.4
|
96
|
2,094
|
262
|
2.69
|
4.98
|
|||||||||||||||||||||
2012
|
30
|
15.0
|
85
|
2,165
|
403
|
(.15
|
)
|
5.11
|
||||||||||||||||||||
DNB/ERB
|
-
|
22.1
|
X
|
161
|
%
|
$
|
749
|
$
|
331
|
7.73
|
%
|
.45
|
%
|
Price/
|
Seller
|
|||||||||||||||||||||||||||||||
Deal
|
Common
|
Tang.
|
Return
|
|||||||||||||||||||||||||||||
Value
|
Times
|
Tangible
|
Equity/
|
on Avg.
|
NPA's
(2)
/
|
|||||||||||||||||||||||||||
(in mill.)
|
Earnings
|
Book
|
Assets
|
Deposits
|
Assets
|
Equity
|
Assets
|
|||||||||||||||||||||||||
Acquirer/Seller
|
||||||||||||||||||||||||||||||||
Univest/Valley Green
|
$
|
78
|
15.3
|
X
|
234
|
%
|
21.0
|
%
|
23.2
|
%
|
8.97
|
%
|
16.58
|
%
|
.36
|
%
|
||||||||||||||||
WSFS/Penn Liberty
|
102
|
31.8
|
199
|
18.7
|
18.2
|
9.96
|
5.07
|
1.28
|
||||||||||||||||||||||||
Bryn Mawr/Continental
|
109
|
42.3
|
175
|
16.6
|
23.6
|
8.99
|
4.20
|
1.49
|
||||||||||||||||||||||||
Beneficial/Conestoga
|
100
|
24.5
|
160
|
13.9
|
18.7
|
8.70
|
6.75
|
.92
|
||||||||||||||||||||||||
National Penn/TF Financial
|
142
|
21.0
|
148
|
16.7
|
20.5
|
10.96
|
7.37
|
1.20
|
||||||||||||||||||||||||
WSFS/Alliance
|
93
|
36.6
|
136
|
22.2
|
27.1
|
15.79
|
3.82
|
2.24
|
||||||||||||||||||||||||
Univest/Fox Chase
|
244
|
24.8
|
134
|
22.2
|
34.0
|
16.02
|
5.62
|
1.11
|
||||||||||||||||||||||||
ESSA/Eagle National
|
25
|
-
|
112
|
14.4
|
17.0
|
14.22
|
1.02
|
1.66
|
||||||||||||||||||||||||
Median (8 transactions)
|
$
|
101
|
24.8
|
X
|
154
|
%
|
17.7
|
%
|
21.9
|
%
|
10.46
|
%
|
5.35
|
%
|
1.24
|
%
|
||||||||||||||||
DNB/ERB
|
-
|
22.1
|
X
|
161
|
%
|
15.8
|
X
|
21.0
|
%
|
9.78
|
%
|
7.73
|
%
|
.45
|
%
|
•
|
The financial condition and performance of DNB.
|
|
•
|
Comparisons to comparable institutions.
|
|
•
|
A historical trading analysis of DNB common stock.
|
|
•
|
A discounted dividend analysis.
|
|
•
|
Other analyses as deemed appropriate
|
Assets
(1)
|
||||||||||
Institution
|
In Millions
|
City, State
|
Ticker
|
Exchange
|
||||||
1st Constitution Bancorp
|
$
|
968
|
Cranbury, NJ
|
FCCY
|
NASDAQ
|
|||||
Bancorp of New Jersey, Inc.
|
803
|
Fort Lee, NJ
|
BKJ
|
NYSE MKT
|
||||||
Bank of the James Financial Group, Inc.
|
527
|
Lynchburg, VA
|
BOTJ
|
NASDAQ
|
||||||
CB Financial Services, Inc.
|
831
|
Carmichaels, PA
|
CBFV
|
NASDAQ
|
||||||
Elmira Savings Bank
|
561
|
Elmira, NY
|
ESBK
|
NASDAQ
|
||||||
Embassy Bancorp, Inc.
|
804
|
Bethlehem, PA
|
EMYB
|
OTCQX
|
||||||
Emclaire Financial Corp.
|
601
|
Emlenton, PA
|
EMCF
|
NASDAQ
|
||||||
Harleysville Savings Financial Corporation
|
774
|
Harleysville, PA
|
HARL
|
OTCQX
|
||||||
John Marshall Bank
|
929
|
Reston, VA
|
JMSB
|
OTCQB
|
||||||
Mid Penn Bancorp, Inc.
|
932
|
Millersburg, PA
|
MPB
|
NASDAQ
|
||||||
Stewardship Financial Corporation
|
718
|
Midland Park, NJ
|
SSFN
|
NASDAQ
|
||||||
Sussex Bancorp
|
685
|
Rockaway, NJ
|
SBBX
|
NASDAQ
|
||||||
Two River Bancorp
|
864
|
Tinton Falls, NJ
|
TRCB
|
NASDAQ
|
||||||
DNB
|
$
|
749
|
Downingtown, PA
|
DNBF
|
NASDAQ
|
Tangible
|
Tangible
|
Return
|
Return
|
|||||||||||||||||||||
Equity/
|
Comm. Eq./
|
on
|
on
|
|||||||||||||||||||||
Assets
|
Tang.
|
Tang.
|
NPAs
(2)
/
|
Average
|
Average
|
|||||||||||||||||||
Institution
|
In Millions
|
Assets
|
Assets
|
Assets
|
Assets
|
Equity
|
||||||||||||||||||
Minimum
|
$
|
527
|
6.63
|
%
|
5.95
|
%
|
.48
|
%
|
.59
|
%
|
6.59
|
%
|
||||||||||||
25
th
Percentile
|
685
|
7.72
|
7.50
|
.83
|
.65
|
7.44
|
||||||||||||||||||
Median
|
803
|
8.47
|
8.47
|
1.06
|
.74
|
7.89
|
||||||||||||||||||
75
th
Percentile
|
864
|
9.11
|
9.11
|
1.49
|
.89
|
9.49
|
||||||||||||||||||
Maximum
|
968
|
11.77
|
11.77
|
1.74
|
1.04
|
10.89
|
||||||||||||||||||
DNB
|
$
|
749
|
7.40
|
%
|
7.40
|
%
|
1.02
|
%
|
.71
|
%
|
8.93
|
%
|
Price/
|
Shares
|
|||||||||||||||||||||||||||
Stock
|
LTM
|
MRQ
|
Price/
|
Price/
|
Dividend
|
Traded
|
||||||||||||||||||||||
Institution
|
Price
|
Earnings
|
Earnings
|
Tang. Book
|
Assets
|
Yield
|
Daily*
|
|||||||||||||||||||||
Minimum
|
-
|
9.3
|
X
|
8.5
|
X
|
74
|
%
|
4.9
|
%
|
0.00
|
%
|
1,177
|
||||||||||||||||
25
th
Percentile
|
-
|
10.7
|
11.3
|
104
|
8.4
|
0.92
|
1,879
|
|||||||||||||||||||||
Median
|
-
|
11.7
|
13.7
|
110
|
9.1
|
0.95
|
2,515
|
|||||||||||||||||||||
75
th
Percentile
|
-
|
15.1
|
15.3
|
116
|
10.0
|
0.95
|
4,493
|
|||||||||||||||||||||
Maximum
|
-
|
19.4
|
19.3
|
150
|
17.8
|
5.01
|
8,106
|
|||||||||||||||||||||
DNB
|
$
|
29.50
|
16.5
|
X
|
15.4
|
X
|
150
|
%
|
11.1
|
%
|
0.95
|
%
|
5,573
|
Weighted
|
||||||||||||||||||||
Average
|
Volume
|
Estimated
|
WASP/
|
WASP/
|
||||||||||||||||
Stock Price
|
of Shares
|
Total Amount
|
LTM
|
Tang.
|
||||||||||||||||
Quarter
|
("WASP")
|
Traded
|
Traded
(1)
|
Earnings
(2)
|
Equity
|
|||||||||||||||
April 1, 2016
(3)
|
$
|
29.50
|
2,611
|
$
|
77,025
|
16.5
|
X
|
151
|
%
|
|||||||||||
1st Quarter 2016
|
28.69
|
319,584
|
$
|
9,169,356
|
16.0
|
X
|
147
|
%
|
||||||||||||
4th Quarter 2015
|
27.90
|
73,143
|
2,040,342
|
15.6
|
142
|
|||||||||||||||
3rd Quarter 2015
|
26.27
|
512,023
|
13,452,502
|
14.6
|
134
|
|||||||||||||||
2nd Quarter 2015
|
26.30
|
498,046
|
13,096,346
|
14.7
|
139
|
|||||||||||||||
1st Quarter 2015
|
22.83
|
98,208
|
2,241,758
|
13.1
|
121
|
Percentage Contribution
|
||||||||||||||||||||
DNB
|
ERB
|
Combined
|
DNB
|
ERB
|
||||||||||||||||
Ownership
|
||||||||||||||||||||
Shareholder ownership (includes
|
||||||||||||||||||||
$6.5 million in cash consideration)
|
-
|
-
|
4,180,611
|
67.3
|
%
|
32.7
|
%
|
|||||||||||||
Balance Sheet ($ in millions)
(2)
|
||||||||||||||||||||
Assets
|
$
|
749
|
$
|
311
|
$
|
1,060
|
70.7
|
%
|
29.3
|
%
|
||||||||||
Gross loans – held for investment
|
482
|
282
|
764
|
63.1
|
36.9
|
|||||||||||||||
Deposits
|
606
|
234
|
840
|
72.1
|
27.9
|
|||||||||||||||
Tangible common equity
|
55
|
30
|
85
|
64.4
|
35.6
|
|||||||||||||||
Income statement ($000)
(3)
|
||||||||||||||||||||
Net income
|
$
|
5,491
|
$
|
2,213
|
$
|
7,301
|
69.7
|
%
|
30.3
|
%
|
||||||||||
- with pre-tax cost savings
|
||||||||||||||||||||
of $3.1 million
(4)
|
$
|
5,491
|
$
|
4,259
|
$
|
9,750
|
56.3
|
%
|
43.7
|
%
|
•
|
The consideration being offered to ERB's shareholders in relation to the market value, book value per share, earnings per share and projected earnings per share of ERB;
|
|
•
|
The results that could be expected to be obtained by ERB if it continued to operate independently and the potential future value of ERB stock compared to the value of the merger consideration offered by DNB as well as the potential future trading value of the DNB common stock;
|
|
•
|
The current and prospective environment in which ERB operates, including national, regional and local economic conditions, the competitive environment for financial institutions, the increased regulatory burdens on financial institutions, and the uncertainties in the regulatory climate going forward;
|
|
•
|
The lack of any trading market for ERB stock;
|
|
•
|
The form of merger consideration offered by DNB, including the opportunity for ERB shareholders to receive shares of DNB common stock on a tax-free basis for their shares of ERB stock;
|
|
•
|
The fact that the merger agreement provides that ERB may terminate the merger agreement if the average closing price of DNB common stock is less than $ 23.3280 and DNB's common stock underperforms the Nasdaq Bank index by more than 20% during a specified 20 trading day period prior to the effective date of the merger, unless DNB elects to make a compensating adjustment to the exchange ratio;
|
|
•
|
The scale, scope, strength and diversity of operations, product lines and delivery systems that could be achieved by combining ERB with DNB;
|
|
•
|
The complementary geographic locations of the ERB and DNB branch networks in southeastern Pennsylvania;
|
|
•
|
DNB's asset size and capital position, which would give the resulting institution over $1.0 billion in assets;
|
|
•
|
The earnings prospects of the resulting institution;
|
|
•
|
The additional products offered by DNB to its customers, particularly investment management services, brokerage and insurance services, and the ability of the resulting institution to provide comprehensive financial services to its customers;
|
|
•
|
ERB's and DNB's shared community banking philosophies; and
|
|
•
|
The presentation by Griffin Financial Group, ERB's financial advisor, as to the fairness of the merger consideration, from a financial point of view, to ERB's shareholders. In this regard, ERB's board of directors has received from Griffin Financial Group a written opinion dated April 4, 2016 that, as of such date, the merger consideration was fair to ERB's shareholders from a financial point of view. The opinion is attached as Annex __ to this joint proxy statement/prospectus. For a summary of the presentation of Griffin Financial Group, see "Opinion of ERB's Financial Advisor" below.
|
|
Other factors considered by ERB's board of directors included:
|
•
|
The terms and conditions of the merger agreement, including the parties' respective representations, warranties, covenants, and other agreements, the conditions to closing, a provision which permits ERB's board of directors, in the exercise of its fiduciary duties, under certain conditions, to furnish information to, or engage in negotiations with, a third party which has submitted an unsolicited proposal to acquire ERB and a provision providing for ERB's payment of a termination fee to DNB if the merger agreement is terminated under certain circumstances and the effect such termination fee could have on a third party's decision to propose a merger or similar transaction to ERB at a higher price than that contemplated by the merger with DNB;
|
|
•
|
The reports of ERB's management and the financial presentation by Griffin Financial Group to ERB's board of directors concerning the operations, financial condition and prospects of DNB and the expected financial impact of the merger on the combined company, including pro forma assets, earnings, deposits and capital ratios;
|
|
•
|
The proposed board arrangements of the combined company, including the inclusion of three of ERB's directors on DNB's board;
|
|
•
|
The addition of two of ERB's executive officers to DNB's senior management team upon consummation of the merger;
|
|
•
|
The likelihood of successful integration and the successful operation of the combined company;
|
|
•
|
The likelihood that the regulatory approvals needed to complete the transaction will be obtained;
|
|
•
|
The potential cost-saving opportunities;
|
|
•
|
The effects of the merger on ERB's employees, including the prospects for continued employment and the severance and other benefits agreed to be provided to ERB employees; and
|
|
•
|
The review by the ERB board of directors with its legal and financial advisors of the structure of the merger and the financial and other terms of the merger, including the condition that the merger must qualify as a transaction that will permit ERB's shareholders to receive DNB shares in exchange for their ERB shares on a tax-free basis for federal income tax purposes.
|
•
|
The fact that the exchange ratio is fixed, and the value of the consideration to be received by the ERB's shareholders is subject to fluctuation;
|
||||
•
|
The risks and costs to ERB if the merger does not close, including:
|
||||
•
|
the diversion of management and employee attention, potential employee attrition and the effect on customers and business relationships; and
|
||||
•
|
the potential adverse impact on the value of ERB's common stock if the merger agreement was terminated;
|
||||
•
|
The restrictions that the merger agreement imposes on actively soliciting competing bids, and the fact that ERB would be obligated to pay a $1.39 million termination fee to DNB under certain circumstances; and
|
||||
•
|
The fact that ERB will no longer exist as an independent, stand-alone company.
|
•
|
reviewed a draft of the merger agreement;
|
|
•
|
reviewed and discussed with ERB its financial information as of and for the twelve months ended December 31, 2015 and December 31, 2014;
|
|
•
|
reviewed and discussed with DNB its financial information as of and for the twelve months ended December 31, 2015 and December 31, 2014;
|
|
•
|
reviewed and discussed with management of ERB and DNB their respective budgeted balance sheet growth and earnings for 2016 and growth trends for assets, loans, deposits, capital and earnings for future periods;
|
•
|
analyzed and discussed with ERB and DNB the potential strategic implications and operational benefits of the merger estimated by the managements of ERB and DNB;
|
|
•
|
discussed with the management of ERB and DNB matters relating to their respective financial condition, liquidity, net income, asset quality, reserve levels, capital adequacy, regulatory status, stock market valuation (as applicable) and related matters as of such dates and for the periods then ended;
|
|
•
|
reviewed and discussed with ERB certain publicly available and other financial information concerning ERB and the economic and regulatory environments in which it operates;
|
|
•
|
held discussions with certain members of the management of ERB and DNB with respect to certain aspects of the merger, including past and current business operations, regulatory relations, financial condition, dividend and capital policies, opportunities within each of their core operating markets, and other matters as deemed appropriate by Griffin;
|
|
•
|
discussed with management of ERB and DNB their respective forecasts and related assumptions for future growth and their respective estimates of cost savings and transaction costs associated with the merger;
|
|
•
|
compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving whole bank and thrift acquisitions as deemed relevant by Griffin;
|
|
•
|
compared the financial condition and implied valuation of ERB to the financial condition and valuation of certain institutions deemed relevant by Griffin;
|
|
•
|
evaluated, from publicly available sources and discussions with the management of DNB, the capacity of DNB to complete the merger on a timely basis;
|
|
•
|
evaluated and compared DNB's ownership structure, market structure, stock market performance, ownership concentrations, common stock dividend, and trading history of its common stock (which is being used as part of the merger consideration) to certain institutions deemed relevant by Griffin;
|
|
•
|
performed a pro forma transaction analyses combining projected balance sheet and income statement information for ERB and DNB;
|
|
•
|
performed a discounted cash flow analysis, and
|
|
•
|
performed such other financial studies and analyses and considered such other information, including the tenor and results of the process conducted by Griffin among potential acquirers for ERB, as deemed appropriate for the purpose of its opinion.
|
•
|
the representations and warranties of each party in the merger agreement are true and correct;
|
|
•
|
each party to the merger agreement will perform all of the covenants and agreements required to be performed by such party under such agreement in a manner that will not give DNB the ability to terminate the merger agreement or decline to close under the merger agreement;
|
|
•
|
all conditions to the completion of the merger, including required approvals by federal and state banking regulators and by the shareholders of ERB and DNB, will be satisfied in a manner that will not give DNB the ability to terminate the merger agreement or decline to close under the merger agreement;
|
|
•
|
all material governmental, regulatory, stockholder and any other consents and approvals necessary for the completion of the merger will be obtained without any adverse effect to ERB or DNB or to the contemplated benefits of the merger; and
|
|
•
|
the merger will be completed substantially in accordance with the terms set forth in the draft merger agreement provided to Griffin.
|
52-week high (December 21, 2015)
|
$
|
30.00
|
||
52-week low (April 10, 2015)
|
$
|
24.58
|
||
Average daily trading volume during last 52 weeks
|
5,573
|
|||
Price/Last Trailing Twelve Months ("LTM") Earnings per Share ("EPS") (x)
|
16.5
|
|||
Price/Book Value (%)
|
150.1
|
|||
Price/Tangible Book Value ("TBV") (%)
|
150.3
|
|||
Dividend Yield (%)
|
0.95
|
1
st
Constitution Bancorp
|
First Community Corporation
|
Oak Valley Bancorp
|
||
Avidbank Holdings, Inc.
|
First Savings Financial Group, Inc.
|
Two River Bancorp
|
||
CB Financial Services, Inc.
|
Mackinac Financial Corporation
|
Union Bankshares, Inc.
|
||
Cortland Bancorp
|
National Peers
|
||||||||||||
DNB
|
Average
|
Median
|
||||||||||
Branches/Offices
|
12
|
15
|
17
|
|||||||||
Total Assets ($000)
|
748,818
|
774,976
|
788,038
|
|||||||||
Loan Growth during 2015 (%)
|
5.74
|
8.27
|
7.41
|
|||||||||
NPAs/Total Assets (%)
|
1.02
|
1.24
|
1.32
|
|||||||||
ROAA (%)
|
0.69
|
0.84
|
0.77
|
|||||||||
Return on Average Equity ("ROAE") (%)
|
8.72
|
8.45
|
7.57
|
|||||||||
Net Interest Margin (%)
|
3.16
|
3.89
|
3.82
|
|||||||||
Efficiency Ratio (%)
|
68.51
|
66.48
|
67.89
|
|||||||||
Non-Interest Income/Operating Revenue (%)
|
18.10
|
16.89
|
16.92
|
|||||||||
TCE/TA (%)
|
7.40
|
8.98
|
9.05
|
|||||||||
Average Daily Trading Volume (3 months)
|
5,196
|
4,397
|
2,933
|
|||||||||
Institutional Ownership (%)
|
28.1
|
16.8
|
11.8
|
|||||||||
Price/Tangible Book (%)
|
150.3
|
123.6
|
109.6
|
|||||||||
Price/LTM EPS (x)
|
16.5
|
13.7
|
13.8
|
|||||||||
Dividend Yield (%)
|
0.95
|
2.72
|
2.38
|
1
st
Colonial Bancorp, Inc.
|
Bank of Napa, N.A.
|
Poage Bankshares, Inc.
|
||
Americas United Bank
|
Communities First Financial Corporation
|
United American Bank
|
||
Aquesta Financial Holdings, Inc.
|
Greater Hudson Bank
|
National Peers
|
||||||||||||
ERB
|
Average
|
Median
|
||||||||||
Branches/Offices
|
3
|
4
|
4
|
|||||||||
Total Assets ($000)
|
310,742
|
328,488
|
294,457
|
|||||||||
Loan Growth during 2015 (%)
|
12.56
|
22.04
|
16.12
|
|||||||||
NPAs & 90+ PD/Total Assets (%)
|
0.45
|
0.80
|
0.75
|
|||||||||
ROAA (%)
|
0.76
|
0.80
|
0.80
|
|||||||||
ROAE (%)
|
7.73
|
7.98
|
8.05
|
|||||||||
Net Interest Margin (%)
|
3.79
|
3.53
|
3.50
|
|||||||||
Efficiency Ratio (%)
|
67.27
|
73.60
|
72.82
|
|||||||||
Non-Interest Income/Operating Revenue (%)
|
4.46
|
12.34
|
9.85
|
|||||||||
TCE/TA (%)
|
9.78
|
9.63
|
9.69
|
|||||||||
Average Daily Trading Volume (3 months)
|
N/
|
A
|
1,281
|
1,286
|
||||||||
Institutional Ownership (%)
|
N/
|
A
|
9.3
|
3.2
|
||||||||
Price/Tangible Book (%)
|
N/
|
A
|
102.8
|
97.3
|
||||||||
Price/LTM EPS (x)
|
N/
|
A
|
12.9
|
14.3
|
Mid-Atlantic Selected Transactions
|
||
|
|
|
Acquirer
|
|
Acquiree
|
Lakeland Bancorp
|
Harmony Bank
|
|
Bay Bancorp, Inc.
|
Hopkins Bancorp Inc.
|
|
Revere Bank
|
BlueRidge Bank
|
|
Northfield Bancorp Inc.
|
Hopewell Valley Community Bank
|
|
Lakeland Bancorp
|
Pascack Bancorp Inc.
|
|
Citizens Financial Services
|
First National Bank of Frederick
|
|
Howard Bancorp Inc.
|
Patapsco Bancorp Inc.
|
|
WSFS Financial Corp.
|
Alliance Bancorp of Pennsylvania
|
|
Cathay General Bancorp
|
Asia Bancshares Inc.
|
|
Putnam County SB
|
CMS Bancorp Inc.
|
|
Univest Corp. of Pennsylvania
|
Valley Green Bank
|
|
CB Financial Services Inc.
|
FedFirst Financial Corp.
|
|
F.N.B. Corp.
|
OBA Financial Services Inc.
|
|
Salisbury Bancorp Inc.
|
Riverside Bank
|
Nationwide Selected Transactions
|
||
|
|
|
Acquirer
|
|
Acquiree
|
Lakeland Bancorp
|
Harmony Bank
|
|
Seacoast Banking Corp. of Florida
|
Floridian Financial Group Inc.
|
|
Renasant Corp.
|
Key Worth Bank
|
|
CVS Financial Corp.
|
County Commerce Bank
|
|
Glacier Bancorp Inc.
|
Cañon Bank Corp.
|
|
National Commerce Corp.
|
Reunion Bank of Florida
|
|
Home Bancorp Inc.
|
Louisiana Bancorp Inc.
|
|
Southwest Bancorp Inc.
|
First Commercial Bancshares Inc.
|
|
River Financial Corp.
|
Keystone Bancshares Inc.
|
|
First Financial Bankshares
|
FBC Bancshares Inc.
|
|
United Community Banks Inc.
|
MoneyTree Corp.
|
|
Cathay General Bancorp
|
Asia Bancshares Inc.
|
1. | Aggregate price per common share paid for the acquired company to last twelve months earnings per share of the acquired company based on the latest publicly available financial statements of the company available prior to the announcement of the acquisition; |
2. | Aggregate price per common share paid for the acquired company to tangible common equity of the acquired company based on the latest publicly available financial statements of the company available prior to the announcement of the acquisition; and |
3. | Aggregate price per common share paid for the acquired company to tangible common equity of the acquired company based on the latest publicly available financial statements of the company available prior to the announcement of the acquisition and assuming capital in excess of 8% tangible common equity as of such date is acquired on a dollar-for-dollar basis (using a distribution method whereby both the numerator and denominator of the targeted tangible common equity ratio are adjusted for excess capital). |
Mid-Atlantic
Selected Transactions |
National
Selected Transactions |
|||||||||||||||||||||||
ERB
|
Average
|
Median
|
Average of those
with between 0.60% and 1.0% ROAA |
Average
|
Median
|
|||||||||||||||||||
Target Financials
|
||||||||||||||||||||||||
Total Assets ($000)
|
310,742
|
323,988
|
307,059
|
328,782
|
338,502
|
317,631
|
||||||||||||||||||
Prior Calendar Year Loan Growth (%)
|
12.56
|
7.34
|
4.03
|
3.97
|
21.81
|
10.70
|
||||||||||||||||||
TCE/TA (%)
|
9.78
|
10.77
|
8.80
|
12.92
|
11.11
|
10.80
|
||||||||||||||||||
NPAs/Total Assets (%)
|
0.45
|
1.22
|
1.22
|
1.37
|
0.79
|
0.61
|
||||||||||||||||||
LTM ROAA (%)
|
0.76
|
0.55
|
0.53
|
0.71
|
0.81
|
0.77
|
||||||||||||||||||
LTM ROAE (%)
|
7.73
|
5.17
|
4.25
|
5.84
|
7.52
|
6.77
|
||||||||||||||||||
Deal Value/Deal Ratios
|
||||||||||||||||||||||||
Deal Value ($ in millions)
|
47.07
|
50.63
|
36.81
|
54.42
|
56.13
|
47.61
|
||||||||||||||||||
Deal Value/LTM Earnings (x)
|
21.3
|
25.5
|
23.1
|
23.6
|
21.3
|
21.6
|
||||||||||||||||||
Deal Value/TCE (%)
|
154.9
|
133.8
|
127.7
|
120.3
|
164.3
|
140.6
|
||||||||||||||||||
Estimated Adjusted Deal Value/8% TCE (%)
|
167.1
|
144.9
|
129.2
|
132.1
|
179.1
|
158.3
|
•
|
earnings assumptions for ERB from management based upon historical trends, assumptions, and inputs from ERB that Griffin considered reasonable;
|
|
•
|
a required capitalization level of 8.0% TCE/TA;
|
|
•
|
earnings in excess of required capital retention are distributed to shareholders;
|
|
•
|
ranges of discount rates based on a normalized risk free interest rate as recommended by Duff & Phelps, the latest published Duff & Phelps U.S. Equity Risk Premium recommendation, and a size premium also published by Duff & Phelps; and
|
|
•
|
a projected terminal value multiple range of 13.0x to 16.0x of forecasted 2021 earnings, based on observed transaction multiples, industry practice, and Griffin's professional judgment.
|
· | The merger closed on [ ] , 2016, the last practicable date prior to the filing of this joint proxy statement/prospectus; and |
· | The projected cost of providing continued medical and dental insurance is based on current premiums, which are assumed to increase by 10% on each renewal date. |
Cash (1)
|
Equity(2)
|
Perquisites/
Benefits(3)
|
Total (4)
|
|||||||||||||
Christopher P. McGill, President
and CEO
|
$
|
565,265
|
$
|
512,200
|
$
|
--
|
$
|
1,077,465
|
||||||||
Jerry L. Cotlov, Executive VP
and Chief Lending Officer
|
430,423
|
394,000
|
--
|
824,423
|
||||||||||||
Charles T. Field, Senior VP
and Chief Financial Officer
|
226,938
|
69,700
|
22,344
|
318,982
|
(1) | The existing employment and change of control severance agreements with Messrs. Christopher McGill, Cotlov and Field provide that if the executive's employment is terminated concurrently with or following completion of the merger (provided that such termination occurs during the term of the agreement), the executive will receive a lump sum cash severance payment equal to the sum of (x) two times (one times for Mr. Field) his average compensation for the five calendar years ending immediately prior to the year in which his employment is terminated (or such shorter period as Mr. Field was employed), and (y) the projected cost of providing certain fringe benefits for the remaining term of the agreement. Because DNB has agreed that ERB shall provide lump sum cash payments to each of the three executives upon completion of the merger in satisfaction of their rights under their employment and change of control severance agreements (other than the medical and dental benefits to be provided to Mr. Field as described in Note (3) below) even if their employment is not terminated, the cash payments are considered to be a single-trigger arrangement. |
(2) | Represents the value of the vested and unvested stock options held by Messrs. Christopher McGill, Cotlov and Field, assuming that none of such options are exercised prior to completion of the merger and that all of such stock options are canceled in connection with the merger in exchange for a cash payment based on the cash merger consideration of $18.65 per share. Because all outstanding stock options will be canceled in exchange for a cash payment in connection with completion of the merger even if the executive's employment is not terminated, the cash payments are considered to be a single-trigger arrangement. If the value of the stock merger consideration is higher than $18.65 per share, holders of vested stock options to purchase shares of ERB common stock could elect to exercise their vested stock options prior to completion of the merger and then elect to receive shares of DNB common stock in the merger in order to increase the value of their vested stock options. Any such election to receive shares of DNB common stock would be subject to the proration procedures in the merger agreement. |
(3) | Represents the projected cost of providing Mr. Field with continued medical and dental insurance benefits for a period of one year following completion of the merger. The projected cost assumes that Mr. Field's employment is terminated upon completion of the merger and that he does not obtain full-time employment by another employer entitling him to substantially similar insurance benefits prior to the one-year anniversary of the completion of the merger. The projected cost assumes the insurance premiums increase by 10% on each renewal date, and the amounts have not been discounted to present value. Because the benefits in this column will only be provided if the executive's employment is terminated, these benefits are considered to be a double-trigger arrangement. No amounts are shown for Messrs. Christopher McGill and Cotlov as they will receive insurance benefits following completion of the merger pursuant to their new employment agreements with DNB First. |
(4) | All of the amounts in this column, except for the $23,344 shown in the "Perquisites/Benefits" column for Mr. Field, are attributable to a single-trigger arrangement, as the payment or benefit is not conditioned upon termination of the executive's employment. The amounts in this column exclude the value of other benefits under broad-based employee benefit plans such as ERB's Simple IRA Plan. Also excludes any pro-rated bonuses that may be paid for services rendered in 2016. If the payments and benefits under the employment and change of control severance agreements would constitute a parachute payment under Section 280G of the Internal Revenue Code, then each of the employment and change of control severance agreements provide that the payments and benefits shown in the above table will be reduced by the minimum amount necessary to avoid having a parachute payment under Section 280G of the Internal Revenue Code. Based upon the assumptions made, no reduction in the payments and benefits will be required. |
•
|
be present, in person or by proxy, at all ERB shareholder meetings to vote for approval of the merger so that all shares of common stock of ERB over which the shareholder or a member of the shareholder's immediate family has sole or shared voting power (excluding shares voted in a fiduciary capacity on behalf of a person who is not an immediate family member) will be counted for the purpose of determining the presence of a quorum at such ERB shareholder meetings;
|
|
•
|
to vote, or cause to be voted, all such shares in favor of approval and adoption of the merger agreement and the transactions contemplated thereby, including any amendments or modifications to the terms of the merger agreement approved by the ERB board of directors;
|
|
•
|
to vote against approval or adoption of any other merger, business combination, recapitalization, partial liquidation or similar transaction involving ERB;
|
|
•
|
not to vote or execute any written consent to rescind or amend in any manner any prior vote or written consent, as a shareholder of ERB, to approve or adopt the merger agreement; and
|
|
•
|
not to sell, transfer or otherwise dispose of any common stock of ERB on or prior to the date of the meeting of ERB shareholders to vote on the merger agreement, with certain exceptions for transfers to charities, charitable trusts, or other charitable organizations or for certain estate or tax planning purposes (provided that the transferee agrees in writing to be bound by the terms of the voting agreement), or in connection with the exercise of outstanding stock options in order to pay the exercise price of such stock options or any withholding taxes triggered by such exercise.
|
•
|
file a written notice with ERB of your intention to demand payment of the fair value of your shares if the merger is completed, prior to the vote of shareholders on the merger at the meeting;
|
|
•
|
make no change in your beneficial ownership of stock from the date you give notice through the day of completion of the merger; and
|
|
•
|
refrain from voting your shares to approve and adopt the merger agreement (a failure to vote against approval and adoption of the merger agreement, however, will not constitute a waiver of dissenters' rights).
|
•
|
a closing balance sheet and statement of income of ERB for a fiscal year ending not more than 16 months before the date of remittance or notice together with the latest available interim financial statements;
|
|
•
|
a statement of DNB's estimate of the fair value of the ERB stock; and
|
|
•
|
a notice of the right of the dissenter to demand supplemental payment, accompanied by a copy of the law.
|
•
|
timely receipt by DNB, as ERB's successor of any demands for payment; or
|
|
•
|
timely receipt by DNB, as ERB's successor of any estimates by dissenters of the fair value,
|
•
|
all ERB shareholders who have elected to receive cash or who have made no election will receive the cash consideration in exchange for their ERB shares; and
|
|
•
|
all ERB shareholders who elected to receive shares of DNB common stock will receive a pro rata portion of the DNB shies of common stock available for issuance pursuant to terms of the merger agreement plus cash consideration for those shares of ERB common stock that are not exchanged for shares of DNB common stock.
|
•
|
if the number of shares held by ERB shareholders who have made no election, if exchanged for shares of DNB common stock based upon the exchange ratio, is sufficient to make up the shortfall in the number of shares of DNB common stock to be issued pursuant to the terms of the merger agreement, then all ERB shareholders who elected cash consideration will receive cash in exchange for their ERB shares, and those shareholders who made no election will receive a combination of cash and shares of DNB common stock in such proportion as is necessary to make up the shortfall; or
|
|
•
|
if the number of shares held by ERB shareholders who have made no election, if exchanged for shares of DNB common stock based upon the exchange ratio, is insufficient to make up the shortfall in the number of shares of DNB common stock to be issued pursuant to the terms of the merger agreement, then all ERB shareholders who made no election will receive shares of DNB common stock and those ERB shareholders who elected to receive cash consideration will receive a combination of cash and shares of DNB common stock in such proportion as is necessary to make up the shortfall.
|
•
|
corporate matters, including due organization and qualification;
|
|
•
|
capitalization;
|
|
•
|
authority relative to execution and delivery of the merger agreement and the absence of breach or violations of organizational documents or other obligations as a result of the merger;
|
|
•
|
required governmental filings and consents;
|
|
•
|
the timely filing of reports with governmental entities, and the absence of investigations by regulatory agencies;
|
|
•
|
financial statements and the absence of undisclosed liabilities;
|
|
•
|
tax matters;
|
|
•
|
the absence of circumstances and events reasonably likely to have a material adverse effect on the business of ERB and DNB;
|
|
•
|
ownership of property;
|
|
•
|
insurance coverage;
|
•
|
legal proceedings;
|
|
•
|
compliance with applicable law;
|
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•
|
employee matters, including employee benefit plans;
|
|
•
|
brokers, finders and financial advisors;
|
|
•
|
environmental matters;
|
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•
|
loan related matters;
|
|
•
|
availability of corporate documents;
|
|
•
|
related party transactions;
|
|
•
|
the vote required to approve the merger;
|
|
•
|
the receipt of the respective financial advisor's fairness opinion;
|
|
•
|
intellectual property;
|
|
•
|
information supplied; and
|
|
•
|
investment securities and commodities.
|
•
|
change or waive any provision of its articles of incorporation, charter or bylaws, except as required by law, or appoint a new director to the board of directors;
|
|
•
|
change the number of authorized or issued shares of its capital stock, issue any shares of ERB common stock, including any shares that are held as treasury stock as of the date of the merger agreement, or issue or grant any right or agreement of any character relating to its authorized or issued capital stock or any securities convertible into shares of such stock, make any grant or award under the ERB stock benefit plans, or split, combine or reclassify any shares of capital stock, or declare, set aside or pay any dividend or other distribution in respect of capital stock or redeem, repurchase or otherwise acquire any shares of capital stock, except that ERB may issue, redeem or repurchase shares of ERB common stock in connection with the valid exercise, in accordance with the information set forth in disclosure schedules of the merger agreement, of presently outstanding ERB options issued under the ERB stock benefit plan;
|
•
|
enter into, amend, extend or terminate any contract or agreement (including without limitation any settlement agreement with respect to litigation) except in the ordinary course of business;
|
|
•
|
make application for the opening or closing of any, or open or close any, branch or automated banking facility;
|
|
•
|
grant or agree to pay any bonus, severance or termination to, or enter into, renew, amend or extend any employment agreement, severance agreement and/or supplemental executive agreement with, or increase in any manner the compensation or fringe benefits of, any of its directors, officers or employees, except (a) as may be required pursuant to commitments existing on the date hereof and set forth on the disclosure schedules of the merger agreement, (b) pay increases in the ordinary course of business consistent with past practices to non-executive officers and employees provided such increases shall not exceed 5% (on an annualized basis) with respect to any individual and (c) the payment of bonuses for services performed on or after January 1, 2016 as set forth in the disclosure schedules of the merger agreement, with targets and payments to be pro-rated as set forth in such schedule. Except as set forth in disclosure schedules of the merger agreement, neither ERB nor any ERB subsidiary shall hire or promote any employee to an officer position or hire any new employee at an annual rate of compensation in excess of $50,000; provided that ERB or an ERB subsidiary may hire at-will, non-officer employees to fill vacancies that may from time to time arise in the ordinary course of business;
|
|
•
|
enter into or, except as may be required by law, modify any pension, retirement, stock option, stock purchase, stock appreciation right, stock grant, savings, profit sharing, deferred compensation, supplemental retirement, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement related thereto, in respect of any of its directors, officers or employees; or make any contributions to any defined contribution plan not in the ordinary course of business consistent with past practice;
|
|
•
|
merge or consolidate ERB or any ERB subsidiary with any other corporation; sell or lease all or any substantial portion of the assets or business of ERB or any ERB subsidiary; make any acquisition of all or any substantial portion of the business or assets of any other person, firm, association, corporation or business organization other than in connection with foreclosures, settlements in lieu of foreclosure, troubled loan or debt restructuring, or the collection of any loan or credit arrangement between ERB, or any ERB subsidiary, and any other person; enter into a purchase and assumption transaction with respect to deposits and liabilities; voluntarily revoke or surrender by any ERB subsidiary of its approval to maintain, or file an application for the relocation of, any existing branch office, or file an application for approval to establish a new branch office;
|
|
•
|
sell or otherwise dispose of any asset of ERB or of any ERB subsidiary other than in the ordinary course of business consistent with past practice; except for transactions with the Federal Home Loan Bank of Pittsburgh or Atlantic Community Bankers Bank, subject any asset of ERB or of any ERB subsidiary to a lien, pledge, security interest or other encumbrance (other than in connection with deposits, repurchase agreements, bankers acceptances, "treasury tax and loan" accounts established in the ordinary course of business and transactions in "federal funds" and the satisfaction of legal requirements in the exercise of trust powers); except as may be permitted pursuant the merger agreement, incur liability of any nature, including any indebtedness for borrowed money (or guarantee any indebtedness for borrowed money);
|
|
•
|
voluntarily take any action which would result in any of the representations and warranties of ERB set forth in the merger agreement becoming untrue or in any of the conditions set forth in the merger agreement not being satisfied, except in each case as may be required by applicable law;
|
|
•
|
change any method, practice or principle of accounting, except as may be required from time to time by generally accepted accounting principles (without regard to any optional early adoption date), any bank regulator responsible for regulating ERB, or ERB's independent accounting firm;
|
|
•
|
waive, release, grant or transfer any rights of value or modify or change any existing agreement or indebtedness to which ERB or any ERB subsidiary is a party;
|
|
•
|
purchase any equity securities (other than additional shares of common stock of the Federal Home Loan Bank of Pittsburgh as may be required), or purchase any debt securities other than (a) debt securities issued by US Government Agencies or direct obligations of the US Treasury with final maturities not to exceed 3 years and a par of $1 million per security, and (b) any US government fixed rate mortgage backed security with a weighted average maturity not to exceed 4 years that passes all applicable regulatory stress tests at the time of purchase, not to exceed $2 million in any one security;
|
|
•
|
except as permitted under the merger agreement, issue or sell any equity or debt securities;
|
|
•
|
except for commitments issued prior to the date of the merger agreement which have not yet expired and which have been disclosed on the disclosure schedules of the merger agreement, and the renewal of existing lines of credit, make any new loan or other credit facility commitment (including without limitation, lines of credit and letters of credit) without DNB's prior approval (i) to any borrower or group of affiliated borrowers whose credit exposure with ERB, in the aggregate, exceeds $2,225,000 for a commercial loan; or (ii) to any borrower or group of affiliated borrowers whose credit exposure with ERB, in the aggregate, exceeds $600,000 for a residential or consumer loan with the exception of loans originated that are subject to a commitment to sell pursuant to the Mortgage Partnership Finance program. In addition, the prior approval of DNB is required with respect to the following: (a) any overdraft to commercial clients in excess of $50,000; (b) any new credit or loan to an existing relationship that is rated "special mention," "substandard," or some lesser classification; and (c) any Small Business Administration loans to one borrower in aggregate amount of $1,000,000 or more. With respect to any loan that requires DNB prior approval, DNB shall have five (5) business days to act on such request from date the request is submitted by ERB together with all relevant documentation for DNB review, provided that ERB shall first have approved such loan or credit. In the event DNB has not acted within such five (5) business day period, DNB shall be deemed to have consented to the subject loan(s);
|
|
•
|
except as set forth on the disclosure schedules to the merger agreement, enter into, renew, extend or modify any other transaction (other than a deposit transaction) with any affiliate;
|
|
•
|
enter into any futures contract, option, interest rate caps, interest rate floors, interest rate exchange agreement or other agreement or take any other action for purposes of hedging the exposure of its interest-earning assets and interest-bearing liabilities to changes in market rates of interest;
|
|
•
|
borrow any new amounts from the Federal Home Loan Bank of Pittsburgh, other than overnight borrowings or borrowings with bullet maturities of not more than 6 months;
|
|
•
|
except for the execution of the merger agreement, and actions taken or which will be taken in accordance with the merger agreement and performance thereunder, take any action that would give rise to a right of payment to any individual under any employment agreement;
|
|
•
|
make any change in policies in existence on the date of the merger agreement with regard to: the extension of credit, or the establishment of reserves with respect to the possible loss thereon or the charge off of losses incurred thereon; investments; asset/liability management; deposit pricing or gathering; or other banking policies except as may be required by changes in applicable law or regulations or generally accepted accounting principles, by a bank regulator;
|
|
•
|
enter into any new line of business;
|
|
•
|
except for the execution of the merger agreement, and the transactions contemplated therein, take any action that would give rise to an acceleration of the right to payment to any individual under any employment agreement, stock option plan or employee benefit plan;
|
•
|
make any capital expenditures in excess of $25,000 individually or $50,000 in the aggregate, other than pursuant to binding commitments existing on the of the merger agreement and other than expenditures necessary to maintain existing assets in good repair;
|
|
•
|
incur any discretionary expense in excess of $25,000 individually that is not otherwise addressed in these negative covenants;
|
|
•
|
issue any certificates of deposit with a maturity longer than one year except with respect to existing certificates of deposit which provide for automatic renewal upon maturity to new certificates of deposit with like terms to maturity;
|
|
•
|
undertake, enter into or renew (including by automatic renewal) any lease, contract or other commitment for its account, other than in the normal course of providing credit to customers as part of its banking business, involving a payment by ERB or ERB of more than $25,000 annually, or containing any financial commitment extending beyond 12 months from the of the merger agreement;
|
|
•
|
pay, discharge, settle, modify or compromise any claim, loan, action, litigation, arbitration or proceeding, other than any such payment, discharge, settlement, modification or compromise in the ordinary course of business consistent with past practice that involves solely money damages in the amount not in excess of $25,000 individually or $50,000 in the aggregate, and that does not create negative precedent for other pending or potential claims, actions, litigation, arbitration or proceedings; provided that ERB may charge-off through settlement, compromise or discharge up to 10% of the outstanding principal balance of any loan that is 90+ days contractually past due;
|
|
•
|
institute any new litigation or other legal or regulatory proceedings (excluding loan foreclosure or collection actions and any litigation to enforce its rights under the merger agreement);
|
|
•
|
foreclose upon or take a deed or title to any (a) commercial real estate, or (b) residential real estate on which, in the case of either clause (a) or (b), the presence of materials of environmental concern could be reasonably expected, without first conducting a Phase I of the property and confirming that such Phase I does not indicate the presence of a materials of environmental concern;
|
|
•
|
purchase or, other than in the ordinary course of business consistent with past practice, sell any mortgage loan servicing rights;
|
|
•
|
issue any broadly distributed communication of a general nature to employees (including general communications relating to benefits and compensation, post-closing employment, benefit or compensation information) without prior consultation with and without the prior consent of DNB (which shall not be unreasonably withheld, conditioned or delayed) or issue any broadly distributed communication of a general nature to customers without the prior approval of DNB (which shall not be unreasonably withheld, conditioned or delayed), except as required by law or for communications in the ordinary course of business consistent with past practice that do not relate to the merger or other transactions contemplated thereby;
|
|
•
|
amend, modify or waive any non-competition, non-solicitation, no-piracy, or confidentiality agreement, or any other such restrictive agreement;
|
|
•
|
take any action that would or could reasonably be expected to disqualify the merger as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended; or
|
|
•
|
agree to do any of the foregoing.
|
•
|
take all reasonable action so that ERB employees continuing after the merger are entitled to participate in the DNB compensation and benefit plans to the same extent as similarly situated employees of DNB, as further detailed in the merger agreement;
|
|
•
|
for determining eligibility and vesting for certain DNB employee benefit plans (and not for benefit accrual purposes except with respect to vacation, leave policies or programs and for calculating severance benefits), provide credit for meeting eligibility and vesting requirements in such plans for service as an employee of ERB or any predecessor of ERB;
|
|
•
|
honor the terms of all ERB compensation and benefit plans set forth in the disclosure schedules of the merger agreement;
|
|
•
|
pay severance benefits to any employee of ERB whose employment is terminated within 12 months of the closing of the merger, other than for circumstances constituting cause, upon the effective date of a general release signed by the employee in an amount equal to two (2) weeks of such employee's regular pay for each full year that such employee was employed by ERB, any ERB subsidiary or any successor thereto, with a minimum of four (4) weeks and a maximum of twenty-six (26) weeks;
|
|
•
|
in the event of terminating the health plans of ERB, DNB shall make available to continuing employees and their dependents health plans of DNB on the same basis it provides coverage to DNB employees, as further detailed in the merger agreement;
|
|
•
|
establish a retention bonus pool for employees of ERB who are selected by the chief executive officer of ERB in order to help retain key employees (who are not otherwise covered by an employment or similar contract) through the date of the data processing systems of conversion or such other date mutually agreed to by ERB and DNB, provided that the aggregate amount of such retention bonuses shall not exceed $100,000;
|
|
•
|
enter into an employment agreement with Christopher P. McGill and Jerry Cotlov in the form set forth in the disclosure schedules of the merger agreement, which agreements shall become effective upon the effective time of the merger;
|
|
•
|
for a period of six years after the merger, to indemnify, defend and hold harmless all current and former officers and directors of ERB against all claims that arise out of the fact that such person is or was a director or officer of ERB or its subsidiaries and that relate to any matter of fact existing at or prior to the merger, to the fullest extent as would have been permitted by ERB under Pennsylvania law and under ERB's articles of incorporation and bylaws;
|
|
•
|
in certain circumstances, make proper provision so that successors and assigns of DNB shall assume the obligations set forth in these covenants;
|
|
•
|
maintain, for six years following the merger, ERB's current directors' and officers' liability insurance policies covering the officers and directors of ERB with respect to matters occurring at or prior to the merger, except that DNB may substitute similar policies, and that DNB is not required spend more than 225% of the annual cost currently expended by ERB in order to obtain this insurance;
|
|
•
|
obtain approval for listing of the shares of its common stock on NASDAQ;
|
|
•
|
reserve a sufficient number of shares of its common stock and maintain sufficient liquid accounts or borrowing capacity to fulfill its obligations in connection with the merger; and
|
|
•
|
cause each of DNB and DNB First's board of directors to be increased by three members, effective immediately following the effective time of the merger and make the appointments to the boards of directors as described in "The Merger – Board of Directors and Management of DNB Following Completion of the Merger."
|
•
|
ERB has received a bona fide unsolicited written Acquisition Proposal that did not result from a breach of the merger agreement;
|
|
•
|
the board of directors of ERB determines in good faith, after consultation with and having considered the advice of its outside legal counsel and its independent financial advisor, that such Acquisition Proposal constitutes a Superior Proposal;
|
|
•
|
ERB has provided DNB with at least two (2) business days prior notice that the Acquisition Proposal constitutes a Superior Proposal;
|
|
•
|
prior to furnishing or affording access to any information or data with respect to ERB or any of its subsidiaries or otherwise relating to an Acquisition Proposal, ERB receives from such person a confidentiality agreement with terms no less favorable to ERB than those contained in the confidentiality agreements between ERB and DNB; and
|
|
•
|
the board of directors of ERB determines in good faith, after consultation with and having considered the advice of its outside legal counsel, that the failure to take any such actions would be reasonably likely to violate its fiduciary duties under applicable laws.
|
•
|
withdraw, qualify or modify in a manner adverse to DNB, its recommendation to its shareholders to approve the merger agreement, except to the extent otherwise permitted and described below;
|
|
•
|
approve or recommend, or publicly propose to approve or recommend, any Acquisition Proposal other than with respect to the DNB merger; or
|
|
•
|
enter into (or cause ERB or any of the ERB subsidiaries to enter into) any letter of intent or other agreement relating to an Acquisition Proposal other than with respect to the DNB merger or requiring ERB to fail to consummate the merger.
|
•
|
the ERB board of directors has reasonably determined in good faith, after consultation with and having considered the advice of its outside legal counsel and financial advisor that the failure to take such actions would be inconsistent with the board's fiduciary duties to ERB's shareholders under applicable law;
|
|
•
|
it has provided at least three business days' notice to DNB that a bona fide unsolicited proposal constitutes a Superior Proposal; and
|
|
•
|
after taking into account any adjusted, modified or amended terms as may have been committed to by DNB in writing, the ERB board of directors has again in good faith determined that the other Acquisition Proposal constitutes a Superior Proposal.
|
•
|
the approval and adoption of the merger agreement by ERB's shareholders;
|
|
•
|
the approval and adoption of the issuance of shares of DNB common stock in connection with the merger by DNB's shareholders;
|
|
•
|
the absence of any law, statute, regulation, judgment, decree, injunction or other order in effect by any court or other governmental entity that prohibits completion of the transactions contemplated by the merger agreement;
|
|
•
|
the receipt and effectiveness of all required governmental and other approvals, authorizations and consents on terms and conditions that would not have a material adverse effect on DNB or ERB, and the expiration of all related waiting periods required to complete the merger;
|
|
•
|
the effectiveness of the registration statement of which this joint proxy statement/prospectus is a part with respect to the DNB common stock to be issued in the merger and the absence of any stop order or proceedings initiated or threatened by the SEC for that purpose;
|
|
•
|
the approval for listing on NASDAQ of the shares of DNB common stock issuable in the merger; and
|
|
•
|
the receipt by each of DNB and ERB of a legal opinion with respect to certain United States federal income tax consequences of the merger.
|
•
|
the absence of a material adverse effect on the other party;
|
|
•
|
the truth and correctness of the representations and warranties of each other party in the merger agreement, subject generally to the materiality standard provided in the merger agreement, and the performance by each other party in all material respects of their obligations under the merger agreement and the receipt by each party of certificates from the other party to that effect;
|
|
•
|
performance of all obligations in all material respects;
|
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•
|
obtaining all material permits, authorizations, consents, waivers, clearances or approvals required for the lawful consummation of the merger;
|
|
•
|
holders of no more than fifteen percent (15%) of the issued and outstanding shares of ERB shall have exercised their statutory appraisal or dissenters' right pursuant to the merger agreement prior to the merger; and
|
|
•
|
DNB having delivered the merger consideration to the exchange agent.
|
•
|
if there is a breach by the other party that would cause the failure of the closing conditions, unless the breach is capable of being, and is, cured within 30 days of notice of the breach and the terminating party is not itself in material breach;
|
|
•
|
if the merger has not been completed by November 30, 2016, unless the failure to complete the merger by that date was due to the terminating party's action or inaction;
|
|
•
|
if the shareholders of ERB fail to adopt the merger agreement or the shareholders of DNB fail to approve the issuance of the shares of DNB common stock in connection with the merger at their respective special meetings;
|
|
•
|
if any of the required regulatory approvals are denied (and the denial is final and non-appealable); or
|
|
•
|
if any court of competent jurisdiction or governmental authority issues an order, decree, ruling or takes any other action restraining, enjoining or otherwise prohibiting the merger (and such order, decree, ruling or action is final and non-appealable).
|
•
|
the average of the daily closing sale prices of a share of DNB common stock as reported on Nasdaq for the 20 consecutive trading days immediately preceding the Determination Date (the "Average Closing Price") is less than 80% of the closing sale price of DNB common stock on the last trading date before the date of the merger agreement; and
|
|
•
|
the decrease in the price of DNB common stock is 20% greater than the decrease in the NASDAQ Bank Index during the same period.
|
•
|
by DNB because ERB has received a Superior Proposal and ERB entered into an acquisition agreement with respect to the Superior Proposal, terminated the merger agreement, or withdrew the ERB recommendation to its shareholders, failed to make the ERB recommendation or modified or qualified the ERB recommendation in a manner adverse to DNB;
|
|
•
|
by ERB because ERB received and made a determination to accept a Superior Proposal; or
|
|
•
|
where ERB enters into a definitive agreement relating to an Acquisition Proposal or the consummation of an Acquisition Proposal involving ERB within twelve (12) months after the occurrence of any of the following: (a) the termination of the merger agreement by DNB pursuant to a willful material breach of a representation, warranty, covenant or other agreement by ERB, or (b) the failure of the shareholders of ERB to approve the merger agreement after the public disclosure or public awareness of an Acquisition Proposal.
|
•
|
extend the time for the performance of any of the obligations or other acts of the other party;
|
|
•
|
waive any inaccuracies in the representations and warranties of the other party; or
|
|
•
|
waive compliance by the other party with any of the other agreements or conditions contained in the merger agreement.
|
•
|
non-U.S. holders;
|
|
•
|
banks and other financial institutions;
|
|
•
|
subchapter S corporations, entities or arrangements treated as partnerships for U.S. federal income tax purposes or other pass-through entities and investors therein;
|
|
•
|
retirement plans;
|
|
•
|
individual retirement accounts or other tax-deferred accounts;
|
|
•
|
holders who are liable for the alternative minimum tax;
|
|
•
|
insurance companies;
|
|
•
|
tax-exempt entities;
|
|
•
|
dealers in securities or currencies;
|
|
•
|
traders in securities that elect to use a mark-to-market method of accounting;
|
|
•
|
persons that hold ERB stock as part of a straddle, hedge, constructive sale, conversion or other integrated transaction;
|
|
•
|
regulated investment companies;
|
|
•
|
real estate investment trusts;
|
|
•
|
certain former citizens or former long-term residents of the United States;
|
|
•
|
U.S. holders whose functional currency is not the U.S. dollar;
|
|
•
|
holders that exercise dissenters' rights; and
|
|
•
|
holders who acquired their shares of ERB stock through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation.
|
•
|
Provide compensation that takes into account our performance relative to our financial goals and objectives;
|
|
•
|
Provide compensation that takes into account the executive's performance against assigned individual goals;
|
|
•
|
Align management's financial interests with those of shareholders. One way we do this is by providing equity-based long-term incentives; and
|
|
•
|
Offer each executive a total compensation program based on the executive's level of responsibility, the executive's skills and experience relative to our other executives and similar executives of peer group financial institutions.
|
Name & Principal Position
|
Year
|
Salary
($) |
Bonus
($) |
Stock
awards ($) (3) |
Option
awards ($) (4) |
Non-Equity
Incentive Plan Compensation ($) (2) |
All Other
Compensation ($) (5) |
Total
($) (1) |
||||||||||||||||||||||
William S. Latoff
(6)
|
2015
|
430,000
|
100,000
|
274,189
|
—
|
80,090
|
17,161
|
901,440
|
||||||||||||||||||||||
Chairman & CEO
|
2014
|
390,000
|
100,000
|
129,961
|
—
|
75,557
|
17,011
|
712,529
|
||||||||||||||||||||||
William J. Hieb
(6)
|
2015
|
225,000
|
25,000
|
44,142
|
—
|
—
|
19,014
|
313,156
|
||||||||||||||||||||||
President and Chief
|
2014
|
225,000
|
22,000
|
16,395
|
10,092
|
—
|
19,314
|
292,801
|
||||||||||||||||||||||
Risk & Credit Officer
|
|
|||||||||||||||||||||||||||||
Gerald F. Sopp
|
2015
|
200,000
|
24,000
|
42,658
|
—
|
—
|
15,633
|
282,291
|
||||||||||||||||||||||
EVP, Chief Financial
|
2014
|
195,000
|
22,000
|
14,912
|
6,315
|
—
|
15,423
|
253,650
|
||||||||||||||||||||||
Officer & Corporate Secretary
|
|
|
Option awards
(1) (2)
|
Stock awards
(1) (3)
|
||||||||||||||||||||||
Name & Principal Position
|
Number of Securities
Underlying
Unexercised Options
(#) Exercisable |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
Option
Exercise Price ($) |
Option
Expiration Date |
Number of
Shares or Units of Stock that Have Not Vested (#) |
Market Value
of Shares or Units of Stock that Have Not Vested ($) |
||||||||||||||||||
William S. Latoff
(4)
|
—
|
—
|
—
|
—
|
33,700
|
994,150
|
||||||||||||||||||
Chairman & CEO
|
||||||||||||||||||||||||
William J. Hieb
(4)
|
8,600 |
— |
6.93 |
04/23/2017 |
7,350 |
216,825 |
||||||||||||||||||
President and Chief
|
8,600
|
—
|
10.31
|
12/12/2018
|
||||||||||||||||||||
Risk & Credit Officer
|
||||||||||||||||||||||||
Gerald F. Sopp
|
4,700 |
— |
6.93 |
04/23/2017 |
7,000 |
206,500 |
||||||||||||||||||
EVP, Chief
|
5,500
|
—
|
10.31
|
12/12/2018
|
||||||||||||||||||||
Financial Officer & Corporate
Secretary
|
Name
|
Fees Earned or
Paid ($) |
Stock awards
($) (3) |
Non-equity
Incentive Plan Compensation ($) |
Total
($) (1) (2) |
||||||||||||
James R. Biery
|
26,000
|
6,576
|
—
|
32,576
|
||||||||||||
Thomas A. Fillippo
|
26,000
|
10,819
|
1,950
|
38,769
|
||||||||||||
Gerard F. Griesser
|
23,600
|
10,819
|
2,360
|
36,779
|
||||||||||||
William J. Hieb
(2)
|
—
|
—
|
—
|
—
|
||||||||||||
Mildred C. Joyner
|
26,000
|
10,819
|
1,300
|
38,119
|
||||||||||||
James J. Koegel
|
34,000
|
10,819
|
3,400
|
48,219
|
||||||||||||
William S. Latoff
(2)
|
—
|
—
|
—
|
—
|
||||||||||||
James H. Thornton
|
35,500
|
10,819
|
1,207
|
47,526
|
Annual Fees:
|
|
|||
Retainer (all members)
|
$
|
20,000
|
||
Non-Employee Chairman (effective in 2016)
|
6
0,000
|
|||
Equity Compensation (all members)
|
—
|
|||
Committee Chairman:
|
||||
Audit Committee
|
7,000
|
|||
All Other Committees
|
5,000
|
|||
Fee for a Director who Chairs more than one Committee
|
2,500
|
|||
Per-Meeting Attendance Fees:
|
||||
Board meetings (all members)
|
—
|
|||
Committee meetings:
|
||||
On-Site
|
600
|
|||
Telephonic
|
300
|
|
Option awards (1)
|
Stock awards (2)
|
||||||||||||||||||||||
Name & Principal Position
|
Number of
Securities Underlying Unexercised Options (#) Exercisable |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
Option
Exercise Price ($) |
Option
Expiration Date |
Number of
Shares or Units of Stock that Have Not Vested (#) |
Market Value
of Shares or Units of Stock that Have Not Vested ($) |
||||||||||||||||||
James R. Biery
|
—
|
—
|
—
|
—
|
900
|
26,550
|
||||||||||||||||||
Thomas A. Fillippo
|
1,800 |
— |
6.93 |
04/23/2017 |
1,850 |
54,575 |
||||||||||||||||||
2,100
|
—
|
10.31
|
12/12/2018
|
|||||||||||||||||||||
Gerard F. Griesser
|
— |
— |
— |
— |
1,850 |
54,575 |
||||||||||||||||||
Mildred C. Joyner
|
1,800 |
— |
6.93 |
04/23/2017 |
1,850 |
54,575 |
||||||||||||||||||
2,100
|
—
|
10.31
|
12/12/2018
|
|||||||||||||||||||||
James J. Koegel
|
1,800 |
— |
6.93 |
04/23/2017 |
1,850 |
54,575 |
||||||||||||||||||
2,100
|
—
|
10.31
|
12/12/2018
|
|||||||||||||||||||||
James H. Thornton
|
1,800 |
— |
6.93 |
04/23/2017 |
1,850 |
54,575 |
||||||||||||||||||
2,100
|
—
|
10.31
|
12/12/2018
|
|
Amount of Annual Retirement Benefit
with Credited Service of: |
|||||||||||||||
Average
Annual Earnings |
10 Years
|
20 Years
|
30 Years
|
40 Years
|
||||||||||||
$ 25,000
|
$
|
3,750
|
$
|
7,500
|
$
|
11,250
|
$
|
15,000
|
||||||||
50,000
|
7,500
|
15,000
|
22,500
|
30,000
|
||||||||||||
75,000
|
11,250
|
22,500
|
33,750
|
45,000
|
||||||||||||
100,000
|
15,000
|
30,000
|
45,000
|
60,000
|
||||||||||||
125,000
|
18,750
|
37,500
|
56,250
|
75,000
|
||||||||||||
150,000
|
22,500
|
45,000
|
67,500
|
90,000
|
||||||||||||
175,000
|
26,250
|
52,500
|
78,750
|
105,000
|
||||||||||||
200,000
|
30,000
|
60,000
|
90,000
|
120,000
|
Name
|
Year
|
Salary
|
Bonus
|
All Other Compensation
(1)
|
Total
|
|||||
Christopher P. McGill
|
2015
|
$210,000
|
$84,233
|
$47,681
|
$341,914
|
(1) | Includes premiums for medical and dental insurance, an automobile allowance, club dues and matching IRA contributions, among other items |
Option Awards
|
||||||||
Number of Securities
Underlying Unexercised Options
|
||||||||
Name
|
Exercisable
|
Unexercisable
(1)
|
Exercise
Price
|
Option
Expiration
Date
|
||||
Christopher P. McGill
|
54,600
|
10,400
|
$10.77
|
7/24/2024
|
(1) | Mr. McGill's unexercisable options will become fully vested and exercisable on July 24, 2016. |
Name
|
Fees Earned or
Paid in Cash
|
Stock
Awards
|
Option
Awards
|
All Other
Compensation
|
Total
(1)
|
|||||||||||||||
John F. McGill, Jr.
|
$
|
21,600
|
--
|
--
|
$
|
100,000
|
$
|
121,600
|
||||||||||||
Charles A. Murray
|
21,600
|
--
|
--
|
--
|
21,600
|
|||||||||||||||
G. Daniel O'Donnell
|
20,900
|
--
|
--
|
--
|
20,900
|
•
|
Earnings increased $330,000 or 26.9% — Net income available to common shareholders for the quarter ended March 31, 2016 was $1.56 million, or $0.54 per diluted share, compared with $1.23 million or $0.43 per diluted share, for the same period in 2015.
|
|
•
|
Continued increase in Assets Under Care — Wealth Management assets under care increased 4.1% (not annualized) to $199.3 million as of March 31, 2016 from $191.5 million as of December 31, 2015.
|
|
•
|
Loan Growth —Total loans increased 5.51% in the first quarter of 2016 compared to the same period in 2015 and 1.6% compared to the quarter ended December 31, 2015.
|
|
•
|
Asset Quality — Asset quality remained stable. Net loan charge-offs were only 0.08% (annualized) of total average loans for the first quarter of 2016, and non-performing loans were only 1.06% of total loans at quarter-end.
|
|
•
|
New Chairman and new CEO — On April 4, 2016, DNB announced that William J. Hieb was named permanent President and Chief Executive Officer. DNB also announced that James H. Thornton was named permanent Chairman of the Board of Directors.
|
•
|
Earnings increased $419,000 or 9.0% — Net income available to common shareholders for the year ended December 31, 2015 was $5.1 million, or $1.79 per diluted share, compared with $4.7 million or $1.66 per diluted share, for 2014.
|
|
•
|
Strong loan growth and stable asset quality — Total loans grew $26.2 million or 5.7% to $481.8 million as of December 31, 2015, from $455.6 million as of December 31, 2014. Non-performing assets to total assets was 1.02% at December 31, 2015, compared to 1.07% at December 31, 2014.
|
|
•
|
Continued focus on growing fee-based income — Wealth Management continued to record strong growth in total assets under care, which increased 16.9% to $191.5 million at December 31, 2015 compared with $163.8 million at December 31, 2014. This growth contributed to a $171,000 or 13.0% increase in Wealth Management fee income. In addition, mortgage banking revenue increased $79,000 or 85.9% to $171,000 in 2015.
|
|
•
|
Full redemption of SBLF Preferred Shares — During 2015, we redeemed $13.0 million or 100% of the Series 2011A Preferred Stock which we had issued and sold to the U.S. Treasury. Capital ratios continue to exceed minimum regulatory standards for well capitalized institutions. At December 31, 2015, the Tier 1 leverage ratio was 8.94%, Tier 1 risk-based capital was 12.08%, and total risk based capital ratio was 14.79%. As of the same date, the tangible common equity-to-tangible assets ratio was 7.40%, and the common equity tier 1 capital ratio was 10.44%.
|
•
|
Focus on penetrating existing markets to maximize profitability;
|
|
•
|
Grow loans and diversify the mix;
|
|
•
|
Improve asset quality;
|
|
•
|
Focus on profitable of directors customer segments;
|
|
•
|
Grow and diversify non-interest income, primarily wealth management and mortgage banking;
|
|
•
|
Continue to grow core deposits to maintain low funding costs;
|
|
•
|
Focus on cost containment and improving operational efficiencies; and
|
|
•
|
Continue to engage employees to help them become more effective and successful.
|
•
|
Investment Management
|
•
|
Investment Advisory
|
||
•
|
Estate Settlement
|
•
|
Client Bill Paying
|
||
•
|
Custody Services
|
•
|
Financial Planning
|
||
•
|
Corporate Trustee / Trust Administration
|
•
|
Power of Attorney and Guardian of the Estate Capacities
|
Three Months Ended March 31,
|
||||||||||||||||||||||||
2016
|
2015
|
|||||||||||||||||||||||
Annualized
|
Annualized
|
|||||||||||||||||||||||
Average
|
Yield/
|
Average
|
Yield/
|
|||||||||||||||||||||
(Dollars in thousands)
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Investment securities:
|
||||||||||||||||||||||||
Taxable
|
$
|
158,234
|
$
|
682
|
1.72
|
%
|
$
|
183,826
|
$
|
735
|
1.60
|
%
|
||||||||||||
Tax-exempt
|
55,456
|
498
|
3.59
|
51,502
|
511
|
3.97
|
||||||||||||||||||
Total securities
|
213,690
|
1,180
|
2.21
|
235,328
|
1,246
|
2.12
|
||||||||||||||||||
Cash and cash equivalents
|
23,080
|
21
|
0.37
|
18,037
|
7
|
0.16
|
||||||||||||||||||
Total loans
|
483,125
|
5,165
|
4.28
|
460,585
|
4,957
|
4.31
|
||||||||||||||||||
Total interest-earning assets
|
719,895
|
6,366
|
3.54
|
713,950
|
6,210
|
3.48
|
||||||||||||||||||
Non-interest-earning assets
|
23,778
|
22,048
|
||||||||||||||||||||||
Total assets
|
$
|
743,673
|
$
|
735,998
|
||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Savings deposits
|
$
|
405,321
|
$
|
164
|
0.16
|
%
|
$
|
424,089
|
$
|
149
|
0.14
|
%
|
||||||||||||
Time deposits
|
70,927
|
117
|
0.66
|
74,618
|
109
|
0.58
|
||||||||||||||||||
Brokered deposits
|
18,491
|
62
|
1.34
|
10,241
|
24
|
0.95
|
||||||||||||||||||
Total interest-bearing deposits
|
494,739
|
343
|
0.28
|
508,948
|
282
|
0.22
|
||||||||||||||||||
Federal funds purchased
|
1,043
|
1
|
0.64
|
434
|
1
|
0.46
|
||||||||||||||||||
Federal Reserve borrowing
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Repurchase agreements
|
23,040
|
11
|
0.20
|
17,812
|
9
|
0.20
|
||||||||||||||||||
Subordinated debt
|
9,750
|
104
|
4.25
|
2,925
|
30
|
4.09
|
||||||||||||||||||
FHLBP advances
|
23,111
|
94
|
1.63
|
20,000
|
194
|
3.89
|
||||||||||||||||||
Other interest bearing accounts
|
9,741
|
97
|
3.98
|
9,780
|
90
|
3.68
|
||||||||||||||||||
Total interest-bearing liabilities
|
561,424
|
650
|
0.46
|
559,899
|
606
|
0.43
|
||||||||||||||||||
Demand deposits
|
120,391
|
108,452
|
||||||||||||||||||||||
Other liabilities
|
4,818
|
5,161
|
||||||||||||||||||||||
Stockholders' equity
|
57,040
|
62,486
|
||||||||||||||||||||||
Total liabilities and stockholders' equity
|
$
|
743,673
|
$
|
735,998
|
||||||||||||||||||||
Net interest income
|
$
|
5,716
|
$
|
5,604
|
||||||||||||||||||||
Interest rate spread
|
3.08
|
%
|
3.05
|
%
|
||||||||||||||||||||
Net interest margin
|
3.18
|
%
|
3.14
|
%
|
Year Ended December 31
|
||||||||||||||||||||||||||||||||||||
2015
|
2014
|
2013
|
||||||||||||||||||||||||||||||||||
Average
|
Yield/
|
Average
|
Yield/
|
Average
|
Yield/
|
|||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
|||||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||||||||||||||
Investment securities:
|
||||||||||||||||||||||||||||||||||||
Taxable
|
$
|
177,213
|
$
|
2,955
|
1.67
|
%
|
$
|
156,402
|
$
|
2,850
|
1.82
|
%
|
$
|
155,725
|
$
|
2,861
|
1.84
|
%
|
||||||||||||||||||
Tax-exempt
|
54,578
|
2,112
|
3.87
|
41,934
|
1,685
|
4.02
|
43,495
|
1,657
|
3.81
|
|||||||||||||||||||||||||||
Total securities
|
231,791
|
5,067
|
2.19
|
198,336
|
4,535
|
2.29
|
199,220
|
4,518
|
2.27
|
|||||||||||||||||||||||||||
Cash and cash equivalents
|
21,075
|
42
|
0.20
|
21,247
|
42
|
0.20
|
34,379
|
70
|
0.20
|
|||||||||||||||||||||||||||
Total loans
|
465,944
|
20,348
|
4.37
|
435,816
|
19,733
|
4.53
|
396,997
|
19,340
|
4.87
|
|||||||||||||||||||||||||||
Total interest-earning assets
|
718,810
|
25,457
|
3.54
|
655,399
|
24,310
|
3.71
|
630,596
|
23,928
|
3.79
|
|||||||||||||||||||||||||||
Non-interest-earning assets
|
22,542
|
21,457
|
23,440
|
|||||||||||||||||||||||||||||||||
Total assets
|
$
|
741,352
|
$
|
676,856
|
$
|
654,036
|
||||||||||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||||||||||||||
Savings deposits
|
$
|
414,920
|
$
|
590
|
0.14
|
%
|
$
|
376,568
|
$
|
541
|
0.14
|
%
|
$
|
362,985
|
$
|
740
|
0.20
|
%
|
||||||||||||||||||
Time deposits
|
67,487
|
396
|
0.59
|
81,546
|
697
|
0.85
|
95,356
|
1,071
|
1.12
|
|||||||||||||||||||||||||||
Brokered deposits
|
14,803
|
179
|
1.21
|
5,590
|
53
|
0.95
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Total interest-bearing deposits
|
497,210
|
1,165
|
0.23
|
463,704
|
1,291
|
0.28
|
458,341
|
1,811
|
0.40
|
|||||||||||||||||||||||||||
Federal funds purchased
|
204
|
1
|
0.51
|
276
|
2
|
0.64
|
17
|
-
|
0.47
|
|||||||||||||||||||||||||||
Repurchase agreements
|
25,574
|
51
|
0.20
|
19,531
|
39
|
0.20
|
20,590
|
45
|
0.22
|
|||||||||||||||||||||||||||
Subordinated debt
|
8,067
|
341
|
4.22
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
FHLBP advances
|
20,603
|
787
|
3.82
|
10,986
|
613
|
5.58
|
12,356
|
653
|
5.29
|
|||||||||||||||||||||||||||
Other interest bearing accounts
|
9,765
|
367
|
3.76
|
9,802
|
366
|
3.73
|
9,836
|
379
|
3.85
|
|||||||||||||||||||||||||||
Total interest-bearing liabilities
|
561,423
|
2,712
|
0.48
|
504,299
|
2,311
|
0.46
|
501,140
|
2,888
|
0.58
|
|||||||||||||||||||||||||||
Demand deposits
|
115,901
|
106,604
|
89,696
|
|||||||||||||||||||||||||||||||||
Other liabilities
|
5,115
|
4,190
|
5,167
|
|||||||||||||||||||||||||||||||||
Stockholders' equity
|
58,913
|
61,763
|
58,033
|
|||||||||||||||||||||||||||||||||
Total liabilities and stockholders' equity
|
$
|
741,352
|
$
|
676,856
|
$
|
654,036
|
||||||||||||||||||||||||||||||
Net interest income
|
$
|
22,745
|
$
|
21,999
|
$
|
21,040
|
||||||||||||||||||||||||||||||
Interest rate spread
|
3.09
|
%
|
3.25
|
%
|
3.22
|
%
|
||||||||||||||||||||||||||||||
Net interest margin
|
3.16
|
%
|
3.36
|
%
|
3.34
|
%
|
Three Months Ended March 31
|
||||||||||||||||||||||||||||||||||||
2016 Versus 2015
|
2015 Versus 2014
|
2014 Versus 2013
|
||||||||||||||||||||||||||||||||||
Change Due To
|
Change Due To
|
Change Due To
|
||||||||||||||||||||||||||||||||||
Rate
|
Volume
|
Total
|
Rate
|
Volume
|
Total
|
Rate
|
Volume
|
Total
|
||||||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||||||||||||||
Loans
|
$
|
(33
|
)
|
$
|
241
|
$
|
208
|
$
|
(701
|
)
|
$
|
1,316
|
$
|
615
|
$
|
(1,364
|
)
|
$
|
1,757
|
$
|
393
|
|||||||||||||||
Investment securities:
|
||||||||||||||||||||||||||||||||||||
Taxable
|
58
|
(111
|
)
|
(53
|
)
|
(242
|
)
|
347
|
105
|
(23
|
)
|
12
|
(11
|
)
|
||||||||||||||||||||||
Tax-exempt
|
(49
|
)
|
36
|
(13
|
)
|
(62
|
)
|
489
|
427
|
90
|
(62
|
)
|
28
|
|||||||||||||||||||||||
Cash and cash equivalents
|
10
|
4
|
14
|
1
|
(1
|
)
|
-
|
(2
|
)
|
(26
|
)
|
(28
|
)
|
|||||||||||||||||||||||
Total
|
(14
|
)
|
170
|
156
|
(1,004
|
)
|
2,151
|
1,147
|
(1,299
|
)
|
1,681
|
382
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||||||||||||||
Savings deposits
|
22
|
(7
|
)
|
15
|
(5
|
)
|
54
|
49
|
(219
|
)
|
20
|
(199
|
)
|
|||||||||||||||||||||||
Time deposits
|
14
|
(6
|
)
|
8
|
(219
|
)
|
(82
|
)
|
(301
|
)
|
(256
|
)
|
(118
|
)
|
(374
|
)
|
||||||||||||||||||||
Brokered deposits
|
10
|
28
|
38
|
14
|
112
|
126
|
-
|
53
|
53
|
|||||||||||||||||||||||||||
Federal funds purchased
|
-
|
-
|
-
|
-
|
(1
|
)
|
(1
|
)
|
-
|
2
|
2
|
|||||||||||||||||||||||||
Repurchase agreements
|
-
|
2
|
2
|
-
|
12
|
12
|
(4
|
)
|
(2
|
)
|
(6
|
)
|
||||||||||||||||||||||||
Subordinated notes
|
1
|
73
|
74
|
-
|
341
|
341
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
FHLBP advances
|
(113
|
)
|
13
|
(100
|
)
|
(193
|
)
|
367
|
174
|
36
|
(76
|
)
|
(40
|
)
|
||||||||||||||||||||||
Other borrowings
|
7
|
-
|
7
|
2
|
(1
|
)
|
1
|
(12
|
)
|
(1
|
)
|
(13
|
)
|
|||||||||||||||||||||||
Total
|
(59
|
)
|
103
|
44
|
(401
|
)
|
802
|
401
|
(455
|
)
|
(122
|
)
|
(577
|
)
|
||||||||||||||||||||||
Net interest income
|
$
|
45
|
$
|
67
|
$
|
112
|
$
|
(603
|
)
|
$
|
1,349
|
$
|
746
|
$
|
(844
|
)
|
$
|
1,803
|
$
|
959
|
March 31, 2016
|
||||||||||||
Time
|
Brokered
|
|||||||||||
(Dollars in thousands)
|
Deposits
|
Deposits
|
Total
|
|||||||||
Three months or less
|
$
|
21,467
|
$
|
3,859
|
$
|
25,326
|
||||||
Over three through six months
|
2,935
|
-
|
2,935
|
|||||||||
Over six through twelve months
|
16,480
|
-
|
16,480
|
|||||||||
Over one year through two years
|
4,459
|
5,427
|
9,886
|
|||||||||
Over two years
|
2,498
|
-
|
2,498
|
|||||||||
Total
|
$
|
47,839
|
$
|
9,286
|
$
|
57,125
|
December 31, 2015
|
||||||||||||
Time
|
Brokered
|
|||||||||||
(Dollars in thousands)
|
Deposits
|
Deposits
|
Total
|
|||||||||
Three months or less
|
$
|
14,225
|
$
|
-
|
$
|
14,225
|
||||||
Over three through six months
|
17,432
|
3,858
|
21,290
|
|||||||||
Over six through twelve months
|
2,602
|
-
|
2,602
|
|||||||||
Over one year through two years
|
4,359
|
5,420
|
9,779
|
|||||||||
Over two years
|
2,916
|
-
|
2,916
|
|||||||||
Total
|
$
|
41,534
|
$
|
9,278
|
$
|
50,812
|
March 31
|
December 31
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||||||
Non-interest-bearing deposits
|
$
|
131,951
|
$
|
125,581
|
$
|
102,107
|
$
|
101,853
|
$
|
85,055
|
$
|
68,371
|
||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||
NOW
|
201,566
|
185,973
|
205,816
|
170,427
|
161,844
|
171,321
|
||||||||||||||||||
Money market
|
138,241
|
137,555
|
143,483
|
130,835
|
122,953
|
107,368
|
||||||||||||||||||
Savings
|
75,535
|
72,660
|
66,634
|
60,090
|
58,256
|
45,250
|
||||||||||||||||||
Certificates
|
60,827
|
55,180
|
62,747
|
75,856
|
81,637
|
83,260
|
||||||||||||||||||
IRA
|
10,437
|
10,838
|
14,058
|
19,686
|
20,679
|
21,975
|
||||||||||||||||||
Brokered deposits
|
18,498
|
18,488
|
10,238
|
-
|
-
|
-
|
||||||||||||||||||
Total deposits
|
$
|
637,055
|
$
|
606,275
|
$
|
605,083
|
$
|
558,747
|
$
|
530,424
|
$
|
497,545
|
•
|
Total non-interest income for the first quarter of 2016 included a $1.15 million net gain from the insurance proceeds associated with the fire at our West Chester location.
|
|
•
|
Non-interest expense for the quarter ended March 31, 2016 included net compensation expense of $446,000 associated with the passing of the former Chairman and CEO, William S. Latoff and merger-related costs of $188,000 associated with our pending merger with ERB.
|
•
|
Total loans were $481.8 million at December 31, 2015, up $26.2 million or 5.7% from 2014. Gross loans funded during 2015 were $145.9 million, compared to $129.6 million in 2014. Paydowns on loans were $119.7 million, up 33.9% from $89.4 million in 2014. Commercial loans grew by $6.2 million or 5.3% to $122.5 million, commercial mortgage loans grew $16.8 million or 6.5%, consumer loans grew $486,000 or 0.9% to $56.4 million, and residential loans grew $2.7 million or 10.2% to $28.7 million.
|
|
•
|
During 2015, we redeemed $13.0 million or 100% of the Series 2011A Preferred Stock which we had issued and sold to the Treasury. Capital ratios continue to exceed minimum regulatory standards for well capitalized institutions. At December 31, 2015, the Tier 1 leverage ratio was 8.94%, Tier 1 risk-based capital was 12.08%, and total risk based capital ratio was 14.79%. As of the same date, the tangible common equity-to-tangible assets ratio was 7.40%, and the common equity tier 1 capital ratio was 10.44%.
|
|
•
|
Wealth management assets under care grew to $191.5 million at December 31, 2015, up from $163.8 million at December 31, 2014, as we continued expanding our wealth management business.
|
March 31, 2016
|
||||||||||||||||||||||||||||
Less than
|
1-5 | 5-10 |
Over
|
No
Stated
|
||||||||||||||||||||||||
Held to Maturity
|
1 Year
|
Years
|
Years
|
10 Years
|
Maturity
|
Total
|
Yield
|
|||||||||||||||||||||
US Government agency obligations
|
$
|
-
|
$
|
8,035
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
8,035
|
3.13
|
%
|
||||||||||||||
GSE mortgage-backed securities
|
-
|
-
|
2,615
|
-
|
-
|
2,615
|
2.89
|
|||||||||||||||||||||
Corporate bonds
|
-
|
3,803
|
7,617
|
-
|
-
|
11,420
|
4.45
|
|||||||||||||||||||||
Collateralized mortgage obligations GSE
|
-
|
-
|
-
|
2,455
|
-
|
2,455
|
2.14
|
|||||||||||||||||||||
State and municipal tax-exempt
|
-
|
8,183
|
17,298
|
15,644
|
-
|
41,125
|
3.96
|
|||||||||||||||||||||
Total
|
$
|
-
|
$
|
20,021
|
$
|
27,530
|
$
|
18,099
|
$
|
-
|
$
|
65,650
|
3.83
|
%
|
||||||||||||||
Percent of portfolio
|
-
|
%
|
30
|
%
|
42
|
%
|
28
|
%
|
-
|
%
|
100
|
%
|
||||||||||||||||
Weighted average yield
|
-
|
%
|
3.13
|
%
|
3.99
|
%
|
4.36
|
%
|
-
|
%
|
3.83
|
%
|
No
|
||||||||||||||||||||||||||||
Less than
|
1-5 | 5-10 |
Over
|
Stated
|
||||||||||||||||||||||||
Available for Sale
|
1 Year
|
Years
|
Years
|
10 Years
|
Maturity
|
Total
|
Yield
|
|||||||||||||||||||||
US Government agency obligations
|
$
|
9,997
|
$
|
47,119
|
$
|
2,000
|
$
|
-
|
$
|
-
|
$
|
59,116
|
1.13
|
%
|
||||||||||||||
GSE mortgage-backed securities
|
-
|
-
|
28,143
|
6,085
|
-
|
34,228
|
1.55
|
|||||||||||||||||||||
Collateralized mortgage obligations GSE
|
-
|
-
|
-
|
15,389
|
-
|
15,389
|
1.65
|
|||||||||||||||||||||
Corporate bonds
|
2,016
|
15,787
|
2,069
|
-
|
-
|
19,872
|
1.91
|
|||||||||||||||||||||
State and municipal tax-exempt
|
6,644
|
-
|
2,723
|
3,401
|
-
|
12,768
|
2.45
|
|||||||||||||||||||||
Total
|
$
|
18,657
|
$
|
62,906
|
$
|
34,935
|
$
|
24,875
|
$
|
-
|
$
|
141,373
|
1.52
|
%
|
||||||||||||||
Percent of portfolio
|
13
|
%
|
44
|
%
|
25
|
%
|
18
|
%
|
-
|
%
|
100
|
%
|
||||||||||||||||
Weighted average yield
|
0.81
|
%
|
1.39
|
%
|
1.78
|
%
|
2.00
|
%
|
-
|
%
|
1.52
|
%
|
December 31, 2015
|
||||||||||||||||||||||||||||
Less than
|
1-5
|
5-10
|
Over
|
No
Stated
|
||||||||||||||||||||||||
Held to Maturity
|
1 Year
|
Years
|
Years
|
10 Years
|
Maturity
|
Total
|
Yield
|
|||||||||||||||||||||
US Government agency obligations
|
$
|
-
|
$
|
7,973
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
7,973
|
3.08
|
%
|
||||||||||||||
GSE mortgage-backed securities
|
-
|
-
|
2,759
|
-
|
-
|
2,759
|
2.86
|
|||||||||||||||||||||
Corporate bonds
|
-
|
3,519
|
7,999
|
-
|
-
|
11,518
|
4.42
|
|||||||||||||||||||||
Collateralized mortgage obligations GSE
|
-
|
-
|
-
|
2,623
|
-
|
2,623
|
2.17
|
|||||||||||||||||||||
State and municipal tax-exempt
|
-
|
8,185
|
18,112
|
16,659
|
-
|
42,956
|
3.87
|
|||||||||||||||||||||
Total
|
$
|
-
|
$
|
19,677
|
$
|
28,870
|
$
|
19,282
|
$
|
-
|
$
|
67,829
|
3.76
|
%
|
||||||||||||||
Percent of portfolio
|
-
|
%
|
29
|
%
|
43
|
%
|
28
|
%
|
-
|
%
|
100
|
%
|
||||||||||||||||
Weighted average yield
|
-
|
%
|
3.06
|
%
|
3.88
|
%
|
4.31
|
%
|
-
|
%
|
3.76
|
%
|
||||||||||||||||
Less than
|
1-5
|
5-10
|
Over
|
No
Stated
|
||||||||||||||||||||||||
Available for Sale
|
1 Year
|
Years
|
Years
|
10 Years
|
Maturity
|
Total
|
Yield
|
|||||||||||||||||||||
US Government agency obligations
|
$
|
9,988
|
$
|
46,728
|
$
|
1,492
|
$
|
-
|
$
|
-
|
$
|
58,208
|
1.13
|
%
|
||||||||||||||
GSE mortgage-backed securities
|
-
|
-
|
34,111
|
6,240
|
-
|
40,351
|
1.46
|
|||||||||||||||||||||
Collateralized mortgage obligations GSE
|
-
|
-
|
-
|
15,806
|
-
|
15,806
|
1.64
|
|||||||||||||||||||||
Corporate bonds
|
2,020
|
16,537
|
2,014
|
-
|
-
|
20,571
|
1.83
|
|||||||||||||||||||||
State and municipal tax-exempt
|
6,660
|
-
|
3,578
|
7,205
|
-
|
17,443
|
2.85
|
|||||||||||||||||||||
Total
|
$
|
18,668
|
$
|
63,265
|
$
|
41,195
|
$
|
29,251
|
$
|
-
|
$
|
152,379
|
1.56
|
%
|
||||||||||||||
Percent of portfolio
|
12
|
%
|
42
|
%
|
27
|
%
|
19
|
%
|
-
|
%
|
100
|
%
|
||||||||||||||||
Weighted average yield
|
0.81
|
%
|
1.37
|
%
|
1.68
|
%
|
2.27
|
%
|
-
|
%
|
1.56
|
%
|
March 31
|
December 31
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
|||||||||||||||||||||||||||||
Amortized
|
Estimated
|
Amortized
|
Estimated
|
Amortized
|
Estimated
|
Amortized
|
Estimated
|
|||||||||||||||||||||||||
Held to Maturity
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
||||||||||||||||||||||||
US Government agency obligations
|
$
|
8,035
|
$
|
8,517
|
$
|
7,973
|
$
|
8,293
|
$
|
7,730
|
$
|
8,073
|
$
|
7,494
|
$
|
7,569
|
||||||||||||||||
GSE mortgage-backed securities
|
2,615
|
2,720
|
2,759
|
2,842
|
3,579
|
3,712
|
5,934
|
6,134
|
||||||||||||||||||||||||
Corporate bonds
|
11,420
|
11,654
|
11,518
|
11,710
|
3,951
|
4,275
|
6,357
|
6,606
|
||||||||||||||||||||||||
Collateralized mortgage obligations GSE
|
2,455
|
2,478
|
2,623
|
2,606
|
3,605
|
3,579
|
4,903
|
4,824
|
||||||||||||||||||||||||
State and municipal tax-exempt
|
41,125
|
41,428
|
42,956
|
42,980
|
40,589
|
40,460
|
40,611
|
38,269
|
||||||||||||||||||||||||
Total
|
$
|
65,650
|
$
|
66,797
|
$
|
67,829
|
$
|
68,431
|
$
|
59,454
|
$
|
60,099
|
$
|
65,299
|
$
|
63,402
|
||||||||||||||||
March 31
|
December 31
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
|||||||||||||||||||||||||||||
Amortized
|
Estimated
|
Amortized
|
Estimated
|
Amortized
|
Estimated
|
Amortized
|
Estimated
|
|||||||||||||||||||||||||
Available for Sale
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
||||||||||||||||||||||||
US Government agency obligations
|
$
|
58,950
|
$
|
59,116
|
$
|
58,460
|
$
|
58,208
|
$
|
61,547
|
$
|
61,354
|
$
|
30,522
|
$
|
29,943
|
||||||||||||||||
GSE mortgage-backed securities
|
34,055
|
34,228
|
40,663
|
40,351
|
66,669
|
66,723
|
49,448
|
48,930
|
||||||||||||||||||||||||
Collateralized mortgage obligations GSE
|
15,518
|
15,389
|
16,241
|
15,806
|
20,499
|
20,011
|
23,836
|
22,886
|
||||||||||||||||||||||||
Corporate bonds
|
19,951
|
19,872
|
20,921
|
20,571
|
13,208
|
13,102
|
16,944
|
16,550
|
||||||||||||||||||||||||
State and municipal tax-exempt
|
12,641
|
12,768
|
17,274
|
17,443
|
10,917
|
10,994
|
2,091
|
2,072
|
||||||||||||||||||||||||
Certificates of deposit
|
-
|
-
|
-
|
-
|
-
|
-
|
1,250
|
1,260
|
||||||||||||||||||||||||
Equity securities
|
-
|
-
|
-
|
-
|
27
|
18
|
27
|
18
|
||||||||||||||||||||||||
Total
|
$
|
141,115
|
$
|
141,373
|
$
|
153,559
|
$
|
152,379
|
$
|
172,867
|
$
|
172,202
|
$
|
124,118
|
$
|
121,659
|
March 31
|
December 31
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||||||
Residential mortgage
|
$
|
27,560
|
$
|
28,651
|
$
|
25,993
|
$
|
24,677
|
$
|
25,835
|
$
|
26,461
|
||||||||||||
Commercial mortgage
|
274,372
|
274,132
|
257,310
|
234,599
|
234,202
|
232,297
|
||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Commercial term
|
107,232
|
102,178
|
80,819
|
89,279
|
81,888
|
76,302
|
||||||||||||||||||
Commercial construction
|
24,833
|
20,364
|
35,534
|
19,117
|
12,247
|
24,818
|
||||||||||||||||||
Lease financing
|
-
|
-
|
-
|
2
|
67
|
191
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Home equity
|
49,545
|
51,270
|
50,192
|
41,418
|
35,322
|
36,042
|
||||||||||||||||||
Other
|
5,824
|
5,163
|
5,755
|
6,262
|
6,937
|
7,573
|
||||||||||||||||||
Total loans
|
489,366
|
481,758
|
455,603
|
415,354
|
396,498
|
403,684
|
||||||||||||||||||
Less allowance for credit losses
|
(5,172
|
)
|
(4,935
|
)
|
(4,906
|
)
|
(4,623
|
)
|
(6,838
|
)
|
(6,164
|
)
|
||||||||||||
Net loans
|
$
|
484,194
|
$
|
476,823
|
$
|
450,697
|
$
|
410,731
|
$
|
389,660
|
$
|
397,520
|
March 31, 2016
|
December 31, 2015
|
|||||||||||||||||||||||||||||||
Less than
|
1-5
|
Over 5
|
Less than
|
1-5
|
Over 5
|
|||||||||||||||||||||||||||
1 Year
|
Years
|
Years
|
Total
|
1 Year
|
Years
|
Years
|
Total
|
|||||||||||||||||||||||||
Residential mortgage
|
$
|
7,200
|
$
|
58
|
$
|
20,302
|
$
|
27,560
|
$
|
8,023
|
$
|
43
|
$
|
20,585
|
$
|
28,651
|
||||||||||||||||
Commercial mortgage
|
14,737
|
96,784
|
162,851
|
274,372
|
12,360
|
94,913
|
166,859
|
274,132
|
||||||||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||||||||||
Commercial term
|
8,030
|
11,605
|
87,597
|
107,232
|
6,566
|
13,608
|
82,004
|
102,178
|
||||||||||||||||||||||||
Commercial construction
|
11,826
|
8,291
|
4,716
|
24,833
|
10,900
|
3,818
|
5,646
|
20,364
|
||||||||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||||||
Home equity
|
48
|
3,573
|
45,924
|
49,545
|
1,114
|
3,716
|
46,440
|
51,270
|
||||||||||||||||||||||||
Other
|
682
|
616
|
4,526
|
5,824
|
17
|
579
|
4,567
|
5,163
|
||||||||||||||||||||||||
Total loans
|
42,523
|
120,927
|
325,916
|
489,366
|
38,980
|
116,677
|
326,101
|
481,758
|
||||||||||||||||||||||||
Loans with fixed interest rates
|
16,173
|
109,005
|
193,913
|
319,091
|
14,355
|
105,768
|
191,496
|
311,619
|
||||||||||||||||||||||||
Loans with variable interest rates
|
26,350
|
11,922
|
132,003
|
170,275
|
24,625
|
10,909
|
134,605
|
170,139
|
||||||||||||||||||||||||
Total loans
|
$
|
42,523
|
$
|
120,927
|
$
|
325,916
|
$
|
489,366
|
$
|
38,980
|
$
|
116,677
|
$
|
326,101
|
$
|
481,758
|
March 31
|
December 31
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||||||
Non-accrual loans:
|
||||||||||||||||||||||||
Residential mortgage
|
$
|
1,781
|
$
|
1,619
|
$
|
2,457
|
$
|
2,250
|
$
|
2,196
|
$
|
1,873
|
||||||||||||
Commercial mortgage
|
1,025
|
1,048
|
1,294
|
266
|
2,804
|
2,114
|
||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Commercial term
|
210
|
188
|
198
|
-
|
-
|
201
|
||||||||||||||||||
Commercial construction
|
1,237
|
1,028
|
2,043
|
2,554
|
4,326
|
3,032
|
||||||||||||||||||
Lease financing
|
-
|
-
|
-
|
-
|
28
|
61
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Home equity
|
574
|
563
|
432
|
434
|
64
|
61
|
||||||||||||||||||
Other
|
199
|
189
|
95
|
82
|
147
|
90
|
||||||||||||||||||
Total non-accrual loans
|
5,026
|
4,635
|
6,519
|
5,586
|
9,565
|
7,432
|
||||||||||||||||||
Loans 90 days past due and still accruing
|
164
|
457
|
334
|
141
|
869
|
210
|
||||||||||||||||||
Total non-performing loans
|
5,190
|
5,092
|
6,853
|
5,727
|
10,434
|
7,642
|
||||||||||||||||||
Other real estate owned & other repossessed property
|
2,612
|
2,581
|
901
|
1,096
|
1,237
|
3,974
|
||||||||||||||||||
Total non-performing assets
|
$
|
7,802
|
$
|
7,673
|
$
|
7,754
|
$
|
6,823
|
$
|
11,671
|
$
|
11,616
|
||||||||||||
Asset quality ratios:
|
||||||||||||||||||||||||
Non-performing loans to total loans
|
1.06
|
%
|
1.06
|
%
|
1.50
|
%
|
1.38
|
%
|
2.63
|
%
|
1.89
|
%
|
||||||||||||
Non-performing assets to total assets
|
1.02
|
1.02
|
1.07
|
1.03
|
1.82
|
1.91
|
||||||||||||||||||
Allowance for credit losses to:
|
||||||||||||||||||||||||
Total loans
|
1.06
|
1.02
|
1.08
|
1.11
|
1.72
|
1.53
|
||||||||||||||||||
Non-performing loans
|
99.65
|
96.91
|
71.59
|
80.70
|
65.54
|
80.70
|
Three Months Ended March 31, 2016
|
||||||||||||||||
March 31, 2016
|
Interest income that would have
been recorded
|
Interest income recorded during
|
Net impact on
|
|||||||||||||
Amount
|
under original terms
|
the period
|
interest income
|
|||||||||||||
Non-accrual loans:
|
||||||||||||||||
Residential mortgage
|
$
|
1,781
|
$
|
19
|
$
|
-
|
$
|
19
|
||||||||
Commercial mortgage
|
1,025
|
20
|
-
|
20
|
||||||||||||
Commercial:
|
-
|
|||||||||||||||
Commercial term
|
210
|
3
|
-
|
3
|
||||||||||||
Commercial construction
|
1,237
|
41
|
-
|
41
|
||||||||||||
Lease financing
|
-
|
-
|
-
|
-
|
||||||||||||
Consumer:
|
-
|
|||||||||||||||
Home equity
|
574
|
16
|
-
|
16
|
||||||||||||
Other
|
199
|
5
|
-
|
5
|
||||||||||||
Total non-accrual loans
|
5,026
|
104
|
-
|
104
|
||||||||||||
Loans 90 days past due and still accruing
|
164
|
1
|
1
|
-
|
||||||||||||
Total non-performing loans
|
$
|
5,190
|
$
|
105
|
$
|
1
|
$
|
104
|
||||||||
Three Months Ended March 31, 2015
|
||||||||||||||||
March 31, 2015
|
Interest income that would have
been recorded
|
Interest income recorded during
|
Net impact on
|
|||||||||||||
Amount
|
under original terms
|
the period
|
interest income
|
|||||||||||||
Non-accrual loans:
|
||||||||||||||||
Residential mortgage
|
$
|
2,446
|
$
|
16
|
$
|
-
|
$
|
16
|
||||||||
Commercial mortgage
|
1,262
|
21
|
-
|
21
|
||||||||||||
Commercial:
|
-
|
|||||||||||||||
Commercial term
|
196
|
2
|
-
|
2
|
||||||||||||
Commercial construction
|
2,043
|
84
|
-
|
84
|
||||||||||||
Lease financing
|
-
|
-
|
-
|
-
|
||||||||||||
Consumer:
|
-
|
|||||||||||||||
Home equity
|
429
|
7
|
-
|
7
|
||||||||||||
Other
|
194
|
5
|
-
|
5
|
||||||||||||
Total non-accrual loans
|
6,570
|
135
|
-
|
135
|
||||||||||||
Loans 90 days past due and still accruing
|
239
|
5
|
5
|
-
|
||||||||||||
Total non-performing loans
|
$
|
6,809
|
$
|
140
|
$
|
5
|
$
|
135
|
Year Ended December 31, 2015
|
||||||||||||||||
December 31, 2015
|
Interest income that would have
been recorded
|
Interest income recorded during
|
Net impact on
|
|||||||||||||
Amount
|
under original terms
|
the period
|
interest income
|
|||||||||||||
Non-accrual loans:
|
||||||||||||||||
Residential mortgage
|
$
|
1,619
|
$
|
69
|
$
|
-
|
$
|
69
|
||||||||
Commercial mortgage
|
1,048
|
86
|
-
|
86
|
||||||||||||
Commercial:
|
-
|
|||||||||||||||
Commercial term
|
188
|
9
|
-
|
9
|
||||||||||||
Commercial construction
|
1,028
|
268
|
-
|
268
|
||||||||||||
Lease financing
|
-
|
-
|
-
|
-
|
||||||||||||
Consumer:
|
-
|
|||||||||||||||
Home equity
|
563
|
26
|
-
|
26
|
||||||||||||
Other
|
189
|
15
|
-
|
15
|
||||||||||||
Total non-accrual loans
|
4,635
|
473
|
-
|
473
|
||||||||||||
Loans 90 days past due and still accruing
|
457
|
3
|
3
|
-
|
||||||||||||
Total non-performing loans
|
$
|
5,092
|
$
|
476
|
$
|
3
|
$
|
473
|
||||||||
Year Ended December 31, 2014
|
||||||||||||||||
December 31, 2014
|
Interest income that
would have
been recorded
|
Interest income recorded during
|
Net impact on
|
|||||||||||||
Amount
|
under original terms
|
the period
|
interest income
|
|||||||||||||
Non-accrual loans:
|
||||||||||||||||
Residential mortgage
|
$
|
2,457
|
$
|
56
|
$
|
-
|
$
|
56
|
||||||||
Commercial mortgage
|
1,294
|
41
|
-
|
41
|
||||||||||||
Commercial:
|
-
|
|||||||||||||||
Commercial term
|
198
|
3
|
-
|
3
|
||||||||||||
Commercial construction
|
2,043
|
355
|
-
|
355
|
||||||||||||
Lease financing
|
-
|
-
|
-
|
-
|
||||||||||||
Consumer:
|
-
|
|||||||||||||||
Home equity
|
432
|
26
|
3
|
23
|
||||||||||||
Other
|
95
|
12
|
-
|
12
|
||||||||||||
Total non-accrual loans
|
6,519
|
493
|
3
|
490
|
||||||||||||
Loans 90 days past due and still accruing
|
334
|
6
|
6
|
-
|
||||||||||||
Total non-performing loans
|
$
|
6,853
|
$
|
499
|
$
|
9
|
$
|
490
|
•
|
Changes in the nature and volume of the portfolio and in the terms of loans.
|
|
•
|
Changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans.
|
|
•
|
The existence and effect of any concentrations of credit, and changes in the level of such concentrations.
|
|
•
|
Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.
|
•
|
Changes in the experience, ability, and depth of lending management and other relevant staff.
|
|
•
|
Changes in the Loan Review Methodology and Degree of Oversight by Bank's board of directors.
|
|
•
|
Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.
|
|
•
|
The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution's existing portfolio.
|
|
•
|
Changes in the value of underlying collateral for collateral
‑
dependent loans.
|
Three Months Ended
|
||||||||||||||||||||||||||||
March 31,
|
Year Ended December 31
|
|||||||||||||||||||||||||||
2016
|
2015
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||||||||
Beginning balance
|
$
|
4,935
|
$
|
4,906
|
$
|
4,906
|
$
|
4,623
|
$
|
6,838
|
$
|
6,164
|
$
|
5,884
|
||||||||||||||
Provisions
|
330
|
300
|
1,105
|
1,130
|
2,530
|
1,455
|
1,480
|
|||||||||||||||||||||
Loans charged off:
|
||||||||||||||||||||||||||||
Residential mortgage
|
(84
|
)
|
-
|
(194
|
)
|
(326
|
)
|
(183
|
)
|
(99
|
)
|
(280
|
)
|
|||||||||||||||
Commercial mortgage
|
-
|
-
|
(105
|
)
|
(8
|
)
|
(716
|
)
|
-
|
(51
|
)
|
|||||||||||||||||
Commercial:
|
||||||||||||||||||||||||||||
Commercial term
|
(13
|
)
|
(11
|
)
|
(200
|
)
|
(47
|
)
|
(247
|
)
|
(38
|
)
|
(717
|
)
|
||||||||||||||
Commercial construction
|
-
|
-
|
(581
|
)
|
(511
|
)
|
(3,648
|
)
|
(848
|
)
|
-
|
|||||||||||||||||
Lease financing
|
-
|
-
|
-
|
(1
|
)
|
(26
|
)
|
(1
|
)
|
(200
|
)
|
|||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||
Home equity
|
-
|
-
|
(11
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Other
|
-
|
(6
|
)
|
(63
|
)
|
(82
|
)
|
(70
|
)
|
(31
|
)
|
(64
|
)
|
|||||||||||||||
Total charged off
|
(97
|
)
|
(17
|
)
|
(1,154
|
)
|
(975
|
)
|
(4,890
|
)
|
(1,017
|
)
|
(1,312
|
)
|
||||||||||||||
Recoveries:
|
||||||||||||||||||||||||||||
Residential mortgage
|
1
|
-
|
4
|
5
|
80
|
21
|
79
|
|||||||||||||||||||||
Commercial mortgage
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||||||
Commercial term
|
1
|
-
|
13
|
3
|
5
|
115
|
9
|
|||||||||||||||||||||
Commercial construction
|
1
|
-
|
10
|
103
|
-
|
-
|
-
|
|||||||||||||||||||||
Lease financing
|
1
|
1
|
49
|
8
|
59
|
72
|
3
|
|||||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Other
|
-
|
-
|
2
|
9
|
1
|
28
|
21
|
|||||||||||||||||||||
Total recoveries
|
4
|
1
|
78
|
128
|
145
|
236
|
112
|
|||||||||||||||||||||
Net charge-offs
|
(93
|
)
|
(16
|
)
|
(1,076
|
)
|
(847
|
)
|
(4,745
|
)
|
(781
|
)
|
(1,200
|
)
|
||||||||||||||
Ending balance
|
$
|
5,172
|
$
|
5,190
|
$
|
4,935
|
$
|
4,906
|
$
|
4,623
|
$
|
6,838
|
$
|
6,164
|
||||||||||||||
Reserve for unfunded loan commitments
|
$
|
186
|
$
|
156
|
$
|
188
|
$
|
166
|
$
|
143
|
$
|
125
|
$
|
99
|
||||||||||||||
Ratio of net charge-offs to average loans
|
0.02
|
%
|
0.00
|
%
|
0.23
|
%
|
0.19
|
%
|
1.20
|
%
|
0.20
|
%
|
0.29
|
%
|
March 31
|
December 31
|
|||||||||||||||||||||||||||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||||||||||||||||||||||||||||||
Amount
|
Percent of
Loan Type
|
Amount
|
Percent of
Loan Type
|
Amount
|
Percent of
Loan Type
|
Amount
|
Percent of
Loan Type
|
Amount
|
Percent of
Loan Type
|
Amount
|
Percent of
Loan Type
|
|||||||||||||||||||||||||||||||||||||
Residential mortgage
|
$
|
220
|
6
|
%
|
$
|
216
|
6
|
%
|
$
|
269
|
6
|
%
|
$
|
285
|
6
|
%
|
$
|
306
|
6
|
%
|
$
|
383
|
6
|
%
|
||||||||||||||||||||||||
Commercial mortgage
|
2,376
|
56
|
2,375
|
57
|
2,300
|
56
|
2,010
|
56
|
3,094
|
59
|
3,442
|
58
|
||||||||||||||||||||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Commercial term
|
948
|
22
|
989
|
21
|
709
|
18
|
621
|
21
|
506
|
21
|
474
|
19
|
||||||||||||||||||||||||||||||||||||
Commercial construction
|
765
|
5
|
569
|
4
|
881
|
8
|
1,073
|
5
|
1,536
|
3
|
1,029
|
6
|
||||||||||||||||||||||||||||||||||||
Lease financing
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
3
|
-
|
10
|
-
|
||||||||||||||||||||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Home equity
|
188
|
10
|
195
|
11
|
189
|
11
|
156
|
10
|
178
|
9
|
165
|
4
|
||||||||||||||||||||||||||||||||||||
Other
|
67
|
1
|
64
|
1
|
70
|
1
|
78
|
2
|
86
|
2
|
95
|
7
|
||||||||||||||||||||||||||||||||||||
Unallocated
|
608
|
-
|
527
|
-
|
488
|
-
|
440
|
-
|
1,129
|
-
|
566
|
-
|
||||||||||||||||||||||||||||||||||||
Total
|
$
|
5,172
|
100
|
%
|
$
|
4,935
|
100
|
%
|
$
|
4,906
|
100
|
%
|
$
|
4,623
|
100
|
%
|
$
|
6,838
|
100
|
%
|
$
|
6,164
|
100
|
%
|
||||||||||||||||||||||||
Reserve for unfunded loan
|
||||||||||||||||||||||||||||||||||||||||||||||||
commitments (other
|
||||||||||||||||||||||||||||||||||||||||||||||||
liability)
|
$
|
186
|
$
|
188
|
$
|
166
|
$
|
143
|
$
|
125
|
$
|
99
|
March 31, 2016
|
||||||||||||||||||||
Expiration by Period
|
||||||||||||||||||||
Total
|
Less than
1 Year
|
1-3
Years
|
3-5
Years
|
More than
5 Years
|
||||||||||||||||
Commitments to extend credit
|
$
|
116,862
|
$
|
10,878
|
$
|
5,525
|
$
|
1,476
|
$
|
98,983
|
||||||||||
Letters of credit
|
2,635
|
2,605
|
4
|
-
|
26
|
|||||||||||||||
Total
|
$
|
119,497
|
$
|
13,483
|
$
|
5,529
|
$
|
1,476
|
$
|
99,009
|
December 31, 2015
|
||||||||||||||||||||
Expiration by Period
|
||||||||||||||||||||
Total
|
Less than
1 Year
|
1-3
Years
|
3-5
Years
|
More than
5 Years
|
||||||||||||||||
Commitments to extend credit
|
$
|
116,380
|
$
|
11,821
|
$
|
5,200
|
$
|
1,010
|
$
|
98,349
|
||||||||||
Letters of credit
|
3,170
|
3,090
|
54
|
-
|
26
|
|||||||||||||||
Total
|
$
|
119,550
|
$
|
14,911
|
$
|
5,254
|
$
|
1,010
|
$
|
98,375
|
March 31, 2016
|
||||||||||||||||||||
Payments Due by Period
|
||||||||||||||||||||
Total
|
Less than
1 Year
|
1-3
Years
|
3-5
Years
|
More than
5 Years
|
||||||||||||||||
FHLBP advances
|
$
|
20,000
|
$
|
-
|
$
|
4,000
|
$
|
16,000
|
$
|
-
|
||||||||||
Repurchase agreements
|
21,661
|
21,661
|
-
|
-
|
-
|
|||||||||||||||
Capital lease obligations
|
454
|
48
|
117
|
154
|
135
|
|||||||||||||||
Operating lease obligations
|
1,717
|
384
|
823
|
465
|
45
|
|||||||||||||||
Long-term subordinated debt
|
9,750
|
-
|
-
|
-
|
9,750
|
|||||||||||||||
Junior subordinated debentures
|
9,279
|
-
|
-
|
-
|
9,279
|
|||||||||||||||
Total
|
$
|
62,861
|
$
|
22,093
|
$
|
4,940
|
$
|
16,619
|
$
|
19,209
|
December 31, 2015
|
||||||||||||||||||||
Payments Due by Period
|
||||||||||||||||||||
Total
|
Less than
1 Year
|
1-3
Years
|
3-5
Years
|
More than
5 Years
|
||||||||||||||||
FHLBP advances
|
$
|
30,000
|
$
|
10,000
|
$
|
4,000
|
$
|
16,000
|
$
|
-
|
||||||||||
Repurchase agreements
|
32,416
|
32,416
|
-
|
-
|
-
|
|||||||||||||||
Capital lease obligations
|
464
|
46
|
113
|
148
|
157
|
|||||||||||||||
Operating lease obligations
|
1,932
|
445
|
931
|
465
|
91
|
|||||||||||||||
Long-term subordinated debt
|
9,750
|
-
|
-
|
-
|
9,750
|
|||||||||||||||
Junior subordinated debentures
|
9,279
|
-
|
-
|
-
|
9,279
|
|||||||||||||||
Total
|
$
|
83,841
|
$
|
42,907
|
$
|
5,044
|
$
|
16,613
|
$
|
19,277
|
•
|
Commercial real estate loans to local businesses;
|
|
•
|
SBA preferred lending;
|
|
•
|
Commercial and industrial loans to local businesses;
|
|
•
|
Multi-family mortgage loans;
|
|
•
|
Residential, multi-family and commercial construction loans;
|
|
•
|
Residential mortgages including home equity loans and second mortgage loans; and
|
|
•
|
Consumer secured and unsecured loans.
|
•
|
Personal checking accounts, savings accounts and NOW accounts;
|
|
•
|
Personal money market deposit accounts and certificates of deposit;
|
|
•
|
Small business checking and savings accounts; and
|
|
•
|
Commercial business checking and savings accounts.
|
•
|
Electronic banking including online and mobile banking;
|
|
•
|
Transactional website;
|
|
•
|
ATM cards, credit cards and debit cards;
|
|
•
|
Bill payment;
|
|
•
|
ATM network access;
|
|
•
|
Bank by mail;
|
|
•
|
Wire transfers; and
|
|
•
|
Telephone banking.
|
•
|
Sweep accounts;
|
|
•
|
Wire transfer services;
|
|
•
|
Zero balance accounts;
|
|
•
|
Depository services;
|
|
•
|
Remote deposit capture;
|
|
•
|
ACH originations;
|
|
•
|
Escrow accounting services;
|
|
•
|
Business debit/credit cards; and
|
|
•
|
Controlled disbursement accounts.
|
March 31,
|
December 31,
|
|||||||||||||||||||||||||||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||||||||||||||||||||||||||||||
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||
Commercial
|
$
|
224,642
|
77.5
|
%
|
$
|
220,246
|
77.8
|
%
|
$
|
194,410
|
77.3
|
%
|
$
|
159,650
|
75.2
|
%
|
$
|
153,938
|
79.2
|
%
|
$
|
135,724
|
78.7
|
%
|
||||||||||||||||||||||||
Residential
|
65,002
|
22.4
|
62,750
|
22.1
|
56,868
|
22.6
|
52,298
|
24.7
|
40,086
|
20.6
|
36,416
|
21.1
|
||||||||||||||||||||||||||||||||||||
Consumer
|
244
|
0.1
|
213
|
0.1
|
239
|
0.1
|
256
|
0.1
|
311
|
0.2
|
407
|
0.2
|
||||||||||||||||||||||||||||||||||||
Total loans
|
$
|
289,888
|
100.0
|
%
|
$
|
283,209
|
100.0
|
%
|
$
|
251,517
|
100.0
|
%
|
$
|
212,204
|
100.0
|
%
|
$
|
194,335
|
100.0
|
%
|
$
|
172,547
|
100.0
|
%
|
||||||||||||||||||||||||
Less:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Deferred loan fees
|
1,072
|
1,118
|
892
|
767
|
750
|
663
|
||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses
|
3,564
|
3,445
|
3,086
|
2,948
|
2,526
|
2,107
|
||||||||||||||||||||||||||||||||||||||||||
Net loans
|
$
|
285,252
|
$
|
278,646
|
$
|
247,539
|
$
|
208,489
|
$
|
191,059
|
$
|
169,777
|
Commercial
|
Residential
|
Consumer
|
Total
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Amounts due after December 31, 2015 in:
|
||||||||||||||||
One year or less
|
$
|
32,919
|
$
|
158
|
$
|
25
|
$
|
33,102
|
||||||||
After one year through five years
|
53,041
|
785
|
160
|
53,986
|
||||||||||||
After five years
|
134,286
|
61,807
|
28
|
196,121
|
||||||||||||
Total
|
$
|
220,246
|
$
|
62,750
|
$
|
213
|
$
|
283,209
|
Fixed-Rate
|
Floating or Adjustable-Rate
|
Total at
December 31,2015
|
||||||||||
(In thousands)
|
||||||||||||
Commercial
|
$
|
18,326
|
$
|
169,019
|
$
|
187,346
|
||||||
Residential
|
51,694
|
10,898
|
62,592
|
|||||||||
Consumer
|
57
|
131
|
188
|
|||||||||
Total
|
$
|
70,077
|
$
|
180,048
|
$
|
250,126
|
March 31,
|
December 31,
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Non-accruing loans:
|
||||||||||||||||||||||||
Commercial
|
$
|
1,897
|
$
|
897
|
$
|
900
|
$
|
646
|
$
|
1,373
|
$
|
2,842
|
||||||||||||
Residential
|
27
|
--
|
36
|
--
|
126
|
820
|
||||||||||||||||||
Consumer
|
-
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Total non-accruing loans
|
1,924
|
897
|
936
|
646
|
1,499
|
3,662
|
||||||||||||||||||
Accruing loans 90 days or more past due:
|
||||||||||||||||||||||||
Commercial
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Residential
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Consumer
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Total accruing loans 90 days or more past due
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Total non-performing loans
|
1,924
|
897
|
936
|
646
|
1,499
|
3,662
|
||||||||||||||||||
Other real estate owned
|
417
|
22
|
53
|
168
|
1,033
|
360
|
||||||||||||||||||
Total non-performing assets
|
$
|
2,341
|
$
|
919
|
$
|
989
|
$
|
814
|
$
|
2,532
|
$
|
4,022
|
||||||||||||
Troubled debt restructurings:
|
||||||||||||||||||||||||
Commercial
|
$
|
2,516
|
$
|
4,023
|
$
|
3,761
|
$
|
3,835
|
$
|
3,818
|
$
|
2,188
|
||||||||||||
Residential
|
102
|
102
|
103
|
75
|
38
|
--
|
||||||||||||||||||
Consumer
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Total troubled debt restructurings
|
2,618
|
4,125
|
3,864
|
3,910
|
3,856
|
2,188
|
||||||||||||||||||
Total non-performing assets and troubled debt
restructurings
|
$
|
4,959
|
$
|
5,044
|
$
|
4,853
|
$
|
4,724
|
$
|
6,388
|
$
|
6,210
|
||||||||||||
At or for the Three
Months Ended
March 31,
|
At or for the Year Ended December 31,
|
|||||||||||||||||||||||||||
2016
|
2015 | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Total loans outstanding at end of period
|
$
|
289,888
|
$
|
255,561
|
$
|
283,209
|
$
|
251,517
|
$
|
212,204
|
$
|
194,335
|
$
|
172,547
|
||||||||||||||
Daily average loans outstanding
|
286,983
|
254,628
|
262,955
|
230,395
|
206,410
|
180,285
|
165,792
|
|||||||||||||||||||||
Allowance for loan losses, beginning
of period
|
3,445
|
3,086
|
3,086
|
2,948
|
2,526
|
2,107
|
2,600
|
|||||||||||||||||||||
Provision for loan losses
|
184
|
64
|
408
|
192
|
550
|
1,075
|
1,229
|
|||||||||||||||||||||
Charge-offs:
|
||||||||||||||||||||||||||||
Commercial
|
65
|
49
|
49
|
30
|
135
|
268
|
744
|
|||||||||||||||||||||
Residential
|
--
|
--
|
--
|
24
|
--
|
368
|
982
|
|||||||||||||||||||||
Consumer
|
--
|
--
|
--
|
--
|
--
|
20
|
--
|
|||||||||||||||||||||
Total charge-offs
|
65
|
49
|
49
|
54
|
135
|
656
|
1,726
|
|||||||||||||||||||||
Recoveries on loans previously
charged-off
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||||||||
Allowance for loan losses, end of
period
|
$
|
3,564
|
$
|
3,101
|
$
|
3,445
|
$
|
3,086
|
$
|
2,948
|
$
|
2,526
|
$
|
2,107
|
||||||||||||||
Net charge-offs/average loans
outstanding
|
0.02
|
%
|
0.02
|
%
|
0.02
|
%
|
0.02
|
%
|
0.07
|
%
|
0.36
|
%
|
1.04
|
%
|
March 31,
|
December 31,
|
|||||||||||||||||||||||||||||||
2016
|
2015
|
2014
|
2013
|
|||||||||||||||||||||||||||||
Amortized
Cost
|
Market
Value
|
Amortized
Cost
|
Market
Value
|
Amortized
Cost
|
Market
Value
|
Amortized
Cost
|
Market
Value
|
|||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||
Securities available-for-sale:
|
||||||||||||||||||||||||||||||||
Mortgage-backed securities
|
$
|
1,827
|
$
|
1,922
|
$
|
1,909
|
$
|
1,982
|
$
|
1,274
|
$
|
1,396
|
$
|
4,867
|
$
|
5,118
|
||||||||||||||||
SBA pass-through securities
|
4,749
|
4,793
|
4,935
|
4,976
|
6,010
|
6,073
|
7,225
|
7,309
|
||||||||||||||||||||||||
Total securities available-for- sale
|
6,576
|
6,715
|
6,844
|
6,958
|
7,284
|
7,469
|
12,092
|
12,427
|
||||||||||||||||||||||||
Securities held to maturity:
|
313
|
320
|
314
|
319
|
--
|
--
|
--
|
--
|
||||||||||||||||||||||||
Total securities
|
$
|
6,889
|
$
|
7,035
|
$
|
7,158
|
$
|
7,277
|
$
|
7,284
|
$
|
7,469
|
$
|
12,092
|
$
|
12,427
|
Amounts at March 31, 2016, Which Mature In
|
||||||||||||||||||||
One Year
or Less
|
After One
through Five
Years
|
After Five
through 10
Years
|
Over 10
Years
|
Total
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||
Mortgage-backed securities
|
--
|
$
|
--
|
$
|
435
|
$
|
1,487
|
$
|
1,922
|
|||||||||||
SBA pass-through securities
|
--
|
1,171
|
785
|
2,837
|
4,793
|
|||||||||||||||
Other securities
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Total
|
--
|
1,171
|
1,220
|
4,324
|
6,715
|
|||||||||||||||
Weighted average yield
|
--
|
1.84
|
%
|
2.95
|
%
|
2.26
|
%
|
2.31
|
%
|
|||||||||||
Held to maturity:
|
||||||||||||||||||||
Mortgage-backed securities
|
--
|
--
|
--
|
$ |
--
|
$ |
--
|
|||||||||||||
SBA pass-through securities
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Other securities
|
--
|
--
|
--
|
313
|
313
|
|||||||||||||||
Total
|
--
|
--
|
--
|
313
|
313
|
|||||||||||||||
Weighted average yield
|
--
|
--
|
--
|
3.41
|
%
|
3.41
|
%
|
|||||||||||||
Total mortgage-backed and investment securities:
|
||||||||||||||||||||
Mortgage-backed securities
|
--
|
$ |
--
|
$ |
435
|
$ |
1,487
|
$ |
1,922
|
|||||||||||
SBA pass-through securities
|
--
|
1,171
|
785
|
2,837
|
4,793
|
|||||||||||||||
Other Securities
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Total
|
--
|
$
|
1,171
|
$
|
1,220
|
$
|
4,324
|
$
|
6,715
|
|||||||||||
Weighted average yield
|
--
|
%
|
1.84
|
%
|
2.95
|
%
|
2.26
|
%
|
2.31
|
%
|
Amounts at December 31, 2015 Which Mature In
|
||||||||||||||||||||
One Year
or Less
|
After One through Five Years
|
After Five through 10 Years
|
Over 10 Years
|
Total
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||
Mortgage-backed securities
|
--
|
$
|
--
|
$
|
475
|
$
|
1,507
|
$
|
1,982
|
|||||||||||
SBA pass-through securities
|
-- |
1,250
|
822
|
2,904
|
4,976
|
|||||||||||||||
Other Securities
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Total
|
--
|
1,250
|
1,297
|
4,411
|
6,958
|
|||||||||||||||
Weighted average yield
|
--
|
1.59
|
%
|
2.82
|
%
|
2.07
|
%
|
2.12
|
%
|
|||||||||||
Held to maturity:
|
||||||||||||||||||||
Mortgage-backed securities
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
|||||||||||
SBA pass-through securities
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Other securities
|
--
|
--
|
--
|
314
|
314
|
|||||||||||||||
Total
|
--
|
--
|
--
|
314
|
314
|
|||||||||||||||
Weighted average yield
|
--
|
--
|
--
|
3.41
|
%
|
3.41
|
%
|
|||||||||||||
Total mortgage-backed and investment securities:
|
||||||||||||||||||||
Mortgage-backed securities
|
--
|
$ |
--
|
$ |
475
|
$ |
1,507
|
$ |
1,982
|
|||||||||||
SBA pass-through securities
|
--
|
1,250
|
822
|
2,904
|
4,976
|
|||||||||||||||
Other Securities
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Total
|
--
|
$
|
1,250
|
$
|
1,297
|
$
|
4,411
|
$
|
6,958
|
|||||||||||
Weighted average yield
|
--
|
1.59
|
%
|
2.82
|
%
|
2.07
|
%
|
2.12
|
%
|
Quarter Ending:
|
Amount
|
Weighted Average Rate
|
||||||
(Dollars in thousands)
|
||||||||
June 30, 2016
|
$
|
9,250
|
1.20
|
%
|
||||
September 30, 2016
|
11,312
|
1.16
|
||||||
December 31, 2016
|
11,303
|
1.13
|
||||||
March 31, 2017
|
10,102
|
1.19
|
||||||
After March 31, 2017
|
29,049
|
1.56
|
||||||
Total certificates of deposit with balances of $100,000 or more
|
$
|
71,016
|
1.33
|
%
|
Quarter Ending:
|
Amount
|
Weighted Average Rate
|
||||||
(Dollars in thousands)
|
||||||||
March 31, 2016
|
$
|
10,658
|
1.14
|
%
|
||||
June 30, 2016
|
12,564
|
1.20
|
||||||
September 30, 2016
|
8,356
|
1.15
|
||||||
December 31, 2016
|
11,521
|
1.12
|
||||||
After December 31, 2016
|
28,590
|
1.51
|
||||||
Total certificates of deposit with balances of $100,000 or more
|
$
|
71,689
|
1.30
|
%
|
At or For the Three Months Ended
March 31,
|
At or For the Year Ended
December 31,
|
|||||||||||||||||||
2016
|
2015 |
2015
|
2014
|
2013
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
FHLB advances and other borrowings:
|
||||||||||||||||||||
Average balance outstanding
|
$
|
44,412
|
$ | 42,059 |
$
|
43,708
|
$
|
29,968
|
$
|
13,124
|
||||||||||
Maximum amount outstanding at any
month-end during the period
|
48,637
|
43,351 |
46,260
|
39,223
|
13,200
|
|||||||||||||||
Balance outstanding at end of
period
|
48,637
|
43,351 |
45,759
|
39,223
|
13,200
|
|||||||||||||||
Average interest rate during the
period
|
1.83
|
%
|
1.84 | % |
1.83
|
%
|
2.07
|
%
|
3.56
|
%
|
||||||||||
Weighted average interest rate at
end of period
|
1.66
|
%
|
1.81 | % |
1.78
|
%
|
1.87
|
%
|
3.52
|
%
|
•
|
it has attempted to ladder its borrowings in order to match a portion of its loan portfolio;
|
|
•
|
it has attempted, where possible, to extend the maturities of its deposits and borrowings;
|
|
•
|
it has invested in securities with variable rates of interest and short anticipated lives, generally less than five years, and it maintains a significant amount of liquidity; and
|
|
•
|
it has increased its outstanding shorter term loans particularly commercial real estate loans.
|
3 Months
or Less
|
More than
3 Months
to 6 Months
|
More than
6 Months
to 1 Year
|
More than
1 Year
to 3 Years
|
More than
3 Years
to 5 Years
|
More than
5 Years
|
Total
Amount
|
||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||
Interest-earning assets
(1)
:
|
||||||||||||||||||||||||||||
Loans receivable
(2)
|
$
|
60,240
|
$
|
17,351
|
$
|
21,026
|
$
|
88,572
|
$
|
61,692
|
$
|
41,007
|
$
|
289,888
|
||||||||||||||
Investment securities
|
3,502
|
2,285
|
154
|
794
|
579
|
3,362
|
10,676
|
|||||||||||||||||||||
Other interest-earning assets
|
10,537
|
- | - | - | - | - |
10,537
|
|||||||||||||||||||||
Total interest-earning assets
|
$
|
74,279
|
$
|
19,636
|
$
|
21,180
|
$
|
89,366
|
$
|
62,271
|
$
|
44,369
|
$
|
311,101
|
||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||||||
Savings accounts
|
$
|
706
|
$
|
706
|
$
|
1,412
|
$
|
5,650
|
$
|
5,208
|
$
|
25
|
$
|
13,707
|
||||||||||||||
Demand deposits
|
2,675
|
2,675
|
5,351
|
21,404
|
14,755
|
2,768
|
49,628
|
|||||||||||||||||||||
Money market accounts
|
1,547
|
1,547
|
3,095
|
12,379
|
7,247
|
87
|
25,902
|
|||||||||||||||||||||
Certificate accounts
|
23,753
|
14,745
|
35,803
|
33,216
|
10,330
|
233
|
118,080
|
|||||||||||||||||||||
FHLB advances
|
7,318
|
2,674
|
13,042
|
16,750
|
8,853
|
-
|
48,637
|
|||||||||||||||||||||
Total interest-bearing liabilities
|
$
|
35,999
|
$
|
22,347
|
$
|
58,703
|
$
|
89,399
|
$
|
46,393
|
$
|
3,113
|
$
|
255,954
|
||||||||||||||
Interest-earning assets less
interest-bearing liabilities
|
$
|
38,280
|
$
|
(2,711
|
)
|
$
|
(37,523
|
)
|
$
|
(33
|
)
|
$
|
15,878
|
$
|
41,256
|
$
|
55,147
|
|||||||||||
Cumulative interest-rate
sensitivity gap
(3)
|
$
|
38,280
|
$
|
35,569
|
$
|
(1,954
|
)
|
$
|
(1,987
|
)
|
$
|
13,891
|
$
|
55,147
|
$
|
110,294
|
||||||||||||
Cumulative interest-rate gap as a
percentage of total assets at
March 31, 2016
|
12.29
|
%
|
11.42
|
%
|
-0.63
|
%
|
-0.64
|
%
|
4.46
|
%
|
17.71
|
%
|
||||||||||||||||
Cumulative interest-earning assets
as a percentage of cumulative
interest-bearing liabilities at
March 31, 2016
|
206.34
|
%
|
160.96
|
%
|
98.33
|
%
|
99.04
|
%
|
105.49
|
%
|
121.55
|
%
|
Change in Interest
Rates
|
Net Portfolio Value
at March 31, 2016
|
NPV as % of Portfolio Value of Assets
|
||||||||||||||||||
In Basis Points
(Rate Shock)
|
Amount
|
$ Change
|
% Change
|
NPV Ratio
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
300bp
|
$
|
32,059
|
$
|
(10,541
|
)
|
(24.7
|
)%
|
10.61
|
%
|
(2.62
|
)%
|
|||||||||
200
|
35,495
|
(7,105
|
)
|
(16.7
|
)
|
11.50
|
(1.73
|
)
|
||||||||||||
100
|
39,109
|
(3,491
|
)
|
(8.2
|
)
|
12.41
|
(0.82
|
)
|
||||||||||||
Static
|
42,600
|
--
|
--
|
13.23
|
--
|
|||||||||||||||
(100)
|
$
|
46,789
|
$
|
4,189
|
9.8
|
%
|
14.21
|
%
|
0.98
|
%
|
Change in Interest
Rates
|
Net Portfolio Value
at December 31, 2015
|
NPV as % of Portfolio Value of Assets
|
||||||||||||||||||
In Basis Points
(Rate Shock)
|
Amount
|
$ Change
|
% Change
|
NPV Ratio
|
Change
|
|||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
300bp
|
$
|
32,025
|
$
|
(9,879
|
)
|
(23.6
|
)%
|
10.66
|
%
|
(2.45
|
)%
|
|||||||||
200
|
35,085
|
(6,819
|
)
|
(16.3
|
)
|
11.45
|
(1.66
|
)
|
||||||||||||
100
|
38,596
|
(3,308
|
)
|
(7.9
|
)
|
12.33
|
(0.78
|
)
|
||||||||||||
Static
|
41,904
|
--
|
--
|
13.11
|
--
|
|||||||||||||||
(100)
|
$
|
46,050
|
$
|
4,146
|
9.9
|
%
|
14.09
|
%
|
0.98
|
%
|
Interest-earning assets:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans receivable
(1)
|
$
|
282,414
|
$
|
3,598
|
5.10
|
%
|
$
|
250,608
|
$
|
3,163
|
5.05
|
%
|
$
|
258,768
|
$
|
13,178
|
5.09
|
%
|
$
|
226,508
|
$
|
11,703
|
5.17
|
%
|
$
|
202,884
|
$
|
11,057
|
5.45
|
%
|
||||||||||||||||||||||||||||||
Investment securities
|
9,220
|
65
|
2.82
|
9,125
|
94
|
4.12
|
9,282
|
272
|
2.93
|
10,248
|
220
|
2.15
|
18,574
|
443
|
2.39
|
|||||||||||||||||||||||||||||||||||||||||||||
Other interest-earning assets
|
13,195
|
20
|
0.61
|
15,114
|
13
|
0.34
|
16,986
|
57
|
0.34
|
18,047
|
85
|
0.47
|
25,717
|
100
|
0.39
|
|||||||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets
|
304,829
|
3,683
|
4.83
|
%
|
274,847
|
3,270
|
4.76
|
%
|
285,036
|
13,507
|
4.74
|
%
|
254,803
|
12,008
|
4.71
|
%
|
247,175
|
11,600
|
4.69
|
%
|
||||||||||||||||||||||||||||||||||||||||
Non-interest-earning assets
|
4,724
|
4,491
|
4,733
|
5,238
|
4,499
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets
|
$
|
309,553
|
$
|
279,338
|
$
|
289,769
|
$
|
260,041
|
$
|
251,674
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing
liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Savings, demand and money
market
accounts
|
89,516
|
84
|
0.38
|
79,894
|
75
|
0.38
|
82,911
|
309
|
0.37
|
89,351
|
356
|
0.40
|
96,865
|
593
|
0.61
|
|||||||||||||||||||||||||||||||||||||||||||||
Certificates of deposit
|
117,975
|
382
|
1.30
|
107,883
|
320
|
1.19
|
110,878
|
1,399
|
1.26
|
94,365
|
1,076
|
1.14
|
98,918
|
1,243
|
1.26
|
|||||||||||||||||||||||||||||||||||||||||||||
Total deposits
|
207,491
|
466
|
0.90
|
187,777
|
395
|
0.84
|
193,789
|
1,708
|
0.88
|
183,716
|
1,432
|
0.78
|
195,783
|
1,836
|
0.94
|
|||||||||||||||||||||||||||||||||||||||||||||
FHLB advances and
other borrowings
|
44,412
|
203
|
1.83
|
42,059
|
193
|
1.84
|
43,708
|
798
|
1.83
|
29,968
|
621
|
2.07
|
13,214
|
470
|
3.56
|
|||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities
|
251,903
|
669
|
1.06
|
229,836
|
588
|
1.02
|
237,497
|
2,506
|
1.06
|
213,684
|
2,053
|
0.96
|
208,997
|
2,306
|
1.10
|
|||||||||||||||||||||||||||||||||||||||||||||
Non-interest-bearing liabilities
|
22,185
|
17,500
|
19,549
|
16,478
|
15,319
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities
|
4,742
|
4,385
|
4,101
|
3,832
|
2,885
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity
|
30,723
|
27,617
|
28,622
|
26,047
|
24,473
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and
Stockholder's equity
|
$
|
309,553
|
$
|
279,338
|
$
|
289,769
|
$
|
260,041
|
$
|
251,674
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest-earning
assets
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income;
average interest rate
spread
|
$
|
3,014
|
3.77
|
%
|
$
|
2,862
|
3.74
|
%
|
$
|
11,001
|
3.68
|
%
|
$
|
9,955
|
3.75
|
%
|
$
|
9,294
|
3.59
|
%
|
||||||||||||||||||||||||||||||||||||||||
Net interest margin
(2)
|
3.96
|
%
|
3.90
|
%
|
3.86
|
%
|
3.91
|
%
|
3.76
|
%
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest earning assets to average interest bearing liabilities
|
121.01
|
%
|
119.58
|
%
|
120.02
|
%
|
119.24
|
%
|
118.27
|
%
|
(1) | Includes nonaccrual loans during the respective periods. Calculated net of deferred fees and discounts , loans in process and allowance for loan losses. |
(2) | Equals net interest income divided by average interest-earning assets. |
Three Months Ended
March 31, 2016 Compared to
Three Months Ended March 31, 2015
|
Year Ended December 31, 2015
Compared to 2014
|
Year Ended December 31, 2014
Compared to 2013
|
||||||||||||||||||||||||||||||||||
Increase (Decrease) Due to
|
Increase (Decrease) Due to
|
Increase (Decrease) Due to
|
||||||||||||||||||||||||||||||||||
Rate
|
Volume
|
Total
Increase
(Decrease)
|
Rate
|
Volume
|
Total
Increase
(Decrease)
|
Rate
|
Volume
|
Total
Increase
(Decrease)
|
||||||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||||||
Interest income:
|
||||||||||||||||||||||||||||||||||||
Loans receivable
|
$
|
34
|
$
|
401
|
$
|
435
|
$
|
(192
|
)
|
$
|
1,667
|
$
|
1,475
|
$
|
(641
|
)
|
$
|
1,287
|
$
|
646
|
||||||||||||||||
Investment securities
|
(30
|
)
|
1
|
(29
|
)
|
73
|
(21
|
)
|
52
|
(24
|
)
|
(199
|
)
|
(223
|
)
|
|||||||||||||||||||||
Other interest-earning assets
|
9
|
(2
|
) |
7
|
(23
|
)
|
(5
|
)
|
(28
|
)
|
15
|
(30
|
)
|
(15
|
)
|
|||||||||||||||||||||
Total interest income
|
13
|
400
|
413
|
(142
|
)
|
1,641
|
1,499
|
(650
|
)
|
1,058
|
408
|
|||||||||||||||||||||||||
Interest expense:
|
||||||||||||||||||||||||||||||||||||
Savings, demand and money
market accounts
|
--
|
9
|
9
|
(21
|
)
|
(26
|
)
|
(47
|
)
|
(191
|
)
|
(46
|
)
|
(237
|
)
|
|||||||||||||||||||||
Certificates of deposit
|
32
|
30
|
62
|
135
|
188
|
323
|
(110
|
)
|
(57
|
)
|
(167
|
)
|
||||||||||||||||||||||||
Total deposits
|
32
|
39
|
71
|
114
|
162
|
276
|
(301
|
)
|
(103
|
)
|
(404
|
)
|
||||||||||||||||||||||||
FHLB advances and other
borrowings
|
(1
|
)
|
11
|
10
|
(108
|
)
|
285
|
177
|
(445
|
)
|
596
|
151
|
||||||||||||||||||||||||
Total interest expense
|
31
|
50
|
81
|
6
|
447
|
453
|
(746
|
)
|
493
|
(253
|
)
|
|||||||||||||||||||||||||
Increase (decrease) in net interest
income
|
||||||||||||||||||||||||||||||||||||
$
|
(18
|
)
|
$
|
350
|
$
|
332
|
$
|
(148
|
)
|
$
|
1,194
|
$
|
1,046
|
$
|
96
|
$
|
565
|
$
|
661
|
|||||||||||||||||
Total
Amounts
|
Amount of Commitment Expiration - Per Period
|
|||||||||||||||||||
Committed at March 31,
2016
|
To
1 Year
|
1-3
Years
|
3-5
Years
|
After 5
Years
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Standby letters of credit
|
$
|
4,336
|
$
|
3,761
|
$
|
350
|
$
|
--
|
$
|
225
|
||||||||||
Unused lines of credit
|
17,230
|
7,236
|
5,001
|
4,861
|
132
|
|||||||||||||||
Undisbursed portion of loans in
process
|
33,530
|
15,332
|
18,198
|
--
|
--
|
|||||||||||||||
Commitments to originate loans
|
18,511
|
18,511
|
--
|
--
|
--
|
|||||||||||||||
Total commitments
|
$
|
73,607
|
$
|
44,840
|
$
|
23,459
|
$
|
4,861
|
$
|
357
|
Payments Due By Period
|
||||||||||||||||||||
Total at
March 31, 2016
|
To
1 Year
|
1-3
Years
|
3-5
Years
|
After 5
Years
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Certificates of deposit
|
$
|
118,080
|
$
|
74,301
|
$
|
33,216
|
$
|
10,330
|
$
|
233
|
||||||||||
FHLB advances, long-term(1)
|
39,895
|
14,292
|
16,750
|
8,853
|
--
|
|||||||||||||||
Total long-term debt
|
157,975
|
88,593
|
49,966
|
19,183
|
233
|
|||||||||||||||
Operating lease obligations
|
912
|
259
|
493
|
160
|
--
|
|||||||||||||||
Total contractual obligations
|
$
|
158,887
|
$
|
88,852
|
$
|
50,459
|
$
|
19,343
|
$
|
233
|
Payments Due By Period
|
||||||||||||||||||||
Total at
December 31, 2015
|
To
1 Year
|
1-3
Years
|
3-5
Years
|
After 5
Years
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Certificates of deposit
|
$
|
117,732
|
$
|
77,158
|
$
|
27,277
|
$
|
13,297
|
$
|
--
|
||||||||||
FHLB advances, long-term(1)
|
42,936
|
8,084
|
25,000
|
9,852
|
--
|
|||||||||||||||
Total long-term debt
|
160,668
|
85,242
|
52,277
|
23,149
|
--
|
|||||||||||||||
Operating lease obligations
|
974
|
256
|
506
|
212
|
--
|
|||||||||||||||
Total contractual obligations
|
$
|
161,642
|
$
|
85,498
|
$
|
52,783
|
$
|
23,361
|
$
|
--
|
March 31, 2016
|
Actual
|
For Capital Adequacy Purposes
|
To be Well Capitalized under Prompt Corrective Action Provisions
|
||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||
Common equity Tier 1 capital (to risk-weighted assets)
|
$
|
33,972
|
12.48
|
%
|
11,130
|
≥4.5%
|
$
|
12,367
|
≥6.5%
|
||||||||||||
Total capital (to risk-weighted assets)
|
30,874
|
13.73
|
%
|
19,788
|
≥8.0%
|
24,734
|
≥10.0%
|
||||||||||||||
Tier 1 capital (to risk-weighted assets)
|
33,972
|
12.48
|
%
|
14,841
|
≥6.0%
|
19,788
|
≥8.0%
|
||||||||||||||
Tier 1 capital (to average assets)
|
30,874
|
9.97
|
%
|
12,382
|
≥4.0%
|
15,478
|
≥5.0%
|
|
High
|
Low
|
Dividend
|
|||||||||
2014
|
||||||||||||
First quarter
|
$
|
20.48
|
18.60
|
$
|
0.07
|
|||||||
Second quarter
|
22.75
|
19.33
|
0.07
|
|||||||||
Third quarter
|
21.93
|
20.63
|
0.07
|
|||||||||
Fourth quarter
|
22.07
|
20.93
|
0.07
|
|||||||||
2015
|
||||||||||||
First quarter
|
28.67
|
21.13
|
0.07
|
|||||||||
Second quarter
|
26.93
|
24.44
|
0.07
|
|||||||||
Third quarter
|
27.85
|
25.10
|
0.07
|
|||||||||
Fourth quarter
|
29.87
|
26.07
|
0.07
|
|||||||||
2016
|
||||||||||||
First quarter
|
29.40
|
25.40
|
0.07
|
|||||||||
Second quarter (through [ ], 2016
|
[
|
]
|
[
|
]
|
0.07
|
•
|
one vote for each share of common stock held on any matter submitted to a vote of shareholders;
|
|
•
|
receive dividends if and when declared by DNB's board of directors from DNB's unreserved and unrestricted earned surplus or DNB's unreserved and unrestricted net earnings for the current fiscal year; and
|
|
•
|
share ratably in DNB's net assets legally available to DNB's shareholders in the event of DNB's liquidation, dissolution or winding up, after payment in full of all amounts required to be paid to creditors and preferred shareholders, if any, or provision for such payment.
|
•
|
whether the offer price is acceptable based on the historical and present operating results or financial condition of the corporation;
|
|
•
|
whether a more favorable price could be obtained for the corporation's securities in the future;
|
|
•
|
the impact which an acquisition of the corporation would have on the employees, depositors and customers of the corporation and its subsidiaries and the communities which they serve;
|
|
•
|
the reputation and business practices of the offeror and its management and affiliates as they would affect the employees, depositors and customers of the corporation and its subsidiaries and the future value of the corporation's stock;
|
|
•
|
the value of the securities (if any) which the offeror is offering in exchange for the corporation's securities, based on an analysis of the worth of the corporation as compared to the corporation or other entity whose securities are being offered; and
|
|
•
|
any antitrust or other legal and regulatory issues that are raised by the offer.
|
•
|
the board of directors approves the business combination or the acquisition of stock by means of which the interested shareholder became the beneficial owner of 20% of the shares prior to such stock acquisition;
|
|
•
|
the business combination is approved by the affirmative vote of the holders of all the outstanding shares of common stock of the corporation; or
|
|
•
|
the business combination is approved by the affirmative vote of the holders of a majority of all shares entitled to vote, excluding votes of shares held by any interested shareholder, and at the time of such vote, the interested shareholder is the beneficial owner of at least 80% of the voting shares of the corporation and shareholders receive a minimum "fair price" for their shares.
|
•
|
the business combination is approved by the affirmative vote of a majority of the shares other than those beneficially owned by the interested shareholder and its affiliates; or
|
|
•
|
the merger is approved at a shareholders meeting and shareholders receive a minimum "fair price" for their shares.
|
•
|
expand the factors and groups (including shareholders) which a corporation's board of directors can consider in determining whether an action is in the best interests of the corporation;
|
|||
•
|
provide that a corporation's board of directors need not consider the interests of any particular group as dominant or controlling;
|
|||
•
|
provide that a corporation's directors, in order to satisfy the presumption that they have acted in the best interests of the corporation, need not satisfy any greater obligation or higher burden of proof with respect to actions relating to an acquisition or potential acquisition of control;
|
|||
•
|
provide that the fiduciary duty of a corporation's directors is solely to the corporation and may be enforced by the corporation or by a shareholder in a derivative action, but not by a shareholder directly;
|
|||
•
|
provide that actions relating to acquisitions of control that are approved by a majority of "disinterested directors" are presumed to satisfy the directors' fiduciary duty standard, unless it is proven by clear and convincing evidence that the directors did not assent to such action in good faith after reasonable investigation;
|
|||
•
|
provide that in the exercise of their fiduciary duties, directors are not required to:
|
|||
•
|
render inapplicable, or make determinations under, provisions of the PBCL relating to control transactions, business combinations, control-share acquisitions or disgorgement by certain controlling shareholders following attempts to acquire control;
|
|||
•
|
take action as the board of directors, a committee of the board or an individual director, solely because of the effect such action might have on an acquisition or potential acquisition of control of DNB or the consideration that might be offered or paid to shareholders in such an acquisition; or
|
|||
•
|
redeem any rights under, or to modify or render inapplicable, any shareholder rights plan.
|
DNB Financial Corporation
4 Brandywine Avenue
Downingtown, PA 19335
(484) 359-3138
Attention: Gerald F. Sopp
Executive Vice President and
Chief Financial Officer |
East River Bank
4341 Ridge Avenue Philadelphia, PA 19129 (267) 295-6420 Attention: Charles T. Field
Senior Vice President and
Chief Financial Officer
|
PAGE
|
||
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated Statements of Financial Condition as of December 31, 2015 and 2014
|
F-3
|
|
Consolidated Statements of Income for the years ended December 31, 2015 and 2014
|
F-4
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015 and 2014
|
F-5
|
|
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2015 and 2014
|
F-6
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014
|
F-7
|
|
Notes to Consolidated Financial Statements for the year ended December 31, 2015
|
F-8
|
Consolidated Statements of Financial Condition as of March 31, 2016 and December 31, 2015
|
F-43
|
|
Consolidated Statements of Income for the three months ended March 31, 2016 and 2015
|
F-44
|
|
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015
|
F-45
|
|
Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2016 and 2015
|
F-46
|
|
Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015
|
F-47
|
|
Notes to Consolidated Financial Statements for the three months ended March 31, 2016
|
F-48
|
December 31
|
||||||||
2015
|
2014
|
|||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
21,119
|
$
|
12,504
|
||||
Federal Funds Sold
|
-
|
-
|
||||||
Cash and cash equivalents
|
21,119
|
12,504
|
||||||
Available-for-sale investment securities at fair value (amortized cost of $153,559 and $172,867)
|
152,379
|
172,202
|
||||||
Held-to-maturity investment securities (fair value of $68,431 and $60,099)
|
67,829
|
59,454
|
||||||
Total investment securities
|
220,208
|
231,656
|
||||||
Loans held for sale
|
-
|
617
|
||||||
Loans
|
481,758
|
455,603
|
||||||
Allowance for credit losses
|
(4,935
|
)
|
(4,906
|
)
|
||||
Net loans
|
476,823
|
450,697
|
||||||
Restricted stock
|
3,447
|
2,587
|
||||||
Office property and equipment, net
|
6,806
|
7,668
|
||||||
Accrued interest receivable
|
2,410
|
2,253
|
||||||
Other real estate owned & other repossessed property
|
2,581
|
901
|
||||||
Bank owned life insurance (BOLI)
|
9,326
|
9,098
|
||||||
Core deposit intangible
|
66
|
82
|
||||||
Net deferred taxes
|
3,733
|
3,446
|
||||||
Other assets
|
2,299
|
1,821
|
||||||
Total assets
|
$
|
748,818
|
$
|
723,330
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Non-interest-bearing deposits
|
$
|
125,581
|
$
|
102,107
|
||||
Interest-bearing deposits:
|
||||||||
NOW
|
185,973
|
205,816
|
||||||
Money market
|
137,555
|
143,483
|
||||||
Savings
|
72,660
|
66,634
|
||||||
Time
|
66,018
|
76,805
|
||||||
Brokered deposits
|
18,488
|
10,238
|
||||||
Total deposits
|
606,275
|
605,083
|
||||||
Federal Home Loan Bank of Pittsburgh (FHLBP) advances
|
30,000
|
20,000
|
||||||
Repurchase agreements
|
32,416
|
19,221
|
||||||
Junior subordinated debentures
|
9,279
|
9,279
|
||||||
Subordinated debt
|
9,750
|
-
|
||||||
Other borrowings
|
464
|
505
|
||||||
Total borrowings
|
81,909
|
49,005
|
||||||
Accrued interest payable
|
345
|
351
|
||||||
Other liabilities
|
4,801
|
4,983
|
||||||
Total liabilities
|
693,330
|
659,422
|
||||||
Commitments and contingencies
|
-
|
-
|
||||||
Stockholders' Equity
|
||||||||
Preferred stock, $10.00 par value; 1,000,000 shares authorized; $1,000 liquidation preference per share; 0 and 13,000 shares issued and outstanding, respectively
|
-
|
13,000
|
||||||
Common stock, $1.00 par value; 10,000,000 shares authorized; 2,933,049 and 2,903,610 issued, respectively; 2,823,840 and 2,778,724 outstanding, respectively
|
2,955
|
2,931
|
||||||
Treasury stock, at cost; 109,209 and 124,886 shares, respectively
|
(2,015
|
)
|
(2,301
|
)
|
||||
Surplus
|
35,097
|
34,745
|
||||||
Retained earnings
|
21,436
|
17,132
|
||||||
Accumulated other comprehensive loss, net
|
(1,985
|
)
|
(1,599
|
)
|
||||
Total stockholders' equity
|
55,488
|
63,908
|
||||||
Total liabilities and stockholders' equity
|
$
|
748,818
|
$
|
723,330
|
Year Ended December 31
|
||||||||
2015
|
2014
|
|||||||
Interest and Dividend Income:
|
||||||||
Interest and fees on loans
|
$
|
20,082
|
$
|
19,588
|
||||
Interest and dividends on investment securities:
|
||||||||
Taxable
|
2,955
|
2,850
|
||||||
Exempt from federal taxes
|
1,399
|
1,116
|
||||||
Interest on cash and cash equivalents
|
42
|
42
|
||||||
Total interest and dividend income
|
24,478
|
23,596
|
||||||
Interest Expense:
|
||||||||
Interest on NOW, money market and savings
|
590
|
541
|
||||||
Interest on time deposits
|
396
|
697
|
||||||
Interest on brokered deposits
|
179
|
53
|
||||||
Interest on FHLBP advances
|
787
|
613
|
||||||
Interest on repurchase agreements
|
51
|
39
|
||||||
Interest on junior subordinated debentures
|
301
|
295
|
||||||
Interest on subordinated debt
|
341
|
-
|
||||||
Interest on other borrowings
|
67
|
73
|
||||||
Total interest expense
|
2,712
|
2,311
|
||||||
Net interest income
|
21,766
|
21,285
|
||||||
Provision for credit losses
|
1,105
|
1,130
|
||||||
Net interest income after provision for credit losses
|
20,661
|
20,155
|
||||||
Non-interest Income:
|
||||||||
Service charges
|
1,131
|
1,226
|
||||||
Wealth management
|
1,485
|
1,314
|
||||||
Mortgage banking, net
|
171
|
92
|
||||||
Increase in cash surrender value of BOLI
|
228
|
235
|
||||||
Gain from insurance proceeds
|
120
|
-
|
||||||
Gains on sale of investment securities, net
|
78
|
858
|
||||||
Gains on sale of loans
|
484
|
-
|
||||||
Other fees
|
1,312
|
1,233
|
||||||
Total non-interest income
|
5,009
|
4,958
|
||||||
Non-interest Expense:
|
||||||||
Salaries and employee benefits
|
10,551
|
9,998
|
||||||
Furniture and equipment
|
1,239
|
1,289
|
||||||
Occupancy
|
1,919
|
2,119
|
||||||
Professional and consulting
|
1,185
|
1,216
|
||||||
Advertising and marketing
|
631
|
662
|
||||||
Printing and supplies
|
161
|
165
|
||||||
FDIC insurance
|
497
|
455
|
||||||
PA shares tax
|
602
|
602
|
||||||
Telecommunications
|
245
|
252
|
||||||
Loss on sale or write down of OREO, net
|
134
|
7
|
||||||
Other expenses
|
1,865
|
1,867
|
||||||
Total non-interest expense
|
19,029
|
18,632
|
||||||
Income before income tax expense
|
6,641
|
6,481
|
||||||
Income tax expense
|
1,503
|
1,677
|
||||||
Net income
|
5,138
|
4,804
|
||||||
Preferred stock dividends
|
50
|
135
|
||||||
Net income available to common stockholders
|
$
|
5,088
|
$
|
4,669
|
||||
Earnings per common share:
|
||||||||
Basic
|
$
|
1.82
|
$
|
1.69
|
||||
Diluted
|
$
|
1.79
|
$
|
1.66
|
||||
Cash dividends per common share
|
$
|
0.28
|
$
|
0.28
|
||||
Weighted average common shares outstanding:
|
||||||||
Basic
|
2,801,881
|
2,766,723
|
||||||
Diluted
|
2,847,488
|
2,812,726
|
Year Ended
|
||||||||
December 31
|
||||||||
2015
|
2014
|
|||||||
Net income
|
$
|
5,138
|
$
|
4,804
|
||||
Other comprehensive income (loss):
|
||||||||
Unrealized holding gains (losses) on AFS investment securities arising during the period
|
||||||||
Before tax amount
|
(437
|
)
|
2,237
|
|||||
Tax effect
|
149
|
(760
|
)
|
|||||
(288
|
)
|
1,477
|
||||||
Accretion of discount on AFS to HTM reclassification
(1)
|
||||||||
Before tax amount
|
7
|
8
|
||||||
Tax effect
(2)
|
(2
|
)
|
(3
|
)
|
||||
5
|
5
|
|||||||
Less reclassification for gains on AFS investment securities included in net income
|
||||||||
Before tax amount
|
(78
|
)
|
(443
|
)
|
||||
Tax effect
(2)
|
27
|
151
|
||||||
(51
|
)
|
(292
|
)
|
|||||
Other comprehensive income (loss) - securities
|
(334
|
)
|
1,190
|
|||||
Unrealized actuarial losses - pension
|
||||||||
Before tax amount
|
(79
|
)
|
(630
|
)
|
||||
Tax effect
|
27
|
214
|
||||||
(52
|
)
|
(416
|
)
|
|||||
Total other comprehensive (loss) income
|
(386
|
)
|
774
|
|||||
Total comprehensive income
|
$
|
4,752
|
$
|
5,578
|
||||
(1)
Amounts are included in interest and dividends on investment securities in the consolidated statements of income.
|
||||||||
(2)
Amounts are included in income tax expense in the consolidated statements of income.
|
Accumulated
|
||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||
Compre-
|
||||||||||||||||||||||||||||
Preferred
|
Common
|
Treasury
|
Retained
|
hensive
|
||||||||||||||||||||||||
Stock
|
Stock
|
Stock
|
Surplus
|
Earnings
|
Loss
|
Total
|
||||||||||||||||||||||
Balance at January 1, 2014
|
$
|
12,995
|
$
|
2,910
|
$
|
(2,629
|
)
|
$
|
34,441
|
$
|
13,239
|
$
|
(2,373
|
)
|
$
|
58,583
|
||||||||||||
Net income
|
-
|
-
|
-
|
-
|
4,804
|
-
|
4,804
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
774
|
774
|
|||||||||||||||||||||
SBLF issuance costs accretion to liquidation value
|
5
|
-
|
-
|
-
|
(5
|
)
|
-
|
-
|
||||||||||||||||||||
Restricted stock compensation expense
|
-
|
14
|
-
|
202
|
-
|
-
|
216
|
|||||||||||||||||||||
Exercise of stock options (6,907 shares)
|
-
|
7
|
-
|
32
|
-
|
-
|
39
|
|||||||||||||||||||||
Taxes on exercise of stock options
|
-
|
-
|
-
|
(23
|
)
|
-
|
-
|
(23
|
)
|
|||||||||||||||||||
Stock option compensation
|
-
|
-
|
-
|
51
|
-
|
-
|
51
|
|||||||||||||||||||||
Cash dividends - common ($0.28 per share)
|
-
|
-
|
-
|
-
|
(775
|
)
|
-
|
(775
|
)
|
|||||||||||||||||||
Cash dividends SBLF preferred
|
-
|
-
|
-
|
-
|
(131
|
)
|
-
|
(131
|
)
|
|||||||||||||||||||
Sale of treasury shares to 401(k) (11,866 shares)
|
-
|
-
|
218
|
28
|
-
|
-
|
246
|
|||||||||||||||||||||
Sale of treasury shares to deferred comp. plan (6,020 shares)
|
-
|
-
|
110
|
14
|
-
|
-
|
124
|
|||||||||||||||||||||
Balance at December 31, 2014
|
13,000
|
2,931
|
(2,301
|
)
|
34,745
|
17,132
|
(1,599
|
)
|
63,908
|
|||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
5,138
|
-
|
5,138
|
|||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
-
|
(386
|
)
|
(386
|
)
|
|||||||||||||||||||
Redemption of preferred stock (13,000 shares)
|
(13,000
|
)
|
-
|
-
|
-
|
-
|
-
|
(13,000
|
)
|
|||||||||||||||||||
Restricted stock compensation expense (13,048 restricted stock shares)
|
-
|
19
|
-
|
323
|
-
|
-
|
342
|
|||||||||||||||||||||
Exercise of stock options (16,391 shares)
|
-
|
16
|
-
|
386
|
-
|
-
|
402
|
|||||||||||||||||||||
Taxes on stock option exercise and share award vest
|
-
|
(11
|
)
|
-
|
(458
|
)
|
-
|
-
|
(469
|
)
|
||||||||||||||||||
Cash dividends - common ($0.28 per share)
|
-
|
-
|
-
|
-
|
(784
|
)
|
-
|
(784
|
)
|
|||||||||||||||||||
Cash dividends SBLF preferred
|
-
|
-
|
-
|
-
|
(50
|
)
|
-
|
(50
|
)
|
|||||||||||||||||||
Sale of treasury shares to 401(k) (10,519 shares)
|
-
|
-
|
192
|
68
|
-
|
-
|
260
|
|||||||||||||||||||||
Sale of treasury shares to deferred comp. plan (5,158 shares)
|
-
|
-
|
94
|
33
|
-
|
-
|
127
|
|||||||||||||||||||||
Balance at December 31, 2015
|
$
|
-
|
$
|
2,955
|
$
|
(2,015
|
)
|
$
|
35,097
|
$
|
21,436
|
$
|
(1,985
|
)
|
$
|
55,488
|
Year Ended
|
||||||||
December 31
|
||||||||
2015
|
2014
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net income
|
$
|
5,138
|
$
|
4,804
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation, amortization and accretion
|
1,806
|
1,802
|
||||||
Provision for credit losses
|
1,105
|
1,130
|
||||||
Stock based compensation
|
342
|
267
|
||||||
Net gain on sale of securities
|
(78
|
)
|
(858
|
)
|
||||
Net loss on sale and write down of OREO and other repossessed property
|
134
|
7
|
||||||
Earnings from investment in BOLI
|
(228
|
)
|
(235
|
)
|
||||
Deferred tax benefit
|
(88
|
)
|
(226
|
)
|
||||
Proceeds from sales of loans
|
18,739
|
3,645
|
||||||
Loans originated for sale
|
(17,467
|
)
|
(4,170
|
)
|
||||
Gain on sale of loans, net
|
(655
|
)
|
(92
|
)
|
||||
Write off of property and equipment
|
698
|
-
|
||||||
(Increase) decrease in accrued interest receivable
|
(157
|
)
|
44
|
|||||
(Increase) decrease in other assets
|
(475
|
)
|
799
|
|||||
Decrease in accrued interest payable
|
(6
|
)
|
(25
|
)
|
||||
(Decrease) increase in other liabilities
|
(260
|
)
|
260
|
|||||
Net Cash Provided By Operating Activities
|
8,548
|
7,152
|
||||||
Cash Flows From Investing Activities:
|
||||||||
Activity in available-for-sale securities:
|
||||||||
Sales
|
17,988
|
39,333
|
||||||
Maturities, repayments and calls
|
58,262
|
25,805
|
||||||
Purchases
|
(57,928
|
)
|
(114,425
|
)
|
||||
Activity in held-to-maturity securities:
|
||||||||
Sales
|
-
|
1,612
|
||||||
Maturities, repayments and calls
|
1,822
|
4,756
|
||||||
Purchases
|
(10,093
|
)
|
-
|
|||||
Net (increase) decrease in restricted stock
|
(860
|
)
|
316
|
|||||
Net increase in loans
|
(29,020
|
)
|
(41,196
|
)
|
||||
Purchases of office property and equipment
|
(661
|
)
|
(344
|
)
|
||||
Expenses capitalized in OREO
|
(202
|
)
|
-
|
|||||
Proceeds from sale of OREO and other repossessed property
|
177
|
288
|
||||||
Net Cash Used in Investing Activities
|
(20,515
|
)
|
(83,855
|
)
|
||||
Cash Flows From Financing Activities:
|
||||||||
Net increase in deposits
|
1,192
|
46,336
|
||||||
Repayment of FHLBP advances
|
(10,000
|
)
|
-
|
|||||
Funding of FHLBP advances
|
20,000
|
10,000
|
||||||
Net increase (decrease) in repurchase agreements
|
13,195
|
(633
|
)
|
|||||
Proceeds from issuance of subordinated debt
|
9,750
|
-
|
||||||
Decrease in other borrowings
|
(41
|
)
|
(36
|
)
|
||||
Dividends paid
|
(834
|
)
|
(906
|
)
|
||||
Proceeds from the exercise of stock options
|
402
|
39
|
||||||
Taxes on stock option exercise and share award vest
|
(469
|
)
|
(23
|
)
|
||||
Redemption of preferred stock
|
(13,000
|
)
|
-
|
|||||
Sale of treasury stock
|
387
|
370
|
||||||
Net Cash Provided by Financing Activities
|
20,582
|
55,147
|
||||||
Net Change in Cash and Cash Equivalents
|
8,615
|
(21,556
|
)
|
|||||
Cash and Cash Equivalents at Beginning of Period
|
12,504
|
34,060
|
||||||
Cash and Cash Equivalents at End of Period
|
$
|
21,119
|
$
|
12,504
|
||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
2,718
|
$
|
2,336
|
||||
Income taxes
|
1,777
|
872
|
||||||
Supplemental Disclosure of Non-cash Flow Information:
|
||||||||
Transfers from loans to other real estate owned and other repossessed property
|
1,789
|
100
|
1. | Lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices |
2. | National, regional, and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans |
3. | Nature and volume of the portfolio and terms of loans |
4. | Experience, ability, and depth of lending management and staff |
5. | Volume and severity of past due, classified and nonaccrual loans as well as other loan modifications |
6. | Quality of DNB's loan review system, and the degree of oversight by DNB's Board of Directors |
7. | Existence and effect of any concentrations of credit and changes in the level of such concentrations |
8. | Effect of external factors, such as competition and legal and regulatory requirements |
9. | Changes in the value of underlying collateral for collateral‑dependent loans |
Accumulated Other Comprehensive Loss
|
Before-Tax
|
Tax
|
Net-of-Tax
|
|||||||||
(Dollars in thousands)
|
Amount
|
Effect
|
Amount
|
|||||||||
December 31, 2015
|
||||||||||||
Net unrealized loss on AFS securities
|
$
|
(1,180
|
)
|
$
|
402
|
$
|
(778
|
)
|
||||
Discount on AFS to HTM reclassification
|
(17
|
)
|
6
|
(11
|
)
|
|||||||
Unrealized actuarial losses-pension
|
(1,812
|
)
|
616
|
(1,196
|
)
|
|||||||
$
|
(3,009
|
)
|
$
|
1,024
|
$
|
(1,985
|
)
|
|||||
December 31, 2014
|
||||||||||||
Net unrealized loss on AFS securities
|
$
|
(665
|
)
|
$
|
227
|
$
|
(438
|
)
|
||||
Discount on AFS to HTM reclassification
|
(24
|
)
|
8
|
(16
|
)
|
|||||||
Unrealized actuarial losses-pension
|
(1,734
|
)
|
589
|
(1,145
|
)
|
|||||||
$
|
(2,423
|
)
|
$
|
824
|
$
|
(1,599
|
)
|
December 31, 2015
|
||||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Estimated
|
|||||||||||||
(Dollars in thousands)
|
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
Held To Maturity
|
||||||||||||||||
US Government agency obligations
|
$
|
7,973
|
$
|
320
|
$
|
-
|
$
|
8,293
|
||||||||
Government Sponsored Entities (GSE) mortgage-backed securities
|
2,759
|
83
|
-
|
2,842
|
||||||||||||
Corporate bonds
|
11,518
|
234
|
(42
|
)
|
11,710
|
|||||||||||
Collateralized mortgage obligations GSE
|
2,623
|
9
|
(26
|
)
|
2,606
|
|||||||||||
State and municipal tax-exempt
|
42,956
|
300
|
(276
|
)
|
42,980
|
|||||||||||
Total
|
$
|
67,829
|
$
|
946
|
$
|
(344
|
)
|
$
|
68,431
|
|||||||
Available For Sale
|
||||||||||||||||
US Government agency obligations
|
$
|
58,460
|
$
|
-
|
$
|
(252
|
)
|
$
|
58,208
|
|||||||
GSE mortgage-backed securities
|
40,663
|
13
|
(325
|
)
|
40,351
|
|||||||||||
Collateralized mortgage obligations GSE
|
16,241
|
3
|
(438
|
)
|
15,806
|
|||||||||||
Corporate bonds
|
20,921
|
-
|
(350
|
)
|
20,571
|
|||||||||||
State and municipal tax-exempt
|
17,274
|
180
|
(11
|
)
|
17,443
|
|||||||||||
Total
|
$
|
153,559
|
$
|
196
|
$
|
(1,376
|
)
|
$
|
152,379
|
December 31, 2014
|
||||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Estimated
|
|||||||||||||
(Dollars in thousands)
|
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
Held To Maturity
|
||||||||||||||||
US Government agency obligations
|
$
|
7,730
|
$
|
343
|
$
|
-
|
$
|
8,073
|
||||||||
Government Sponsored Entities (GSE) mortgage-backed securities
|
3,579
|
133
|
-
|
3,712
|
||||||||||||
Corporate bonds
|
3,951
|
324
|
-
|
4,275
|
||||||||||||
Collateralized mortgage obligations GSE
|
3,605
|
3
|
(29
|
)
|
3,579
|
|||||||||||
State and municipal tax-exempt
|
40,589
|
418
|
(547
|
)
|
40,460
|
|||||||||||
Total
|
$
|
59,454
|
$
|
1,221
|
$
|
(576
|
)
|
$
|
60,099
|
|||||||
Available For Sale
|
||||||||||||||||
US Government agency obligations
|
$
|
61,547
|
$
|
4
|
$
|
(197
|
)
|
$
|
61,354
|
|||||||
GSE mortgage-backed securities
|
66,669
|
189
|
(135
|
)
|
66,723
|
|||||||||||
Collateralized mortgage obligations GSE
|
20,499
|
8
|
(496
|
)
|
20,011
|
|||||||||||
Corporate bonds
|
13,208
|
-
|
(106
|
)
|
13,102
|
|||||||||||
State and municipal tax-exempt
|
10,917
|
87
|
(10
|
)
|
10,994
|
|||||||||||
Equity securities
|
27
|
2
|
(11
|
)
|
18
|
|||||||||||
Total
|
$
|
172,867
|
$
|
290
|
$
|
(955
|
)
|
$
|
172,202
|
December 31, 2015
|
||||||||||||||||||||||||
Fair Value
|
Unrealized
|
Fair Value
|
Unrealized
|
|||||||||||||||||||||
Total
|
Impaired
|
Loss
|
Impaired
|
Loss
|
||||||||||||||||||||
Total
|
Unrealized
|
Less Than
|
Less Than
|
More Than
|
More Than
|
|||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
Loss
|
12 Months
|
12 Months
|
12 Months
|
12 Months
|
||||||||||||||||||
Held To Maturity
|
||||||||||||||||||||||||
Corporate bonds
|
$
|
7,597
|
$
|
(42
|
)
|
$
|
7,597
|
$
|
(42
|
)
|
$
|
-
|
$
|
-
|
||||||||||
Collateralized mortgage obligations GSE
|
1,482
|
(26
|
)
|
388
|
(10
|
)
|
1,094
|
(16
|
)
|
|||||||||||||||
State and municipal tax-exempt
|
13,161
|
(276
|
)
|
4,380
|
(34
|
)
|
8,781
|
(242
|
)
|
|||||||||||||||
Total
|
$
|
22,240
|
$
|
(344
|
)
|
$
|
12,365
|
$
|
(86
|
)
|
$
|
9,875
|
$
|
(258
|
)
|
|||||||||
Available For Sale
|
||||||||||||||||||||||||
US Government agency obligations
|
$
|
58,208
|
$
|
(252
|
)
|
$
|
58,208
|
$
|
(252
|
)
|
$
|
-
|
$
|
-
|
||||||||||
GSE mortgage-backed securities
|
38,307
|
(325
|
)
|
33,984
|
(238
|
)
|
4,323
|
(87
|
)
|
|||||||||||||||
Collateralized mortgage obligations GSE
|
15,231
|
(438
|
)
|
4,187
|
(41
|
)
|
11,044
|
(397
|
)
|
|||||||||||||||
Corporate bonds
|
20,571
|
(350
|
)
|
16,157
|
(264
|
)
|
4,414
|
(86
|
)
|
|||||||||||||||
State and municipal tax-exempt
|
6,660
|
(11
|
)
|
6,660
|
(11
|
)
|
-
|
-
|
||||||||||||||||
Total
|
$
|
138,977
|
$
|
(1,376
|
)
|
$
|
119,196
|
$
|
(806
|
)
|
$
|
19,781
|
$
|
(570
|
)
|
December 31, 2014
|
||||||||||||||||||||||||
Fair value
|
Unrealized
|
Fair value
|
Unrealized
|
|||||||||||||||||||||
Total
|
Impaired
|
Loss
|
Impaired
|
Loss
|
||||||||||||||||||||
Total
|
Unrealized
|
Less Than
|
Less Than
|
More Than
|
More Than
|
|||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
Loss
|
12 Months
|
12 Months
|
12 Months
|
12 Months
|
||||||||||||||||||
Held To Maturity
|
||||||||||||||||||||||||
Collateralized mortgage obligations GSE
|
$
|
3,043
|
$
|
(29
|
)
|
$
|
3,043
|
$
|
(29
|
)
|
$
|
-
|
$
|
-
|
||||||||||
State and municipal tax-exempt
|
19,054
|
(547
|
)
|
2,138
|
(7
|
)
|
16,916
|
(540
|
)
|
|||||||||||||||
Total
|
$
|
22,097
|
$
|
(576
|
)
|
$
|
5,181
|
$
|
(36
|
)
|
$
|
16,916
|
$
|
(540
|
)
|
|||||||||
Available For Sale
|
||||||||||||||||||||||||
US Government agency obligations
|
$
|
56,342
|
$
|
(197
|
)
|
$
|
49,222
|
$
|
(97
|
)
|
$
|
7,120
|
$
|
(100
|
)
|
|||||||||
GSE mortgage-backed securities
|
22,157
|
(135
|
)
|
14,996
|
(38
|
)
|
7,161
|
(97
|
)
|
|||||||||||||||
Collateralized mortgage obligations GSE
|
18,133
|
(496
|
)
|
3,669
|
(5
|
)
|
14,464
|
(491
|
)
|
|||||||||||||||
Corporate bonds
|
13,102
|
(106
|
)
|
9,531
|
(31
|
)
|
3,571
|
(75
|
)
|
|||||||||||||||
State and municipal tax-exempt
|
2,967
|
(10
|
)
|
2,360
|
(9
|
)
|
607
|
(1
|
)
|
|||||||||||||||
Equity securities
|
12
|
(11
|
)
|
-
|
-
|
12
|
(11
|
)
|
||||||||||||||||
Total
|
$
|
112,713
|
$
|
(955
|
)
|
$
|
79,778
|
$
|
(180
|
)
|
$
|
32,935
|
$
|
(775
|
)
|
Held to Maturity
|
Available for Sale
|
|||||||||||||||
Amortized
|
Estimated
|
Amortized
|
Estimated
|
|||||||||||||
(Dollars in thousands)
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
||||||||||||
Due in one year or less
|
$
|
-
|
$
|
-
|
$
|
18,694
|
$
|
18,668
|
||||||||
Due after one year through five years
|
19,677
|
20,250
|
63,770
|
63,265
|
||||||||||||
Due after five years through ten years
|
28,870
|
28,972
|
41,423
|
41,195
|
||||||||||||
Due after ten years
|
19,282
|
19,209
|
29,672
|
29,251
|
||||||||||||
No stated maturity
|
-
|
-
|
-
|
-
|
||||||||||||
Total investment securities
|
$
|
67,829
|
$
|
68,431
|
$
|
153,559
|
$
|
152,379
|
Year Ended
|
||||||||
December 31
|
||||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Available for sale securities sold
|
$
|
17,988
|
$
|
39,333
|
||||
Held to maturity securities sold
|
-
|
1,612
|
||||||
Total sold securities
|
$
|
17,988
|
$
|
40,945
|
Year Ended
|
||||||||
December 31
|
||||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Gross realized gains-AFS
|
$
|
90
|
$
|
474
|
||||
Gross realized gains-HTM
|
-
|
415
|
||||||
Gross realized losses-AFS
|
(12
|
)
|
(31
|
)
|
||||
Gross realized losses-HTM
|
-
|
-
|
||||||
Net realized gain
|
$
|
78
|
$
|
858
|
December 31
|
||||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Residential mortgage
|
$
|
28,651
|
$
|
25,993
|
||||
Commercial mortgage
|
274,132
|
257,310
|
||||||
Commercial:
|
||||||||
Commercial term
|
102,178
|
80,819
|
||||||
Commercial construction
|
20,364
|
35,534
|
||||||
Consumer:
|
||||||||
Home equity
|
51,270
|
50,192
|
||||||
Other
|
5,163
|
5,755
|
||||||
Total loans
|
$
|
481,758
|
$
|
455,603
|
||||
Less allowance for credit losses
|
(4,935
|
)
|
(4,906
|
)
|
||||
Net loans
|
$
|
476,823
|
$
|
450,697
|
December 31, 2015
|
||||||||||||||||||||||||||||
Loans
|
||||||||||||||||||||||||||||
Receivable
|
||||||||||||||||||||||||||||
30-59
|
60-89
|
Greater
|
Total
|
> 90
|
||||||||||||||||||||||||
Days Past
|
Days Past
|
than
|
Total
|
Loans
|
Days and
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Due
|
Due
|
90 Days
|
Past Due
|
Current
|
Receivables
|
Accruing
|
|||||||||||||||||||||
Residential mortgage
|
$
|
502
|
$
|
552
|
$
|
2,076
|
$
|
3,130
|
$
|
25,521
|
$
|
28,651
|
$
|
457
|
||||||||||||||
Commercial mortgage
|
36
|
86
|
96
|
218
|
273,914
|
274,132
|
-
|
|||||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||||||
Commercial term
|
-
|
-
|
-
|
-
|
102,178
|
102,178
|
-
|
|||||||||||||||||||||
Commercial construction
|
-
|
581
|
447
|
1,028
|
19,336
|
20,364
|
-
|
|||||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||
Home equity
|
7
|
310
|
153
|
470
|
50,800
|
51,270
|
-
|
|||||||||||||||||||||
Other
|
100
|
-
|
148
|
248
|
4,915
|
5,163
|
-
|
|||||||||||||||||||||
Total
|
$
|
645
|
$
|
1,529
|
$
|
2,920
|
$
|
5,094
|
$
|
476,664
|
$
|
481,758
|
$
|
457
|
December 31, 2014 | ||||||||||||||||||||||||||||
30-59
|
60-89
|
Greater
|
Total
|
Loans
Receivable
> 90
|
||||||||||||||||||||||||
Days Past
|
Days Past
|
than
|
Total
|
Loans
|
Days and
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Due
|
Due
|
90 Days
|
Past Due
|
Current
|
Receivables
|
Accruing
|
|||||||||||||||||||||
Residential mortgage
|
$
|
1,005
|
$
|
302
|
$
|
2,648
|
$
|
3,955
|
$
|
22,038
|
$
|
25,993
|
$
|
191
|
||||||||||||||
Commercial mortgage
|
48
|
187
|
236
|
471
|
256,839
|
257,310
|
-
|
|||||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||||||
Commercial term
|
-
|
-
|
-
|
-
|
80,819
|
80,819
|
-
|
|||||||||||||||||||||
Commercial construction
|
-
|
-
|
2,043
|
2,043
|
33,491
|
35,534
|
-
|
|||||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||
Home equity
|
58
|
214
|
386
|
658
|
49,534
|
50,192
|
119
|
|||||||||||||||||||||
Other
|
71
|
70
|
119
|
260
|
5,495
|
5,755
|
24
|
|||||||||||||||||||||
Total
|
$
|
1,182
|
$
|
773
|
$
|
5,432
|
$
|
7,387
|
$
|
448,216
|
$
|
455,603
|
$
|
334
|
December 31
|
||||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Non-accrual loans:
|
||||||||
Residential mortgage
|
$
|
1,619
|
$
|
2,457
|
||||
Commercial mortgage
|
1,048
|
1,294
|
||||||
Commercial:
|
||||||||
Commercial term
|
188
|
198
|
||||||
Commercial construction
|
1,028
|
2,043
|
||||||
Consumer:
|
||||||||
Home equity
|
563
|
432
|
||||||
Other
|
189
|
95
|
||||||
Total non-accrual loans
|
4,635
|
6,519
|
||||||
Loans 90 days past due and still accruing
|
457
|
334
|
||||||
Total non-performing loans
|
5,092
|
6,853
|
||||||
Other real estate owned & other repossessed property
|
2,581
|
901
|
||||||
Total non-performing assets
|
$
|
7,673
|
$
|
7,754
|
December 31, 2015
|
||||||||||||||||||||
Unpaid
|
Average
|
Interest
|
||||||||||||||||||
Recorded
|
Principal
|
Related
|
Recorded
|
Income
|
||||||||||||||||
(Dollars in thousands)
|
Investment
|
Balance
|
Allowance
|
Investment
|
Recognized
|
|||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Residential mortgage
|
$
|
1,620
|
$
|
1,919
|
$
|
-
|
$
|
1,883
|
$
|
5
|
||||||||||
Commercial mortgage
|
1,181
|
1,461
|
-
|
2,501
|
85
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Commercial construction
|
1,140
|
3,526
|
-
|
838
|
-
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
691
|
716
|
-
|
535
|
4
|
|||||||||||||||
Other
|
82
|
90
|
-
|
124
|
2
|
|||||||||||||||
Total
|
$
|
4,714
|
$
|
7,712
|
$
|
-
|
$
|
5,881
|
$
|
96
|
||||||||||
With allowance recorded:
|
||||||||||||||||||||
Residential mortgage
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
105
|
$
|
-
|
||||||||||
Commercial mortgage
|
-
|
-
|
-
|
121
|
-
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
200
|
211
|
110
|
200
|
-
|
|||||||||||||||
Commercial construction
|
-
|
-
|
-
|
537
|
-
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
-
|
-
|
-
|
18
|
-
|
|||||||||||||||
Other
|
107
|
107
|
4
|
29
|
-
|
|||||||||||||||
Total
|
$
|
307
|
$
|
318
|
$
|
114
|
$
|
1,010
|
$
|
-
|
||||||||||
Total:
|
||||||||||||||||||||
Residential mortgage
|
$
|
1,620
|
$
|
1,919
|
$
|
-
|
$
|
1,988
|
$
|
5
|
||||||||||
Commercial mortgage
|
1,181
|
1,461
|
-
|
2,622
|
85
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
200
|
211
|
110
|
200
|
-
|
|||||||||||||||
Commercial construction
|
1,140
|
3,526
|
-
|
1,375
|
-
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
691
|
716
|
-
|
553
|
4
|
|||||||||||||||
Other
|
189
|
197
|
4
|
153
|
2
|
|||||||||||||||
Total
|
$
|
5,021
|
$
|
8,030
|
$
|
114
|
$
|
6,891
|
$
|
96
|
December 31, 2014
|
||||||||||||||||||||
Unpaid
|
Average
|
Interest
|
||||||||||||||||||
Recorded
|
Principal
|
Related
|
Recorded
|
Income
|
||||||||||||||||
(Dollars in thousands)
|
Investment
|
Balance
|
Allowance
|
Investment
|
Recognized
|
|||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Residential mortgage
|
$
|
2,457
|
$
|
3,270
|
$
|
-
|
$
|
2,010
|
$
|
-
|
||||||||||
Commercial mortgage
|
3,400
|
3,501
|
-
|
2,869
|
88
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Commercial construction
|
1,706
|
4,822
|
-
|
1,310
|
-
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
549
|
564
|
-
|
459
|
9
|
|||||||||||||||
Other
|
94
|
102
|
-
|
62
|
-
|
|||||||||||||||
Total
|
$
|
8,206
|
$
|
12,259
|
$
|
-
|
$
|
6,710
|
$
|
97
|
||||||||||
With allowance recorded:
|
||||||||||||||||||||
Residential mortgage
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
151
|
$
|
-
|
||||||||||
Commercial mortgage
|
200
|
200
|
104
|
54
|
-
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
200
|
202
|
119
|
80
|
-
|
|||||||||||||||
Commercial construction
|
450
|
2,031
|
50
|
1,026
|
-
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Other
|
-
|
-
|
-
|
43
|
-
|
|||||||||||||||
Total
|
$
|
850
|
$
|
2,433
|
$
|
273
|
$
|
1,354
|
$
|
-
|
||||||||||
Total:
|
||||||||||||||||||||
Residential mortgage
|
$
|
2,457
|
$
|
3,270
|
$
|
-
|
$
|
2,161
|
$
|
-
|
||||||||||
Commercial mortgage
|
3,600
|
3,701
|
104
|
2,923
|
88
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
200
|
202
|
119
|
80
|
-
|
|||||||||||||||
Commercial construction
|
2,156
|
6,853
|
50
|
2,336
|
-
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
549
|
564
|
-
|
459
|
9
|
|||||||||||||||
Other
|
94
|
102
|
-
|
105
|
-
|
|||||||||||||||
Total
|
$
|
9,056
|
$
|
14,692
|
$
|
273
|
$
|
8,064
|
$
|
97
|
December 31, 2015
|
||||||||||||||||||||
Special
|
||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Residential mortgage
|
$
|
26,762
|
$
|
-
|
$
|
1,889
|
$
|
-
|
$
|
28,651
|
||||||||||
Commercial mortgage
|
262,036
|
4,802
|
7,294
|
-
|
274,132
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
93,025
|
2,555
|
6,598
|
-
|
102,178
|
|||||||||||||||
Commercial construction
|
17,521
|
-
|
2,843
|
-
|
20,364
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
50,551
|
-
|
719
|
-
|
51,270
|
|||||||||||||||
Other
|
4,974
|
-
|
189
|
-
|
5,163
|
|||||||||||||||
Total
|
$
|
454,869
|
$
|
7,357
|
$
|
19,532
|
$
|
-
|
$
|
481,758
|
December 31, 2014
|
||||||||||||||||||||
Special
|
||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Residential mortgage
|
$
|
23,259
|
$
|
-
|
$
|
2,734
|
$
|
-
|
$
|
25,993
|
||||||||||
Commercial mortgage
|
245,307
|
2,610
|
9,393
|
-
|
257,310
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
75,303
|
72
|
5,444
|
-
|
80,819
|
|||||||||||||||
Commercial construction
|
31,057
|
-
|
4,477
|
-
|
35,534
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
49,611
|
-
|
581
|
-
|
50,192
|
|||||||||||||||
Other
|
5,661
|
-
|
94
|
-
|
5,755
|
|||||||||||||||
Total
|
$
|
430,198
|
$
|
2,682
|
$
|
22,723
|
$
|
-
|
$
|
455,603
|
2015
|
||||||||||||||||||
Residential
|
Commercial
|
Commercial
|
Commercial
|
Lease
|
Consumer
|
Consumer
|
||||||||||||
(Dollars in thousands)
|
Mortgage
|
Mortgage
|
Term
|
Construction
|
Financing
|
Home Equity
|
Other
|
Unallocated
|
Total
|
|||||||||
Allowance for credit losses:
|
||||||||||||||||||
Beginning balance - January 1, 2015
|
$
|
269
|
$
|
2,300
|
$
|
709
|
$
|
881
|
$
|
-
|
$
|
189
|
$
|
70
|
$
|
488
|
$
|
4,906
|
Charge-offs
|
(194)
|
(105)
|
(200)
|
(581)
|
-
|
(11)
|
(63)
|
-
|
(1,154)
|
|||||||||
Recoveries
|
4
|
-
|
13
|
10
|
49
|
-
|
2
|
-
|
78
|
|||||||||
Provisions
|
137
|
180
|
467
|
259
|
(49)
|
17
|
55
|
39
|
1,105
|
|||||||||
Ending balance - December 31, 2015
|
$
|
216
|
$
|
2,375
|
$
|
989
|
$
|
569
|
$
|
-
|
$
|
195
|
$
|
64
|
$
|
527
|
$
|
4,935
|
Ending balance: individually
|
||||||||||||||||||
evaluated for impairment
|
$
|
-
|
$
|
-
|
$
|
110
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
4
|
$
|
-
|
$
|
114
|
Ending balance: collectively
|
||||||||||||||||||
evaluated for impairment
|
$
|
216
|
$
|
2,375
|
$
|
879
|
$
|
569
|
$
|
-
|
$
|
195
|
$
|
60
|
$
|
527
|
$
|
4,821
|
Ending balance: Loan
|
||||||||||||||||||
receivables
|
$
|
28,651
|
$
|
274,132
|
$
|
102,178
|
$
|
20,364
|
$
|
-
|
$
|
51,270
|
$
|
5,163
|
$
|
481,758
|
||
Ending balance: individually
|
||||||||||||||||||
evaluated for impairment
|
$
|
1,620
|
$
|
1,181
|
$
|
200
|
$
|
1,140
|
$
|
-
|
$
|
691
|
$
|
189
|
$
|
5,021
|
||
Ending balance: collectively
|
||||||||||||||||||
evaluated for impairment
|
$
|
27,031
|
$
|
272,951
|
$
|
101,978
|
$
|
19,224
|
$
|
-
|
$
|
50,579
|
$
|
4,974
|
$
|
476,737
|
2014
|
||||||||||||||||||
Residential
|
Commercial
|
Commercial
|
Commercial
|
Lease
|
Consumer
|
Consumer
|
||||||||||||
(Dollars in thousands)
|
Mortgage
|
Mortgage
|
Term
|
Construction
|
Financing
|
Home Equity
|
Other
|
Unallocated
|
Total
|
|||||||||
Allowance for credit losses:
|
||||||||||||||||||
Beginning balance - January 1, 2014
|
$
|
285
|
$
|
2,010
|
$
|
621
|
$
|
1,033
|
$
|
-
|
$
|
156
|
$
|
78
|
$
|
440
|
$
|
4,623
|
Charge-offs
|
(326)
|
(8)
|
(47)
|
(511)
|
(1)
|
-
|
(82)
|
-
|
(975)
|
|||||||||
Recoveries
|
5
|
-
|
3
|
103
|
8
|
-
|
9
|
-
|
128
|
|||||||||
Provisions
|
305
|
298
|
132
|
256
|
(7)
|
33
|
65
|
48
|
1,130
|
|||||||||
Ending balance - December 31, 2014
|
$
|
269
|
$
|
2,300
|
$
|
709
|
$
|
881
|
$
|
-
|
$
|
189
|
$
|
70
|
$
|
488
|
$
|
4,906
|
Ending balance: individually
|
||||||||||||||||||
evaluated for impairment
|
$
|
-
|
$
|
104
|
$
|
119
|
$
|
50
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
273
|
Ending balance: collectively
|
||||||||||||||||||
evaluated for impairment
|
$
|
269
|
$
|
2,196
|
$
|
590
|
$
|
831
|
$
|
-
|
$
|
189
|
$
|
70
|
$
|
488
|
$
|
4,633
|
Ending balance: Loan
|
||||||||||||||||||
receivables
|
$
|
25,993
|
$
|
257,310
|
$
|
80,819
|
$
|
35,534
|
$
|
-
|
$
|
50,192
|
$
|
5,755
|
$
|
455,603
|
||
Ending balance: individually
|
||||||||||||||||||
evaluated for impairment
|
$
|
2,457
|
$
|
3,600
|
$
|
200
|
$
|
2,156
|
$
|
-
|
$
|
549
|
$
|
94
|
$
|
9,056
|
||
Ending balance: collectively
|
||||||||||||||||||
evaluated for impairment
|
$
|
23,536
|
$
|
253,710
|
$
|
80,619
|
$
|
33,378
|
$
|
-
|
$
|
49,643
|
$
|
5,661
|
$
|
446,547
|
Estimated
|
December 31
|
||||
(Dollars in thousands)
|
Useful Lives
|
2015
|
2014
|
||
Land
|
$
|
840
|
$
|
840
|
|
Buildings and leasehold improvements
|
5-31.5 years
|
10,982
|
11,807
|
||
Furniture, fixtures and equipment
|
2-20 years
|
14,712
|
14,382
|
||
Total cost
|
26,534
|
27,029
|
|||
Less accumulated depreciation
|
(19,728)
|
(19,361)
|
|||
Office property and equipment, net
|
$
|
6,806
|
$
|
7,668
|
December 31, 2015
|
||||||||||||
Time
|
Brokered
|
|||||||||||
(Dollars in thousands)
|
Deposits
|
Deposits
|
Total
|
|||||||||
Three months or less
|
$
|
13,014
|
$
|
-
|
$
|
13,014
|
||||||
Over three through six months
|
15,919
|
-
|
15,919
|
|||||||||
Over six through twelve months
|
1,259
|
-
|
1,259
|
|||||||||
Over one year through two years
|
1,359
|
-
|
1,359
|
|||||||||
Over two years
|
1,155
|
-
|
1,155
|
|||||||||
Total
|
$
|
32,706
|
$
|
-
|
$
|
32,706
|
December 31, 2015
|
||||||||||||
Time
|
Brokered
|
|||||||||||
(Dollars in thousands)
|
Deposits
|
Deposits
|
Total
|
|||||||||
One year or less
|
$
|
48,783
|
$
|
4,015
|
$
|
52,798
|
||||||
Over one year through two years
|
9,055
|
6,077
|
15,132
|
|||||||||
Over two years through three years
|
2,331
|
3,174
|
5,505
|
|||||||||
Over three years through four years
|
3,796
|
-
|
3,796
|
|||||||||
Over four years through five years
|
2,053
|
5,222
|
7,275
|
|||||||||
Over five years
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
66,018
|
$
|
18,488
|
$
|
84,506
|
2015
|
2014
|
|||||||||||||||
Other
|
Other
|
|||||||||||||||
Repurchase
|
Short-term
|
Repurchase
|
Short-term
|
|||||||||||||
(Dollars in thousands)
|
Agreements
|
Borrowings
|
Agreements
|
Borrowings
|
||||||||||||
Amount outstanding at end of year
|
$
|
32,416
|
$
|
-
|
$
|
19,221
|
$
|
-
|
||||||||
Weighted average interest rate at end of year
|
0.20
|
%
|
-
|
%
|
0.16
|
%
|
-
|
%
|
||||||||
Maximum amount outstanding at any month-end
|
$
|
35,271
|
$
|
-
|
$
|
35,555
|
$
|
600
|
||||||||
Daily average amount outstanding
|
$
|
25,574
|
$
|
204
|
$
|
19,531
|
$
|
276
|
||||||||
Weighted average interest rate for the year
|
0.20
|
%
|
0.51
|
%
|
0.20
|
%
|
0.64
|
%
|
(Dollars in thousands)
|
Overnight and Continuous
|
Up to 30 days
|
30 - 90 days
|
Greater than
90 days
|
Total
|
|||||||||||||||
December 31, 2015
|
||||||||||||||||||||
Repurchase agreements and repurchase-to-maturity transactions
|
$
|
32,416
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
32,416
|
||||||||||
Gross amount of recognized liabilities for repurchase agreements
|
||||||||||||||||||||
in statement of condition
|
$
|
32,416
|
||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||
Repurchase agreements and repurchase-to-maturity transactions
|
$
|
19,221
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
19,221
|
||||||||||
Gross amount of recognized liabilities for repurchase agreements
|
||||||||||||||||||||
in statement of condition
|
$
|
19,221
|
December 31, 2015
|
December 31, 2014
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
(Dollars in thousands)
|
Average Rate
|
Amount
|
Average Rate
|
Amount
|
||||||||||||
Due by December 31, 2015
|
-
|
%
|
$
|
-
|
5.86
|
%
|
$
|
10,000
|
||||||||
Due by December 31, 2016
|
0.51
|
10,000
|
-
|
-
|
||||||||||||
Due by December 31, 2017
|
1.22
|
2,000
|
-
|
-
|
||||||||||||
Due by December 31, 2018
|
1.46
|
2,000
|
-
|
-
|
||||||||||||
Due by December 31, 2019
|
1.91
|
10,000
|
1.91
|
10,000
|
||||||||||||
Due by December 31, 2020
|
1.88
|
6,000
|
-
|
-
|
||||||||||||
Total
|
1.36
|
%
|
$
|
30,000
|
3.89
|
%
|
$
|
20,000
|
Year ended
|
||||
(Dollars in thousands)
|
December 31
|
|||
2016
|
$
|
107
|
||
2017
|
107
|
|||
2018
|
106
|
|||
2019
|
107
|
|||
2020
|
106
|
|||
Thereafter
|
175
|
|||
Total minimum lease payments
|
708
|
|||
Less amount representing interest
|
(244
|
)
|
||
Present value of net minimum lease payments
|
$
|
464
|
Year ended
|
||||
(Dollars in thousands)
|
December 31
|
|||
2016
|
$
|
445
|
||
2017
|
399
|
|||
2018
|
399
|
|||
2019
|
314
|
|||
2020
|
254
|
|||
Thereafter
|
121
|
|||
Total minimum lease payments
|
$
|
1,932
|
December 31, 2015
|
||||||||||||||||
Assets at
|
||||||||||||||||
(Dollars in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
||||||||||||
Assets Measured at Fair Value on a Recurring Basis
|
||||||||||||||||
US Government agency obligations
|
$
|
-
|
$
|
58,208
|
$
|
-
|
$
|
58,208
|
||||||||
GSE mortgage-backed securities
|
-
|
40,351
|
-
|
40,351
|
||||||||||||
Collateralized mortgage obligations GSE
|
-
|
15,806
|
-
|
15,806
|
||||||||||||
Corporate bonds
|
-
|
20,571
|
-
|
20,571
|
||||||||||||
State and municipal tax-exempt
|
-
|
17,443
|
-
|
17,443
|
||||||||||||
Total assets measured at fair value on a recurring basis
|
$
|
-
|
$
|
152,379
|
$
|
-
|
$
|
152,379
|
||||||||
Assets Measured at Fair Value on a Nonrecurring Basis
|
||||||||||||||||
Impaired loans
|
$
|
-
|
$
|
-
|
$
|
964
|
$
|
964
|
||||||||
OREO & other repossessed property
|
-
|
-
|
682
|
682
|
||||||||||||
Total assets measured at fair value on a nonrecurring basis
|
$
|
-
|
$
|
-
|
$
|
1,646
|
$
|
1,646
|
December 31, 2014
|
||||||||||||||||
Assets at
|
||||||||||||||||
(Dollars in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
||||||||||||
Assets Measured at Fair Value on a Recurring Basis
|
||||||||||||||||
US Government agency obligations
|
$
|
-
|
$
|
61,354
|
$
|
-
|
$
|
61,354
|
||||||||
GSE mortgage-backed securities
|
-
|
66,723
|
-
|
66,723
|
||||||||||||
Collateralized mortgage obligations GSE
|
-
|
20,011
|
-
|
20,011
|
||||||||||||
Corporate bonds
|
-
|
13,102
|
-
|
13,102
|
||||||||||||
State and municipal tax-exempt
|
-
|
10,994
|
-
|
10,994
|
||||||||||||
Equity securities
|
18
|
-
|
-
|
18
|
||||||||||||
Total assets measured at fair value on a recurring basis
|
$
|
18
|
$
|
172,184
|
$
|
-
|
$
|
172,202
|
||||||||
Assets Measured at Fair Value on a Nonrecurring Basis
|
||||||||||||||||
Impaired loans
|
$
|
-
|
$
|
-
|
$
|
2,916
|
$
|
2,916
|
||||||||
OREO & other repossessed property
|
-
|
-
|
100
|
100
|
||||||||||||
Total assets measured at fair value on a nonrecurring basis
|
$
|
-
|
$
|
-
|
$
|
3,016
|
$
|
3,016
|
(1) | Fair value is generally determined through independent appraisals or sales contracts of the underlying collateral, which generally include various level 3 inputs which are not identifiable. |
(2) | Appraisals are adjusted by management for qualitative factors and disposal costs. |
December 31, 2015
|
||||||||||||||||||||
Estimated
|
||||||||||||||||||||
Carrying
|
Fair
|
|||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
21,119
|
$
|
21,119
|
$
|
21,119
|
$
|
-
|
$
|
-
|
||||||||||
AFS investment securities
|
152,379
|
152,379
|
-
|
152,379
|
-
|
|||||||||||||||
HTM investment securities
|
67,829
|
68,431
|
-
|
66,431
|
2,000
|
|||||||||||||||
Restricted stock
|
3,447
|
3,447
|
-
|
3,447
|
-
|
|||||||||||||||
Loans held-for-sale
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Loans, net of allowance, including impaired
|
476,823
|
461,925
|
-
|
-
|
461,925
|
|||||||||||||||
Accrued interest receivable
|
2,410
|
2,410
|
-
|
2,410
|
-
|
|||||||||||||||
Financial liabilities
|
||||||||||||||||||||
Deposits:
|
||||||||||||||||||||
Non-interest-bearing deposits
|
125,581
|
125,581
|
-
|
125,581
|
-
|
|||||||||||||||
Interest-bearing deposits:
|
396,188
|
396,188
|
-
|
396,188
|
-
|
|||||||||||||||
Time
|
66,018
|
65,697
|
-
|
65,697
|
-
|
|||||||||||||||
Brokered deposits
|
18,488
|
18,327
|
-
|
18,327
|
-
|
|||||||||||||||
Repurchase agreements
|
32,416
|
32,416
|
-
|
32,416
|
-
|
|||||||||||||||
FHLBP advances
|
30,000
|
30,210
|
-
|
30,210
|
-
|
|||||||||||||||
Junior subordinated debentures and other borrowings
|
9,279
|
7,889
|
-
|
7,889
|
-
|
|||||||||||||||
Subordinated debt
|
9,750
|
9,999
|
-
|
9,999
|
-
|
|||||||||||||||
Accrued interest payable
|
345
|
345
|
-
|
345
|
-
|
|||||||||||||||
Off-balance sheet instruments
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
December 31, 2014
|
||||||||||||||||||||
Estimated
|
||||||||||||||||||||
Carrying
|
Fair
|
|||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
12,504
|
$
|
12,504
|
$
|
12,504
|
$
|
-
|
$
|
-
|
||||||||||
AFS investment securities
|
172,202
|
172,202
|
18
|
172,184
|
-
|
|||||||||||||||
HTM investment securities
|
59,454
|
60,099
|
-
|
60,099
|
-
|
|||||||||||||||
Restricted stock
|
2,587
|
2,587
|
-
|
2,587
|
-
|
|||||||||||||||
Loans held-for-sale
|
617
|
640
|
-
|
-
|
-
|
|||||||||||||||
Loans, net of allowance, including impaired
|
450,697
|
436,499
|
-
|
-
|
436,499
|
|||||||||||||||
Accrued interest receivable
|
2,253
|
2,253
|
-
|
2,253
|
-
|
|||||||||||||||
Financial liabilities
|
||||||||||||||||||||
Deposits:
|
||||||||||||||||||||
Non-interest-bearing deposits
|
102,107
|
102,107
|
-
|
102,107
|
-
|
|||||||||||||||
Interest-bearing deposits:
|
415,933
|
415,933
|
-
|
415,933
|
-
|
|||||||||||||||
Time
|
76,805
|
76,519
|
-
|
76,519
|
-
|
|||||||||||||||
Brokered deposits
|
10,238
|
10,204
|
-
|
10,204
|
-
|
|||||||||||||||
Repurchase agreements
|
19,221
|
19,221
|
-
|
19,221
|
-
|
|||||||||||||||
FHLBP advances
|
20,000
|
20,616
|
-
|
20,616
|
-
|
|||||||||||||||
Junior subordinated debentures and other borrowings
|
9,279
|
7,546
|
-
|
7,546
|
-
|
|||||||||||||||
Accrued interest payable
|
351
|
351
|
-
|
351
|
-
|
|||||||||||||||
Off-balance sheet instruments
|
-
|
-
|
-
|
-
|
-
|
Year Ended
|
||||||||
December 31
|
||||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Current tax expense:
|
||||||||
Federal
|
$
|
1,581
|
$
|
1,894
|
||||
State
|
10
|
9
|
||||||
Deferred income tax (benefit) expense:
|
||||||||
Federal
|
(88
|
)
|
(226
|
)
|
||||
Income tax expense
|
$
|
1,503
|
$
|
1,677
|
Year Ended
|
||||||||
December 31
|
||||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Federal income taxes at statutory rate
|
$
|
2,258
|
$
|
2,203
|
||||
Decrease resulting from:
|
||||||||
Tax-exempt interest and dividend preference
|
(640
|
)
|
(467
|
)
|
||||
Bank owned life insurance
|
(78
|
)
|
(80
|
)
|
||||
Other, net (decrease) increase
|
(37
|
)
|
21
|
|||||
Income tax expense
|
$
|
1,503
|
$
|
1,677
|
December 31
|
||||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Deferred tax assets:
|
||||||||
Allowance for credit losses
|
$
|
1,677
|
$
|
1,485
|
||||
Unrealized losses on securities
|
402
|
227
|
||||||
Unrealized losses on reclassified securities
|
6
|
8
|
||||||
Unrealized loss on pension obligation
|
616
|
589
|
||||||
Capital loss disallowance
|
1
|
1
|
||||||
State net operating losses
|
528
|
463
|
||||||
Unvested stock awards
|
147
|
131
|
||||||
Deferred compensation (SERP)
|
732
|
704
|
||||||
Nonqualified stock options
|
59
|
74
|
||||||
Non-accrued interest
|
468
|
547
|
||||||
Provision for unfunded loans
|
64
|
57
|
||||||
OREO write-downs
|
52
|
75
|
||||||
Core deposit intangible
|
14
|
16
|
||||||
Accrued expenses
|
57
|
51
|
||||||
Total gross deferred tax assets
|
4,823
|
4,428
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
(31
|
)
|
(101
|
)
|
||||
Pension expense
|
(27
|
)
|
(50
|
)
|
||||
Bank shares tax credit
|
(199
|
)
|
(189
|
)
|
||||
Prepaid expenses
|
(219
|
)
|
(151
|
)
|
||||
Mortgage servicing rights
|
(44
|
)
|
(28
|
)
|
||||
Deferred gain from insurance proceeds
|
(41
|
)
|
-
|
|||||
Total gross deferred tax liabilities
|
(561
|
)
|
(519
|
)
|
||||
Valuation allowance
|
(529
|
)
|
(463
|
)
|
||||
Net deferred tax asset
|
$
|
3,733
|
$
|
3,446
|
(In thousands,
|
Year Ended December 31
|
|||||||||||||||||||||||
except per share data)
|
2015
|
2014
|
||||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic EPS
|
||||||||||||||||||||||||
Net income available to common stockholders
|
$
|
5,088
|
2,802
|
$
|
1.82
|
$
|
4,669
|
2,767
|
$
|
1.69
|
||||||||||||||
Effect of potential dilutive common stock equivalents -
|
||||||||||||||||||||||||
stock options and restricted shares
|
-
|
45
|
(0.03
|
)
|
-
|
46
|
(0.03
|
)
|
||||||||||||||||
Diluted EPS
|
||||||||||||||||||||||||
Income available to common stockholders after assumed
|
||||||||||||||||||||||||
exercises
|
$
|
5,088
|
2,847
|
$
|
1.79
|
$
|
4,669
|
2,813
|
$
|
1.66
|
December 31
|
||||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Projected benefit obligation
|
$
|
(6,583
|
)
|
$
|
(6,783
|
)
|
||
Accumulated benefit obligation
|
(6,583
|
)
|
(6,783
|
)
|
||||
Fair value of plan assets
|
4,851
|
5,197
|
||||||
Amounts recognized in the statement of financial position consist of:
|
||||||||
Other liabilities
|
$
|
(1,732
|
)
|
$
|
(1,586
|
)
|
||
Funded status
|
$
|
(1,732
|
)
|
$
|
(1,586
|
)
|
||
Amounts recognized in accumulated other comprehensive loss consist of:
|
||||||||
Net loss
|
$
|
1,812
|
$
|
1,734
|
||||
Total
|
$
|
1,812
|
$
|
1,734
|
Year ended December 31
|
||||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$
|
6,783
|
$
|
6,250
|
||||
Interest cost
|
243
|
275
|
||||||
Actuarial (gain) loss
|
(162
|
)
|
636
|
|||||
Benefits paid
|
(281
|
)
|
(378
|
)
|
||||
Benefit obligation at end of year
|
$
|
6,583
|
$
|
6,783
|
||||
Change in plan assets
|
||||||||
Fair value of assets at beginning of year
|
$
|
5,197
|
$
|
5,274
|
||||
Actual return on plan assets
|
(58
|
)
|
235
|
|||||
Employer contribution
|
57
|
103
|
||||||
Benefits paid
|
(281
|
)
|
(378
|
)
|
||||
Estimated expenses
|
(64
|
)
|
(37
|
)
|
||||
Fair value of assets at end of year
|
$
|
4,851
|
$
|
5,197
|
December 31
|
||||||||
2015
|
2014
|
|||||||
Cash and cash equivalents
|
2.6
|
%
|
2.4
|
%
|
||||
Equity securities
|
55.1
|
57.8
|
||||||
Fixed income securities
|
42.3
|
39.8
|
||||||
Total
|
100.0
|
%
|
100.0
|
%
|
Year Ended December 31
|
||||||||
(Dollars in thousands)
|
2015 | 2014 | ||||||
Service cost
|
$
|
46
|
$
|
44
|
||||
Interest cost
|
243
|
275
|
||||||
Expected return on plan assets
|
(272
|
)
|
(285
|
)
|
||||
Recognized net actuarial loss
|
109
|
49
|
||||||
Net periodic cost
|
$
|
126
|
$
|
83
|
||||
Assumptions used:
|
||||||||
Discount rate:
|
||||||||
Obligation
|
4.05
|
%
|
3.75
|
%
|
||||
Expense
|
3.75
|
4.50
|
||||||
Rate of increase in compensation level
|
N/
|
A
|
N/
|
A
|
||||
Expected long-term rate of return on assets
|
5.50
|
5.50
|
(Dollars in thousands)
|
Period
|
Benefits
|
|
2016
|
$
|
622
|
|
2017
|
306
|
||
2018
|
361
|
||
2019
|
431
|
||
2020
|
917
|
||
2021-2025
|
2,387
|
(Dollars in thousands)
|
||||
Service cost
|
$
|
44
|
||
Interest cost
|
254
|
|||
Expected return on plan assets
|
(253
|
)
|
||
Recognized net actuarial gain
|
128
|
|||
Estimated 2016 net periodic benefit cost
|
$
|
173
|
December 31, 2015
|
||||||||||||||||
Assets at
|
||||||||||||||||
Fair
|
||||||||||||||||
(Dollars in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Value
|
||||||||||||
Mutual fund - equity:
|
||||||||||||||||
US equities
|
$
|
1,345
|
$
|
-
|
$
|
-
|
$
|
1,345
|
||||||||
International equities
|
1,202
|
-
|
-
|
1,202
|
||||||||||||
Real estate
|
126
|
-
|
-
|
126
|
||||||||||||
Mutual funds - fixed income:
|
||||||||||||||||
Domestic fixed income
|
2,052
|
-
|
-
|
2,052
|
||||||||||||
US corporate bonds, notes and cash:
|
||||||||||||||||
Corporate bonds
|
-
|
-
|
-
|
-
|
||||||||||||
Cash
|
126
|
-
|
-
|
126
|
||||||||||||
Total assets measured at fair value on a recurring basis
|
$
|
4,851
|
$
|
-
|
$
|
-
|
$
|
4,851
|
December 31, 2014
|
||||||||||||||||
Assets at
|
||||||||||||||||
Fair
|
||||||||||||||||
(Dollars in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Value
|
||||||||||||
Mutual fund - equity:
|
||||||||||||||||
US equities
|
$
|
1,622
|
$
|
-
|
$
|
-
|
$
|
1,622
|
||||||||
International equities
|
1,245
|
-
|
-
|
1,245
|
||||||||||||
Real estate
|
133
|
-
|
-
|
133
|
||||||||||||
Mutual funds - fixed income:
|
||||||||||||||||
Domestic fixed income
|
2,070
|
-
|
-
|
2,070
|
||||||||||||
US corporate bonds, notes and cash:
|
||||||||||||||||
Corporate bonds
|
-
|
-
|
-
|
-
|
||||||||||||
Cash
|
127
|
-
|
-
|
127
|
||||||||||||
Total assets measured at fair value on a recurring basis
|
$
|
5,197
|
$
|
-
|
$
|
-
|
$
|
5,197
|
Number
|
Weighted Average
|
|||||||
Outstanding
|
Exercise Price
|
|||||||
Outstanding January 1, 2014
|
207,303
|
$
|
15.92
|
|||||
Issued
|
-
|
-
|
||||||
Exercised
|
(24,906
|
)
|
15.92
|
|||||
Forfeited
|
-
|
-
|
||||||
Expired
|
(18,811
|
)
|
22.78
|
|||||
Outstanding December 31, 2014
|
163,586
|
$
|
15.13
|
|||||
Issued
|
-
|
-
|
||||||
Exercised
|
(99,086
|
)
|
19.34
|
|||||
Forfeited
|
-
|
-
|
||||||
Expired
|
-
|
-
|
||||||
Outstanding December 31, 2015
|
64,500
|
$
|
8.67
|
December 31, 2014
|
|||||||||||||||||||||
Range of
|
Weighted Average
|
||||||||||||||||||||
Exercise
|
Number
|
Number
|
Exercise
|
Remaining
|
Intrinsic
|
||||||||||||||||
Prices
|
Outstanding
|
Exercisable
|
Price
|
Contractual Life
|
Value
|
||||||||||||||||
$ 6.93-10.99
|
80,650
|
80,650
|
$
|
8.66
|
3.15
|
years
|
$
|
1,044,000
|
|||||||||||||
14.00-19.99
|
34,895
|
34,895
|
17.51
|
0.97
|
years
|
143,000
|
|||||||||||||||
23.00-24.27
|
48,041
|
48,041
|
24.27
|
0.29
|
years
|
-
|
|||||||||||||||
Total
|
163,586
|
163,586
|
$
|
15.13
|
1.85
|
years
|
$
|
1,187,000
|
Weighted Average
|
||||||||
Shares
|
Stock Price
|
|||||||
Non-vested stock awards - January 1, 2014
|
50,795
|
$
|
15.65
|
|||||
Granted
|
25,135
|
21.72
|
||||||
Forfeited
|
-
|
-
|
||||||
Vested
|
-
|
-
|
||||||
Non-vested stock awards - December 31, 2014
|
75,930
|
$
|
17.66
|
|||||
Granted
|
26,595
|
27.55
|
||||||
Forfeited
|
(1,270
|
)
|
19.21
|
|||||
Vested
|
(24,000
|
)
|
12.28
|
|||||
Non-vested stock awards - December 31, 2015
|
77,255
|
$
|
22.71
|
Condensed Statements of Financial Condition
|
December 31
|
|||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Assets
|
||||||||
Cash
|
$
|
75
|
$
|
160
|
||||
Investment securities, at fair value
|
-
|
18
|
||||||
Investment in subsidiary
|
74,243
|
73,206
|
||||||
Other assets
|
302
|
104
|
||||||
Total assets
|
$
|
74,620
|
$
|
73,488
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Junior subordinated debentures
|
$
|
9,279
|
$
|
9,279
|
||||
Subordinated debt
|
9,750
|
-
|
||||||
Other liabilities
|
103
|
301
|
||||||
Total liabilities
|
19,132
|
9,580
|
||||||
Stockholders' equity
|
55,488
|
63,908
|
||||||
Total liabilities and stockholders' equity
|
$
|
74,620
|
$
|
73,488
|
Year Ended
|
||||||||
Condensed Statements of Income
|
December 31
|
|||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Income:
|
||||||||
Equity in undistributed income of subsidiary
|
$
|
1,429
|
$
|
4,548
|
||||
Loss on sale of equity securities
|
(8
|
)
|
-
|
|||||
Dividends from subsidiary
|
4,359
|
551
|
||||||
Total income
|
5,780
|
5,099
|
||||||
Expense:
|
||||||||
Interest expense
|
642
|
295
|
||||||
Total expense
|
642
|
295
|
||||||
Net income
|
$
|
5,138
|
$
|
4,804
|
Condensed Statements of Cash Flows
|
Year Ended December 31
|
|||||||
(Dollars in thousands)
|
2015
|
2014
|
||||||
Cash Flows From Operating Activities:
|
||||||||
Net income
|
$
|
5,138
|
$
|
4,804
|
||||
Adjustments to reconcile net income to net cash used
|
||||||||
in operating activities:
|
||||||||
Equity in income of subsidiary and dividends
|
(5,787
|
)
|
(5,099
|
)
|
||||
Loss on sale of equity securities
|
8
|
-
|
||||||
Stock based compensation
|
342
|
267
|
||||||
Deferred tax benefit
|
(3
|
)
|
-
|
|||||
Dividends to holding company
|
4,358
|
549
|
||||||
Net change in other liabilities
|
(198
|
)
|
(5
|
)
|
||||
Net change in other assets
|
(198
|
)
|
7
|
|||||
Net Cash Used in Operating Activities
|
3,660
|
523
|
||||||
Cash Flows From Investing Activities:
|
||||||||
Sale of available-for-sale equity securities
|
19
|
-
|
||||||
Net Cash Provided by Investing Activities
|
19
|
-
|
||||||
Cash Flows From Financing Activities:
|
||||||||
Sale of treasury stock
|
387
|
370
|
||||||
Proceeds from exercise of stock options
|
402
|
39
|
||||||
Taxes on exercise of stock options
|
(469
|
)
|
(23
|
)
|
||||
Proceeds from issuance of subordinated debt
|
9,750
|
-
|
||||||
Payment to repurchase preferred stock
|
(13,000
|
)
|
-
|
|||||
Dividends paid
|
(834
|
)
|
(906
|
)
|
||||
Net Cash Used in Financing Activities
|
(3,764
|
)
|
(520
|
)
|
||||
Net Change in Cash and Cash Equivalents
|
(85
|
)
|
3
|
|||||
Cash and cash equivalents at Beginning of Period
|
160
|
157
|
||||||
Cash and cash equivalents at End of Period
|
$
|
75
|
$
|
160
|
To Be Well
|
||||||||||||||||||||||||
For Capital
|
Capitalized Under
|
|||||||||||||||||||||||
Adequacy
|
Prompt Corrective
|
|||||||||||||||||||||||
Actual
|
Purposes
|
Action Provisions
|
||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
DNB Financial Corporation
|
||||||||||||||||||||||||
December 31, 2015:
|
||||||||||||||||||||||||
Total risk-based capital
|
$
|
81,321
|
14.78
|
%
|
$
|
57,744
|
10.50
|
%
|
N/
|
A
|
N/
|
A
|
||||||||||||
Common equity tier 1 capital
|
57,448
|
10.44
|
38,502
|
7.00
|
N/
|
A
|
N/
|
A
|
||||||||||||||||
Tier 1 risk-based capital
|
66,448
|
12.08
|
46,753
|
8.50
|
N/
|
A
|
N/
|
A
|
||||||||||||||||
Tier 1 (leverage) capital
|
66,448
|
8.94
|
29,717
|
4.00
|
N/
|
A
|
N/
|
A
|
||||||||||||||||
December 31, 2014:
|
||||||||||||||||||||||||
Total risk-based capital
|
$
|
79,491
|
15.92
|
%
|
$
|
39,951
|
8.00
|
%
|
N/
|
A
|
N/
|
A
|
||||||||||||
Tier 1 risk-based capital
|
74,419
|
14.90
|
19,975
|
4.00
|
N/
|
A
|
N/
|
A
|
||||||||||||||||
Tier 1 (leverage) capital
|
74,419
|
10.55
|
28,215
|
4.00
|
N/
|
A
|
N/
|
A
|
||||||||||||||||
DNB First, N.A.
|
||||||||||||||||||||||||
December 31, 2015:
|
||||||||||||||||||||||||
Total risk-based capital
|
$
|
80,286
|
14.63
|
%
|
$
|
57,624
|
10.50
|
%
|
$
|
68,600
|
12.50
|
%
|
||||||||||||
Common equity tier 1 capital
|
75,163
|
13.70
|
38,416
|
7.00
|
49,392
|
9.00
|
||||||||||||||||||
Tier 1 risk-based capital
|
75,163
|
13.70
|
46,648
|
8.50
|
57,624
|
10.50
|
||||||||||||||||||
Tier 1 (leverage) capital
|
75,163
|
10.13
|
29,670
|
4.00
|
37,087
|
5.00
|
||||||||||||||||||
December 31, 2014:
|
||||||||||||||||||||||||
Total risk-based capital
|
$
|
79,510
|
15.93
|
%
|
$
|
39,919
|
8.00
|
%
|
$
|
49,898
|
10.00
|
%
|
||||||||||||
Tier 1 risk-based capital
|
74,438
|
14.92
|
19,959
|
4.00
|
29,939
|
6.00
|
||||||||||||||||||
Tier 1 (leverage) capital
|
74,438
|
10.56
|
28,198
|
4.00
|
35,247
|
5.00
|
March 31,
|
December 31,
|
|||||||
(Dollars in thousands, except share and per share data)
|
2016
|
2015
|
||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
38,740
|
$
|
21,119
|
||||
Federal Funds Sold
|
-
|
-
|
||||||
Cash and cash equivalents
|
38,740
|
21,119
|
||||||
Available-for-sale investment securities at fair value (amortized cost of $141,115 and $153,559)
|
141,373
|
152,379
|
||||||
Held-to-maturity investment securities (fair value of $66,797 and $68,431)
|
65,650
|
67,829
|
||||||
Total investment securities
|
207,023
|
220,208
|
||||||
Loans held for sale
|
359
|
-
|
||||||
Loans
|
489,366
|
481,758
|
||||||
Allowance for credit losses
|
(5,172
|
)
|
(4,935
|
)
|
||||
Net loans
|
484,194
|
476,823
|
||||||
Restricted stock
|
3,166
|
3,447
|
||||||
Office property and equipment, net
|
7,817
|
6,806
|
||||||
Accrued interest receivable
|
2,569
|
2,410
|
||||||
Other real estate owned & other repossessed property
|
2,612
|
2,581
|
||||||
Bank owned life insurance (BOLI)
|
9,381
|
9,326
|
||||||
Core deposit intangible
|
63
|
66
|
||||||
Net deferred taxes
|
2,946
|
3,733
|
||||||
Other assets
|
2,570
|
2,299
|
||||||
Total assets
|
$
|
761,440
|
$
|
748,818
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Non-interest-bearing deposits
|
$
|
131,951
|
$
|
125,581
|
||||
Interest-bearing deposits:
|
||||||||
NOW
|
201,566
|
185,973
|
||||||
Money market
|
138,241
|
137,555
|
||||||
Savings
|
75,535
|
72,660
|
||||||
Time
|
71,264
|
66,018
|
||||||
Brokered deposits
|
18,498
|
18,488
|
||||||
Total deposits
|
637,055
|
606,275
|
||||||
Federal Home Loan Bank of Pittsburgh (FHLBP) advances
|
20,000
|
30,000
|
||||||
Repurchase agreements
|
21,661
|
32,416
|
||||||
Junior subordinated debentures
|
9,279
|
9,279
|
||||||
Subordinated debt
|
9,750
|
9,750
|
||||||
Other borrowings
|
454
|
464
|
||||||
Total borrowings
|
61,144
|
81,909
|
||||||
Accrued interest payable
|
313
|
345
|
||||||
Other liabilities
|
4,748
|
4,801
|
||||||
Total liabilities
|
703,260
|
693,330
|
||||||
Stockholders' Equity
|
||||||||
Preferred stock, $10.00 par value;
|
||||||||
1,000,000 shares authorized; $1,000 liquidation preference per share; 0 and 0 issued, respectively
|
-
|
-
|
||||||
Common stock, $1.00 par value;
|
||||||||
10,000,000 shares authorized; 2,951,128 and 2,933,049 issued, respectively; 2,844,973 and 2,823,840 outstanding, respectively
|
2,969
|
2,955
|
||||||
Treasury stock, at cost; 106,155 and 109,209 shares, respectively
|
(1,960
|
)
|
(2,015
|
)
|
||||
Surplus
|
35,413
|
35,097
|
||||||
Retained earnings
|
22,793
|
21,436
|
||||||
Accumulated other comprehensive loss
|
(1,035
|
)
|
(1,985
|
)
|
||||
Total stockholders' equity
|
58,180
|
55,488
|
||||||
Total liabilities and stockholders' equity
|
$
|
761,440
|
$
|
748,818
|
Three Months Ended March 31,
|
||||||||
(Dollars in thousands, except per share data)
|
2016
|
2015
|
||||||
Interest Income:
|
||||||||
Interest and fees on loans
|
$
|
5,068
|
$
|
4,912
|
||||
Interest and dividends on investment securities:
|
||||||||
Taxable
|
682
|
735
|
||||||
Exempt from federal taxes
|
334
|
342
|
||||||
Interest on cash and cash equivalents
|
21
|
7
|
||||||
Total interest and dividend income
|
6,105
|
5,996
|
||||||
Interest Expense:
|
||||||||
Interest on NOW, money market and savings
|
164
|
149
|
||||||
Interest on time deposits
|
117
|
109
|
||||||
Interest on brokered deposits
|
62
|
24
|
||||||
Interest on FHLB advances
|
94
|
194
|
||||||
Interest on repurchase agreements
|
11
|
9
|
||||||
Interest on junior subordinated debentures
|
81
|
74
|
||||||
Interest on subordinated debt
|
104
|
30
|
||||||
Interest on other borrowings
|
17
|
17
|
||||||
Total interest expense
|
650
|
606
|
||||||
Net interest income
|
5,455
|
5,390
|
||||||
Provision for credit losses
|
330
|
300
|
||||||
Net interest income after provision for credit losses
|
5,125
|
5,090
|
||||||
Non-interest Income:
|
||||||||
Service charges
|
307
|
296
|
||||||
Wealth management
|
397
|
352
|
||||||
Mortgage banking
|
32
|
38
|
||||||
Increase in cash surrender value of BOLI
|
55
|
55
|
||||||
Gain on sale of investment securities, net
|
31
|
53
|
||||||
Gain on sale of loans
|
39
|
231
|
||||||
Gains from insurance proceeds
|
1,150
|
-
|
||||||
Other fees
|
318
|
310
|
||||||
Total non-interest income
|
2,329
|
1,335
|
||||||
Non-interest Expense:
|
||||||||
Salaries and employee benefits
|
3,126
|
2,644
|
||||||
Furniture and equipment
|
329
|
302
|
||||||
Occupancy
|
468
|
603
|
||||||
Professional and consulting
|
309
|
328
|
||||||
Advertising and marketing
|
183
|
169
|
||||||
Printing and supplies
|
33
|
48
|
||||||
FDIC insurance
|
129
|
123
|
||||||
PA shares tax
|
162
|
150
|
||||||
Telecommunications
|
61
|
61
|
||||||
Postage
|
21
|
23
|
||||||
Due diligence and merger expense
|
188
|
-
|
||||||
Loss on sale or write down of OREO, net
|
-
|
-
|
||||||
Other expenses
|
409
|
373
|
||||||
Total non-interest expense
|
5,418
|
4,824
|
||||||
Income before income tax expense
|
2,036
|
1,601
|
||||||
Income tax expense
|
480
|
349
|
||||||
Net income
|
$
|
1,556
|
$
|
1,252
|
||||
Preferred stock dividends and accretion of discount
|
-
|
26
|
||||||
Net income available to common shareholders
|
$
|
1,556
|
$
|
1,226
|
||||
Earnings per common share:
|
||||||||
Basic
|
$
|
0.55
|
$
|
0.44
|
||||
Diluted
|
$
|
0.54
|
$
|
0.43
|
||||
Cash dividends per common share
|
$
|
0.07
|
$
|
0.07
|
||||
Weighted average common shares outstanding:
|
||||||||
Basic
|
2,832,521
|
2,786,012
|
||||||
Diluted
|
2,869,119
|
2,832,869
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
(Dollars in thousands)
|
2016
|
2015
|
||||||
Net income
|
$
|
1,556
|
$
|
1,252
|
||||
Other Comprehensive Income:
|
||||||||
Unrealized holding gains arising during the period
|
||||||||
Before tax amount
|
1,469
|
1,087
|
||||||
Tax effect
|
(499
|
)
|
(370
|
)
|
||||
970
|
717
|
|||||||
Accretion of discount on AFS to HTM reclassification
(1)
|
||||||||
Before tax amount
|
2
|
3
|
||||||
Tax effect
(2)
|
(1
|
)
|
(1
|
)
|
||||
1
|
2
|
|||||||
Less reclassification for gains included in net income
|
||||||||
Before tax amount
|
(31
|
)
|
(53
|
)
|
||||
Tax effect
(2)
|
10
|
18
|
||||||
(21
|
)
|
(35
|
)
|
|||||
Total other comprehensive income
|
950
|
684
|
||||||
Total comprehensive income
|
$
|
2,506
|
$
|
1,936
|
||||
(1)
Amounts are included in interest and dividends on investment securities in the consolidated statements of income.
|
||||||||
(2)
Amounts are included in income tax expense in the consolidated statements of income.
|
Accumulated
|
||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||
Preferred
|
Common
|
Treasury
|
Retained
|
Comprehensive
|
||||||||||||||||||||||||
(Dollars in thousands)
|
Stock
|
Stock
|
Stock
|
Surplus
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||||||
Balance at January 1, 2016
|
$
|
-
|
$
|
2,955
|
$
|
(2,015
|
)
|
$
|
35,097
|
$
|
21,436
|
$
|
(1,985
|
)
|
$
|
55,488
|
||||||||||||
Net income for three months ended March 31, 2016
|
-
|
-
|
-
|
-
|
1,556
|
-
|
1,556
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
950
|
950
|
|||||||||||||||||||||
Restricted stock compensation expense (18,079 shares vested)
|
-
|
29
|
-
|
631
|
-
|
-
|
660
|
|||||||||||||||||||||
Taxes on share award vest
|
-
|
(15
|
)
|
-
|
(421
|
)
|
-
|
-
|
(436
|
)
|
||||||||||||||||||
Tax benefit for restricted stock vest
|
-
|
-
|
-
|
64
|
-
|
-
|
64
|
|||||||||||||||||||||
Cash dividends - common ($0.07 per share)
|
-
|
-
|
-
|
-
|
(199
|
)
|
-
|
(199
|
)
|
|||||||||||||||||||
Sale of treasury shares to 401(k) (2,040 shares)
|
-
|
-
|
37
|
28
|
-
|
-
|
65
|
|||||||||||||||||||||
Sale of treasury shares to deferred comp. plan (1,014 shares)
|
-
|
-
|
18
|
14
|
-
|
-
|
32
|
|||||||||||||||||||||
Balance at March 31, 2016
|
$
|
-
|
$
|
2,969
|
$
|
(1,960
|
)
|
$
|
35,413
|
$
|
22,793
|
$
|
(1,035
|
)
|
$
|
58,180
|
Accumulated
|
||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||
Preferred
|
Common
|
Treasury
|
Retained
|
Comprehensive
|
||||||||||||||||||||||||
(Dollars in thousands)
|
Stock
|
Stock
|
Stock
|
Surplus
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||||||
Balance at January 1, 2015
|
$
|
13,000
|
$
|
2,931
|
$
|
(2,301
|
)
|
$
|
34,745
|
$
|
17,132
|
$
|
(1,599
|
)
|
$
|
63,908
|
||||||||||||
Net income for three months ended March 31, 2015
|
-
|
-
|
-
|
-
|
1,252
|
-
|
1,252
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
684
|
684
|
|||||||||||||||||||||
Redemption of preferred stock (9,750 shares)
|
(9,750
|
)
|
-
|
-
|
-
|
-
|
-
|
(9,750
|
)
|
|||||||||||||||||||
Restricted stock compensation expense
|
-
|
5
|
-
|
82
|
-
|
-
|
87
|
|||||||||||||||||||||
Exercise of stock options (14,696 shares)
|
-
|
14
|
-
|
149
|
-
|
-
|
163
|
|||||||||||||||||||||
Taxes on stock option exercise and share award vest
|
-
|
-
|
-
|
(46
|
)
|
-
|
-
|
(46
|
)
|
|||||||||||||||||||
Cash dividends - common ($0.07 per share)
|
-
|
-
|
-
|
-
|
(194
|
)
|
-
|
(194
|
)
|
|||||||||||||||||||
Cash dividends SBLF preferred
|
-
|
-
|
-
|
-
|
(26
|
)
|
-
|
(26
|
)
|
|||||||||||||||||||
Sale of treasury shares to 401(k) (2,926 shares)
|
-
|
-
|
54
|
9
|
-
|
-
|
63
|
|||||||||||||||||||||
Sale of treasury shares to deferred comp. plan (1,474 shares)
|
-
|
-
|
27
|
5
|
-
|
-
|
32
|
|||||||||||||||||||||
Balance at March 31, 2015
|
$
|
3,250
|
$
|
2,950
|
$
|
(2,220
|
)
|
$
|
34,944
|
$
|
18,164
|
$
|
(915
|
)
|
$
|
56,173
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
(Dollars in thousands)
|
2016
|
2015
|
||||||
Cash Flows From Operating Activities:
|
||||||||
Net income
|
$
|
1,556
|
$
|
1,252
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation, amortization and accretion
|
361
|
460
|
||||||
Provision for credit losses
|
330
|
300
|
||||||
Stock based compensation
|
660
|
87
|
||||||
Net gain on sale of securities
|
(31
|
)
|
(53
|
)
|
||||
Earnings from investment in BOLI
|
(55
|
)
|
(55
|
)
|
||||
Deferred tax expense (benefit)
|
298
|
(339
|
)
|
|||||
Proceeds from sales of loans
|
1,233
|
5,555
|
||||||
Loans originated for sale
|
(1,521
|
)
|
(4,669
|
)
|
||||
Gain on sale of loans
|
(71
|
)
|
(269
|
)
|
||||
Increase in accrued interest receivable
|
(159
|
)
|
(319
|
)
|
||||
Increase in other assets
|
(271
|
)
|
(61
|
)
|
||||
Decrease in accrued interest payable
|
(32
|
)
|
(45
|
)
|
||||
Decrease in other liabilities
|
(53
|
)
|
(123
|
)
|
||||
Net Cash Provided By Operating Activities
|
2,245
|
1,721
|
||||||
Cash Flows From Investing Activities:
|
||||||||
Activity in available-for-sale securities:
|
||||||||
Sales
|
12,118
|
3,926
|
||||||
Maturities, repayments and calls
|
8,867
|
11,386
|
||||||
Purchases
|
(8,687
|
)
|
(14,778
|
)
|
||||
Activity in held-to-maturity securities:
|
||||||||
Sales
|
-
|
-
|
||||||
Maturities, repayments and calls
|
2,194
|
509
|
||||||
Purchases
|
-
|
(1,500
|
)
|
|||||
Net decrease (increase) in restricted stock
|
281
|
(133
|
)
|
|||||
Net increase in loans
|
(7,701
|
)
|
(8,520
|
)
|
||||
Purchases of property and equipment
|
(1,206
|
)
|
(35
|
)
|
||||
Costs capitalized in OREO and other repossessed property
|
(315
|
)
|
-
|
|||||
Proceeds from sale of OREO and other repossessed property
|
284
|
-
|
||||||
Net Cash Provided By (Used In) Investing Activities
|
5,835
|
(9,145
|
)
|
|||||
Cash Flows From Financing Activities:
|
||||||||
Net increase in deposits
|
30,780
|
22,178
|
||||||
Repayment of FHLBP advances
|
(10,000
|
)
|
-
|
|||||
Net (decrease) increase in repurchase agreements
|
(10,755
|
)
|
1,095
|
|||||
Proceeds from issuance of subordinated debt
|
-
|
9,750
|
||||||
Repayment of other borrowings
|
(10
|
)
|
(10
|
)
|
||||
Dividends paid
|
(199
|
)
|
(220
|
)
|
||||
Proceeds from the exercise of stock options
|
-
|
163
|
||||||
Taxes on exercise of stock options
|
(436
|
)
|
(46
|
)
|
||||
Tax benefit for restricted stock vest
|
64
|
-
|
||||||
Redemption of preferred stock
|
-
|
(9,750
|
)
|
|||||
Sale of treasury stock
|
97
|
95
|
||||||
Net Cash Provided by Financing Activities
|
9,541
|
23,255
|
||||||
Net Change in Cash and Cash Equivalents
|
17,621
|
15,831
|
||||||
Cash and Cash Equivalents at Beginning of Period
|
21,119
|
12,504
|
||||||
Cash and Cash Equivalents at End of Period
|
$
|
38,740
|
$
|
28,335
|
||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
682
|
$
|
651
|
||||
Income taxes
|
150
|
858
|
||||||
Supplemental Disclosure of Non-cash Flow Information:
|
||||||||
Transfers from loans to real estate owned and other repossessed property
|
-
|
7
|
March 31, 2016
|
||||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
||||||||||||||
(Dollars in thousands)
|
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
Held To Maturity
|
||||||||||||||||
US Government agency obligations
|
$
|
8,035
|
$
|
482
|
$
|
-
|
$
|
8,517
|
||||||||
Government Sponsored Entities (GSE) mortgage-backed securities
|
2,615
|
105
|
-
|
2,720
|
||||||||||||
Corporate bonds
|
11,420
|
304
|
(70
|
)
|
11,654
|
|||||||||||
Collateralized mortgage obligations GSE
|
2,455
|
25
|
(2
|
)
|
2,478
|
|||||||||||
State and municipal tax-exempt
|
41,125
|
376
|
(73
|
)
|
41,428
|
|||||||||||
Total
|
$
|
65,650
|
$
|
1,292
|
$
|
(145
|
)
|
$
|
66,797
|
|||||||
Available For Sale
|
||||||||||||||||
US Government agency obligations
|
$
|
58,950
|
$
|
169
|
$
|
(3
|
)
|
$
|
59,116
|
|||||||
GSE mortgage-backed securities
|
34,055
|
173
|
-
|
34,228
|
||||||||||||
Collateralized mortgage obligations GSE
|
15,518
|
28
|
(157
|
)
|
15,389
|
|||||||||||
Corporate bonds
|
19,951
|
69
|
(148
|
)
|
19,872
|
|||||||||||
State and municipal tax-exempt
|
12,641
|
136
|
(9
|
)
|
12,768
|
|||||||||||
Total
|
$
|
141,115
|
$
|
575
|
$
|
(317
|
)
|
$
|
141,373
|
December 31, 2015
|
||||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
||||||||||||||
(Dollars in thousands)
|
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
Held To Maturity
|
||||||||||||||||
US Government agency obligations
|
$
|
7,973
|
$
|
320
|
$
|
-
|
$
|
8,293
|
||||||||
Government Sponsored Entities (GSE) mortgage-backed securities
|
2,759
|
83
|
-
|
2,842
|
||||||||||||
Corporate bonds
|
11,518
|
234
|
(42
|
)
|
11,710
|
|||||||||||
Collateralized mortgage obligations GSE
|
2,623
|
9
|
(26
|
)
|
2,606
|
|||||||||||
State and municipal tax-exempt
|
42,956
|
300
|
(276
|
)
|
42,980
|
|||||||||||
Total
|
$
|
67,829
|
$
|
946
|
$
|
(344
|
)
|
$
|
68,431
|
|||||||
Available For Sale
|
||||||||||||||||
US Government agency obligations
|
$
|
58,460
|
$
|
-
|
$
|
(252
|
)
|
$
|
58,208
|
|||||||
GSE mortgage-backed securities
|
40,663
|
13
|
(325
|
)
|
40,351
|
|||||||||||
Collateralized mortgage obligations GSE
|
16,241
|
3
|
(438
|
)
|
15,806
|
|||||||||||
Corporate bonds
|
20,921
|
-
|
(350
|
)
|
20,571
|
|||||||||||
State and municipal tax-exempt
|
17,274
|
180
|
(11
|
)
|
17,443
|
|||||||||||
Total
|
$
|
153,559
|
$
|
196
|
$
|
(1,376
|
)
|
$
|
152,379
|
March 31, 2016
|
||||||||||||||||||||||||
Fair Value
|
Unrealized
|
Fair Value
|
Unrealized
|
|||||||||||||||||||||
Total
|
Impaired
|
Loss
|
Impaired
|
Loss
|
||||||||||||||||||||
Total
|
Unrealized
|
Less Than
|
Less Than
|
More Than
|
More Than
|
|||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
Loss
|
12 Months
|
12 Months
|
12 Months
|
12 Months
|
||||||||||||||||||
Held To Maturity
|
||||||||||||||||||||||||
Corporate bonds
|
$
|
3,423
|
$
|
(70
|
)
|
$
|
3,423
|
$
|
(70
|
)
|
$
|
-
|
$
|
-
|
||||||||||
Collateralized mortgage obligations GSE
|
368
|
(2
|
)
|
368
|
(2
|
)
|
-
|
-
|
||||||||||||||||
State and municipal tax-exempt
|
4,144
|
(73
|
)
|
563
|
(7
|
)
|
3,581
|
(66
|
)
|
|||||||||||||||
Total
|
$
|
7,935
|
$
|
(145
|
)
|
$
|
4,354
|
$
|
(79
|
)
|
$
|
3,581
|
$
|
(66
|
)
|
|||||||||
Available For Sale
|
||||||||||||||||||||||||
US Government agency obligations
|
$
|
9,997
|
$
|
(3
|
)
|
$
|
9,997
|
$
|
(3
|
)
|
$
|
-
|
$
|
-
|
||||||||||
Collateralized mortgage obligations GSE
|
12,321
|
(157
|
)
|
1,507
|
(15
|
)
|
10,814
|
(142
|
)
|
|||||||||||||||
Corporate bonds
|
10,975
|
(148
|
)
|
4,487
|
(53
|
)
|
6,488
|
(95
|
)
|
|||||||||||||||
State and municipal tax-exempt
|
6,644
|
(9
|
)
|
6,644
|
(9
|
)
|
-
|
-
|
||||||||||||||||
Total
|
$
|
39,937
|
$
|
(317
|
)
|
$
|
22,635
|
$
|
(80
|
)
|
$
|
17,302
|
$
|
(237
|
)
|
December 31, 2015
|
||||||||||||||||||||||||
Fair Value
|
Unrealized
|
Fair Value
|
Unrealized
|
|||||||||||||||||||||
Total
|
Impaired
|
Loss
|
Impaired
|
Loss
|
||||||||||||||||||||
Total
|
Unrealized
|
Less Than
|
Less Than
|
More Than
|
More Than
|
|||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
Loss
|
12 Months
|
12 Months
|
12 Months
|
12 Months
|
||||||||||||||||||
Held To Maturity
|
||||||||||||||||||||||||
Corporate bonds
|
$
|
7,597
|
$
|
(42
|
)
|
$
|
7,597
|
$
|
(42
|
)
|
$
|
-
|
$
|
-
|
||||||||||
Collateralized mortgage obligations GSE
|
1,482
|
(26
|
)
|
388
|
(10
|
)
|
1,094
|
(16
|
)
|
|||||||||||||||
State and municipal tax-exempt
|
13,161
|
(276
|
)
|
4,380
|
(34
|
)
|
8,781
|
(242
|
)
|
|||||||||||||||
Total
|
$
|
22,240
|
$
|
(344
|
)
|
$
|
12,365
|
$
|
(86
|
)
|
$
|
9,875
|
$
|
(258
|
)
|
|||||||||
Available For Sale
|
||||||||||||||||||||||||
US Government agency obligations
|
$
|
58,208
|
$
|
(252
|
)
|
$
|
58,208
|
$
|
(252
|
)
|
$
|
-
|
$
|
-
|
||||||||||
GSE mortgage-backed securities
|
38,307
|
(325
|
)
|
33,984
|
(238
|
)
|
4,323
|
(87
|
)
|
|||||||||||||||
Collateralized mortgage obligations GSE
|
15,231
|
(438
|
)
|
4,187
|
(41
|
)
|
11,044
|
(397
|
)
|
|||||||||||||||
Corporate bonds
|
20,571
|
(350
|
)
|
16,157
|
(264
|
)
|
4,414
|
(86
|
)
|
|||||||||||||||
State and municipal tax-exempt
|
6,660
|
(11
|
)
|
6,660
|
(11
|
)
|
-
|
-
|
||||||||||||||||
Total
|
$
|
138,977
|
$
|
(1,376
|
)
|
$
|
119,196
|
$
|
(806
|
)
|
$
|
19,781
|
$
|
(570
|
)
|
Held to Maturity
|
Available for Sale
|
|||||||||||||||
Amortized
|
Amortized
|
|||||||||||||||
(Dollars in thousands)
|
Cost
|
Fair Value
|
Cost
|
Fair Value
|
||||||||||||
Due in one year or less
|
$
|
-
|
$
|
-
|
$
|
18,669
|
$
|
18,657
|
||||||||
Due after one year through five years
|
20,021
|
20,802
|
62,804
|
62,906
|
||||||||||||
Due after five years through ten years
|
27,530
|
27,778
|
34,738
|
34,935
|
||||||||||||
Due after ten years
|
18,099
|
18,217
|
24,904
|
24,875
|
||||||||||||
Total investment securities
|
$
|
65,650
|
$
|
66,797
|
$
|
141,115
|
$
|
141,373
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
(Dollars in thousands)
|
2016
|
2015
|
||||||
Gross realized gains-AFS
|
$
|
61
|
$
|
53
|
||||
Gross realized losses-AFS
|
(30
|
)
|
-
|
|||||
Net realized gain
|
$
|
31
|
$
|
53
|
(Dollars in thousands)
|
March 31, 2016
|
December 31, 2015
|
||||||
Residential mortgage
|
$
|
27,560
|
$
|
28,651
|
||||
Commercial mortgage
|
274,372
|
274,132
|
||||||
Commercial:
|
||||||||
Commercial term
|
107,232
|
102,178
|
||||||
Commercial construction
|
24,833
|
20,364
|
||||||
Consumer:
|
||||||||
Home equity
|
49,545
|
51,270
|
||||||
Other
|
5,824
|
5,163
|
||||||
Total loans
|
$
|
489,366
|
$
|
481,758
|
||||
Less allowance for credit losses
|
(5,172
|
)
|
(4,935
|
)
|
||||
Net loans
|
$
|
484,194
|
$
|
476,823
|
Three Months Ended March 31, 2016
|
||||||||||||||||||||
(Dollars in thousands)
|
December 31, 2015
|
March 31, 2016
|
Interest income that would have been recorded under original terms
|
Interest income recorded during
the period
|
Net impact on
interest income
|
|||||||||||||||
Non-accrual loans:
|
||||||||||||||||||||
Residential mortgage
|
$
|
1,619
|
$
|
1,781
|
$
|
19
|
$
|
-
|
$
|
19
|
||||||||||
Commercial mortgage
|
1,048
|
1,025
|
20
|
-
|
20
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
188
|
210
|
3
|
-
|
3
|
|||||||||||||||
Commercial construction
|
1,028
|
1,237
|
41
|
-
|
41
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
563
|
574
|
16
|
-
|
16
|
|||||||||||||||
Other
|
189
|
199
|
5
|
-
|
5
|
|||||||||||||||
Total non-accrual loans
|
$
|
4,635
|
$
|
5,026
|
$
|
104
|
$
|
-
|
$
|
104
|
||||||||||
Loans 90 days past due and accruing
|
457
|
164
|
1
|
1
|
-
|
|||||||||||||||
Total non-performing loans
|
$
|
5,092
|
$
|
5,190
|
$
|
105
|
$
|
1
|
$
|
104
|
||||||||||
Three Months Ended March 31, 2015
|
||||||||||||||||
(Dollars in thousands)
|
March 31, 2015
|
Interest income that would have been recorded under original terms
|
Interest income recorded during the period
|
Net impact on interest income
|
||||||||||||
Non-accrual loans:
|
||||||||||||||||
Residential mortgage
|
$
|
2,446
|
$
|
16
|
$
|
-
|
$
|
16
|
||||||||
Commercial mortgage
|
1,262
|
21
|
-
|
21
|
||||||||||||
Commercial:
|
||||||||||||||||
Commercial term
|
196
|
2
|
-
|
2
|
||||||||||||
Commercial construction
|
2,043
|
84
|
-
|
84
|
||||||||||||
Consumer:
|
||||||||||||||||
Home equity
|
429
|
7
|
-
|
7
|
||||||||||||
Other
|
194
|
5
|
-
|
5
|
||||||||||||
Total non-accrual loans
|
$
|
6,570
|
$
|
135
|
$
|
-
|
$
|
135
|
||||||||
Loans 90 days past due and accruing
|
239
|
5
|
5
|
-
|
||||||||||||
Total non-performing loans
|
$
|
6,809
|
$
|
140
|
$
|
5
|
$
|
135
|
March 31, 2016
|
||||||||||||||||||||||||||||
30-59
Days Past
|
60-89
Days Past
|
Greater
than
|
Total
|
Total
Loans
|
Loans
Receivable
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Due
|
Due
|
90 Days
|
Past Due
|
Current
|
Receivable
|
Accruing
|
|||||||||||||||||||||
Residential mortgage
|
$
|
-
|
$
|
384
|
$
|
1,945
|
$
|
2,329
|
$
|
25,231
|
$
|
27,560
|
$
|
164
|
||||||||||||||
Commercial mortgage
|
-
|
-
|
182
|
182
|
274,190
|
274,372
|
-
|
|||||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||||||
Commercial term
|
-
|
-
|
24
|
24
|
107,208
|
107,232
|
-
|
|||||||||||||||||||||
Commercial construction
|
-
|
-
|
447
|
447
|
24,386
|
24,833
|
-
|
|||||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||
Home equity
|
31
|
-
|
417
|
448
|
49,097
|
49,545
|
-
|
|||||||||||||||||||||
Other
|
26
|
12
|
147
|
185
|
5,639
|
5,824
|
-
|
|||||||||||||||||||||
Total
|
$
|
57
|
$
|
396
|
$
|
3,162
|
$
|
3,615
|
$
|
485,751
|
$
|
489,366
|
$
|
164
|
December 31, 2015
|
||||||||||||||||||||||||||||
30-59
Days Past
|
60-89
Days Past
|
Greater
than
|
Total
|
Total
Loans
|
Loans
Receivable
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Due
|
Due
|
90 Days
|
Past Due
|
Current
|
Receivable
|
Accruing
|
|||||||||||||||||||||
Residential mortgage
|
$
|
502
|
$
|
552
|
$
|
2,076
|
$
|
3,130
|
$
|
25,521
|
$
|
28,651
|
$
|
457
|
||||||||||||||
Commercial mortgage
|
36
|
86
|
96
|
218
|
273,914
|
274,132
|
-
|
|||||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||||||
Commercial term
|
-
|
-
|
-
|
-
|
102,178
|
102,178
|
-
|
|||||||||||||||||||||
Commercial construction
|
-
|
581
|
447
|
1,028
|
19,336
|
20,364
|
-
|
|||||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||
Home equity
|
7
|
310
|
153
|
470
|
50,800
|
51,270
|
-
|
|||||||||||||||||||||
Other
|
100
|
-
|
148
|
248
|
4,915
|
5,163
|
-
|
|||||||||||||||||||||
Total
|
$
|
645
|
$
|
1,529
|
$
|
2,920
|
$
|
5,094
|
$
|
476,664
|
$
|
481,758
|
$
|
457
|
March 31, 2016
|
December 31, 2015
|
|||||||||||||||||||||||
Recorded
|
Unpaid
|
Related
|
Recorded
|
Unpaid
|
Related
|
|||||||||||||||||||
Investment
|
Principal
|
Allowance
|
Investment
|
Principal
|
Allowance
|
|||||||||||||||||||
(Dollars in thousands)
|
Balance
|
Balance
|
||||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||||||
Residential mortgage
|
$
|
1,637
|
$
|
1,790
|
$
|
-
|
$
|
1,620
|
$
|
1,919
|
$
|
-
|
||||||||||||
Commercial mortgage
|
1,025
|
1,320
|
-
|
1,181
|
1,461
|
-
|
||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Commercial term
|
24
|
24
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Commercial construction
|
790
|
790
|
-
|
1,140
|
3,526
|
-
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Home equity
|
676
|
735
|
-
|
691
|
716
|
-
|
||||||||||||||||||
Other
|
92
|
100
|
-
|
82
|
90
|
-
|
||||||||||||||||||
Total
|
$
|
4,244
|
$
|
4,759
|
$
|
-
|
$
|
4,714
|
$
|
7,712
|
$
|
-
|
||||||||||||
With allowance recorded:
|
||||||||||||||||||||||||
Residential mortgage
|
144
|
290
|
1
|
-
|
-
|
-
|
||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Commercial term
|
186
|
200
|
107
|
200
|
211
|
110
|
||||||||||||||||||
Commercial construction
|
447
|
2,833
|
89
|
-
|
-
|
-
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Other
|
107
|
107
|
3
|
107
|
107
|
4
|
||||||||||||||||||
Total
|
$
|
884
|
$
|
3,430
|
$
|
200
|
$
|
307
|
$
|
318
|
$
|
114
|
||||||||||||
Total:
|
||||||||||||||||||||||||
Residential mortgage
|
1,781
|
2,080
|
1
|
1,620
|
1,919
|
-
|
||||||||||||||||||
Commercial mortgage
|
1,025
|
1,320
|
-
|
1,181
|
1,461
|
-
|
||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Commercial term
|
210
|
224
|
107
|
200
|
211
|
110
|
||||||||||||||||||
Commercial construction
|
1,237
|
3,623
|
89
|
1,140
|
3,526
|
-
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
Home equity
|
676
|
735
|
-
|
691
|
716
|
-
|
||||||||||||||||||
Other
|
199
|
207
|
3
|
189
|
197
|
4
|
||||||||||||||||||
Total
|
$
|
5,128
|
$
|
8,189
|
$
|
200
|
$
|
5,021
|
$
|
8,030
|
$
|
114
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||
March 31, 2016
|
March 31, 2015
|
|||||||||||||||
Average
|
Interest
|
Average
|
Interest
|
|||||||||||||
Recorded
|
Income
|
Recorded
|
Income
|
|||||||||||||
(Dollars in thousands)
|
Investment
|
Recognized
|
Investment
|
Recognized
|
||||||||||||
With no related allowance recorded:
|
||||||||||||||||
Residential mortgage
|
$
|
1,629
|
$
|
-
|
$
|
2,320
|
$
|
-
|
||||||||
Commercial mortgage
|
1,103
|
-
|
3,386
|
26
|
||||||||||||
Commercial:
|
||||||||||||||||
Commercial term
|
12
|
-
|
-
|
-
|
||||||||||||
Commercial construction
|
965
|
-
|
1,400
|
-
|
||||||||||||
Consumer:
|
||||||||||||||||
Home equity
|
684
|
1
|
504
|
1
|
||||||||||||
Other
|
87
|
-
|
144
|
-
|
||||||||||||
Total
|
$
|
4,480
|
$
|
1
|
$
|
7,754
|
$
|
27
|
||||||||
With allowance recorded:
|
||||||||||||||||
Residential mortgage
|
72
|
-
|
204
|
-
|
||||||||||||
Commercial mortgage
|
-
|
-
|
201
|
-
|
||||||||||||
Commercial:
|
||||||||||||||||
Commercial term
|
193
|
-
|
200
|
-
|
||||||||||||
Commercial construction
|
224
|
-
|
756
|
-
|
||||||||||||
Consumer:
|
||||||||||||||||
Home equity
|
-
|
-
|
44
|
-
|
||||||||||||
Other
|
107
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
596
|
$
|
-
|
$
|
1,405
|
$
|
-
|
||||||||
Total:
|
||||||||||||||||
Residential mortgage
|
1,701
|
-
|
2,524
|
-
|
||||||||||||
Commercial mortgage
|
1,103
|
-
|
3,587
|
26
|
||||||||||||
Commercial:
|
||||||||||||||||
Commercial term
|
205
|
-
|
200
|
-
|
||||||||||||
Commercial construction
|
1,189
|
-
|
2,156
|
-
|
||||||||||||
Consumer:
|
||||||||||||||||
Home equity
|
684
|
1
|
548
|
1
|
||||||||||||
Other
|
194
|
-
|
144
|
-
|
||||||||||||
Total
|
$
|
5,076
|
$
|
1
|
$
|
9,159
|
$
|
27
|
March 31, 2016
|
||||||||||||||||||||
Special
|
||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Residential mortgage
|
$
|
25,512
|
$
|
-
|
$
|
2,048
|
$
|
-
|
$
|
27,560
|
||||||||||
Commercial mortgage
|
260,529
|
4,763
|
9,080
|
-
|
274,372
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
98,787
|
2,507
|
5,938
|
-
|
107,232
|
|||||||||||||||
Commercial construction
|
21,781
|
-
|
3,052
|
-
|
24,833
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
48,814
|
-
|
731
|
-
|
49,545
|
|||||||||||||||
Other
|
5,625
|
-
|
199
|
-
|
5,824
|
|||||||||||||||
Total
|
$
|
461,048
|
$
|
7,270
|
$
|
21,048
|
$
|
-
|
$
|
489,366
|
December 31, 2015
|
||||||||||||||||||||
Special
|
||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Residential mortgage
|
$
|
26,762
|
$
|
-
|
$
|
1,889
|
$
|
-
|
$
|
28,651
|
||||||||||
Commercial mortgage
|
262,036
|
4,802
|
7,294
|
-
|
274,132
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial term
|
93,025
|
2,555
|
6,598
|
-
|
102,178
|
|||||||||||||||
Commercial construction
|
17,521
|
-
|
2,843
|
-
|
20,364
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Home equity
|
50,551
|
-
|
719
|
-
|
51,270
|
|||||||||||||||
Other
|
4,974
|
-
|
189
|
-
|
5,163
|
|||||||||||||||
Total
|
$
|
454,869
|
$
|
7,357
|
$
|
19,532
|
$
|
-
|
$
|
481,758
|
Residential
|
Commercial
|
Commercial
|
Commercial
|
Lease
|
Consumer
|
Consumer
|
||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Mortgage
|
Mortgage
|
Term
|
Construction
|
Financing
|
Home Equity
|
Other
|
Unallocated
|
Total
|
|||||||||||||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||||||||||||||||||
Beginning balance - January 1, 2016
|
$
|
216
|
$
|
2,375
|
$
|
989
|
$
|
569
|
$
|
-
|
$
|
195
|
$
|
64
|
$
|
527
|
$
|
4,935
|
||||||||||||||||||
Charge-offs
|
(84
|
)
|
-
|
(13
|
)
|
-
|
-
|
-
|
-
|
-
|
(97
|
)
|
||||||||||||||||||||||||
Recoveries
|
1
|
-
|
1
|
1
|
1
|
-
|
-
|
-
|
4
|
|||||||||||||||||||||||||||
Provisions
|
87
|
1
|
(29
|
)
|
195
|
(1
|
)
|
(7
|
)
|
3
|
81
|
330
|
||||||||||||||||||||||||
Ending balance - March 31, 2016
|
$
|
220
|
$
|
2,376
|
$
|
948
|
$
|
765
|
$
|
-
|
$
|
188
|
$
|
67
|
$
|
608
|
$
|
5,172
|
||||||||||||||||||
Ending balance: individually evaluated for impairment
|
$
|
1
|
$
|
-
|
$
|
107
|
$
|
89
|
$
|
-
|
$
|
-
|
$
|
3
|
$
|
-
|
$
|
200
|
||||||||||||||||||
Ending balance: collectively evaluated for impairment
|
$
|
219
|
$
|
2,376
|
$
|
841
|
$
|
676
|
$
|
-
|
$
|
188
|
$
|
64
|
$
|
608
|
$
|
4,972
|
||||||||||||||||||
Loans receivables:
|
||||||||||||||||||||||||||||||||||||
Ending balance
|
$
|
27,560
|
$
|
274,372
|
$
|
107,232
|
$
|
24,833
|
$
|
-
|
$
|
49,545
|
$
|
5,824
|
$
|
489,366
|
||||||||||||||||||||
Ending balance: individually evaluated for impairment
|
$
|
1,781
|
$
|
1,025
|
$
|
210
|
$
|
1,237
|
$
|
-
|
$
|
676
|
$
|
199
|
$
|
5,128
|
||||||||||||||||||||
Ending balance: collectively evaluated for impairment
|
$
|
25,779
|
$
|
273,347
|
$
|
107,022
|
$
|
23,596
|
$
|
-
|
$
|
48,869
|
$
|
5,625
|
$
|
484,238
|
||||||||||||||||||||
Reserve for unfunded loan commitments included in other liabilities
|
$
|
-
|
$
|
3
|
$
|
115
|
$
|
55
|
$
|
-
|
$
|
13
|
$
|
-
|
$
|
186
|
Residential
|
Commercial
|
Commercial
|
Commercial
|
Lease
|
Consumer
|
Consumer
|
||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Mortgage
|
Mortgage
|
Term
|
Construction
|
Financing
|
Home Equity
|
Other
|
Unallocated
|
Total
|
|||||||||||||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||||||||||||||||||
Beginning balance - January 1, 2015
|
$
|
269
|
$
|
2,300
|
$
|
709
|
$
|
881
|
$
|
-
|
$
|
189
|
$
|
70
|
$
|
488
|
$
|
4,906
|
||||||||||||||||||
Charge-offs
|
-
|
-
|
(11
|
)
|
-
|
-
|
-
|
(6
|
)
|
-
|
(17
|
)
|
||||||||||||||||||||||||
Recoveries
|
-
|
-
|
-
|
-
|
1
|
-
|
-
|
-
|
1
|
|||||||||||||||||||||||||||
Provisions
|
-
|
98
|
7
|
41
|
(1
|
)
|
35
|
2
|
118
|
300
|
||||||||||||||||||||||||||
Ending balance - March 31, 2015
|
$
|
269
|
$
|
2,398
|
$
|
705
|
$
|
922
|
$
|
-
|
$
|
224
|
$
|
66
|
$
|
606
|
$
|
5,190
|
||||||||||||||||||
Reserve for unfunded loan commitments included in other liabilities
|
$
|
-
|
$
|
4
|
$
|
87
|
$
|
53
|
$
|
-
|
$
|
12
|
$
|
-
|
$
|
156
|
Residential
|
Commercial
|
Commercial
|
Commercial
|
Lease
|
Consumer
|
Consumer
|
||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Mortgage
|
Mortgage
|
Term
|
Construction
|
Financing
|
Home Equity
|
Other
|
Unallocated
|
Total
|
|||||||||||||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||||||||||||||||||
Ending balance - December 31, 2015
|
$
|
216
|
$
|
2,375
|
$
|
989
|
$
|
569
|
$
|
-
|
$
|
195
|
$
|
64
|
$
|
527
|
$
|
4,935
|
||||||||||||||||||
Ending balance: individually evaluated for impairment
|
$
|
-
|
$
|
-
|
$
|
110
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
4
|
$
|
-
|
$
|
114
|
||||||||||||||||||
Ending balance: collectively evaluated for impairment
|
$
|
216
|
$
|
2,375
|
$
|
879
|
$
|
569
|
$
|
-
|
$
|
195
|
$
|
60
|
$
|
527
|
$
|
4,821
|
||||||||||||||||||
Loans receivables:
|
||||||||||||||||||||||||||||||||||||
Ending balance
|
$
|
28,651
|
$
|
274,132
|
$
|
102,178
|
$
|
20,364
|
$
|
-
|
$
|
51,270
|
$
|
5,163
|
$
|
481,758
|
||||||||||||||||||||
Ending balance: individually evaluated for impairment
|
$
|
1,620
|
$
|
1,181
|
$
|
200
|
$
|
1,140
|
$
|
-
|
$
|
691
|
$
|
189
|
$
|
5,021
|
||||||||||||||||||||
Ending balance: collectively evaluated for impairment
|
$
|
27,031
|
$
|
272,951
|
$
|
101,978
|
$
|
19,224
|
$
|
-
|
$
|
50,579
|
$
|
4,974
|
$
|
476,737
|
||||||||||||||||||||
Reserve for unfunded loan commitments included in other liabilities
|
$
|
-
|
$
|
2
|
$
|
115
|
$
|
58
|
$
|
-
|
$
|
13
|
$
|
-
|
$
|
188
|
Three Months Ended
|
||||||||||||
March 31, 2016
|
||||||||||||
(In thousands, except per-share data)
|
Income
|
Shares
|
Amount
|
|||||||||
Basic EPS
|
||||||||||||
Income available to common stockholders
|
$
|
1,556
|
2,833
|
$
|
0.55
|
|||||||
Effect of potential dilutive common stock equivalents – stock options and restricted shares
|
-
|
36
|
(0.01
|
)
|
||||||||
Diluted EPS
|
||||||||||||
Income available to common stockholders after assumed conversions
|
$
|
1,556
|
2,869
|
$
|
0.54
|
Three Months Ended
|
||||||||||||
March 31, 2015
|
||||||||||||
(In thousands, except per-share data)
|
Income
|
Shares
|
Amount
|
|||||||||
Basic EPS
|
||||||||||||
Income available to common stockholders
|
$
|
1,226
|
2,786
|
$
|
0.44
|
|||||||
Effect of potential dilutive common stock equivalents – stock options and restricted shares
|
-
|
47
|
(0.01
|
)
|
||||||||
Diluted EPS
|
||||||||||||
Income available to common stockholders after assumed conversions
|
$
|
1,226
|
2,833
|
$
|
0.43
|
Accumulated Other Comprehensive Loss
|
Before-Tax
|
Tax
|
Net-of-Tax
|
|||||||||
(Dollars in thousands)
|
Amount
|
Effect
|
Amount
|
|||||||||
March 31, 2016
|
||||||||||||
Net unrealized gain on AFS securities
|
$
|
258
|
$
|
(87
|
)
|
$
|
171
|
|||||
Discount on AFS to HTM reclassification
|
(15
|
)
|
5
|
(10
|
)
|
|||||||
Unrealized actuarial losses-pension
|
(1,812
|
)
|
616
|
(1,196
|
)
|
|||||||
$
|
(1,569
|
)
|
$
|
534
|
$
|
(1,035
|
)
|
|||||
December 31, 2015
|
||||||||||||
Net unrealized loss on AFS securities
|
$
|
(1,180
|
)
|
$
|
402
|
$
|
(778
|
)
|
||||
Discount on AFS to HTM reclassification
|
(17
|
)
|
6
|
(11
|
)
|
|||||||
Unrealized actuarial losses-pension
|
(1,812
|
)
|
616
|
(1,196
|
)
|
|||||||
$
|
(3,009
|
)
|
$
|
1,024
|
$
|
(1,985
|
)
|
(Dollars in thousands)
|
Overnight and Continuous
|
Up to 30 days
|
30 - 90 days
|
Greater than 90 days
|
Total
|
|||||||||||||||
March 31, 2016
|
||||||||||||||||||||
Repurchase agreements and repurchase-to-maturity transactions
|
$
|
21,661
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
21,661
|
||||||||||
Gross amount of recognized liabilities for repurchase agreements
|
||||||||||||||||||||
in statement of condition
|
$
|
21,661
|
$
|
21,661
|
||||||||||||||||
December 31, 2015
|
||||||||||||||||||||
Repurchase agreements and repurchase-to-maturity transactions
|
$
|
32,416
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
32,416
|
||||||||||
Gross amount of recognized liabilities for repurchase agreements
|
||||||||||||||||||||
in statement of condition
|
$
|
32,416
|
$
|
32,416
|
Number
|
Weighted Average
|
|||||||
Outstanding
|
Exercise Price
|
|||||||
Outstanding January 1, 2016
|
64,500
|
$
|
8.67
|
|||||
Issued
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Forfeited
|
-
|
-
|
||||||
Expired
|
-
|
-
|
||||||
Outstanding March 31, 2016
|
64,500
|
$
|
8.67
|
Number
|
Weighted Average
|
|||||||
Outstanding
|
Exercise Price
|
|||||||
Outstanding January 1, 2015
|
163,586
|
$
|
15.13
|
|||||
Issued
|
-
|
-
|
||||||
Exercised
|
93,834
|
19.60
|
||||||
Forfeited
|
-
|
-
|
||||||
Expired
|
-
|
-
|
||||||
Outstanding March 31, 2015
|
69,752
|
$
|
9.13
|
March 31, 2016
|
||||||||
Range of
|
Weighted Average
|
|||||||
Exercise
|
Number
|
Number
|
Exercise
|
Remaining
|
Intrinsic
|
|||
Prices
|
Outstanding
|
Exercisable
|
Price
|
Contractual Life
|
Value
|
|||
$
|
6.93-10.99
|
64,500
|
64,500
|
$
|
8.67
|
1.91 years
|
$
|
1,281,000
|
December 31, 2015
|
||||||||
Range of
|
Weighted Average
|
|||||||
Exercise
|
Number
|
Number
|
Exercise
|
Remaining
|
Intrinsic
|
|||
Prices
|
Outstanding
|
Exercisable
|
Price
|
Contractual Life
|
Value
|
|||
$
|
6.93-10.99
|
64,500
|
64,500
|
$
|
8.67
|
2.15 years
|
$
|
1,344,000
|
Weighted Average
|
||||||||
Shares
|
Stock Price
|
|||||||
Non-vested stock awards—January 1, 2016
|
77,255
|
$
|
22.71
|
|||||
Granted
|
3,000
|
28.75
|
||||||
Forfeited
|
-
|
-
|
||||||
Vested
|
33,700
|
23.66
|
||||||
Non-vested stock awards—March 31, 2016
|
46,555
|
$
|
22.42
|
Weighted Average
|
||||||||
Shares
|
Stock Price
|
|||||||
Non-vested stock awards—January 1, 2015
|
75,930
|
$
|
17.66
|
|||||
Granted
|
-
|
-
|
||||||
Forfeited
|
-
|
-
|
||||||
Vested
|
-
|
-
|
||||||
Non-vested stock awards—March 31, 2015
|
75,930
|
$
|
17.66
|
March 31, 2016
|
||||||||||||||||
(Dollars in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
||||||||||||
Assets Measured at Fair Value on a Recurring Basis
|
||||||||||||||||
AFS Investment Securities:
|
||||||||||||||||
US Government agency obligations
|
$
|
-
|
$
|
59,116
|
$
|
-
|
$
|
59,116
|
||||||||
GSE mortgage-backed securities
|
-
|
34,228
|
-
|
34,228
|
||||||||||||
Collateralized mortgage obligations GSE
|
-
|
15,389
|
-
|
15,389
|
||||||||||||
Corporate bonds
|
-
|
19,872
|
-
|
19,872
|
||||||||||||
State and municipal tax-exempt
|
-
|
12,768
|
-
|
12,768
|
||||||||||||
Total
|
$
|
-
|
$
|
141,373
|
$
|
-
|
$
|
141,373
|
||||||||
Assets Measured at Fair Value on a Nonrecurring Basis
|
||||||||||||||||
Impaired loans
|
$
|
-
|
$
|
-
|
$
|
690
|
$
|
690
|
||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
690
|
$
|
690
|
December 31, 2015
|
||||||||||||||||
(Dollars in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
||||||||||||
Assets Measured at Fair Value on a Recurring Basis
|
||||||||||||||||
AFS Investment Securities:
|
||||||||||||||||
US Government agency obligations
|
$
|
-
|
$
|
58,208
|
$
|
-
|
$
|
58,208
|
||||||||
GSE mortgage-backed securities
|
-
|
40,351
|
-
|
40,351
|
||||||||||||
Collateralized mortgage obligations GSE
|
-
|
15,806
|
-
|
15,806
|
||||||||||||
Corporate bonds
|
-
|
20,571
|
-
|
20,571
|
||||||||||||
State and municipal tax-exempt
|
-
|
17,443
|
-
|
17,443
|
||||||||||||
Total
|
$
|
-
|
$
|
152,379
|
$
|
-
|
$
|
152,379
|
||||||||
Assets Measured at Fair Value on a Nonrecurring Basis
|
||||||||||||||||
Impaired loans
|
$
|
-
|
$
|
-
|
$
|
964
|
$
|
964
|
||||||||
OREO and other repossessed property
|
-
|
-
|
682
|
682
|
||||||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
1,646
|
$
|
1,646
|
(1) | Fair value is generally determined through independent appraisals or sales contracts of the underlying collateral, which generally include various level 3 inputs which are not identifiable. |
(2) | Appraisals are adjusted by management for qualitative factors and disposal costs. |
March 31, 2016
|
||||||||||||||||||||
Carrying
|
Fair
|
|||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
38,740
|
$
|
38,740
|
$
|
38,740
|
$
|
-
|
$
|
-
|
||||||||||
AFS investment securities
|
141,373
|
141,373
|
-
|
141,373
|
-
|
|||||||||||||||
HTM investment securities
|
65,650
|
66,797
|
-
|
64,797
|
2,000
|
|||||||||||||||
Restricted stock
|
3,166
|
3,166
|
-
|
3,166
|
-
|
|||||||||||||||
Loans, net of allowance, including impaired
|
484,194
|
468,013
|
-
|
-
|
468,013
|
|||||||||||||||
Accrued interest receivable
|
2,569
|
2,569
|
-
|
2,569
|
-
|
|||||||||||||||
Financial liabilities
|
||||||||||||||||||||
Deposits:
|
||||||||||||||||||||
Non-interest-bearing deposits
|
131,951
|
131,951
|
-
|
131,951
|
-
|
|||||||||||||||
Interest-bearing deposits
|
415,342
|
415,342
|
-
|
415,342
|
-
|
|||||||||||||||
Time deposits
|
71,264
|
71,098
|
-
|
71,098
|
-
|
|||||||||||||||
Brokered deposits
|
18,498
|
18,566
|
-
|
18,566
|
-
|
|||||||||||||||
Repurchase agreements
|
21,661
|
21,661
|
-
|
21,661
|
-
|
|||||||||||||||
FHLBP advances
|
20,000
|
20,172
|
-
|
20,172
|
-
|
|||||||||||||||
Junior subordinated debentures and other borrowings
|
9,279
|
8,243
|
-
|
8,243
|
-
|
|||||||||||||||
Subordinated debt
|
9,750
|
9,304
|
-
|
9,304
|
-
|
|||||||||||||||
Accrued interest payable
|
313
|
313
|
-
|
313
|
-
|
|||||||||||||||
Off-balance sheet instruments
|
-
|
-
|
-
|
-
|
-
|
December 31, 2015
|
||||||||||||||||||||
Carrying
|
Fair
|
|||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
21,119
|
$
|
21,119
|
$
|
21,119
|
$
|
-
|
$
|
-
|
||||||||||
AFS investment securities
|
152,379
|
152,379
|
-
|
152,379
|
-
|
|||||||||||||||
HTM investment securities
|
67,829
|
68,431
|
-
|
66,431
|
2,000
|
|||||||||||||||
Restricted stock
|
3,447
|
3,447
|
-
|
3,447
|
-
|
|||||||||||||||
Loans held-for-sale
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Loans, net of allowance, including impaired
|
476,823
|
461,925
|
-
|
-
|
461,925
|
|||||||||||||||
Accrued interest receivable
|
2,410
|
2,410
|
-
|
2,410
|
-
|
|||||||||||||||
Financial liabilities
|
||||||||||||||||||||
Deposits:
|
||||||||||||||||||||
Non-interest-bearing deposits
|
125,581
|
125,581
|
-
|
125,581
|
-
|
|||||||||||||||
Interest-bearing deposits
|
396,188
|
396,188
|
-
|
396,188
|
-
|
|||||||||||||||
Time deposits
|
66,018
|
65,697
|
-
|
65,697
|
-
|
|||||||||||||||
Brokered deposits
|
18,488
|
18,327
|
-
|
18,327
|
-
|
|||||||||||||||
Repurchase agreements
|
32,416
|
32,416
|
-
|
32,416
|
-
|
|||||||||||||||
FHLBP advances
|
30,000
|
30,210
|
-
|
30,210
|
-
|
|||||||||||||||
Junior subordinated debentures and other borrowings
|
9,279
|
7,889
|
-
|
7,889
|
-
|
|||||||||||||||
Subordinated debt
|
9,750
|
9,999
|
-
|
9,999
|
-
|
|||||||||||||||
Accrued interest payable
|
345
|
345
|
-
|
345
|
-
|
|||||||||||||||
Off-balance sheet instruments
|
-
|
-
|
-
|
-
|
-
|
PAGE
|
||
Independent Auditor's Report
|
F-68
|
|
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
F-69
|
|
Consolidated Statements of Income for the years ended December 31, 2015 and 2014
|
F-70
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015 and 2014
|
F-70
|
|
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2015 and 2014
|
F-71
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014
|
F-72
|
|
Notes to Consolidated Financial Statements
|
F-73
|
Consolidated Balance Sheets (Unaudited) as of March 31, 2016 and December 31, 2015
|
F-96
|
|
Consolidated Statements of Income (Unaudited) for the three months ended March 31, 2016 and 2015
|
F-97
|
|
Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended March 31, 2016 and 2015
|
F-98
|
|
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the three months ended March 31, 2016 and 2015
|
F-99
|
|
Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2016 and 2015
|
F-100
|
|
Notes to Consolidated Financial Statements (Unaudited)
|
F-101
|
December 31,
|
2015
|
2014
|
||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
18,727
|
$
|
8,876
|
||||
Certificate of deposits, long-term
|
1,225
|
2,940
|
||||||
Investment securities available-for-sale
|
6,958
|
7,468
|
||||||
Investment securities held-to-maturity, at amortized cost (fair value of $319 at December 31, 2015)
|
314
|
-
|
||||||
Loans, net of allowance for loan losses (2015 $3,445; 2014 $3,086)
|
278,646
|
247,539
|
||||||
Investment in stock of correspondent banks, at cost
|
2,062
|
1,764
|
||||||
Bank premises and equipment, net
|
471
|
576
|
||||||
Other real estate owned
|
22
|
53
|
||||||
Accrued interest receivable
|
1,033
|
932
|
||||||
Deferred income taxes, net
|
654
|
732
|
||||||
Other assets
|
604
|
492
|
||||||
Total Assets
|
$
|
310,716
|
$
|
271,372
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Non-interest bearing
|
$
|
27,896
|
$
|
16,626
|
||||
Interest-bearing
|
202,344
|
183,861
|
||||||
Total deposits
|
230,240
|
200,487
|
||||||
Short-term borrowings
|
2,823
|
955
|
||||||
Long-term debt
|
42,936
|
38,268
|
||||||
Advances by borrowers for taxes and insurance
|
2,675
|
2,350
|
||||||
Accrued interest payable
|
132
|
123
|
||||||
Other liabilities
|
1,518
|
2,198
|
||||||
Total Liabilities
|
280,324
|
244,381
|
||||||
Stockholders' Equity
|
||||||||
Preferred stock, no stated par value; authorized 1,000,000 shares; no shares issued or outstanding
|
-
|
-
|
||||||
Common stock, par value $0.10 per share; authorized 10,000,000 shares; issued and outstanding 2015 and 2014 2,444,911 and 2,345,190 shares, respectively
|
244
|
234
|
||||||
Surplus
|
23,862
|
22,637
|
||||||
Accumulated other comprehensive income
|
75
|
122
|
||||||
Retained earnings
|
6,211
|
3,998
|
||||||
Total Stockholders' Equity
|
30,392
|
26,991
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
310,716
|
$
|
271,372
|
Years Ended December 31,
|
2015
|
2014
|
||||||
Interest Income
|
||||||||
Loans receivable, including fees
|
$
|
13,178
|
$
|
11,703
|
||||
Investment securities
|
272
|
220
|
||||||
Interest bearing deposits
|
57
|
85
|
||||||
Total Interest Income
|
13,507
|
12,008
|
||||||
Interest Expense
|
||||||||
Deposits
|
1,708
|
1,432
|
||||||
Borrowings
|
798
|
621
|
||||||
Total Interest Expense
|
2,506
|
2,053
|
||||||
Net interest income
|
11,001
|
9,955
|
||||||
Provision for Loan Losses
|
408
|
192
|
||||||
Net Interest Income After Provision for Loan Losses
|
10,593
|
9,763
|
||||||
Non-Interest Income
|
||||||||
Fees and service charges
|
319
|
321
|
||||||
Gain on sales of loans, net
|
223
|
189
|
||||||
Gain on sale of investment securities, net
|
-
|
120
|
||||||
Other income
|
14
|
226
|
||||||
Total Non-Interest Income
|
556
|
856
|
||||||
Non-Interest Expenses
|
||||||||
Salaries and employee benefits
|
4,161
|
4,066
|
||||||
Occupancy and equipment
|
464
|
436
|
||||||
Depreciation
|
260
|
304
|
||||||
Professional fees
|
538
|
494
|
||||||
Advertising and promotion
|
391
|
433
|
||||||
Data processing
|
911
|
909
|
||||||
Loan expense
|
84
|
56
|
||||||
Loss on sale of other real estate owned
|
-
|
43
|
||||||
Supervisory assessments, including FDIC insurance
|
215
|
179
|
||||||
Other
|
750
|
858
|
||||||
Total Non-Interest Expenses
|
7,774
|
7,778
|
||||||
Income before income taxes
|
3,375
|
2,841
|
||||||
Income Tax Expense
|
1,162
|
986
|
||||||
Net Income
|
$
|
2,213
|
$
|
1,855
|
Years Ended December 31,
|
2015
|
2014
|
||||||
Net Income
|
$
|
2,213
|
$
|
1,855
|
||||
Other Comprehensive Loss
|
||||||||
Unrealized losses on securities:
|
||||||||
Unrealized holding losses arising during period, net of tax
|
(47
|
)
|
(19
|
)
|
||||
Reclassification adjustment for net gains included, net of tax, in net income
(1)
|
-
|
(80
|
)
|
|||||
Other comprehensive loss
|
(47
|
)
|
(99
|
)
|
||||
Total Comprehensive Income
|
$
|
2,166
|
$
|
1,756
|
Common
Stock
|
Surplus
|
Accumulated Other Comprehensive Income
|
Retained Earnings
|
Total
|
||||||||||||||||
Balance, January 1, 2014
|
$
|
234
|
$
|
22,508
|
$
|
221
|
$
|
2,143
|
$
|
25,106
|
||||||||||
Net income
|
-
|
-
|
-
|
1,855
|
1,855
|
|||||||||||||||
Other comprehensive loss
|
-
|
-
|
(99
|
)
|
-
|
(99
|
)
|
|||||||||||||
Share-based compensation expense
|
-
|
116
|
-
|
-
|
116
|
|||||||||||||||
Warrant exercise (1,250 shares)
|
-
|
13
|
-
|
-
|
13
|
|||||||||||||||
Balance, December 31, 2014
|
234
|
22,637
|
122
|
3,998
|
26,991
|
|||||||||||||||
Net income
|
-
|
-
|
-
|
2,213
|
2,213
|
|||||||||||||||
Other comprehensive loss
|
-
|
-
|
(47
|
)
|
-
|
(47
|
)
|
|||||||||||||
Share-based compensation expense
|
-
|
188
|
-
|
-
|
188
|
|||||||||||||||
Warrant exercise (99,721 shares)
|
10
|
1,037
|
-
|
-
|
1,047
|
|||||||||||||||
Balance, December 31, 2015
|
$
|
244
|
$
|
23,862
|
$
|
75
|
$
|
6,211
|
$
|
30,392
|
Years Ended December 31,
|
2015
|
2014
|
||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$
|
2,213
|
$
|
1,855
|
||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||
Provision for loan losses
|
408
|
192
|
||||||
Depreciation expense
|
260
|
304
|
||||||
Deferred income taxes
|
103
|
(213
|
)
|
|||||
Gain on sale of investment securities available-for-sale
|
-
|
(120
|
)
|
|||||
Loss on sale of other real estate owned
|
-
|
43
|
||||||
Amortization of deferred loan fees
|
(433
|
)
|
(325
|
)
|
||||
Net accretion of premium/discounts
|
50
|
81
|
||||||
Gain on sale of loans
|
(223
|
)
|
(189
|
)
|
||||
Stock based compensation
|
188
|
116
|
||||||
Decrease in accrued interest receivable
|
(101
|
)
|
(70
|
)
|
||||
(Increase) decrease in other assets
|
(112
|
)
|
45
|
|||||
Increase in accrued interest payable
|
9
|
37
|
||||||
(Decrease) increase in other liabilities
|
(680
|
)
|
472
|
|||||
Net Cash Provided by Operating Activities
|
1,682
|
2,228
|
||||||
Cash Flows from Investing Activities
|
||||||||
Net increase in loans
|
(36,664
|
)
|
(42,644
|
)
|
||||
Proceeds from the sale of loans held for investment
|
5,786
|
3,905
|
||||||
Purchases of investment securities held-to-maturity
|
(315
|
)
|
-
|
|||||
Purchases of investment securities available-for-sale
|
(1,079
|
)
|
-
|
|||||
Principal repayments on investment securities available-for-sale
|
1,468
|
1,572
|
||||||
Proceeds from sales of investment securities available-for-sale
|
-
|
3,276
|
||||||
Purchase of long-term certificates of deposit
|
-
|
(1,960
|
)
|
|||||
Proceeds from maturities of long term certificates of deposit
|
1,715
|
10,735
|
||||||
Purchases of restricted bank stock
|
(430
|
)
|
(1,296
|
)
|
||||
Redemptions of restricted bank stock
|
132
|
696
|
||||||
Purchases of premises and equipment
|
(155
|
)
|
(79
|
)
|
||||
Proceeds from sale of other real estate owned
|
50
|
83
|
||||||
Net Cash Used in Investing Activities
|
(29,492
|
)
|
(25,712
|
)
|
||||
Cash Flows from Financing Activities
|
||||||||
Net increase (decrease) in deposits
|
29,753
|
(5,152
|
)
|
|||||
Proceeds from short-term borrowings
|
2,823
|
14,355
|
||||||
Proceeds from long-term borrowings
|
7,018
|
25,917
|
||||||
Repayment of short-term borrowings
|
(955
|
)
|
(14,250
|
)
|
||||
Repayment of long-term borrowings
|
(2,350
|
)
|
-
|
|||||
Net increase in advances from borrowers for taxes and insurance
|
325
|
509
|
||||||
Warrant exercise
|
1,047
|
13
|
||||||
Net Cash Provided by Financing Activities
|
37,661
|
21,392
|
||||||
Net increase (decrease) in cash and cash equivalents
|
9,851
|
(2,092
|
)
|
|||||
Cash and Cash Equivalents, Beginning
|
8,876
|
10,968
|
||||||
Cash and Cash Equivalents, Ending
|
$
|
18,727
|
$
|
8,876
|
||||
Supplementary Cash Flows Information
|
||||||||
Interest paid
|
$
|
2,497
|
$
|
2,016
|
||||
Income taxes paid
|
$
|
1,070
|
$
|
1,000
|
||||
Supplementary Schedule of Noncash Activities
|
||||||||
Transfer from loans to foreclosed assets held-for-sale
|
$
|
19
|
$
|
11
|
1. | Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices. |
2. | National, regional, and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans. |
3. | Nature and volume of the portfolio and terms of loans. |
4. | Volume and severity of past due, classified and nonaccrual loans as well as and other loan modifications. |
5. | Existence and effect of any concentrations of credit and changes in the level of such concentrations. |
6. | Effect of external factors, such as competition and legal and regulatory requirements. |
7. | Experience, ability, and depth of management. |
December 31, 2015
|
Amortized Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
Securities held-to-maturity:
Municipal and political subdivisions
|
$
|
314
|
$
|
5
|
$
|
-
|
$
|
319
|
||||||||
Securities available-for-sale:
|
||||||||||||||||
FHLMC pass-through securities
|
$
|
753
|
$
|
70
|
$
|
-
|
$
|
823
|
||||||||
FNMA pass-through securities
|
1,156
|
10
|
(7
|
)
|
1,159
|
|||||||||||
SBA pass-through securities
|
4,935
|
44
|
(3
|
)
|
4,976
|
|||||||||||
$
|
6,844
|
$
|
124
|
$
|
(10
|
)
|
$
|
6,958
|
December 31, 2014
|
Amortized Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
Securities available-for-sale:
|
||||||||||||||||
FHLMC pass-through securities
|
$
|
918
|
$
|
88
|
$
|
-
|
$
|
1,006
|
||||||||
FNMA pass-through securities
|
356
|
33
|
-
|
389
|
||||||||||||
SBA pass-through securities
|
6,010
|
68
|
(5
|
)
|
6,073
|
|||||||||||
$
|
7,284
|
$
|
189
|
$
|
(5
|
)
|
$
|
7,468
|
December 31, 2015
|
Held-to-Maturity
|
Available-for-Sale
|
||||||||||||||
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
|||||||||||||
Due in one year or less
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Due in one to five years
|
-
|
-
|
1,238
|
1,250
|
||||||||||||
Due in five to ten years
|
-
|
-
|
1,261
|
1,297
|
||||||||||||
Due in ten and thereafter
|
314
|
319
|
4,345
|
4,411
|
||||||||||||
$
|
314
|
$
|
319
|
$
|
6,844
|
$
|
6,958
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
December 31, 2015
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
FNMA pass-through securities
|
$
|
1,030
|
$
|
(7
|
)
|
$
|
-
|
$
|
-
|
$
|
1,030
|
$
|
(7
|
)
|
||||||||||
SBA pass-through securities
|
295
|
(1
|
)
|
287
|
(2
|
)
|
582
|
(3
|
)
|
|||||||||||||||
$
|
1,325
|
$
|
(8
|
)
|
$
|
287
|
$
|
(2
|
)
|
$
|
1,612
|
$
|
(10
|
)
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
December 31, 2014
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
SBA pass-through securities
|
$
|
-
|
$
|
-
|
$
|
522
|
$
|
(5
|
)
|
$
|
522
|
$
|
(5
|
)
|
2015
|
2014
|
|||||||
Commercial
|
$
|
220,246
|
$
|
194,410
|
||||
Residential
|
62,750
|
56,868
|
||||||
Consumer
|
213
|
239
|
||||||
Total loans
|
283,209
|
251,517
|
||||||
Net deferred loan fees
|
(1,118
|
)
|
(892
|
)
|
||||
Allowance for loan losses
|
(3,445
|
)
|
(3,086
|
)
|
||||
Net Loans
|
$
|
278,646
|
$
|
247,539
|
2015
|
2014
|
|||||||
Balance, beginning
|
$
|
76
|
$
|
71
|
||||
Originations
|
29
|
35
|
||||||
Payments
|
(18
|
)
|
(30
|
)
|
||||
Balance, Ending
|
$
|
87
|
$
|
76
|
December 31, 2015
|
Beginning
Balance
|
Charge-offs
|
Recoveries
|
Provisions
|
Ending
Balance
|
|||||||||||||||
Commercial
|
$
|
2,325
|
$
|
49
|
$
|
-
|
$
|
429
|
$
|
2,705
|
||||||||||
Residential
|
515
|
-
|
-
|
17
|
532
|
|||||||||||||||
Consumer
|
3
|
-
|
-
|
-
|
3
|
|||||||||||||||
Unallocated
|
243
|
-
|
-
|
(38
|
)
|
205
|
||||||||||||||
$
|
3,086
|
$
|
49
|
$
|
-
|
$
|
408
|
$
|
3,445
|
Allowance for Loan Losses
|
Loans Receivable
|
|||||||||||||||||||||||
December 31, 2015
|
Balance
|
Balance Related to Loans Individually Evaluated for Impairment
|
Balance Related to Loans Collectively Evaluated for Impairment
|
Balance
|
Balance Individually Evaluated for Impairment
|
Balance Collectively Evaluated for Impairment
|
||||||||||||||||||
Commercial
|
$
|
2,705
|
$
|
384
|
$
|
2,321
|
$
|
220,246
|
$
|
4,921
|
$
|
215,325
|
||||||||||||
Residential
|
532
|
28
|
504
|
62,750
|
102
|
62,648
|
||||||||||||||||||
Consumer
|
3
|
-
|
3
|
213
|
-
|
213
|
||||||||||||||||||
Unallocated
|
205
|
-
|
205
|
-
|
-
|
-
|
||||||||||||||||||
$
|
3,445
|
$
|
412
|
$
|
3,033
|
$
|
283,209
|
$
|
5,023
|
$
|
278,186
|
December 31, 2014
|
Beginning
Balance
|
Charge-offs
|
Recoveries
|
Provisions
|
Ending
Balance
|
|||||||||||||||
Commercial
|
$
|
2,217
|
$
|
30
|
$
|
-
|
$
|
138
|
$
|
2,325
|
||||||||||
Residential
|
477
|
24
|
-
|
62
|
515
|
|||||||||||||||
Consumer
|
2
|
-
|
-
|
1
|
3
|
|||||||||||||||
Unallocated
|
252
|
-
|
-
|
(9
|
)
|
243
|
||||||||||||||
$
|
2,948
|
$
|
54
|
$
|
-
|
$
|
192
|
$
|
3,086
|
Allowance for Loan Losses
|
Loans Receivable
|
|||||||||||||||||||||||
December 31, 2014
|
Balance
|
Balance Related to Loans Individually Evaluated for Impairment
|
Balance Related to Loans Collectively Evaluated for Impairment
|
Balance
|
Balance Individually Evaluated for Impairment
|
Balance Collectively Evaluated for Impairment
|
||||||||||||||||||
Commercial
|
$
|
2,325
|
$
|
261
|
$
|
2,064
|
$
|
194,410
|
$
|
5,472
|
$
|
188,938
|
||||||||||||
Residential
|
515
|
37
|
478
|
56,868
|
140
|
56,728
|
||||||||||||||||||
Consumer
|
3
|
-
|
3
|
239
|
-
|
239
|
||||||||||||||||||
Unallocated
|
243
|
-
|
243
|
-
|
-
|
-
|
||||||||||||||||||
$
|
3,086
|
$
|
298
|
$
|
2,788
|
$
|
251,517
|
$
|
5,612
|
$
|
245,905
|
December 31, 2015
|
Recorded Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
2,522
|
$
|
2,522
|
$
|
-
|
$
|
2,741
|
$
|
89
|
||||||||||
Residential
|
-
|
-
|
-
|
61
|
-
|
|||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
2,399
|
$
|
2,399
|
$
|
384
|
$
|
2,648
|
$
|
66
|
||||||||||
Residential
|
102
|
102
|
28
|
103
|
6
|
|||||||||||||||
Total:
|
||||||||||||||||||||
Commercial
|
$
|
4,921
|
$
|
4,921
|
$
|
384
|
$
|
5,389
|
$
|
155
|
||||||||||
Residential
|
102
|
102
|
28
|
164
|
6
|
December 31, 2014
|
Recorded Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
2,274
|
$
|
2,304
|
$
|
-
|
$
|
2,192
|
$
|
121
|
||||||||||
Residential mortgage
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
3,199
|
$
|
3,199
|
$
|
261
|
$
|
3,148
|
$
|
109
|
||||||||||
Residential mortgage
|
140
|
140
|
37
|
141
|
8
|
|||||||||||||||
Total:
|
||||||||||||||||||||
Commercial
|
$
|
5,472
|
$
|
5,503
|
$
|
261
|
$
|
5,340
|
$
|
230
|
||||||||||
Residential mortgage
|
140
|
140
|
37
|
141
|
8
|
2015
|
2014
|
|||||||
Commercial
|
$
|
897
|
$
|
900
|
||||
Residential
|
-
|
36
|
||||||
Consumer
|
-
|
-
|
||||||
$
|
897
|
$
|
936
|
December 31, 2015
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Commercial
|
$
|
215,669
|
$
|
-
|
$
|
4,577
|
$
|
-
|
$
|
220,246
|
||||||||||
Residential
|
62,440
|
-
|
310
|
-
|
62,750
|
|||||||||||||||
Consumer
|
213
|
-
|
-
|
-
|
213
|
|||||||||||||||
$
|
278,322
|
$
|
-
|
$
|
4,887
|
$
|
-
|
$
|
283,209
|
December 31, 2014
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Commercial
|
$
|
189,410
|
$
|
857
|
$
|
4,143
|
$
|
-
|
$
|
194,410
|
||||||||||
Residential
|
56,583
|
121
|
164
|
-
|
56,868
|
|||||||||||||||
Consumer
|
239
|
-
|
-
|
-
|
239
|
|||||||||||||||
$
|
246,232
|
$
|
978
|
$
|
4,307
|
$
|
-
|
$
|
251,517
|
December 31, 2015
|
30-59 Days
Past Due
|
60-89 Days
Past Due
|
Greater
Than 90
Days
|
Total Past
Due
|
Current
|
Total
Loans
Receivables
|
Loans
Receivable
>90 Days and Accruing
|
|||||||||||||||||||||
Commercial
|
$
|
1,546
|
$
|
-
|
$
|
897
|
$
|
2,443
|
$
|
217,803
|
$
|
220,246
|
$
|
-
|
||||||||||||||
Residential
|
380
|
-
|
-
|
380
|
62,370
|
62,750
|
-
|
|||||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
213
|
213
|
-
|
|||||||||||||||||||||
$
|
1,926
|
$
|
-
|
$
|
897
|
$
|
2,823
|
$
|
280,386
|
$
|
283,209
|
$
|
-
|
December 31, 2014
|
30-59 Days
Past Due
|
60-89 Days
Past Due
|
Greater
Than 90
Days
|
Total Past
Due
|
Current
|
Total
Loans
Receivables
|
Loans
Receivable
>90 Days and Accruing
|
|||||||||||||||||||||
Commercial
|
$
|
1,246
|
$
|
-
|
$
|
899
|
$
|
2,145
|
$
|
192,265
|
$
|
194,410
|
$
|
-
|
||||||||||||||
Residential
|
46
|
184
|
37
|
267
|
56,601
|
56,868
|
-
|
|||||||||||||||||||||
Consumer
|
9
|
-
|
-
|
9
|
230
|
239
|
-
|
|||||||||||||||||||||
$
|
1,301
|
$
|
184
|
$
|
936
|
$
|
2,421
|
$
|
249,096
|
$
|
251,517
|
$
|
-
|
December 31, 2014
|
Number of Contracts
|
Pre-
Modification Outstanding Recorded Investments
|
Post-
Modification Outstanding Recorded Investments
|
|||||||||
Troubled debt restructurings:
|
||||||||||||
Commercial
|
-
|
$
|
-
|
$
|
-
|
|||||||
Residential
|
1
|
30
|
30
|
|||||||||
Consumer
|
-
|
-
|
-
|
2015
|
2014
|
|||||||
Leasehold improvements
|
$
|
1,653
|
$
|
1,639
|
||||
Furniture, fixtures and equipment
|
1,230
|
1,178
|
||||||
Computer equipment and data processing software
|
776
|
1,054
|
||||||
3,659
|
3,871
|
|||||||
Accumulated depreciation
|
(3,188
|
)
|
(3,295
|
)
|
||||
$
|
471
|
$
|
576
|
2015
|
2014
|
|||||||
Demand, non-interest bearing
|
$
|
27,896
|
$
|
16,626
|
||||
NOW
|
49,802
|
50,062
|
||||||
Money market accounts
|
20,527
|
15,935
|
||||||
Savings
|
14,283
|
14,038
|
||||||
Time, $250,000 and over
|
17,923
|
16,421
|
||||||
Time, other
|
99,809
|
87,405
|
||||||
$
|
230,240
|
$
|
200,487
|
2015
|
||||||||
Maturity Date
|
Amount
|
Interest Rate
|
||||||
February 2, 2016
|
$
|
1,050
|
0.390
|
%
|
||||
June 11, 2016
|
773
|
0.434
|
||||||
September 1, 2016
|
1,000
|
0.503
|
||||||
$
|
2,823
|
2014
|
||||||||
Maturity Date
|
Amount
|
Interest Rate
|
||||||
April 15, 2015
|
$
|
455
|
0.100
|
%
|
||||
October 30, 2015
|
500
|
0.240
|
||||||
$
|
955
|
2015
|
2014
|
|||||||||||
Maturity Date
|
Next Conversion Date
|
Amount
|
Interest
Rate
|
Amount
|
Interest
Rate
|
|||||||
July 31, 2017
(1)
|
January 31, 2016
|
$
|
5,000
|
4.390
|
%
|
$
|
5,000
|
4.390
|
%
|
|||
November 1, 2017
(1)
|
February 1, 2016
|
5,000
|
3.805
|
5,000
|
3.805
|
|||||||
May 11, 2015
|
N/A
|
-
|
-
|
1,500
|
1.990
|
|||||||
August 3, 2015
|
N/A
|
-
|
-
|
500
|
1.711
|
|||||||
August 10, 2015
|
N/A
|
-
|
-
|
350
|
1.480
|
|||||||
January 13, 2016
|
N/A
|
2,000
|
0.649
|
2,000
|
0.649
|
|||||||
February 29, 2016
|
N/A
|
1,042
|
0.546
|
1,042
|
0.546
|
|||||||
May 31, 2016
|
N/A
|
500
|
0.533
|
500
|
0.533
|
|||||||
June 24, 2016
|
N/A
|
750
|
0.673
|
750
|
0.673
|
|||||||
September 6, 2016
|
N/A
|
1,000
|
0.734
|
1,000
|
0.734
|
|||||||
October 30, 2016
|
N/A
|
1,000
|
0.644
|
1,000
|
0.644
|
|||||||
November 22, 2016
|
N/A
|
750
|
0.754
|
750
|
0.754
|
|||||||
November 28, 2016
|
N/A
|
1,042
|
0.846
|
1,042
|
0.846
|
|||||||
January 13, 2017
|
N/A
|
2,000
|
1.131
|
2,000
|
1.131
|
|||||||
January 17, 2017
|
N/A
|
500
|
0.884
|
500
|
0.884
|
|||||||
February 10, 2017
|
N/A
|
2,000
|
0.929
|
2,000
|
0.929
|
|||||||
March 3, 2017
|
N/A
|
1,000
|
0.922
|
1,000
|
0.922
|
|||||||
March 14, 2017
|
N/A
|
3,000
|
0.934
|
3,000
|
0.934
|
|||||||
March 27, 2017
|
N/A
|
750
|
1.048
|
750
|
1.048
|
|||||||
June 5, 2017
|
N/A
|
1,000
|
1.052
|
1,000
|
1.052
|
|||||||
August 22, 2017
|
N/A
|
750
|
1.094
|
750
|
1.094
|
|||||||
February 6, 2018
|
N/A
|
1,000
|
1.244
|
-
|
-
|
|||||||
September 4, 2018
|
N/A
|
1,000
|
1.211
|
-
|
-
|
|||||||
October 15, 2018
|
N/A
|
1,000
|
1.227
|
1,000
|
1.227
|
|||||||
October 31, 2018
|
N/A
|
1,000
|
1.573
|
1,000
|
1.573
|
|||||||
February 6, 2019
|
N/A
|
1,000
|
1.526
|
-
|
-
|
|||||||
June 11, 2019
|
N/A
|
700
|
1.644
|
-
|
-
|
|||||||
October 15, 2019
|
N/A
|
1,000
|
1.496
|
1,000
|
1.496
|
|||||||
October 29, 2019
|
N/A
|
834
|
1.824
|
834
|
1.824
|
|||||||
October 31, 2019
|
N/A
|
1,000
|
1.897
|
1,000
|
1.897
|
|||||||
January 7, 2020
|
N/A
|
1,078
|
1.692
|
-
|
-
|
|||||||
June 11, 2020
|
N/A
|
700
|
1.937
|
-
|
-
|
|||||||
September 1, 2020
|
N/A
|
1,540
|
1.761
|
-
|
-
|
|||||||
October 15, 2020
|
N/A
|
1,000
|
1.741
|
1,000
|
1.741
|
|||||||
October 31, 2020
|
N/A
|
1,000
|
2.150
|
1,000
|
2.150
|
|||||||
$
|
42,936
|
$
|
38,268
|
2015
|
2014
|
|||||||
Dividend yield
(1)
|
-
|
%
|
-
|
%
|
||||
Expected volatility
|
10.40
|
%
|
11.28
|
%
|
||||
Risk-free interest rate
(2)
|
1.44
|
%
|
1.72
|
%
|
||||
Expected life
|
5.5 years
|
5.5 years
|
2015
|
2014
|
|||||||
Stock based compensation expense recognized
|
$
|
188
|
$
|
116
|
||||
Number of unvested stock options
|
98,970
|
190,000
|
||||||
Fair value of unvested stock options
|
$
|
1.59
|
$
|
1.64
|
||||
Amount remaining to be recognized as expense
|
$
|
102
|
$
|
196
|
Options
|
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining Contractual
Term
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding, January 1, 2014
|
-
|
$
|
-
|
-
|
$
|
-
|
||||||||||
Granted
|
190,000
|
10.77
|
9.50
|
-
|
||||||||||||
Exercised
|
-
|
-
|
-
|
-
|
||||||||||||
Forfeited or expired
|
-
|
-
|
-
|
-
|
||||||||||||
Outstanding, December 31, 2014
|
190,000
|
10.77
|
9.50
|
-
|
||||||||||||
Granted
|
60,000
|
11.68
|
9.70
|
-
|
||||||||||||
Exercised
|
-
|
-
|
-
|
-
|
||||||||||||
Forfeited or expired
|
-
|
-
|
-
|
-
|
||||||||||||
Outstanding at December 31, 2015
|
250,000
|
$
|
10.99
|
8.80
|
$
|
365
|
||||||||||
Exercisable at December 31, 2015
|
151,030
|
10.77
|
8.50
|
$
|
221
|
2015
|
2014
|
|||||||
Current:
|
||||||||
Federal
|
$
|
1,058
|
$
|
1,199
|
||||
State
|
1
|
-
|
||||||
Total current
|
1,059
|
1,199
|
||||||
Deferred:
|
||||||||
Federal
|
80
|
167
|
||||||
State
|
23
|
(46
|
)
|
|||||
Total deferred
|
103
|
(213
|
)
|
|||||
Income Tax Expense
|
$
|
1,162
|
$
|
986
|
2015
|
2014
|
|||||||||||||||
Amount
|
% of Pretax Income
|
Amount
|
% of Pretax
Income
|
|||||||||||||
Federal income tax expense at statutory rate
|
$
|
1,148
|
34.0
|
%
|
$
|
966
|
34.0
|
%
|
||||||||
Other
|
14
|
0.7
|
20
|
0.7
|
||||||||||||
$
|
1,162
|
34.7
|
%
|
$
|
986
|
34.7
|
%
|
2015
|
2014
|
|||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$
|
929
|
$
|
820
|
||||
Deferred compensation
|
64
|
33
|
||||||
Other reserves
|
26
|
50
|
||||||
State net operating loss carry forwards
|
49
|
72
|
||||||
Premises and equipment
|
-
|
42
|
||||||
Organization and start-up costs
|
38
|
45
|
||||||
Interest income on nonaccrual loans
|
11
|
58
|
||||||
Other real estate owned
|
1
|
31
|
||||||
Total deferred tax assets
|
1,118
|
1,151
|
||||||
Deferred tax liabilities:
|
||||||||
Deferred loan costs
|
(217
|
)
|
(188
|
)
|
||||
Mortgage servicing rights
|
(67
|
)
|
(62
|
)
|
||||
Prepaid expenses
|
(53
|
)
|
(46
|
)
|
||||
Premises and equipment
|
(27
|
)
|
-
|
|||||
Net unrealized gain on securities available-for-sale
|
(38
|
)
|
(63
|
)
|
||||
Accretion of discounts
|
(16
|
)
|
(14
|
)
|
||||
Total deferred tax liabilities
|
(418
|
)
|
(373
|
)
|
||||
Valuation allowance
|
(46
|
)
|
(46
|
)
|
||||
Net Deferred Tax Asset
|
$
|
654
|
$
|
732
|
2015
|
2014
|
|||||||
Commitments to grant loans
|
$
|
55,429
|
$
|
37,568
|
||||
Unfunded commitments under lines of credit
|
17,981
|
13,147
|
||||||
Standby letters of credit
|
4,024
|
753
|
||||||
$
|
77,434
|
$
|
51,468
|
December 31, 2015
|
Actual
|
For Capital Adequacy Purposes
|
To be Well Capitalized under Prompt Corrective Action Provisions
|
|||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
Common equity Tier 1 capital (to risk-weighted assets)
|
$
|
33,348
|
12.53
|
%
|
$
|
³
10,890
|
³
4.5
|
%
|
$
|
³
12,101
|
³
5.0
|
%
|
||||||||||||
Total capital (to risk-weighted assets)
|
30,317
|
13.78
|
%
|
³
19,362
|
³
8.0
|
%
|
³
24,202
|
³
10.0
|
%
|
|||||||||||||||
Tier 1 capital (to risk-weighted assets)
|
33,348
|
12.53
|
%
|
³
14,521
|
³
6.0
|
%
|
³
19,362
|
³
8.0
|
%
|
|||||||||||||||
Tier 1 capital (to average assets)
|
30,317
|
10.00
|
%
|
³
12,126
|
³
4.0
|
%
|
³
15,158
|
³
5.0
|
%
|
December 31, 2014
|
Actual
|
For Capital Adequacy Purposes
|
To be Well Capitalized under Prompt Corrective Action Provisions
|
|||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
Total capital (to risk-weighted assets)
|
$
|
29,321
|
15.0
|
%
|
$
|
³
15,628
|
³
8.0
|
%
|
$
|
³
19,535
|
³
10.0
|
%
|
||||||||||||
Tier 1 capital (to risk-weighted assets)
|
26,869
|
13.8
|
%
|
³
10,823
|
³
4.0
|
%
|
³
16,235
|
³
6.0
|
%
|
|||||||||||||||
Tier 1 capital (to average assets)
|
26,869
|
9.9
|
%
|
³
10,823
|
³
4.0
|
%
|
³
13,529
|
³
5.0
|
%
|
December 31, 2015
|
Total
|
(Level 1)
Quoted Prices
in Active
Markets for Identical
Assets
|
(Level 2)
Significant
Other
Observable
Inputs
|
(Level 3)
Significant Unobservable Inputs
|
||||||||||||
FHLMC pass-through securities
|
$
|
823
|
$
|
-
|
$
|
823
|
$
|
-
|
||||||||
FNMA pass-through securities
|
1,159
|
-
|
1,159
|
-
|
||||||||||||
SBA pass-through securities
|
4,976
|
-
|
4,976
|
-
|
||||||||||||
$
|
6,958
|
$
|
-
|
$
|
6,958
|
$
|
-
|
December 31, 2014
|
Total
|
(Level 1)
Quoted Prices
in Active
Markets for
Identical Assets
|
(Level 2)
Significant
Other
Observable
Inputs
|
(Level 3)
Significant Unobservable Inputs
|
||||||||||||
FHLMC pass-through securities
|
$
|
1,006
|
$
|
-
|
$
|
1,006
|
$
|
-
|
||||||||
FNMA pass-through securities
|
389
|
-
|
389
|
-
|
||||||||||||
SBA pass-through securities
|
6,073
|
-
|
6,073
|
-
|
||||||||||||
$
|
7,468
|
$
|
-
|
$
|
7,468
|
$
|
-
|
December 31, 2015
|
Total
|
(Level 1)
Quoted Prices
in Active
Markets for Identical
Assets
|
(Level 2)
Significant
Other
Observable
Inputs
|
(Level 3)
Significant Unobservable Inputs
|
||||||||||||
Impaired loans
|
$
|
2,089
|
$
|
-
|
$
|
-
|
$
|
2,089
|
||||||||
Other real estate owned
|
22
|
-
|
-
|
22
|
||||||||||||
$
|
2,111
|
$
|
-
|
$
|
-
|
$
|
2,111
|
|||||||||
December 31, 2014
|
||||||||||||||||
Impaired loans
|
$
|
3,041
|
$
|
-
|
$
|
-
|
$
|
3,041
|
||||||||
Other real estate owned
|
53
|
-
|
-
|
53
|
||||||||||||
$
|
3,094
|
$
|
-
|
$
|
-
|
$
|
3,094
|
Qualitative Information about Level 3 Fair Value Measurements
|
|||||||||
December 31, 2015
|
Fair Value
|
Valuation Techniques
|
Unobservable Input
|
Range (Weighted Average)
|
|||||
Impaired loans
|
$
|
2,089
|
Fair Value of Collateral
(1)
|
Appraised Value
(2)
|
0% - 40% (13.4%)
(3)
|
||||
Other real estate owned
|
22
|
Fair Value of Collateral
(1)
|
Appraised Value
(2)
Sales Price
|
27% (27%)
(3)
|
Qualitative Information about Level 3 Fair Value Measurements
|
|||||||||
December 31, 2014
|
Fair Value
|
Valuation Techniques
|
Unobservable Input
|
Range (Weighted Average)
|
|||||
Impaired loans
|
$
|
3,041
|
Fair Value of Collateral
(1)
|
Appraised Value
(2)
|
0% - 30% (7.5%)
(3)
|
||||
Other real estate owned
|
53
|
Fair Value of Collateral
(1)
|
Appraised Value
(2)
Sales Price
|
27% - 76% (52%)
(3)
|
(1) | Fair value is generally determined through independent appraisals of the underlying collateral, which include Level 3 inputs that are not identifiable. |
(2) | Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. |
(3) | The range and weighted average of qualitative factors such as economic conditions and estimated liquidation expenses are presented as a percent of the appraised value. |
March 31,
2016
|
December 31,
2015
|
|||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
12,099
|
$
|
18,727
|
||||
Certificate of deposits, short-term
|
245
|
-
|
||||||
Cash and cash equivalents
|
12,344
|
18,727
|
||||||
Certificate of deposits, long-term
|
1,470
|
1,225
|
||||||
Investment securities available-for-sale
|
6,715
|
6,958
|
||||||
Investment securities held-to-maturity, at amortized cost (fair value of $320 and $319)
|
313
|
314
|
||||||
Loans, net of allowance for loan losses ($3,564 and $3,445)
|
285,252
|
278,646
|
||||||
Investment in stock of correspondent banks, at cost
|
2,178
|
2,062
|
||||||
Bank premises and equipment, net
|
459
|
471
|
||||||
Other real estate owned
|
417
|
22
|
||||||
Accrued interest receivable
|
1,034
|
1,033
|
||||||
Deferred income taxes, net
|
645
|
654
|
||||||
Other assets
|
599
|
604
|
||||||
Total Assets
|
$
|
311,426
|
$
|
310,716
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Non-interest bearing
|
$
|
21,546
|
$
|
27,896
|
||||
Interest-bearing
|
207,318
|
202,344
|
||||||
Total deposits
|
228,864
|
230,240
|
||||||
Short-term borrowings
|
8,742
|
2,823
|
||||||
Long-term debt
|
39,895
|
42,936
|
||||||
Advances by borrowers for taxes and insurance
|
949
|
2,675
|
||||||
Accrued interest payable
|
129
|
132
|
||||||
Other liabilities
|
1,881
|
1,518
|
||||||
Total Liabilities
|
280,460
|
280,324
|
||||||
Stockholders' Equity
|
||||||||
Preferred stock, no stated par value; authorized 1,000,000 shares; no shares issued or outstanding
|
-
|
-
|
||||||
Common stock, par value $0.10 per share; authorized 10,000,000 shares; issued and outstanding 2016 and 2015 were 2,444,911
|
244
|
244
|
||||||
Surplus
|
23,882
|
23,862
|
||||||
Accumulated other comprehensive income
|
92
|
75
|
||||||
Retained earnings
|
6,748
|
6,211
|
||||||
Total Stockholders' Equity
|
30,966
|
30,392
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
311,426
|
$
|
310,716
|
For the three months ended March 31,
|
2016
|
2015
|
||||||
Interest Income
|
||||||||
Loans receivable, including fees
|
$
|
3,598
|
$
|
3,163
|
||||
Investment securities
|
65
|
94
|
||||||
Interest bearing deposits
|
20
|
13
|
||||||
Total Interest Income
|
3,683
|
3,270
|
||||||
Interest Expense
|
||||||||
Deposits
|
466
|
395
|
||||||
Borrowings
|
203
|
193
|
||||||
Total Interest Expense
|
669
|
588
|
||||||
Net interest income
|
3,014
|
2,682
|
||||||
Provision for Loan Losses
|
184
|
64
|
||||||
Net Interest Income After Provision for Loan Losses
|
2,830
|
2,618
|
||||||
Non-Interest Income
|
||||||||
Fees and service charges
|
85
|
66
|
||||||
Gain on sales of loans, net
|
165
|
25
|
||||||
Other income
|
-
|
5
|
||||||
Total Non-Interest Income
|
250
|
96
|
||||||
Non-Interest Expenses
|
||||||||
Salaries and employee benefits
|
1,030
|
1,050
|
||||||
Occupancy and equipment
|
110
|
116
|
||||||
Depreciation
|
44
|
72
|
||||||
Professional fees
|
146
|
118
|
||||||
Merger related expenses
|
175
|
-
|
||||||
Advertising and promotion
|
105
|
108
|
||||||
Data processing
|
251
|
224
|
||||||
Loan expense
|
74
|
20
|
||||||
Supervisory assessments, including FDIC insurance
|
58
|
51
|
||||||
Other
|
195
|
208
|
||||||
Total Non-Interest Expenses
|
2,188
|
1,967
|
||||||
Income before income taxes
|
892
|
747
|
||||||
Income Tax Expense
|
355
|
259
|
||||||
Net Income
|
$
|
537
|
$
|
488
|
Three Months Ended March 31,
|
2016
|
2015
|
||||||
Net Income
|
$
|
537
|
$
|
488
|
||||
Other Comprehensive Loss
|
||||||||
Unrealized losses on securities:
|
||||||||
Unrealized holding gains arising during period, net of tax
|
17
|
-
|
||||||
Other comprehensive loss
|
17
|
-
|
||||||
Total Comprehensive Income
|
$
|
554
|
$
|
488
|
Common
Stock
|
Surplus
|
Accumulated
Other
Comprehensive Income
|
Retained
Earnings
|
Total
|
||||||||||||||||
Balance, December 31, 2014
|
$
|
234
|
$
|
22,637
|
$
|
122
|
$
|
3,998
|
$
|
26,991
|
||||||||||
Net income
|
-
|
-
|
-
|
488
|
488
|
|||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Share-based compensation expense
|
-
|
70
|
-
|
-
|
70
|
|||||||||||||||
Warrant exercise (25,625 shares)
|
3
|
266
|
-
|
-
|
269
|
|||||||||||||||
Balance, March 31, 2015
|
$
|
237
|
$
|
22,973
|
$
|
122
|
$
|
4,486
|
$
|
27,818
|
||||||||||
Balance, December 31, 2015
|
$
|
244
|
$
|
23,862
|
$
|
75
|
$
|
6,211
|
$
|
30,392
|
||||||||||
Net income
|
-
|
-
|
-
|
537
|
537
|
|||||||||||||||
Other comprehensive income
|
-
|
-
|
17
|
-
|
17
|
|||||||||||||||
Share-based compensation expense
|
-
|
20
|
-
|
-
|
20
|
|||||||||||||||
Balance, March 31, 2016
|
$
|
244
|
$
|
23,882
|
$
|
92
|
$
|
6,748
|
$
|
30,966
|
For the three months ended March 31,
|
2016
|
2015
|
||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$
|
537
|
$
|
488
|
||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||
Provision for loan losses
|
184
|
64
|
||||||
Depreciation expense
|
44
|
72
|
||||||
Gain on sale of real estate owned
|
-
|
(5
|
)
|
|||||
Amortization of deferred loan fees
|
(150
|
)
|
(98
|
)
|
||||
Net accretion of premium/discounts
|
10
|
16
|
||||||
Gain on sale of loans
|
(165
|
)
|
(25
|
)
|
||||
Stock based compensation
|
20
|
70
|
||||||
Decrease in accrued interest receivable
|
(1
|
)
|
(19
|
)
|
||||
Prepaid expenses and other assets
|
5
|
(84
|
)
|
|||||
Accrued interest payable
|
(3
|
)
|
6
|
|||||
Other liabilities
|
363
|
229
|
||||||
Net Cash Provided by Operating Activities
|
844
|
714
|
||||||
Cash Flows from Investing Activities
|
||||||||
Net increase in loans
|
(6,870
|
)
|
(3,980
|
)
|
||||
Principal repayments on investment securities available-for-sale
|
260
|
390
|
||||||
Purchase of long-term certificates of deposit
|
(245
|
)
|
-
|
|||||
Proceeds from maturities of long term certificates of deposit
|
-
|
735
|
||||||
Purchase of FHLB stock
|
(279
|
)
|
(165
|
)
|
||||
Proceeds from redemption of FHLB stock
|
163
|
-
|
||||||
Purchases of premises and equipment
|
(32
|
)
|
(83
|
)
|
||||
Proceeds from sale of real estate owned
|
-
|
36
|
||||||
Net Cash Used in Investing Activities
|
(7,003
|
)
|
(3,067
|
)
|
||||
Cash Flows from Financing Activities
|
||||||||
Net increase (decrease) in deposits
|
(1,376
|
)
|
8,958
|
|||||
Proceeds from short-term borrowings
|
6,969
|
-
|
||||||
Proceeds from long-term borrowings
|
-
|
4,128
|
||||||
Repayment of short-term borrowings
|
(1,050
|
)
|
-
|
|||||
Repayment of long-term borrowings
|
(3,041
|
)
|
-
|
|||||
Net increase in advances from borrowers for taxes and insurance
|
(1,726
|
)
|
(1,444
|
)
|
||||
Warrant exercise
|
-
|
269
|
||||||
Net Cash Provided by Financing Activities
|
(224
|
)
|
11,911
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(6,383
|
)
|
9,558
|
|||||
Cash and Cash Equivalents, Beginning
|
18,727
|
8,876
|
||||||
Cash and Cash Equivalents, Ending
|
$
|
12,344
|
$
|
18,434
|
||||
Supplementary Cash Flows Information
|
||||||||
Interest paid
|
$
|
672
|
$
|
582
|
||||
Income taxes paid
|
$
|
300
|
$
|
175
|
||||
Supplementary Schedule of Noncash Activities
|
||||||||
Transfer from loans to foreclosed assets held-for-sale
|
$
|
395
|
$
|
-
|
March 31, 2016
|
Amortized Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
Securities held-to-maturity:
Municipal and political subdivisions
|
$
|
313
|
$
|
7
|
$
|
-
|
$
|
320
|
||||||||
Securities available-for-sale:
|
||||||||||||||||
FHLMC pass-through securities
|
$
|
715
|
$
|
74
|
$
|
-
|
$
|
789
|
||||||||
FNMA pass-through securities
|
1,112
|
21
|
-
|
1,133
|
||||||||||||
SBA pass-through securities
|
4,749
|
45
|
(1
|
)
|
4,793
|
|||||||||||
$
|
6,576
|
$
|
140
|
$
|
(1
|
)
|
$
|
6,715
|
December 31, 2015
|
Amortized Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
Securities held-to-maturity:
Municipal and political subdivisions
|
$
|
314
|
$
|
5
|
$
|
-
|
$
|
319
|
||||||||
Securities available-for-sale:
|
||||||||||||||||
FHLMC pass-through securities
|
$
|
753
|
$
|
70
|
$
|
-
|
$
|
823
|
||||||||
FNMA pass-through securities
|
1,156
|
10
|
(7
|
)
|
1,159
|
|||||||||||
SBA pass-through securities
|
4,935
|
44
|
(3
|
)
|
4,976
|
|||||||||||
$
|
6,844
|
$
|
124
|
$
|
(10
|
)
|
$
|
6,958
|
March 31, 2016
|
Held-to-Maturity
|
Available-for-Sale
|
||||||||||||||
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
|||||||||||||
Due in one year or less
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Due in one to five years
|
-
|
-
|
1,158
|
1,171
|
||||||||||||
Due in five to ten years
|
-
|
-
|
1,184
|
1,220
|
||||||||||||
Due in ten and thereafter
|
313
|
320
|
4,234
|
4,324
|
||||||||||||
$
|
313
|
$
|
320
|
$
|
6,576
|
$
|
6,715
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
March 31, 2016
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
SBA pass-through securities
|
-
|
-
|
201
|
(1
|
)
|
201
|
(1
|
)
|
||||||||||||||||
$ | $ |
$
|
201
|
$
|
(1
|
)
|
$
|
201
|
$
|
(1
|
)
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
December 31, 2015
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||
FNMA pass-through securities
|
$
|
1,030
|
$
|
(7
|
)
|
$
|
-
|
$
|
-
|
$
|
1,030
|
$
|
(7
|
)
|
||||||||||
SBA pass-through securities
|
295
|
(1
|
)
|
287
|
(2
|
)
|
582
|
(3
|
)
|
|||||||||||||||
$
|
1,325
|
$
|
(8
|
)
|
$
|
287
|
$
|
(2
|
)
|
$
|
1,612
|
$
|
(10
|
)
|
March 31, 2016
|
December 31, 2015
|
|||||||
Commercial
|
$
|
224,642
|
$
|
220,246
|
||||
Residential
|
65,002
|
62,750
|
||||||
Consumer
|
244
|
213
|
||||||
Total loans
|
289,888
|
283,209
|
||||||
Net deferred loan fees
|
(1,072
|
)
|
(1,118
|
)
|
||||
Allowance for loan losses
|
(3,564
|
)
|
(3,445
|
)
|
||||
Net Loans
|
$
|
285,252
|
$
|
278,646
|
March 31, 2016
|
Beginning
Balance
|
Charge-offs
|
Recoveries
|
Provisions
|
Ending
Balance
|
|||||||||||||||
Commercial
|
$
|
2,705
|
$
|
65
|
$
|
-
|
$
|
283
|
$
|
2,923
|
||||||||||
Residential
|
532
|
-
|
-
|
(28
|
)
|
504
|
||||||||||||||
Consumer
|
3
|
-
|
-
|
-
|
3
|
|||||||||||||||
Unallocated
|
205
|
-
|
-
|
(71
|
)
|
134
|
||||||||||||||
$
|
3,445
|
$
|
65
|
$
|
-
|
$
|
184
|
$
|
3,564
|
March 31, 2015
|
Beginning
Balance
|
Charge-offs
|
Recoveries
|
Provisions
|
Ending
Balance
|
|||||||||||||||
Commercial
|
$
|
2,325
|
$
|
49
|
$
|
-
|
$
|
30
|
$
|
2,306
|
||||||||||
Residential
|
515
|
-
|
-
|
29
|
544
|
|||||||||||||||
Consumer
|
3
|
-
|
-
|
-
|
3
|
|||||||||||||||
Unallocated
|
243
|
-
|
-
|
5
|
248
|
|||||||||||||||
$
|
3,086
|
$
|
49
|
$
|
-
|
$
|
64
|
$
|
3,101
|
Allowance for Loan Losses
|
Loans Receivable
|
|||||||||||||||||||||||
March 31, 2016
|
Balance
|
Balance Related to Loans Individually Evaluated for Impairment
|
Balance Related to Loans Collectively Evaluated for Impairment
|
Balance
|
Balance Individually Evaluated for Impairment
|
Balance Collectively Evaluated for Impairment
|
||||||||||||||||||
Commercial
|
$
|
2,923
|
$
|
757
|
$
|
2,166
|
$
|
224,642
|
$
|
4,413
|
$
|
220,229
|
||||||||||||
Residential
|
504
|
28
|
476
|
65,002
|
298
|
64,714
|
||||||||||||||||||
Consumer
|
3
|
-
|
3
|
244
|
-
|
244
|
||||||||||||||||||
Unallocated
|
134
|
-
|
134
|
-
|
-
|
-
|
||||||||||||||||||
$
|
3,564
|
$
|
785
|
$
|
2,779
|
$
|
289,888
|
$
|
4,711
|
$
|
285,167
|
Allowance for Loan Losses
|
Loans Receivable
|
|||||||||||||||||||||||
December 31, 2015
|
Balance
|
Balance Related to Loans Individually Evaluated for Impairment
|
Balance Related to Loans Collectively Evaluated for Impairment
|
Balance
|
Balance Individually Evaluated for Impairment
|
Balance Collectively Evaluated for Impairment
|
||||||||||||||||||
Commercial
|
$
|
2,705
|
$
|
384
|
$
|
2,321
|
$
|
220,246
|
$
|
4,921
|
$
|
215,325
|
||||||||||||
Residential
|
533
|
28
|
505
|
62,750
|
102
|
62,648
|
||||||||||||||||||
Consumer
|
3
|
-
|
3
|
213
|
-
|
213
|
||||||||||||||||||
Unallocated
|
204
|
-
|
205
|
-
|
-
|
-
|
||||||||||||||||||
$
|
3,445
|
$
|
412
|
$
|
3,033
|
$
|
283,209
|
$
|
5,023
|
$
|
278,206
|
As of March 31, 2016
|
Recorded Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
|||||||||
With no related allowance recorded:
|
||||||||||||
Commercial
|
$
|
2,291
|
$
|
2,291
|
$
|
-
|
||||||
Residential
|
196
|
196
|
-
|
|||||||||
With an allowance recorded:
|
||||||||||||
Commercial
|
$
|
2,122
|
$
|
2,122
|
$
|
757
|
||||||
Residential
|
102
|
102
|
28
|
|||||||||
Total:
|
||||||||||||
Commercial
|
$
|
4,413
|
$
|
4,413
|
$
|
757
|
||||||
Residential
|
298
|
298
|
28
|
As of December 31, 2015
|
Recorded Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
|||||||||
With no related allowance recorded:
|
||||||||||||
Commercial
|
$
|
2,522
|
$
|
2,522
|
$
|
-
|
||||||
Residential mortgage
|
-
|
-
|
-
|
|||||||||
With an allowance recorded:
|
||||||||||||
Commercial
|
$
|
2,399
|
$
|
2,399
|
$
|
384
|
||||||
Residential mortgage
|
102
|
102
|
28
|
|||||||||
Total:
|
||||||||||||
Commercial
|
$
|
4,921
|
$
|
4,921
|
$
|
384
|
||||||
Residential mortgage
|
102
|
102
|
28
|
Three months ended
March 31, 2016
|
Three months ended
March 31, 2015
|
|||||||||||||||
Average Recorded Investment
|
Interest Income Recognized
|
Average Recorded Investment
|
Interest Income Recognized
|
|||||||||||||
With no related allowance recorded:
|
||||||||||||||||
Commercial
|
$
|
2,446
|
$
|
16
|
$
|
2,316
|
$
|
24
|
||||||||
Residential mortgage
|
98
|
1
|
184
|
-
|
||||||||||||
With an allowance recorded:
|
||||||||||||||||
Commercial
|
$
|
2,315
|
$
|
6
|
$
|
3,186
|
$
|
27
|
||||||||
Residential mortgage
|
109
|
1
|
103
|
2
|
||||||||||||
Total:
|
||||||||||||||||
Commercial
|
$
|
4,761
|
$
|
22
|
$
|
5,502
|
$
|
51
|
||||||||
Residential mortgage
|
207
|
2
|
287
|
2
|
March 31,
2016
|
December 31,
2015
|
|||||||
Commercial
|
$
|
1,897
|
$
|
897
|
||||
Residential
|
27
|
-
|
||||||
Consumer
|
-
|
-
|
||||||
$
|
1,924
|
$
|
897
|
March 31, 2016
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Commercial
|
$
|
220,572
|
$
|
-
|
$
|
4,070
|
$
|
-
|
$
|
224,642
|
||||||||||
Residential
|
64,497
|
-
|
505
|
-
|
65,002
|
|||||||||||||||
Consumer
|
244
|
-
|
-
|
-
|
244
|
|||||||||||||||
$
|
285,313
|
$
|
-
|
$
|
4,575
|
$
|
-
|
$
|
289,888
|
December 31, 2015
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
|||||||||||||||
Commercial
|
$
|
215,669
|
$
|
-
|
$
|
4,577
|
$
|
-
|
$
|
220,246
|
||||||||||
Residential
|
62,440
|
-
|
310
|
-
|
62,750
|
|||||||||||||||
Consumer
|
213
|
-
|
-
|
-
|
213
|
|||||||||||||||
$
|
278,322
|
$
|
-
|
$
|
4,887
|
$
|
-
|
$
|
283,209
|
March 31, 2016
|
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater Than 90 Days
|
Total Past Due
|
Current
|
Total
Loans Receivables
|
Loans Receivable >90 Days and Accruing
|
|||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
1,897
|
$
|
1,897
|
$
|
222,745
|
$
|
224,642
|
$
|
-
|
||||||||||||||
Residential
|
-
|
169
|
27
|
196
|
64,806
|
65,002
|
-
|
|||||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
244
|
244
|
-
|
|||||||||||||||||||||
$
|
-
|
$
|
169
|
$
|
1,924
|
$
|
2,093
|
$
|
287,795
|
$
|
289,888
|
$
|
-
|
December 31, 2015
|
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater Than 90 Days
|
Total Past Due
|
Current
|
Total
Loans Receivables
|
Loans Receivable >90 Days and Accruing
|
|||||||||||||||||||||
Commercial
|
$
|
1,546
|
$
|
-
|
$
|
897
|
$
|
2,443
|
$
|
217,803
|
$
|
220,246
|
$
|
-
|
||||||||||||||
Residential
|
380
|
-
|
-
|
380
|
62,370
|
62,750
|
-
|
|||||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
213
|
213
|
-
|
|||||||||||||||||||||
$
|
1,926
|
$
|
-
|
$
|
897
|
$
|
2,823
|
$
|
280,386
|
$
|
283,209
|
$
|
-
|
As of March 31, 2016
|
||||||||
Maturity Date
|
Amount
|
Interest Rate
|
||||||
June 11, 2016
|
$
|
773
|
0.434
|
%
|
||||
June 20, 2016
|
5,295
|
0.386
|
||||||
August 10, 2016
|
674
|
0.486
|
||||||
September 1, 2016
|
1,000
|
0.503
|
||||||
November 8, 2016
|
1,000
|
0.551
|
||||||
$
|
8,742
|
Options
|
Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Term
|
|||||||||
Outstanding, December 31, 2015
|
250,000
|
10.99
|
8.8
|
|||||||||
Granted
|
-
|
-
|
-
|
|||||||||
Exercised
|
-
|
-
|
-
|
|||||||||
Forfeited or expired
|
-
|
-
|
-
|
|||||||||
Outstanding at March 31, 2016
|
250,000
|
$
|
10.99
|
8.6
|
||||||||
Outstanding, December 31, 2014
|
190,000
|
10.77
|
9.5
|
|||||||||
Granted
|
-
|
-
|
-
|
|||||||||
Exercised
|
-
|
-
|
-
|
|||||||||
Forfeited or expired
|
-
|
-
|
-
|
|||||||||
Outstanding at March 31, 2015
|
190,000
|
$
|
10.77
|
9.3
|
||||||||
March 31, 2016
|
Total
|
(Level 1)
Quoted Prices
in Active
Markets for Identical
Assets
|
(Level 2)
Significant
Other
Observable
Inputs
|
(Level 3)
Significant Unobservable Inputs
|
||||||||||||
FHLMC pass-through securities
|
$
|
789
|
$
|
-
|
$
|
789
|
$
|
-
|
||||||||
FNMA pass-through securities
|
1,133
|
-
|
1,133
|
-
|
||||||||||||
SBA pass-through securities
|
4,793
|
-
|
4,793
|
-
|
||||||||||||
$
|
6,715
|
$
|
-
|
$
|
6,715
|
$
|
-
|
December 31, 2015
|
Total
|
(Level 1)
Quoted Prices
in Active
Markets for Identical
Assets
|
(Level 2)
Significant
Other
Observable
Inputs
|
(Level 3)
Significant Unobservable Inputs
|
||||||||||||
FHLMC pass-through securities
|
$
|
823
|
$
|
-
|
$
|
823
|
$
|
-
|
||||||||
FNMA pass-through securities
|
1,159
|
-
|
1,159
|
-
|
||||||||||||
SBA pass-through securities
|
4,976
|
-
|
4,976
|
-
|
||||||||||||
$
|
6,958
|
$
|
-
|
$
|
6,958
|
$
|
-
|
March 31, 2016
|
Total
|
(Level 1)
Quoted Prices
in Active
Markets for Identical
Assets
|
(Level 2)
Significant
Other
Observable
Inputs
|
(Level 3)
Significant Unobservable Inputs
|
||||||||||||
Impaired loans
|
$
|
1,440
|
$
|
-
|
$
|
-
|
$
|
1,440
|
||||||||
Other real estate owned
|
395
|
-
|
-
|
395
|
||||||||||||
$
|
1,835
|
$
|
-
|
$
|
-
|
$
|
1,835
|
|||||||||
December 31, 2015
|
||||||||||||||||
Impaired loans
|
$
|
2,089
|
$
|
-
|
$
|
-
|
$
|
2,089
|
||||||||
Other real estate owned
|
22
|
-
|
-
|
22
|
||||||||||||
$
|
2,111
|
$
|
-
|
$
|
-
|
$
|
2,111
|
Qualitative Information about Level 3 Fair Value Measurements
|
|||||||||
March 31, 2016
|
Fair Value
|
Valuation Techniques
|
Unobservable Input
|
Range (Weighted Average)
|
|||||
Impaired loans
|
$
|
1,440
|
Fair Value of Collateral
(1)
|
Appraised Value
(2)
|
0-68% (24.8%)
(3)
|
||||
Other real estate owned
|
395
|
Fair Value of Collateral
(1)
|
Appraised Value
(2)
Sales Price
|
9-15% (10%)
(3)
|
Qualitative Information about Level 3 Fair Value Measurements
|
|||||||||
December 31, 2015
|
Fair Value
|
Valuation Techniques
|
Unobservable Input
|
Range (Weighted Average)
|
|||||
Impaired loans
|
$
|
2,089
|
Fair Value of Collateral
(1)
|
Appraised Value
(2)
|
0% - 40% (13.4%)
(3)
|
||||
Other real estate owned
|
22
|
Fair Value of Collateral
(1)
|
Appraised Value
(2)
Sales Price
|
27% (27%)
(3)
|
(4) | Fair value is generally determined through independent appraisals of the underlying collateral, which include Level 3 inputs that are not identifiable. |
(5) | Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. |
(6) | The range and weighted average of qualitative factors such as economic conditions and estimated liquidation expenses are presented as a percent of the appraised value. |
ARTICLE I
|
CERTAIN DEFINITIONS
|
2
|
1.1.
|
Certain Definitions
|
2
|
ARTICLE II
|
THE MERGER
|
11
|
2.1.
|
Merger
|
11
|
2.2.
|
Effective Time
|
11
|
2.3.
|
Articles of Association and Bylaws
|
12
|
2.4.
|
Directors and Officers of DNB and the Surviving Institution
|
12
|
2.5.
|
Effects of the Merger
|
12
|
2.6.
|
Tax Consequences
|
12
|
2.7.
|
Possible Alternative Structures
|
12
|
2.8.
|
Absence of Control
|
13
|
ARTICLE III
|
CONVERSION OF SHARES
|
13
|
3.1.
|
Conversion of ERB Common Stock; Merger Consideration
|
13
|
3.2.
|
Election Procedures
|
14
|
3.3.
|
Procedures for Exchange of ERB Common Stock
|
17
|
ARTICLE IV
|
REPRESENTATIONS AND WARRANTIES OF ERB
|
20
|
4.1.
|
Organization
|
20
|
4.2.
|
Capitalization
|
21
|
4.3.
|
Authority; No Violation
|
21
|
4.4.
|
Consents
|
22
|
4.5.
|
Reports, Regulatory Matters, Financial Statements
|
23
|
4.6.
|
Taxes
|
24
|
4.7.
|
No Material Adverse Effect
|
26
|
4.8.
|
Material Contracts; Leases; Defaults
|
27
|
4.9.
|
Ownership of Property; Insurance Coverage
|
29
|
4.10.
|
Legal Proceedings
|
30
|
4.11.
|
Compliance With Applicable Law
|
30
|
4.12.
|
Employee Benefit Plans
|
31
|
4.13.
|
Brokers, Finders and Financial Advisors
|
34
|
4.14.
|
Environmental Matters
|
34
|
4.15.
|
Loan Portfolio
|
35
|
4.16.
|
Documents
|
36
|
4.17.
|
Related Party Transactions
|
36
|
4.18.
|
Deposits
|
37
|
4.19.
|
Required Vote
|
37
|
4.20.
|
Registration Obligations
|
37
|
4.21.
|
Risk Management Instruments
|
37
|
4.22.
|
Fairness Opinion
|
37
|
4.23.
|
Trust Accounts
|
38
|
4.24.
|
Intellectual Property
|
38
|
4.25.
|
Labor Matters
|
38
|
4.26.
|
ERB Information Supplied
|
39
|
4.27.
|
Investment Securities and Commodities
|
39
|
ARTICLE V
|
REPRESENTATIONS AND WARRANTIES OF DNB
|
39
|
5.1.
|
Organization
|
40
|
5.2.
|
Capitalization
|
40
|
5.3.
|
Authority; No Violation
|
41
|
5.4.
|
Consents
|
42
|
5.5.
|
Financial Statements
|
43
|
5.6.
|
Taxes
|
44
|
5.7.
|
No Material Adverse Effect
|
45
|
5.8.
|
Ownership of Property; Insurance Coverage
|
45
|
5.9.
|
Legal Proceedings
|
46
|
5.10.
|
Compliance With Applicable Law
|
46
|
5.11.
|
Employee Benefit Plans
|
48
|
5.12.
|
Environmental Matters
|
50
|
5.13.
|
Securities Documents
|
51
|
5.14.
|
Brokers, Finders and Financial Advisors
|
51
|
5.15.
|
DNB Common Stock
|
51
|
5.16.
|
DNB Information Supplied
|
51
|
5.17.
|
Loan Portfolio
|
52
|
5.18.
|
Investment Securities and Commodities
|
52
|
5.19.
|
Related Party Transactions
|
52
|
5.20.
|
Fairness Opinion
|
53
|
5.21.
|
Intellectual Property
|
53
|
ARTICLE VI
|
COVENANTS OF ERB
|
54
|
6.1.
|
Conduct of Business
|
54
|
6.2.
|
Current Information and Cooperation
|
58
|
6.3.
|
Access to Properties and Records
|
59
|
6.4.
|
Financial and Other Statements
|
61
|
6.5.
|
Maintenance of Insurance
|
61
|
6.6.
|
Disclosure Supplements
|
61
|
6.7.
|
Consents and Approvals of Third Parties
|
62
|
6.8.
|
Reasonable Best Efforts
|
62
|
6.9.
|
Failure to Fulfill Conditions
|
62
|
6.10.
|
No Solicitation
|
62
|
6.11.
|
Reserves and Merger-Related Costs
|
65
|
6.12.
|
ERB Board of Directors and Committee Meetings
|
65
|
ARTICLE VII
|
COVENANTS OF DNB
|
66
|
7.1.
|
Conduct of Business
|
66
|
7.2.
|
Current Information
|
66
|
7.3.
|
Financial and Other Statements
|
66
|
7.4.
|
Disclosure Supplements
|
67
|
7.5.
|
Consents and Approvals of Third Parties
|
67
|
7.6.
|
Reasonable Best Efforts
|
67
|
7.7.
|
Failure to Fulfill Conditions
|
67
|
7.8.
|
Employee Benefits
|
67
|
7.9.
|
Directors and Officers Indemnification and Insurance
|
69
|
7.10.
|
Stock Listing
|
71
|
7.11.
|
Stock and Cash Reserve
|
71
|
7.12.
|
DNB/DNB Bank Board of Directors
|
71
|
ARTICLE VIII
|
REGULATORY AND OTHER MATTERS
|
72
|
8.1.
|
Shareholder Meetings
|
72
|
8.2.
|
Proxy Statement-Prospectus
|
72
|
If to ERB, to:
|
Jef McGill, Chairman
East River Bank 4341 Ridge Avenue Philadelphia, PA 19129 Fax: 267.295.6421 |
With required copies (which shall not constitute notice) to:
|
Raymond A. Tiernan, Esquire
Philip Ross Bevan, Esquire Silver, Freedman, Taff & Tiernan LLP 3299 K Street, NW, Suite 100 Washington, DC 20007 |
If to DNB, to:
|
William J. Hieb, CEO and President
DNB Financial Corporation 4 Brandywine Avenue Downingtown, PA 19335 Fax: 484.359.3176 |
With required copies (which shall not constitute notice) to:
|
Christopher S. Connell, Esquire
Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 |
|
DNB Financial Corporation
By:
/s/ William J. Hieb
Name: William J. Hieb
Title: President and CEO
East River Bank
By:
/s/ John F. McGill
Name: John F. McGill
Title: Chairman
|
|
|
|
|
DNB FIRST, N.A.
|
|
[SEAL]
|
|
By: ____________________________
|
|
Name:
|
|
Title:
|
|
By: ____________________________
|
|
Name:
|
|
Title:
|
|
EAST RIVER BANK
|
|
[SEAL]
|
|
By: ____________________________
|
|
Name:
|
|
Title:
|
|
By: ____________________________
|
|
Name:
|
|
Title:
|
|
Sincerely,
|
|
|
|
Name:
Title:
|
v | Reviewed and analyzed the Agreement and Plan of Merger. |
v | Reviewed DNB's audited consolidated statements of financial condition as of December 31, 2015 and 2014 and related audited consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in stockholders' equity and consolidated statements of cash flows for the years ending December 31, 2015 and 2014. |
v | Reviewed East River's audited consolidated balance sheets as of December 31, 2015 and 2014 and related audited consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in shareholders' equity and consolidated statements of cash flows for the years ending December 31, 2015 and 2014. |
v | Reviewed East River and DNB's banking subsidiary's quarterly call reports for March 31, 2015, June 30, 2015, September 30, 2015, and December 31, 2015. |
v | Reviewed and analyzed other publicly available information regarding East River and DNB. |
v | Reviewed certain non-public information, including business plans, financial projections and third party loan reviews regarding East River. |
v | Reviewed certain non-public information, including financial projections regarding DNB. |
v | Reviewed with senior management of DNB, the pro forma financial impact of the merger on DNB, based on assumptions relating to transaction expenses, purchase accounting adjustments, cost savings and other synergies. |
v | Reviewed recently reported stock prices and trading activity of DNB common stock. |
v | Discussed past and current operations, financial condition and future prospects of each company with senior executives of DNB and East River. |
v | Reviewed and analyzed certain publicly available financial, transaction and stock market data of banking companies that we selected as relevant to our analysis. |
v | Conducted other analyses and reviewed other information we considered necessary or appropriate. |
v | Incorporated our assessment of the overall economic environment and market conditions, as well as our experience in mergers and acquisitions, bank stock valuations and other transactions. |
|
Respectfully submitted,
|
|
|
|
|
|
|
|
Ambassador Financial Group, Inc.
|
|
|
607 Washington Street
|
|
Reading, PA 19601
|
|
Phone:
|
610-478-2105
|
Email:
|
info@griffinfingroup.com
|
Fax:
|
610-478-2227
|
|
Very truly yours,
/s/ Griffin Financial Group LLC
GRIFFIN FINANCIAL GROUP LLC
|
|
(i)
|
listed on a national securities exchange registered under section 6 of the Exchange Act;
1
or
|
|
(ii)
|
held beneficially or of record by more than 2,000 persons.
|
|
(i)
|
(Repealed).
|
|
(ii)
|
Shares of any preferred or special class or series unless the articles, the plan or the terms of the transaction entitle all shareholders of the class or series to vote thereon and require for the adoption of the plan or the effectuation of the transaction the affirmative vote of a majority of the votes cast by all shareholders of the class or series.
|
|
(iii)
|
Shares entitled to dissenters rights under section 329(d) or 1906(c) (relating to dissenters rights upon special treatment).
|
DNB Financial Corporation
|
||
By:
|
/s/ William J. Hieb
|
|
President and Chief Executive Officer
|
Signature
|
Title
|
Date
|
|
/s/ William J. Hieb
|
President, Chief Executive Officer and
Director (Principal Executive Officer)
|
June 22, 2016
|
|
William J. Hieb
|
|||
/s/ Gerald F. Sopp
|
Chief Financial Officer (Principal
Financial and Accounting Officer)
|
June 22, 2016
|
|
Gerald F. Sopp
|
|||
/s/ James H. Thornton
|
Chairman of the Board
|
June 22, 2016
|
|
James H. Thornton
|
|||
/s/ James R. Biery
|
Director
|
June 22, 2016
|
|
James R. Biery
|
|||
/s/ Thomas A. Fillippo
|
Director
|
June 22, 2016
|
|
Thomas A. Fillippo
|
|||
Gerard F. Griesser
|
Director
|
June 22, 2016
|
|
/s/ Gerard F. Griesser
|
|||
/s/ Mildred C. Joyner
|
Director
|
June 22, 2016
|
|
Mildred C. Joyner
|
|||
/s/ James J. Koegel
|
Director
|
June 22, 2016
|
|
James J. Koegel
|
|||
/s/ Mary D. Latoff
|
Director
|
June 22, 2016
|
|
Mary D. Latoff
|
Exhibit No.
|
Document
|
|
2.1
|
Agreement and Plan of Merger dated as of April 4, 2016, by and between DNB Financial Corporation and East River Bank (included as Annex A to the joint proxy statement/prospectus forming a part of this registration statement).
|
|
3.1
|
Amended and Restated Articles of Incorporation, as amended effective December 8, 2008, filed as Exhibit 3(i) to the Registrant's Form 10-K for the fiscal year-ended December 31, 2008, filed March 31, 2009 and incorporated herein by reference.
|
|
3.2
|
Bylaws as amended January 27, 2016, filed as Exhibit 3.1 to the Registrant's Form 8-K filed January 29, 2016 and incorporated herein by reference.
|
|
3.3
|
Certificate of Designations of Fixed Rate Cumulative Preferred Stock, Series 2008A, filed as Exhibit 4.3 to the Registrant's Form 8-K filed January 26, 2009 and incorporated herein by reference.
|
|
3.4
|
Certificate of Designation of Non-Cumulative Perpetual Preferred Stock, Series 2011A, filed as Exhibit 99.3 to the Registrant's Form 8-K filed August 8, 2011 and incorporated herein by reference.
|
|
4.1
|
Form of Preferred Stock Certificate to the United States Department of the Treasury, filed as Exhibit 4.4 to the Registrant's Form 8-K filed January 30, 2009 and incorporated herein by reference.
|
|
4.2
|
Form of Warrant to Purchase Common Stock to the United States Department of the Treasury, filed as Exhibit 4.5 to the Registrant's Form 8-K filed January 30, 2009 and incorporated herein by reference.
|
|
4.3
|
Form of Certificate for 13,000 shares of Non-Cumulative Perpetual Preferred Stock, Series 2011A, filed as Exhibit 99.2 to the Registrant's Form 8-K filed August 8, 2011 and incorporated herein by reference.
|
|
4.4
|
Subordinated Note issued by DNB Financial Corporation to Jersey Shore State Bank, dated as of March 5, 2015, filed as Exhibit 4.1 to the Registrant's Form 8-K filed March 10, 2015 and incorporated herein by reference.
|
|
5.1
|
||
8.1*
|
Tax opinion of Stradley Ronon Stevens & Young, LLP.
|
|
8.2*
|
Tax opinion of Silver, Freedman, Taff & Tiernan LLP.
|
|
10.1
|
Form of Voting Agreement (included as Exhibit B to the Agreement and Plan of Merger attached as Annex A to the joint proxy statement/prospectus forming a part of this registration statement).
|
|
10.2
|
||
10.3
|
||
21.1
|
Subsidiaries of the Registrant, filed as Exhibit 21 of the Registrant's Form 10-K filed March 23, 2016 and incorporated herein by reference.
|
|
23.1
|
||
23.2
|
||
23.3
|
Consent of Stradley Ronon Stevens & Young, LLP (included in Exhibits 5.1 and 8.1).
|
|
23.4
|
Consent of Silver, Freedman, Taff & Tiernan LLP (included in Exhibit 8.2).
|
|
23.5
|
23.6
|
||
24.1
|
Power of Attorney (contained on the signature page of the registration statement).
|
|
99.1
|
Opinion of Ambassador Financial Group, Inc. (included as Annex B to the Joint Proxy Statement/Prospectus contained in this Registration Statement).
|
|
99.2
|
Opinion of Griffin Financial Group, LLC (included as Annex C to the Joint Proxy Statement/Prospectus contained in this Registration Statement).
|
|
99.3*
|
Form of Proxy Card for Special Meeting of Shareholders of DNB Financial Corporation.
|
|
99.4
|
||
99.5
|
||
99.6
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99.7
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Exhibit 5.1
Stradley Ronon Stevens & Young, LLP
Suite 2600
2005 Market Street
Philadelphia, PA 19103-7018
Telephone 215.564.8000
Fax 215.564.8120
www.stradley.com
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Re:
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Registration Statement on Form S-4 of DNB Financial Corporation
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Very truly yours,
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/s/ STRADLEY RONON STEVENS & YOUNG, LLP
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9. | Termination of the Agreement Upon Death or Permanent Incapacitation or by the Employee without Good Reason. |
10.
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Termination of the Agreement (a) by the Company for a Reason other than Cause, Death or Permanent Incapacitation, or (b) by Employee for Good Reason.
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DNB FIRST, N.A.
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By:
/s/ William J. Hieb
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Name: William J. Hieb
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Title: President
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/s/ Christopher P. McGill | |
Christopher P. McGill
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9. | Termination of the Agreement Upon Death or Permanent Incapacitation or by the Employee without Good Reason. |
10.
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Termination of the Agreement (a) by the Company for a Reason other than Cause, Death or Permanent Incapacitation, or (b) by Employee for Good Reason.
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DNB FIRST, N.A.
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By: /s/ William J. Hieb
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Name: William J. Hieb
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Title: President
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/s/ Jerry Cotlov | |
Jerry Cotlov
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Ambassador Financial Group, Inc.
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/s/ Ambassador Financial Group, Inc.
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EAST RIVER BANK
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REVOCABLE PROXY
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1. | Proposal to adopt and approve the Agreement and Plan of Merger, dated as of April 4, 2016 (the "merger agreement"), by and between DNB Financial Corporation ("DNB") and East River Bank, which, among other matters, provides for: (i) the merger of East River Bank with and into DNB First, N.A., a wholly owned subsidiary of DNB, with DNB First, N.A., as the surviving entity, and (ii) upon consummation of the merger, the exchange of each outstanding share of East River Bank common stock (other than shares the holders of which perfect dissenters' rights of appraisal), subject to the election, proration and adjustment procedures provided in the merger agreement, for 0.6562 of a share of DNB common stock or $18.65 in cash. |
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FOR
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AGAINST
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ABSTAIN
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2. | Proposal to approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies in favor of adoption and approval of the merger agreement. |
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FOR
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AGAINST
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ABSTAIN
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Please sign this Proxy exactly as your name(s) appear(s) on this Proxy. When signing in a representative capacity, please give title. When shares are held jointly, only one holder need sign.
PLEASE ACT PROMPTLY
MARK, SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
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/s/ John F. McGill, Jr.
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John F. McGill, Jr.
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/s/ Charles A. Murray
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Charles A. Murray
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/s/ G. Daniel O' Donnell
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G. Daniel O' Donnell
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