x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
For the quarterly period ended March 31, 2010 or | |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
For the transition period from ______to______ | |
Commission File Number: 0-26128 |
NorthWest
Indiana Bancorp
|
(Exact name of
registrant as specified in its
charter)
|
Indiana
|
35-1927981
|
|
(State or other
jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification Number)
|
|
9204 Columbia
Avenue
|
||
Munster,
Indiana
|
46321
|
|
(Address of
principal executive offices)
|
(ZIP
code)
|
Large accelerated filer o | Accelerated filer o |
Non-accelerated
filer o
|
Smaller Reporting Company x |
(Do not check if a smaller reporting
company)
|
Page
Number
|
|
PART I. Financial Information | |
Item
1. Unaudited Financial Statements
|
|
Consolidated Balance
Sheets, March 31, 2010 and December 31, 2009
|
1
|
Consolidated
Statements of Income, Three Months Ended March
31, 2010 and 2009
|
2
|
Consolidated
Statements of Changes in Stockholders' Equity, Three Months Ended
March 31, 2010 and 2009
|
3
|
Consolidated
Statements of Cash Flows, Three Months Ended
March 31, 2010 and 2009
|
4
|
Notes to
Consolidated Financial Statements
|
5-14
|
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results
of Operations
|
15-23
|
Item 3. Quantitative
and Qualitative Disclosures About Market Risk
|
24
|
Item 4T. Controls
and Procedures
|
24
|
PART II. Other Information |
25
|
SIGNATURES |
26
|
|
10.1 Amended
Unfunded Deferred Compensation Plan for the Directors of Peoples Bank
effective January 1, 2005 (amended as of February 26,
2010)
|
10.2 Amended Post 2004 Unfunded Deferred Compensation Plan for the Directors of Peoples Bank SB effective January 1, 2005 (amended as of February 26, 2010) | |
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | |
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | |
32.1 Section 1350 Certifications |
Consolidated
Balance Sheets
|
||||||||
March
31,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
(Dollars
in thousands)
|
(unaudited)
|
|||||||
ASSETS
|
||||||||
Cash
and non-interest bearing balances in financial
institutions
|
$ | 6,612 | $ | 8,705 | ||||
Interest
bearing balances in financial institutions
|
15,003 | 447 | ||||||
Federal
funds sold
|
2,733 | 4,070 | ||||||
Total
cash and cash equivalents
|
24,348 | 13,222 | ||||||
Securities
available-for-sale
|
139,584 | 124,776 | ||||||
Securities
held-to-maturity
|
18,624 | 19,557 | ||||||
Loans
held for sale
|
327 | 1,025 | ||||||
Loans
receivable
|
460,614 | 458,245 | ||||||
Less:
allowance for loan losses
|
(7,053 | ) | (6,114 | ) | ||||
Net
loans receivable
|
453,561 | 452,131 | ||||||
Federal
Home Loan Bank stock
|
3,650 | 3,650 | ||||||
Accrued
interest receivable
|
2,909 | 2,878 | ||||||
Premises
and equipment
|
19,298 | 19,590 | ||||||
Foreclosed
real estate
|
3,625 | 3,747 | ||||||
Cash
value of bank owned life insurance
|
12,149 | 12,049 | ||||||
Prepaid
FDIC insurance premium
|
3,067 | 3,282 | ||||||
Other
assets
|
4,540 | 5,899 | ||||||
Total
assets
|
$ | 685,682 | $ | 661,806 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Deposits:
|
||||||||
Non-interest
bearing
|
$ | 48,511 | $ | 42,390 | ||||
Interest
bearing
|
519,023 | 498,137 | ||||||
Total
|
567,534 | 540,527 | ||||||
Repurchase
agreements
|
20,594 | 15,893 | ||||||
Borrowed
funds
|
34,535 | 47,129 | ||||||
Accrued
expenses and other liabilities
|
8,700 | 5,179 | ||||||
Total
liabilities
|
631,363 | 608,728 | ||||||
Stockholders'
Equity:
|
||||||||
Preferred
stock, no par or stated value;
|
||||||||
10,000,000
shares authorized, none outstanding
|
- | - | ||||||
Common
stock, no par or stated value; 10,000,000 shares
authorized;
|
||||||||
shares
issued: March 31, 2010 - 2,889,452
|
361 | 361 | ||||||
December
31, 2009 - 2,889,452
|
||||||||
shares
outstanding: March 31, 2010 - 2,820,842
|
||||||||
December
31, 2009 - 2,818,578
|
||||||||
Additional
paid in capital
|
5,114 | 5,104 | ||||||
Accumulated
other comprehensive income/(loss)
|
224 | (170 | ) | |||||
Retained
earnings
|
50,075 | 49,312 | ||||||
Treasury
stock, common shares at cost: March 31, 2010 -
68,610
|
||||||||
December
31, 2009 - 70,874
|
(1,455 | ) | (1,529 | ) | ||||
Total
stockholders' equity
|
54,319 | 53,078 | ||||||
Total
liabilities and stockholders' equity
|
$ | 685,682 | $ | 661,806 | ||||
See
accompanying notes to consolidated financial statements.
|
Consolidated
Statements of Income
|
||||||||
(unaudited)
|
||||||||
Three
Months Ended
|
||||||||
(Dollars
in thousands, except per share data)
|
March
31,
|
|||||||
2010
|
2009
|
|||||||
Interest
income:
|
||||||||
Loans
receivable
|
||||||||
Real
estate loans
|
$ | 5,156 | $ | 5,923 | ||||
Commercial
loans
|
1,032 | 897 | ||||||
Consumer
loans
|
24 | 34 | ||||||
Total
loan interest
|
6,212 | 6,854 | ||||||
Securities
|
1,530 | 1,582 | ||||||
Other
interest earning assets
|
7 | 5 | ||||||
Total
interest income
|
7,749 | 8,441 | ||||||
Interest
expense:
|
||||||||
Deposits
|
1,201 | 2,166 | ||||||
Repurchase
agreements
|
52 | 87 | ||||||
Borrowed
funds
|
269 | 399 | ||||||
Total
interest expense
|
1,522 | 2,652 | ||||||
Net
interest income
|
6,227 | 5,789 | ||||||
Provision
for loan losses
|
1,235 | 700 | ||||||
Net
interest income after provision for loan losses
|
4,992 | 5,089 | ||||||
Noninterest
income:
|
||||||||
Fees
and service charges
|
609 | 639 | ||||||
Gain
on sale of securities, net
|
289 | 140 | ||||||
Wealth
management operations
|
281 | 197 | ||||||
Gain
on sale of loans, net
|
109 | 566 | ||||||
Increase
in cash value of bank owned life insurance
|
100 | 105 | ||||||
Gain/(loss)
on foreclosed real estate, net
|
22 | (37 | ) | |||||
Other-than-temporary
impairment of securities
|
(19 | ) | - | |||||
Portion
of loss recognized in other comprehensive income
|
(94 | ) | - | |||||
Other
|
4 | 3 | ||||||
Total
noninterest income
|
1,301 | 1,613 | ||||||
Noninterest
expense:
|
||||||||
Compensation
and benefits
|
2,409 | 2,365 | ||||||
Occupancy
and equipment
|
785 | 783 | ||||||
Data
processing
|
233 | 215 | ||||||
Federal
deposit insurance premiums
|
231 | 186 | ||||||
Marketing
|
125 | 67 | ||||||
Other
|
892 | 932 | ||||||
Total
noninterest expense
|
4,675 | 4,548 | ||||||
Income
before income tax expenses
|
1,618 | 2,154 | ||||||
Income
tax expenses
|
229 | 449 | ||||||
Net
income
|
$ | 1,389 | $ | 1,705 | ||||
Earnings
per common share:
|
||||||||
Basic
|
$ | 0.49 | $ | 0.61 | ||||
Diluted
|
$ | 0.49 | $ | 0.61 | ||||
Dividends
declared per common share
|
$ | 0.21 | $ | 0.36 | ||||
See
accompanying notes to consolidated financial statements.
|
Consolidated
Statements of Changes in Stockholders' Equity
|
||||||||
(unaudited)
|
||||||||
Three
Months Ended
|
||||||||
(Dollars
in thousands)
|
March
31,
|
|||||||
2010
|
2009
|
|||||||
Balance
at beginning of period
|
$ | 53,078 | $ | 52,773 | ||||
Comprehensive
income:
|
||||||||
Net
income
|
1,389 | 1,705 | ||||||
Net
unrealized change on securities
|
||||||||
available-for-sale,
net of reclassifications and tax effects
|
396 | (246 | ) | |||||
Amortization
of unrecognized gain
|
(2 | ) | (2 | ) | ||||
Comprehensive
income
|
1,783 | 1,457 | ||||||
Issuance
of common stock,
|
||||||||
under
stock based compensation plan, including tax effects
|
- | 4 | ||||||
Stock
based compensation expense
|
10 | 13 | ||||||
Sale
of treasury stock
|
40 | - | ||||||
Adjustment
to retained earnings for EITF 06-4
|
- | (63 | ) | |||||
Cash
dividends
|
(592 | ) | (1,011 | ) | ||||
Balance
at end of period
|
$ | 54,319 | $ | 53,173 | ||||
See
accompanying notes to consolidated financial statements.
|
NorthWest
Indiana Bancorp
|
||||||||
Consolidated
Statements of Cash Flows
|
||||||||
(unaudited)
|
||||||||
Three
Months Ended
|
||||||||
(Dollars
in thousands)
|
March
31,
|
|||||||
2010
|
2009
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income
|
$ | 1,389 | $ | 1,705 | ||||
Adjustments
to reconcile net income to
|
||||||||
net
cash provided by operating activities:
|
||||||||
Origination
of loans for sale
|
(3,680 | ) | (20,889 | ) | ||||
Sale
of loans originated for sale
|
4,477 | 20,180 | ||||||
Depreciation
and amortization, net of accretion
|
467 | 326 | ||||||
Amortization
of mortgage servicing rights
|
30 | 26 | ||||||
Amortization
of investment in real estate limited partnerships
|
2 | 48 | ||||||
Equity
in loss of investment in limited partnership,
|
||||||||
net
of interest received
|
37 | 6 | ||||||
Stock
based compensation expense
|
10 | 13 | ||||||
Net
gains on sales and calls of securities
|
(289 | ) | (140 | ) | ||||
Net
gains on sale of loans
|
(109 | ) | (566 | ) | ||||
Net
losses due to other-than-temporary impairment of
securities
|
113 | - | ||||||
Net
(gains)/losses on foreclosed real estate
|
(22 | ) | 37 | |||||
Provision
for loan losses
|
1,235 | 700 | ||||||
Net
change in:
|
||||||||
Interest
receivable
|
(31 | ) | 28 | |||||
Other
assets
|
1,304 | (1,280 | ) | |||||
Cash
value of bank owned life insurance
|
(100 | ) | (105 | ) | ||||
Accrued
expenses and other liabilities
|
3,521 | (3,872 | ) | |||||
Total
adjustments
|
6,965 | (5,488 | ) | |||||
Net
cash - operating activities
|
8,354 | (3,783 | ) | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds
from maturities and pay downs of securities
available-for-sale
|
6,034 | 5,416 | ||||||
Proceeds
from sales of securities available-for-sale
|
5,683 | 2,521 | ||||||
Purchase
of securities available-for-sale
|
(25,815 | ) | (10,454 | ) | ||||
Proceeds
from maturities and pay downs of securities
held-to-maturity
|
926 | 4 | ||||||
Proceeds
from sale of loans transferred to held-for-sale
|
- | 10,651 | ||||||
Net
change in loans receivable
|
(2,858 | ) | 3,070 | |||||
Purchase
of premises and equipment, net
|
(97 | ) | (577 | ) | ||||
Proceeds
from sale of foreclosed real estate
|
337 | - | ||||||
Net
cash - investing activities
|
(15,790 | ) | 10,631 | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Change
in deposits
|
27,007 | 23,497 | ||||||
Proceeds
from FHLB advances
|
4,000 | - | ||||||
Repayment
of FHLB advances
|
(8,000 | ) | (4,000 | ) | ||||
Change
in other borrowed funds
|
(3,893 | ) | (2,802 | ) | ||||
Proceeds
from issuance of common stock
|
- | 5 | ||||||
Proceeds
from sale of treasury stock
|
40 | - | ||||||
Dividends
paid
|
(592 | ) | (1,011 | ) | ||||
Net
cash - financing activities
|
18,562 | 15,689 | ||||||
Net
change in cash and cash equivalents
|
11,126 | 22,537 | ||||||
Cash
and cash equivalents at beginning of period
|
13,222 | 11,296 | ||||||
Cash
and cash equivalents at end of period
|
$ | 24,348 | $ | 33,833 | ||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$ | 1,546 | $ | 2,697 | ||||
Income
taxes
|
$ | 50 | $ | 45 | ||||
SUPPLEMENTAL
NONCASH INFORMATION:
|
||||||||
Transfers
from loans to foreclosed real estate
|
$ | 237 | $ | 48 | ||||
Transfers
from loans to loans held for sale
|
$ | - | $ | 10,493 | ||||
See
accompanying notes to consolidated financial statements.
|
(Dollars
in thousands)
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Cost
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
Basis
|
Gains
|
Losses
|
Value
|
|||||||||||||
3/31/2010
|
||||||||||||||||
U.S.
government sponsored entities
|
$ | 2,000 | $ | 28 | $ | - | $ | 2,028 | ||||||||
CMO
and residential mortgage-backed securities
|
64,673 | 1,705 | (69 | ) | $ | 66,309 | ||||||||||
Municipal
securities
|
33,299 | 1,522 | (78 | ) | $ | 34,743 | ||||||||||
CMO
government sponsored entities
|
34,118 | 1,075 | (20 | ) | $ | 35,173 | ||||||||||
Collateralized
debt obligations
|
5,230 | - | (3,899 | ) | $ | 1,331 | ||||||||||
Total debt
securities
|
$ | 139,320 | $ | 4,330 | $ | (4,066 | ) | $ | 139,584 | |||||||
12/31/2009
|
||||||||||||||||
U.S.
government sponsored entities
|
$ | 1,993 | $ | 52 | $ | - | $ | 2,045 | ||||||||
CMO
and residential mortgage-backed securities
|
61,095 | 2,302 | (82 | ) | 63,315 | |||||||||||
Municipal
securities
|
34,151 | 1,516 | (94 | ) | 35,573 | |||||||||||
CMO
government sponsored entities
|
22,534 | 168 | (209 | ) | 22,493 | |||||||||||
Collateralized
debt obligations
|
5,343 | - | (3,993 | ) | 1,350 | |||||||||||
Total debt
securities
|
$ | 125,116 | $ | 4,038 | $ | (4,378 | ) | $ | 124,776 |
(Dollars
in thousands)
|
|||||||||||||||
Gross
|
Gross
|
||||||||||||||
Cost
|
Unrecognized
|
Unrecognized
|
Fair
|
||||||||||||
Basis
|
Gains
|
Losses
|
Value
|
||||||||||||
3/31/2010
|
|||||||||||||||
Municipal
securities
|
$ | 17,611 | $ | 852 | $ | - | $ | 18,463 | |||||||
Residential
mortgage-backed securities
|
1,013 | 30 | (6 | ) | 1,037 | ||||||||||
Total debt
securities
|
$ | 18,624 | $ | 882 | $ | (6 | ) | $ | 19,500 | ||||||
12/31/2009
|
|||||||||||||||
Municipal
securities
|
$ | 18,539 | $ | 724 | $ | - | $ | 19,263 | |||||||
Residential
mortgage-backed securities
|
1,018 | 28 | (6 | ) | 1,040 | ||||||||||
Total debt
securities
|
$ | 19,557 | $ | 752 | $ | (6 | ) | $ | 20,303 |
(Dollars
in thousands)
|
||||||||||||
Available-for-sale
|
Held-to-maturity
|
|||||||||||
Fair
|
Carrying
|
Fair
|
||||||||||
Value
|
Amount
|
Value
|
||||||||||
Due
in one year or less
|
$ | 196 | $ | - | $ | - | ||||||
Due
from one to five years
|
4,166 | 560 | 603 | |||||||||
Due
over five years
|
33,740 | 17,051 | 17,860 | |||||||||
CMO
and residential mortgage-backed securities
|
101,482 | 1,013 | 1,037 | |||||||||
Total
|
$ | 139,584 | $ | 18,624 | $ | 19,500 |
(Dollars
in thousands)
|
||||||||
3/31/2010
|
3/31/2009
|
|||||||
Proceeds
|
$ | 5,683 | $ | 2,521 | ||||
Gross
gains
|
289 | 140 | ||||||
Gross
losses
|
- | - |
(Dollars
in thousands)
|
||||
Unrealized
gains
|
||||
Beginning
balance, December 31, 2009
|
$ | (247 | ) | |
Current
period change
|
396 | |||
Ending
balance, March 31, 2010
|
$ | 149 |
(Dollars in
thousands)
|
||||||||||||||||||||||||
Less
than 12 months
|
12
months or longer
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
3/31/2010
|
||||||||||||||||||||||||
Description
of Securities:
|
||||||||||||||||||||||||
CMO
and residential mortgage-backed
securities
|
$ | 16,123 | $ | (95 | ) | $ | - | $ | - | $ | 16,123 | $ | (95 | ) | ||||||||||
Municipal
securities
|
2,267 | (11 | ) | 1,487 | (67 | ) | 3,754 | (78 | ) | |||||||||||||||
Collateralized
debt obligations
|
- | - | 1,331 | (3,899 | ) | 1,331 | (3,899 | ) | ||||||||||||||||
Total
temporarily impaired
|
$ | 18,390 | $ | (106 | ) | $ | 2,818 | $ | (3,966 | ) | $ | 21,208 | $ | (4,072 | ) | |||||||||
Number
of securities
|
13 | 8 | 21 |
(Dollars in
thousands)
|
||||||||||||||||||||||||
Less
than 12 months
|
12
months or longer
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
12/31/2009
|
||||||||||||||||||||||||
Description
of Securities:
|
||||||||||||||||||||||||
CMO
and residential mortgage-backed
securities
|
$ | 15,604 | $ | (297 | ) | $ | 13 | $ | - | $ | 15,617 | $ | (297 | ) | ||||||||||
Municipal
securities
|
2,443 | (15 | ) | 1,476 | (79 | ) | 3,919 | (94 | ) | |||||||||||||||
Collateralized
debt obligations
|
- | - | 1,350 | (3,993 | ) | 1,350 | (3,993 | ) | ||||||||||||||||
Total
temporarily impaired
|
$ | 18,047 | $ | (312 | ) | $ | 2,839 | $ | (4,072 | ) | $ | 20,886 | $ | (4,384 | ) | |||||||||
Number
of securities
|
16 | 7 | 23 |
Non-performing
loans at period-end were as follows:
|
||||||||
(Dollars
in thousands)
|
||||||||
3/31/2010
|
12/31/2009
|
|||||||
Loans
past due over 90 days still on accrual
|
$ | 1,123 | $ | 1,491 | ||||
Non-accrual
loans
|
17,705 | 17,074 | ||||||
Impaired
loans at period-end were as follows:
|
||||||||
(Dollars
in thousands)
|
||||||||
3/31/2010
|
12/31/2009
|
|||||||
Period-end
loans with no allocated
|
||||||||
allowance
for loan losses
|
$ | 7,747 | $ | 3,853 | ||||
Period-end
loans with allocated
|
||||||||
allowance
for loan losses (including troubled debt restructurings of $12,043 and
$7,199
|
15,534 | 13,112 | ||||||
Total
|
$ | 23,281 | $ | 16,965 | ||||
Amount
of the allowance for
|
||||||||
loan
losses allocated
|
$ | 1,721 | $ | 1,179 | ||||
Average
of impaired loans
|
||||||||
during
the period
|
20,123 | 12,820 | ||||||
Interest
income recognized
|
||||||||
during
impairment
|
37 | 10 | ||||||
Cash-basis
interest income
|
||||||||
recognized
during impairment
|
170 | 95 |
(Dollars
in thousands)
|
||||||||
3/31/2010
|
12/31/2009
|
|||||||
Commercial
real estate and other dwelling
|
$ | 1,897 | $ | 1,897 | ||||
Residential
real estate
|
1,057 | 1,082 | ||||||
Construction
and land development
|
521 | 768 | ||||||
Commercial
and industrial
|
150 | - | ||||||
Total
|
$ | 3,625 | $ | 3,747 |
(Dollars
in thousands, except per share data)
|
||||||||
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2010
|
2009
|
|||||||
Basic
earnings per common share:
|
||||||||
Net
income as reported
|
$ | 1,389 | $ | 1,705 | ||||
Weighted
average common shares outstanding:
|
2,820,842 | 2,809,270 | ||||||
Basic
earnings per common share:
|
$ | 0.49 | $ | 0.61 | ||||
Diluted
earnings per common share:
|
||||||||
Net
income as reported
|
$ | 1,389 | $ | 1,705 | ||||
Weighted
average common shares outstanding:
|
2,820,842 | 2,809,270 | ||||||
Add: Dilutive
effect of assumed stock
|
||||||||
option
exercises:
|
- | 6,067 | ||||||
Weighted
average common and dilutive
|
||||||||
potential
common shares outstanding:
|
2,820,842 | 2,815,337 | ||||||
Diluted
earnings per common share:
|
$ | 0.49 | $ | 0.61 |
Weighted-
|
|||||||||||
Weighted-
|
Average
|
||||||||||
Average
|
Remaining
|
Aggregate
|
|||||||||
Exercise
|
Contractual
|
Intrinsic
|
|||||||||
Options
|
Shares
|
Price
|
Term
|
Value
|
|||||||
Outstanding
at January 1, 2010
|
65,747 | $ | 23.69 | ||||||||
Granted
|
- | $ | - | ||||||||
Exercised
|
- | $ | - | ||||||||
Forfeited
or expired
|
(11,700 | ) | $ | 21.13 | |||||||
Outstanding
at March 31, 2010
|
54,047 | $ | 24.25 |
2.5
|
-
|
||||||
Exercisable
at March 31, 2010
|
53,047 | $ | 24.17 |
2.4
|
-
|
(Dollars
in thousands)
|
||||
Collateralized debt
obligations
|
||||
Ending
balance, December 31, 2009
|
$ | 136 | ||
Additions
not previously recognized
|
113 | |||
Ending
balance, March 31, 2010
|
$ | 249 |
Deal
name
|
PreTSL
XXIV
|
PreTSL
XXVII
|
Alesco
IX
|
Alesco
XVII
|
||||||||||||
Class
|
B-1 | C-1 | A-2A | B | ||||||||||||
Book
value
|
1,258,772 | 1,296,077 | 1,323,252 | 1,351,903 | ||||||||||||
Fair
value
|
257,059 | 189,386 | 621,600 | 262,895 | ||||||||||||
Unrealized
gains/(losses)
|
(1,001,712 | ) | (1,106,692 | ) | (701,652 | ) | (1,089,008 | ) | ||||||||
Lowest
credit rating assigned
|
Caa3
|
Ca
|
BB
|
Ca
|
||||||||||||
Number
of performing banks
|
53 | 24 | 49 | 42 | ||||||||||||
Number
of performing insurance companies
|
12 | 7 | 10 | n/a | ||||||||||||
Number
of issuers in default
|
10 | 6 | 7 | 4 | ||||||||||||
Number
of issuers in deferral
|
18 | 12 | 10 | 10 | ||||||||||||
Defaults
& deferrals as a % of performing collateral
|
45.75 | % | 33.47 | % | 41.49 | % | 43.49 | % | ||||||||
Subordination:
|
||||||||||||||||
As
a % of performing collateral
|
-13.11 | % | -18.54 | % | 15.52 | % | -4.61 | % | ||||||||
As
a % of performing collateral - adjusted for projected future
defaults
|
-21.37 | % | -25.04 | % | 6.55 | % | -11.64 | % | ||||||||
Other-than-temporary
impairment model assumptions:
|
||||||||||||||||
Defaults:
|
||||||||||||||||
Year
1
|
5.00 | % | 3.30 | % | 7.20 | % | 4.50 | % | ||||||||
Year
2
|
1.10 | % | 1.20 | % | 1.60 | % | 1.30 | % | ||||||||
Year
3
|
0.70 | % | 0.70 | % | 0.80 | % | 0.50 | % | ||||||||
>
3 Years
|
(1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
Discount
rate - 3 month Libor, plus implicit yield spread at
purchase
|
1.48 | % | 1.23 | % | 1.27 | % | 1.44 | % | ||||||||
Recovery
assumptions
|
(2 | ) | (2 | ) | (2 | ) | (2 | ) | ||||||||
Prepayments
|
0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||
Other-than-temporary
impairment
|
39,300 | 132,000 | 15,884 | 61,950 | ||||||||||||
(1)
- Default rates > 3 years are evaluated on a issuer by issuer basis and
range from 0.25% to 5.00%.
|
||||||||||||||||
(2)
- Recovery assumptions are evaluated on a issuer by issuer basis and range
from 0% to 75% with a five year lag.
|
(Dollars
in thousands)
|
Fair
Value Measurements at March 31, 2010 Using
|
|||||||||||||||
3/31/2010
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Available-for-sale
debt securities
|
||||||||||||||||
U.S.
government sponsored entities
|
$ | 2,028 | $ | - | $ | 2,028 | $ | - | ||||||||
CMO
and residential mortgage-backed securities
|
66,309 | - | 66,309 | - | ||||||||||||
Municipal
securities
|
34,743 | - | 34,743 | - | ||||||||||||
CMO
government sponsored entities
|
35,173 | - | 35,173 | - | ||||||||||||
Collateralized
debt obligations
|
1,331 | - | - | 1,331 | ||||||||||||
Total
available for sale debt securities
|
$ | 139,584 | $ | - | $ | 138,253 | $ | 1,331 |
(Dollars
in thousands)
|
Fair
Value Measurements at December 31, 2009 Using
|
|||||||||||||||
12/31/2009
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Available-for-sale
debt securities
|
||||||||||||||||
U.S.
government sponsored entities
|
$ | 2,045 | $ | - | $ | 2,045 | $ | - | ||||||||
CMO
and residential mortgage-backed securities
|
63,315 | - | 63,315 | - | ||||||||||||
Municipal
securities
|
35,573 | - | 35,573 | - | ||||||||||||
CMO
government sponsored entities
|
22,493 | - | 22,493 | - | ||||||||||||
Collateralized
debt obligations
|
1,350 | - | - | 1,350 | ||||||||||||
Total
available for sale debt securities
|
$ | 124,776 | $ | - | $ | 123,426 | $ | 1,350 |
(Dollars
in thousands)
|
Fair
Value Measurements at March 31, 2010 Using Significant Unobservable
Inputs
(Level
3)
|
|||
Available
for
sale
debt securities
|
||||
Collateralized
Debt Obligations
|
||||
Beginning
balance, December 31, 2009
|
$ | 1,350 | ||
Transfers
in and/or (out) of Level 3
|
- | |||
Total
gains or (losses)
|
||||
Included
in earnings
|
(113 | ) | ||
Included
in other comprehensive income
|
94 | |||
Purchases,
issuances, sales, and settlements
|
||||
Purchases
|
- | |||
Issuances
|
- | |||
Sales
|
- | |||
Settlements
|
- | |||
Ending
balance, March 31, 2010
|
$ | 1,331 |
(Dollars
in thousands)
|
Fair
Value Measurements at March 31, 2010 Using
|
|||||||||||||||
3/31/2010
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Impaired
loans
|
$ | 13,813 | $ | - | $ | - | $ | 13,813 | ||||||||
Foreclosed
real estate
|
3,625 | - | - | 3,625 |
(Dollars
in thousands)
|
Fair
Value Measurements at December 31, 2009 Using
|
|||||||||||||||
12/31/2009
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Impaired
loans
|
$ | 11,933 | $ | - | $ | - | $ | 11,933 | ||||||||
Foreclosed
real estate
|
3,747 | - | - | 3,747 |
(Dollars
in thousands)
|
||||||||
March
31, 2010
|
||||||||
Carrying
|
Estimated
|
|||||||
Value
|
Fair
Value
|
|||||||
Financial
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 24,348 | $ | 24,348 | ||||
Securities
available-for-sale
|
139,584 | 139,584 | ||||||
Securities
held-to-maturity
|
18,624 | 19,500 | ||||||
Loans
held for sale
|
327 | 327 | ||||||
Loans
receivable, net
|
453,561 | 498,742 | ||||||
Federal
Home Loan Bank stock
|
3,650 | 3,650 | ||||||
Accrued
interest receivable
|
2,909 | 2,909 | ||||||
Financial
liabilities:
|
||||||||
Demand
and savings deposits
|
333,125 | 333,125 | ||||||
Certificates
of deposit
|
234,409 | 235,148 | ||||||
Repurchase
agreements
|
20,594 | 20,008 | ||||||
Borrowed
funds
|
34,535 | 34,792 | ||||||
Accrued
interest payable
|
126 | 126 |
(Dollars
in thousands)
|
||||||||
December
31, 2009
|
||||||||
Carrying
|
Estimated
|
|||||||
Value
|
Fair
Value
|
|||||||
Financial assets:
|
||||||||
Cash
and cash equivalents
|
$ | 13,222 | $ | 13,222 | ||||
Securities
available-for-sale
|
124,776 | 124,776 | ||||||
Securities
held-to-maturity
|
19,557 | 20,303 | ||||||
Loans
held for sale
|
1,025 | 1,025 | ||||||
Loans
receivable, net
|
452,131 | 498,005 | ||||||
Federal
Home Loan Bank stock
|
3,650 | 3,650 | ||||||
Accrued
interest receivable
|
2,878 | 2,878 | ||||||
Financial liabilities:
|
||||||||
Demand
and savings deposits
|
313,669 | 313,669 | ||||||
Certificates
of deposit
|
226,858 | 227,672 | ||||||
Repurchase
agreements
|
15,893 | 15,525 | ||||||
Borrowed
funds
|
47,129 | 38,932 | ||||||
Accrued
interest payable
|
150 | 150 |
·
|
We
expect to face increased regulation of our industry. Compliance
with such regulation may increase our costs and limit our ability to
pursue business opportunities.
|
·
|
Our
ability to assess the creditworthiness of our customers may be impaired if
the models and approaches we use to select, manage and underwrite our
customers become less predictive of future
behaviors.
|
·
|
The
process we use to estimate losses inherent in our credit exposure requires
difficult, subjective and complex judgments, including forecasts of
economic conditions and how these economic predictions might impair the
ability of our borrowers to repay their loans, which may no longer be
capable of accurate estimation which may, in turn, impact the reliability
of the process.
|
·
|
Our
ability to borrow from other financial institutions on favorable terms or
at all could be adversely affected by further disruptions in the capital
markets or other events, including actions by rating agencies and
deteriorating investor
expectations.
|
·
|
Competition
in our industry could intensify as a result of the increasing
consolidation of financial services companies in connection with current
market conditions.
|
·
|
We
may be required to pay significantly higher deposit insurance premiums
because market developments have significantly depleted the insurance fund
of the Federal Deposit Insurance Corporation and reduced the ratio of
reserves to insured deposits.
|
(Dollars
in millions)
|
Required
for
|
To
be well
|
||||||||||||||||||||||
Actual
|
adequate
capital
|
capitalized
|
||||||||||||||||||||||
At
March 31, 2010
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
Total
capital to risk-weighted assets
|
$ | 59.7 | 11.9 | % | $ | 40.3 | 8.0 | % | $ | 50.4 | 10.0 | % | ||||||||||||
Tier
1 capital to risk-weighted assets
|
$ | 53.4 | 10.6 | % | $ | 20.2 | 4.0 | % | $ | 30.2 | 6.0 | % | ||||||||||||