ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
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Tennessee
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58-2461486
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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531 Broad Street, Chattanooga, TN
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37402
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(Address of principal executive offices)
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(Zip Code)
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(423) 266-2000
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(Registrant’s telephone number, including area code)
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Securities Registered Pursuant to Section 12(b) of the Act:
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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, $0.01 par value
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The NASDAQ Stock Market LLC
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Securities Registered Pursuant to Section 12(g) of the Act:
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None
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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ý
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Page
No.
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PART I.
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Item 1.
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Business
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Item 1A.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Item 4.
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PART II.
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Item 7A.
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Item 8.
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Financial Statements
and Supplementary Data
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 9A.
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Item 9B.
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Other Information
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PART III.
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accountant Fees and Services
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PART IV.
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Item 15.
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Exhibits
, Financial Statement Schedules
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•
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deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses;
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•
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changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments;
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•
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changes in business policies or practices as a result of the changes in management;
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changes in political and economic conditions, including the political and economic effects of the current economic downturn and other major developments, including the ongoing war on terrorism, continued tensions in the Middle East, and the ongoing economic challenges facing the European Union;
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changes in financial market conditions, either internationally, nationally or locally in areas in which First Security conducts its operations, including, without limitation, reduced rates of business formation and growth, commercial and residential real estate development, and real estate prices;
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•
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First Security’s ability to comply with any requirements imposed on it or FSGBank by their respective regulators, and the potential negative consequences that result;
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•
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the failure of assumptions underlying the establishment of reserves for possible loan losses;
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changes in accounting principles, policies, and guidelines applicable to bank holding companies and banking;
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the impacts of renewed regulatory scrutiny on consumer protection and compliance led by the newly created Consumer Finance Protection Bureau;
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changes in capital standards and asset risk-weighting included in proposed Federal Reserve rules to implement the so-called “Basel III” accords;
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fluctuations in markets for equity, fixed-income, commercial paper and other securities, which could affect availability, market liquidity levels, and pricing;
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governmental monetary and fiscal policies including the undetermined effects of the Federal Reserves "Quantitative Easing" program, as well as legislative and regulatory changes, including, but not limited to, implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
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•
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First Security’s participation or lack of participation in governmental programs implemented under the Emergency Economic Stabilization Act (the “EESA”) and the American Recovery and Reinvestment Act (the “ARRA”), including, without limitation, the Capital Purchase Program (the “CPP”) administered under the Troubled Asset Relief Program (“TARP”), and the impact of such programs and related regulations on First Security and on international, national, and local economic and financial markets and conditions;
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First Security’s lack of participation in a “stress test” under the Federal Reserve’s Supervisory Capital Assessment Program; the diagnostic and stress testing we conducted differs from that administered under the Supervisory Capital Assessment Program, and the results of our test may be inaccurate;
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•
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the impact of the EESA and the ARRA and related rules and regulations on the business operations and competitiveness of First Security and other participating American financial institutions, including the impact of the executive compensation limits of these acts, which may impact the ability of First Security to retain and recruit executives and other personnel necessary for their businesses and competitiveness;
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•
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the risk that First Security may be required to contribute additional capital to FSGBank in the future to enable it to meet its regulatory capital requirements or otherwise;
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•
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the risks of changes in interest rates on the level and composition of deposits, loan demand and the values of loan collateral, securities and interest sensitive assets and liabilities;
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the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other
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•
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the effect of any mergers, acquisitions or other transactions, to which we or our subsidiary may from time to time be a party, including, without limitation, our ability to successfully integrate any businesses that we acquire.
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ITEM 1.
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Business
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Market
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Number of
Branches
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Our Market
Deposits
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Total
Market
Deposits
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Ranking
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Market Share
Percentage
(%)
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(dollar amounts in millions)
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Tennessee
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Bradley County
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2
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$
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31
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$
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1,404
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8
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2.2
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%
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Hamilton County
1
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8
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359
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6,711
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5
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5.3
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%
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Jackson County
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1
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59
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117
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1
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50.4
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%
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Jefferson County
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2
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108
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555
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2
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19.5
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%
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Knox County
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3
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67
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10,081
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13
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0.7
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%
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Loudon County
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1
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26
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736
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8
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3.5
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%
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McMinn County
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1
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29
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873
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8
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3.3
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%
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Monroe County
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2
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66
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642
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5
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10.3
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%
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Putnam County
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3
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81
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1,489
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7
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5.4
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%
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Union County
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1
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49
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131
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2
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37.4
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%
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Georgia
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Catoosa County
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1
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8
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786
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9
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1.0
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%
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Whitfield County
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5
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150
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1,721
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4
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8.7
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%
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FSGBank
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30
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$
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1,033
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$
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25,246
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6
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4.1
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%
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1
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Our brokered deposits, totaling $193.2 million at June 30, 2012, are included in the totals for Hamilton County.
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Amount
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Percentage of
Portfolio
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(in thousands, except percentages)
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Loans secured by real estate—
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Residential 1-4 family
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$
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188,191
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34.8
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%
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Commercial
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221,655
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41.0
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%
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Construction
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33,407
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6.2
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%
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Multi-family and farmland
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17,051
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3.2
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%
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460,304
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85.2
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%
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Commercial loans
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61,398
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11.3
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%
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Consumer installment loans
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13,387
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2.5
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%
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Leases, net of unearned income
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568
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0.1
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%
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Other
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5,473
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0.9
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%
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Total loans
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$
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541,130
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100.0
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%
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Amount
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Percentage of
Contractual
Obligations
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(in thousands, except percentages)
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Contractual obligations secured by real estate—
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Residential 1-4 family
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$
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48,184
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41.5
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%
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Commercial
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1,648
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1.4
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%
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Construction
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8,716
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7.5
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%
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Multi-family and farmland
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1,166
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1.0
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%
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59,714
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51.4
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%
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Commercial loans
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31,789
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27.4
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%
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Consumer installment loans
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774
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0.7
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%
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Leases, net of unearned income
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—
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—
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%
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Other
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23,880
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20.5
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%
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Total contractual obligations
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$
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116,157
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100.0
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%
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•
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total reported loans for construction, land development and other land represent 100% or more of the institution’s total capital, or
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•
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total commercial real estate loans represent 300% or more of the institution’s total capital, and the outstanding balance of the institution’s commercial real estate loan portfolio has increased by 50% or more.
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•
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how, when and where we may expand geographically;
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•
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which product or service market we may enter;
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•
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how we must manage our assets or liabilities; and
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•
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under what circumstances money may or must flow between the parent bank holding company and the subsidiary bank.
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•
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acquiring direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly own or control more than 5% of the bank’s voting shares;
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•
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acquiring all or substantially all of the assets of any bank; or
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•
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merging or consolidating with any other bank holding company.
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•
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the bank holding company has registered securities under Section 12 of the Securities Exchange Act of 1934; or
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•
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no other person owns a greater percentage of that class of voting securities immediately after the transaction.
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•
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prohibit capital distributions;
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•
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prohibit payment of management fees to a controlling person;
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•
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require the bank to submit a capital restoration plan within 45 days of becoming undercapitalized;
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•
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require close monitoring of compliance with capital restoration plans, requirements and restrictions by the primary federal regulator;
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•
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restrict asset growth by requiring the bank to restrict its average total assets to the amount attained in the preceding calendar quarter;
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•
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prohibit the acceptance of employee benefit plan deposits;
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•
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require prior approval by the primary federal regulator for acquisitions, branching and new lines of business;
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•
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prohibit any material changes in accounting methods; and
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•
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other operating restrictions at the discretion of the bank's primary federal regulator.
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•
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require the sale of enough securities so that the bank is adequately capitalized or, if grounds for conservatorship or receivership exist, the merger or acquisition of the bank;
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•
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restrict affiliate transactions;
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•
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restrict interest rates paid on deposits;
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•
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further restrict growth, including a requirement that the bank reduce its total assets;
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•
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restrict or prohibit all activities that are determined to pose an excessive risk to the bank;
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•
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require the bank to elect new directors, dismiss directors or senior executive officers, or employ qualified senior executive officers to improve management;
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•
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prohibit the acceptance of deposits from correspondent banks, including renewals and rollovers of prior deposits;
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•
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require prior approval of capital distributions by holding companies;
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•
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require holding company divestiture of the financial institution, bank divestiture of subsidiaries and/or holding company divestiture of other affiliates; and
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•
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require the bank to take any other action the federal regulator determines will “better achieve” prompt corrective action objectives.
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•
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entering into material transactions other than in the ordinary course of business;
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•
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extending credit for any highly leveraged transaction;
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•
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amending the institution’s charter or bylaws, except to the extent necessary to carry out any other requirements of law, regulation or order;
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•
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making any material change in accounting methods;
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•
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engaging in certain types of transactions with affiliates;
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•
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paying excessive compensation or bonuses, including golden parachutes;
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•
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paying interest on new or renewed liabilities at a rate that would increase the institution’s weighted average cost of funds to a level significantly exceeding the prevailing rates of its competitors; and
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•
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making principal or interest payment on subordinated debt 60 days or more after becoming critically undercapitalized.
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•
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total reported loans for construction, land development and other land represent 100% or more of the institution’s total capital, or
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•
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total commercial real estate loans represent 300% or more of the institution’s total capital, and the outstanding balance of the institution’s commercial real estate loan portfolio has increased by 50% or more.
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•
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Federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
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•
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Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
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•
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Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;
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•
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Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit Transactions Act, governing the use and provision of information to credit reporting agencies, certain identity theft protections, and certain credit and other disclosures;
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•
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Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;
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•
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National Flood Insurance Act and Flood Disaster Protection Act, requiring flood insurance to extend or renew certain loans in flood plains;
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Real Estate Settlement Procedures Act, requiring certain disclosures concerning loan closing costs and escrows, and governing transfers of loan servicing and the amounts of escrows in connection with loans secured by one-to-four family residential properties;
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•
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Soldiers’ and Sailors’ Civil Relief Act of 1940, as amended by the Servicemembers’ Civil Relief Act, governing the repayment terms of, and property rights underlying, secured obligations of persons currently on active duty with the United States military;
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•
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Talent Amendment in the 2007 Defense Authorization Act, establishing a 36% annual percentage rate ceiling, which includes a variety of charges including late fees, for consumer loans to military service members and their dependents; and
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•
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Bank Secrecy Act, as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), imposing requirements and limitations on specific financial transactions and account relationships, intended to guard against money laundering and terrorism financing;
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•
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sections 22(g) and 22(h) of the Federal Reserve Act which set lending restrictions and limitations regarding loans and other extensions of credit made to executive officers, directors, principal shareholders and other insiders; and
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•
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rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
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•
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Truth-In-Savings Act, requiring certain disclosures of consumer deposit accounts:
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•
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Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;
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•
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Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and
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•
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rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
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•
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a bank’s loans or extensions of credit to affiliates;
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•
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a bank’s investment in affiliates;
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•
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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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•
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loans or extensions of credit to third parties collateralized by the securities or obligations of affiliates; and
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•
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a bank’s guarantee, acceptance or letter of credit issued on behalf of an affiliate.
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•
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incentive compensation arrangements should provide employees incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose the organization to imprudent risk;
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•
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incentive compensation arrangements should be compatible with effective controls and risk management; and
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incentive compensation arrangements should be supported by strong corporate governance, including active and effective oversight by the board of directors.
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•
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ensure that its senior executive incentive compensation packages do not encourage excessive risk;
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•
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subject senior executive compensation to “clawback” if the compensation was based on inaccurate financial information or performance metrics;
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•
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prohibit any golden parachute payments to senior executive officers; and
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•
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agree not to deduct more than $500,000 from taxable income for a senior executive officer’s compensation.
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•
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established the Financial Stability Oversight Counsel made up of the heads of the various bank regulatory and other agencies to identify and respond to risks to U.S. financial stability arising from ongoing activities of large financial companies
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•
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established centralized responsibility for consumer financial protection by creating a new Consumer Financial Protection Bureau which will be responsible for implementing, examining and enforcing compliance with federal consumer financial laws with respect to financial institutions with over $10 billion in assets
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•
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required that banking agencies establish for most bank holding companies the same leverage and risk-based capital requirements as apply to insured depository institutions, and that bank holding companies and banks be well-capitalized and well managed in order to acquire banks located outside their home states
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•
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prohibits bank holding companies from including new trust preferred securities in their Tier 1 capital and, beginning with a three-year phase-in period on January 1, 2013, requires bank holding companies with assets over $15 billion to deduct existing trust preferred securities from their Tier 1 capital;
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•
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required the FDIC to set a minimum DIF reserve ratio of 1.35% and that the DIF reserve ratio be increased to that level by September 30, 2020; that FDIC off-set the effect of the higher minimum ratio on insured depository institutions with assets of less than $10 billion; and that FDIC change the assessment base used for calculating insurance assessments from the amount of insured deposits to average consolidated total assets minus average tangible equity;
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•
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established a permanent $250,000 limit for federal deposit insurance; provided separate, unlimited federal deposit insurance until December 31, 2012 for noninterest-bearing demand transaction accounts; and repealed the federal prohibition on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts
|
•
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amended the Electronic Fund Transfer Act to, among other things, give the Federal Reserve the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory requirement that those fees be reasonable and proportional to the actual cost of a transaction to the issuer; an
|
•
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required implementation of various corporate governance processes affecting areas such as executive compensation and proxy access by shareholders. Many provisions of the Dodd-Frank Act are subject to rulemaking by bank regulatory agencies and the SEC and will take effect over time, making it difficult to anticipate the overall financial impact on financial institutions and consumers. However, many provisions in the Dodd-Frank Act (including those permitting the payment of interest on demand deposits and restricting interchange fees) are likely to increase expenses and reduce revenues for all financial institutions.
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ITEM 1A.
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Risk Factors
|
ITEM 1B.
|
Unresolved Staff Comments
|
ITEM 2.
|
Properties
|
Office Address
|
|
Date Opened
|
|
Owned/Leased
|
|
Square
Footage
|
|
Use of
Office
|
|
401 South Thornton Avenue
Dalton, Whitfield County, Georgia
|
|
September 17, 1999
|
|
Owned
|
|
16,438
|
|
|
Branch
|
1237 North Glenwood Avenue
Dalton, Whitfield County, Georgia
|
|
September 17, 1999
|
|
Owned
|
|
3,300
|
|
|
Branch
|
761 New Highway 68
Sweetwater, Monroe County, Tennessee
|
|
June 26, 2000
|
|
Owned
|
|
3,000
|
|
|
Branch
|
1740 Gunbarrel Road
Chattanooga, Hamilton County, Tennessee
|
|
July 3, 2000
|
|
Leased
|
|
3,400
|
|
|
Branch
|
4227 Ringgold Road
East Ridge, Hamilton County, Tennessee
|
|
July 28, 2000
|
|
Leased
|
|
3,400
|
|
|
Branch
|
835 South Congress Parkway
Athens, McMinn County, Tennessee
|
|
November 6, 2000
|
|
Owned
|
|
3,400
|
|
|
Branch
|
4535 Highway 58
Chattanooga, Hamilton County, Tennessee
|
|
May 7, 2001
|
|
Owned
|
|
3,400
|
|
|
Branch
|
820 Ridgeway Avenue
Signal Mountain, Hamilton County, Tennessee
|
|
May 29, 2001
|
|
Owned
|
|
2,500
|
|
|
Branch
|
1301 Cowart Street
Chattanooga, Hamilton County, Tennessee
|
|
March 28, 2011
|
|
Leased
|
|
1,000
|
|
|
Branch
|
9217 Lee Highway
Ooltewah, Hamilton County, Tennessee
|
|
July 8, 2002
|
|
Owned
|
|
3,400
|
|
|
Branch
|
2905 Maynardville Highway
Maynardville, Union County, Tennessee
|
|
July 20, 2002
|
|
Owned
|
|
12,197
|
|
|
Branch
|
2918 East Walnut Avenue
Dalton, Whitfield County, Georgia
|
|
March 31, 2003
|
|
Owned
|
|
10,337
|
|
|
Branch
|
715 South Thornton Avenue
Dalton, Whitfield County, Georgia
|
|
March 31, 2003
|
|
Building Owned
Land Leased
|
|
4,181
|
|
|
Branch
|
35 Poplar Springs Road
Ringgold, Catoosa County, Georgia
|
|
July 14, 2003
|
|
Owned
|
|
3,400
|
|
|
Branch
|
167 West Broadway Boulevard
Jefferson City, Jefferson County, Tennessee
|
|
October 14, 2003
|
|
Owned
|
|
3,743
|
|
|
Branch
|
705 East Broadway
Lenoir City, Loudon County, Tennessee
|
|
October 27, 2003
|
|
Owned
|
|
3,610
|
|
|
Branch
|
215 Warren Street
Madisonville, Monroe County, Tennessee
|
|
December 4, 2003
|
|
Owned
|
|
8,456
|
|
|
Branch
|
155 North Campbell Station Road
Knoxville, Knox County, Tennessee
|
|
March 2, 2004
|
|
Building Owned
Land Leased
|
|
3,743
|
|
|
Branch
|
Office Address
|
|
Date Opened
|
|
Owned/Leased
|
|
Square
Footage
|
|
Use of
Office
|
|
1013 South Highway 92
Dandridge, Jefferson County, Tennessee
|
|
April 5, 2004
|
|
Owned
|
|
3,500
|
|
|
Branch
|
307 Lovell Road
Knoxville, Knox County, Tennessee
|
|
August 16, 2004
|
|
Building Owned
Land Leased
|
|
3,500
|
|
|
Branch
|
1111 Northshore Drive, Suite S600
Knoxville, Knox County, Tennessee
|
|
October 1, 2004
|
|
Leased
|
|
9,867
|
|
|
Loan &
Leasing
|
1111 Northshore Drive, Suite P-100
Knoxville, Knox County, Tennessee
|
|
July 25, 2005
|
|
Leased
|
|
1,105
|
|
|
Branch
|
307 Hull Avenue
Gainesboro, Jackson County, Tennessee
|
|
August 31, 2005
|
|
Owned
|
|
9,662
|
|
|
Branch
|
340 South Jefferson Avenue
Cookeville, Putnam County, Tennessee
|
|
August 31, 2005
|
|
Owned
|
|
3,220
|
|
|
Branch
|
376 West Jackson Street
Cookeville, Putnam County, Tennessee
|
|
August 31, 2005
|
|
Owned
|
|
14,780
|
|
|
Branch
|
301 Keith Street SW
Cleveland, Bradley County, Tennessee
|
|
October 31, 2005
|
|
Leased
|
|
3,072
|
|
|
Branch
|
3895 Cleveland Road
Varnell, Whitfield County, Georgia
|
|
November 11, 2005
|
|
Owned
|
|
1,860
|
|
|
Branch
|
531 Broad Street
Chattanooga, Hamilton County, Tennessee
|
|
December 11, 2006
|
|
Owned
|
|
39,700
|
|
|
Branch &
Headquarters
|
614 West Main Street
Algood, Putnam County, Tennessee
|
|
April 10, 2007
|
|
Owned
|
|
1,936
|
|
|
Branch
|
52 Mouse Creek Road
Cleveland, Bradley County, Tennessee
|
|
May 14, 2007
|
|
Owned
|
|
1,256
|
|
|
Branch
|
5188 Highway 153
Knoxville, Knox County, Tennessee
|
|
May 22, 2009
|
|
Owned
|
|
4,194
|
|
|
Branch
|
ITEM 3.
|
Legal Proceedings
|
ITEM 4.
|
Mine Safety Disclosures
|
ITEM 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Quarter
|
|
High
|
|
Low
|
|
Dividend
|
||||||
2012
|
|
|
|
|
|
|
||||||
4
th
Quarter
|
|
$
|
3.04
|
|
|
$
|
1.30
|
|
|
$
|
—
|
|
3
rd
Quarter
|
|
3.30
|
|
|
2.15
|
|
|
—
|
|
|||
2
nd
Quarter
|
|
3.35
|
|
|
1.98
|
|
|
—
|
|
|||
1
st
Quarter
|
|
3.68
|
|
|
2.35
|
|
|
—
|
|
|||
2011
|
|
|
|
|
|
|
||||||
4
th
Quarter
|
|
$
|
3.34
|
|
|
$
|
1.13
|
|
|
$
|
—
|
|
3
rd
Quarter
|
|
5.70
|
|
|
1.81
|
|
|
—
|
|
|||
2
nd
Quarter
|
|
9.10
|
|
|
4.61
|
|
|
—
|
|
|||
1
st
Quarter
|
|
13.00
|
|
|
8.10
|
|
|
—
|
|
ITEM 6.
|
Selected Financial Data
|
|
|
As of and for the Years Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands, except per share amounts and full-time
equivalent employees)
|
||||||||||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net interest income
|
|
$
|
23,580
|
|
|
$
|
27,779
|
|
|
$
|
34,681
|
|
|
$
|
42,209
|
|
|
$
|
45,227
|
|
Provision for loan and lease losses
|
|
$
|
20,866
|
|
|
$
|
10,920
|
|
|
$
|
33,589
|
|
|
$
|
25,380
|
|
|
$
|
15,729
|
|
Non-interest income
|
|
$
|
9,295
|
|
|
$
|
8,650
|
|
|
$
|
9,503
|
|
|
$
|
10,335
|
|
|
$
|
11,682
|
|
Non-interest expense
|
|
$
|
48,808
|
|
|
$
|
48,178
|
|
|
$
|
45,258
|
|
|
$
|
68,871
|
|
|
$
|
40,406
|
|
Dividends and accretion on preferred stock
|
|
$
|
2,078
|
|
|
$
|
2,053
|
|
|
$
|
2,029
|
|
|
$
|
1,954
|
|
|
$
|
—
|
|
Net (loss) income available to common stockholders
|
|
$
|
(39,648
|
)
|
|
$
|
(25,114
|
)
|
|
$
|
(46,371
|
)
|
|
$
|
(35,409
|
)
|
|
$
|
1,361
|
|
Earnings—Normalized
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-interest expense, excluding goodwill impairment
|
|
$
|
48,808
|
|
|
$
|
48,178
|
|
|
$
|
45,258
|
|
|
$
|
41,715
|
|
|
$
|
40,406
|
|
Net (loss) income available to common stockholders, excluding goodwill impairment
|
|
$
|
(39,648
|
)
|
|
$
|
(25,114
|
)
|
|
$
|
(46,371
|
)
|
|
$
|
(10,647
|
)
|
|
$
|
1,361
|
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income, basic
|
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
$
|
(22.77
|
)
|
|
$
|
0.85
|
|
Net (loss) income, diluted
|
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
$
|
(22.77
|
)
|
|
$
|
0.85
|
|
Cash dividends declared on common shares
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.80
|
|
|
$
|
2.00
|
|
Book value per common share
|
|
$
|
(1.94
|
)
|
|
$
|
21.44
|
|
|
$
|
37.55
|
|
|
$
|
66.90
|
|
|
$
|
87.80
|
|
Tangible book value per common share
|
|
$
|
(2.28
|
)
|
|
$
|
20.86
|
|
|
$
|
36.70
|
|
|
$
|
65.70
|
|
|
$
|
69.80
|
|
Per Share Data—Normalized:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income, excluding goodwill impairment, basic
|
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
$
|
(6.80
|
)
|
|
$
|
0.85
|
|
Net (loss) income excluding goodwill impairment, diluted
|
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
$
|
(6.80
|
)
|
|
$
|
0.85
|
|
Performance Ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Return on average assets
1
|
|
(3.57
|
)%
|
|
(2.25
|
)%
|
|
(3.55
|
)%
|
|
(2.81
|
)%
|
|
0.11
|
%
|
|||||
Return on average common equity
1
|
|
(170.65
|
)%
|
|
(47.76
|
)%
|
|
(46.81
|
)%
|
|
(25.92
|
)%
|
|
0.92
|
%
|
|||||
Return on average tangible assets
1
|
|
(3.57
|
)%
|
|
(2.25
|
)%
|
|
(3.55
|
)%
|
|
(2.86
|
)%
|
|
0.11
|
%
|
|||||
Return on average tangible common equity
1
|
|
(176.59
|
)%
|
|
(48.91
|
)%
|
|
(47.62
|
)%
|
|
(31.00
|
)%
|
|
1.15
|
%
|
|||||
Net interest margin, taxable equivalent
|
|
2.45
|
%
|
|
2.77
|
%
|
|
2.92
|
%
|
|
3.75
|
%
|
|
4.07
|
%
|
|||||
Efficiency ratio
|
|
148.47
|
%
|
|
132.25
|
%
|
|
102.38
|
%
|
|
131.03
|
%
|
|
70.96
|
%
|
|||||
Non-interest income to net interest income and non-interest income
|
|
28.27
|
%
|
|
23.74
|
%
|
|
21.51
|
%
|
|
19.67
|
%
|
|
20.53
|
%
|
|
|
As of and for the Years Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands, except per share amounts and full-time
equivalent employees)
|
||||||||||||||||||
Performance Ratios—Normalized:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Return on average assets, excluding goodwill impairment
1
|
|
(3.57
|
)%
|
|
(2.25
|
)%
|
|
(3.55
|
)%
|
|
(0.85
|
)%
|
|
0.11
|
%
|
|||||
Return on average common equity, excluding goodwill impairment
1
|
|
(170.65
|
)%
|
|
(47.76
|
)%
|
|
(46.81
|
)%
|
|
(7.79
|
)%
|
|
0.92
|
%
|
|||||
Return on average tangible assets, excluding goodwill impairment
1
|
|
(3.57
|
)%
|
|
(2.25
|
)%
|
|
(3.55
|
)%
|
|
(0.86
|
)%
|
|
0.11
|
%
|
|||||
Return on average tangible common equity, excluding goodwill impairment
1
|
|
(176.59
|
)%
|
|
(48.91
|
)%
|
|
(47.62
|
)%
|
|
(9.32
|
)%
|
|
1.15
|
%
|
|||||
Capital & Liquidity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total equity to total assets
|
|
2.74
|
%
|
|
6.12
|
%
|
|
7.99
|
%
|
|
10.43
|
%
|
|
11.30
|
%
|
|||||
Tangible equity to tangible assets
|
|
2.68
|
%
|
|
6.04
|
%
|
|
7.88
|
%
|
|
10.30
|
%
|
|
9.20
|
%
|
|||||
Tangible common equity to tangible assets
|
|
(0.38
|
)%
|
|
3.15
|
%
|
|
5.16
|
%
|
|
7.98
|
%
|
|
9.20
|
%
|
|||||
Tier 1 risk-based capital ratio
|
|
4.23
|
%
|
|
9.70
|
%
|
|
11.20
|
%
|
|
12.68
|
%
|
|
9.85
|
%
|
|||||
Total risk-based capital ratio
|
|
5.49
|
%
|
|
10.96
|
%
|
|
12.47
|
%
|
|
13.94
|
%
|
|
11.10
|
%
|
|||||
Tier 1 leverage ratio
|
|
2.31
|
%
|
|
5.69
|
%
|
|
7.27
|
%
|
|
10.59
|
%
|
|
8.74
|
%
|
|||||
Dividend payout ratio
|
|
nm
|
|
|
nm
|
|
|
nm
|
|
|
nm
|
|
|
239.02
|
%
|
|||||
Total loans to total deposits
|
|
53.68
|
%
|
|
57.34
|
%
|
|
69.33
|
%
|
|
80.50
|
%
|
|
93.99
|
%
|
|||||
Asset Quality:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net charge-offs
|
|
$
|
26,666
|
|
|
$
|
15,320
|
|
|
$
|
36,081
|
|
|
$
|
16,273
|
|
|
$
|
9,300
|
|
Net loans charged-off to average loans
|
|
4.52
|
%
|
|
2.36
|
%
|
|
4.27
|
%
|
|
1.66
|
%
|
|
0.93
|
%
|
|||||
Non-accrual loans
|
|
$
|
25,071
|
|
|
$
|
46,907
|
|
|
$
|
54,082
|
|
|
$
|
45,454
|
|
|
$
|
18,453
|
|
Other real estate owned
|
|
$
|
13,441
|
|
|
$
|
25,141
|
|
|
$
|
24,399
|
|
|
$
|
15,312
|
|
|
$
|
7,145
|
|
Repossessed assets
|
|
$
|
8
|
|
|
$
|
302
|
|
|
$
|
763
|
|
|
$
|
3,881
|
|
|
$
|
1,680
|
|
Non-performing assets (NPA)
|
|
$
|
40,176
|
|
|
$
|
75,172
|
|
|
$
|
84,082
|
|
|
$
|
69,171
|
|
|
$
|
29,984
|
|
NPA to total assets
|
|
3.78
|
%
|
|
6.74
|
%
|
|
7.20
|
%
|
|
5.11
|
%
|
|
2.35
|
%
|
|||||
Loans 90 days past due
|
|
$
|
1,656
|
|
|
$
|
2,822
|
|
|
$
|
4,838
|
|
|
$
|
4,524
|
|
|
$
|
2,706
|
|
Non-performing loans (NPL)
|
|
$
|
26,727
|
|
|
$
|
49,729
|
|
|
$
|
58,920
|
|
|
$
|
49,978
|
|
|
$
|
21,159
|
|
NPL to total loans
|
|
4.94
|
%
|
|
8.54
|
%
|
|
8.10
|
%
|
|
5.25
|
%
|
|
2.09
|
%
|
|||||
Allowance for loan and lease losses to total loans
|
|
2.55
|
%
|
|
3.35
|
%
|
|
3.30
|
%
|
|
2.78
|
%
|
|
1.72
|
%
|
|||||
Allowance for loan and lease losses to NPL
|
|
51.63
|
%
|
|
39.41
|
%
|
|
40.73
|
%
|
|
53.01
|
%
|
|
82.16
|
%
|
|||||
Period End Balances:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans
|
|
$
|
541,130
|
|
|
$
|
582,264
|
|
|
$
|
727,091
|
|
|
$
|
952,018
|
|
|
$
|
1,011,584
|
|
Allowance for loan and lease losses
|
|
$
|
13,800
|
|
|
$
|
19,600
|
|
|
$
|
24,000
|
|
|
$
|
26,492
|
|
|
$
|
17,385
|
|
Intangible assets
|
|
$
|
600
|
|
|
$
|
982
|
|
|
$
|
1,461
|
|
|
$
|
1,918
|
|
|
$
|
29,560
|
|
Assets
|
|
$
|
1,063,555
|
|
|
$
|
1,114,901
|
|
|
$
|
1,168,548
|
|
|
$
|
1,353,399
|
|
|
$
|
1,276,227
|
|
Deposits
|
|
$
|
1,008,066
|
|
|
$
|
1,019,422
|
|
|
$
|
1,048,723
|
|
|
$
|
1,182,673
|
|
|
$
|
1,076,286
|
|
Common stockholders’ equity
|
|
$
|
(3,439
|
)
|
|
$
|
36,111
|
|
|
$
|
61,657
|
|
|
$
|
109,825
|
|
|
$
|
144,244
|
|
Total stockholders’ equity
|
|
$
|
29,110
|
|
|
$
|
68,232
|
|
|
$
|
93,374
|
|
|
$
|
141,164
|
|
|
$
|
144,244
|
|
Common stock market capitalization
|
|
$
|
3,952
|
|
|
$
|
3,958
|
|
|
$
|
14,776
|
|
|
$
|
39,075
|
|
|
$
|
75,860
|
|
Full-time equivalent employees
|
|
329
|
|
|
303
|
|
|
311
|
|
|
347
|
|
|
361
|
|
|||||
Common shares outstanding
|
|
1,772
|
|
|
1,684
|
|
|
1,642
|
|
|
1,642
|
|
|
1,642
|
|
|
|
As of and for the Years Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands, except per share amounts and full-time
equivalent employees)
|
||||||||||||||||||
Average Balances:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans
|
|
$
|
590,109
|
|
|
$
|
647,920
|
|
|
$
|
845,945
|
|
|
$
|
977,758
|
|
|
$
|
997,371
|
|
Intangible assets
|
|
$
|
781
|
|
|
$
|
1,239
|
|
|
$
|
1,691
|
|
|
$
|
22,382
|
|
|
$
|
29,948
|
|
Earning assets
|
|
$
|
1,024,471
|
|
|
$
|
1,028,654
|
|
|
$
|
1,213,145
|
|
|
$
|
1,150,337
|
|
|
$
|
1,132,962
|
|
Assets
|
|
$
|
1,110,794
|
|
|
$
|
1,118,649
|
|
|
$
|
1,306,831
|
|
|
$
|
1,258,662
|
|
|
$
|
1,258,469
|
|
Deposits
|
|
$
|
1,027,520
|
|
|
$
|
1,007,930
|
|
|
$
|
1,147,724
|
|
|
$
|
1,057,090
|
|
|
$
|
956,994
|
|
Common stockholders’ equity
|
|
$
|
23,233
|
|
|
$
|
52,584
|
|
|
$
|
99,067
|
|
|
$
|
136,598
|
|
|
$
|
148,655
|
|
Total stockholders’ equity
|
|
$
|
55,549
|
|
|
$
|
84,486
|
|
|
$
|
130,579
|
|
|
$
|
166,803
|
|
|
$
|
148,655
|
|
Common shares outstanding, basic—wtd
|
|
1,613
|
|
|
1,591
|
|
|
1,574
|
|
|
1,555
|
|
|
1,603
|
|
|||||
Common shares outstanding, diluted—wtd
|
|
1,613
|
|
|
1,591
|
|
|
1,574
|
|
|
1,555
|
|
|
1,615
|
|
1
|
|
Performance ratios are calculated using net (loss) income available to common shareholders, excluding the goodwill impairment.
|
•
|
“Non-interest expense, excluding goodwill impairment” is defined as non-interest expense reduced by the effect of goodwill impairment. “Net (loss) income available to common stockholders, excluding goodwill impairment” is defined as net income, increased by the effect of impairment of goodwill, net of tax. “Net (loss) income, excluding goodwill impairment per share” is defined as net income, increased by the effect of impairment of goodwill, net of tax, divided by total common shares outstanding. Our management includes these measures because it believes that they are important when measuring First Security’s performance exclusive of the effects of impairment of goodwill. As of September 30, 2009, the annual assessment of goodwill indicated a full impairment of goodwill; accordingly, no further goodwill remains on the books of First Security. The goodwill impairment is a one-time, non-cash accounting adjustment that has no effect on First Security's cash flows, liquidity, tangible capital, or ability to conduct business and as such, management believes excluding this charge is appropriate to properly measure First Security's performance. These three non-GAAP financial measures exclude the effect of the goodwill impairment on the most comparable GAAP measures: non-interest expense (to measure the overall level of First Security's recurring non-interest related expenses); net (loss) income available to common stockholders (to reflect the recurring overall net income available to stockholders collectively); and net (loss) income per share (to reflect the recurring overall net income available to stockholders on a per share basis).
|
•
|
“Return on average common equity” is defined as annualized earnings for the period divided by average equity reduced by average preferred stock. Our management includes this measure in addition to return on average equity, the most comparable GAAP measure, because it believes that it is important when measuring First Security’s performance exclusive of the effects of First Security’s outstanding preferred stock, which has a fixed return, and that this measure is important to many investors in First Security’s common stock.
|
•
|
“Return on average tangible assets” is defined as annualized earnings for the period divided by average assets reduced by average goodwill and other intangible assets. “Return on average tangible common equity” is defined as annualized earnings for the period divided by average equity reduced by average preferred stock and average goodwill and other intangible assets. Our management includes these measures because it believes that they are important when measuring First Security’s performance exclusive of the effects of goodwill and other intangibles recorded in First Security’s historic acquisitions, exclusive of the effects of First Security’s outstanding preferred stock, which has a fixed return, and these measures are used by many investors as part of their analysis of First Security’s performance.
|
•
|
“Return on average assets, excluding goodwill impairment” is defined as net income, increased by the effect of impairment of goodwill, net of tax, divided by average assets. “Return on average common equity, excluding goodwill impairment” is defined as net income, increased by the effect of impairment of goodwill, net of tax, divided by average equity reduced by average preferred stock. “Return on average tangible assets, excluding goodwill impairment” is defined as net income, increased by the effect of impairment of goodwill, net of tax, divided by average assets reduced by average goodwill and other intangible assets. “Return on average tangible common equity, excluding goodwill impairment” is defined as net income, increased by the effect of impairment of goodwill, net of tax, divided by average equity reduced by average preferred stock and average goodwill and other intangible assets. The most comparable GAAP measure for each of these measures is return on average assets. Our management includes these measures because it believes that they are important when measuring First Security’s performance exclusive of the effects of impairment of goodwill. As of September 30, 2009, the annual assessment of goodwill indicated a full impairment of goodwill; accordingly, no further goodwill remains on the books of First Security. The goodwill impairment is a one-time, non-cash accounting adjustment that has no effect on First Security’s cash flows, liquidity, tangible capital, or ability to conduct business and as such, management believes excluding this charge is necessary to properly measure First Security’s performance.
|
|
|
As of and for the Years Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||||||
Return on average assets
|
|
(3.57
|
)%
|
|
(2.25
|
)%
|
|
(3.55
|
)%
|
|
(2.81
|
)%
|
|
0.11
|
%
|
|||||
Effect of intangible assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.05
|
)%
|
|
—
|
|
|||||
Return on average tangible assets
|
|
(3.57
|
)%
|
|
(2.25
|
)%
|
|
(3.55
|
)%
|
|
(2.86
|
)%
|
|
0.11
|
%
|
|||||
Return on average assets
|
|
(3.57
|
)%
|
|
(2.25
|
)%
|
|
(3.55
|
)%
|
|
(2.81
|
)%
|
|
0.11
|
%
|
|||||
Effect of goodwill impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.96
|
%
|
|
—
|
|
|||||
Return on average assets, excluding goodwill impairment
|
|
(3.57
|
)%
|
|
(2.25
|
)%
|
|
(3.55
|
)%
|
|
(0.85
|
)%
|
|
0.11
|
%
|
|||||
Effect of average intangible assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)%
|
|
—
|
|
|||||
Return on average tangible assets, excluding goodwill impairment
|
|
(3.57
|
)%
|
|
(2.25
|
)%
|
|
(3.55
|
)%
|
|
(0.86
|
)%
|
|
0.11
|
%
|
|||||
Return on average common equity
|
|
(170.65
|
)%
|
|
(47.76
|
)%
|
|
(46.81
|
)%
|
|
(25.92
|
)%
|
|
0.92
|
%
|
|||||
Effect of goodwill impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18.13
|
%
|
|
—
|
|
|||||
Return on average common equity, excluding goodwill impairment
|
|
(170.65
|
)%
|
|
(47.76
|
)%
|
|
(46.81
|
)%
|
|
(7.79
|
)%
|
|
0.92
|
%
|
|||||
Effect on average intangible assets
|
|
(5.94
|
)%
|
|
(1.15
|
)%
|
|
(0.81
|
)%
|
|
(1.53
|
)%
|
|
0.23
|
%
|
|||||
Return on average tangible common equity, excluding goodwill impairment
|
|
(176.59
|
)%
|
|
(48.91
|
)%
|
|
(47.62
|
)%
|
|
(9.32
|
)%
|
|
1.15
|
%
|
|||||
Total equity to total assets
|
|
2.74
|
%
|
|
6.12
|
%
|
|
7.99
|
%
|
|
10.43
|
%
|
|
11.30
|
%
|
|||||
Effect of intangible assets
|
|
(0.06
|
)%
|
|
(0.08
|
)%
|
|
(0.11
|
)%
|
|
(0.13
|
)%
|
|
(2.10
|
)%
|
|||||
Tangible equity to tangible assets
|
|
2.68
|
%
|
|
6.04
|
%
|
|
7.88
|
%
|
|
10.30
|
%
|
|
9.20
|
%
|
|||||
Effect of preferred stock
|
|
(3.06
|
)%
|
|
(2.89
|
)%
|
|
(2.72
|
)%
|
|
(2.32
|
)%
|
|
—
|
|
|||||
Tangible common equity to tangible assets
|
|
(0.38
|
)%
|
|
3.15
|
%
|
|
5.16
|
%
|
|
7.98
|
%
|
|
9.20
|
%
|
|||||
Non-interest expense
|
|
$
|
48,808
|
|
|
$
|
48,178
|
|
|
$
|
45,258
|
|
|
$
|
68,871
|
|
|
$
|
40,382
|
|
Effect of goodwill impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,156
|
)
|
|
—
|
|
|||||
Non-interest expense, excluding goodwill impairment
|
|
$
|
48,808
|
|
|
$
|
48,178
|
|
|
$
|
45,258
|
|
|
$
|
41,715
|
|
|
$
|
40,382
|
|
Net (loss) income available to common stockholders
|
|
$
|
(39,648
|
)
|
|
$
|
(25,114
|
)
|
|
$
|
(46,371
|
)
|
|
$
|
(35,409
|
)
|
|
$
|
1,361
|
|
Effect of goodwill impairment, net of $2,394 tax effect
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,762
|
|
|
—
|
|
|||||
Net (loss) income available to common stockholders, excluding goodwill impairment
|
|
$
|
(39,648
|
)
|
|
$
|
(25,114
|
)
|
|
$
|
(46,371
|
)
|
|
$
|
(10,647
|
)
|
|
$
|
1,361
|
|
Total stockholders’ equity
|
|
$
|
29,110
|
|
|
$
|
68,232
|
|
|
$
|
93,374
|
|
|
$
|
141,164
|
|
|
$
|
144,244
|
|
Effect of preferred stock
|
|
(32,549
|
)
|
|
(32,121
|
)
|
|
(31,717
|
)
|
|
(31,339
|
)
|
|
—
|
|
|||||
Common stockholders’ equity
|
|
$
|
(3,439
|
)
|
|
$
|
36,111
|
|
|
$
|
61,657
|
|
|
$
|
109,825
|
|
|
$
|
144,244
|
|
Average assets
|
|
$
|
1,110,794
|
|
|
$
|
1,118,646
|
|
|
$
|
1,306,831
|
|
|
$
|
1,258,662
|
|
|
$
|
1,258,469
|
|
Effect of average intangible assets
|
|
(781
|
)
|
|
(1,239
|
)
|
|
(1,691
|
)
|
|
(22,382
|
)
|
|
(29,948
|
)
|
|||||
Average tangible assets
|
|
$
|
1,110,013
|
|
|
$
|
1,117,407
|
|
|
$
|
1,305,140
|
|
|
$
|
1,236,280
|
|
|
$
|
1,228,521
|
|
|
|
As of and for the Years Ended December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
Average total stockholders’ equity
|
|
$
|
55,549
|
|
|
$
|
84,486
|
|
|
$
|
130,579
|
|
|
$
|
166,803
|
|
|
$
|
148,655
|
|
Effect of average preferred stock
|
|
(32,316
|
)
|
|
(31,902
|
)
|
|
(31,512
|
)
|
|
(30,205
|
)
|
|
—
|
|
|||||
Average common stockholders’ equity
|
|
23,233
|
|
|
52,584
|
|
|
99,067
|
|
|
136,598
|
|
|
148,655
|
|
|||||
Effect of average intangible assets
|
|
(781
|
)
|
|
(1,239
|
)
|
|
(1,691
|
)
|
|
(22,382
|
)
|
|
(29,948
|
)
|
|||||
Average tangible common stockholders’ equity
|
|
$
|
22,452
|
|
|
$
|
51,345
|
|
|
$
|
97,376
|
|
|
$
|
114,216
|
|
|
$
|
118,707
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per common share
|
|
$
|
(1.94
|
)
|
|
$
|
21.54
|
|
|
$
|
37.55
|
|
|
$
|
66.90
|
|
|
$
|
87.80
|
|
Effect of intangible assets
|
|
(0.34
|
)
|
|
(0.58
|
)
|
|
(0.85
|
)
|
|
(1.20
|
)
|
|
(18.00
|
)
|
|||||
Tangible book value per common share
|
|
$
|
(2.28
|
)
|
|
$
|
20.86
|
|
|
$
|
36.70
|
|
|
$
|
65.70
|
|
|
$
|
69.80
|
|
Net (loss) income, basic
|
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
$
|
(22.77
|
)
|
|
$
|
0.85
|
|
Effect of goodwill impairment, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.97
|
|
|
—
|
|
|||||
Net (loss) income, excluding goodwill impairment, basic
|
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
$
|
(6.80
|
)
|
|
$
|
0.85
|
|
Net (loss) income, diluted
|
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
$
|
(22.77
|
)
|
|
$
|
0.85
|
|
Effect of goodwill impairment, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.97
|
|
|
—
|
|
|||||
Net (loss) income, excluding goodwill impairment, diluted
|
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
$
|
(6.80
|
)
|
|
$
|
0.85
|
|
ITEM 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operation
|
|
|
Condensed Consolidated Statements of Income
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||||
|
|
2012
|
|
Change
From
Prior
Year
|
|
Percent
Change
|
|
2011
|
|
Change
From
Prior
Year
|
|
Percent
Change
|
|
2010
|
|
Change
From
Prior
Year
|
|
Percent
Change
|
|||||||||||||||
|
|
(in thousands, except percentages)
|
|||||||||||||||||||||||||||||||
Interest income
|
|
$
|
36,310
|
|
|
$
|
(6,474
|
)
|
|
(15.1
|
)%
|
|
$
|
42,784
|
|
|
$
|
(12,132
|
)
|
|
(22.1
|
)%
|
|
$
|
54,916
|
|
|
$
|
(9,091
|
)
|
|
(14.2
|
)%
|
Interest expense
|
|
12,730
|
|
|
(2,275
|
)
|
|
(15.2
|
)%
|
|
15,005
|
|
|
(5,230
|
)
|
|
(25.8
|
)%
|
|
20,235
|
|
|
(1,563
|
)
|
|
(7.2
|
)%
|
||||||
Net interest income
|
|
23,580
|
|
|
(4,199
|
)
|
|
(15.1
|
)%
|
|
27,779
|
|
|
(6,902
|
)
|
|
(19.9
|
)%
|
|
34,681
|
|
|
(7,528
|
)
|
|
(17.8
|
)%
|
||||||
Provision for loan and lease losses
|
|
20,866
|
|
|
9,946
|
|
|
91.1
|
%
|
|
10,920
|
|
|
(22,669
|
)
|
|
(67.5
|
)%
|
|
33,589
|
|
|
8,209
|
|
|
32.3
|
%
|
||||||
Net interest income after provision for loan and lease losses
|
|
2,714
|
|
|
(14,145
|
)
|
|
(83.9
|
)%
|
|
16,859
|
|
|
15,767
|
|
|
1,443.9
|
%
|
|
1,092
|
|
|
(15,737
|
)
|
|
(93.6
|
)%
|
||||||
Noninterest income
|
|
9,295
|
|
|
645
|
|
|
7.5
|
%
|
|
8,650
|
|
|
(853
|
)
|
|
(9.0
|
)%
|
|
9,503
|
|
|
(832
|
)
|
|
(8.1
|
)%
|
||||||
Noninterest expense
|
|
48,808
|
|
|
630
|
|
|
1.3
|
%
|
|
48,178
|
|
|
2,920
|
|
|
6.5
|
%
|
|
45,258
|
|
|
(23,613
|
)
|
|
(34.3
|
)%
|
||||||
Net loss before income taxes
|
|
(36,799
|
)
|
|
(14,130
|
)
|
|
62.3
|
%
|
|
(22,669
|
)
|
|
11,994
|
|
|
(34.6
|
)%
|
|
(34,663
|
)
|
|
7,044
|
|
|
(16.9
|
)%
|
||||||
Income tax provision (benefit)
|
|
771
|
|
|
379
|
|
|
96.7
|
%
|
|
392
|
|
|
(9,287
|
)
|
|
(95.9
|
)%
|
|
9,679
|
|
|
17,931
|
|
|
217.3
|
%
|
||||||
Net loss
|
|
(37,570
|
)
|
|
(14,509
|
)
|
|
62.9
|
%
|
|
(23,061
|
)
|
|
21,281
|
|
|
(48.0
|
)%
|
|
(44,342
|
)
|
|
(10,887
|
)
|
|
(32.5
|
)%
|
||||||
Preferred stock dividends and discount accretion
|
|
2,078
|
|
|
25
|
|
|
1.2
|
%
|
|
2,053
|
|
|
24
|
|
|
1.2
|
%
|
|
2,029
|
|
|
75
|
|
|
3.8
|
%
|
||||||
Net loss allocated to common stockholders
|
|
$
|
(39,648
|
)
|
|
$
|
(14,534
|
)
|
|
57.9
|
%
|
|
$
|
(25,114
|
)
|
|
$
|
21,257
|
|
|
(45.8
|
)%
|
|
$
|
(46,371
|
)
|
|
$
|
(10,962
|
)
|
|
(31.0
|
)%
|
|
|
For the Years Ended,
|
|||||||||||||||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|||||||||||||||||||||||||||
|
|
Average
Balance
|
|
Income/
Expense
|
|
Yield/
Rate
|
|
Average
Balance
|
|
Income/
Expense
|
|
Yield/
Rate
|
|
Average
Balance
|
|
Income/
Expense
|
|
Yield/
Rate
|
|||||||||||||||
|
|
(in thousands, except percentages)
(fully tax-equivalent basis)
|
|||||||||||||||||||||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loans, net of unearned income
1,2
|
|
$
|
590,109
|
|
|
$
|
31,264
|
|
|
5.30
|
%
|
|
$
|
647,920
|
|
|
$
|
37,521
|
|
|
5.79
|
%
|
|
$
|
845,945
|
|
|
$
|
49,127
|
|
|
5.81
|
%
|
Debt securities—taxable
|
|
211,771
|
|
|
3,557
|
|
|
1.68
|
%
|
|
127,399
|
|
|
3,488
|
|
|
2.74
|
%
|
|
111,526
|
|
|
3,919
|
|
|
3.51
|
%
|
||||||
Debt securities—non-taxable
2
|
|
26,596
|
|
|
2,538
|
|
|
9.54
|
%
|
|
34,049
|
|
|
1,953
|
|
|
5.74
|
%
|
|
38,232
|
|
|
2,156
|
|
|
5.64
|
%
|
||||||
Federal funds sold and other earning assets
|
|
195,996
|
|
|
512
|
|
|
0.26
|
%
|
|
219,286
|
|
|
543
|
|
|
0.25
|
%
|
|
217,442
|
|
|
517
|
|
|
0.24
|
%
|
||||||
Total earning assets
|
|
1,024,472
|
|
|
$
|
37,871
|
|
|
3.70
|
%
|
|
1,028,654
|
|
|
$
|
43,505
|
|
|
4.23
|
%
|
|
1,213,145
|
|
|
$
|
55,719
|
|
|
4.59
|
%
|
|||
Allowance for loan losses
|
|
(19,941
|
)
|
|
|
|
|
|
(23,311
|
)
|
|
|
|
|
|
(26,698
|
)
|
|
|
|
|
||||||||||||
Intangible assets
|
|
781
|
|
|
|
|
|
|
1,239
|
|
|
|
|
|
|
1,691
|
|
|
|
|
|
||||||||||||
Cash & due from banks
|
|
13,416
|
|
|
|
|
|
|
9,924
|
|
|
|
|
|
|
8,117
|
|
|
|
|
|
||||||||||||
Premises & equipment
|
|
29,248
|
|
|
|
|
|
|
30,174
|
|
|
|
|
|
|
32,362
|
|
|
|
|
|
||||||||||||
Other assets
|
|
62,818
|
|
|
|
|
|
|
71,966
|
|
|
|
|
|
|
78,214
|
|
|
|
|
|
||||||||||||
Total assets
|
|
$
|
1,110,794
|
|
|
|
|
|
|
$
|
1,118,646
|
|
|
|
|
|
|
$
|
1,306,831
|
|
|
|
|
|
|||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
NOW accounts
|
|
$
|
63,269
|
|
|
$
|
191
|
|
|
0.30
|
%
|
|
$
|
60,733
|
|
|
$
|
158
|
|
|
0.26
|
%
|
|
$
|
65,809
|
|
|
$
|
186
|
|
|
0.28
|
%
|
Money market accounts
|
|
135,688
|
|
|
966
|
|
|
0.71
|
%
|
|
114,529
|
|
|
990
|
|
|
0.86
|
%
|
|
133,298
|
|
|
1,315
|
|
|
0.99
|
%
|
||||||
Savings deposits
|
|
40,078
|
|
|
79
|
|
|
0.20
|
%
|
|
38,807
|
|
|
92
|
|
|
0.24
|
%
|
|
38,582
|
|
|
102
|
|
|
0.26
|
%
|
||||||
Time deposits less than $100 thousand
|
|
231,648
|
|
|
2,681
|
|
|
1.16
|
%
|
|
207,570
|
|
|
2,940
|
|
|
1.42
|
%
|
|
228,907
|
|
|
4,673
|
|
|
2.04
|
%
|
||||||
Time deposits > $100 thousand
|
|
199,618
|
|
|
2,554
|
|
|
1.28
|
%
|
|
153,803
|
|
|
2,517
|
|
|
1.64
|
%
|
|
184,432
|
|
|
4,049
|
|
|
2.20
|
%
|
||||||
Brokered CDs and CDARS
®
|
|
198,454
|
|
|
5,862
|
|
|
2.95
|
%
|
|
275,279
|
|
|
7,864
|
|
|
2.86
|
%
|
|
335,416
|
|
|
9,372
|
|
|
2.79
|
%
|
||||||
Brokered money markets and NOWs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
6,561
|
|
|
57
|
|
|
0.87
|
%
|
||||||
Repurchase agreements
|
|
14,083
|
|
|
396
|
|
|
2.81
|
%
|
|
15,170
|
|
|
439
|
|
|
2.89
|
%
|
|
18,435
|
|
|
475
|
|
|
2.58
|
%
|
||||||
Other borrowings
|
|
13
|
|
|
1
|
|
|
7.31
|
%
|
|
67
|
|
|
5
|
|
|
7.46
|
%
|
|
85
|
|
|
6
|
|
|
7.06
|
%
|
||||||
Total interest bearing liabilities
|
|
882,851
|
|
|
12,730
|
|
|
1.44
|
%
|
|
865,958
|
|
|
15,005
|
|
|
1.73
|
%
|
|
1,011,525
|
|
|
20,235
|
|
|
2.00
|
%
|
||||||
Net interest spread
|
|
|
|
$
|
25,141
|
|
|
2.26
|
%
|
|
|
|
$
|
28,500
|
|
|
2.50
|
%
|
|
|
|
$
|
35,484
|
|
|
2.59
|
%
|
||||||
Noninterest bearing demand deposits
|
|
158,765
|
|
|
|
|
|
|
157,209
|
|
|
|
|
|
|
154,719
|
|
|
|
|
|
||||||||||||
Accrued expenses and other liabilities
|
|
13,629
|
|
|
|
|
|
|
10,993
|
|
|
|
|
|
|
10,018
|
|
|
|
|
|
||||||||||||
Stockholders’ equity
|
|
52,243
|
|
|
|
|
|
|
80,478
|
|
|
|
|
|
|
124,825
|
|
|
|
|
|
||||||||||||
Accumulated other comprehensive gain (loss)
|
|
3,306
|
|
|
|
|
|
|
4,008
|
|
|
|
|
|
|
5,744
|
|
|
|
|
|
||||||||||||
Total liabilities and stockholders’ equity
|
|
$
|
1,110,794
|
|
|
|
|
|
|
$
|
1,118,646
|
|
|
|
|
|
|
$
|
1,306,831
|
|
|
|
|
|
|||||||||
Impact of noninterest bearing sources and other changes in balance sheet composition
|
|
|
|
|
|
0.19
|
%
|
|
|
|
|
|
0.27
|
%
|
|
|
|
|
|
0.33
|
%
|
||||||||||||
Net interest margin
|
|
|
|
|
|
2.45
|
%
|
|
|
|
|
|
2.77
|
%
|
|
|
|
|
|
2.92
|
%
|
1
|
|
Nonaccrual loans have been included in the average balance. Only the interest collected on such loans has been included as income.
|
2
|
|
Interest income from securities and loans includes the effects of taxable-equivalent adjustments using a federal income tax rate of approximately 34% for all years reported and where applicable, state income taxes, to increase tax-exempt interest income to a taxable-equivalent basis. The net taxable equivalent adjustment amounts included in the above table were $1.6 million, $721 thousand and $803 thousand for the years ended December 31, 2012, 2011 and 2010, respectively.
|
|
|
2012 compared to 2011 increase
(decrease) in interest income and
expense due to changes in:
|
|
2011 compared to 2010 increase
(decrease) in interest income and
expense due to changes in:
|
||||||||||||||||||||
|
|
Volume
|
|
Rate
|
|
Total
|
|
Volume
|
|
Rate
|
|
Total
|
||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||
Earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans, net of unearned income
|
|
$
|
(3,354
|
)
|
|
$
|
(2,903
|
)
|
|
$
|
(6,257
|
)
|
|
$
|
(11,500
|
)
|
|
$
|
(106
|
)
|
|
$
|
(11,606
|
)
|
Debt Securities—taxable
|
|
2,315
|
|
|
(2,246
|
)
|
|
69
|
|
|
558
|
|
|
(989
|
)
|
|
(431
|
)
|
||||||
Debt Securities—non-taxable
|
|
(426
|
)
|
|
1,011
|
|
|
585
|
|
|
(236
|
)
|
|
33
|
|
|
(203
|
)
|
||||||
Federal funds sold and other earning assets
|
|
(53
|
)
|
|
22
|
|
|
(31
|
)
|
|
4
|
|
|
22
|
|
|
26
|
|
||||||
Total earning assets
|
|
(1,518
|
)
|
|
(4,116
|
)
|
|
(5,634
|
)
|
|
(11,174
|
)
|
|
(1,040
|
)
|
|
(12,214
|
)
|
||||||
Interest bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NOW accounts
|
|
6
|
|
|
27
|
|
|
33
|
|
|
(14
|
)
|
|
(14
|
)
|
|
(28
|
)
|
||||||
Money market accounts
|
|
178
|
|
|
(202
|
)
|
|
(24
|
)
|
|
(185
|
)
|
|
(141
|
)
|
|
(326
|
)
|
||||||
Savings deposits
|
|
4
|
|
|
(17
|
)
|
|
(13
|
)
|
|
1
|
|
|
(11
|
)
|
|
(10
|
)
|
||||||
Time deposits less than $100 thousand
|
|
348
|
|
|
(607
|
)
|
|
(259
|
)
|
|
(436
|
)
|
|
(1,297
|
)
|
|
(1,733
|
)
|
||||||
Time deposits > $100 thousand
|
|
750
|
|
|
(713
|
)
|
|
37
|
|
|
(672
|
)
|
|
(860
|
)
|
|
(1,532
|
)
|
||||||
Brokered CDs and CDARS
®
|
|
(2,188
|
)
|
|
187
|
|
|
(2,001
|
)
|
|
(1,680
|
)
|
|
172
|
|
|
(1,508
|
)
|
||||||
Brokered money market accounts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
|
(57
|
)
|
||||||
Federal funds purchased
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase agreements
|
|
(32
|
)
|
|
(11
|
)
|
|
(43
|
)
|
|
(84
|
)
|
|
49
|
|
|
(35
|
)
|
||||||
Other borrowings
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Total interest bearing liabilities
|
|
(938
|
)
|
|
(1,336
|
)
|
|
(2,274
|
)
|
|
(3,128
|
)
|
|
(2,102
|
)
|
|
(5,230
|
)
|
||||||
Increase (decrease) in net interest income
|
|
$
|
(580
|
)
|
|
$
|
(2,780
|
)
|
|
$
|
(3,360
|
)
|
|
$
|
(8,046
|
)
|
|
$
|
1,062
|
|
|
$
|
(6,984
|
)
|
|
|
For the Years Ended
|
||||||||||||||||
|
|
2012
|
|
Percent
Change
|
|
2011
|
|
Percent
Change
|
|
2010
|
||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||
Non-sufficient funds (NSF) fees
|
|
$
|
2,227
|
|
|
(4.7
|
)%
|
|
$
|
2,337
|
|
|
(21.4
|
)%
|
|
$
|
2,973
|
|
Service charges on deposit accounts
|
|
805
|
|
|
2.5
|
%
|
|
785
|
|
|
(16.4
|
)%
|
|
939
|
|
|||
Point-of-sale (POS) fees
|
|
1,367
|
|
|
1.4
|
%
|
|
1,348
|
|
|
6.1
|
%
|
|
1,270
|
|
|||
Mortgage loan and related fees
|
|
974
|
|
|
32.2
|
%
|
|
737
|
|
|
(18.9
|
)%
|
|
909
|
|
|||
Bank-owned life insurance income
|
|
995
|
|
|
(1.2
|
)%
|
|
1,007
|
|
|
(2.4
|
)%
|
|
1,032
|
|
|||
Net gain (loss) on sales of available-for-sale securities
|
|
154
|
|
|
100.0
|
%
|
|
—
|
|
|
(100.0
|
)%
|
|
57
|
|
|||
Other income
|
|
2,773
|
|
|
13.8
|
%
|
|
2,436
|
|
|
4.9
|
%
|
|
2,323
|
|
|||
Total noninterest income
|
|
$
|
9,295
|
|
|
7.5
|
%
|
|
$
|
8,650
|
|
|
(9.0
|
)%
|
|
$
|
9,503
|
|
|
|
For the Years Ended
|
||||||||||||||||
|
|
2012
|
|
Percent
Change
|
|
2011
|
|
Percent
Change
|
|
2010
|
||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||
Salaries and benefits
|
|
$
|
20,446
|
|
|
16.4
|
%
|
|
$
|
17,571
|
|
|
(7.2
|
)%
|
|
$
|
18,926
|
|
Occupancy
|
|
3,403
|
|
|
3.6
|
%
|
|
3,286
|
|
|
(5.9
|
)%
|
|
3,493
|
|
|||
Furniture and equipment
|
|
2,412
|
|
|
38.5
|
%
|
|
1,741
|
|
|
(14.3
|
)%
|
|
2,032
|
|
|||
Professional fees
|
|
3,382
|
|
|
(1.4
|
)%
|
|
3,430
|
|
|
9.1
|
%
|
|
3,144
|
|
|||
FDIC insurance
|
|
3,352
|
|
|
1.9
|
%
|
|
3,289
|
|
|
(13.5
|
)%
|
|
3,803
|
|
|||
Data processing
|
|
1,983
|
|
|
18.8
|
%
|
|
1,669
|
|
|
14.2
|
%
|
|
1,462
|
|
|||
Write-downs on other real estate owned and repossessions
|
|
5,051
|
|
|
(25.6
|
)%
|
|
6,788
|
|
|
91.8
|
%
|
|
3,539
|
|
|||
Losses on other real estate owned, repossessions and fixed assets
|
|
782
|
|
|
(43.5
|
)%
|
|
1,384
|
|
|
19.1
|
%
|
|
1,162
|
|
|||
OREO and repossession holding costs
|
|
1,591
|
|
|
(31.5
|
)%
|
|
2,322
|
|
|
41.8
|
%
|
|
1,637
|
|
|||
Intangible asset amortization
|
|
382
|
|
|
(20.3
|
)%
|
|
479
|
|
|
4.8
|
%
|
|
457
|
|
|||
Communications
|
|
523
|
|
|
(7.4
|
)%
|
|
565
|
|
|
(8.4
|
)%
|
|
617
|
|
|||
Printing and supplies
|
|
391
|
|
|
26.9
|
%
|
|
308
|
|
|
(14.0
|
)%
|
|
358
|
|
|||
Advertising
|
|
297
|
|
|
(8.0
|
)%
|
|
323
|
|
|
108.4
|
%
|
|
155
|
|
|||
Other expense
|
|
4,813
|
|
|
(4.2
|
)%
|
|
5,023
|
|
|
12.3
|
%
|
|
4,473
|
|
|||
Total noninterest expense
|
|
$
|
48,808
|
|
|
1.3
|
%
|
|
$
|
48,178
|
|
|
6.5
|
%
|
|
$
|
45,258
|
|
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Core deposit intangible amortization expense
|
|
$
|
270
|
|
|
$
|
196
|
|
|
$
|
134
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
As of December 31,
|
||||||||||||||||||||||||||||||
|
|
2012
|
|
Percent
Change
|
|
2011
|
|
Percent
Change
|
|
2010
|
|
Percent
Change
|
|
2009
|
|
Percent
Change
|
|
2008
|
||||||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||||||||||
Loans secured by real estate-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Residential 1-4 family
|
|
$
|
188,191
|
|
|
(12.6
|
)%
|
|
$
|
215,364
|
|
|
(13.7
|
)%
|
|
$
|
252,026
|
|
|
(10.4
|
)%
|
|
$
|
281,354
|
|
|
(5.1
|
)%
|
|
$
|
296,454
|
|
Commercial
|
|
221,655
|
|
|
13.6
|
%
|
|
195,062
|
|
|
(13.8
|
)%
|
|
226,357
|
|
|
(12.9
|
)%
|
|
259,819
|
|
|
10.7
|
%
|
|
234,630
|
|
|||||
Construction
|
|
33,407
|
|
|
(37.9
|
)%
|
|
53,807
|
|
|
(36.1
|
)%
|
|
84,232
|
|
|
(45.0
|
)%
|
|
153,144
|
|
|
(21.3
|
)%
|
|
194,603
|
|
|||||
Multi-family and farmland
|
|
17,051
|
|
|
(46.2
|
)%
|
|
31,668
|
|
|
(13.0
|
)%
|
|
36,393
|
|
|
(4.1
|
)%
|
|
37,960
|
|
|
10.8
|
%
|
|
34,273
|
|
|||||
|
|
460,304
|
|
|
(7.2
|
)%
|
|
495,901
|
|
|
(16.8
|
)%
|
|
599,008
|
|
|
(18.2
|
)%
|
|
732,277
|
|
|
(3.6
|
)%
|
|
759,960
|
|
|||||
Commercial loans
|
|
61,398
|
|
|
3.0
|
%
|
|
59,623
|
|
|
(28.0
|
)%
|
|
82,807
|
|
|
(43.3
|
)%
|
|
146,016
|
|
|
(7.5
|
)%
|
|
157,906
|
|
|||||
Consumer loans
|
|
13,387
|
|
|
(33.1
|
)%
|
|
20,011
|
|
|
(40.9
|
)%
|
|
33,860
|
|
|
(30.8
|
)%
|
|
48,927
|
|
|
(16.1
|
)%
|
|
58,296
|
|
|||||
Leases, net of unearned income
|
|
568
|
|
|
(80.5
|
)%
|
|
2,920
|
|
|
(63.1
|
)%
|
|
7,916
|
|
|
(59.9
|
)%
|
|
19,730
|
|
|
(36.1
|
)%
|
|
30,873
|
|
|||||
Other
|
|
5,473
|
|
|
43.7
|
%
|
|
3,809
|
|
|
(8.8
|
)%
|
|
3,500
|
|
|
(30.9
|
)%
|
|
5,068
|
|
|
11.4
|
%
|
|
4,549
|
|
|||||
Total loans
|
|
541,130
|
|
|
(7.1
|
)%
|
|
582,264
|
|
|
(19.6
|
)%
|
|
727,091
|
|
|
(23.6
|
)%
|
|
952,018
|
|
|
(5.9
|
)%
|
|
1,011,584
|
|
|||||
Allowance for loan and lease losses
|
|
(13,800
|
)
|
|
(29.6
|
)%
|
|
(19,600
|
)
|
|
(18.3
|
)%
|
|
(24,000
|
)
|
|
(9.4
|
)%
|
|
(26,492
|
)
|
|
52.4
|
%
|
|
(17,385
|
)
|
|||||
Net loans
|
|
$
|
527,330
|
|
|
(6.3
|
)%
|
|
$
|
562,664
|
|
|
(19.7
|
)%
|
|
$
|
703,091
|
|
|
(24.0
|
)%
|
|
$
|
925,526
|
|
|
(6.9
|
)%
|
|
$
|
994,199
|
|
|
|
As of December 31,
|
|||||||||||||||||||||||||||||||||
|
|
2012
|
|
% of
Loans
|
|
2011
|
|
% of
Loans
|
|
2010
|
|
% of
Loans
|
|
2009
|
|
% of
Loans
|
|
2008
|
|
% of
Loans
|
|||||||||||||||
|
|
(in thousands, expect percentages)
|
|||||||||||||||||||||||||||||||||
Secured by real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Construction and land development
|
|
$
|
33,407
|
|
|
6.2
|
%
|
|
$
|
53,807
|
|
|
9.2
|
%
|
|
$
|
84,232
|
|
|
11.6
|
%
|
|
$
|
153,144
|
|
|
16.1
|
%
|
|
$
|
194,603
|
|
|
19.2
|
%
|
Farmland
|
|
8,373
|
|
|
1.5
|
%
|
|
9,729
|
|
|
1.7
|
%
|
|
11,793
|
|
|
1.6
|
%
|
|
12,077
|
|
|
1.3
|
%
|
|
11,470
|
|
|
1.1
|
%
|
|||||
Home equity lines of credit
|
|
63,370
|
|
|
11.7
|
%
|
|
71,783
|
|
|
12.3
|
%
|
|
81,742
|
|
|
11.2
|
%
|
|
88,770
|
|
|
9.3
|
%
|
|
88,708
|
|
|
8.8
|
%
|
|||||
Residential first liens
|
|
119,094
|
|
|
22.0
|
%
|
|
136,306
|
|
|
23.7
|
%
|
|
161,622
|
|
|
22.2
|
%
|
|
181,740
|
|
|
19.1
|
%
|
|
196,734
|
|
|
19.4
|
%
|
|||||
Residential junior liens
|
|
5,727
|
|
|
1.1
|
%
|
|
7,275
|
|
|
1.2
|
%
|
|
8,662
|
|
|
1.2
|
%
|
|
10,844
|
|
|
1.1
|
%
|
|
11,012
|
|
|
1.1
|
%
|
|||||
Multi-family residential
|
|
8,678
|
|
|
1.6
|
%
|
|
21,939
|
|
|
3.7
|
%
|
|
24,600
|
|
|
3.4
|
%
|
|
25,883
|
|
|
2.7
|
%
|
|
22,803
|
|
|
2.3
|
%
|
|||||
Non-farm and non-residential
|
|
221,655
|
|
|
41.0
|
%
|
|
195,062
|
|
|
33.4
|
%
|
|
226,357
|
|
|
31.1
|
%
|
|
259,819
|
|
|
27.3
|
%
|
|
234,630
|
|
|
23.2
|
%
|
|||||
Total Real Estate
|
|
460,304
|
|
|
85.1
|
%
|
|
495,901
|
|
|
85.2
|
%
|
|
599,008
|
|
|
82.3
|
%
|
|
732,277
|
|
|
76.9
|
%
|
|
759,960
|
|
|
75.1
|
%
|
|||||
Other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial—leases, net of unearned
|
|
568
|
|
|
0.1
|
%
|
|
2,920
|
|
|
0.5
|
%
|
|
7,916
|
|
|
1.1
|
%
|
|
19,730
|
|
|
2.1
|
%
|
|
30,873
|
|
|
3.1
|
%
|
|||||
Commercial and industrial
|
|
61,398
|
|
|
11.3
|
%
|
|
59,623
|
|
|
10.2
|
%
|
|
82,807
|
|
|
11.4
|
%
|
|
146,016
|
|
|
15.4
|
%
|
|
157,906
|
|
|
15.6
|
%
|
|||||
Agricultural production
|
|
458
|
|
|
0.1
|
%
|
|
564
|
|
|
0.1
|
%
|
|
1,165
|
|
|
0.2
|
%
|
|
2,151
|
|
|
0.2
|
%
|
|
1,945
|
|
|
0.1
|
%
|
|||||
Consumer installment loans
|
|
13,387
|
|
|
2.5
|
%
|
|
20,011
|
|
|
3.4
|
%
|
|
33,860
|
|
|
4.7
|
%
|
|
48,927
|
|
|
5.1
|
%
|
|
58,296
|
|
|
5.8
|
%
|
|||||
Other
|
|
5,015
|
|
|
0.9
|
%
|
|
3,245
|
|
|
0.6
|
%
|
|
2,335
|
|
|
0.3
|
%
|
|
2,917
|
|
|
0.3
|
%
|
|
2,604
|
|
|
0.3
|
%
|
|||||
Total other loans
|
|
80,826
|
|
|
14.9
|
%
|
|
86,363
|
|
|
14.8
|
%
|
|
128,083
|
|
|
17.7
|
%
|
|
219,741
|
|
|
23.1
|
%
|
|
251,624
|
|
|
24.9
|
%
|
|||||
Total loans
|
|
$
|
541,130
|
|
|
100.0
|
%
|
|
$
|
582,264
|
|
|
100.0
|
%
|
|
$
|
727,091
|
|
|
100.0
|
%
|
|
$
|
952,018
|
|
|
100.0
|
%
|
|
$
|
1,011,584
|
|
|
100.0
|
%
|
Maturity
|
|
Construction and land development loans
|
|
Commercial and industrial loans
|
|
All loans
|
||||||||||||||||||||||||||||||
(in thousands)
|
|
Fixed Rate
|
|
Variable Rate
|
|
Total
|
|
Fixed Rate
|
|
Variable Rate
|
|
Total
|
|
Fixed Rate
|
|
Variable Rate
|
|
Total
|
||||||||||||||||||
Less than three months
|
|
$
|
3,790
|
|
|
$
|
2,020
|
|
|
$
|
5,810
|
|
|
$
|
5,816
|
|
|
$
|
5,414
|
|
|
$
|
11,230
|
|
|
$
|
30,438
|
|
|
$
|
22,508
|
|
|
$
|
52,946
|
|
Over three to twelve months
|
|
4,409
|
|
|
7,476
|
|
|
11,885
|
|
|
6,595
|
|
|
18,270
|
|
|
24,865
|
|
|
75,726
|
|
|
36,379
|
|
|
112,105
|
|
|||||||||
One year to five years
|
|
11,900
|
|
|
228
|
|
|
12,128
|
|
|
17,685
|
|
|
4,039
|
|
|
21,724
|
|
|
249,746
|
|
|
5,756
|
|
|
255,502
|
|
|||||||||
Over five years
|
|
$
|
3,012
|
|
|
$
|
572
|
|
|
$
|
3,584
|
|
|
$
|
3,579
|
|
|
$
|
—
|
|
|
$
|
3,579
|
|
|
$
|
71,455
|
|
|
$
|
49,122
|
|
|
$
|
120,577
|
|
Total
|
|
$
|
23,111
|
|
|
$
|
10,296
|
|
|
$
|
33,407
|
|
|
$
|
33,675
|
|
|
$
|
27,723
|
|
|
$
|
61,398
|
|
|
$
|
427,365
|
|
|
$
|
113,765
|
|
|
$
|
541,130
|
|
•
|
our loan loss experience;
|
•
|
specific known risks;
|
•
|
the status and amount of past due and non-performing assets;
|
•
|
underlying estimated values of collateral securing loans;
|
•
|
current and anticipated economic conditions; and
|
•
|
other factors which we believe affect the allowance for potential credit losses.
|
•
|
Downward trend in sales, profit levels and margins
|
•
|
Impaired working capital position compared to industry
|
•
|
Cash flow strained in order to meet debt repayment schedule
|
•
|
Technical defaults due to noncompliance with financial covenants
|
•
|
Recurring trade payable slowness
|
•
|
High leverage compared to industry average with shrinking equity cushion
|
•
|
Questionable abilities of management
|
•
|
Weak industry conditions
|
•
|
Inadequate or outdated financial statements
|
•
|
Loan delinquencies and overdrafts may occur
|
•
|
Original source of repayment questionable
|
•
|
Documentation deficiencies may not be easily correctable
|
•
|
Loan may need to be restructured
|
•
|
Collateral or guarantor offers adequate protection
|
•
|
Unsecured debt to tangible net worth is excessive
|
•
|
Sustained losses that have severely eroded equity and cash flows
|
•
|
Concentration in illiquid assets
|
•
|
Serious management problems or internal fraud
|
•
|
Chronic trade payable slowness; may be placed on COD or collection by trade creditor
|
•
|
Inability to access other funding sources
|
•
|
Financial statements with adverse opinion or disclaimer; may be received late
|
•
|
Insufficient documented cash flows to meet contractual debt service requirements
|
•
|
Chronic or severe delinquency or has met the retail classification standards which is generally past dues greater than 90 days
|
•
|
Frequent overdrafts
|
•
|
Likelihood of bankruptcy exists
|
•
|
Serious documentation deficiencies
|
•
|
Reliance on secondary sources of repayment which are presently considered adequate
|
•
|
Demand letter sent
|
•
|
Litigation may have been filed against the borrower
|
•
|
Normal operations are severely diminished or have ceased
|
•
|
Seriously impaired cash flow
|
•
|
Numerous exceptions to loan agreement
|
•
|
Outside accountant questions entity’s survivability as a “going concern”
|
•
|
Financial statements may be received late, if at all
|
•
|
Material legal judgments filed
|
•
|
Collection of principal and interest is impaired
|
•
|
Collateral/Guarantor may offer inadequate protection
|
•
|
Original repayment terms materially altered
|
•
|
Secondary source of repayment is inadequate
|
•
|
Asset liquidation may be in process with all efforts directed at debt retirement
|
•
|
Documentation deficiencies not correctable
|
|
|
For the Years Ending December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||
Allowance for loan and lease losses—
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning of period
|
|
$
|
19,600
|
|
|
$
|
24,000
|
|
|
$
|
26,492
|
|
|
$
|
17,385
|
|
|
$
|
10,956
|
|
Provision for loan and lease losses
|
|
20,866
|
|
|
10,920
|
|
|
33,589
|
|
|
25,380
|
|
|
15,729
|
|
|||||
Sub-total
|
|
40,466
|
|
|
34,920
|
|
|
60,081
|
|
|
42,765
|
|
|
26,685
|
|
|||||
Charged-off loans:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate—residential 1-4 family
|
|
8,153
|
|
|
2,180
|
|
|
2,572
|
|
|
1,778
|
|
|
1,492
|
|
|||||
Real estate—commercial
|
|
8,316
|
|
|
6,928
|
|
|
2,955
|
|
|
1,505
|
|
|
—
|
|
|||||
Real estate—construction
|
|
6,897
|
|
|
5,581
|
|
|
10,514
|
|
|
1,801
|
|
|
982
|
|
|||||
Real estate—multi-family and farmland
|
|
2,511
|
|
|
207
|
|
|
1,150
|
|
|
58
|
|
|
—
|
|
|||||
Commercial loans
|
|
3,095
|
|
|
3,235
|
|
|
16,420
|
|
|
8,109
|
|
|
3,468
|
|
|||||
Consumer installment loans and other
|
|
476
|
|
|
334
|
|
|
1,110
|
|
|
1,217
|
|
|
2,350
|
|
|||||
Leases, net of unearned income
|
|
894
|
|
|
929
|
|
|
2,050
|
|
|
2,214
|
|
|
1,227
|
|
|||||
Total charged-off
|
|
30,342
|
|
|
19,394
|
|
|
36,771
|
|
|
16,682
|
|
|
9,519
|
|
|||||
Recoveries of charged-off loans:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate—residential 1-4 family
|
|
229
|
|
|
404
|
|
|
56
|
|
|
35
|
|
|
25
|
|
|||||
Real estate—commercial
|
|
366
|
|
|
222
|
|
|
160
|
|
|
9
|
|
|
—
|
|
|||||
Real estate—construction
|
|
1,013
|
|
|
744
|
|
|
7
|
|
|
23
|
|
|
1
|
|
|||||
Real estate—multi-family and farmland
|
|
12
|
|
|
384
|
|
|
—
|
|
|
3
|
|
|
6
|
|
|||||
Commercial loans
|
|
406
|
|
|
894
|
|
|
326
|
|
|
166
|
|
|
15
|
|
|||||
Consumer installment loans and other
|
|
662
|
|
|
954
|
|
|
141
|
|
|
167
|
|
|
172
|
|
|||||
Leases, net of unearned income
|
|
988
|
|
|
472
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|||||
Total recoveries
|
|
3,676
|
|
|
4,074
|
|
|
690
|
|
|
409
|
|
|
219
|
|
|||||
Net charged-off loans
|
|
26,666
|
|
|
15,320
|
|
|
36,081
|
|
|
16,273
|
|
|
9,300
|
|
|||||
Allowance for loan and lease losses—end of period
|
|
$
|
13,800
|
|
|
$
|
19,600
|
|
|
$
|
24,000
|
|
|
$
|
26,492
|
|
|
$
|
17,385
|
|
Total loans—end of period
|
|
$
|
541,130
|
|
|
$
|
582,264
|
|
|
$
|
727,091
|
|
|
$
|
952,018
|
|
|
$
|
1,011,584
|
|
Average loans
|
|
$
|
590,109
|
|
|
$
|
647,920
|
|
|
$
|
845,945
|
|
|
$
|
977,758
|
|
|
$
|
997,371
|
|
Net loans charged-off to average loans
|
|
4.52
|
%
|
|
2.36
|
%
|
|
4.27
|
%
|
|
1.66
|
%
|
|
0.93
|
%
|
|||||
Provision for loan and lease losses to average loans
|
|
3.54
|
%
|
|
1.69
|
%
|
|
3.97
|
%
|
|
2.60
|
%
|
|
1.58
|
%
|
|||||
Allowance for loan and lease losses as a percentage of:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Period end loans
|
|
2.55
|
%
|
|
3.37
|
%
|
|
3.30
|
%
|
|
2.78
|
%
|
|
1.72
|
%
|
|||||
Non-performing loans
|
|
51.63
|
%
|
|
39.41
|
%
|
|
40.73
|
%
|
|
53.01
|
%
|
|
82.16
|
%
|
|
|
As of December 31,
|
|||||||||||||||||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|||||||||||||||||||||||||
|
|
Amount
|
|
Percent
of
Portfolio
1
|
|
Amount
|
|
Percent
of
Portfolio
1
|
|
Amount
|
|
Percent
of
Portfolio
1
|
|
Amount
|
|
Percent
of
Portfolio
1
|
|
Amount
|
|
Percent
of
Portfolio
1
|
|||||||||||||||
|
|
(in thousands, except percentages)
|
|||||||||||||||||||||||||||||||||
Real estate—residential 1-4 family
|
|
$
|
6,207
|
|
|
34.8
|
%
|
|
$
|
6,368
|
|
|
37.0
|
%
|
|
$
|
7,346
|
|
|
34.7
|
%
|
|
$
|
5,037
|
|
|
29.6
|
%
|
|
$
|
3,760
|
|
|
29.3
|
%
|
Real estate—commercial
|
|
3,736
|
|
|
41.0
|
%
|
|
6,227
|
|
|
33.5
|
%
|
|
5,550
|
|
|
31.1
|
%
|
|
4,525
|
|
|
27.3
|
%
|
|
2,599
|
|
|
23.2
|
%
|
|||||
Real estate—construction
|
|
667
|
|
|
6.2
|
%
|
|
1,485
|
|
|
9.2
|
%
|
|
2,905
|
|
|
11.6
|
%
|
|
6,706
|
|
|
16.0
|
%
|
|
3,919
|
|
|
19.2
|
%
|
|||||
Real estate—multi-family and farmland
|
|
741
|
|
|
3.1
|
%
|
|
728
|
|
|
5.4
|
%
|
|
761
|
|
|
5.0
|
%
|
|
766
|
|
|
4.0
|
%
|
|
366
|
|
|
3.4
|
%
|
|||||
Commercial loans
|
|
2,103
|
|
|
11.3
|
%
|
|
3,649
|
|
|
10.2
|
%
|
|
5,692
|
|
|
11.4
|
%
|
|
6,953
|
|
|
15.4
|
%
|
|
3,149
|
|
|
15.6
|
%
|
|||||
Consumer loans
|
|
272
|
|
|
2.5
|
%
|
|
405
|
|
|
3.4
|
%
|
|
813
|
|
|
4.7
|
%
|
|
1,107
|
|
|
5.1
|
%
|
|
872
|
|
|
5.8
|
%
|
|||||
Leases, net of unearned income
|
|
47
|
|
|
0.1
|
%
|
|
718
|
|
|
0.5
|
%
|
|
917
|
|
|
1.1
|
%
|
|
1,386
|
|
|
2.1
|
%
|
|
2,588
|
|
|
3.1
|
%
|
|||||
Other and unallocated
|
|
27
|
|
|
1.0
|
%
|
|
20
|
|
|
0.8
|
%
|
|
16
|
|
|
0.4
|
%
|
|
12
|
|
|
0.5
|
%
|
|
132
|
|
|
0.4
|
%
|
|||||
Total
|
|
$
|
13,800
|
|
|
100.0
|
%
|
|
$
|
19,600
|
|
|
100.0
|
%
|
|
$
|
24,000
|
|
|
100.0
|
%
|
|
$
|
26,492
|
|
|
100.0
|
%
|
|
$
|
17,385
|
|
|
100.0
|
%
|
1
|
|
Represents the percentage of loans in each category to total loans.
|
|
|
Pass
|
|
Special
Mention
|
|
Substandard –
Non-impaired
|
|
Substandard –
Impaired
|
|
Total
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Loans by Classification
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate: Residential 1-4 family
|
|
$
|
164,555
|
|
|
$
|
7,668
|
|
|
$
|
15,511
|
|
|
$
|
457
|
|
|
$
|
188,191
|
|
Real estate: Commercial
|
|
207,188
|
|
|
4,930
|
|
|
8,810
|
|
|
727
|
|
|
221,655
|
|
|||||
Real estate: Construction
|
|
30,471
|
|
|
97
|
|
|
1,056
|
|
|
1,783
|
|
|
33,407
|
|
|||||
Real estate: Multi-family and farmland
|
|
14,025
|
|
|
1,794
|
|
|
1,232
|
|
|
—
|
|
|
17,051
|
|
|||||
Commercial
|
|
51,972
|
|
|
756
|
|
|
6,593
|
|
|
2,077
|
|
|
61,398
|
|
|||||
Consumer
|
|
12,793
|
|
|
126
|
|
|
468
|
|
|
—
|
|
|
13,387
|
|
|||||
Leases, net of unearned income
|
|
1
|
|
|
74
|
|
|
101
|
|
|
392
|
|
|
568
|
|
|||||
Other
|
|
5,365
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
5,473
|
|
|||||
Total Loans
|
|
$
|
486,370
|
|
|
$
|
15,445
|
|
|
$
|
33,879
|
|
|
$
|
5,436
|
|
|
$
|
541,130
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||
Nonaccrual loans
|
|
$
|
25,071
|
|
|
$
|
46,907
|
|
|
$
|
54,082
|
|
|
$
|
45,454
|
|
|
$
|
18,453
|
|
Loans past due 90 days and still accruing
|
|
1,656
|
|
|
2,822
|
|
|
4,838
|
|
|
4,524
|
|
|
2,706
|
|
|||||
Total nonperforming loans
|
|
$
|
26,727
|
|
|
$
|
49,729
|
|
|
$
|
58,920
|
|
|
$
|
49,978
|
|
|
$
|
21,159
|
|
Other real estate owned
|
|
$
|
13,441
|
|
|
$
|
25,141
|
|
|
$
|
24,399
|
|
|
$
|
15,312
|
|
|
$
|
7,145
|
|
Repossessed assets
|
|
8
|
|
|
302
|
|
|
763
|
|
|
3,881
|
|
|
1,680
|
|
|||||
Total nonperforming assets
|
|
$
|
40,176
|
|
|
$
|
75,172
|
|
|
$
|
84,082
|
|
|
$
|
69,171
|
|
|
$
|
29,984
|
|
Nonperforming loans as a percentage of total loans
|
|
4.94
|
%
|
|
8.54
|
%
|
|
8.10
|
%
|
|
5.25
|
%
|
|
2.09
|
%
|
|||||
Nonperforming assets as a percentage of total assets
|
|
3.78
|
%
|
|
6.74
|
%
|
|
7.20
|
%
|
|
5.11
|
%
|
|
2.35
|
%
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
December 31, 2010
|
|||||||||||||||
|
|
Amount
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Units
|
|||||||||
|
|
(in thousands, except units)
|
|||||||||||||||||||
Nonaccrual loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Construction/development loans
|
|
$
|
4,516
|
|
|
41
|
|
|
$
|
14,683
|
|
|
30
|
|
|
$
|
25,586
|
|
|
56
|
|
Residential real estate loans
|
|
9,217
|
|
|
217
|
|
|
10,877
|
|
|
107
|
|
|
8,906
|
|
|
84
|
|
|||
Commercial real estate loans
|
|
6,150
|
|
|
69
|
|
|
13,288
|
|
|
38
|
|
|
10,007
|
|
|
30
|
|
|||
Commercial and industrial loans
|
|
3,104
|
|
|
56
|
|
|
3,087
|
|
|
32
|
|
|
4,228
|
|
|
26
|
|
|||
Commercial leases
|
|
436
|
|
|
42
|
|
|
2,244
|
|
|
96
|
|
|
3,459
|
|
|
59
|
|
|||
Consumer and other loans
|
|
1,648
|
|
|
34
|
|
|
2,728
|
|
|
24
|
|
|
1,896
|
|
|
18
|
|
|||
Total
|
|
$
|
25,071
|
|
|
459
|
|
|
$
|
46,907
|
|
|
327
|
|
|
$
|
54,082
|
|
|
273
|
|
Other real estate owned
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Construction/development loans
|
|
$
|
6,163
|
|
|
351
|
|
|
$
|
12,225
|
|
|
89
|
|
|
$
|
10,821
|
|
|
67
|
|
Residential real estate loans
|
|
1,921
|
|
|
86
|
|
|
6,579
|
|
|
63
|
|
|
8,266
|
|
|
63
|
|
|||
Commercial real estate loans
|
|
4,211
|
|
|
39
|
|
|
5,380
|
|
|
22
|
|
|
5,312
|
|
|
20
|
|
|||
Multi-family and farmland loans
|
|
873
|
|
|
3
|
|
|
541
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|||
Commercial and industrial loans
|
|
273
|
|
|
2
|
|
|
416
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
$
|
13,441
|
|
|
481
|
|
|
$
|
25,141
|
|
|
178
|
|
|
$
|
24,399
|
|
|
150
|
|
|
|
First
Security
|
|
UBPR
Peer
Group
|
||
Allowance for loan and lease losses to total loans
|
|
2.55
|
%
|
|
1.80
|
%
|
Non-performing loans
1
as a percentage of gross loans
|
|
4.94
|
%
|
|
2.02
|
%
|
Non-performing loans
1
as a percentage of the allowance
|
|
193.67
|
%
|
|
114.63
|
%
|
Non-performing loans
1
as a percentage of equity capital
|
|
91.81
|
%
|
|
11.96
|
%
|
Non-performing loans
1
plus OREO as a percentage of gross loans plus OREO
|
|
7.24
|
%
|
|
3.06
|
%
|
1
|
|
Non-performing loans consist of nonaccrual loans and loans 90 days past due that are still accruing.
|
|
|
Less than
One Year
|
|
One Year to
Five Years
|
|
Five Years to
Ten Years
|
|
More than
Ten Years
|
|
Totals
|
||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||
Municipal—tax exempt
|
|
$
|
880
|
|
|
$
|
12,234
|
|
|
$
|
5,701
|
|
|
$
|
2,210
|
|
|
$
|
21,025
|
|
Municipal—taxable
|
|
—
|
|
|
—
|
|
|
14,063
|
|
|
—
|
|
|
14,063
|
|
|||||
Agency bonds
|
|
—
|
|
|
3,000
|
|
|
45,030
|
|
|
9,363
|
|
|
57,393
|
|
|||||
Agency issued REMICs
|
|
4,488
|
|
|
77,988
|
|
|
—
|
|
|
—
|
|
|
82,476
|
|
|||||
Agency issued mortgage pools
|
|
138
|
|
|
51,769
|
|
|
20,207
|
|
|
2,601
|
|
|
74,715
|
|
|||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
61
|
|
|||||
Total
|
|
$
|
5,506
|
|
|
$
|
144,991
|
|
|
$
|
85,001
|
|
|
$
|
14,235
|
|
|
$
|
249,733
|
|
Tax equivalent yield
|
|
3.71
|
%
|
|
2.56
|
%
|
|
2.16
|
%
|
|
2.84
|
%
|
|
2.48
|
%
|
|
|
As of December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
|
(in thousands)
|
||||||||||
Securities available-for-sale
|
|
|
|
|
|
|
||||||
Debt securities—
|
|
|
|
|
|
|
||||||
Federal agencies
|
|
$
|
57,393
|
|
|
$
|
23,984
|
|
|
$
|
31,967
|
|
Mortgage-backed
|
|
157,191
|
|
|
134,210
|
|
|
84,515
|
|
|||
Municipals
|
|
35,088
|
|
|
30,453
|
|
|
34,700
|
|
|||
Other
|
|
61
|
|
|
127
|
|
|
127
|
|
|||
Total
|
|
$
|
249,733
|
|
|
$
|
188,774
|
|
|
$
|
151,309
|
|
|
|
Less than 12 months
|
|
12 months or greater
|
|
Totals
|
||||||||||||||||||
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Federal agencies
|
|
$
|
20,199
|
|
|
$
|
104
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,199
|
|
|
$
|
104
|
|
Mortgage-backed
|
|
15,509
|
|
|
138
|
|
|
—
|
|
|
—
|
|
|
15,509
|
|
|
138
|
|
||||||
Municipals
|
|
8,012
|
|
|
122
|
|
|
—
|
|
|
—
|
|
|
8,012
|
|
|
122
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
41
|
|
|
20
|
|
|
41
|
|
|
20
|
|
||||||
Totals
|
|
$
|
43,720
|
|
|
$
|
364
|
|
|
$
|
41
|
|
|
$
|
20
|
|
|
$
|
43,761
|
|
|
$
|
384
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Federal agencies
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage-backed
|
|
26,780
|
|
|
129
|
|
|
—
|
|
|
—
|
|
|
26,780
|
|
|
129
|
|
||||||
Municipals
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
36
|
|
|
91
|
|
|
36
|
|
|
91
|
|
||||||
Totals
|
|
$
|
26,780
|
|
|
$
|
129
|
|
|
$
|
36
|
|
|
$
|
91
|
|
|
$
|
26,816
|
|
|
$
|
220
|
|
|
|
Book Value
|
|
Market Value
|
||||
|
|
(in thousands)
|
||||||
Fannie Mae
|
|
$
|
44,767
|
|
|
$
|
46,211
|
|
Federal Home Loan Mortgage Corporation
|
|
$
|
14,895
|
|
|
$
|
15,542
|
|
Ginnie Mae
|
|
$
|
15,052
|
|
|
$
|
15,381
|
|
|
|
2012
|
|
2011
|
||||
|
|
(in thousands)
|
||||||
Brokered certificates of deposits
|
|
$
|
165,106
|
|
|
$
|
237,032
|
|
CDARS
®
|
|
371
|
|
|
1,405
|
|
||
|
|
$
|
165,477
|
|
|
$
|
238,437
|
|
|
|
Less than
3 months
|
|
Three months
to six months
|
|
Six months to
twelve months
|
|
Greater than
twelve months
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Certificates of deposit of $100 thousand or more
|
|
$
|
35,409
|
|
|
$
|
27,903
|
|
|
$
|
57,921
|
|
|
$
|
80,640
|
|
Brokered certificates of deposit
|
|
25,763
|
|
|
29,833
|
|
|
34,822
|
|
|
74,688
|
|
||||
CDARS
®
|
|
—
|
|
|
—
|
|
|
—
|
|
|
371
|
|
||||
|
|
$
|
61,172
|
|
|
$
|
57,736
|
|
|
$
|
92,743
|
|
|
$
|
155,699
|
|
Maturity
Year
|
|
Origination
Date
|
|
Type
|
|
Principal
|
|
Original
Term
|
|
Rate
|
|
Maturity
|
|||
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|||
2015
|
|
1/5/1995
|
|
Fixed rate mortgage
|
|
$
|
58
|
|
|
240 months
|
|
7.50
|
%
|
|
1/5/2015
|
|
|
As of December 31, 2012
|
|||||||||||||||||||
|
|
Within
Three Months
|
|
After
Three Months
but Within
One Year
|
|
After
One Year
but Within
Five Years
|
|
After
Five Years
and Non-Rate
Sensitive
|
|
Total
|
|||||||||||
|
|
(in thousands)
|
|||||||||||||||||||
Interest earning assets:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest bearing deposits
|
|
$
|
156,870
|
|
|
$
|
2,795
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
159,665
|
|
|
Federal funds sold
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Securities
|
|
104
|
|
|
5,468
|
|
|
148,424
|
|
|
100,061
|
|
|
254,057
|
|
||||||
Loans originated for held for sale
|
|
3,624
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,624
|
|
||||||
Loans transferred to held for sale
|
|
22,296
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans
|
|
225,146
|
|
|
167,943
|
|
|
77,467
|
|
|
70,574
|
|
|
541,130
|
|
||||||
Total interest earning assets
|
|
408,040
|
|
|
176,206
|
|
|
|
225,891
|
|
|
170,635
|
|
|
958,476
|
|
|||||
Interest bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Demand deposits
|
|
4,762
|
|
|
4,762
|
|
|
77,051
|
|
|
—
|
|
|
86,575
|
|
||||||
MMDA deposits
|
|
23,976
|
|
|
23,976
|
|
|
97,358
|
|
|
—
|
|
|
145,310
|
|
||||||
Savings deposits
|
|
3,929
|
|
|
3,929
|
|
|
31,429
|
|
|
—
|
|
|
39,287
|
|
||||||
Time deposits
|
|
76,111
|
|
|
193,910
|
|
|
159,996
|
|
|
—
|
|
|
430,017
|
|
||||||
Brokered certificates of deposits
|
|
25,763
|
|
|
64,655
|
|
|
74,688
|
|
|
—
|
|
|
165,106
|
|
||||||
CDARS
®
|
|
—
|
|
|
—
|
|
|
371
|
|
|
—
|
|
|
371
|
|
||||||
Fed funds purchased/repos
|
|
12,481
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,481
|
|
||||||
Other borrowings
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total interest bearing liabilities
|
|
147,022
|
|
|
291,232
|
|
|
|
440,893
|
|
|
—
|
|
|
879,147
|
|
|||||
Noninterest bearing sources of funds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101,625
|
|
|
101,625
|
|
||||||
Interest sensitivity gap
|
|
$
|
261,018
|
|
|
$
|
(115,026
|
)
|
|
$
|
(215,002
|
)
|
|
$
|
69,010
|
|
|
$
|
(22,296
|
)
|
|
Cumulative sensitivity gap
|
|
$
|
261,018
|
|
|
$
|
145,992
|
|
|
$
|
(69,010
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Total
|
|
Less than
One Year
|
|
One to Three
Years
|
|
Three to Five
Years
|
|
More than
Five Years
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Certificates of deposit
1
|
|
$
|
430,017
|
|
|
$
|
270,021
|
|
|
$
|
158,946
|
|
|
$
|
1,050
|
|
|
$
|
—
|
|
Brokered certificates of deposit
1
|
|
165,106
|
|
|
90,418
|
|
|
72,712
|
|
|
1,976
|
|
|
—
|
|
|||||
CDARS
®1
|
|
371
|
|
|
—
|
|
|
371
|
|
|
—
|
|
|
—
|
|
|||||
Federal funds purchased and securities sold under agreements to repurchase
2
|
|
12,481
|
|
|
12,481
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
3
|
|
6,910
|
|
|
824
|
|
|
1,441
|
|
|
1,221
|
|
|
3,424
|
|
|||||
Total
|
|
$
|
614,885
|
|
|
$
|
373,744
|
|
|
$
|
233,470
|
|
|
$
|
4,247
|
|
|
$
|
3,424
|
|
1
|
|
Time deposits give customers rights to early withdrawal. Early withdrawals may be subject to penalties. The penalty amount depends on the remaining time to maturity at the time of early withdrawal. For more information regarding certificates of deposits, see “Deposits and Other Borrowings.”
|
2
|
|
We expect securities repurchase agreements to be re-issued and, as such, they do not necessarily represent an immediate need for cash.
|
3
|
|
Operating lease obligations include existing and future property and equipment non-cancelable lease commitments.
|
|
|
FSGBank
Consent
Order
(1)
|
|
Minimum to be
Well Capitalized
under Prompt
Corrective Action
Provisions
|
|
|
|
Minimum
Capital
Requirements
|
|
First
Security
|
|
FSGBank
|
|
|
|||||
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tier 1 capital to risk weighted assets
|
|
n/a
|
|
|
6.0
|
%
|
|
%
|
|
4.0
|
%
|
|
4.2
|
%
|
|
4.5
|
|
|
%
(3)
|
Total capital to risk weighted assets
|
|
13.0
|
%
|
|
10.0
|
%
|
|
%
|
|
8.0
|
%
|
|
5.5
|
%
|
|
5.8
|
|
|
%
(3)
|
Leverage ratio
|
|
9.0
|
%
|
|
5.0
|
|
|
%
(2)
|
|
4.0
|
%
|
|
2.3
|
%
|
|
2.5
|
|
|
%
(3)
|
As of December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tier 1 capital to risk weighted assets
|
|
n/a
|
|
|
6.0
|
%
|
|
%
|
|
4.0
|
%
|
|
9.7
|
%
|
|
9.7
|
|
|
%
(3)
|
Total capital to risk weighted assets
|
|
13.0
|
%
|
|
10.0
|
%
|
|
%
|
|
8.0
|
%
|
|
11.0
|
%
|
|
10.9
|
|
|
%
(3)
|
Leverage ratio
|
|
9.0
|
%
|
|
5.0
|
|
|
%
(2)
|
|
4.0
|
%
|
|
5.7
|
%
|
|
5.6
|
|
|
%
(3)
|
(1)
|
The Consent order required FSGBank to achieve and maintain the above capital ratios within 120 days from April 28, 2010.
|
(2)
|
The Federal Reserve Board definition of well capitalized for bank holding companies does not include a leverage ratio component; accordingly, the leverage ratio requirement for well capitalized status only applies to FSGBank.
|
(3)
|
Due to the capital requirement within FSGBank’s Consent Order, FSGBank may not be considered well capitalized.
|
|
|
2012
|
|
2011
|
||||
|
|
(in thousands)
|
||||||
Commitments to Extend Credit
|
|
$
|
111,134
|
|
|
$
|
108,335
|
|
Standby Letters of Credit
|
|
$
|
5,023
|
|
|
$
|
7,983
|
|
ITEM 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Down
100 BP
|
|
Current
|
|
Up 100
BP
|
|
Up 200
BP
|
|||||||
|
(in thousands, except percentages)
|
|||||||||||||
Net interest income
|
21,573
|
|
|
$
|
23,580
|
|
|
$
|
26,921
|
|
|
$
|
29,892
|
|
Dollar change net interest income
|
(2,007
|
)
|
|
—
|
|
|
3,341
|
|
|
6,312
|
|
|||
Percentage change net interest income
|
(8.51
|
)%
|
|
—
|
%
|
|
14.17
|
%
|
|
26.77
|
%
|
ITEM 8.
|
Financial Statements and Supplementary Data
|
|
Reports of Independent Registered Public Accounting Firms
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
(in thousands, except share and per share data)
|
2012
|
|
2011
|
||||
ASSETS
|
|
|
|
||||
Cash and Due from Banks
|
$
|
12,806
|
|
|
$
|
8,884
|
|
Interest Bearing Deposits in Banks
|
159,665
|
|
|
249,297
|
|
||
Cash and Cash Equivalents
|
172,471
|
|
|
258,181
|
|
||
Securities Available-for-Sale
|
254,057
|
|
|
193,041
|
|
||
Loans Held for Sale
|
25,920
|
|
|
2,233
|
|
||
Loans
|
541,130
|
|
|
582,264
|
|
||
Less: Allowance for Loan and Lease Losses
|
13,800
|
|
|
19,600
|
|
||
Net Loans
|
527,330
|
|
|
562,664
|
|
||
Premises and Equipment, net
|
29,304
|
|
|
28,671
|
|
||
Bank Owned Life Insurance
|
27,576
|
|
|
26,722
|
|
||
Intangible Assets
|
600
|
|
|
982
|
|
||
Other Real Estate Owned
|
13,441
|
|
|
25,141
|
|
||
Other Assets
|
12,856
|
|
|
17,266
|
|
||
TOTAL ASSETS
|
$
|
1,063,555
|
|
|
$
|
1,114,901
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
LIABILITIES
|
|
|
|
||||
Deposits
|
|
|
|
||||
Noninterest Bearing Demand
|
$
|
141,400
|
|
|
$
|
159,735
|
|
Interest Bearing Demand
|
86,575
|
|
|
56,573
|
|
||
Savings and Money Market Accounts
|
184,597
|
|
|
156,402
|
|
||
Certificates of Deposit less than $100 thousand
|
228,144
|
|
|
222,371
|
|
||
Certificates of Deposit of $100 thousand or more
|
201,873
|
|
|
185,904
|
|
||
Brokered Deposits
|
165,477
|
|
|
238,437
|
|
||
Total Deposits
|
1,008,066
|
|
|
1,019,422
|
|
||
Federal Funds Purchased and Securities Sold under Agreements to Repurchase
|
12,481
|
|
|
14,520
|
|
||
Security Deposits
|
58
|
|
|
204
|
|
||
Other Borrowings
|
—
|
|
|
58
|
|
||
Other Liabilities
|
13,840
|
|
|
12,465
|
|
||
Total Liabilities
|
1,034,445
|
|
|
1,046,669
|
|
||
SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Preferred Stock – no par value – 10,000,000 shares authorized; 33,000 issued as of December 31, 2012 and December 31, 2011; Liquidation value of $38,156 as of December 31, 2012 and $36,506 as of December 31, 2011
|
32,549
|
|
|
32,121
|
|
||
Common Stock – $.01 par value – 150,000,000 shares authorized; 1,772,342 shares issued as of December 31, 2012, 1,684,342 issued as of December 31, 2011
|
115
|
|
|
114
|
|
||
Paid-In Surplus
|
106,531
|
|
|
109,525
|
|
||
Common Stock Warrants
|
2,006
|
|
|
2,006
|
|
||
Unallocated ESOP Shares
|
—
|
|
|
(3,290
|
)
|
||
Accumulated Deficit
|
(115,391
|
)
|
|
(75,743
|
)
|
||
Accumulated Other Comprehensive Income
|
3,300
|
|
|
3,499
|
|
||
Total Shareholders’ Equity
|
29,110
|
|
|
68,232
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
1,063,555
|
|
|
$
|
1,114,901
|
|
(in thousands, except per share data)
|
2012
|
|
2011
|
|
2010
|
||||||
INTEREST INCOME
|
|
|
|
|
|
||||||
Loans, including fees
|
$
|
31,264
|
|
|
$
|
37,519
|
|
|
$
|
49,118
|
|
Investment Securities – taxable
|
3,528
|
|
|
3,444
|
|
|
3,870
|
|
|||
Investment Securities – non-taxable
|
1,006
|
|
|
1,278
|
|
|
1,411
|
|
|||
Other
|
512
|
|
|
543
|
|
|
517
|
|
|||
Total Interest Income
|
36,310
|
|
|
42,784
|
|
|
54,916
|
|
|||
INTEREST EXPENSE
|
|
|
|
|
|
||||||
Interest Bearing Demand Deposits
|
191
|
|
|
158
|
|
|
186
|
|
|||
Savings Deposits and Money Market Accounts
|
1,045
|
|
|
1,082
|
|
|
1,417
|
|
|||
Certificates of Deposit of less than $100 thousand
|
2,681
|
|
|
2,940
|
|
|
4,673
|
|
|||
Certificates of Deposit of $100 thousand or more
|
2,554
|
|
|
2,517
|
|
|
4,049
|
|
|||
Brokered Deposits
|
5,863
|
|
|
7,864
|
|
|
9,429
|
|
|||
Other
|
396
|
|
|
444
|
|
|
481
|
|
|||
Total Interest Expense
|
12,730
|
|
|
15,005
|
|
|
20,235
|
|
|||
NET INTEREST INCOME
|
23,580
|
|
|
27,779
|
|
|
34,681
|
|
|||
Provision for Loan and Lease Losses
|
20,866
|
|
|
10,920
|
|
|
33,589
|
|
|||
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES
|
2,714
|
|
|
16,859
|
|
|
1,092
|
|
|||
NONINTEREST INCOME
|
|
|
|
|
|
||||||
Service Charges on Deposit Accounts
|
3,032
|
|
|
3,122
|
|
|
3,912
|
|
|||
Mortgage Banking Income
|
974
|
|
|
737
|
|
|
909
|
|
|||
Gain on Sales of Securities Available-for-Sale
|
154
|
|
|
—
|
|
|
57
|
|
|||
Other
|
5,135
|
|
|
4,791
|
|
|
4,625
|
|
|||
Total Noninterest Income
|
9,295
|
|
|
8,650
|
|
|
9,503
|
|
|||
NONINTEREST EXPENSES
|
|
|
|
|
|
||||||
Salaries and Employee Benefits
|
20,446
|
|
|
17,571
|
|
|
18,926
|
|
|||
Expense on Premises and Fixed Assets, net of rental income
|
5,815
|
|
|
5,027
|
|
|
5,525
|
|
|||
Other
|
22,547
|
|
|
25,580
|
|
|
20,807
|
|
|||
Total Noninterest Expenses
|
48,808
|
|
|
48,178
|
|
|
45,258
|
|
|||
LOSS BEFORE INCOME TAX PROVISION
|
(36,799
|
)
|
|
(22,669
|
)
|
|
(34,663
|
)
|
|||
Income Tax Provision
|
771
|
|
|
392
|
|
|
9,679
|
|
|||
NET LOSS
|
(37,570
|
)
|
|
(23,061
|
)
|
|
(44,342
|
)
|
|||
Preferred Stock Dividends
|
1,650
|
|
|
1,650
|
|
|
1,650
|
|
|||
Accretion on Preferred Stock Discount
|
428
|
|
|
403
|
|
|
379
|
|
|||
NET LOSS ALLOCATED TO COMMON SHAREHOLDERS
|
$
|
(39,648
|
)
|
|
$
|
(25,114
|
)
|
|
$
|
(46,371
|
)
|
OTHER COMPREHENSIVE LOSS
|
|
|
|
|
|
||||||
Net loss
|
(37,570
|
)
|
|
(23,061
|
)
|
|
(44,342
|
)
|
|||
Unrealized net gain (loss) on securities
|
212
|
|
|
1,412
|
|
|
(809
|
)
|
|||
Reclassification adjustment for realized gain on securities included in net loss
|
(154
|
)
|
|
—
|
|
|
(57
|
)
|
|||
Tax expense related to realized gain from securities realized in net loss
|
—
|
|
|
—
|
|
|
19
|
|
|||
Unrealized net gain (loss) on cash flow swaps
|
(1,255
|
)
|
|
(105
|
)
|
|
29
|
|
|||
Reclassification for realized gain on cash flow swaps included in net loss
|
(67
|
)
|
|
(1,847
|
)
|
|
(2,022
|
)
|
|||
Tax expense related to realized gain on cash flow swaps included in net loss
|
1,065
|
|
|
—
|
|
|
687
|
|
|||
COMPREHENSIVE LOSS
|
(37,769
|
)
|
|
(23,601
|
)
|
|
(46,495
|
)
|
|||
NET LOSS PER COMMON SHARE:
|
|
|
|
|
|
||||||
Net Loss Per Share – Basic
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
Net Loss Per Share – Diluted
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
Accumulated
Other
Comprehensive
Income
|
|
|
|
|
||||||||||||||||||||
(in thousands)
|
Preferred
Stock
|
|
Shares
|
|
Amount
|
|
Paid-In
Surplus
|
|
Common
Stock
Warrants
|
|
Accumulated
Deficit
|
|
Unallocated ESOP Shares
|
|
Total
|
||||||||||||||||||||
BALANCE - December 31, 2009
|
$
|
31,339
|
|
|
$
|
1,642
|
|
|
$
|
114
|
|
|
$
|
111,964
|
|
|
$
|
2,006
|
|
|
$
|
(4,258
|
)
|
|
$
|
6,192
|
|
|
$
|
(6,193
|
)
|
|
$
|
141,164
|
|
Issuance of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Net Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,342
|
)
|
|
—
|
|
|
—
|
|
|
(44,342
|
)
|
|||||||||
Other Comprehensive Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,153
|
)
|
|
—
|
|
|
(2,153
|
)
|
|||||||||
Accretion of Discount associated with Preferred Stock
|
379
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(379
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Preferred Stock Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,650
|
)
|
|
—
|
|
|
—
|
|
|
(1,650
|
)
|
|||||||||
Common Stock Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Stock-based Compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|||||||||
ESOP Allocation
|
—
|
|
|
—
|
|
|
—
|
|
|
(644
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
975
|
|
|
331
|
|
|||||||||
BALANCE - December 31, 2010
|
$
|
31,718
|
|
|
$
|
1,642
|
|
|
$
|
114
|
|
|
$
|
111,344
|
|
|
$
|
2,006
|
|
|
$
|
(50,629
|
)
|
|
$
|
4,039
|
|
|
$
|
(5,218
|
)
|
|
$
|
93,374
|
|
Issuance of Common Stock
|
—
|
|
|
42
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||||||
Net Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,061
|
)
|
|
—
|
|
|
—
|
|
|
(23,061
|
)
|
|||||||||
Other Comprehensive Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(540
|
)
|
|
—
|
|
|
(540
|
)
|
|||||||||
Accretion of Discount associated with Preferred Stock
|
403
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(403
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Preferred Stock Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,650
|
)
|
|
—
|
|
|
—
|
|
|
(1,650
|
)
|
|||||||||
Common Stock Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Stock-based Compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||||||
ESOP Allocation
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,834
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,928
|
|
|
94
|
|
|||||||||
Balance - December 31, 2011
|
$
|
32,121
|
|
|
$
|
1,684
|
|
|
$
|
114
|
|
|
$
|
109,525
|
|
|
$
|
2,006
|
|
|
$
|
(75,743
|
)
|
|
$
|
3,499
|
|
|
$
|
(3,290
|
)
|
|
$
|
68,232
|
|
Restricted Stock Grants
|
—
|
|
|
88
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Net Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,570
|
)
|
|
—
|
|
|
—
|
|
|
(37,570
|
)
|
|||||||||
Other Comprehensive Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(199
|
)
|
|
—
|
|
|
(199
|
)
|
|||||||||
Accretion of Discount Associated with Preferred Stock
|
428
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(428
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Preferred Stock Dividend
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,650
|
)
|
|
—
|
|
|
—
|
|
|
(1,650
|
)
|
|||||||||
Share-based Compensation, net of forfeitures
|
—
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|||||||||
ESOP Allocation
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,208
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,290
|
|
|
82
|
|
|||||||||
Balance - December 31, 2012
|
$
|
32,549
|
|
|
$
|
1,772
|
|
|
$
|
115
|
|
|
$
|
106,531
|
|
|
$
|
2,006
|
|
|
$
|
(115,391
|
)
|
|
$
|
3,300
|
|
|
$
|
—
|
|
|
$
|
29,110
|
|
(in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net Loss
|
$
|
(37,570
|
)
|
|
$
|
(23,061
|
)
|
|
$
|
(44,342
|
)
|
Adjustments to Reconcile Net Loss to Net Cash From Operating Activities
|
|
|
|
|
|
||||||
Provision for Loan and Lease Losses
|
20,866
|
|
|
10,920
|
|
|
33,589
|
|
|||
Amortization, net
|
3,807
|
|
|
1,576
|
|
|
1,095
|
|
|||
Share-Based Compensation
|
215
|
|
|
12
|
|
|
24
|
|
|||
ESOP Compensation
|
82
|
|
|
94
|
|
|
331
|
|
|||
Depreciation
|
1,496
|
|
|
1,491
|
|
|
1,795
|
|
|||
Gain on Sales of Available-for-Sale Securities
|
(154
|
)
|
|
—
|
|
|
(57
|
)
|
|||
Loss on Sales of Premises and Equipment, net
|
16
|
|
|
60
|
|
|
199
|
|
|||
(Gain) Loss on Sales of Other Real Estate Owned and Repossessions, net
|
(148
|
)
|
|
1,122
|
|
|
710
|
|
|||
Write-down of Other Real Estate Owned and Repossessions
|
5,288
|
|
|
6,788
|
|
|
3,539
|
|
|||
Accretion of Fair Value Adjustment, net
|
(40
|
)
|
|
(9
|
)
|
|
(89
|
)
|
|||
Accretion of Terminated Cash Flow Swaps
|
(881
|
)
|
|
(1,219
|
)
|
|
(2,022
|
)
|
|||
Deferred Income Tax
|
—
|
|
|
—
|
|
|
12,457
|
|
|||
Changes in Operating Assets and Liabilities
|
|
|
|
|
|
||||||
Loans Held for Sale
|
(1,395
|
)
|
|
323
|
|
|
(1,303
|
)
|
|||
Interest Receivable
|
(175
|
)
|
|
571
|
|
|
1,084
|
|
|||
Other Assets
|
4,067
|
|
|
495
|
|
|
(3,753
|
)
|
|||
Interest Payable
|
(341
|
)
|
|
(816
|
)
|
|
(1,462
|
)
|
|||
Other Liabilities
|
(80
|
)
|
|
913
|
|
|
(115
|
)
|
|||
Net Cash From Operating Activities
|
(4,947
|
)
|
|
(740
|
)
|
|
1,680
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Activity in Securities Available-for-Sale
|
|
|
|
|
|
||||||
Maturities, Prepayments, and Calls
|
75,449
|
|
|
60,066
|
|
|
61,794
|
|
|||
Sales
|
21,395
|
|
|
—
|
|
|
14,762
|
|
|||
Purchases
|
(161,074
|
)
|
|
(98,627
|
)
|
|
(89,540
|
)
|
|||
Loan Originations and Principal Collections, net
|
(17,692
|
)
|
|
108,310
|
|
|
172,893
|
|
|||
Proceeds from sale of loans
|
3,954
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from Sales of Premises and Equipment
|
—
|
|
|
45
|
|
|
25
|
|
|||
Proceeds from Sales of Other Real Estate and Repossessions
|
12,968
|
|
|
11,480
|
|
|
9,045
|
|
|||
Additions to Premises and Equipment
|
(2,145
|
)
|
|
(537
|
)
|
|
(200
|
)
|
|||
Capital Improvements to Other Real Estate and Repossessions
|
(165
|
)
|
|
(5
|
)
|
|
(1,431
|
)
|
|||
Net Cash From Investing Activities
|
(67,310
|
)
|
|
80,732
|
|
|
167,348
|
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Net Increase (Decrease) in Deposits
|
(11,356
|
)
|
|
(29,301
|
)
|
|
(133,950
|
)
|
|||
Net Increase (Decrease) in Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
|
(2,039
|
)
|
|
(1,413
|
)
|
|
(1,978
|
)
|
|||
Net Decrease of Other Borrowings
|
(58
|
)
|
|
(19
|
)
|
|
(17
|
)
|
|||
Proceeds from Issuance of Common Stock
|
—
|
|
|
3
|
|
|
—
|
|
|||
Net Cash From Financing Activities
|
(13,453
|
)
|
|
(30,730
|
)
|
|
(135,945
|
)
|
|||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(85,710
|
)
|
|
49,262
|
|
|
33,083
|
|
|||
CASH AND CASH EQUIVALENTS – beginning of period
|
258,181
|
|
|
208,919
|
|
|
175,836
|
|
|||
CASH AND CASH EQUIVALENTS – end of period
|
$
|
172,471
|
|
|
$
|
258,181
|
|
|
$
|
208,919
|
|
(in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Loans and leases transfered to OREO and repossessions
|
$
|
8,008
|
|
|
$
|
20,569
|
|
|
$
|
22,309
|
|
Transfers of loans to loans held for sale at fair value
|
$
|
22,296
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financed sales of OREO and repossessions
|
$
|
2,058
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued and deferred cash dividends on preferred stock
|
$
|
1,650
|
|
|
$
|
1,650
|
|
|
$
|
1,650
|
|
SUPPLEMENTAL SCHEDULE OF CASH FLOWS
|
|
|
|
|
|
||||||
Interest paid
|
$
|
13,071
|
|
|
$
|
15,822
|
|
|
$
|
21,697
|
|
Income taxes paid
|
$
|
70
|
|
|
$
|
273
|
|
|
$
|
128
|
|
•
|
the Company’s loan loss experience;
|
•
|
the amount of past due and nonperforming loans;
|
•
|
specific known risks;
|
•
|
the status of nonperforming assets;
|
•
|
underlying estimated values of collateral securing loans;
|
•
|
current economic conditions; and
|
•
|
other factors which management believes affect the allowance for potential credit losses.
|
Pro-Forma Stockholders' Equity
|
|||||||||||||||
|
December 31, 2012
|
|
Estimated Impact of CPP Restructuring
1
|
|
Estimated Impact of Recapitalization
|
|
Pro-Forma
|
||||||||
|
(amount in thousands)
|
||||||||||||||
Preferred Stock - no par value - 10,000,000 shares authorized; 33,000 issued as of December 31, 2012; Liquidation value of $38,156
|
$
|
32,549
|
|
|
$
|
(32,549
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Common Stock - $0.01 par value - 150,000,000 shared authorized; 1,772,342 shares issued as of December 31, 2012
|
115
|
|
|
99
|
|
|
508
|
|
|
722
|
|
||||
Paid-In Surplus
|
106,531
|
|
|
14,813
|
|
|
70,592
|
|
|
191,936
|
|
||||
Common Stock Warrants
|
2,006
|
|
|
(2,006
|
)
|
|
—
|
|
|
—
|
|
||||
Accumulated Deficit
|
(115,391
|
)
|
|
25,728
|
|
|
—
|
|
|
(89,663
|
)
|
||||
Accumulated Other Comprehensive Income
|
3,300
|
|
|
—
|
|
|
—
|
|
|
3,300
|
|
||||
Total Shareholders' Equity
|
$
|
29,110
|
|
|
6,085
|
|
|
71,100
|
|
|
106,295
|
|
|||
|
|
|
|
|
|
|
|
1
|
CPP Restructuring – The Company issued common stock equal to
26.75%
of the
$33 million
par value of the Preferred Stock plus
100%
of the accrued but unpaid dividends on April 11, 2013. The net increase of
$6,085 thousand
represents the conversion of the accrued dividends from a liability into capital. The above is based on the accrued but unpaid dividends as of the transaction date.
|
2
|
Recapitalization – The Company issued
$91.1 million
of aggregate new shares of common stock, inclusive of the shares issued to the U.S. Treasury as part of the CPP restructuring. The Company has deducted
$5.1 million
as the estimated transaction expenses that will reduce the net proceeds to the Company. The transaction expenses are an estimate and subject to change.
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands, except per share amounts)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(37,570
|
)
|
|
$
|
(23,061
|
)
|
|
$
|
(44,342
|
)
|
Preferred stock dividends
|
1,650
|
|
|
1,650
|
|
|
1,650
|
|
|||
Accretion of preferred stock discount
|
428
|
|
|
403
|
|
|
379
|
|
|||
Net loss allocated to common shareholders
|
$
|
(39,648
|
)
|
|
$
|
(25,114
|
)
|
|
$
|
(46,371
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding including participating securities
|
1,730
|
|
|
1,593
|
|
|
1,575
|
|
|||
Less: Participating securities
|
117
|
|
|
2
|
|
|
1
|
|
|||
Weighted average basic common shares outstanding
|
1,613
|
|
|
1,591
|
|
|
1,574
|
|
|||
Effect of diluted securities:
|
|
|
|
|
|
||||||
Equivalent shares issuable upon exercise of stock options, stock warrants and restricted stock awards
|
—
|
|
|
—
|
|
|
—
|
|
|||
Weighted average diluted common shares outstanding
|
1,613
|
|
|
1,591
|
|
|
1,574
|
|
|||
Net loss per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
Diluted
|
$
|
(24.58
|
)
|
|
$
|
(15.79
|
)
|
|
$
|
(29.46
|
)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
December 31, 2012
|
|
|
|
|
|
|
|
||||||||
Debt securities—
|
|
|
|
|
|
|
|
||||||||
Federal agencies
|
$
|
57,393
|
|
|
256
|
|
|
104
|
|
|
$
|
57,545
|
|
||
Mortgage-backed—residential
|
157,191
|
|
|
3,424
|
|
|
138
|
|
|
160,477
|
|
||||
Municipals
|
35,088
|
|
|
1,028
|
|
|
122
|
|
|
35,994
|
|
||||
Other
|
61
|
|
|
—
|
|
|
20
|
|
|
41
|
|
||||
Total
|
$
|
249,733
|
|
|
4,708
|
|
|
$
|
384
|
|
|
$
|
254,057
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2011
|
|
|
|
|
|
|
|
||||||||
Debt securities—
|
|
|
|
|
|
|
|
||||||||
Federal agencies
|
$
|
23,984
|
|
|
$
|
251
|
|
|
$
|
—
|
|
|
$
|
24,235
|
|
Mortgage-backed—residential
|
134,210
|
|
|
2,817
|
|
|
129
|
|
|
136,898
|
|
||||
Municipals
|
30,453
|
|
|
1,419
|
|
|
—
|
|
|
31,872
|
|
||||
Other
|
127
|
|
|
—
|
|
|
91
|
|
|
36
|
|
||||
Total
|
$
|
188,774
|
|
|
$
|
4,487
|
|
|
$
|
220
|
|
|
$
|
193,041
|
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
|
(in thousands)
|
||||||
Within 1 year
|
$
|
880
|
|
|
$
|
889
|
|
Over 1 year through 5 years
|
15,234
|
|
|
15,745
|
|
||
5 years to 10 years
|
59,999
|
|
|
60,281
|
|
||
Over 10 years
|
16,429
|
|
|
16,665
|
|
||
|
92,542
|
|
|
93,580
|
|
||
Mortgage-backed residential securities
|
157,191
|
|
|
160,477
|
|
||
Total
|
$
|
249,733
|
|
|
$
|
254,057
|
|
|
Less than 12 months
|
|
12 months or greater
|
|
Totals
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Federal agencies
|
$
|
20,199
|
|
|
$
|
104
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,199
|
|
|
$
|
104
|
|
Mortgage-backed—residential
|
15,509
|
|
|
138
|
|
|
—
|
|
|
—
|
|
|
15,509
|
|
|
138
|
|
||||||
Municipals
|
8,012
|
|
|
122
|
|
|
—
|
|
|
—
|
|
|
8,012
|
|
|
122
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
41
|
|
|
20
|
|
|
41
|
|
|
20
|
|
||||||
Totals
|
$
|
43,720
|
|
|
$
|
364
|
|
|
$
|
41
|
|
|
$
|
20
|
|
|
$
|
43,761
|
|
|
$
|
384
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Federal agencies
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage-backed—residential
|
26,780
|
|
|
129
|
|
|
—
|
|
|
—
|
|
|
26,780
|
|
|
129
|
|
||||||
Municipals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
36
|
|
|
91
|
|
|
36
|
|
|
91
|
|
||||||
Totals
|
$
|
26,780
|
|
|
$
|
129
|
|
|
$
|
36
|
|
|
$
|
91
|
|
|
$
|
26,816
|
|
|
$
|
220
|
|
|
2012
|
|
2011
|
||||
Loans secured by real estate—
|
(in thousands)
|
||||||
Residential 1-4 family originated to be held-for-sale
|
$
|
3,624
|
|
|
$
|
2,233
|
|
Residential 1-4 family transferred to held-for-sale
|
7,964
|
|
|
$
|
—
|
|
|
Commercial
|
6,906
|
|
|
—
|
|
||
Construction
|
2,537
|
|
|
—
|
|
||
Multi-family and farmland
|
3,962
|
|
|
—
|
|
||
Total Real Estate
|
24,993
|
|
|
2,233
|
|
||
Commercial loans
|
895
|
|
|
—
|
|
||
Consumer installment loans
|
32
|
|
|
—
|
|
||
Total loans held for sale
|
$
|
25,920
|
|
|
$
|
2,233
|
|
|
Pass
|
|
Special
Mention
|
|
Substandard –
Non-impaired
|
|
Substandard –
Impaired
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Loans by Classification
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate: Residential 1-4 family originated to be held-for-sale
|
$
|
3,624
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,624
|
|
Real estate: Residential 1-4 family transferred to held-for-sale
|
264
|
|
|
511
|
|
|
4,229
|
|
|
2,960
|
|
|
7,964
|
|
|||||
Real estate: Commercial
|
—
|
|
|
438
|
|
|
2,922
|
|
|
3,546
|
|
|
6,906
|
|
|||||
Real estate: Construction
|
23
|
|
|
16
|
|
|
754
|
|
|
1,744
|
|
|
2,537
|
|
|||||
Real estate: Multi-family and farmland
|
281
|
|
|
—
|
|
|
2,788
|
|
|
893
|
|
|
3,962
|
|
|||||
Commercial
|
21
|
|
|
—
|
|
|
372
|
|
|
502
|
|
|
895
|
|
|||||
Consumer
|
22
|
|
|
—
|
|
|
2
|
|
|
8
|
|
|
32
|
|
|||||
Total Loans
|
$
|
4,235
|
|
|
$
|
965
|
|
|
$
|
11,067
|
|
|
$
|
9,653
|
|
|
$
|
25,920
|
|
|
As of December 31, 2012
|
||
|
(in thousands)
|
||
Nonaccrual Loans by Classification
|
|
||
Real estate: Residential 1-4 family
|
$
|
5,311
|
|
Real estate: Commercial
|
4,336
|
|
|
Real estate: Construction
|
1,967
|
|
|
Real estate: Multi-family and farmland
|
1,152
|
|
|
Commercial
|
580
|
|
|
Consumer and other
|
27
|
|
|
Total Loans
|
$
|
13,373
|
|
|
30-89
Days
Past Due
|
|
Greater
than
90 Days
Past Due
|
|
Total
Past Due
|
|
Current
|
|
Total
|
|
Greater
than
90 Days
Past Due
and
Accruing
|
|||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||
Loans by Classification
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Residential 1-4 family originated to be held-for-sale
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,624
|
|
|
$
|
3,624
|
|
|
$
|
—
|
|
|
Residential 1-4 family transferred to held-for-sale
|
436
|
|
|
697
|
|
|
1,133
|
|
|
6,831
|
|
|
7,964
|
|
|
697
|
|
|||||||
Real estate: Commercial
|
63
|
|
|
—
|
|
|
63
|
|
|
6,843
|
|
|
6,906
|
|
|
—
|
|
|||||||
Real estate: Construction
|
16
|
|
|
—
|
|
|
16
|
|
|
2,521
|
|
|
2,537
|
|
|
—
|
|
|||||||
Real estate: Multi-family and farmland
|
1,428
|
|
|
—
|
|
|
1,428
|
|
|
2,534
|
|
|
3,962
|
|
|
—
|
|
|||||||
Subtotal of real estate secured loans
|
1,943
|
|
|
697
|
|
—
|
|
2,640
|
|
|
22,353
|
|
|
24,993
|
|
|
697
|
|
||||||
Commercial
|
292
|
|
|
21
|
|
|
313
|
|
|
582
|
|
|
895
|
|
|
21
|
|
|||||||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
32
|
|
|
—
|
|
|||||||
Leases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total Loans
|
$
|
2,235
|
|
|
$
|
718
|
|
—
|
|
$
|
2,953
|
|
|
$
|
22,967
|
|
|
$
|
25,920
|
|
|
$
|
718
|
|
|
2012
|
|
2011
|
||||
Loans secured by real estate—
|
(in thousands)
|
||||||
Residential 1-4 family
|
$
|
188,191
|
|
|
$
|
215,364
|
|
Commercial
|
221,655
|
|
|
195,062
|
|
||
Construction
|
33,407
|
|
|
53,807
|
|
||
Multi-family and farmland
|
17,051
|
|
|
31,668
|
|
||
|
460,304
|
|
|
495,901
|
|
||
Commercial loans
|
61,398
|
|
|
59,623
|
|
||
Consumer installment loans
|
13,387
|
|
|
20,011
|
|
||
Leases, net of unearned income
|
568
|
|
|
2,920
|
|
||
Other
|
5,473
|
|
|
3,809
|
|
||
Total loans
|
541,130
|
|
|
582,264
|
|
||
Allowance for loan and lease losses
|
(13,800
|
)
|
|
(19,600
|
)
|
||
Net loans
|
$
|
527,330
|
|
|
$
|
562,664
|
|
|
Real estate:
Residential
1-4 family
|
|
Real estate:
Commercial
|
|
Real estate:
Construction
|
|
Real estate:
Multi-family
and
farmland
|
|
Commercial
|
|
Consumer
|
|
Leases
|
|
Other
|
|
Total
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Beginning balance, December 31, 2011
|
$
|
6,368
|
|
|
$
|
6,227
|
|
|
$
|
1,485
|
|
|
$
|
728
|
|
|
$
|
3,649
|
|
|
$
|
405
|
|
|
$
|
718
|
|
|
$
|
20
|
|
|
$
|
19,600
|
|
Charge-offs
|
(8,153
|
)
|
|
(8,316
|
)
|
|
(6,897
|
)
|
|
(2,511
|
)
|
|
(3,095
|
)
|
|
(473
|
)
|
|
(894
|
)
|
|
(3
|
)
|
|
(30,342
|
)
|
|||||||||
Recoveries
|
229
|
|
|
366
|
|
|
1,013
|
|
|
12
|
|
|
406
|
|
|
654
|
|
|
988
|
|
|
8
|
|
|
3,676
|
|
|||||||||
Provision
|
7,763
|
|
|
5,459
|
|
|
5,066
|
|
|
2,512
|
|
|
1,143
|
|
|
(314
|
)
|
|
(765
|
)
|
|
2
|
|
|
20,866
|
|
|||||||||
Ending balance, December 31, 2012
|
$
|
6,207
|
|
|
$
|
3,736
|
|
|
$
|
667
|
|
|
$
|
741
|
|
|
$
|
2,103
|
|
|
$
|
272
|
|
|
$
|
47
|
|
|
$
|
27
|
|
|
$
|
13,800
|
|
|
Real estate:
Residential
1-4 family
|
|
Real estate:
Commercial
|
|
Real estate:
Construction
|
|
Real estate:
Multi-family
and
farmland
|
|
Commercial
|
|
Consumer
|
|
Leases
|
|
Other
|
|
Total
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Beginning balance, December 31, 2010
|
$
|
7,346
|
|
|
$
|
5,550
|
|
|
$
|
2,905
|
|
|
$
|
761
|
|
|
$
|
5,692
|
|
|
$
|
813
|
|
|
$
|
917
|
|
|
$
|
16
|
|
|
$
|
24,000
|
|
Charge-offs
|
(2,180
|
)
|
|
(6,928
|
)
|
|
(5,581
|
)
|
|
(207
|
)
|
|
(3,235
|
)
|
|
(330
|
)
|
|
(929
|
)
|
|
(4
|
)
|
|
(19,394
|
)
|
|||||||||
Recoveries
|
404
|
|
|
222
|
|
|
744
|
|
|
384
|
|
|
894
|
|
|
949
|
|
|
472
|
|
|
5
|
|
|
4,074
|
|
|||||||||
Provision
|
798
|
|
|
7,383
|
|
|
3,417
|
|
|
(210
|
)
|
|
298
|
|
|
(1,027
|
)
|
|
258
|
|
|
3
|
|
|
10,920
|
|
|||||||||
Ending balance, December 31, 2011
|
$
|
6,368
|
|
|
$
|
6,227
|
|
|
$
|
1,485
|
|
|
$
|
728
|
|
|
$
|
3,649
|
|
|
$
|
405
|
|
|
$
|
718
|
|
|
$
|
20
|
|
|
$
|
19,600
|
|
|
Real estate:
Residential
1-4 family
|
|
Real estate:
Commercial
|
|
Real estate:
Construction
|
|
Real estate:
Multi-family
and
farmland
|
|
Commercial
|
|
Consumer
|
|
Leases
|
|
Other
|
|
Total
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Beginning balance, December 31, 2009
|
$
|
5,037
|
|
|
$
|
4,525
|
|
|
$
|
6,706
|
|
|
$
|
766
|
|
|
$
|
6,953
|
|
|
$
|
1,107
|
|
|
$
|
1,386
|
|
|
$
|
12
|
|
|
$
|
26,492
|
|
Charge-offs
|
(2,572
|
)
|
|
(2,955
|
)
|
|
(10,514
|
)
|
|
(1,150
|
)
|
|
(16,420
|
)
|
|
(1,061
|
)
|
|
(2,050
|
)
|
|
(49
|
)
|
|
(36,771
|
)
|
|||||||||
Recoveries
|
56
|
|
|
160
|
|
|
7
|
|
|
—
|
|
|
326
|
|
|
138
|
|
|
—
|
|
|
3
|
|
|
690
|
|
|||||||||
Provision
|
4,825
|
|
|
3,820
|
|
|
6,706
|
|
|
1,145
|
|
|
14,833
|
|
|
629
|
|
|
1,581
|
|
|
50
|
|
|
33,589
|
|
|||||||||
Ending balance, December 31, 2010
|
$
|
7,346
|
|
|
$
|
5,550
|
|
|
$
|
2,905
|
|
|
$
|
761
|
|
|
$
|
5,692
|
|
|
$
|
813
|
|
|
$
|
917
|
|
|
$
|
16
|
|
|
$
|
24,000
|
|
|
Real estate:
Residential
1-4 family
|
|
Real estate:
Commercial
|
|
Real estate:
Construction
|
|
Real estate:
Multi-family and
farmland
|
|
Total Real Estate
Loans
|
||||||||||||||||||||||||||||||
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||||
Individually evaluated
|
$
|
457
|
|
|
$
|
—
|
|
|
$
|
727
|
|
|
$
|
—
|
|
|
$
|
1,783
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,967
|
|
|
$
|
—
|
|
Collectively evaluated
|
187,734
|
|
|
6,207
|
|
|
220,928
|
|
|
3,736
|
|
|
31,624
|
|
|
667
|
|
|
17,051
|
|
|
741
|
|
|
457,337
|
|
|
11,351
|
|
||||||||||
Total evaluated
|
$
|
188,191
|
|
|
$
|
6,207
|
|
|
$
|
221,655
|
|
|
$
|
3,736
|
|
|
$
|
33,407
|
|
|
$
|
667
|
|
|
$
|
17,051
|
|
|
$
|
741
|
|
|
$
|
460,304
|
|
|
$
|
11,351
|
|
|
Commercial
|
|
Consumer
|
|
Leases
|
|
Other
|
|
Grand Total
|
||||||||||||||||||||||||||||||
(continued from above)
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||||
Individually evaluated
|
$
|
2,077
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
392
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,436
|
|
|
$
|
50
|
|
Collectively evaluated
|
59,321
|
|
|
2,053
|
|
|
13,387
|
|
|
272
|
|
|
176
|
|
|
47
|
|
|
5,473
|
|
|
27
|
|
|
535,694
|
|
|
13,750
|
|
||||||||||
Total evaluated
|
$
|
61,398
|
|
|
$
|
2,103
|
|
|
$
|
13,387
|
|
|
$
|
272
|
|
|
$
|
568
|
|
|
$
|
47
|
|
|
$
|
5,473
|
|
|
$
|
27
|
|
|
$
|
541,130
|
|
|
$
|
13,800
|
|
|
Real estate:
Residential
1-4 family
|
|
Real estate:
Commercial
|
|
Real estate:
Construction
|
|
Real estate:
Multi-family and
farmland
|
|
Total Real Estate
Loans
|
||||||||||||||||||||||||||||||
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||||
Individually evaluated
|
$
|
4,109
|
|
|
$
|
33
|
|
|
$
|
10,904
|
|
|
$
|
474
|
|
|
$
|
13,377
|
|
|
$
|
324
|
|
|
$
|
1,471
|
|
|
$
|
—
|
|
|
$
|
29,861
|
|
|
$
|
831
|
|
Collectively evaluated
|
211,255
|
|
|
6,335
|
|
|
184,158
|
|
|
5,753
|
|
|
40,430
|
|
|
1,161
|
|
|
30,197
|
|
|
728
|
|
|
466,040
|
|
|
13,977
|
|
||||||||||
Total evaluated
|
$
|
215,364
|
|
|
$
|
6,368
|
|
|
$
|
195,062
|
|
|
$
|
6,227
|
|
|
$
|
53,807
|
|
|
$
|
1,485
|
|
|
$
|
31,668
|
|
|
$
|
728
|
|
|
$
|
495,901
|
|
|
$
|
14,808
|
|
|
Commercial
|
|
Consumer
|
|
Leases
|
|
Other
|
|
Grand Total
|
||||||||||||||||||||||||||||||
(continued from above)
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
|
Carrying
Value
|
|
Associated
Allowance
|
||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||||
Individually evaluated
|
$
|
2,064
|
|
|
$
|
150
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,564
|
|
|
$
|
495
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33,489
|
|
|
$
|
1,476
|
|
Collectively evaluated
|
57,559
|
|
|
3,499
|
|
|
20,011
|
|
|
405
|
|
|
1,356
|
|
|
223
|
|
|
3,809
|
|
|
20
|
|
|
548,775
|
|
|
18,124
|
|
||||||||||
Total evaluated
|
$
|
59,623
|
|
|
$
|
3,649
|
|
|
$
|
20,011
|
|
|
$
|
405
|
|
|
$
|
2,920
|
|
|
$
|
718
|
|
|
$
|
3,809
|
|
|
$
|
20
|
|
|
$
|
582,264
|
|
|
$
|
19,600
|
|
•
|
Downward trend in sales, profit levels and margins
|
•
|
Impaired working capital position compared to industry
|
•
|
Cash flow strained in order to meet debt repayment schedule
|
•
|
Technical defaults due to noncompliance with financial covenants
|
•
|
Recurring trade payable slowness
|
•
|
High leverage compared to industry average with shrinking equity cushion
|
•
|
Questionable abilities of management
|
•
|
Weak industry conditions
|
•
|
Inadequate or outdated financial statements
|
•
|
Loan delinquencies and overdrafts may occur
|
•
|
Original source of repayment questionable
|
•
|
Documentation deficiencies may not be easily correctable
|
•
|
Loan may need to be restructured
|
•
|
Collateral or guarantor offers adequate protection
|
•
|
Unsecured debt to tangible net worth is excessive
|
•
|
Sustained losses that have severely eroded equity and cash flows
|
•
|
Concentration in illiquid assets
|
•
|
Serious management problems or internal fraud
|
•
|
Chronic trade payable slowness; may be placed on COD or collection by trade creditor
|
•
|
Inability to access other funding sources
|
•
|
Financial statements with adverse opinion or disclaimer; may be received late
|
•
|
Insufficient documented cash flows to meet contractual debt service requirements
|
•
|
Chronic or severe delinquency or has met the retail classification standards which is generally past dues greater than 90 days
|
•
|
Frequent overdrafts
|
•
|
Likelihood of bankruptcy exists
|
•
|
Serious documentation deficiencies
|
•
|
Reliance on secondary sources of repayment which are presently considered adequate
|
•
|
Demand letter sent
|
•
|
Litigation may have been filed against the borrower
|
•
|
Normal operations are severely diminished or have ceased
|
•
|
Seriously impaired cash flow
|
•
|
Numerous exceptions to loan agreement
|
•
|
Outside accountant questions entity’s survivability as a “going concern”
|
•
|
Financial statements may be received late, if at all
|
•
|
Material legal judgments filed
|
•
|
Collection of principal and interest is impaired
|
•
|
Collateral/Guarantor may offer inadequate protection
|
•
|
Original repayment terms materially altered
|
•
|
Secondary source of repayment is inadequate
|
•
|
Asset liquidation may be in process with all efforts directed at debt retirement
|
•
|
Documentation deficiencies not correctable
|
|
Pass
|
|
Special
Mention
|
|
Substandard –
Non-impaired
|
|
Substandard –
Impaired
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Loans by Classification
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate: Residential 1-4 family
|
$
|
164,555
|
|
|
$
|
7,668
|
|
|
$
|
15,511
|
|
|
$
|
457
|
|
|
$
|
188,191
|
|
Real estate: Commercial
|
207,188
|
|
|
4,930
|
|
|
8,810
|
|
|
727
|
|
|
221,655
|
|
|||||
Real estate: Construction
|
30,471
|
|
|
97
|
|
|
1,056
|
|
|
1,783
|
|
|
33,407
|
|
|||||
Real estate: Multi-family and farmland
|
14,025
|
|
|
1,794
|
|
|
1,232
|
|
|
—
|
|
|
17,051
|
|
|||||
Commercial
|
51,972
|
|
|
756
|
|
|
6,593
|
|
|
2,077
|
|
|
61,398
|
|
|||||
Consumer
|
12,793
|
|
|
126
|
|
|
468
|
|
|
—
|
|
|
13,387
|
|
|||||
Leases
|
1
|
|
|
74
|
|
|
101
|
|
|
392
|
|
|
568
|
|
|||||
Other
|
5,365
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
5,473
|
|
|||||
Total Loans
|
$
|
486,370
|
|
|
$
|
15,445
|
|
|
$
|
33,879
|
|
|
$
|
5,436
|
|
|
$
|
541,130
|
|
|
Pass
|
|
Special
Mention
|
|
Substandard –
Non-impaired
|
|
Substandard –
Impaired
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Loans by Classification
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate: Residential 1-4 family
|
$
|
183,231
|
|
|
$
|
6,383
|
|
|
$
|
21,641
|
|
|
$
|
4,109
|
|
|
$
|
215,364
|
|
Real estate: Commercial
|
151,671
|
|
|
12,743
|
|
|
19,744
|
|
|
10,904
|
|
|
195,062
|
|
|||||
Real estate: Construction
|
34,289
|
|
|
3,082
|
|
|
3,059
|
|
|
13,377
|
|
|
53,807
|
|
|||||
Real estate: Multi-family and farmland
|
25,163
|
|
|
2,804
|
|
|
2,230
|
|
|
1,471
|
|
|
31,668
|
|
|||||
Commercial
|
39,577
|
|
|
3,750
|
|
|
14,232
|
|
|
2,064
|
|
|
59,623
|
|
|||||
Consumer
|
19,380
|
|
|
111
|
|
|
520
|
|
|
—
|
|
|
20,011
|
|
|||||
Leases
|
—
|
|
|
678
|
|
|
678
|
|
|
1,564
|
|
|
2,920
|
|
|||||
Other
|
3,739
|
|
|
—
|
|
|
70
|
|
|
—
|
|
|
3,809
|
|
|||||
Total Loans
|
$
|
457,050
|
|
|
$
|
29,551
|
|
|
$
|
62,174
|
|
|
$
|
33,489
|
|
|
$
|
582,264
|
|
|
As of December 31, 2012
|
|
As of December 31, 2011
|
|||||||||||||||||||||||||||
|
Recorded
Investment
|
|
Unpaid
Principal
Balance
|
|
Related
Allowance
|
|
Average
Balance of
Recorded
Investment
|
|
Recorded
Investment
|
|
Unpaid
Principal
Balance
|
|
Related
Allowance
|
|
Average
Balance of
Recorded
Investment
|
|||||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||||||||
Impaired loans with no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Real estate: Residential 1-4 family
|
$
|
457
|
|
|
$
|
529
|
|
|
$
|
—
|
|
|
$
|
3,474
|
|
|
$
|
3,510
|
|
|
$
|
3,665
|
|
|
$
|
—
|
|
|
2,280
|
|
Real estate: Commercial
|
727
|
|
|
4,438
|
|
|
—
|
|
|
10,099
|
|
|
9,512
|
|
|
15,555
|
|
|
—
|
|
|
10,601
|
|
|||||||
Real estate: Construction
|
1,783
|
|
|
2,512
|
|
|
—
|
|
|
9,875
|
|
|
12,623
|
|
|
15,757
|
|
|
—
|
|
|
10,897
|
|
|||||||
Real estate: Multi-family and farmland
|
—
|
|
|
—
|
|
|
—
|
|
|
1,071
|
|
|
1,471
|
|
|
1,471
|
|
|
—
|
|
|
1,189
|
|
|||||||
Commercial
|
2,027
|
|
|
3,062
|
|
|
—
|
|
|
2,214
|
|
|
1,354
|
|
|
1,354
|
|
|
—
|
|
|
2,603
|
|
|||||||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
385
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
899
|
|
|||||||
Leases
|
392
|
|
|
392
|
|
|
—
|
|
|
684
|
|
|
574
|
|
|
574
|
|
|
—
|
|
|
1,029
|
|
|||||||
Total
|
$
|
5,386
|
|
|
$
|
10,933
|
|
|
$
|
—
|
|
|
$
|
27,802
|
|
|
$
|
29,044
|
|
|
$
|
38,376
|
|
|
$
|
—
|
|
|
29,498
|
|
Impaired loans with an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Real estate: Residential 1-4 family
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
425
|
|
|
$
|
599
|
|
|
$
|
599
|
|
|
$
|
33
|
|
|
1,103
|
|
Real estate: Commercial
|
—
|
|
|
—
|
|
|
—
|
|
|
445
|
|
|
1,392
|
|
|
1,392
|
|
|
474
|
|
|
2,376
|
|
|||||||
Real estate: Construction
|
—
|
|
|
—
|
|
|
—
|
|
|
2,214
|
|
|
755
|
|
|
755
|
|
|
324
|
|
|
6,316
|
|
|||||||
Real estate: Multi-family and farmland
|
—
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
294
|
|
|||||||
Commercial
|
50
|
|
|
95
|
|
|
50
|
|
|
1,074
|
|
|
710
|
|
|
710
|
|
|
150
|
|
|
642
|
|
|||||||
Consumer
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Leases
|
—
|
|
|
—
|
|
|
—
|
|
|
108
|
|
|
989
|
|
|
989
|
|
|
495
|
|
|
115
|
|
|||||||
Total
|
50
|
|
|
95
|
|
|
50
|
|
|
4,433
|
|
|
4,445
|
|
|
4,445
|
|
|
1,476
|
|
|
10,846
|
|
|||||||
Total impaired loans
|
$
|
5,436
|
|
|
$
|
11,028
|
|
|
$
|
50
|
|
|
$
|
32,235
|
|
|
$
|
33,489
|
|
|
$
|
42,821
|
|
|
$
|
1,476
|
|
|
40,344
|
|
|
As of December 31, 2012
|
|
As of December 31, 2011
|
||||
|
(in thousands)
|
||||||
Nonaccrual Loans by Classification
|
|
|
|
||||
Real estate: Residential 1-4 family
|
$
|
3,906
|
|
|
$
|
10,877
|
|
Real estate: Commercial
|
1,814
|
|
|
13,288
|
|
||
Real estate: Construction
|
2,549
|
|
|
14,683
|
|
||
Real estate: Multi-family and farmland
|
94
|
|
|
2,272
|
|
||
Commercial
|
2,524
|
|
|
3,087
|
|
||
Consumer and other
|
375
|
|
|
456
|
|
||
Leases
|
436
|
|
|
2,244
|
|
||
Total Loans
|
$
|
11,698
|
|
|
$
|
46,907
|
|
|
30-89
Days
Past Due
|
|
Greater
than
90 Days
Past Due
|
|
Total
Past Due
|
|
Current
|
|
Total
|
|
Greater
than
90 Days
Past Due
and
Accruing
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Loans by Classification
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Real estate: Residential 1-4 family
|
$
|
3,189
|
|
|
$
|
3,066
|
|
|
$
|
6,255
|
|
|
$
|
181,936
|
|
|
$
|
188,191
|
|
|
$
|
312
|
|
Real estate: Commercial
|
885
|
|
|
1,973
|
|
|
2,858
|
|
|
218,797
|
|
|
221,655
|
|
|
159
|
|
||||||
Real estate: Construction
|
626
|
|
|
1,653
|
|
|
2,279
|
|
|
31,128
|
|
|
33,407
|
|
|
—
|
|
||||||
Real estate: Multi-family and farmland
|
255
|
|
|
89
|
|
|
344
|
|
|
16,707
|
|
|
17,051
|
|
|
—
|
|
||||||
Subtotal of real estate secured loans
|
4,955
|
|
|
6,781
|
|
|
11,736
|
|
|
448,568
|
|
|
460,304
|
|
|
471
|
|
||||||
Commercial
|
1,223
|
|
|
2,360
|
|
|
3,583
|
|
|
57,815
|
|
|
61,398
|
|
|
463
|
|
||||||
Consumer
|
107
|
|
|
270
|
|
|
377
|
|
|
13,010
|
|
|
13,387
|
|
|
—
|
|
||||||
Leases
|
28
|
|
|
435
|
|
|
463
|
|
|
105
|
|
|
568
|
|
|
4
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
5,473
|
|
|
5,473
|
|
|
—
|
|
||||||
Total Loans
|
$
|
6,313
|
|
|
$
|
9,846
|
|
|
$
|
16,159
|
|
|
$
|
524,971
|
|
|
$
|
541,130
|
|
|
$
|
938
|
|
|
30-89
Days
Past Due
|
|
Greater
than
90 Days
Past Due
|
|
Total
Past Due
|
|
Current
|
|
Total
|
|
Greater
than
90 Days
Past Due
and
Accruing
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Loans by Classification
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Real estate: Residential 1-4 family
|
$
|
4,857
|
|
|
$
|
6,232
|
|
|
$
|
11,089
|
|
|
$
|
204,275
|
|
|
$
|
215,364
|
|
|
$
|
232
|
|
Real estate: Commercial
|
4,652
|
|
|
9,587
|
|
|
14,239
|
|
|
180,823
|
|
|
195,062
|
|
|
370
|
|
||||||
Real estate: Construction
|
2,262
|
|
|
10,393
|
|
|
12,655
|
|
|
41,152
|
|
|
53,807
|
|
|
70
|
|
||||||
Real estate: Multi-family and farmland
|
583
|
|
|
2,922
|
|
|
3,505
|
|
|
28,163
|
|
|
31,668
|
|
|
1,416
|
|
||||||
Subtotal of real estate secured loans
|
12,354
|
|
|
29,134
|
|
|
41,488
|
|
|
454,413
|
|
|
495,901
|
|
|
2,088
|
|
||||||
Commercial
|
690
|
|
|
3,454
|
|
|
4,144
|
|
|
55,479
|
|
|
59,623
|
|
|
620
|
|
||||||
Consumer
|
70
|
|
|
370
|
|
|
440
|
|
|
19,571
|
|
|
20,011
|
|
|
42
|
|
||||||
Leases
|
150
|
|
|
1,674
|
|
|
1,824
|
|
|
1,096
|
|
|
2,920
|
|
|
4
|
|
||||||
Other
|
5
|
|
|
68
|
|
|
73
|
|
|
3,736
|
|
|
3,809
|
|
|
68
|
|
||||||
Total Loans
|
$
|
13,269
|
|
|
$
|
34,700
|
|
|
$
|
47,969
|
|
|
$
|
534,295
|
|
|
$
|
582,264
|
|
|
$
|
2,822
|
|
|
As of December 31, 2012
|
|
As of December 31, 2011
|
||||||||||||||||||
|
Number of
Contracts
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
Post-Modification
Outstanding
Recorded
Investment
|
|
Number of
Contracts
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
Post-Modification
Outstanding
Recorded
Investment
|
||||||||||
|
(dollar amounts in thousands)
|
||||||||||||||||||||
Troubled Debt Restructurings:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential real estate
|
1
|
|
|
$
|
224
|
|
|
$
|
224
|
|
|
1
|
|
|
$
|
254
|
|
|
$
|
254
|
|
Commercial real estate
|
1
|
|
|
557
|
|
|
557
|
|
|
1
|
|
|
3,300
|
|
|
3,300
|
|
||||
Commercial loan
|
3
|
|
|
907
|
|
|
907
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Consumer loan
|
1
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
6
|
|
|
$
|
1,691
|
|
|
$
|
1,691
|
|
|
2
|
|
|
$
|
3,554
|
|
|
$
|
3,554
|
|
|
As of December 31, 2012
|
|
As of December 31, 2011
|
||||||||||||||||||||
|
Number of
Contracts
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
Post-Modification
Outstanding
Recorded
Investment
|
|
Number of
Contracts
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
Post-Modification
Outstanding
Recorded
Investment
|
||||||||||||
|
(dollar amounts in thousands)
|
||||||||||||||||||||||
Troubled Debt Restructurings That Subsequently Defaulted:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential real estate
|
1
|
|
|
$
|
254
|
|
|
$
|
254
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Commercial real estate
|
2
|
|
|
1,370
|
|
|
1,370
|
|
|
1
|
|
|
430
|
|
|
430
|
|
||||||
Construction & land development
|
1
|
|
|
3,300
|
|
|
3,300
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Consumer loan
|
1
|
|
|
3
|
|
3,000
|
|
3
|
|
|
1
|
|
|
1,988
|
|
|
959
|
|
|||||
Commercial loan
|
2
|
|
|
769
|
|
|
698
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
7
|
|
|
$
|
5,696
|
|
|
$
|
5,625
|
|
|
$
|
2
|
|
|
$
|
2,418
|
|
|
$
|
1,389
|
|
|
|||||||
|
2012
|
|
2011
|
||||
|
(in thousands)
|
||||||
Land and improvements
|
$
|
9,789
|
|
|
$
|
9,789
|
|
Buildings and improvements
|
24,314
|
|
|
24,068
|
|
||
Equipment
|
16,148
|
|
|
14,268
|
|
||
Premises and equipment-gross
|
50,251
|
|
|
48,125
|
|
||
Accumulated depreciation
|
(20,947
|
)
|
|
(19,454
|
)
|
||
Premises and equipment-net
|
$
|
29,304
|
|
|
$
|
28,671
|
|
|
2012
|
|
2011
|
||||
|
(in thousands)
|
||||||
Gross carrying amount
|
$
|
7,041
|
|
|
$
|
7,041
|
|
Less: Accumulated amortization and impairment
|
6,441
|
|
|
6,059
|
|
||
Balance
|
$
|
600
|
|
|
$
|
982
|
|
Year
|
(in thousands)
|
||
2013
|
$
|
270
|
|
2014
|
196
|
|
|
2015
|
134
|
|
|
|
$
|
600
|
|
|
2012
|
|
2011
|
||||
|
(in thousands)
|
||||||
Brokered certificates of deposits
|
$
|
165,106
|
|
|
$
|
237,032
|
|
CDARS
®
|
371
|
|
|
1,405
|
|
||
|
$
|
165,477
|
|
|
$
|
238,437
|
|
|
Time
Deposits
|
|
Brokered
CDs
|
|
CDARS
®
|
|
Totals
|
||||||||
|
(in thousands)
|
||||||||||||||
2013
|
$
|
270,022
|
|
|
$
|
90,418
|
|
|
$
|
—
|
|
|
$
|
360,440
|
|
2014
|
151,701
|
|
|
51,867
|
|
|
371
|
|
|
203,939
|
|
||||
2015
|
4,903
|
|
|
16,054
|
|
|
—
|
|
|
20,957
|
|
||||
2016
|
2,342
|
|
|
4,791
|
|
|
—
|
|
|
7,133
|
|
||||
2017 and thereafter
|
1,049
|
|
|
1,976
|
|
|
—
|
|
|
3,025
|
|
||||
|
$
|
430,017
|
|
|
$
|
165,106
|
|
|
$
|
371
|
|
|
$
|
595,494
|
|
Maturity
Year
|
|
Origination
Date
|
|
Type
|
|
Principal
|
|
Original
Term
|
|
Rate
|
|
Maturity
|
|||
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|||
2015
|
|
January 5, 1995
|
|
Fixed Rate Mortgage
|
|
$
|
58
|
|
|
240 months
|
|
7.50
|
%
|
|
January 5, 2015
|
|
Amount
|
||
|
(in thousands)
|
||
2013
|
$
|
824
|
|
2014
|
731
|
|
|
2015
|
710
|
|
|
2016
|
688
|
|
|
2017
|
533
|
|
|
Thereafter
|
3,424
|
|
|
Total minimum lease commitments
|
$
|
6,910
|
|
|
|
For the Years Ended
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
|
(in thousands)
|
||||||||||
Current (benefit) provision
|
|
$
|
771
|
|
|
$
|
392
|
|
|
$
|
(2,778
|
)
|
Deferred provision (benefit)
|
|
—
|
|
|
—
|
|
|
12,457
|
|
|||
Income tax provision (benefit)
|
|
$
|
771
|
|
|
$
|
392
|
|
|
$
|
9,679
|
|
|
For the Years Ended
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands)
|
||||||||||
Federal taxes at statutory tax rate
|
$
|
(12,512
|
)
|
|
$
|
(7,707
|
)
|
|
$
|
(11,785
|
)
|
Tax exempt earnings on loans and securities
|
(342
|
)
|
|
(435
|
)
|
|
(480
|
)
|
|||
Tax exempt earnings on bank owned life insurance
|
(338
|
)
|
|
(342
|
)
|
|
(351
|
)
|
|||
Low-income housing tax credits
|
(363
|
)
|
|
(389
|
)
|
|
(895
|
)
|
|||
Other, net
|
(418
|
)
|
|
678
|
|
|
126
|
|
|||
State tax provision, net of federal effect
|
(1,595
|
)
|
|
(923
|
)
|
|
(1,486
|
)
|
|||
Change in reserve for uncertain tax positions
|
(727
|
)
|
|
—
|
|
|
—
|
|
|||
Reversal of disproportionate tax effect relative to cash flow swap termination
|
1,065
|
|
|
—
|
|
|
—
|
|
|||
Changes in the deferred tax asset valuation allowance
|
16,001
|
|
|
9,510
|
|
|
24,550
|
|
|||
Income tax provision (benefit)
|
$
|
771
|
|
|
$
|
392
|
|
|
$
|
9,679
|
|
|
2012
|
|
2011
|
||||
|
(in thousands)
|
||||||
Deferred Tax Assets
|
|
|
|
||||
Net operating loss carryforward
|
$
|
40,800
|
|
|
$
|
21,104
|
|
Allowance for loan and lease losses
|
5,500
|
|
|
7,434
|
|
||
Federal tax credits
|
3,230
|
|
|
2,582
|
|
||
Other real estate owned
|
2,439
|
|
|
3,685
|
|
||
Goodwill and other intangible assets
|
669
|
|
|
896
|
|
||
Salary continuation plan
|
846
|
|
|
883
|
|
||
Acquisition fair value adjustments
|
5
|
|
|
22
|
|
||
Deferred loan fees
|
99
|
|
|
71
|
|
||
Other assets
|
303
|
|
|
805
|
|
||
Total deferred tax assets
|
53,891
|
|
|
37,482
|
|
||
Deferred Tax Liabilities
|
|
|
|
||||
Premises and equipment
|
1,325
|
|
|
1,296
|
|
||
Core deposit intangibles
|
1
|
|
|
108
|
|
||
Leasing activities
|
7
|
|
|
15
|
|
||
Securities available-for-sale
|
1,471
|
|
|
1,451
|
|
||
FHLB stock
|
305
|
|
|
305
|
|
||
Gain on business combination
|
2
|
|
|
13
|
|
||
Other
|
116
|
|
|
50
|
|
||
Total deferred tax liabilities
|
3,227
|
|
|
3,238
|
|
||
Net deferred tax asset before valuation allowance
|
50,664
|
|
|
34,244
|
|
||
Deferred tax asset valuation allowance
|
(50,664
|
)
|
|
(34,244
|
)
|
||
Net deferred tax asset after valuation allowance
|
$
|
—
|
|
|
$
|
—
|
|
|
2012
|
|
2011
|
||||
|
(in thousands)
|
||||||
Balance at beginning of period
|
$
|
1,480
|
|
|
$
|
1,338
|
|
Decreases related to prior year tax positions
|
(1,480
|
)
|
|
—
|
|
||
Increases related to current year tax positions
|
—
|
|
|
142
|
|
||
Lapse of statute
|
—
|
|
|
—
|
|
||
Balance at end of period
|
$
|
—
|
|
|
$
|
1,480
|
|
|
Unallocated
shares
|
|
Committed
to be
released
shares
|
|
Allocated
shares
|
|
Compensation
Expense
|
|||||
|
|
|
|
|
|
|
(in thousands)
|
|||||
Shares as of December 31, 2009
|
76,878
|
|
|
—
|
|
|
43,189
|
|
|
|
||
Shares allocated for match during 2010
|
(19,106
|
)
|
|
—
|
|
|
19,106
|
|
|
$
|
331
|
|
Shares as of December 31, 2010
|
57,772
|
|
|
—
|
|
|
62,295
|
|
|
|
||
Shares obtained as result of reverse stock split
|
7
|
|
|
—
|
|
|
—
|
|
|
|
||
Shares allocated for match during 2011
|
(27,054
|
)
|
|
—
|
|
|
27,054
|
|
|
$
|
99
|
|
Shares as of December 31, 2011
|
30,725
|
|
|
—
|
|
|
89,349
|
|
|
|
||
Shares allocated for match during 2012
|
(30,725
|
)
|
|
—
|
|
|
30,725
|
|
|
$
|
92
|
|
Shares as of December 31, 2012
|
—
|
|
|
—
|
|
|
120,074
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands)
|
||||||||||
Stock option compensation expense
|
$
|
64
|
|
|
$
|
9
|
|
|
$
|
14
|
|
Stock option compensation expense, net of tax
1
|
$
|
42
|
|
|
$
|
6
|
|
|
$
|
9
|
|
|
Shares
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value
|
|
|||||
Outstanding, January 1, 2012
|
48,205
|
|
|
$
|
82.58
|
|
|
|
|
|
|
||
Granted
|
98,000
|
|
|
$
|
3.00
|
|
|
|
|
|
|
||
Exercised
|
—
|
|
|
|
|
|
|
|
|
||||
Forfeited
|
11,029
|
|
|
|
|
|
|
|
|
||||
Outstanding, December 31, 2012
|
135,176
|
|
|
$
|
25.54
|
|
|
7.65
|
|
$
|
—
|
|
1
|
Exercisable, December 31, 2012
|
36,462
|
|
|
$
|
86.34
|
|
|
2.89
|
|
—
|
|
1
|
|
Shares
|
|
Weighted Average Grant-Date Fair Value
|
|||
Nonvested shares at January 1, 2012
|
41,940
|
|
1
|
$
|
1.87
|
|
Granted
|
88,000
|
|
2
|
3.32
|
|
|
Vested
|
(39
|
)
|
|
8.80
|
|
|
Forfeited
|
(120
|
)
|
|
8.80
|
|
|
Nonvested, December 31, 2012
|
129,781
|
|
3
|
$
|
2.85
|
|
|
Actual
|
|
FSGBank
Consent Order
|
|
Minimum to be
Adequately
Capitalized
under Prompt
Corrective Acton
Provisions
|
|||||||||||||||
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|||||||||
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total capital to risk-weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
First Security Group, Inc. and subsidiary
|
$
|
32,743
|
|
|
5.5
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
47,688
|
|
|
8.0
|
%
|
|
FSGBank, N.A.
|
$
|
34,588
|
|
|
5.8
|
%
|
|
$
|
77,466
|
|
|
13.0
|
%
|
|
$
|
47,671
|
|
|
8.0
|
%
|
Tier 1 capital to risk-weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
First Security Group, Inc. and subsidiary
|
$
|
25,210
|
|
|
4.2
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
23,844
|
|
|
4.0
|
%
|
|
FSGBank, N.A.
|
$
|
27,058
|
|
|
4.5
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
23,836
|
|
|
4.0
|
%
|
|
Tier 1 capital to average assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
First Security Group, Inc. and subsidiary
|
$
|
25,210
|
|
|
2.3
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
43,570
|
|
|
4.0
|
%
|
|
FSGBank, N.A.
|
$
|
27,058
|
|
|
2.5
|
%
|
|
$
|
98,011
|
|
|
9.0
|
%
|
|
$
|
43,561
|
|
|
4.0
|
%
|
|
Actual
|
|
FSGBank
Consent Order
|
|
Minimum to be
Adequately
Capitalized
under Prompt
Corrective Acton
Provisions
|
|||||||||||||||
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|||||||||
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total capital to risk-weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
First Security Group, Inc. and subsidiary
|
$
|
72,061
|
|
|
11.0
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
52,579
|
|
|
8.0
|
%
|
|
FSGBank, N.A.
|
$
|
71,411
|
|
|
10.9
|
%
|
|
$
|
84,915
|
|
|
13.0
|
%
|
|
$
|
52,255
|
|
|
8.0
|
%
|
Tier 1 capital to risk-weighted assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
First Security Group, Inc. and subsidiary
|
$
|
63,752
|
|
|
9.7
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
26,290
|
|
|
4.0
|
%
|
|
FSGBank, N.A.
|
$
|
63,102
|
|
|
9.7
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
26,128
|
|
|
4.0
|
%
|
|
Tier 1 capital to average assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
First Security Group, Inc. and subsidiary
|
$
|
63,752
|
|
|
5.7
|
%
|
|
N/A
|
|
|
N/A
|
|
|
$
|
44,788
|
|
|
4.0
|
%
|
|
FSGBank, N.A.
|
$
|
63,102
|
|
|
5.6
|
%
|
|
$
|
100,770
|
|
|
9.0
|
%
|
|
$
|
44,787
|
|
|
4.0
|
%
|
|
Fair Value Measurements at
|
||||||||||||||
|
December 31, 2012 Using:
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
||||||||
Securities available-for-sale—
|
|
|
|
|
|
|
|
||||||||
Federal agencies
|
$
|
—
|
|
|
$
|
57,545
|
|
|
$
|
—
|
|
|
$
|
57,545
|
|
Mortgage-backed—residential
|
—
|
|
|
160,477
|
|
|
—
|
|
|
160,477
|
|
||||
Municipals
|
—
|
|
|
35,994
|
|
|
—
|
|
|
35,994
|
|
||||
Other
|
—
|
|
|
—
|
|
|
41
|
|
|
41
|
|
||||
Total securities available-for-sale
|
$
|
—
|
|
|
$
|
254,016
|
|
|
$
|
41
|
|
|
$
|
254,057
|
|
Loans held for sale
|
$
|
—
|
|
|
$
|
3,624
|
|
|
$
|
—
|
|
|
$
|
3,624
|
|
Financial liabilities
|
|
|
|
|
|
|
|
||||||||
Forward loan sales contracts
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
Fair Value Measurements at
|
||||||||||||||
|
December 31, 2011 Using:
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
||||||||
Securities available-for-sale—
|
|
|
|
|
|
|
|
||||||||
Federal agencies
|
$
|
—
|
|
|
$
|
24,235
|
|
|
$
|
—
|
|
|
$
|
24,235
|
|
Mortgage-backed—residential
|
—
|
|
|
136,898
|
|
|
—
|
|
|
136,898
|
|
||||
Municipals
|
—
|
|
|
30,533
|
|
|
1,339
|
|
|
31,872
|
|
||||
Other
|
—
|
|
|
—
|
|
|
36
|
|
|
36
|
|
||||
Total securities available-for-sale
|
$
|
—
|
|
|
$
|
191,666
|
|
|
$
|
1,375
|
|
|
$
|
193,041
|
|
Loans held for sale
|
$
|
—
|
|
|
$
|
2,233
|
|
|
$
|
—
|
|
|
$
|
2,233
|
|
Financial liabilities
|
|
|
|
|
|
|
|
||||||||
Forward loan sales contracts
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
Balance as of December 31, 2011
|
|
Total
Realized
and
Unrealized
Gains or
Losses
|
|
Sales
|
|
Net
Transfers
In and/or
Out of
Level 3
|
|
Balance as of December 31, 2012
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Securities available-for-sale—
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipals
|
$
|
1,339
|
|
|
$
|
(605
|
)
|
|
$
|
(734
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Other
|
$
|
36
|
|
|
30
|
|
|
(27
|
)
|
|
—
|
|
|
$
|
41
|
|
|
Carrying Value as of December 31, 2012
|
|
Level 1
Fair Value
Measurement
|
|
Level 2
Fair Value
Measurement
|
|
Level 3
Fair Value
Measurement
|
|
Valuation Allowance as of December 31, 2012
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Loans transferred to held for sale
|
$
|
22,296
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,296
|
|
|
$
|
—
|
|
Other real estate owned –
|
|
|
|
|
|
|
|
|
|
||||||||||
Construction/development loans
|
5,279
|
|
|
—
|
|
|
—
|
|
|
5,279
|
|
|
(2,921
|
)
|
|||||
Residential real estate loans
|
1,489
|
|
|
—
|
|
|
—
|
|
|
1,489
|
|
|
(450
|
)
|
|||||
Commercial real estate loans
|
2,901
|
|
|
—
|
|
|
—
|
|
|
2,901
|
|
|
(1,081
|
)
|
|||||
Multi-family and farmland loans
|
873
|
|
|
—
|
|
|
—
|
|
|
873
|
|
|
(229
|
)
|
|||||
Commercial and industrial loans
|
273
|
|
|
—
|
|
|
—
|
|
|
273
|
|
|
(150
|
)
|
|||||
Other real estate owned
|
10,815
|
|
|
—
|
|
|
—
|
|
|
10,815
|
|
|
(4,831
|
)
|
|||||
Collateral-dependent loans –
|
|
|
|
|
|
|
|
|
|
||||||||||
Real Estate: Residential 1-4 family
|
457
|
|
|
—
|
|
|
—
|
|
|
457
|
|
|
—
|
|
|||||
Real Estate: Commercial
|
727
|
|
|
—
|
|
|
—
|
|
|
727
|
|
|
—
|
|
|||||
Real Estate: Construction
|
1,783
|
|
|
—
|
|
|
—
|
|
|
1,783
|
|
|
—
|
|
|||||
Real Estate: Multi-family and farmland
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Commercial
|
436
|
|
|
—
|
|
|
—
|
|
|
436
|
|
|
—
|
|
|||||
Collateral-dependent loans
|
3,403
|
|
|
—
|
|
|
—
|
|
|
3,403
|
|
|
—
|
|
|||||
Totals
|
$
|
14,218
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,218
|
|
|
$
|
(4,831
|
)
|
|
Carrying Value as of December 31, 2011
|
|
Level 1
Fair Value
Measurement
|
|
Level 2
Fair Value
Measurement
|
|
Level 3
Fair Value
Measurement
|
|
Valuation Allowance as of December 31, 2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Other real estate owned –
|
|
|
|
|
|
|
|
|
|
||||||||||
Construction/development loans
|
$
|
8,591
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,591
|
|
|
$
|
(4,351
|
)
|
Residential real estate loans
|
5,007
|
|
|
—
|
|
|
—
|
|
|
5,007
|
|
|
(1,285
|
)
|
|||||
Commercial real estate loans
|
3,064
|
|
|
—
|
|
|
—
|
|
|
3,064
|
|
|
(1,696
|
)
|
|||||
Commercial and industrial loans
|
417
|
|
|
—
|
|
|
—
|
|
|
417
|
|
|
—
|
|
|||||
Other real estate owned
|
17,079
|
|
|
—
|
|
|
—
|
|
|
17,079
|
|
|
(7,613
|
)
|
|||||
Collateral-dependent loans –
|
|
|
|
|
|
|
|
|
|
||||||||||
Real Estate: Residential 1-4 family
|
12,919
|
|
|
—
|
|
|
—
|
|
|
12,919
|
|
|
(324
|
)
|
|||||
Real Estate: Commercial
|
3,191
|
|
|
—
|
|
|
—
|
|
|
3,191
|
|
|
(33
|
)
|
|||||
Real Estate: Construction
|
7,158
|
|
|
—
|
|
|
—
|
|
|
7,158
|
|
|
—
|
|
|||||
Real Estate: Multi-family and farmland
|
1,129
|
|
|
—
|
|
|
—
|
|
|
1,129
|
|
|
—
|
|
|||||
Commercial
|
989
|
|
|
—
|
|
|
—
|
|
|
989
|
|
|
(495
|
)
|
|||||
Collateral-dependent loans
|
25,386
|
|
|
—
|
|
|
—
|
|
|
25,386
|
|
|
(852
|
)
|
|||||
Totals
|
$
|
42,465
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42,465
|
|
|
$
|
(8,465
|
)
|
|
Fair value (in thousands)
|
|
Valuation technique(s)
|
|
Unobservable input(s)
|
|
Range
|
|
Weighted average
|
|||||||
Impaired Loans - CRE
|
$
|
727
|
|
|
Sales comparison approach
|
|
Adjustment for differences between the comparable sales
|
|
(47.5
|
)%
|
|
60.0
|
%
|
|
4.8
|
%
|
|
|
|
Income Approach
|
|
Adjustment for differences in net operating income expectations
|
|
(10.0
|
)%
|
|
15.0
|
%
|
|
1.3
|
%
|
||
|
|
|
|
|
Capitalization rate
|
|
8.0
|
%
|
|
14.8
|
%
|
|
8.0
|
%
|
||
Impaired Loans - Residential
|
457
|
|
|
Sales Approach
|
|
Adjustment for differences between the comparable sales
|
|
(51.9
|
)%
|
|
74.0
|
%
|
|
1.1
|
%
|
|
|
|
|
Income Approach
|
|
Adjustment for differences in net operating income expectations
|
|
6.0
|
%
|
|
6.0
|
%
|
|
6.0
|
%
|
||
|
|
|
|
|
Capitalization rate
|
|
8.8
|
%
|
|
10.0
|
%
|
|
9.7
|
%
|
||
Impaired Loans - Construction
|
1,783
|
|
|
Sales comparison approach
|
|
Adjustment for differences between the comparable sales
|
|
(35.0
|
)%
|
|
40.0
|
%
|
|
3.9
|
%
|
|
|
|
|
Income Approach
|
|
Adjustment for differences in net operating income expectations
|
|
(44.0
|
)%
|
|
22.0
|
%
|
|
(9.0
|
)%
|
||
|
|
|
Development Loans
|
|
Absorption Rate
|
|
3.0
|
%
|
|
33.3
|
%
|
|
20.8
|
%
|
||
|
|
|
Development Loans
|
|
Discount Rate
|
|
18.0
|
%
|
|
24.0
|
%
|
|
22.5
|
%
|
||
|
|
|
|
|
Capitalization rate
|
|
10.0
|
%
|
|
12.0
|
%
|
|
11.8
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Impaired Loans - Commercial and Industrial
|
436
|
|
|
Sales comparison approach
|
|
Adjustment for differences between the comparable sales
|
|
(74.5
|
)%
|
|
43.5
|
%
|
|
17.0
|
%
|
|
|
|
|
Income Approach
|
|
Adjustment for differences in net operating income expectations
|
|
—
|
%
|
|
29.2
|
%
|
|
15.3
|
%
|
||
|
|
|
|
|
Capitalization rate
|
|
—
|
%
|
|
22.0
|
%
|
|
10.3
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
OREO-Residential
|
1,489
|
|
|
Sales comparison approach
|
|
Adjustment for differences between the comparable sales
|
|
(41.6
|
)%
|
|
58.4
|
%
|
|
8.8
|
%
|
|
OREO-Commercial
|
2,901
|
|
|
Sales comparison approach
|
|
Adjustment for differences between the comparable sales
|
|
(85.0
|
)%
|
|
129.1
|
%
|
|
(5.6
|
)%
|
|
|
|
|
Income Approach
|
|
Adjustment for differences in net operating income expectations
|
|
(60.0
|
)%
|
|
100.0
|
%
|
|
31.3
|
%
|
||
|
|
|
|
|
Capitalization rate
|
|
8.5
|
%
|
|
18.0
|
%
|
|
7.2
|
%
|
||
OREO-Construction
|
5,279
|
|
|
Sales comparison approach
|
|
Adjustment for differences between the comparable sales
|
|
(79.0
|
)%
|
|
131.8
|
%
|
|
10.1
|
%
|
|
|
|
|
Income Approach
|
|
Adjustment for differences in net operating income expectations
|
|
5.0
|
%
|
|
10.0
|
%
|
|
5.7
|
%
|
||
|
|
|
|
|
Capitalization rate
|
|
12.0
|
%
|
|
12.0
|
%
|
|
12.0
|
%
|
||
OREO- Multifamily and Farmland
|
873
|
|
|
Sales comparison approach
|
|
Adjustment for differences between the comparable sales
|
|
(10.8
|
)%
|
|
20.8
|
%
|
|
1.0
|
%
|
|
|
|
|
Income Approach
|
|
Adjustment for differences in net operating income expectations
|
|
8.0
|
%
|
|
11.6
|
%
|
|
8.5
|
%
|
||
|
|
|
|
|
Capitalization rate
|
|
10.0
|
%
|
|
11.0
|
%
|
|
10.8
|
%
|
|
|
|
Fair Value Measurements at
|
||||||||||||||||
|
|
|
December 31, 2012 Using:
|
||||||||||||||||
|
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
$
|
12,806
|
|
|
$
|
12,806
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,806
|
|
Interest bearing deposits in banks
|
159,665
|
|
|
159,665
|
|
|
—
|
|
|
—
|
|
|
159,665
|
|
|||||
Securities available-for-sale
|
254,057
|
|
|
—
|
|
|
254,016
|
|
|
41
|
|
|
254,057
|
|
|||||
Federal Home Loan Bank stock
|
2,276
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Federal Reserve Bank stock
|
1,382
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Loans held for sale
|
25,920
|
|
|
—
|
|
|
3,624
|
|
|
22,296
|
|
|
25,920
|
|
|||||
Loans, net
|
527,330
|
|
|
—
|
|
|
—
|
|
|
545,076
|
|
|
545,076
|
|
|||||
Accrued interest receivable
|
2,973
|
|
|
—
|
|
|
947
|
|
|
2,026
|
|
|
2,973
|
|
|||||
Financial liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
1,008,066
|
|
|
412,573
|
|
|
600,226
|
|
|
—
|
|
|
1,012,799
|
|
|||||
Federal funds purchased and securities sold under agreements to repurchase
|
12,481
|
|
|
12,481
|
|
|
—
|
|
|
—
|
|
|
12,481
|
|
|||||
Accrued interest payable
|
1,565
|
|
|
12
|
|
|
1,553
|
|
|
—
|
|
|
1,565
|
|
|
|
|
Fair Value Measurements at
|
||||||||||||||||
|
|
|
December 31, 2011 Using:
|
||||||||||||||||
|
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks
|
$
|
8,884
|
|
|
$
|
8,884
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,884
|
|
Interest bearing deposits in banks
|
249,297
|
|
|
249,297
|
|
|
—
|
|
|
—
|
|
|
249,297
|
|
|||||
Securities available-for-sale
|
193,041
|
|
|
—
|
|
|
191,666
|
|
|
1,375
|
|
|
193,041
|
|
|||||
Federal Home Loan Bank stock
|
2,276
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Federal Reserve Bank stock
|
2,310
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Loans held for sale
|
2,233
|
|
|
—
|
|
|
2,233
|
|
|
—
|
|
|
2,233
|
|
|||||
Loans, net
|
562,664
|
|
|
—
|
|
|
—
|
|
|
571,125
|
|
|
571,125
|
|
|||||
Accrued interest receivable
|
2,798
|
|
|
—
|
|
|
821
|
|
|
1,977
|
|
|
2,798
|
|
|||||
Financial liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
1,019,422
|
|
|
372,710
|
|
|
649,021
|
|
|
—
|
|
|
1,021,731
|
|
|||||
Federal funds purchased and securities sold under agreements to repurchase
|
14,520
|
|
|
14,520
|
|
|
—
|
|
|
—
|
|
|
14,520
|
|
|||||
Other borrowings
|
58
|
|
|
58
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|||||
Accrued interest payable
|
1,906
|
|
|
62
|
|
|
1,844
|
|
|
—
|
|
|
1,906
|
|
|
Aggregate fair value
|
|
Aggregate unpaid principal balance under FVO
|
|
Fair value carrying amount over (under) unpaid principal
|
||||||
|
(in thousands)
|
||||||||||
Loans held for sale
|
$
|
3,624
|
|
|
$
|
3,599
|
|
|
$
|
25
|
|
|
Notional
Amount
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Accumulated
Other
Comprehensive
Income
|
Maturity
Date
|
||||||||
|
(in thousands)
|
|||||||||||||||
Asset hedges
|
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||||
Forward contracts
|
$
|
3,624
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
54
|
|
Various
|
|
$
|
3,624
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
54
|
|
|
Terminated asset hedges
|
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges:
1
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
35,000
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
June 28, 2012
|
||
Interest rate swap
|
$
|
25,000
|
|
|
—
|
|
|
—
|
|
|
$
|
16
|
|
October 11, 2012
|
||
Interest rate swap
|
$
|
25,000
|
|
|
—
|
|
|
—
|
|
|
$
|
16
|
|
October 11, 2012
|
||
|
$
|
85,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32
|
|
|
1.
|
$32 thousand
in gains, net of taxes, was reclassified from accumulated other comprehensive income into earnings as interest income as of
December 31, 2012
.
|
|
|
Notional
Amount
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Accumulated
Other
Comprehensive
Income
|
|
Maturity Date
|
||||||||
|
|
(in thousands)
|
|
|
||||||||||||||
Asset hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Forward contracts
|
|
$
|
2,233
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
(14
|
)
|
|
various
|
Total
|
|
$
|
2,233
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
(14
|
)
|
|
|
Terminated asset hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges:
1
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
|
$
|
35,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
June 28, 2012
|
Interest rate swap
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
420
|
|
|
October 11, 2012
|
||||
Interest rate swap
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
420
|
|
|
October 11, 2012
|
||||
Total
|
|
$
|
85,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
881
|
|
|
|
1.
|
$881 thousand
in gains, net of taxes, was reclassified from accumulated other comprehensive income into earnings as interest income as of
December 31, 2011
.
|
|
|
Consolidated Balance
Sheet Presentation
|
|
Consolidated Income
Statement Presentation
|
||||||||||||||||
|
|
Assets
|
|
Liabilities
|
|
Gains
|
||||||||||||||
|
Notional
|
Classification
|
|
Amount
|
|
Classification
|
|
Amount
|
|
Classification
|
|
Amount
Recognized
|
||||||||
|
(in thousands)
|
|||||||||||||||||||
Hedging Instrument:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Forward contracts
|
$
|
3,624
|
|
Other assets
|
|
N/A
|
|
|
Other liabilities
|
|
$
|
—
|
|
|
Noninterest
income – other
|
|
$
|
(4
|
)
|
|
Hedged Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loans held for sale
|
N/A
|
|
Loans held for
sale
|
|
$
|
3,624
|
|
|
N/A
|
|
N/A
|
|
|
Noninterest
income – other
|
|
N/A
|
|
|
December 31,
2012 |
|
December 31,
2011 |
||||
|
(in thousands)
|
||||||
Commitments to extend credit - fixed rate
|
$
|
16,312
|
|
|
$
|
10,825
|
|
Commitments to extend credit - variable rate
|
94,822
|
|
|
97,510
|
|
||
Total commitments to extend credit
|
$
|
111,134
|
|
|
$
|
108,335
|
|
|
|
|
|
||||
Standby letters of credit
|
$
|
5,023
|
|
|
$
|
7,983
|
|
|
2012
|
|
2011
|
||||
|
(in thousands)
|
||||||
Other assets:
|
|
|
|
||||
Equity securities
|
$
|
5,862
|
|
|
$
|
7,063
|
|
Interest receivable
|
2,973
|
|
|
2,798
|
|
||
Prepaid expenses
|
1,252
|
|
|
2,630
|
|
||
Federal income tax receivable
|
204
|
|
|
2,340
|
|
||
Security deposits
|
2,000
|
|
|
2,000
|
|
||
Other
|
565
|
|
|
435
|
|
||
Total other assets
|
$
|
12,856
|
|
|
$
|
17,266
|
|
Other liabilities:
|
|
|
|
||||
Accrued interest payable
|
$
|
1,565
|
|
|
$
|
1,906
|
|
Accrued expenses
|
2,489
|
|
|
2,882
|
|
||
Accrued preferred stock dividend
|
5,156
|
|
|
3,506
|
|
||
Supplemental executive retirement plan accrual
|
1,996
|
|
|
2,078
|
|
||
Other
|
2,634
|
|
|
2,093
|
|
||
Total other liabilities
|
$
|
13,840
|
|
|
$
|
12,465
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands)
|
||||||||||
Other noninterest income—
|
|
|
|
|
|
||||||
Point-of-service fees
|
$
|
1,367
|
|
|
$
|
1,348
|
|
|
$
|
1,270
|
|
Bank-owned life insurance income
|
995
|
|
|
1,007
|
|
|
1,032
|
|
|||
Trust fees
|
523
|
|
|
736
|
|
|
771
|
|
|||
Gain on sale of OREO
|
913
|
|
|
180
|
|
|
92
|
|
|||
All other items
|
1,337
|
|
|
1,520
|
|
|
1,460
|
|
|||
Total other noninterest income
|
$
|
5,135
|
|
|
$
|
4,791
|
|
|
$
|
4,625
|
|
Other noninterest expense—
|
|
|
|
|
|
||||||
Professional fees
|
$
|
3,382
|
|
|
$
|
3,430
|
|
|
$
|
3,144
|
|
FDIC insurance
|
3,352
|
|
|
3,289
|
|
|
3,803
|
|
|||
Data processing
|
1,983
|
|
|
1,669
|
|
|
1,462
|
|
|||
Write-downs on other real estate owned and repossessions
|
5,051
|
|
|
6,788
|
|
|
3,539
|
|
|||
Losses on other real estate owned, repossessions and fixed assets
|
782
|
|
|
1,384
|
|
|
1,162
|
|
|||
OREO and repossession holding costs
|
1,591
|
|
|
2,322
|
|
|
1,637
|
|
|||
Communications
|
523
|
|
|
565
|
|
|
617
|
|
|||
ATM/debit card fees
|
511
|
|
|
514
|
|
|
529
|
|
|||
Insurance
|
1,341
|
|
|
1,251
|
|
|
452
|
|
|||
OCC Assessments
|
504
|
|
|
546
|
|
|
325
|
|
|||
All other items
|
3,527
|
|
|
3,822
|
|
|
4,137
|
|
|||
Total other noninterest expense
|
$
|
22,547
|
|
|
$
|
25,580
|
|
|
$
|
20,807
|
|
|
2012
|
|
2011
|
||||
|
(in thousands)
|
||||||
ASSETS
|
|
|
|
||||
Cash and due from bank subsidiary
|
$
|
841
|
|
|
$
|
1,161
|
|
Investment in common stock of subsidiary
|
30,958
|
|
|
67,582
|
|
||
Other assets
|
2,980
|
|
|
3,301
|
|
||
TOTAL ASSETS
|
$
|
34,779
|
|
|
$
|
72,044
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
LIABILITIES
|
$
|
5,669
|
|
|
$
|
3,812
|
|
STOCKHOLDERS’ EQUITY
|
29,110
|
|
|
68,232
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
34,779
|
|
|
$
|
72,044
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands)
|
||||||||||
INCOME
|
|
|
|
|
|
||||||
Management fees
|
$
|
—
|
|
|
$
|
6,772
|
|
|
$
|
7,400
|
|
Interest income from loan to subsidiary
|
—
|
|
|
—
|
|
|
145
|
|
|||
Total income
|
—
|
|
|
6,772
|
|
|
7,545
|
|
|||
EXPENSES
|
|
|
|
|
|
||||||
Salaries and employee benefits
|
987
|
|
|
5,380
|
|
|
5,828
|
|
|||
Other
|
848
|
|
|
1,882
|
|
|
2,427
|
|
|||
Total expenses
|
1,835
|
|
|
7,262
|
|
|
8,255
|
|
|||
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED EARNINGS IN SUBSIDIARY
|
(1,835
|
)
|
|
(490
|
)
|
|
(710
|
)
|
|||
Income tax (benefit) expense
|
(690
|
)
|
|
(181
|
)
|
|
(254
|
)
|
|||
(LOSS) INCOME BEFORE EQUITY IN UNDISTRIBUTED EARNINGS IN SUBSIDIARY
|
(1,145
|
)
|
|
(309
|
)
|
|
(456
|
)
|
|||
Equity in undistributed loss in subsidiary
|
(36,425
|
)
|
|
(22,752
|
)
|
|
(43,886
|
)
|
|||
NET LOSS
|
(37,570
|
)
|
|
(23,061
|
)
|
|
(44,342
|
)
|
|||
Preferred stock dividends
|
1,650
|
|
|
1,650
|
|
|
1,650
|
|
|||
Accretion on preferred stock discount
|
428
|
|
|
403
|
|
|
379
|
|
|||
NET LOSS ALLOCATED TO COMMON STOCKHOLDERS
|
$
|
(39,648
|
)
|
|
$
|
(25,114
|
)
|
|
$
|
(46,371
|
)
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
(in thousands)
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net loss
|
$
|
(37,570
|
)
|
|
$
|
(23,061
|
)
|
|
$
|
(44,342
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities—
|
|
|
|
|
|
||||||
Equity in undistributed loss of subsidiary
|
36,425
|
|
|
22,752
|
|
|
43,886
|
|
|||
Amortization of deferred compensation
|
208
|
|
|
79
|
|
|
24
|
|
|||
ESOP compensation
|
82
|
|
|
94
|
|
|
331
|
|
|||
(Increase) decrease in other assets
|
347
|
|
|
(1,115
|
)
|
|
1,404
|
|
|||
(Decrease) increase in other liabilities
|
188
|
|
|
(63
|
)
|
|
(207
|
)
|
|||
Net cash from operating activities
|
(320
|
)
|
|
(1,314
|
)
|
|
1,096
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Equity investment in subsidiary
|
—
|
|
|
—
|
|
|
(8,000
|
)
|
|||
Loan to subsidiary, net of payments
|
—
|
|
|
—
|
|
|
8,000
|
|
|||
Net cash from investing activities
|
—
|
|
|
—
|
|
|
—
|
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Proceeds from issuance of preferred and common stock
|
—
|
|
|
3
|
|
|
—
|
|
|||
Net cash from financing activities
|
—
|
|
|
3
|
|
|
—
|
|
|||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(320
|
)
|
|
(1,311
|
)
|
|
1,096
|
|
|||
CASH AND CASH EQUIVALENTS
—beginning of year
|
1,161
|
|
|
2,472
|
|
|
1,376
|
|
|||
CASH AND CASH EQUIVALENTS—
end of year
|
$
|
841
|
|
|
$
|
1,161
|
|
|
$
|
2,472
|
|
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Income taxes paid
|
$
|
70
|
|
|
$
|
273
|
|
|
$
|
128
|
|
|
First
Quarter
2012
|
|
Second
Quarter
2012
|
|
Third
Quarter
2012
|
|
Fourth
Quarter
2012
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Interest income
|
$
|
9,689
|
|
|
$
|
9,581
|
|
|
$
|
8,974
|
|
|
$
|
8,066
|
|
Interest expense
|
3,454
|
|
|
3,276
|
|
|
3,125
|
|
|
2,875
|
|
||||
Net interest income
|
6,235
|
|
|
6,305
|
|
|
5,849
|
|
|
5,191
|
|
||||
Provision for loan and lease losses
|
1,801
|
|
|
4,149
|
|
|
4,543
|
|
|
10,373
|
|
||||
Net interest income (loss) after provision for loan and lease losses
|
4,434
|
|
|
2,156
|
|
|
1,306
|
|
|
(5,182
|
)
|
||||
Noninterest income
|
1,983
|
|
|
2,312
|
|
|
2,694
|
|
|
2,306
|
|
||||
Noninterest expense
|
12,135
|
|
|
12,364
|
|
|
12,781
|
|
|
11,528
|
|
||||
Income loss before income taxes
|
(5,718
|
)
|
|
(7,896
|
)
|
|
(8,781
|
)
|
|
(14,404
|
)
|
||||
Income tax provision (benefit)
|
109
|
|
|
(619
|
)
|
|
108
|
|
|
1,173
|
|
||||
Net loss
|
(5,827
|
)
|
|
(7,277
|
)
|
|
(8,889
|
)
|
|
(15,577
|
)
|
||||
Dividends and accretion on preferred stock
|
517
|
|
|
518
|
|
|
521
|
|
|
522
|
|
||||
Net loss allocated to common stockholders
|
$
|
(6,344
|
)
|
|
$
|
(7,795
|
)
|
|
$
|
(9,410
|
)
|
|
$
|
(16,099
|
)
|
Net loss per share
|
|
|
|
|
|
|
|
||||||||
Net loss per share—basic
|
$
|
(3.94
|
)
|
|
$
|
(4.82
|
)
|
|
$
|
(5.79
|
)
|
|
$
|
(9.90
|
)
|
Net loss per share—diluted
|
$
|
(3.94
|
)
|
|
$
|
(4.82
|
)
|
|
$
|
(5.79
|
)
|
|
$
|
(9.90
|
)
|
Shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
1
|
1,612
|
|
|
1,618
|
|
|
1,626
|
|
|
1,626
|
|
||||
Diluted
1
|
1,612
|
|
|
1,618
|
|
|
1,626
|
|
|
1,626
|
|
|
First
Quarter
2011
|
|
Second
Quarter
2011
|
|
Third
Quarter
2011
|
|
Fourth
Quarter
2011
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Interest income
|
$
|
11,502
|
|
|
$
|
11,014
|
|
|
$
|
10,338
|
|
|
$
|
9,930
|
|
Interest expense
|
3,976
|
|
|
3,695
|
|
|
3,662
|
|
|
3,672
|
|
||||
Net interest income
|
7,526
|
|
|
7,319
|
|
|
6,676
|
|
|
6,258
|
|
||||
Provision for loan and lease losses
|
884
|
|
|
2,625
|
|
|
3,882
|
|
|
3,529
|
|
||||
Net interest income after provision for loan and lease losses
|
6,642
|
|
|
4,694
|
|
|
2,794
|
|
|
2,729
|
|
||||
Noninterest income
|
2,264
|
|
|
2,056
|
|
|
2,104
|
|
|
2,226
|
|
||||
Noninterest expense
|
11,373
|
|
|
12,250
|
|
|
11,433
|
|
|
13,122
|
|
||||
Loss before income taxes
|
(2,467
|
)
|
|
(5,500
|
)
|
|
(6,535
|
)
|
|
(8,167
|
)
|
||||
Income tax benefit
|
191
|
|
|
(105
|
)
|
|
(54
|
)
|
|
360
|
|
||||
Net loss
|
(2,658
|
)
|
|
(5,395
|
)
|
|
(6,481
|
)
|
|
(8,527
|
)
|
||||
Dividends and accretion on preferred stock
|
511
|
|
|
512
|
|
|
514
|
|
|
515
|
|
||||
Net loss allocated to common stockholders
|
$
|
(3,169
|
)
|
|
$
|
(5,907
|
)
|
|
$
|
(6,995
|
)
|
|
$
|
(9,042
|
)
|
Net loss per share
|
|
|
|
|
|
|
|
||||||||
Net loss per share—basic
|
$
|
(2.00
|
)
|
|
$
|
(3.35
|
)
|
|
$
|
(4.40
|
)
|
|
$
|
(5.64
|
)
|
Net loss per share—diluted
|
$
|
(2.00
|
)
|
|
$
|
(3.35
|
)
|
|
$
|
(4.40
|
)
|
|
$
|
(5.64
|
)
|
Shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
1,584
|
|
|
1,587
|
|
|
1,591
|
|
|
1,602
|
|
||||
Diluted
|
1,584
|
|
|
1,587
|
|
|
1,591
|
|
|
1,602
|
|
1
|
The sum of the quarterly net loss per share (basic and diluted) differs from the annual net loss per share (basic and diluted) because of the differences in the weighted average number of common shares outstanding and the common shares used in the quarterly and annual computations as well as differences in rounding.
|
|
2012
|
|
2011
|
||||
|
(in thousands)
|
||||||
Cash surrender value—beginning of year
|
$
|
26,722
|
|
|
$
|
25,806
|
|
Increase in cash surrender value, net of expenses
|
854
|
|
|
916
|
|
||
Cash surrender value—end of year
|
$
|
27,576
|
|
|
$
|
26,722
|
|
ITEM 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
ITEM 9A.
|
Controls and Procedures
|
ITEM 9B.
|
Other Information
|
ITEM 10.
|
Directors, Executive Officers and Corporate Governance
|
Name (Age)
|
Director
Since
|
Position with First Security and Business Experience
|
William F. Grant, III (64)
|
2012
|
Director of FSGBank since March 2012; Founding Director and Chair of the Audit Committee for Square 1 Bank and Square 1 Financial, Inc. since July 2005. Retired from the Office of the Comptroller of the Currency, a division of the Treasury, in 2000 with 27 years of service in various positions, including National Bank Examiner, Director of Staffing and National Recruitment and Director for Banking Relations. We believe that Mr. Grant's extensive regulatory and banking experience well qualifies him to serve on our Board of Directors.
|
William C. Hall (61)
|
2010
|
Owner and Manager of Town and Country Restaurant (restaurant / hospitality, Chattanooga, TN) from 1976 to 2005; Managing Partner of T&C Holdings, GP (real estate investment), 2005 to present. We believe Mr. Hall's experience as a small business owner in Chattanooga, one of our primary market areas, well qualifies him to serve on our Board of Directors.
|
Carol H. Jackson (73)
|
2002
|
Retired as Vice President of Baker Street Rentals (property management, Knoxville, TN) in 2006 after serving in this role since 1991. Ms. Jackson has 17 years of property management experience and has served on various bank boards continuously over the last 21 years. We believe Ms. Jackson's experience in property management and her long service on the boards of financial institutions well qualifies her to serve on our Board of Directors.
|
Name (Age)
|
Director
Since
|
Position with First Security and Business Experience
|
Robert P. Keller (74)
|
2011
|
Managing Director of Triumph Investment Managers, LLC (private equity) since October 2003; Director of Pennichuck Corporation, a publicly-traded water utility and land development company, since April 1983; Director of Homeland Renewable Energy, Inc. (energy industry) since August 2005; Director of First State Bank from November 2008 to October 2011 (elevated to Chairman in November 2010); Director of California Oaks State Bank from January 2005 to December 2010; Chairman of the Board of Directors at Security Business Bank of San Diego and Security Business Bancorp since September 2002 and April 2008, respectively; President and Chief Executive Officer of Eldorado Bancshares, Inc. from August 1995 to April 2001; Chairman and Chief Executive Officer of Eldorado Bank from August 1995 to April 2001; and Chairman and Chief Executive Officer of Antelope Valley Bank from July 1999 to April 2001. Mr. Keller is also a CPA. We believe that Mr. Keller's extensive experience in management and as a director of several community-based financial institutions well qualifies him for service on our Board of Directors.
|
Kelly P. Kirkland (54)
|
2011
|
Retired as a partner with Leitner, Williams, Dooley & Napolitan, PLLC, following 27 and a half years of practice in December 2010. Ms. Kirkland maintains membership with the State Bars of Florida, Georgia and Tennessee, and is a member of the Chattanooga Bar Association. We believe that Ms. Kirkland's varied legal practice, which included the representation of numerous complex public companies, well qualifies her to serve on our Board of Directors.
|
D. Michael Kramer (54)
|
2011
|
Chief Executive Officer and President of First Security since December 2011; Chief Executive Officer of FSGBank since December 2011; Managing Director of Ridley Capital Group from May 2010 to December 2011; Director, Chief Executive Officer and President of Ohio Legacy Corporation from January, 2006 to February, 2010; Chief Operating Officer and Chief Technology Officer, of Integra Bank Corporation from 1999 to 2004. We believe that Mr. Kramer's more than 20 years of executive leadership in financial organizations, including his service as First Security's Chief Executive Officer, well qualifies him to serve on our Board of Directors.
|
Robert R. Lane (64)
|
2012
|
Director of FSGBank since February 2012; Faculty Advisor for the Fisher College of Business at the Ohio State University since September 2011; Chief Executive Officer of Lane Leadership Group, LLC since August 2008; President of the Central Ohio District of KeyBank, N.A. from January 2008 to August 2010; Director for Crowe Horwath and Company, LLP from July 1997 to December 2006; Chairman and Chief Executive Officer of First Union National Bank of Tennessee from July 1987 to March 1993. We believe that Mr. Lane's more than 40 years of banking and financial service consulting experience well qualifies him to serve on our Board of Directors.
|
Larry D. Mauldin (67)
|
2012
|
Retired as Chairman, President and Chief Executive Officer of SunTrust Bank, East Tennessee, in 2007 after serving in this role since 2002; Owner and manager of Mauldin Properties, LLC since 1996; Chairman of the Board of Covenant Health, a Tennessee public benefit nonprofit corporation (hospital health care system), since 2008; and Chairman of the Board, Project GRAD Knoxville, Inc., a Tennessee public benefit nonprofit corporation, since 2004. We believe Mr. Mauldin's 40 years of banking experience, including executive roles, well qualifies him to serve on our Board of Directors.
|
Name (Age)
|
Officer
Since
|
Position with First Security and Business Experience
|
Denise M. Cobb (38)
|
2010
|
Executive Vice President and Chief Administrative Officer of First Security and FSGBank since February 2012; Executive Vice President and Chief Risk Officer of First Security and FSGBank from May 2010 to February 2012; Senior Vice President and Chief Risk Officer of First Security and FSGBank from May 2009 to May 2010; Vice President, Director of Internal Audit for First Security and FSGBank from October 2007 to May 2009; Vice President, Project Manager of First Security and FSGBank from August 2006 to October 2007; and Vice President, Corporate Controller and Principal Accounting Officer of First Security and FSGBank from February 2005 to August 2006.
|
John R. Haddock (34)
|
2011
|
Executive Vice President, Chief Financial Officer, and Secretary of the Board of First Security and FSGBank since February 2011; Corporate Controller of First Security and FSGBank from 2006 to February 2011.
|
D. Michael Kramer (54)
|
2011
|
Chief Executive Officer and President of First Security since December 2011; Chief Executive Officer of FSGBank since December 2011; Managing Director of Ridley Capital Group from May 2010 to December 2011; Director, Chief Executive Officer and President of Ohio Legacy Corporation from January, 2006 to February, 2010; Chief Operating Officer and Chief Technology Officer, of Integra Bank Corporation from 1999 to 2004.
|
Chris Tietz (49)
|
2012
|
Executive Vice President and Chief Credit Officer of FSGBank since February 2012. Executive Vice President and Chief Credit Officer of First Place Bank from May 2011 to February 2012. Chief Credit Officer of Monroe Bank from 2005 to April 2011.
|
(1)
|
the name, age, business address and residence address of all individuals nominated;
|
(2)
|
the principal occupation or employment of all individuals nominated;
|
(3)
|
the class and number of shares of First Security that are beneficially owned by all individuals nominated;
|
(4)
|
any other information relating to all individuals nominated that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the SEC's rules and regulations thereunder and any other applicable laws or rules or regulations of any governmental authority or of any national securities exchange or similar body overseeing any trading market on which shares of First Security are traded;
|
(5)
|
the name and record address of the nominating shareholder; and
|
(6)
|
the class and number of shares of First Security which are beneficially owned by the nominating shareholder.
|
ITEM 11.
|
Executive Compensation
|
Name and Principal Position
|
|
Year
|
|
Salary
(1)
|
|
Bonus
(2)
|
|
Stock Awards
(3)
|
|
Option Awards
(4)
|
|
Non-Equity Incentive Plan Compensation
(5)
|
|
All Other Compensation
(6)
|
|
Total
|
|||||||
(a)
|
|
(b)
|
|
($)
(c)
|
|
($)
(d)
|
|
($)
(e)
|
|
($)
(f)
|
|
($)
(g)
|
|
($)
(i)
|
|
($)
(h)
|
|||||||
D. Michael Kramer
|
|
2012
|
|
311,458
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,782
|
|
|
352,240
|
|
President and CEO
|
|
2011
|
|
28,126
|
|
|
—
|
|
|
62,300
|
|
|
—
|
|
|
—
|
|
|
29,625
|
|
(7)
|
120,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
John R. Haddock
|
|
2012
|
|
185,448
|
|
|
—
|
|
|
36,000
|
|
|
—
|
|
|
—
|
|
|
6,153
|
|
|
227,601
|
|
Secretary, CFO and EVP
|
|
2011
|
|
176,967
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,514
|
|
|
184,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Denise M. Cobb
|
|
2012
|
|
167,047
|
|
|
—
|
|
|
36,000
|
|
|
—
|
|
|
—
|
|
|
9,780
|
|
|
212,827
|
|
Chief Administrative Officer and EVP
|
|
2011
|
|
167,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,462
|
|
|
176,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Christopher G. Tietz
|
|
2012
|
|
206,529
|
|
|
—
|
|
|
101,100
|
|
|
—
|
|
|
—
|
|
|
9,763
|
|
|
317,392
|
|
Chief Credit Officer and EVP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Joseph E. Dell, Jr
|
(8)
|
2012
|
|
206,042
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,359
|
|
|
226,401
|
|
Chief Lending Officer and EVP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents base salary.
|
(2)
|
Represents discretionary bonus awards. First Security did not pay its Named Executive Officers any bonuses in 2012.
|
(3)
|
Represents the grant date fair value of the restricted stock awards computed in accordance with FASB ASC Topic 718, using the methods and assumptions described in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for the year ended December 31, 2012. The grant to Mr. Kramer was made as an inducement in connection with his employment offer. Mr. Kramer was granted 35,000 shares during 2011 at fair value of $1.78 per share. Mr. Haddock and Ms. Cobb were granted 10,000 shares, respectively, during 2012, at fair value of $3.60 per share. The grants were made under the 1999 and 2002 Long Term Incentive Plans. The grant to Mr. Tietz was made as an inducement in connection with his employment offer. Mr. Tietz was granted 30,000 shares during 2012 at a fair value of $3.37 per share. All remaining grants are subject to three-year service vesting and TARP CPP transfer restrictions. Based on the terms of the TARP Exchange, the NEOs forfeited 75% of the restricted stock awards during April 2013.
|
(4)
|
Represents the grant date fair value of the stock options computed in accordance with FASB ASC Topic 718, using the methods and assumptions described in Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for the year ended December 31, 2012. First Security did not issue any stock options to its Named Executive Officers in 2012.
|
(5)
|
Represents Non-Equity Incentive Plan Awards as defined by the SEC. First Security did not issue any Non-Equity Incentive Plan Awards to its Named Executive Officers in 2012.
|
(6)
|
Represents all other forms of compensation, including the First Security's 401(k) match and perquisites provided to the Named Executive Officers (consisting of automobile allowance or business and personal use of a company car for transportation for the executive, his customers, employees and directors; social and civic club dues for networking and entertaining; and business and personal use of a cell phone for accessibility to the executive). First Security provided 401(k) matches in 2012 as follows: Kramer-$2,370, Haddock-$1,855, Cobb-$1,730, Tietz-$0 and Dell-$1,932. First Security does not provide the Named Executive Officers with nonqualified deferred compensation opportunities.
|
(7)
|
Includes $29,625 paid for as an independent contractor for consulting services prior to Mr. Kramer's appointment as Chief Executive Officer in December 2012.
|
(8)
|
Mr. Dell resigned on January 28, 2013.
|
•
|
incentive compensation arrangements should provide employees incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose the organization to imprudent risk;
|
•
|
incentive compensation arrangements should be compatible with effective controls and risk management; and
|
•
|
incentive compensation arrangements should be supported by strong corporate governance, including active and effective oversight by the board of directors.
|
•
|
ensure that its senior executive incentive compensation packages do not encourage excessive risk;
|
•
|
subject senior executive compensation to “clawback” if the compensation was based on inaccurate financial information or performance metrics;
|
•
|
prohibit any golden parachute payments to senior executive officers; and
|
•
|
agree not to deduct more than $500,000 from taxable income for a senior executive officer's compensation.
|
|
|
Option Awards
|
|
Stock Awards
|
|||||||||||||||
Name (a)
|
|
Number of Securities Underlying Unexercised Options
(#) Exercisable
(b)
|
|
Number of Securities Underlying Unexercised Options
(#) Unexercisable
(c)
|
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
(d)
|
|
Option Exercise Price
($)
(e)
|
|
Option Expiration Date
(f)
|
|
Number of Shares or Units of Stock That Have Not Vested
(#)
(g)
|
|
Market Value of Shares or Units of Stock That Have Not Vested(1)
(#)
(h)
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested
(#)
(i)
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)
(j)
|
|
Kramer
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
35,000
|
(2)
|
78,050
|
|
—
|
|
—
|
|
Haddock
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,000
|
(3)
|
22,300
|
|
—
|
|
—
|
|
|
200
|
|
—
|
|
—
|
|
95.00
|
|
12/21/2015
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
500
|
|
—
|
|
—
|
|
113.50
|
|
12/27/2016
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
105
|
|
—
|
|
—
|
|
90.80
|
|
2/27/2018
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Cobb
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,000
|
(3)
|
22,300
|
|
—
|
|
—
|
|
|
|
550
|
|
—
|
|
—
|
|
100.00
|
|
8/29/2015
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Tietz
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
30,000
|
(4)
|
66,900
|
|
—
|
|
—
|
|
Dell
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,700
|
(5)
|
14,941
|
|
—
|
|
—
|
(1)
|
Based on the closing price of First Security's common stock (NASDAQ: FSGI) on December 30, 2012 ($2.23 per share).
|
(2)
|
Vesting schedule for stock: 11,550 shares on 12/28/2013 and 23,100 shares on 12/28/2014.
|
(3)
|
Vesting schedule for stock: 3,300 shares on 1/25/2014 and 6,700 shares on 1/25/2015.
|
(4)
|
Vesting schedule for stock: 9,900 shares on 2/8/2014 and 20,100 shares on 2/2/2015.
|
(5)
|
On January 28, 2013, Mr. Dell resigned and forfeited his award.
|
Name
|
|
Fees Earned or Paid in Cash
|
|
Stock Awards
|
|
Option Awards
|
|
Non-Equity Incentive Plan Compensation
|
|
All Other Compensation
|
|
Total
|
||||||||
(a)
|
|
($)
(b)
|
|
($)
(c)
|
|
($)
(d)
|
|
($)
(e)
|
|
($)
(g)
|
|
($)
(h)
|
||||||||
William F. Grant
|
|
$
|
37,000
|
|
|
—
|
|
|
9,350
|
|
(1)
|
—
|
|
|
—
|
|
|
$
|
46,350
|
|
William C. Hall
|
|
$
|
55,000
|
|
|
—
|
|
|
9,350
|
|
(1)
|
—
|
|
|
—
|
|
|
$
|
64,350
|
|
Carol H. Jackson
|
|
$
|
64,000
|
|
|
—
|
|
|
9,350
|
|
(1)
|
—
|
|
|
—
|
|
|
$
|
73,350
|
|
Robert P. Keller
|
|
$
|
39,875
|
|
|
—
|
|
|
9,350
|
|
(1)
|
—
|
|
|
140,000
|
|
(2)
|
$
|
189,225
|
|
Ralph L. Kendall
|
|
$
|
42,500
|
|
|
—
|
|
|
9,350
|
|
(1)
|
—
|
|
|
—
|
|
|
$
|
51,850
|
|
Kelly P. Kirkland
|
|
$
|
44,000
|
|
|
—
|
|
|
9,350
|
|
(1)
|
—
|
|
|
—
|
|
|
$
|
53,350
|
|
Robert R. Lane
|
|
$
|
44,875
|
|
|
—
|
|
|
9,350
|
|
(1)
|
—
|
|
|
—
|
|
|
$
|
54,225
|
|
Larry Mauldin
|
|
$
|
43,000
|
|
|
25,000
|
|
(3)
|
9,350
|
|
(1)
|
—
|
|
|
—
|
|
|
$
|
77,350
|
|
(1)
|
Represents the grant date fair value of the restricted stock award computed in accordance with FASB ASC Topic 718, using the methods and assumptions described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2012. The Committee granted each non-employee Director a stock option award for 5,000 shares at a fair value of $1.87 per share. The following assumptions were used in the Black-Scholes methodology for the 2012 awards: expected volatility 67.81%%, risk-free rate 1.09%, expected life of 6.5 years and expected dividend yield of 0.00%.
|
(2)
|
Represents consulting fees paid to Triumph, for whom Mr. Keller is a Managing Director. See "Related Party Transactions - Engagement of Triumph" on page 153 for more information.
|
(3)
|
Represents the grant date fair value of the restricted stock award computed in accordance with FASB ASC Topic 718, using the methods and assumptions described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2012. The Committee granted Mr. Mauldin a restricted stock award for 10,000 shares at a fair value of $2.50 per share.
|
ITEM 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Management
|
Name of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
(1)
|
|
Percent of Shares Beneficially Owned
(2)
|
|
Directors and Director Nominees:
|
|
|
|
|
William F. Grant, III
|
42,659
|
|
(3)
|
*
|
William C. Hall
|
15,318
|
|
(4)
|
*
|
Carol H. Jackson
|
61,966
|
|
(5)
|
*
|
Robert P. Keller
|
77,763
|
|
(6)
|
*
|
Kelly P. Kirkland
|
16,697
|
|
(7)
|
*
|
D. Michael Kramer
|
111,586
|
|
(8)
|
*
|
Robert R. Lane
|
20,300
|
|
(9)
|
*
|
Larry D. Mauldin
|
169,000
|
|
(10)
|
*
|
|
|
|
|
|
Named Executive Officers, who are not also Directors:
|
|
|
|
|
Denise M. Cobb
|
24,206
|
|
(11)
|
*
|
John R. Haddock
|
75,421
|
|
(12)
|
*
|
Christopher G. Tietz
|
90,053
|
|
(13)
|
*
|
Joseph E. Dell, Jr.
|
7,027
|
|
(14)
|
*
|
|
|
|
|
|
All Current Directors and Executive Officers,
as a Group (11 persons):
|
704,969
|
|
(15)
|
1.15%
|
|
|
|
|
|
5% Shareholders:
|
|
|
|
|
EFJ Capital, LLC
|
6,080,000
|
|
(16)
|
9.74%
|
GF Financial II, LLC
|
6,080,000
|
|
(16)
|
9.74%
|
MFP Partners, L.P.
|
6,080,000
|
|
(16)
|
9.74%
|
Ulysses Partners, L.P.
|
6,000,000
|
|
(16)
|
9.61%
|
(1)
|
Some or all of the shares may be subject to margin accounts.
|
(2)
|
The percentage of our common stock beneficially owned was calculated based on 62,420,992 shares of common stock issued and outstanding as of April 15, 2013. The percentage assumes the exercise by the shareholder or group named in each row of all options for the purchase of our common stock held by such shareholder or group and exercisable within 60 days of April 15, 2013.
|
(3)
|
All shares directly owned by Mr. Grant.
|
(4)
|
Includes 120 shares subject to restricted stock awards and 198 shares that Mr. Hall has the right to acquire by exercising options that are exercisable within 60 days after April 15, 2013. All other shares directly owned.
|
(5)
|
Includes 666 shares owned by Ms. Jackson's spouse and 509 shares owned by an IRA for the benefit of Ms. Jackson; also includes 3,550 shares that Ms. Jackson has the right to acquire by exercising options that are exercisable with 60 days after April 15, 2013. All other shares directly owned.
|
(6)
|
Includes 226 shares owned by Triumph Investment Partners, LLC, 12,000 shares held by Triumph Investment Fund, LP, and 15,506 shares held by Triumph Investment Fund II, LP. All other shares directly owned.
|
(7)
|
All shares directly owned by Ms. Kirkland.
|
(8)
|
Includes 35,000 shares subject to restricted stock awards and all other shares directly owned.
|
(9)
|
All shares directly owned by Mr. Lane.
|
(10)
|
All shares directly owned by Mr. Mauldin.
|
(11)
|
Includes 1,706 shares held in First Security's 401(k) plan and also includes 10,000 shares subject to restricted stock awards. Additionally, Ms. Cobb has the right to acquire 550 shares by exercising options that are exercisable within 60 days after April 15, 2013. All other shares directly owned.
|
(12)
|
Includes 1,716 shares held in First Security's 401(k) plan and also includes 10,000 shares subject to restricted stock awards. Additionally, Mr. Haddock has the right to acquire 805 shares by exercising options that are exercisable within 60 days after April 15, 2013. All other shares directly owned.
|
(13)
|
Includes 1,634 shares owned by an IRA for the benefit of Mr. Tietz's spouse and also includes 30,000 shares subject to restricte
d stock awards. All other shares directly owned.
|
(14)
|
Mr. Dell resigned on January 28, 2013 and all shares are directly owned.
|
(15)
|
Includes 5,103 sh
ares that the owner has the right to acquire by exercising options that are exercisable within 60 days after April 15, 2013.
|
(16)
|
Based on the shares purchased as part of the Company's recapitalization that occurred on April 11-12, 2013.
|
|
|
Number of securities to be
issued upon exercise of
outstanding options and
vesting of restricted awards
|
|
Weighted-average
exercise price of
outstanding options
|
|
Number of shares
remaining available for
future issuance under
the Plans (excludes
outstanding options)
|
||||
Equity compensation plans approved by security holders
|
|
165,257
|
|
|
$
|
86.34
|
|
|
149,000
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
165,257
|
|
|
$
|
86.34
|
|
|
149,000
|
|
ITEM 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
•
|
William C. Hall
|
•
|
William F. Grant, III
|
•
|
Carol H. Jackson
|
•
|
Kelly P. Kirkland
|
•
|
Robert R. Lane
|
•
|
Larry D. Mauldin
|
ITEM 14.
|
Principal Accountant Fees and Services
|
|
2012
|
|
2011
|
||||
Audit Fees
(1)
|
$
|
377,700
|
|
|
$
|
158,760
|
|
Audit-Related Fees
(2)
|
21,500
|
|
|
1,775
|
|
||
Tax Fees - Preparation and Compliance
(3)
|
—
|
|
|
—
|
|
||
Sub total
|
399,200
|
|
|
160,535
|
|
||
Tax Fees - Other
|
—
|
|
|
—
|
|
||
All Other Fees
(4)
|
—
|
|
|
12,500
|
|
||
Sub total
|
—
|
|
|
12,500
|
|
||
Total Fees
|
$
|
399,200
|
|
|
$
|
173,035
|
|
(1)
|
Audit fees consist of fees billed for professional services rendered in connection with the audit of the company's consolidated financial statements, review of periodic reports and other documents filed with the SEC, including quarterly financial statements included in Forms 10-Q and services normally provided in connection with statutory or regulatory filings or engagements.
|
(2)
|
Audit-related fees consist of assurance and other services that are related to the performance of the audit or quarterly review of the company's consolidated financial statements. The audit-related fees primarily relate to the audit of the company's financial statements related to its employee benefit plan. Such fees include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.
|
(3)
|
Tax Fees - Preparation and Compliance consist of the aggregate fees billed for professional services rendered for tax return preparation and compliance.
|
(4)
|
All Other Fees consist of the aggregate fees for professional services related to a one-time information technology project and other SOX-404 testings prior to the audit engagement in 2011.
|
|
2011
|
||
Audit Fees
(1)
|
$
|
152,409
|
|
Audit-Related Fees
(2)
|
2,570
|
|
|
Tax Fees - Preparation and Compliance
(3)
|
63,400
|
|
|
Sub total
|
218,379
|
|
|
Tax fees - Other
(4)
|
9,850
|
|
|
All Other Fees
|
—
|
|
|
Sub total
|
9,850
|
|
|
Total Fees
|
$
|
228,229
|
|
(1)
|
Audit fees consist of fees billed for professional services rendered in connection with the audit of the company's consolidated financial statements, review of periodic reports and other documents filed with the SEC, including quarterly financial statements included in Forms 10-Q and services normally provided in connection with statutory or regulatory filings or engagements.
|
(2)
|
Audit-related fees consist of assurance and other services that are related to the performance of the audit or quarterly review of the company's consolidated financial statements. Such fees include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.
|
(3)
|
Tax Fees - Preparation and Compliance consist of the aggregate fees billed for professional services rendered for tax return preparation and compliance.
|
(4)
|
Tax Fees - Other consist primarily of tax research and consultation, as well as tax planning and other tax advice.
|
ITEM 15.
|
Exhibits and Financial Statement Schedules
|
(a)
|
The list of all financial statements is included at Item 8.
|
(b)
|
The financial statement schedules are either included in the financial statements or are not applicable.
|
(c)
|
Exhibits Required by Item 601. The following exhibits are attached hereto or incorporated by reference herein (numbered to correspond to Item 601(a) of Regulation S-K, as promulgated by the Securities and Exchange Commission):
|
Exhibit
Number
|
|
Description
|
|
3.1
|
|
|
Amended and Restated Articles of Incorporation.
|
|
|
||
3.4
|
|
|
Amended and Restated Bylaws.
|
|
|
||
4.1
|
|
|
Form of Common Stock Certificate.
1
|
|
|
||
4.2
|
|
|
Form of Series A Preferred Stock Certificate.
2
|
|
|
||
4.3
|
|
|
Warrant to Purchase up to 823,627 shares of Common Stock, dated January 9, 2009.
3
|
|
|
|
|
4.4
|
|
|
Tax Benefit Preservation Plan, dated October 30, 2012
|
|
|
||
10.1*
|
|
|
First Security’s Second Amended and Restated 1999 Long-Term Incentive Plan.
1
|
|
|
||
10.2*
|
|
|
First Security’s Amended and Restated 2002 Long-Term Incentive Plan.
4
|
|
|
||
10.3*
|
|
|
Form of Incentive Stock Option Award under the Second Amended and Restated 1999 Long-Term Incentive Plan.
5
|
|
|
||
10.4*
|
|
|
Form of Incentive Stock Option Award under the 2002 Long-Term Incentive Plan.
5
|
|
|
||
10.5*
|
|
|
Form of Non-qualified Stock Option Award under the 2002 Long-Term Incentive Plan.
5
|
|
|
||
10.6*
|
|
|
Form of Restricted Stock Award under the 2002 Long-Term Incentive Plan.
5
|
|
|
||
10.7*
|
|
|
Form of Restricted Stock Award under the 2002 Long-Term Incentive Plan with TARP restrictions.
6
|
|
|
||
10.8*
|
|
|
Employment Agreement Dated as of May 16, 2003 by and between First Security and Rodger B. Holley.
7
|
|
|
||
10.9*
|
|
|
Salary Continuation Agreement Dated as of December 21, 2005 by and between First Security, FSGBank and Rodger B. Holley.
8
|
|
|
||
10.10*
|
|
|
Employment Agreement Dated as of September 20, 2010 and Executed November 24, 2010 by and between First Security and Ralph E. “Gene” Coffman, Jr.
9
|
|
|
||
10.11*
|
|
|
Employment Agreement Dated as of May 16, 2003 by and between First Security and William L. Lusk, Jr.
7
|
|
|
||
10.12*
|
|
|
Salary Continuation Agreement Dated as of December 21, 2005 by and between First Security, FSGBank and William L. Lusk, Jr.
8
|
|
|
||
10.13*
|
|
|
First Security Group, Inc. Non-Employee Director Compensation Policy.
10
|
|
|
||
10.14*
|
|
|
Form of First Amendment to Employment Agreements, Dated as of December 18, 2008 (executed by Messrs. Holley and Lusk).
10
|
|
|
||
10.15*
|
|
|
Form of Senior Executive Officer Agreement, Dated as of January 9, 2009 (executed by Messrs. Holley and Lusk).
11
|
|
|
||
10.16
|
|
|
Letter Agreement, Dated January 9, 2009, including Securities Purchase Agreement—Standard Terms, incorporated by reference therein, between the Company and the United States Department of the Treasury.
12
|
|
|
|
|
10.17*
|
|
|
Form of TARP Restricted Employee Agreement, Dated as of December 10, 2009 (executed by Messrs. Holley and Lusk).
13
|
|
|
||
10.18
|
|
|
Consent Order, Dated April 28, 2010, between FSGBank and the Office of the Comptroller of the Currency.
14
|
|
|
||
10.19
|
|
|
Stipulation and Consent to the Issuance of a Consent Order, Dated April 28, 2010, between FSGBank and the Office of the Comptroller of the Currency.
15
|
10.20
|
|
|
Written Agreement, Dated September 7, 2010, between First Security Group, Inc. and the Federal Reserve Bank of Atlanta.
16
|
|
|
||
10.21
|
|
|
Resignation Letter of Rodger B. Holley, dated April 21, 2011.
18
|
|
|
||
10.22
|
|
|
Severance Agreement by and between Rodger B. Holley, First Security Group, Inc. and FSGBank, N.A., dated April 21, 2011.
19
|
|
|
||
10.23
|
|
|
Engagement Agreement with First Security Group, Inc., FSGBank, N.A. and Triumph Investment Management, LLC, dated April 28, 2011.
20
|
|
|
||
10.24
|
|
|
Amendment to Engagement Agreement with First Security Group, Inc., FSGBank, N.A. and Triumph Investment Management, LLC, dated March 28, 2012.
|
|
|
||
10.25
|
|
|
Employment Agreement by and between D. Michael Kramer, First Security Group, Inc. and FSGBank, N.A., dated December 28, 2011.
21
|
|
|
|
|
10.26
|
|
|
Exchange Agreement by and between First Security Group, Inc. and The United States Department of The Treasury, dated February 25, 2013.
22
|
|
|
|
|
10.27
|
|
|
Stock Purchase Agreement by and between First Security Group, Inc. and certain Named Investors, dated February 25, 2013.
23
|
|
|
|
|
10.28
|
|
|
Form of Securities Purchase Agreement by and between The United States Department of The Treasury and First Security Group, Inc., dated February 25, 2013.
24
|
|
|
|
|
10.29*
|
|
|
Form of Incentive Stock Option Award under the 2012 Long-Term Incentive Plan.
|
|
|
||
10.30*
|
|
|
Form of Non-qualified Stock Option Award under the 2012 Long-Term Incentive Plan.
|
|
|
||
10.31*
|
|
|
Form of Restricted Stock Award for a Director under the 2012 Long-Term Incentive Plan with TARP restrictions.
|
|
|
||
10.32*
|
|
|
Form of Restricted Stock Award for an Employee under the 2012 Long-Term Incentive Plan with TARP restrictions.
|
|
|
|
|
21.1
|
|
|
Subsidiaries of the Registrant.
17
|
|
|
||
23.1
|
|
|
Consent of Crowe Horwath LLP.
|
|
|
||
23.2
|
|
|
Consent of Joseph Decosimo and Company, PLLC.
|
|
|
||
31.1
|
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934.
|
|
|
||
31.2
|
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934.
|
|
|
||
32.1
|
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934.
|
|
|
||
32.2
|
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934.
|
|
|
||
99.1
|
|
|
Certification of Chief Executive Officer pursuant to EESA.
|
|
|
||
99.2
|
|
|
Certification of Chief Financial Officer pursuant to EESA.
|
|
|
||
101
|
|
|
Interactive Data Files providing financial information from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012 in XBRL (eXtensible Business Reporting Language). Pursuant to Regulation 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and are otherwise not subject to liability.
|
1
|
|
Incorporated by reference to First Security’s Registration Statement on Form S-1 dated April 20, 2001, File No. 333-59338.
|
2
|
|
Incorporated by reference to the Exhibit 4.1 to the Current Report on Form 8-K filed January 9, 2009.
|
3
|
|
Incorporated by reference to the Exhibit 4.2 to the Current Report on Form 8-K filed January 9, 2009.
|
4
|
|
Incorporated by reference from Appendix A to First Security’s Proxy Statement filed April 30, 2007.
|
5
|
|
Incorporated by reference to First Security’s Annual Report on Form 10-K for the year ended December 31, 2004.
|
6
|
|
Incorporated by reference to the Exhibit 10.7 to First Security’s Annual Report on Form 10-K for the year ended December 31, 2010.
|
7
|
|
Incorporated by reference to First Security’s Quarterly Report on Form 10-Q for the period ended June 30, 2003.
|
8
|
|
Incorporated by reference to First Security’s Annual Report on Form 10-K for the year ended December 31, 2005.
|
9
|
|
Incorporated by reference to the Exhibit 10.1 to the Current Report on Form 8-K filed December 1, 2010.
|
10
|
|
Incorporated by reference to First Security’s Annual Report on Form 10-K for the year ended December 31, 2008.
|
11
|
|
Incorporated by reference to the Exhibit 10.3 to the Current Report on Form 8-K filed January 9, 2009.
|
12
|
|
Incorporated by reference to the Exhibit 10.1 to the Current Report on Form 8-K filed January 9, 2009.
|
13
|
|
Incorporated by reference to First Security’s Annual Report on Form 10-K for the year ended December 31, 2009.
|
14
|
|
Incorporated by reference to the Exhibit 10.1 to the Current Report on Form 8-K filed April 29, 2010.
|
15
|
|
Incorporated by reference to the Exhibit 10.2 to the Current Report on Form 8-K filed April 29, 2010.
|
16
|
|
Incorporated by reference to the Exhibit 10.1 to the Current Report on Form 8-K filed September 14, 2010.
|
17
|
|
Incorporated by Reference to First Security’s Annual Report on Form 10-K for the year ended December 31, 2003.
|
18
|
|
Incorporated by Reference to the Exhibit 10.1 to the Current Report on Form 8-K filed April 27, 2011.
|
19
|
|
Incorporated by Reference to the Exhibit 10.2 to the Current Report on Form 8-K filed April 27, 2011.
|
20
|
|
Incorporated by Reference to the Exhibit 10.1 to the Current Report on Form 8-K filed April 29, 2011.
|
21
|
|
Incorporated by Reference to the Exhibit 10.1 to the Current Report on Form 8-K filed December 29, 2011.
|
22
|
|
Incorporated by Reference to the Exhibit 10.1 to the Current Report on Form 8-K filed February 26, 2013.
|
23
|
|
Incorporated by Reference to the Exhibit 10.2 to the Current Report on Form 8-K filed February 26, 2013.
|
24
|
|
Incorporated by Reference to the Exhibit 10.3 to the Current Report on Form 8-K filed February 26, 2013.
|
*
|
The indicated exhibit is a compensatory plan required to be filed as an exhibit to this Form 10-K.
|
(b)
|
The Exhibits not incorporated by reference herein are submitted as a separate part of this report.
|
(c)
|
The financial statement schedules are either included in the financial statements or are not applicable.
|
|
|
|
FIRST SECURITY GROUP, INC.
|
||
|
|
|
BY:
|
|
/
S
/ D. M
ICHAEL
K
RAMER
|
|
|
D. Michael Kramer
|
|
|
Chief Executive Officer
|
|
|
|
Signature
|
|
Title
|
|
|
|
/
S
/ D. M
ICHAEL
K
RAMER
D. Michael Kramer
(Principal Executive Officer)
|
|
Chief Executive Officer,
President and Director
|
|
|
|
/
S
/ J
OHN
R. H
ADDOCK
John R. Haddock
(Principal Financial and Accounting Officer)
|
|
Chief Financial Officer,
Executive Vice President and Secretary
|
|
|
|
/
S
/ Larry D. Mauldin
Larry D. Mauldin
|
|
Chairman of the Board and Director
|
|
|
|
/s/ William F. Grant, III
William F. Grant, III
|
|
Director
|
|
|
|
/
S
/ W
ILLIAM
C. H
ALL
William C. Hall
|
|
Director
|
|
|
|
/
S
/ C
AROL
H. J
ACKSON
Carol H. Jackson
|
|
Director
|
|
|
|
/
S
/ R
OBERT
P. K
ELLER
Robert P. Keller
|
|
Director
|
|
|
|
/
S
/ K
ELLY
P. K
IRKLAND
Kelly P. Kirkland
|
|
Director
|
|
|
|
/
S
/ R
OBERT
R. L
ANE
Robert R. Lane
|
|
Director
|
|
|
|
C.
|
Plan under which granted: First Security Group, Inc. 2012 Long-Term Incentive Plan.
|
D.
|
Option Shares: All or any part of ________ shares of the Company’s common stock (the “Common Stock”), subject to adjustment as provided in the attached Terms and Conditions.
|
E.
|
Exercise Price: $_______ per share of Common Stock. The Exercise Price shall be subject to adjustment as provided in the attached Terms and Conditions. The Exercise Price is, in the judgment of the Committee (as defined in the Plan), not less than 100% of the Fair Market Value of a share of Common Stock on the Grant Date.
|
F.
|
Option Period: The Option may be exercised only during the Option Period which commences on the Grant Date and ends on the earliest of:
|
(i)
|
the tenth (10
th
) anniversary of the Grant Date;
|
(ii)
|
three (3) months following the date the Participant ceases to be either an employee, director, or any other type of service provider of the Company and its Affiliates due to a Termination of Employment or termination of any other service relationship for reasons other than for Cause; or
|
(iii)
|
twelve (12) months following the date the Participant ceases to be an employee, director, or contractor of the Company and all Affiliates due to death or Disability;
|
G.
|
Vesting Schedule: The Option Shares shall become vested in accordance with
Schedule
1
hereto (the “Vesting Schedule”). Any portion of the Option which is not vested at the time of Participant’s Termination of Employment or termination of any other service relationship with the Company or an Affiliate shall be forfeited to the Company.
|
[ ]
|
by delivery of cash or a certified check for $_____________ for the full purchase price payable to the order of First Security Group, Inc.
|
[ ]
|
by delivery of shares of Common Stock that I own and that are represented by a stock certificate I will surrender to the Company with my endorsement. If the number of shares of Common Stock represented by such stock certificate exceed the number to be applied against the purchase price, I understand that a new stock certificate will be issued to me reflecting the excess number of shares; and/or
|
[ ]
|
if and when the Common Stock becomes traded by brokers, whether on a national securities exchange or otherwise, by delivery of the purchase price by _________________________, a broker, dealer or other “creditor” as defined by Regulation T issued by the Board of Governors of the Federal Reserve System. I hereby authorize the Company to issue a stock certificate for the number of shares indicated above in the name of said broker, dealer or other creditor or its nominee pursuant to instructions received by the Company and to deliver said stock certificate directly to that broker, dealer or other creditor (or to such other party specified in the instructions received by the Company from the broker, dealer or other creditor) upon receipt of the purchase price.
|
A.
|
The Option Shares shall become vested Option Shares following the completion of a number of continuous years of service as an employee, director, or any other type of service provider of the Company or any Affiliate after the Grant Date as indicated in the schedule below.
|
Percentage of Option Shares
which are Vested
|
Continuous Years of Service
after the Grant Date
|
|
|
|
|
|
|
|
|
|
|
B.
|
For purposes of the Vesting Schedule, Participant shall be granted a year of service for each twelve-consecutive-month period following the Grant Date during which the employment or any other service relationship between the Participant and the Company and its Affiliates continues. No credit will be given for completion of a partial year of service and no period of time following the Participant’s Termination of Employment and/or any other service relationship(s) with the Company (including all Affiliates) shall count towards the vesting of Option Shares.
|
A.
|
Grant Date
: _____________________.
|
B.
|
Restricted Shares
: ________ shares of the Company’s common stock (“Common Stock”).
|
C.
|
Vesting Schedule
: The Restricted Shares shall vest or be forfeited back to the Company, as the case may be, according to the Vesting Schedule attached hereto as
Schedule
1
(the “Vesting Schedule”). The Restricted Shares which have become vested pursuant to the Vesting Schedule are herein referred to as the “Vested Shares.”
|
I.
|
Provided that the Director remains a member of the Board of Directors of the Company or any affiliate through the applicable Vesting Date described in this Part I, the Restricted Shares shall become vested in accordance with the following Vesting Schedule:
|
Vesting Dates
|
Percentage of Restricted Shares
which are Vested Shares
|
|
|
|
|
|
|
|
|
II.
|
Except as otherwise provided in this Vesting Schedule, any portion of the Restricted Shares which have not become Vested Shares shall be forfeited at the time the Director ceases be a member of the Board of Directors of the Company or any affiliate, regardless of the reason. There shall be no proration for partial service.
|
III.
|
Notwithstanding Parts I or II, in the event of the occurrence of any Change in Control following the Grant Date but prior to the date the Recipient ceases to be a member of the Board of Directors of the Company or any affiliate, any previously unvested Restricted Shares shall become immediately vested.
|
A.
|
Grant Date
: _____________________.
|
B.
|
Restricted Shares
: ________ shares of the Company’s common stock (“Common Stock”).
|
C.
|
Vesting Schedule
: The Restricted Shares shall vest or be forfeited back to the Company, as the case may be, according to the Vesting Schedule attached hereto as
Schedule
1
(the “Vesting Schedule”). The Restricted Shares which have become vested pursuant to the Vesting Schedule are herein referred to as the “Vested Shares.”
|
I.
|
Provided that the Employee remains in continuous service of the Company or any affiliate through the applicable Vesting Date described in this Part I, the Restricted Shares shall become vested in accordance with the following Vesting Schedule:
|
Vesting Dates
|
Percentage of Restricted Shares
which are Vested Shares
|
|
|
|
|
|
|
|
|
II.
|
Except as otherwise provided in this Vesting Schedule, any portion of the Restricted Shares which have not become Vested Shares shall be forfeited at the time the Employee’s service with the Company and its affiliates ceases, regardless of the reason.
There shall be no proration for partial service.
|
III.
|
Notwithstanding Parts I or II, any and all remaining Restricted Shares shall become Vested Shares (i) in the event of the Employee’s death or Disability during his service with the Company and its affiliates ceases; or (ii) upon the occurrence of a Change of Control during his service with the Company and its affiliates ceases.
|
[ ]
|
the legal representative of the estate of the original recipient of the Restricted Stock Award.
|
[ ]
|
the legal guardian of the original recipient of the Restricted Stock Award.
|
[ ]
|
to have certain of the Vested Shares withheld and returned to the Company, rather than delivered to me, for the purpose of having the value of such shares applied to pay minimum required federal, state and local, if any, tax withholding obligations arising from the vesting event. The fair market value of the Vested Shares to be withheld and returned to the Company shall be equal to the minimum statutory tax
|
[ ]
|
to deliver to the Company, in cash or cash equivalents, the amount necessary to pay the minimum required federal, state and local, if any, tax withholding obligations arising from the vesting event; or
|
[ ]
|
to have the Company withhold from other wages payable to me the amount necessary to pay minimum required federal, state and local, if any, tax withholding obligations arising from the vesting event.
|
C.
|
Plan under which granted: First Security Group, Inc. 2012 Long-Term Incentive Plan.
|
D.
|
Option Shares: All or any part of ________ shares of the Company’s common stock (the “Common Stock”), subject to adjustment as provided in the attached Terms and Conditions.
|
E.
|
Exercise Price: $_______ per share of Common Stock. The Exercise Price shall be subject to adjustment as provided in the attached Terms and Conditions. The Exercise Price is, in the judgment of the Committee (as defined in the Plan), not less than 100% of the Fair Market Value of a share of Common Stock on the Grant Date or, in the case of an Over 10% Owner, not less than 110% of the Fair Market Value of a share of Common Stock on the Grant Date.
|
F.
|
Option Period: The Option may be exercised only during the Option Period which commences on the Grant Date and ends on the earliest of:
|
(i)
|
the tenth (10
th
) anniversary of the Grant Date (unless the Participant is an Over 10% Owner, in which case the fifth (5
th
) anniversary of the Grant Date);
|
(ii)
|
three (3) months following the date the Participant ceases to be either an employee, director, or any other type of service provider of the Company and its Affiliates due to a Termination of Employment or termination of any other service relationship for reasons other than for Cause; or
|
(iii)
|
twelve (12) months following the date the Participant ceases to be an employee, director, or contractor of the Company and all Affiliates due to death or Disability;
|
G.
|
Vesting Schedule: The Option Shares shall become vested in accordance with
Schedule
1
hereto (the “Vesting Schedule”). Any portion of the Option which is not vested at the time of Participant’s Termination of Employment or termination of any other service relationship with the Company or an Affiliate shall be forfeited to the Company.
|
[ ]
|
by delivery of cash or a certified check for $_____________ for the full purchase price payable to the order of First Security Group, Inc.
|
[ ]
|
by delivery of shares of Common Stock that I own and that are represented by a stock certificate I will surrender to the Company with my endorsement. If the number of shares of Common Stock represented by such stock certificate exceed the number to be applied against the purchase price, I understand that a new stock certificate will be issued to me reflecting the excess number of shares; and/or
|
[ ]
|
if and when the Common Stock becomes traded by brokers, whether on a national securities exchange or otherwise, by delivery of the purchase price by _________________________, a broker, dealer or other “creditor” as defined by Regulation T issued by the Board of Governors of the Federal Reserve System. I hereby authorize the Company to issue a stock certificate for the number of shares indicated above in the name of said broker, dealer or other creditor or its nominee pursuant to instructions received by the Company and to deliver said stock certificate directly to that broker, dealer or other creditor (or to such other party specified in the instructions received by the Company from the broker, dealer or other creditor) upon receipt of the purchase price.
|
A.
|
The Option Shares shall become vested Option Shares following the completion of a number of continuous years of service as an employee, director, or any other type of service provider of the Company or any Affiliate after the Grant Date as indicated in the schedule below.
|
Percentage of Option Shares
which are Vested
|
Continuous Years of Service
after the Grant Date
|
|
|
|
|
|
|
|
|
|
|
B.
|
For purposes of the Vesting Schedule, Participant shall be granted a year of service for each twelve-consecutive-month period following the Grant Date during which the employment or any other service relationship between the Participant and the Company and its Affiliates continues. No credit will be given for completion of a partial year of service and no period of time following the Participant’s Termination of Employment and/or any other service relationship(s) with the Company (including all Affiliates) shall count towards the vesting of Option Shares.
|
1.
|
I have reviewed this report on Form 10-K of First Security Group, Inc.;
|
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-15(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 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.
|
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 function):
|
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.
|
|
/s/ D. Michael Kramer
|
|
D. Michael Kramer
|
|
Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-K of First Security Group, Inc.;
|
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-15(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 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.
|
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 function):
|
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.
|
|
/s/ John R. Haddock
|
|
John R. Haddock
|
|
Secretary, Chief Financial Officer & Executive Vice President
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
April 15, 2013
|
/s/ D. Michael Kramer
|
|
D. Michael Kramer
|
|
Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
April 15, 2013
|
/s/ John R. Haddock
|
|
John R. Haddock
|
|
Secretary, Chief Financial Officer & Executive Vice President
|
|
/s/ D. Michael Kramer
|
D. Michael Kramer
|
Chief Executive Officer
|
|
/s/ John R. Haddock
|
John R. Haddock
|
Chief Financial Officer
|