Virginia
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16-1694602
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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15521 Midlothian Turnpike, Suite 200, Midlothian, Virginia 23113
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(Address of principal executive offices) (Zip Code)
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Issuer’s telephone number
804-897-3900
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Title of each class
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Name of each exchange on which registered
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Common Stock, $4.00 par value
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The Nasdaq Stock Market
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Large Accelerated Filer
o
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Accelerated Filer
o
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Non-Accelerated Filer
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(Do not check if smaller reporting company)
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Smaller Reporting Company
þ
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Business
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3
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Risk Factors
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19
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Unresolved Staff Comments
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27
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Properties
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27
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Legal Proceedings
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27
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Removed and Reserved
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27
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Market for Registrant’s Common Equity, Related Stockholder
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Matters and Issuer Purchases of Equity Securities
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28
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Selected Financial Data
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30
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Management’s Discussion and Analysis of Financial Condition
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And Results of Operations
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31
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Financial Statements and Supplementary Data
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56
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Changes In and Disagreements with Accountants
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on Accounting and Financial Disclosure
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99
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Controls and Procedures
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99
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Other Information
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100
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Directors, Executive Officers, and Corporate Governance
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101
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Executive Compensation
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101
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Security Ownership of Certain Beneficial Owners and
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Management and Related Stockholder Matters
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101
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Certain Relationships and Related Transactions,
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and Director Independence
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101
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Principal Accounting Fees and Services
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101
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Exhibits, Financial Statement Schedules
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102
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104
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·
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To be a full service financial services provider enabling us to establish and maintain relationships with our customers.
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To attract customers by providing the breadth of products offered by larger banks while maintaining the quick response and personal service of a community bank
. We will continue to look for opportunities to expand our products and services. We have established a diverse product line, including commercial, mortgage and consumer loans as well as a full array of deposit products and services.
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To reduce the level of our nonperforming assets
. Nonperforming assets, consisting of nonaccrual loans and real estate acquired through foreclosure, reached record highs in 2010 and continue to have a negative affect on profitability. We have committed significant resources to reduce the level of nonperforming assets.
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·
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To expand our capacity to generate
noninterest
income through the sale of mortgage loans
. Our mortgage company has experienced a significant increase in loan production as a result of the addition of a loan production office in Northern Virginia.
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·
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To continue to emphasize commercial banking products and services
. Small-business commercial customers are a source of prime-based loans, fee income from cash management services, and low cost deposits, which we need to fund our growth. We have been able to build a commercial business base because our staff of commercial bankers seeks opportunities to network within the local business community. Significant additional growth in this banking area will depend on expanding our lending staff.
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·
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eliminate from its books, by charge-offs or collections, all assets or portions of assets classified “Loss” and 50 percent of those assets classified “Doubtful” in the regulatory examination reports that have not been previously collected or charged-off;
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·
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submit to the FDIC and the BFI specific plans and proposals to effect the reduction and improvement of any loans or lines of credit which are adversely classified in the regulatory examination reports or any internal or external loan review, and which aggregate $500,000 or more;
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not extend, directly or indirectly, any additional credit to or for the benefit of any borrower who is obligated in any manner to the Bank on any extension of credit or portion thereof that has been charged off by the Bank or classified Loss or Doubtful in any report of examination, so long as such credit remains uncollected;
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enhance the formal loan review program to provide accurate and timely identification of problem loans;
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formulate a management plan that shall contain a review of each existing officer’s performance, abilities and assignments to positions within the Bank, the need, if any, for personnel outside the Bank, and an organizational chart and written job descriptions for personnel in the supervisory, administrative, and accounting functions;
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review and update the written profit and strategic plan;
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adopt a written plan for monitoring and reducing the Commercial Real Estate (CRE) concentration;
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maintain the Allowance for Loan and Lease Losses at a level that is appropriate to cover estimated losses on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan portfolio;
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limit asset growth to no more than five (5) percent per annum;
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incorporate within the Bank’s Contingency Funding Plan certain recommendations contained in the regulatory examination reports;
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maintain a Tier 1 Leverage Capital Ratio of not less than eight (8) percent and a Total Risk-Based Capital Ratio of not less than 11.5 percent;
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take steps necessary, consistent with sound banking practices, to correct all violations of law and regulations cited in the regulatory examination reports;
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not pay any cash dividends without the prior written consent of the FDIC and BFI; and
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furnish written quarterly progress reports to the FDIC and BFI detailing steps taken to comply with the various provisions of the Memorandum of Understanding.
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declare or pay any dividends on its common stock or preferred stock;
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take dividends or any other form of payment representing a reduction in capital from the Bank;
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make any payments on trust preferred securities;
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incur, increase, repay, refinance or guarantee any debt; or
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purchase or redeem any shares of its stock.
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·
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FDIC Assessments
.
The Dodd-Frank Act changes the assessment base for federal deposit insurance from the amount of insured deposits to average consolidated total assets less its average tangible equity. In addition, it increases the minimum size of the Deposit Insurance Fund (“DIF”) and eliminates its ceiling, with the burden of the increase in the minimum size on institutions with more than $10 billion in assets.
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Deposit Insurance.
The Dodd-Frank Act makes permanent the $250,000 limit for federal deposit insurance and provides unlimited federal deposit insurance until December 31, 2012 for non-interest-bearing demand transaction accounts at all insured depository institutions.
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Interest on Demand Deposits.
The Dodd- Frank Act also provides that, effective one year after the date of enactment, depository institutions may pay interest on demand deposits, including business transaction and other accounts.
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Consumer Financial Protection Bureau.
The Dodd-Frank Act centralizes responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, responsible for implementing federal consumer protection laws, although banks below $10 billion in assets will continue to be examined and supervised for compliance with these laws by their federal bank regulator.
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Mortgage Lending.
New requirements are imposed on mortgage lending, including new minimum underwriting standards, prohibitions on certain yield-spread compensation to mortgage originators, special consumer protections for mortgage loans that do not meet certain provision qualifications, prohibitions and limitations on certain mortgage terms and various new mandated disclosures to mortgage borrowers.
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Holding Company Capital Levels.
Bank regulators are required to establish minimum capital levels for holding companies that are at least as stringent as those currently applicable to banks. In addition, all trust preferred securities issued after May 19, 2010 will be counted as Tier 2 capital, but the Company’s currently outstanding trust preferred securities will continue to qualify as Tier 1 capital.
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De Novo Interstate Branching.
National and state banks are permitted to establish de novo interstate branches outside of their home state, and bank holding companies and banks must be well-capitalized and well managed in order to acquire banks located outside their home state.
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Transactions with Affiliates.
The Dodd-Frank Act enhances the requirements for certain transactions with affiliates under Section 23A and 23B of the Federal Reserve Act, including an expansion of the definition of “covered transactions” and increasing the amount of time for which collateral requirements regarding covered transactions must be maintained.
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Transactions with Insiders.
Insider transaction limitations are expanded through the strengthening of loan restrictions to insiders and the expansion of the types of transactions subject to the various limits, including derivative transactions, repurchase agreements, reverse repurchase agreements and securities lending or borrowing transactions. Restrictions are also placed on certain asset sales to and from an insider to an institution, including requirements that such sales be on market terms and, in certain circumstances, approved by the institution’s board of directors.
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Corporate Governance.
The Dodd-Frank Act includes corporate governance revisions that apply to all public companies, not just financial institutions, including with regard to executive compensation and proxy access to shareholders.
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Total Risk-Based Capital ratio, which is the total of Tier 1 Risk-Based Capital (which includes common shareholders’ equity, trust preferred securities, minority interests and qualifying preferred stock, less goodwill and other adjustments) and Tier 2 Capital (which includes preferred stock not qualifying as Tier 1 capital, mandatory convertible debt, limited amounts of subordinated debt, other qualifying term debt and the allowance for loan losses up to 1.25 percent of risk-weighted assets and other adjustments) as a percentage of total risk-weighted assets,
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Tier 1 Risk-Based Capital ratio (Tier 1 capital divided by total risk-weighted assets), and
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the Leverage ratio (Tier 1 capital divided by adjusted average total assets).
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“well capitalized” if it has a Total Risk-Based Capital ratio of 10% or greater, a Tier 1 Risk-Based Capital ratio of 6% or greater, a Leverage ratio of 5% or greater, and is not subject to any written agreement, order, capital directive, or prompt corrective action directive by a federal bank regulatory agency to meet and maintain a specific capital level for any capital measure,
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“adequately capitalized” if it has a Total Risk-Based Capital ratio of 8% or greater, a Tier 1 Risk-Based Capital ratio of 4% or greater, and a Leverage ratio of 4% or greater (or 3% in certain circumstances) and is not well capitalized,
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“undercapitalized” if it has a Total Risk-Based Capital ratio of less than 8%, a Tier 1 Risk-Based Capital ratio of less than 4% (or 3% in certain circumstances), or a Leverage ratio of less than 4% (or 3% in certain circumstances),
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“significantly undercapitalized” if it has a Total Risk-Based Capital ratio of less than 6%, a Tier 1 Risk-Based Capital ratio of less than 3%, or a Leverage ratio of less than 3%, or
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“critically undercapitalized” if its tangible equity is equal to or less than 2% of tangible assets.
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A bank’s loans or extensions of credit, including purchases of assets subject to an agreement to repurchase, to affiliates;
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A bank’s investment in affiliates;
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Assets a bank may purchase from affiliates, except for real and personal property exempted by the Federal Reserve;
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The amount of loans or extensions of credit to third parties collateralized by the securities or debt obligations of affiliates;
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Transactions involving the borrowing or lending of securities and any derivative transaction that results in credit exposure to an affiliate; and
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A bank’s guarantee, acceptance or letter of credit issued on behalf of an affiliate.
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High
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Low
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|||||||
2009
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1st quarter
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$ | 5.00 | $ | 3.77 | ||||
2nd quarter
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4.95 | 4.12 | ||||||
3rd quarter
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5.98 | 3.85 | ||||||
4th quarter
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4.43 | 2.01 | ||||||
2010
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||||||||
1st quarter
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$ | 5.00 | $ | 2.02 | ||||
2nd quarter
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4.24 | 2.82 | ||||||
3rd quarter
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2.90 | 1.40 | ||||||
4th quarter
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1.98 | 1.40 |
Period Ending
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Index
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12/31/05
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12/31/06
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12/31/07
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12/31/08
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12/31/09
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12/31/10
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Village Bank and Trust Financial Corp.
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100.00
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110.51
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83.27
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35.02
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18.15
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11.60
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NASDAQ Composite
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100.00
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110.39
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122.15
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73.32
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106.57
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125.91
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SNL Bank $250M-$500M
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100.00
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104.48
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84.92
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48.50
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44.89
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50.24
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SNL Bank $500M-$1B
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100.00
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113.73
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91.14
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58.40
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55.62
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60.72
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·
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the risks of changes in interest rates on levels, composition and costs of deposits, loan demand, and the values and liquidity of loan collateral, securities, and interest sensitive assets and liabilities;
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·
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changes in assumptions underlying the establishment of allowances for loan losses, and other estimates;
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changes in market conditions, specifically declines in the residential and commercial real estate market, volatility and disruption of the capital and credit markets, soundness of other financial institutions we do business with;
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risks inherent in making loans such as repayment risks and fluctuating collateral values;
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changes in operations of Village Bank Mortgage Corporation as a result of the activity in the residential real estate market;
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legislative and regulatory changes, including the Financial Reform Act and other changes in banking, securities, and tax laws and regulations and their application by our regulators, and changes in scope and cost of FDIC insurance and other coverages;
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exposure to repurchase loans sold to investors for which borrowers failed to provide full and accurate information on or related to their loan application or for which appraisals have not been acceptable or when the loan was not underwritten in accordance with the loan program specified by the loan investor;
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the effects of future economic, business and market conditions;
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governmental monetary and fiscal policies;
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changes in accounting policies, rules and practices;
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maintaining capital levels adequate to remain well capitalized;
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reliance on our management team, including our ability to attract and retain key personnel;
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competition with other banks and financial institutions, and companies outside of the banking industry, including those companies that have substantially greater access to capital and other resources;
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demand, development and acceptance of new products and services;
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problems with technology utilized by us;
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changing trends in customer profiles and behavior; and
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·
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other factors described from time to time in our reports filed with the SEC.
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·
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The economy would remain depressed and, as this continued to have an effect on our borrowers, we could see an increase in nonperforming assets.
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Loan demand would not be strong.
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Interest rates would remain at historic lows.
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It would be very difficult for us to access the capital markets to increase our capital.
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Our total assets at year-end 2010 amounted to $591,779,000, a $10,214,000 decline from total assets of $601,993,000 at the end of 2009. In addition, as loan demand remained weak, we were able to restructure the make-up of our assets to lower risk-weighted assets for regulatory purposes thereby improving our total risk-weighted asset ratio for the Bank from 11.29% at the end of 2009 to 12.11% at the end of 2010. We lowered our risk-weighted assets primarily by purchasing investment securities with risk weightings of 0% or 20%.
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·
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As expected, nonperforming assets increased in the first half of 2010 as the economy remained depressed, reaching a high of $45,329,000, or 7.5% of total assets, at May 31, 2010 from $37,192,000, or 6.2% of total assets, at December 31, 2009. However, as a result of our focus on managing nonperforming assets, we were able to reduce their amount
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to $32,352,000, or 5.5% of total assets, at December 31, 2010.
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·
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The cost of funds declined from 3.27% for 2009 to 2.15% for 2010 resulting in an improvement in our net interest margin from 3.13% for 2009 to 3.57% for 2010. The decline in our cost of funds was a result of being able to reprice maturing long term certificates of deposit at the low interest rates in 2010.
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2009
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2008
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Increase
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Provision for loan losses
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$ | 13,220,000 | $ | 2,005,633 | $ | 11,214,367 | ||||||
Goodwill impairment
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7,422,141 | - | 7,422,141 | |||||||||
Expenses related to
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foreclosed real estate
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1,475,338 | 165,455 | 1,309,883 | |||||||||
FDIC insurance premium
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1,366,612 | 400,394 | 966,218 | |||||||||
$ | 20,912,609 |
Average Balance Sheets
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(
In thousands
)
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Year Ended December 31, 2010
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Year Ended December 31, 2009
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Year Ended December 31, 2008
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Interest
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Interest
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Interest
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Average
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Income/
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Yield
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Average
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Income/
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Yield
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Average
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Income/
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Yield
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Balance
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Expense
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Rate
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Balance
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Expense
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Rate
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Balance
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Expense
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Rate
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Loans
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Commercial
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$ | 35,214 | $ | 2,235 | 6.35 | % | $ | 47,607 | $ | 2,959 | 6.22 | % | $ | 39,275 | $ | 2,034 | 5.18 | % | ||||||||||||||||||
Real estate - residential
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97,533 | 6,522 | 6.69 | % | 89,386 | 5,802 | 6.49 | % | 61,416 | 5,291 | 8.62 | % | ||||||||||||||||||||||||
Real estate - commercial
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253,409 | 16,111 | 6.36 | % | 230,621 | 15,591 | 6.76 | % | 160,019 | 10,968 | 6.85 | % | ||||||||||||||||||||||||
Real estate - construction
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66,222 | 2,593 | 3.92 | % | 99,103 | 6,038 | 6.09 | % | 105,732 | 8,965 | 8.48 | % | ||||||||||||||||||||||||
Consumer
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10,987 | 786 | 7.15 | % | 10,642 | 788 | 7.40 | % | 7,779 | 657 | 8.45 | % | ||||||||||||||||||||||||
Gross loans
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463,365 | 28,247 | 6.10 | % | 477,359 | 31,178 | 6.53 | % | 374,221 | 27,915 | 7.46 | % | ||||||||||||||||||||||||
Investment securities
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36,066 | 1,087 | 3.01 | % | 33,174 | 1,458 | 4.40 | % | 12,125 | 699 | 5.76 | % | ||||||||||||||||||||||||
Loans held for sale
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16,820 | 793 | 4.71 | % | 10,305 | 533 | 5.17 | % | 3,721 | 225 | 6.05 | % | ||||||||||||||||||||||||
Federal funds and other
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24,157 | 55 | 0.23 | % | 15,034 | 27 | 0.18 | % | 10,455 | 233 | 2.23 | % | ||||||||||||||||||||||||
Total interest earning assets
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540,408 | 30,182 | 5.59 | % | 535,872 | 33,196 | 6.19 | % | 400,522 | 29,072 | 7.26 | % | ||||||||||||||||||||||||
Allowance for loan losses
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(9,722 | ) | (8,367 | ) | (4,309 | ) | ||||||||||||||||||||||||||||||
Cash and due from banks
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13,103 | 15,998 | 8,179 | |||||||||||||||||||||||||||||||||
Premises and equipment, net
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27,630 | 27,880 | 23,951 | |||||||||||||||||||||||||||||||||
Other assets
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32,341 | 28,651 | 14,261 | |||||||||||||||||||||||||||||||||
Total assets
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$ | 603,760 | $ | 600,034 | $ | 442,604 | ||||||||||||||||||||||||||||||
Interest bearing deposits
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||||||||||||||||||||||||||||||||||||
Interest checking
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34,521 | 336 | 0.97 | % | 26,530 | 443 | 1.67 | % | $ | 12,735 | $ | 159 | 1.25 | % | ||||||||||||||||||||||
Money market
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98,762 | 1,077 | 1.09 | % | 69,267 | 1,242 | 1.79 | % | 28,215 | 561 | 1.99 | % | ||||||||||||||||||||||||
Savings
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10,081 | 80 | 0.79 | % | 7,009 | 85 | 1.21 | % | 6,891 | 193 | 2.80 | % | ||||||||||||||||||||||||
Certificates
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315,205 | 7,604 | 2.41 | % | 347,698 | 12,664 | 3.64 | % | 291,629 | 13,435 | 4.61 | % | ||||||||||||||||||||||||
Total deposits
|
458,569 | 9,097 | 1.98 | % | 450,504 | 14,434 | 3.20 | % | 339,470 | 14,348 | 4.23 | % | ||||||||||||||||||||||||
Borrowings
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||||||||||||||||||||||||||||||||||||
Long-tern debt - trust
|
||||||||||||||||||||||||||||||||||||
preferred securities
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8,764 | 346 | 3.95 | % | 8,764 | 392 | 4.47 | % | 8,764 | 508 | 5.80 | % | ||||||||||||||||||||||||
FHLB advances
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28,425 | 864 | 4.22 | % | 26,348 | 970 | 4.22 | % | 20,620 | 834 | 4.22 | % | ||||||||||||||||||||||||
Other borrowings
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11,473 | 578 | 1.77 | % | 16,337 | 612 | 1.77 | % | 13,034 | 280 | 1.77 | % | ||||||||||||||||||||||||
Total interest bearing liabilities
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507,231 | 10,885 | 2.15 | % | 501,953 | 16,408 | 3.27 | % | 381,888 | 15,970 | 4.18 | % | ||||||||||||||||||||||||
Noninterest bearing deposits
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44,495 | 39,626 | 27,657 | |||||||||||||||||||||||||||||||||
Other liabilities
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2,233 | 2,366 | 1,992 | |||||||||||||||||||||||||||||||||
Total liabilities
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553,959 | 543,945 | 411,537 | |||||||||||||||||||||||||||||||||
Equity capital
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49,801 | 56,089 | 31,067 | |||||||||||||||||||||||||||||||||
Total liabilities and capital
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$ | 603,760 | $ | 600,034 | $ | 442,604 | ||||||||||||||||||||||||||||||
Net interest income before
|
||||||||||||||||||||||||||||||||||||
provision for loan losses
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$ | 19,297 | $ | 16,788 | $ | 13,102 | ||||||||||||||||||||||||||||||
Interest spread - average yield
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||||||||||||||||||||||||||||||||||||
on interest earning assets,
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||||||||||||||||||||||||||||||||||||
less average rate on
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||||||||||||||||||||||||||||||||||||
interest bearing liabilities
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3.44 | % | 2.93 | % | 3.08 | % | ||||||||||||||||||||||||||||||
Net interest margin
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||||||||||||||||||||||||||||||||||||
(net interest income
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||||||||||||||||||||||||||||||||||||
expressed as a percentage
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||||||||||||||||||||||||||||||||||||
of average earning assets)
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3.57 | % | 3.13 | % | 3.27 | % |
Investment Securities Available-for-Sale
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(Dollars in thousands)
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||||||||||||||
Unrealized
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Estimated
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|||||||||||||||||||
Par
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Amortized
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Gain
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Fair
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Average
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||||||||||||||||
Value
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Cost
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(Loss)
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Value
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Yield
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||||||||||||||||
December 31, 2010
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||||||||||||||||||||
US Treasuries
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||||||||||||||||||||
One to five years
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$ | 28,000 | $ | 28,017 | $ | - | $ | 28,017 | 0.22 | % | ||||||||||
US Government Agencies
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||||||||||||||||||||
Five to ten years
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3,000 | 3,000 | (111 | ) | 2,889 | 2.00 | % | |||||||||||||
Mortgage-backed securities
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||||||||||||||||||||
One to five years
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686 | 703 | 21 | 724 | 4.90 | % | ||||||||||||||
More than ten years
|
14,410 | 14,796 | 33 | 14,829 | 2.86 | % | ||||||||||||||
Total
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15,096 | 15,499 | 54 | 15,553 | 5.39 | % | ||||||||||||||
Municipals
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||||||||||||||||||||
More than ten years
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6,000 | 6,060 | (337 | ) | 5,723 | 4.69 | % | |||||||||||||
Other investments
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||||||||||||||||||||
More than ten years
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1,418 | 1,418 | (3 | ) | 1,415 | 0.69 | % | |||||||||||||
Total investment securities
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$ | 53,514 | $ | 53,994 | $ | (397 | ) | $ | 53,597 | 2.31 | % |
Unrealized
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Estimated
|
|||||||||||||||||||
Par
|
Amortized
|
Gain
|
Fair
|
Average
|
||||||||||||||||
Value
|
Cost
|
(Loss)
|
Value
|
Yield
|
||||||||||||||||
December 31, 2009
|
||||||||||||||||||||
US Government Agencies
|
||||||||||||||||||||
One to five years
|
$ | 9,000 | $ | 9,315 | $ | (66 | ) | $ | 9,249 | 2.32 | % | |||||||||
Five to ten years
|
3,000 | 3,029 | 32 | 3,061 | 4.50 | % | ||||||||||||||
More than ten years
|
34,250 | 35,284 | 75 | 35,359 | 5.22 | % | ||||||||||||||
Total
|
46,250 | 47,628 | 41 | 47,669 | 4.61 | % | ||||||||||||||
Mortgage-backed securities
|
||||||||||||||||||||
One to five years
|
389 | 435 | (37 | ) | 398 | 4.40 | % | |||||||||||||
Five to ten years
|
471 | 471 | 29 | 500 | 5.24 | % | ||||||||||||||
More than ten years
|
3,141 | 3,227 | 53 | 3,280 | 5.53 | % | ||||||||||||||
Total
|
4,001 | 4,133 | 45 | 4,178 | 5.39 | % | ||||||||||||||
Municipals
|
||||||||||||||||||||
More than ten years
|
1,000 | 1,026 | 1 | 1,027 | 5.28 | % | ||||||||||||||
Other investments
|
||||||||||||||||||||
More than five years
|
2,000 | 1,973 | 10 | 1,983 | 5.65 | % | ||||||||||||||
Total investment securities
|
$ | 53,251 | $ | 54,760 | $ | 97 | $ | 54,857 | 4.72 | % |
Loan Portfolio, Net
|
||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
December 31,
|
||||||||||||||||||||
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||
Commercial
|
$ | 31,706 | $ | 39,576 | $ | 52,438 | $ | 23,152 | $ | 17,889 | ||||||||||
Real estate - residential
|
103,386 | 93,657 | 84,612 | 51,281 | 36,408 | |||||||||||||||
Real estate - commercial
|
261,517 | 240,830 | 220,400 | 140,176 | 100,039 | |||||||||||||||
Real estate - construction
|
45,220 | 81,688 | 103,161 | 106,556 | 80,324 | |||||||||||||||
Consumer
|
11,414 | 11,609 | 10,307 | 6,611 | 6,730 | |||||||||||||||
Total loans
|
453,243 | 467,360 | 470,918 | 327,776 | 241,390 | |||||||||||||||
Deferred loan cost (unearned
|
||||||||||||||||||||
income), net
|
624 | 209 | (196 | ) | (433 | ) | (339 | ) | ||||||||||||
Less: Allowance for loan losses
|
(7,312 | ) | (10,522 | ) | (6,059 | ) | (3,469 | ) | (2,553 | ) | ||||||||||
Total loans, net
|
$ | 446,555 | $ | 457,047 | $ | 464,663 | $ | 323,874 | $ | 238,498 |
December 31, 2010
|
||||||||||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||
Fixed Rate
|
Variable Rate
|
|||||||||||||||||||||||||||||||
Within
|
1 to 5
|
After
|
1 to 5
|
After
|
Total
|
|||||||||||||||||||||||||||
1 Year
|
Years
|
5 Years
|
Total
|
Years
|
5 Years
|
Total
|
Maturities
|
|||||||||||||||||||||||||
Commercial
|
$ | 9,814 | $ | 14,680 | $ | 6,883 | $ | 21,563 | $ | 329 | $ | - | $ | 329 | $ | 31,706 | ||||||||||||||||
Real estate
|
||||||||||||||||||||||||||||||||
Residential
|
61,141 | 8,768 | 32,145 | 40,913 | 1,204 | 128 | 1,332 | 103,386 | ||||||||||||||||||||||||
Commercial
|
41,112 | 68,205 | 113,689 | 181,894 | 30,146 | 8,365 | 38,511 | 261,517 | ||||||||||||||||||||||||
Construction
|
15,155 | 20,781 | 7,944 | 28,725 | 1,340 | - | 1,340 | 45,220 |
Allocation of the Allowance for Loan Losses
|
||||||||||||||||||||||||||||||||||||||||
(
In thousands
)
|
||||||||||||||||||||||||||||||||||||||||
December 31, 2010
|
December 31, 2009
|
December 31, 2008
|
December 31, 2007
|
December 31, 2006
|
||||||||||||||||||||||||||||||||||||
Total
|
%
|
Total
|
%
|
Total
|
%
|
Total
|
%
|
Total
|
%
|
|||||||||||||||||||||||||||||||
Commercial
|
$ | 819 | 11.2 | % | $ | 710 | 6.7 | % | $ | 1,664 | 27.5 | % | $ | 479 | 13.8 | % | $ | 377 | 14.8 | % | ||||||||||||||||||||
Real estate
|
||||||||||||||||||||||||||||||||||||||||
Residential
|
1,090 | 14.9 | % | 1,515 | 14.4 | % | 1,142 | 18.8 | % | 712 | 20.5 | % | 512 | 20.1 | % | |||||||||||||||||||||||||
Commercial
|
2,899 | 39.6 | % | 3,500 | 33.3 | % | 2,166 | 35.7 | % | 1,204 | 34.7 | % | 884 | 34.5 | % | |||||||||||||||||||||||||
Construction
|
2,265 | 31.0 | % | 4,442 | 42.2 | % | 965 | 15.9 | % | 989 | 28.5 | % | 694 | 27.2 | % | |||||||||||||||||||||||||
Consumer
|
239 | 3.3 | % | 355 | 3.4 | % | 122 | 2.0 | % | 85 | 2.5 | % | 86 | 3.4 | % | |||||||||||||||||||||||||
Total
|
$ | 7,312 | 100.0 | % | $ | 10,522 | 100.0 | % | $ | 6,059 | 100.0 | % | $ | 3,469 | 100.0 | % | $ | 2,553 | 100.0 | % |
Asset Quality
|
||||||||||||||||||||
(
In thousands
)
|
||||||||||||||||||||
December 31,
|
||||||||||||||||||||
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||
Nonaccrual loans
|
$ | 20,324 | $ | 25,913 | $ | 8,528 | $ | 2,585 | $ | 2,801 | ||||||||||
Foreclosed properties
|
12,028 | 11,279 | 2,932 | 270 | - | |||||||||||||||
Total nonperforming assets
|
$ | 32,352 | $ | 37,192 | $ | 11,460 | $ | 2,855 | $ | 2,801 | ||||||||||
Restructured loans
|
$ | 21,695 | $ | 15,289 | $ | - | $ | - | $ | - | ||||||||||
Loans past due 90 days and still accruing
|
||||||||||||||||||||
(not included in nonaccrual loans above)
|
$ | 315 | $ | 4,787 | $ | 6,197 | $ | 1,219 | $ | 6,520 | ||||||||||
Nonperforming assets to loans at end of year
(1)
|
7.14 | % | 7.95 | % | 2.43 | % | 0.87 | % | 1.16 | % | ||||||||||
Nonperforming assets to total assets
|
5.47 | % | 6.17 | % | 2.00 | % | 0.73 | % | 0.96 | % | ||||||||||
Allowance for loan losses to nonaccrual loans
|
36.0 | % | 40.6 | % | 71.0 | % | 134.2 | % | 91.1 | % | ||||||||||
(1)
Loans are net of unearned income.
|
Nonperforming Assets
|
||||||||||||
(In thousands)
|
||||||||||||
Nonaccrual
|
Other Real
|
|||||||||||
Loans
|
Estate Owned
|
Total
|
||||||||||
Balance December 31, 2009
|
$ | 25,913 | $ | 11,279 | $ | 37,192 | ||||||
Additions, net
|
10,094 | 481 | 10,575 | |||||||||
Sales
|
- | (6,020 | ) | (6,020 | ) | |||||||
Transfers
|
(6,717 | ) | 6,717 | - | ||||||||
Repayments
|
(600 | ) | - | (600 | ) | |||||||
Charge-offs
|
(8,366 | ) | (429 | ) | (8,795 | ) | ||||||
Balance December 31, 2010
|
$ | 20,324 | $ | 12,028 | $ | 32,352 |
Deposits
|
||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
December 31, 2010
|
December 31, 2009
|
December 31, 2008
|
||||||||||||||||||||||
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||||||||
Demand accounts
|
$ | 41,036 | 8.2 | % | $ | 38,521 | 7.7 | % | $ | 34,483 | 7.4 | % | ||||||||||||
Interest checking accounts
|
33,292 | 6.7 | % | 36,441 | 7.3 | % | 17,427 | 3.7 | % | |||||||||||||||
Money market accounts
|
90,156 | 18.1 | % | 115,167 | 23.1 | % | 30,003 | 6.4 | % | |||||||||||||||
Savings accounts
|
10,538 | 2.1 | % | 8,901 | 1.8 | % | 5,388 | 1.2 | % | |||||||||||||||
Time deposits of $100,000 and over
|
140,847 | 28.2 | % | 119,352 | 24.0 | % | 148,173 | 31.8 | % | |||||||||||||||
Other time deposits
|
183,143 | 36.7 | % | 179,903 | 36.1 | % | 230,758 | 49.5 | % | |||||||||||||||
Total
|
$ | 499,012 | 100.0 | % | $ | 498,285 | 100.0 | % | $ | 466,232 | 100.0 | % |
Average Deposits and Rates Paid
|
||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Year Ended December 31,
|
||||||||||||||||||||||||
2010
|
2009
|
2008
|
||||||||||||||||||||||
Account Type
|
Amount
|
Rate
|
Amount
|
Rate
|
Amount
|
Rate
|
||||||||||||||||||
Noninterest-bearing demand accounts
|
$ | 44,495 | $ | 39,626 | $ | 27,657 | ||||||||||||||||||
Interest-bearing deposits
|
||||||||||||||||||||||||
Interest checking accounts
|
34,521 | 0.97 | % | 26,530 | 1.67 | % | 12,735 | 1.25 | % | |||||||||||||||
Money market accounts
|
98,762 | 1.09 | % | 69,267 | 1.79 | % | 28,215 | 1.99 | % | |||||||||||||||
Savings accounts
|
10,081 | 0.79 | % | 7,009 | 1.21 | % | 6,891 | 2.81 | % | |||||||||||||||
Time deposits of $100,000 and over
|
112,260 | 2.50 | % | 121,440 | 3.72 | % | 100,840 | 4.90 | % | |||||||||||||||
Other time deposits
|
202,945 | 2.36 | % | 226,258 | 3.60 | % | 190,789 | 4.44 | % | |||||||||||||||
Total interest-bearing deposits
|
458,569 | 1.98 | % | 450,504 | 3.20 | % | 339,470 | 4.23 | % | |||||||||||||||
Total average deposits
|
$ | 503,064 | $ | 490,130 | $ | 367,127 |
Maturities of Time Deposits of $100,000 or More
|
||||
(
In thousands
)
|
||||
Due within three months
|
$ | 33,120 | ||
Due after three months through six months
|
24,259 | |||
Due after six months through twelve months
|
26,871 | |||
Over twelve months
|
56,597 | |||
$ | 140,847 |
Analysis of Capital
|
||||||||||||
(
In thousands
)
|
||||||||||||
As of December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Tier 1 capital
|
||||||||||||
Preferred stock
|
$ | 59 | $ | 59 | $ | - | ||||||
Common stock
|
16,954 | 16,922 | 16,917 | |||||||||
Additional paid-in capital
|
40,634 | 40,569 | 25,737 | |||||||||
Retained earnings (deficit)
|
(9,193 | ) | (9,741 | ) | 3,454 | |||||||
Warrant Surplus
|
732 | 732 | - | |||||||||
Discount on preferred stock
|
(492 | ) | (636 | ) | - | |||||||
Qualifying trust preferred securities
|
8,764 | 8,764 | 8,764 | |||||||||
Total equity
|
57,458 | 56,669 | 54,872 | |||||||||
Less: goodwill
|
- | - | (7,422 | ) | ||||||||
Total Tier 1 capital
|
57,458 | 56,669 | 47,450 | |||||||||
Tier 2 capital
|
||||||||||||
Allowance for loan losses
|
5,900 | 6,310 | 6,059 | |||||||||
Total Tier 2 capital
|
5,900 | 6,310 | 6,059 | |||||||||
Total risk-based capital
|
63,358 | 62,979 | 53,509 | |||||||||
Risk-weighted assets
|
$ | 470,662 | $ | 501,864 | $ | 500,689 | ||||||
Average assets
|
$ | 596,765 | $ | 615,184 | $ | 549,140 | ||||||
Capital ratios
|
||||||||||||
Leverage ratio (Tier 1 capital to
|
||||||||||||
average assets)
|
9.63 | % | 9.21 | % | 8.40 | % | ||||||
Tier 1 capital to risk-weighted assets
|
12.21 | % | 11.29 | % | 9.42 | % | ||||||
Total capital to risk-weighted assets
|
13.46 | % | 12.55 | % | 10.63 | % | ||||||
Equity to total assets
|
8.17 | % | 7.95 | % | 8.06 | % |
December 31, 2009
|
||||||||||||
As Reported
|
Adjustment
|
As Revised
|
||||||||||
Other assets
|
$ | 15,015,708 | $ | (969,588 | ) | $ | 14,046,120 | |||||
Other liabilities
|
2,641,410 | 124,140 | 2,765,550 | |||||||||
Retained earnings deficit
|
(8,647,731 | ) | (1,093,728 | ) | (9,741,459 | ) | ||||||
Income tax (benefit) expense
|
(4,973,114 | ) | 1,093,728 | (3,879,386 | ) |
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Estimated
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||||||||
December 31, 2010
|
||||||||||||||||
U.S. Treasuries
|
$ | 28,017,617 | $ | 191 | $ | (291 | ) | $ | 28,017,517 | |||||||
U.S. Government agencies
|
3,000,000 | - | (110,708 | ) | 2,889,292 | |||||||||||
Mortgage-backed securities
|
15,498,544 | 121,888 | (68,046 | ) | 15,552,386 | |||||||||||
Municipals
|
6,060,000 | - | (337,431 | ) | 5,722,569 | |||||||||||
Other investments
|
1,417,962 | (2,552 | ) | 1,415,410 | ||||||||||||
Total
|
$ | 53,994,123 | $ | 122,079 | $ | (519,028 | ) | $ | 53,597,174 | |||||||
December 31, 2009
|
||||||||||||||||
U.S. Government agencies
|
$ | 47,627,779 | $ | 301,365 | $ | (259,967 | ) | $ | 47,669,177 | |||||||
Mortgage-backed securities
|
4,133,353 | 91,937 | (46,982 | ) | 4,178,308 | |||||||||||
Municipals
|
1,026,422 | 233 | - | 1,026,655 | ||||||||||||
Other investments
|
1,972,896 | 10,175 | - | 1,983,071 | ||||||||||||
Total
|
$ | 54,760,450 | $ | 403,710 | $ | (306,949 | ) | $ | 54,857,211 |
Securities in a Loss
|
Securities in a Loss
|
|||||||||||||||||||||||
Position for Less Than
|
Position for More Than
|
|||||||||||||||||||||||
12 Months
|
12 Months
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
December 31, 2010
|
(In thousands)
|
|||||||||||||||||||||||
Investment securities
|
||||||||||||||||||||||||
available for sale
|
||||||||||||||||||||||||
US Treasuries
|
$ | 30,286 | $ | (114 | ) | $ | - | $ | - | $ | 30,286 | $ | (114 | ) | ||||||||||
Mortgage-backed securities
|
7,079 | (68 | ) | - | - | 7,079 | (68 | ) | ||||||||||||||||
Municipals
|
5,723 | (337 | ) | - | - | 5,723 | (337 | ) | ||||||||||||||||
Total
|
$ | 43,088 | $ | (519 | ) | $ | - | $ | - | $ | 43,088 | $ | (519 | ) | ||||||||||
Securities in a Loss
|
Securities in a Loss
|
|||||||||||||||||||||||
Position for Less Than
|
Position for More Than
|
|||||||||||||||||||||||
12 Months
|
12 Months
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
December 31, 2009
|
(In thousands)
|
|||||||||||||||||||||||
Investment securities
|
||||||||||||||||||||||||
available for sale
|
||||||||||||||||||||||||
US Government Agencies
|
$ | 19,542 | $ | (264 | ) | $ | - | $ | - | $ | 19,542 | $ | (264 | ) | ||||||||||
Mortgage-backed securities
|
11 | - | - | - | 11 | - | ||||||||||||||||||
Total
|
$ | 19,553 | $ | (264 | ) | $ | - | $ | - | $ | 19,553 | $ | (264 | ) |
Amortized
|
Estimated
|
|||||||
Cost
|
Fair Value
|
|||||||
One to five years
|
$ | 28,720,301 | $ | 28,741,354 | ||||
Five to ten years
|
3,000,000 | 2,889,292 | ||||||
More than ten years
|
22,273,822 | 21,966,528 | ||||||
Total
|
$ | 53,994,123 | $ | 53,597,174 |
2010
|
2009
|
|||||||
Commercial
|
$ | 31,706,239 | $ | 39,576,219 | ||||
Real estate - residential
|
103,385,314 | 93,656,979 | ||||||
Real estate - commercial
|
261,517,157 | 240,829,484 | ||||||
Real estate - construction
|
45,220,278 | 81,688,330 | ||||||
Consumer
|
11,413,962 | 11,608,652 | ||||||
Total loans
|
453,242,950 | 467,359,664 | ||||||
Deferred loan cost (unearned income), net
|
623,851 | 208,883 | ||||||
Allowance for loan losses
|
(7,311,712 | ) | (10,521,931 | ) | ||||
$ | 446,555,089 | $ | 457,046,616 |
2010
|
2009
|
|||||||
Beginning balance
|
$ | 9,724,791 | $ | 9,985,486 | ||||
Additions
|
7,800,850 | 8,131,630 | ||||||
Reductions
|
(6,417,358 | ) | (8,392,325 | ) | ||||
Ending balance
|
$ | 11,108,284 | $ | 9,724,791 |
2010
|
2009
|
|||||||
Commercial
|
$ | 3,401,381 | $ | 1,674,863 | ||||
Real estate - residential
|
5,728,804 | 9,486,815 | ||||||
Real estate - commercial
|
10,914,812 | 14,475,613 | ||||||
Consumer
|
278,890 | 275,879 | ||||||
Total
|
$ | 20,323,887 | $ | 25,913,170 |
|
·
|
Risk rated 1 to 4 loans are considered of sufficient quality to preclude an adverse rating. 1-4 assets generally are well protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral;
|
|
·
|
Risk rated 5 loans are defined as having potential weaknesses that deserve management’s close attention;
|
|
·
|
Risk rated 6 loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any, and;
|
|
·
|
Risk rated 7 loans have all the weaknesses inherent in substandard loans, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
|
Risk Rated
|
Risk Rated
|
Risk Rated
|
Risk Rated
|
Total
|
||||||||||||||||
1-4 | 5 | 6 | 7 |
Loans
|
||||||||||||||||
Commercial
|
$ | 25,320,711 | $ | 2,577,779 | $ | 3,283,334 | $ | 524,415 | $ | 31,706,239 | ||||||||||
Real estate residential
|
87,598,976 | 5,717,843 | 9,904,670 | 163,825 | 103,385,314 | |||||||||||||||
Real estate commercial
|
212,375,139 | 20,391,192 | 28,557,575 | 193,251 | 261,517,157 | |||||||||||||||
Real estate construction
|
17,132,832 | 3,438,546 | 24,648,900 | - | 45,220,278 | |||||||||||||||
Consumer
|
10,383,486 | 623,556 | 299191 | 107,729 | 11,413,962 | |||||||||||||||
Total loans
|
$ | 352,811,144 | $ | 32,748,916 | $ | 66,693,670 | $ | 989,220 | $ | 453,242,950 |
Recorded
|
||||||||||||||||||||||||||||
Greater
|
Investment >
|
|||||||||||||||||||||||||||
30-59 Days
|
60-89 Days
|
Than
|
Total Past
|
Total
|
90 Days and
|
|||||||||||||||||||||||
Past Due
|
Past Due
|
90 Days
|
Due
|
Current
|
Loans
|
Accruing
|
||||||||||||||||||||||
Commercial
|
$ | 190,585 | $ | 501,378 | $ | - | $ | 691,963 | $ | 31,014,276 | $ | 31,706,239 | $ | - | ||||||||||||||
Real estate - residential
|
2,672,157 | 973,269 | 213,478 | 3,858,904 | 99,526,410 | 103,385,314 | 213,478 | |||||||||||||||||||||
Real estate - construction
|
5,515,931 | 673,204 | 79,343 | 6,268,478 | 300,468,956 | 306,737,434 | 79,343 | |||||||||||||||||||||
Consumer
|
149,804 | 42,645 | 22,322 | 214,771 | 11,199,192 | 11,413,963 | 22,322 | |||||||||||||||||||||
Total
|
$ | 8,528,477 | $ | 2,190,496 | $ | 315,143 | $ | 11,034,116 | $ | 442,208,834 | $ | 453,242,950 | $ | 315,143 |
Contractual
|
Investment
|
Investment
|
||||||||||||||||||||||
Principal
|
Recorded
|
with
|
with No
|
Related
|
Average
|
|||||||||||||||||||
Description of Loans
|
Balance
|
Investment
|
Allowance
|
Allowance
|
Allowance
|
Investment
|
||||||||||||||||||
Commercial
|
$ | 3,642,820 | $ | 3,401,381 | $ | 178,320 | $ | 3,223,061 | $ | 178,320 | $ | 3,755,382 | ||||||||||||
Real estate - residential
|
6,122,804 | 5,728,804 | 59,622 | 5,669,182 | 16,500 | 6,924,937 | ||||||||||||||||||
Real estate - construction
|
15,439,512 | 10,914,812 | 1,476,524 | 9,438,288 | 110,000 | 16,182,175 | ||||||||||||||||||
Consumer
|
278,890 | 278,890 | - | 278,890 | - | 288,539 | ||||||||||||||||||
Total
|
$ | 25,484,026 | $ | 20,323,887 | $ | 1,714,466 | $ | 18,609,421 | $ | 304,820 | $ | 27,151,032 |
Loans
|
Loans
|
|||||||||||
Individually
|
Collectively
|
|||||||||||
Evaluated
|
Evaluated
|
|||||||||||
for Impairment
|
for Impairment
|
Total
|
||||||||||
Commercial
|
$ | 13,072,826 | $ | 18,633,413 | $ | 31,706,239 | ||||||
Real estate - residential
|
18,395,168 | 84,990,146 | 103,385,314 | |||||||||
Real estate - commercial
|
154,935,277 | 106,581,880 | 261,517,157 | |||||||||
Real estate - construction
|
36,466,596 | 8,753,682 | 45,220,278 | |||||||||
Consumer
|
3,948,720 | 7,465,242 | 11,413,962 | |||||||||
Total
|
$ | 226,818,587 | $ | 226,424,363 | $ | 453,242,950 |
2010
|
2009
|
2008
|
||||||||||
Beginning balance
|
$ | 10,521,931 | $ | 6,059,272 | $ | 3,469,274 | ||||||
Provision for loan losses
|
4,842,000 | 13,220,000 | 2,005,633 | |||||||||
River City Bank, acquisition
|
- | - | 2,403,551 | |||||||||
Charge-offs
|
(8,366,246 | ) | (8,767,522 | ) | (2,242,761 | ) | ||||||
Recoveries
|
314,027 | 10,181 | 423,575 | |||||||||
Ending balance
|
$ | 7,311,712 | $ | 10,521,931 | $ | 6,059,272 |
2010
|
2009
|
|||||||
Land
|
$ | 6,190,561 | $ | 6,318,761 | ||||
Buildings and improvements
|
20,256,676 | 21,556,836 | ||||||
Furniture, fixtures and equipment
|
6,779,581 | 4,404,084 | ||||||
Total premises and equipment
|
33,226,818 | 32,279,681 | ||||||
Less: Accumulated depreciation and amortization
|
(5,789,366 | ) | (4,480,597 | ) | ||||
Premises and equipment, net
|
$ | 27,437,452 | $ | 27,799,084 |
2010
|
2009
|
|||||||
Demand accounts
|
$ | 41,036,262 | $ | 38,520,878 | ||||
Interest checking accounts
|
33,291,777 | 36,441,259 | ||||||
Money market accounts
|
90,156,362 | 115,166,477 | ||||||
Savings accounts
|
10,538,023 | 8,901,299 | ||||||
Time deposits of $100,000 and over
|
140,846,619 | 119,352,471 | ||||||
Other time deposits
|
183,143,150 | 179,902,740 | ||||||
Total
|
$ | 499,012,193 | $ | 498,285,124 |
Greater than
|
||||||||||||
Less Than
|
or Equal to
|
|||||||||||
Year Ending December 31,
|
$100,000 | $100,000 |
Total
|
|||||||||
2011
|
$ | 116,270,023 | $ | 84,249,881 | $ | 200,519,904 | ||||||
2012
|
26,028,434 | 18,982,385 | 45,010,819 | |||||||||
2013
|
20,310,064 | 14,960,658 | 35,270,722 | |||||||||
2014
|
4,344,230 | 7,688,242 | 12,032,472 | |||||||||
2015
|
16,190,399 | 14,965,453 | 31,155,852 | |||||||||
$ | 183,143,150 | $ | 140,846,619 | $ | 323,989,769 |
Year Ended December 31,
|
||||||||
2010
|
2009
|
|||||||
Maximum outstanding during the year
|
||||||||
FHLB advances
|
$ | 28,750,000 | $ | 29,000,000 | ||||
Federal funds purchased
|
- | 373,000 | ||||||
Community Bankers' Bank
|
9,943,873 | 10,003,958 | ||||||
Balance outstanding at end of year
|
||||||||
FHLB advances
|
28,750,000 | 29,000,000 | ||||||
Virginia Community Bank
|
- | 2,000,000 | ||||||
Community Bankers' Bank
|
- | 9,943,873 | ||||||
Average amount outstanding during the year
|
||||||||
FHLB advances
|
28,424,658 | 26,347,945 | ||||||
Federal funds purchased
|
- | 3,726 | ||||||
Community Bankers' Bank
|
7,368,630 | 10,003,958 | ||||||
Average interest rate during the year
|
||||||||
FHLB advances
|
3.04 | % | 3.68 | % | ||||
Federal funds purchased
|
- | 0.61 | % | |||||
Community Bankers' Bank
|
6.60 | % | 4.77 | % | ||||
Average interest rate at end of year
|
||||||||
FHLB advances
|
2.45 | % | 3.57 | % | ||||
Federal funds purchased
|
- | 0.25 | % | |||||
Community Bankers' Bank
|
5.03 | % | 2.82 | % | ||||
Virginia Community Bank
|
5.24 | % | 5.00 | % |
2010
|
2009
|
2008
|
||||||||||
Deferred tax assets
|
||||||||||||
Net operating loss carryforward
|
$ | 1,558,313 | $ | 966,363 | $ | - | ||||||
Allowance for loan losses
|
2,485,982 | 3,577,456 | 1,771,460 | |||||||||
Unrealized loss on available-for-sale securities
|
134,963 | - | - | |||||||||
RCB stock replacement option DTA
|
134,200 | 134,200 | - | |||||||||
Stock compensation
|
82,089 | 56,473 | - | |||||||||
Employee benefits
|
172,322 | - | - | |||||||||
Pension expense
|
57,447 | 61,864 | 66,279 | |||||||||
Goodwill
|
117,148 | 132,768 | - | |||||||||
Total deferred tax assets
|
4,742,464 | 4,929,124 | 1,837,739 | |||||||||
Deferred tax liabilities
|
||||||||||||
Depreciation
|
597,977 | 384,183 | 467,219 | |||||||||
Unrealized gain on available-for-sale securities
|
- | 32,899 | 94,219 | |||||||||
Loss on disposal of assets
|
106,741 | - | - | |||||||||
Amortization of intangibles
|
311,055 | 250,946 | 19,613 | |||||||||
Goodwill
|
- | - | 33,857 | |||||||||
Other, net
|
8,196 | 24,780 | 16,209 | |||||||||
Total deferred tax liabilities
|
1,023,969 | 692,808 | 631,117 | |||||||||
Net deferred tax asset
|
$ | 3,718,495 | $ | 4,236,316 | $ | 1,206,622 |
2010
|
2009
|
2008
|
||||||||||
Current tax expense (benefit)
|
$ | - | $ | (906,598 | ) | $ | 532,776 | |||||
Deferred tax expense (benefit)
|
711,627 | (2,972,788 | ) | (291,679 | ) | |||||||
Provision (benefit) for income taxes
|
$ | 711,627 | $ | (3,879,386 | ) | $ | 241,097 |
2010
|
2009
|
2008
|
||||||||||
Net income (loss) before income taxes
|
$ | 2,141,936 | $ | (16,484,482 | ) | $ | 709,186 | |||||
Computed "expected" tax expense
|
$ | 728,257 | $ | (5,604,727 | ) | $ | 241,123 | |||||
Goodwill impairment
|
- | 1,763,482 | - | |||||||||
Cash surrender value of life insurance
|
(68,866 | ) | (55,684 | ) | (36,894 | ) | ||||||
Nondeductible expenses
|
14,862 | 15,495 | 19,504 | |||||||||
Stock compensation ISO expense
|
7,372 | 48,069 | - | |||||||||
Other
|
30,001 | (46,021 | ) | 17,363 | ||||||||
Provision (benefit) for income taxes
|
$ | 711,627 | $ | (3,879,386 | ) | $ | 241,097 |
Year ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Numerator
|
||||||||||||
Net income (loss) - basic and diluted
|
$ | 1,430,309 | $ | (12,605,096 | ) | $ | 468,089 | |||||
Preferred stock dividend and accretion
|
881,402 | 590,151 | - | |||||||||
Net income (loss) available to common
|
||||||||||||
shareholders
|
$ | 548,907 | $ | (13,195,247 | ) | $ | 468,089 | |||||
Denominator
|
||||||||||||
Weighted average shares outstanding - basic
|
4,237,735 | 4,230,462 | 3,013,175 | |||||||||
Dilutive effect of common stock options and
|
- | - | 19,895 | |||||||||
restricted stock awards
|
- | - | - | |||||||||
Weighted average shares outstanding - diluted
|
4,237,735 | 4,230,462 | 3,033,070 | |||||||||
Earnings (loss) per share - basic and diluted
|
||||||||||||
Earnings (loss) per share - basic
|
$ | 0.13 | $ | (3.12 | ) | $ | 0.16 | |||||
Effect of dilutive common stock options
|
- | - | - | |||||||||
Earnings (loss) per share - diluted
|
$ | 0.13 | $ | (3.12 | ) | $ | 0.16 |
2011
|
$ | 419,000 | ||
2012
|
431,000 | |||
2013
|
446,000 | |||
2014
|
460,000 | |||
2015
|
472,000 | |||
Thereafter
|
614,000 | |||
$ | 2,842,000 |
Contract
|
Contract
|
|||||||
Amount
|
Amount
|
|||||||
2010
|
2009
|
|||||||
Undisbursed credit lines
|
$ | 43,683,000 | $ | 49,621,000 | ||||
Commitments to extend or originate credit
|
12,014,000 | 19,078,000 | ||||||
Standby letter of credit
|
3,543,000 | 4,177,000 | ||||||
Total commitments to extend credit
|
$ | 59,240,000 | $ | 72,876,000 |
2010
|
2009
|
2008
|
||||||||||
Unrealized holding gains on investment securities available for sale
|
$ | 274,840 | $ | 148,827 | $ | 278,159 | ||||||
Reclassification adjustment for gains realized in income
|
(768,551 | ) | (329,183 | ) | (23,194 | ) | ||||||
Change in net unrealized gains before tax effect
|
(493,711 | ) | (180,356 | ) | 254,965 | |||||||
Tax effect
|
167,862 | 61,321 | (86,688 | ) | ||||||||
Change in net unrealized gain on investment securities available
|
||||||||||||
for sale, net of reclassification and tax effect
|
$ | (325,849 | ) | $ | (119,035 | ) | $ | 168,277 |
For Capital
|
||||||||||||||||||||||||
Actual
|
Adequacy Purposes
|
To be Well Capitalized
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
December 31, 2010
|
||||||||||||||||||||||||
Total capital (to risk-
|
||||||||||||||||||||||||
weighted assets)
|
||||||||||||||||||||||||
Consolidated
|
$ | 63,358,000 | 13.46 | % | $ | 37,653,000 | 8.00 | % | $ | 47,066,000 | 10.00 | % | ||||||||||||
Village Bank
|
56,602,000 | 12.11 | % | 37,403,000 | 8.00 | % | 46,753,000 | 10.00 | % | |||||||||||||||
Tier 1 capital (to risk-
|
||||||||||||||||||||||||
weighted assets)
|
||||||||||||||||||||||||
Consolidated
|
57,458,000 | 12.21 | % | 18,826,000 | 4.00 | % | 28,240,000 | 6.00 | % | |||||||||||||||
Village Bank
|
50,740,000 | 10.85 | % | 18,701,000 | 4.00 | % | 28,052,000 | 6.00 | % | |||||||||||||||
Leverage ratio (Tier 1
|
||||||||||||||||||||||||
capital to average
|
||||||||||||||||||||||||
assets)
|
||||||||||||||||||||||||
Consolidated
|
57,458,000 | 9.63 | % | 23,871,000 | 4.00 | % | 29,838,000 | 5.00 | % | |||||||||||||||
Village Bank
|
50,740,000 | 8.76 | % | 23,178,000 | 4.00 | % | 28,972,000 | 5.00 | % | |||||||||||||||
December 31, 2009
|
||||||||||||||||||||||||
Total capital (to risk-
|
||||||||||||||||||||||||
weighted assets)
|
||||||||||||||||||||||||
Consolidated
|
$ | 62,978,000 | 12.55 | % | $ | 40,149,000 | 8.00 | % | $ | 50,186,000 | 10.00 | % | ||||||||||||
Village Bank
|
54,796,000 | 11.33 | % | 38,705,000 | 8.00 | % | 48,382,000 | 10.00 | % | |||||||||||||||
Tier 1 capital (to risk-
|
||||||||||||||||||||||||
weighted assets)
|
||||||||||||||||||||||||
Consolidated
|
56,668,000 | 11.29 | % | 20,707,400 | 4.00 | % | 30,112,000 | 6.00 | % | |||||||||||||||
Village Bank
|
48,693,000 | 10.06 | % | 19,353,000 | 4.00 | % | 29,029,000 | 6.00 | % | |||||||||||||||
Leverage ratio (Tier 1
|
||||||||||||||||||||||||
capital to average
|
||||||||||||||||||||||||
assets)
|
||||||||||||||||||||||||
Consolidated
|
56,668,000 | 9.21 | % | 24,607,000 | 4.00 | % | 30,759,000 | 5.00 | % | |||||||||||||||
Village Bank
|
48,693,000 | 8.24 | % | 23,643,000 | 4.00 | % | 29,554,000 | 5.00 | % |
|
·
|
eliminate from its books, by charge-offs or collections, all assets or portions of assets classified “Loss” and 50 percent of those assets classified “Doubtful” in the regulatory examination reports that have not been previously collected or charged-off;
|
|
·
|
submit to the FDIC and the BFI specific plans and proposals to effect the reduction and improvement of any loans or lines of credit which are adversely classified in the regulatory examination reports or any internal or external loan review, and which aggregate $500,000 or more;
|
|
·
|
not extend, directly or indirectly, any additional credit to or for the benefit of any borrower who is obligated in any manner to the Bank on any extension of credit or portion thereof that has been charged off by the Bank or classified Loss or Doubtful in any report of examination, so long as such credit remains uncollected;
|
|
·
|
enhance the formal loan review program to provide accurate and timely identification of problem loans;
|
|
·
|
formulate a management plan that shall contain a review of each existing officer’s performance, abilities and assignments to positions within the Bank, the need, if any, for personnel outside the Bank, and an organizational chart and written job descriptions for personnel in the supervisory, administrative, and accounting functions;
|
|
·
|
review and update the written profit and strategic plan;
|
|
·
|
adopt a written plan for monitoring and reducing the Commercial Real Estate (CRE) concentration;
|
|
·
|
maintain the Allowance for Loan and Lease Losses at a level that is appropriate to cover estimated losses on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan portfolio;
|
|
·
|
limit asset growth to no more than five (5) percent per annum;
|
|
·
|
incorporate within the Bank’s Contingency Funding Plan certain recommendations contained in the regulatory examination reports;
|
|
·
|
maintain a Tier 1 Leverage Capital Ratio of not less than eight (8) percent and a Total Risk-Based Capital Ratio of not less than 11.5 percent;
|
|
·
|
take steps necessary, consistent with sound banking practices, to correct all violations of law and regulations cited in the regulatory examination reports;
|
|
·
|
not pay any cash dividends without the prior written consent of the FDIC and BFI; and
|
|
·
|
furnish written quarterly progress reports to the FDIC and BFI detailing steps taken to comply with the various provisions of the Memorandum of Understanding.
|
|
·
|
declare or pay any dividends on its common stock or preferred stock;
|
|
·
|
take dividends or any other form of payment representing a reduction in capital from the Bank;
|
|
·
|
make any payments on trust preferred securities;
|
|
·
|
incur, increase, repay, refinance or guarantee any debt; or
|
|
·
|
purchase or redeem any shares of its stock.
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||
2010
|
2009
|
|||||||||||||||||||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||||||||||
Exercise
|
Fair Value
|
Intrinsic
|
Exercise
|
Fair Value
|
Intrinsic
|
|||||||||||||||||||||||||||
Options
|
Price
|
Per Share
|
Value
|
Options
|
Price
|
Per Share
|
Value
|
|||||||||||||||||||||||||
Options outstanding,
|
||||||||||||||||||||||||||||||||
beginning of period
|
336,005 | $ | 9.58 | $ | 4.75 | 333,955 | $ | 9.63 | $ | 4.77 | ||||||||||||||||||||||
Granted
|
- | - | - | 3,000 | 4.45 | 2.86 | ||||||||||||||||||||||||||
Forfeited
|
(25,800 | ) | 10.77 | 5.02 | (950 | ) | 10.78 | 5.90 | ||||||||||||||||||||||||
Exercised
|
- | - | - | - | - | - | ||||||||||||||||||||||||||
Options outstanding,
|
||||||||||||||||||||||||||||||||
end of period
|
310,205 | $ | 9.48 | $ | 4.73 | $ | - | 336,005 | $ | 9.58 | $ | 4.75 | $ | - | ||||||||||||||||||
Options exercisable,
|
||||||||||||||||||||||||||||||||
end of period
|
291,350 | 300,900 | ||||||||||||||||||||||||||||||
Year Ended December 31,
|
||||||||||||||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||||||
Weighted
|
||||||||||||||||||||||||||||||||
Average
|
||||||||||||||||||||||||||||||||
Exercise
|
Fair Value
|
Intrinsic
|
||||||||||||||||||||||||||||||
Options
|
Price
|
Per Share
|
Value
|
|||||||||||||||||||||||||||||
Options outstanding,
|
||||||||||||||||||||||||||||||||
beginning of period
|
247,410 | $ | 10.06 | $ | 4.69 | |||||||||||||||||||||||||||
Granted
|
150,680 | 8.49 | 4.86 | |||||||||||||||||||||||||||||
Forfeited
|
(4,250 | ) | 12.23 | 5.14 | ||||||||||||||||||||||||||||
Exercised
|
(59,885 | ) | 8.36 | 4.64 | 20,923 | |||||||||||||||||||||||||||
Options outstanding,
|
||||||||||||||||||||||||||||||||
end of period
|
333,955 | $ | 9.36 | $ | 4.77 | $ | - | |||||||||||||||||||||||||
Options exercisable,
|
Year Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Risk-free interest rate
|
3.46 | % | 2.88 | % | ||||
Dividend yield
|
0 | % | 0 | % | ||||
Expected weighted average term
|
7 years
|
7 years
|
||||||
Volatility
|
50 | % | 50 | % |
Outstanding
|
Exercisable
|
|||||||||||||||||||||
Weighted
|
||||||||||||||||||||||
Average
|
||||||||||||||||||||||
Remaining
|
Weighted
|
Weighted
|
||||||||||||||||||||
Years of
|
Average
|
Average
|
||||||||||||||||||||
Range of
|
Number of
|
Contractual
|
Exercise
|
Number of
|
Exercise
|
|||||||||||||||||
Exercise Prices
|
Options
|
Life
|
Price
|
Options
|
Price
|
|||||||||||||||||
$7.68 - $9.24 | 135,030 | 3.9 | $ | 7.14 | 119,175 | $ | 7.24 | |||||||||||||||
$11.20 - $13.96 | 175,175 | 5.2 | 11.50 | 175,175 | 11.50 | |||||||||||||||||
310,205 | 4.6 | 9.60 | 294,350 | 9.77 |
|
·
|
Level 1 Inputs
— Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
|
|
·
|
Level 2 Inputs
— Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
|
·
|
Level 3 Inputs
- Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
|
Impaired
|
Real Estate
|
|||||||||||
Loans
|
Owned
|
Total Assets
|
||||||||||
(In thousands)
|
||||||||||||
Balance at December 31, 2008
|
$ | 8,528 | $ | 2,932 | $ | 11,460 | ||||||
Total realized and unrealized gains (losses)
|
||||||||||||
Included in earnings
|
- | 46 | 46 | |||||||||
Included in other comprehensive income
|
- | - | - | |||||||||
Net transfers in and/or out of Level 3
|
1,601 | 8,301 | 9,902 | |||||||||
Balance at December 31, 2009
|
10,129 | 11,279 | 21,408 | |||||||||
Total realized and unrealized gains (losses)
|
||||||||||||
Included in earnings
|
- | (88 | ) | (88 | ) | |||||||
Included in other comprehensive income
|
- | - | - | |||||||||
Net transfers in and/or out of Level 3
|
(2,185 | ) | 837 | (1,348 | ) | |||||||
Balance at December 31, 2010
|
$ | 7,944 | $ | 12,028 | $ | 19,972 |
December 31,
|
December 31,
|
|||||||||||||||
2010
|
2009
|
|||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
Value
|
Fair Value
|
Value
|
Fair Value
|
|||||||||||||
Financial assets
|
||||||||||||||||
Cash and cash equivalents
|
$ | 12,012,311 | $ | 12,012,311 | $ | 20,661,820 | $ | 20,661,820 | ||||||||
Investment securities available for sale
|
53,597,174 | 53,597,174 | 54,857,211 | 54,857,211 | ||||||||||||
Loans held for sale
|
19,871,787 | 19,871,787 | 7,506,252 | 7,506,252 | ||||||||||||
Loans
|
446,555,089 | 451,155,101 | 457,046,616 | 466,271,730 | ||||||||||||
Accrued interest receivable
|
2,347,211 | 2,347,211 | 3,366,718 | 3,366,718 | ||||||||||||
Financial liabilities
|
||||||||||||||||
Deposits
|
499,012,193 | 501,222,836 | 498,285,124 | 500,979,984 | ||||||||||||
FHLB borrowings
|
28,750,000 | 28,883,669 | 29,000,000 | 29,011,904 | ||||||||||||
Trust preferred securities
|
8,764,000 | 8,764,000 | 8,764,000 | 8,764,000 | ||||||||||||
Other borrowings
|
4,165,430 | 4,165,430 | 14,829,521 | 14,783,055 | ||||||||||||
Accrued interest payable
|
404,801 | 404,801 | 501,069 | 501,069 |
Village Bank and Trust Financial Corp.
|
||||||||
(Parent Corporation Only)
|
||||||||
Balance Sheets
|
||||||||
December 31, 2010 and 2009
|
||||||||
2010
|
2009
|
|||||||
Assets
|
||||||||
Cash and due from banks
|
$ | 3,725,925 | $ | 2,835,334 | ||||
Investment in subsidiaries
|
50,365,911 | 48,669,651 | ||||||
Investment in special purpose subsidiary
|
264,000 | 264,000 | ||||||
Premises and equipment, net
|
1,799,798 | 14,564,323 | ||||||
Prepaid expenses and other assets
|
4,367,503 | 6,215,109 | ||||||
$ | 60,523,137 | $ | 72,548,417 | |||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Long-tern debt - trust preferred securities
|
$ | 8,764,000 | $ | 8,764,000 | ||||
Payable to subsidiary
|
3,093,720 | 3,203,546 | ||||||
Other borrowings
|
- | 11,943,873 | ||||||
Other liabilities
|
345,223 | 788,907 | ||||||
Total liabilities
|
12,202,943 | 24,700,326 | ||||||
Stockholders' equity
|
||||||||
Preferred stock
|
58,952 | 58,952 | ||||||
Common stock
|
16,953,664 | 16,922,512 | ||||||
Additional paid-in capital
|
40,633,581 | 40,568,771 | ||||||
Retained earnings (deficit)
|
(9,192,552 | ) | (9,741,459 | ) | ||||
Warrant surplus
|
732,479 | 732,479 | ||||||
Discount on preferred stock
|
(492,456 | ) | (636,959 | ) | ||||
Accumulated other comprehensive loss
|
(373,474 | ) | (56,205 | ) | ||||
Total stockholders' equity
|
48,320,194 | 47,848,091 | ||||||
$ | 60,523,137 | $ | 72,548,417 |
Village Bank and Trust Financial Corp.
|
||||||||||||
(Parent Corporation Only)
|
||||||||||||
Statements of Operations
|
||||||||||||
Years Ended December 31, 2010, 2009 and 2008
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Noninterest income
|
||||||||||||
Rental income
|
$ | 871,600 | $ | 881,496 | $ | 265,515 | ||||||
Other income
|
28,426 | - | - | |||||||||
Total noninterest income
|
900,026 | 881,496 | 265,515 | |||||||||
Expenses
|
||||||||||||
Interest
|
910,009 | 978,634 | 708,020 | |||||||||
Occupancy
|
565,463 | 636,053 | 232,612 | |||||||||
Equipment
|
25,119 | 19,767 | 7,140 | |||||||||
Advertising and marketing
|
1,078 | 717 | 4,468 | |||||||||
Supplies
|
48,825 | 51,426 | 52,951 | |||||||||
Legal
|
4,795 | 22,126 | 897 | |||||||||
Audit and accounting
|
- | 6,719 | - | |||||||||
Other outside services
|
66,820 | 39,676 | 17,050 | |||||||||
Insurance
|
12,431 | 15,195 | 6,065 | |||||||||
Telephone
|
- | - | 44,942 | |||||||||
Other
|
28,958 | 52,680 | 21,788 | |||||||||
Total expenses
|
1,663,498 | 1,822,993 | 1,095,933 | |||||||||
Net loss before undistributed
|
||||||||||||
equity in subsidiary
|
(763,472 | ) | (941,497 | ) | (830,418 | ) | ||||||
Undistributed equity in subsidiary
|
1,917,569 | (12,782,126 | ) | 1,016,165 | ||||||||
Net income before income taxes
|
1,154,097 | (13,723,623 | ) | 185,747 | ||||||||
Income tax benefit
|
(276,212 | ) | (1,118,534 | ) | (282,342 | ) | ||||||
$ | 1,430,309 | $ | (12,605,089 | ) | $ | 468,089 | ||||||
Village Bank and Trust Financial Corp.
|
||||||||||||
(Parent Corporation Only)
|
||||||||||||
Statements of Cash Flows
|
||||||||||||
Years Ended December 31, 2010, 2009 and 2008
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Cash Flows from Operating Activities
|
||||||||||||
Net income
|
$ | 1,430,309 | $ | (12,605,096 | ) | $ | 468,089 | |||||
Adjustments to reconcile net income to net cash
|
||||||||||||
provided by operating activities
|
||||||||||||
Depreciation and amortization
|
14,525 | 392,150 | 9,012 | |||||||||
Undistributed earnings of subsidiary
|
(1,917,569 | ) | 12,782,126 | (1,016,165 | ) | |||||||
(Increase) decrease in other assets
|
1,847,606 | (4,951,161 | ) | 293,101 | ||||||||
Increase (decrease) in other liabilities
|
(553,508 | ) | 2,947,919 | 1,335,642 | ||||||||
Net cash provided by operations
|
821,363 | (1,434,062 | ) | 1,089,679 | ||||||||
Cash Flows from Investing Activities
|
||||||||||||
Payments for investments in and advances to subsidiaries
|
- | (10,000,000 | ) | (20,108,076 | ) | |||||||
Proceeds from sale of premises and equipment
|
12,750,000 | - | - | |||||||||
Purchase of premises and equipment
|
- | (367,581 | ) | (7,913,499 | ) | |||||||
Net cash used in operations
|
12,750,000 | (10,367,581 | ) | (28,021,575 | ) | |||||||
Cash Flows from Financing Activities
|
||||||||||||
Proceeds from issuance of preferred stock
|
- | 14,738,000 | - | |||||||||
Proceeds from issuance of common stock
|
- | - | 18,068,960 | |||||||||
Net increase (decrease) in other borrowings
|
(11,943,873 | ) | (327,998 | ) | 9,435,781 | |||||||
Dividends on preferred stock
|
(736,899 | ) | (494,632 | ) | ||||||||
Net cash provided by operations
|
(12,680,772 | ) | 13,915,370 | 27,504,741 | ||||||||
Net increase in cash
|
890,591 | 2,113,727 | 572,845 | |||||||||
Cash, beginning of period
|
2,835,334 | 721,617 | 148,772 | |||||||||
Cash, end of period
|
$ | 3,725,925 | $ | 2,835,344 | $ | 721,617 |
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|||||||||||||
2010
|
||||||||||||||||
Interest income
|
$ | 7,460,596 | $ | 7,516,359 | $ | 7,660,280 | $ | 7,544,603 | ||||||||
Interest expense
|
3,044,787 | 2,814,763 | 2,619,204 | 2,406,659 | ||||||||||||
Net interest income before
|
||||||||||||||||
provision for loan losses
|
4,415,809 | 4,701,596 | 5,041,076 | 5,137,944 | ||||||||||||
Provision for loan losses
|
500,000 | 1,240,000 | 1,410,000 | 1,692,000 | ||||||||||||
Gain on sale of loans
|
1,204,363 | 1,633,861 | 1,922,868 | 2,242,781 | ||||||||||||
Fees and other noninterest
|
||||||||||||||||
income
|
1,005,674 | 1,352,864 | 739,607 | 888,649 | ||||||||||||
Noninterest expenses
|
5,386,696 | 5,751,684 | 5,787,322 | 6,377,454 | ||||||||||||
Income tax (benefit)
|
251,311 | 236,856 | 172,117 | 51,343 | ||||||||||||
Net income
|
487,839 | 459,781 | 334,112 | 148,577 | ||||||||||||
Earnings per share
|
||||||||||||||||
Basic
|
$ | 0.06 | $ | 0.06 | $ | 0.03 | $ | (0.02 | ) | |||||||
Diluted
|
$ | 0.06 | $ | 0.06 | $ | 0.03 | $ | (0.02 | ) | |||||||
2009
|
||||||||||||||||
Interest income
|
$ | 8,353,428 | $ | 8,427,816 | $ | 8,334,206 | $ | 8,080,523 | ||||||||
Interest expense
|
4,446,762 | 4,259,921 | 4,009,344 | 3,691,652 | ||||||||||||
Net interest income before
|
||||||||||||||||
provision for loan losses
|
3,906,666 | 4,167,895 | 4,324,862 | 4,388,871 | ||||||||||||
Provision for loan losses
|
1,100,000 | 3,100,000 | 6,000,000 | 3,020,000 | ||||||||||||
Gain on sale of loans
|
943,116 | 1,509,971 | 1,842,129 | 1,532,790 | ||||||||||||
Fees and other noninterest
|
||||||||||||||||
income
|
513,270 | 525,773 | 552,101 | 865,950 | ||||||||||||
Noninterest expenses
|
4,376,899 | 5,803,529 | 4,916,631 | 13,240,817 | ||||||||||||
Income tax (benefit)
|
(38,708 | ) | (917,962 | ) | (1,427,260 | ) | (1,495,456 | ) | ||||||||
Net income
|
(75,139 | ) | (1,781,928 | ) | (2,770,279 | ) | (7,977,750 | ) | ||||||||
Earnings per share
|
||||||||||||||||
Basic
|
$ | (0.02 | ) | $ | (0.45 | ) | $ | (0.70 | ) | $ | (1.95 | ) | ||||
Diluted
|
$ | (0.02 | ) | $ | (0.45 | ) | $ | (0.70 | ) | $ | (1.95 | ) |
/s/ Thomas W. Winfree
|
|
President and Chief Executive Officer
|
|
/s/ C. Harril Whitehurst, Jr.
|
|
Senior Vice President and Chief Financial Officer
|
|
March 18, 2011
|
|
Date
|
Exhibit
|
|
Number
|
Description
|
3.1
|
Articles of Incorporation of Village Bank and Trust Financial Corp. restated in electronic format only as of May 18, 2005.
|
3.2
|
Articles of Amendment to the Company’s Articles of Incorporation, designating the terms of the Fixed Rate Cumulative Perpetual Preferred Stock, Series A, incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2009
|
3.3
|
Bylaws of Village Bank and Trust Financial Corp., incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 10, 2007.
|
4.1
|
Form of Certificate for Fixed Rate Cumulative Perpetual Preferred Stock, Series A, incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2009.
|
4.2
|
Warrant to Purchase Shares of Common Stock, dated May 1, 2009, incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2009.
|
10.1
|
Incentive Plan, as amended and restated May 23, 2006, incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 10-QSB for the
|
period ended June 30, 2006.*
|
|
VILLAGE BANK AND TRUST FINANCIAL CORP.
|
|||
Date: March 18, 2011
|
By:
|
/s/ Thomas W. Winfree
|
|
Thomas W. Winfree
|
|||
President and Chief Executive Officer
|
Signature
|
Title
|
Date
|
/s/ Thomas W. Winfree
Thomas W. Winfree
|
President and Chief Executive
Officer and Director
(Principal Executive Officer)
|
March 18, 2011
|
/s/ C. Harril Whitehurst, Jr.
C. Harril Whitehurst, Jr.
|
Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
March 18, 2011
|
/s/ R.T. Avery, III
R.T. Avery, III
|
Director
|
March 18, 2011
|
/s/ Donald J. Balzer, Jr.
Donald J. Balzer, Jr.
|
Director and
Vice Chairman of the Board
|
March 18, 2011
|
/s/ Craig D. Bell
Craig D. Bell
|
Director and
Chairman of the Board
|
March 18, 2011
|
/s/ William B. Chandler
William B. Chandler
|
Director
|
March 18, 2011
|
/s/ R. Calvert Esleeck, Jr.
R. Calvert Esleeck, Jr.
|
Director
|
March 18, 2011
|
Signature
|
Title
|
Date
|
/s/ George R. Whittemore
George R. Whittemore
|
Director
|
March 18, 2011
|
/s/ Michael L Toalson
Michael L. Toalson
|
Director
|
March 18, 2011
|
/s/ O. Woodland Hogg, Jr.
O. Woodland Hogg, Jr.
|
Director
|
March 18, 2011
|
/s/ Michael A. Katzen
Michael A. Katzen
|
Director
|
March 18, 2011
|
/s/ Charles E. Walton
Charles E. Walton
|
Director
|
March 18, 2011
|
/s/ John T. Wash, Sr.
John T. Wash, Sr.
|
Director
|
March 18, 2011
|
Exhibit
|
|
Number
|
Description
|
3.1
|
Articles of Incorporation of Village Bank and Trust Financial Corp. restated in electronic format only as of May 18, 2005.
|
3.2
|
Articles of Amendment to the Company’s Articles of Incorporation, designating the terms of the Fixed Rate Cumulative Perpetual Preferred Stock, Series A, incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2009
|
3.3
|
Bylaws of Village Bank and Trust Financial Corp., incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 10, 2007.
|
4.1
|
Form of Certificate for Fixed Rate Cumulative Perpetual Preferred Stock, Series A, incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2009.
|
4.2
|
Warrant to Purchase Shares of Common Stock, dated May 1, 2009, incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2009.
|
10.1
|
Incentive Plan, as amended and restated May 23, 2006, incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 10-QSB for the period ended June 30, 2006.*
|
10.2
|
Executive Employment Agreement, effective as of April 1, 2001, between Thomas W. Winfree and Southern Community Bank & Trust, incorporated by reference to Exhibit 10.4 of the Annual Report on Form 10-KSB for the year ended December 31, 2004.*
|
10.3
|
Form of Incentive Stock Option Agreement, incorporated by reference to Exhibit 10.5 of the Annual Report on Form 10-KSB for the year ended December 31, 2004.*
|
10.4
|
Form of Non-Employee Director Non-Qualified Stock Option Agreement, incorporated by reference to Exhibit 10.6 of the Annual Report on Form 10-KSB for the year ended December 31, 2004. *
|
10.5
|
Letter Agreement, dated as of May 1, 2009, by and between Village Bank and Trust Financial Corp. and the United States Department of the Treasury, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2009.
|
10.6
|
Side Letter Agreement, dated as of May 1, 2009, by and between Village Bank and Trust Financial Crop. and the United States Department of the Treasury, incorporated by reference to Exhibit 10.2 of the Current Report of Form 8-K filed with the Securities and Exchange Commission on May 6, 2009.
|
10.7
|
Form of Senior Executive Officer Waiver, incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2009.*
|
Page
|
|||
INTRODUCTION
|
1
|
||
ARTICLE I DEFINITIONS
|
2
|
||
1.01
|
Account
|
2
|
|
1.02
|
Administrator
|
2
|
|
1.03
|
Affiliate
|
2
|
|
1.04
|
Bank
|
2
|
|
1.05
|
Beneficiary
|
2
|
|
1.06
|
Benefit Commencement Date
|
2
|
|
1.07
|
Board
|
2
|
|
1.08
|
Code
|
2
|
|
1.09
|
Compensation
|
3
|
|
1.1
0
|
Death Benefit
|
3
|
|
1.11
|
Deferral Amount
|
3
|
|
1.12
|
Deferral Contributions
|
3
|
|
1.13
|
Deferral Election
|
3
|
|
1.14
|
Deferred Account
|
3
|
|
1.15
|
Deferred Benefit
|
3
|
|
1.16
|
Director
|
3
|
|
1.17
|
Effective Date
|
4
|
|
1.18
|
Eligible Director
|
4
|
|
1.19
|
Participant
|
4
|
|
1.2
0
|
Plan
|
4
|
|
1.21
|
Plan Year
|
4
|
|
1.22
|
Rate of Return
|
4
|
|
1.23
|
Retirement
|
4
|
|
ARTICLE II ELIGIBILITY AND PARTICIPATION
|
5
|
||
2.01
|
Eligibility
|
5
|
|
2.02
|
Notice and Election Regarding Active Participation
|
5
|
|
2.03
|
Commencement of Active Participation
|
5
|
|
2.04
|
Length of Participation
|
5
|
|
ARTICLE III DETERMINATION OF DEFERRAL
|
6
|
||
3.01
|
Deferred Benefit
|
6
|
|
3.02
|
Deferral Election
|
6
|
|
3.03
|
Crediting of Interest to Deferred Account
|
6
|
|
3.04
|
Equitable Adjustment in Case of Error or Omission
|
7
|
|
ARTICLE IV ACCOUNTS AND INVESTMENTS
|
8
|
||
4.01
|
Accounts
|
8
|
|
4.02
|
Hypothetical Nature of Accounts
|
8
|
|
ARTICLE V VESTING
|
9
|
(i)
|
To execute such applications and take such physical examinations and to supply truthfully and completely such information as may be requested by any health questionnaire provided by the Administrator;
|
(ii)
|
To be bound by all terms and conditions of the Plan and all amendments thereto.
|
(i)
|
The maximum Deferral Contribution of Retainer with respect to any Participant for a Plan Year shall be one hundred percent (100%) of his Retainer for such Plan Year and such election shall be made in ten percent (10%) increments or in a flat dollar amount in fifty dollar ($50) increments.
|
(ii)
|
The maximum Deferral Contribution of Additional Fees with respect to any Participant for a Plan Year shall be one hundred percent (100%) of his Additional Fees for such Plan Year and such election shall be made in ten percent (10%) increments or in a flat dollar amount in fifty dollar ($50) increments.
|
|
(iii)
|
A Participant’s Deferral Election shall remain in effect from year to year unless revised or amended. A Participant may revoke or amend his Deferral Election effective as of the beginning of a Plan Year in accordance with the procedures described in Plan section 2.02(a).
|
(iv)
|
Each Deferral Election shall be made on a form provided by the Administrator and shall specify the Deferral Amount and source of deferrals and such additional information as the Administrator may require.
|
Page
|
|||
ARTICLE I DEFINITIONS
|
1
|
||
1.01
|
Administrator
|
1
|
|
1.02
|
Bank
|
1
|
|
1.03
|
Benefit Commencement Date
|
1
|
|
1.04
|
Board
|
1
|
|
1.05
|
Cause
|
1
|
|
1.06
|
Change in Control
|
1
|
|
1.07
|
Code
|
2
|
|
1.08
|
Committee
|
2
|
|
1.09
|
Disabled or Disability
|
2
|
|
1.10
|
Effective Date
|
2
|
|
1.11
|
Eligible Employee
|
2
|
|
1.12
|
Employer
|
2
|
|
1.13
|
ERISA
|
3
|
|
1.14
|
Named Fiduciary
|
3
|
|
1.15
|
Net Present Value
|
3
|
|
1.16
|
Participant
|
3
|
|
1.17
|
Participating Employer
|
3
|
|
1.18
|
Period of Service or Service
|
3
|
|
1.19
|
Plan
|
3
|
|
1.20
|
Plan Year
|
3
|
|
1.21
|
Regulations or Treasury Regulations
|
4
|
|
1.22
|
Retirement
|
4
|
|
1.23
|
Supplemental Benefit
|
4
|
|
1.24
|
Termination of Employment
|
4
|
|
1.25
|
Years of Service
|
4
|
|
ARTICLE II GENERAL
|
5
|
||
2.01
|
Effective Date
|
5
|
|
2.02
|
Purpose
|
5
|
|
ARTICLE III ELIGIBILITY AND PARTICIPATION
|
6
|
||
3.01
|
Eligibility
|
6
|
|
3.02
|
Participation
|
6
|
|
4.01
|
Supplemental Benefit
|
7
|
|
4.02
|
Termination of Employment
|
7
|
|
4.03
|
Accelerated Vesting
|
7
|
|
4.04
|
Payment of Supplemental Benefit
|
7
|
|
4.05
|
General Limitations
|
8
|
|
ARTICLE V DEATH BENEFITS
|
9
|
||
5.01
|
Pre-Retirement Survivor Benefit
|
9
|
|
5.02
|
Post-Retirement Survivor Benefit
|
9
|
|
5.03
|
Post-Termination Survivor Benefit
|
9
|
|
5.04
|
Beneficiary Designation
|
9
|
|
5.05
|
Suicide
|
10
|
ARTICLE VI ADMINISTRATION
|
11
|
||
6.01
|
Committee as Administrator
|
11
|
|
6.02
|
Appointment of Advisors
|
11
|
|
6.03
|
Administrative Rules
|
11
|
|
6.04
|
Duties
|
11
|
|
6.05
|
Fees
|
12
|
|
ARTICLE VII CLAIMS PROCEDURE
|
13
|
||
7.01
|
Claims Procedure
|
13
|
|
7.02
|
Claims Review Procedure
|
13
|
|
ARTICLE VIII AMENDMENT AND TERMINATION
|
15
|
||
8.01
|
Amendment
|
15
|
|
8.02
|
Termination
|
15
|
|
ARTICLE IX MISCELLANEOUS PROVISIONS
|
16
|
||
9.01
|
Assignment and Alienation
|
16
|
|
9.02
|
Incapacity
|
16
|
|
9.03
|
Successors and Assigns
|
16
|
|
9.04
|
Limitation of Rights
|
16
|
|
9.05
|
No Funding of the Plan
|
17
|
|
9.06
|
Severability
|
17
|
|
9.07
|
Notification of Addresses
|
17
|
|
9.08
|
Receipt and Release for Payments
|
17
|
|
9.09
|
Headings
|
17
|
|
9.10
|
Indemnification
|
18
|
|
9.11
|
Tax Withholding
|
18
|
|
9.12
|
Responsibility for Legal Effect
|
18
|
|
9.13
|
Successors, Acquisitions, Mergers, Consolidations
|
18
|
|
9.14
|
Governing Law
|
18
|
|
9.15
|
Bonding
|
18
|
|
9.16
|
Usage
|
18
|
|
EXHIBIT A DESIGNATION OF BENEFICIARY
|
20
|
||
SCHEDULE A EMPLOYEES APPROVED FOR PLAN PARTICIPATION
|
21
|
||
SCHEDULE B SCHEDULE OF BENEFITS
|
22
|
||
SCHEDULE C PARTICIPATING EMPLOYERS
|
23
|
Eligible Employee
|
Functional Title
|
Date of Participation
|
||
Thomas W. Winfree
|
President and Chief Executive Officer
|
October 20, 2003
|
||
Jack M. Robeson
|
Senior Vice President, Lending
|
January 1, 2005
|
||
Raymond E. Sanders
|
Senior Vice President & COO
|
January 1, 2005
|
||
C. Harril Whitehurst, Jr.
|
Senior Vice President & CFO
|
January 1, 2005
|
||
Dennis J. Falk
|
Senior Vice President, Lending
|
July 1, 2006
|
Eligible Employee
|
Date of Plan Participation
|
Fully Vested Benefit Amount, Payment Period and Benefit Commencement Date*
|
Service Requirement
|
Amount of Annual Supplemental Benefit Earned/
Year of Service
|
Thomas W. Winfree
|
October 20, 2003
|
$4,166.67/month for 180 months ($50,000/yr for 15 years), beginning 10 years from the Date of Plan Participation
|
6 years
|
$8,333.33
|
Jack M. Robeson
|
January 1, 2005
|
$2,083.33/month for 180 months ($25,000/yr for 15 years)
|
10 yrs
|
$2,500.00
|
Raymond E. Sanders
|
January 1, 2005
|
$2,083.33/month for 180 months ($25,000/yr for 15 years)
|
10 years
|
$2,500.00
|
C. Harril Whitehurst, Jr.
|
January 1, 2005
|
$2,083.33/month for 180 months ($25,000/yr for 15 years)
|
10 years
|
$2,500.00
|
Dennis J. Falk
|
July 1, 2006
|
$2,083.33/month for 180 months ($25,000/yr for 15 years)
|
10 years
|
$2,500.00
|
Subsidiaries of Village Bank and Trust Financial Corp.
|
||
Name of Subsidiary
|
State of Organization
|
|
Village Bank
|
Virginia
|
|
Village Bank Mortgage Corporation
|
Virginia
|
|
(wholly-owned subsidiary of Village Bank)
|
||
Village Insurance Agency, Inc.
|
Virginia
|
|
(wholly-owned subsidiary of Village Bank)
|
||
Village Financial Services Corporation
|
Virginia
|
|
(wholly-owned subsidiary of Village Bank)
|
||
Southern Community Financial Capital Trust I
|
Virginia
|
|
Village Financial Statutory Trust II
|
Virginia
|
1.
|
I have reviewed this Annual Report on Form 10-K of Village Bank and Trust Financial Corp. for the year ended December 31, 2010;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-a5(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 18, 2011
|
By:
|
/s/ Thomas W. Winfree
|
||
|
Thomas W. Winfree
|
|||
|
President and
|
|||
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Village Bank and Trust Financial Corp. for the year ended December 31, 2010;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-a5(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 18, 2011
|
By:
|
/s/ C. Harril Whitehurst, Jr.
|
||
C. Harril Whitehurst, Jr.
|
||||
Senior Vice President and
|
||||
Chief Financial Officer
|
/s/ Thomas W. Winfree
|
March 18, 2011
|
|||
Thomas W. Winfree
|
Date
|
|||
Chief Executive Officer
|
||||
/s/ C. Harril Whitehurst, Jr.
|
March 18, 2011
|
|||
C. Harril Whitehurst, Jr.
|
Date
|
|||
Chief Financial Officer
|