Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
10-Q
(Mark One)
|
|
|
þ |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 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 0-20402
WILSON BANK HOLDING COMPANY
(Exact name of registrant as specified in its charter)
|
|
|
Tennessee
|
|
62-1497076 |
|
|
|
(State or other jurisdiction of
|
|
(I.R.S. Employer Identification No.) |
incorporation or organization) |
|
|
|
|
|
623 West Main Street, Lebanon, TN
|
|
37087 |
|
|
|
(Address of principal executive offices)
|
|
Zip Code |
(615) 444-2265
(Registrants telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definition of large accelerated
filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
Large accelerated filer o
|
|
Accelerated filer þ
|
|
Non-accelerated filer o
|
|
Smaller reporting company o |
|
|
|
|
(Do not check if a smaller reporting company) |
|
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes
o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.
Common stock outstanding: 7,225,036 shares at August 9, 2010
Part I. Financial Information
Item 1. Financial Statements
WILSON BANK HOLDING COMPANY
Consolidated Balance Sheets
June 30, 2010 and December 31, 2009
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(Dollars in Thousands |
|
|
|
Except Per Share Amounts) |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Loans |
|
$ |
1,098,599 |
|
|
$ |
1,115,261 |
|
Less: Allowance for loan losses |
|
|
(21,487 |
) |
|
|
(16,647 |
) |
|
|
|
|
|
|
|
Net loans |
|
|
1,077,112 |
|
|
|
1,098,614 |
|
|
|
|
|
|
|
|
Securities: |
|
|
|
|
|
|
|
|
Held to maturity, at cost (market value $14,075 and $12,608,
respectively) |
|
|
13,637 |
|
|
|
12,170 |
|
Available-for-sale, at market (amortized cost $303,490 and $250,412,
respectively) |
|
|
303,350 |
|
|
|
249,647 |
|
|
|
|
|
|
|
|
Total securities |
|
|
316,987 |
|
|
|
261,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale |
|
|
9,072 |
|
|
|
5,027 |
|
Restricted equity securities |
|
|
3,012 |
|
|
|
3,012 |
|
Federal funds sold |
|
|
21,201 |
|
|
|
5,450 |
|
|
|
|
|
|
|
|
Total earning assets |
|
|
1,427,384 |
|
|
|
1,373,920 |
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
26,407 |
|
|
|
26,062 |
|
Bank premises and equipment, net |
|
|
30,959 |
|
|
|
30,865 |
|
Accrued interest receivable |
|
|
6,489 |
|
|
|
7,563 |
|
Deferred income tax asset |
|
|
5,267 |
|
|
|
5,457 |
|
Other real estate |
|
|
11,290 |
|
|
|
3,924 |
|
Other assets |
|
|
11,399 |
|
|
|
10,508 |
|
Goodwill |
|
|
4,805 |
|
|
|
4,805 |
|
Other intangible assets, net |
|
|
706 |
|
|
|
904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,524,706 |
|
|
$ |
1,464,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders Equity |
|
|
|
|
|
|
|
|
Deposits |
|
$ |
1,368,771 |
|
|
$ |
1,310,706 |
|
Securities sold under repurchase agreements |
|
|
5,629 |
|
|
|
6,499 |
|
Federal Home Loan Bank advances |
|
|
2 |
|
|
|
13 |
|
Accrued interest and other liabilities |
|
|
6,885 |
|
|
|
7,233 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
1,381,287 |
|
|
|
1,324,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity: |
|
|
|
|
|
|
|
|
Common stock, $2.00 par value; authorized 15,000,000 shares, issued
7,185,335 and 7,147,582 shares, respectively |
|
|
14,371 |
|
|
|
14,295 |
|
Additional paid-in capital |
|
|
42,328 |
|
|
|
41,022 |
|
Retained earnings |
|
|
86,807 |
|
|
|
84,712 |
|
|
|
|
|
|
|
|
|
|
Net unrealized losses on available-for-sale securities, net of income
taxes of $53 and $293, respectively |
|
|
(87 |
) |
|
|
(472 |
) |
|
|
|
|
|
|
|
Total shareholders equity |
|
|
143,419 |
|
|
|
139,557 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
1,524,706 |
|
|
$ |
1,464,008 |
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements (unaudited).
3
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
Three Months and Six Months Ended June 30, 2010 and 2009
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
(Dollars in Thousands |
|
|
|
Except per Share Amounts) |
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
17,056 |
|
|
$ |
17,776 |
|
|
$ |
33,891 |
|
|
$ |
35,437 |
|
Interest and dividends on securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable securities |
|
|
2,385 |
|
|
|
2,350 |
|
|
|
4,577 |
|
|
|
4,825 |
|
Exempt from Federal income taxes |
|
|
115 |
|
|
|
117 |
|
|
|
234 |
|
|
|
235 |
|
Interest on loans held for sale |
|
|
50 |
|
|
|
99 |
|
|
|
80 |
|
|
|
168 |
|
Interest on Federal funds sold |
|
|
23 |
|
|
|
18 |
|
|
|
41 |
|
|
|
47 |
|
Interest and dividends on restricted securities |
|
|
40 |
|
|
|
35 |
|
|
|
62 |
|
|
|
84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
19,669 |
|
|
|
20,395 |
|
|
|
38,885 |
|
|
|
40,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on negotiable order of withdrawal accounts |
|
|
697 |
|
|
|
604 |
|
|
|
1,327 |
|
|
|
745 |
|
Interest on money market and savings accounts |
|
|
834 |
|
|
|
879 |
|
|
|
1,675 |
|
|
|
2,106 |
|
Interest on certificates of deposit |
|
|
4,739 |
|
|
|
6,364 |
|
|
|
9,969 |
|
|
|
12,819 |
|
Interest on securities sold under repurchase
agreements |
|
|
17 |
|
|
|
28 |
|
|
|
40 |
|
|
|
59 |
|
Interest on Federal Home Loan Bank advances |
|
|
1 |
|
|
|
157 |
|
|
|
1 |
|
|
|
318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
6,288 |
|
|
|
8,032 |
|
|
|
13,012 |
|
|
|
16,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income before provision for
loan losses |
|
|
13,381 |
|
|
|
12,363 |
|
|
|
25,873 |
|
|
|
24,749 |
|
Provision for loan losses |
|
|
6,073 |
|
|
|
1,297 |
|
|
|
8,179 |
|
|
|
3,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for
loan losses |
|
|
7,308 |
|
|
|
11,066 |
|
|
|
17,694 |
|
|
|
21,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
1,374 |
|
|
|
1,437 |
|
|
|
2,666 |
|
|
|
2,775 |
|
Other fees and commissions |
|
|
1,562 |
|
|
|
1,312 |
|
|
|
2,935 |
|
|
|
2,454 |
|
Gain on sale of loans |
|
|
402 |
|
|
|
948 |
|
|
|
721 |
|
|
|
1,723 |
|
Gain (loss) on sale of securities |
|
|
211 |
|
|
|
(5 |
) |
|
|
261 |
|
|
|
500 |
|
Other income |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-interest income |
|
|
3,549 |
|
|
|
3,693 |
|
|
|
6,583 |
|
|
|
7,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
3,814 |
|
|
|
5,179 |
|
|
|
8,865 |
|
|
|
10,275 |
|
Occupancy expenses, net |
|
|
608 |
|
|
|
591 |
|
|
|
1,180 |
|
|
|
1,244 |
|
Furniture and equipment expense |
|
|
359 |
|
|
|
325 |
|
|
|
725 |
|
|
|
696 |
|
Data processing expense |
|
|
286 |
|
|
|
243 |
|
|
|
603 |
|
|
|
488 |
|
Directors fees |
|
|
171 |
|
|
|
184 |
|
|
|
381 |
|
|
|
396 |
|
Other operating expenses |
|
|
2,779 |
|
|
|
2,705 |
|
|
|
5,347 |
|
|
|
4,844 |
|
Loss on sale of other real estate |
|
|
158 |
|
|
|
145 |
|
|
|
262 |
|
|
|
194 |
|
(Gain) loss on sale of other assets |
|
|
(1 |
) |
|
|
18 |
|
|
|
8 |
|
|
|
37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-interest expense |
|
|
8,174 |
|
|
|
9,390 |
|
|
|
17,371 |
|
|
|
18,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
2,683 |
|
|
|
5,369 |
|
|
|
6,906 |
|
|
|
10,667 |
|
Income taxes |
|
|
1,028 |
|
|
|
2,096 |
|
|
|
2,666 |
|
|
|
4,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
1,655 |
|
|
|
3,273 |
|
|
|
4,240 |
|
|
|
6,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding-basic |
|
|
7,185,208 |
|
|
|
7,077,562 |
|
|
|
7,178,453 |
|
|
|
7,073,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding-diluted |
|
|
7,193,199 |
|
|
|
7,100,883 |
|
|
|
7,185,482 |
|
|
|
7,096,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
.23 |
|
|
$ |
.46 |
|
|
$ |
.59 |
|
|
$ |
.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
.23 |
|
|
$ |
.46 |
|
|
$ |
.59 |
|
|
$ |
.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per share |
|
$ |
|
|
|
$ |
|
|
|
$ |
.30 |
|
|
$ |
.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements (unaudited).
4
WILSON BANK HOLDING COMPANY
Consolidated Statements of Comprehensive Earnings
Three Months and Six Months Ended June 30, 2010 and 2009
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
(In Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
1,655 |
|
|
$ |
3,273 |
|
|
$ |
4,240 |
|
|
$ |
6,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive losses (gains), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses (gains) on available-for-sale securities
arising during period, net of taxes of $149, $1,351,
$340 and $350, respectively |
|
|
240 |
|
|
|
(2,178 |
) |
|
|
546 |
|
|
|
(564 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment for net losses
(gains) included in net earnings, net of taxes
of $81, $2, $100 and $191, respectively |
|
|
(130 |
) |
|
|
3 |
|
|
|
(161 |
) |
|
|
(309 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive losses (gains) |
|
|
110 |
|
|
|
(2,175 |
) |
|
|
385 |
|
|
|
(873 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive earnings |
|
$ |
1,765 |
|
|
$ |
1,098 |
|
|
$ |
4,625 |
|
|
$ |
5,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements (unaudited).
5
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2010 and 2009
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
(In Thousands) |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Interest received |
|
$ |
40,779 |
|
|
$ |
41,824 |
|
Fees and commissions received |
|
|
5,601 |
|
|
|
5,230 |
|
Proceeds from sale of loans held for sale |
|
|
42,540 |
|
|
|
104,253 |
|
Origination of loans held for sale |
|
|
(45,864 |
) |
|
|
(105,426 |
) |
Interest paid |
|
|
(13,751 |
) |
|
|
(16,448 |
) |
Cash paid to suppliers and employees |
|
|
(13,962 |
) |
|
|
(15,084 |
) |
Income taxes paid |
|
|
(5,271 |
) |
|
|
(5,494 |
) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
10,072 |
|
|
|
8,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Proceeds from maturities, calls, and principal payments of
held-to-
maturity securities |
|
|
1,112 |
|
|
|
1,471 |
|
Proceeds from maturities, calls, and principal payments of
available-for-sale securities |
|
|
228,157 |
|
|
|
190,783 |
|
Purchase of held-to-maturity securities |
|
|
(2,595 |
) |
|
|
(2,558 |
) |
Purchase of available-for-sale securities |
|
|
(281,778 |
) |
|
|
(205,534 |
) |
Loans made to customers, net of repayments |
|
|
4,061 |
|
|
|
(16,143 |
) |
Purchase of premises and equipment |
|
|
(967 |
) |
|
|
(343 |
) |
Proceeds from sale of other real estate |
|
|
1,540 |
|
|
|
2,504 |
|
Proceeds from sale of other assets |
|
|
83 |
|
|
|
285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(50,387 |
) |
|
|
(29,535 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net increase in non-interest bearing, savings
and NOW deposit accounts |
|
|
59,669 |
|
|
|
19,182 |
|
Net increase (decrease) in time deposits |
|
|
(1,604 |
) |
|
|
16,686 |
|
Decrease in securities sold under repurchase agreements |
|
|
(870 |
) |
|
|
(1,110 |
) |
Net decrease in advances from Federal Home Loan Bank |
|
|
(11 |
) |
|
|
(848 |
) |
Dividends paid |
|
|
(2,144 |
) |
|
|
(2,113 |
) |
Proceeds from sale of common stock |
|
|
1,529 |
|
|
|
1,712 |
|
Proceeds from exercise of stock options |
|
|
67 |
|
|
|
162 |
|
Repurchase of common stock |
|
|
(225 |
) |
|
|
(697 |
) |
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
56,411 |
|
|
|
32,974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
16,096 |
|
|
|
12,294 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
31,512 |
|
|
|
59,243 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
47,608 |
|
|
$ |
71,537 |
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements (unaudited).
6
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows, Continued
Six Months Ended June 30, 2010 and 2009
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
(In Thousands) |
|
Reconciliation of net earnings to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
4,240 |
|
|
$ |
6,498 |
|
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation, amortization, and accretion |
|
|
1,891 |
|
|
|
1,079 |
|
Provision for loan losses |
|
|
8,179 |
|
|
|
3,361 |
|
Stock option compensation |
|
|
10 |
|
|
|
12 |
|
Loss on sale of other real estate |
|
|
262 |
|
|
|
194 |
|
Loss on sale of other assets |
|
|
8 |
|
|
|
37 |
|
Security gains |
|
|
(261 |
) |
|
|
(500 |
) |
Loss on write-off of restricted equity securities |
|
|
|
|
|
|
88 |
|
Increase in loans held for sale |
|
|
(4,045 |
) |
|
|
(2,896 |
) |
Decrease in interest receivable |
|
|
1,074 |
|
|
|
975 |
|
Increase in deferred tax assets |
|
|
(278 |
) |
|
|
(257 |
) |
Decrease (increase) in other assets, net |
|
|
(888 |
) |
|
|
28 |
|
Decrease in taxes payable |
|
|
(2,327 |
) |
|
|
(1,068 |
) |
Increase in other liabilities |
|
|
2,946 |
|
|
|
1,705 |
|
Increase in interest payable |
|
|
(739 |
) |
|
|
(401 |
) |
|
|
|
|
|
|
|
Total adjustments |
|
|
5,832 |
|
|
|
2,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
10,072 |
|
|
$ |
8,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) in values of securities
available-for-sale, net of taxes of $240
and $541, for the six months ended
June 30, 2010 and 2009, respectively |
|
$ |
385 |
|
|
$ |
(873 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash transfers from loans to other real estate |
|
$ |
9,572 |
|
|
$ |
2,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash transfers from other real estate to loans |
|
$ |
404 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash transfers from loans to other assets |
|
$ |
94 |
|
|
$ |
301 |
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements (unaudited).
7
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Nature of Business Wilson Bank Holding Company (the Company) is a bank holding company
whose primary business is conducted by its wholly-owned subsidiary, Wilson Bank & Trust (the
Bank). The Bank is a commercial bank headquartered in Lebanon, Tennessee. The Bank provides a
full range of banking services in its primary market areas of Wilson, Davidson, Rutherford,
Trousdale, Dekalb, and Smith Counties, Tennessee.
Basis of Presentation The accompanying unaudited, consolidated financial statements have
been prepared in accordance with instructions to Form 10-Q and therefore do not include all
information and footnotes necessary for a fair presentation of financial position, results of
operations, and cash flows in conformity with U.S. generally accepted accounting principles. All
adjustments consisting of normally recurring accruals that, in the opinion of management, are
necessary for a fair presentation of the financial position and results of operations for the
periods covered by the report have been included. The accompanying unaudited consolidated financial
statements should be read in conjunction with the Companys consolidated financial statements and
related notes appearing in the 2009 Annual Report previously filed on Form 10-K.
These consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiary. Significant intercompany transactions and accounts are eliminated in
consolidation.
Accounting Standards Codification In June 2009, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) No. 168, The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement
of FASB Statement No. 162. This statement modifies the Generally Accepted Accounting Principles
(GAAP) hierarchy by establishing only two levels of GAAP, authoritative and nonauthoritative
accounting literature. Effective July 2009, the FASB Accounting Standards Codification (ASC),
also known collectively as the Codification, is considered the single source of authoritative
U.S. accounting and reporting standards, except for additional authoritative rules and interpretive
releases issued by the Securities and Exchange Commission (SEC). Nonauthoritative guidance and
literature would include, among other things, FASB Concepts Statements, American Institute of
Certified Public Accountants Issue Papers and Technical Practice Aids and accounting textbooks. The
Codification was developed to organize GAAP pronouncements by topic so that users can more easily
access authoritative accounting guidance. It is organized by topic, subtopic, section, and
paragraph, each of which is identified by a numerical designation. FASB ASC 105-10, Generally
Accepted Accounting Principles, became applicable beginning in the third quarter of 2009. All
accounting references have been updated, and therefore SFAS references have been replaced with ASC
references except for SFAS references that have not been integrated into the Codification.
Use of Estimates The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
as of the balance sheet date and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Material estimates that are particularly
susceptible to significant change in the near term include the determination of the allowance for
loan losses, the valuation of deferred tax assets, determination of any impairment of intangibles,
other-than-temporary impairment of securities, the valuation of other real estate, and the fair
value of financial instruments.
8
Recently Adopted Accounting Pronouncements
Fair Value Measurement In April 2009, the FASB issued ASC 820-10-65-4, Fair Value
Measurements and Disclosures. FASB ASC 820-10-65-4 provides additional guidance for estimating
fair value in accordance with FASB ASC 820 when the volume and level of activity for the asset or
liability have decreased significantly. FASB ASC 820-10-65-4 also provides guidance on identifying
circumstances that indicate a transaction is not orderly. The provisions of FASB ASC 820-10-65-4
were effective April 1, 2009. There was no material impact as a result of adopting FASB ASC
820-10-65-4.
In April 2009, the FASB issued ASC 825-10-65-1, Financial Instruments, which requires
disclosures about fair value of financial instruments in interim reporting periods of publicly
traded companies that were previously only required to be disclosed in annual financial statements.
The provisions of FASB ASC 825-10-65-1 were effective April 1, 2009. As FASB ASC 825-10-65-1 amends
only the disclosure requirements about fair value of financial instruments in interim periods, the
adoption of FASB ASC 825-10-65-1 had no impact on the Companys financial condition or results of
operations.
The Company has an established process for determining fair values. Fair value is based upon
quoted market prices, where available. If listed prices or quotes are not available, fair value is
based upon internally developed models or processes that use primarily market-based or
independently-sourced market data, including interest rate yield curves, option volatilities and
third party information. Valuation adjustments may be made to ensure that financial instruments are
recorded at fair value. Furthermore, while the Company believes its valuation methods are
appropriate and consistent with other market participants, the use of different methodologies, or
assumptions, to determine the fair value of certain financial instruments could result in a
different estimate of fair value at the reporting date.
Other-than-temporary impairment In April 2009, the FASB issued ASC 320-10-65-1, Investments
Debt and Equity Securities, that amends current other-than-temporary impairment guidance in GAAP
for debt securities to make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity securities in the financial
statements. This ASC does not amend existing recognition and measurement guidance related to
other-than-temporary impairments of equity securities. The provisions of FASB ASC 320-10-65-1 were
effective for the Companys interim period ending on June 30, 2009. There was no impact from the
adoption of FASB ASC 320-10-65-1 on the Companys financial position, results of operations or cash
flows.
Note 2. Loans and Allowance for Loan Losses
The following schedule details the loans of the Company at June 30, 2010 and December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Mortgage Loans on real estate |
|
|
|
|
|
|
|
|
Residential 1-4 family |
|
$ |
359,997 |
|
|
|
374,684 |
|
Multifamily |
|
|
8,734 |
|
|
|
5,526 |
|
Commercial |
|
|
325,262 |
|
|
|
324,824 |
|
Construction |
|
|
182,874 |
|
|
|
198,732 |
|
Farmland |
|
|
43,024 |
|
|
|
14,090 |
|
Second mortgages |
|
|
16,386 |
|
|
|
16,847 |
|
Equity lines of credit |
|
|
37,045 |
|
|
|
35,954 |
|
|
|
|
|
|
|
|
Total mortgage loans on real estate |
|
|
973,322 |
|
|
|
970,657 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
|
58,397 |
|
|
|
74,748 |
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
Agriculture loans |
|
|
3,241 |
|
|
|
3,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer installment loans |
|
|
|
|
|
|
|
|
Personal |
|
|
57,491 |
|
|
|
60,792 |
|
Credit cards |
|
|
2,682 |
|
|
|
2,973 |
|
|
|
|
|
|
|
|
Total consumer installment loans |
|
|
60,173 |
|
|
|
63,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans |
|
|
4,868 |
|
|
|
4,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred loan fees |
|
|
(1,402 |
) |
|
|
(1,415 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
|
|
1,098,599 |
|
|
|
1,115,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Allowance for loan losses |
|
|
(21,487 |
) |
|
|
(16,647 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loans |
|
$ |
1,077,112 |
|
|
|
1,098,614 |
|
|
|
|
|
|
|
|
Transactions in the allowance for loan losses were as follows:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(In Thousands) |
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2010 and 2009, respectively |
|
$ |
16,647 |
|
|
$ |
12,138 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
Losses charged to allowance |
|
|
(3,463 |
) |
|
|
(1,754 |
) |
Recoveries credited to allowance |
|
|
124 |
|
|
|
211 |
|
Provision for loan losses |
|
|
8,179 |
|
|
|
3,361 |
|
|
|
|
|
|
|
|
Balance, June 30, 2010 and 2009, respectively |
|
$ |
21,487 |
|
|
$ |
13,956 |
|
|
|
|
|
|
|
|
At June 30, 2010, the Company had certain impaired loans of $24,480,000 which were on non
accruing interest status. At December 31, 2009, the Company had certain impaired loans of
$25,514,000 which were on non accruing interest status. In each case, at the date such loans were
placed on nonaccrual status, the Company reversed all previously accrued interest income against
current year earnings.
Impaired loans also include loans that the Company may elect to formally restructure due to
the weakening credit status of a borrower such that the restructuring may facilitate a repayment
plan that minimizes the potential losses that the Company may have to otherwise incur. These loans
are classified as impaired loans and, if on non-accruing status as of the date of restructuring,
the loans are included in nonperforming loans. Nonperforming restructured loans will remain as
nonperforming until the borrower can demonstrate adherence to the restructured terms for a term of
no less than six months and it is otherwise determined that continued adherence is reasonably
assured. Some restructured loans continue as accruing loans after restructuring due to the borrower
not being past due, adequate collateral valuations supporting the restructured loans and/or the
cash flows of the underlying business appearing adequate to support the restructured debt service.
Once a relationship is classified as a restructured loan and in accordance with industry practice,
the relationship will remain classified as a restructured loan until the borrower can demonstrate
adherence to the restructured terms through the end of the current
fiscal year. Not included in nonperforming loans are loans that have been restructured that
were performing as of the restructure date. At June 30, 2010, there were $16.5 million of accruing
restructured loans that remain in a performing status. There were $8.9 million of accruing
restructured loans at December 31, 2009.
10
Potential problem loans, which are not included in nonperforming assets, amounted to
approximately $36.7 million at June 30, 2010 compared to $33.1 million at December 31, 2009.
Potential problem loans represent those loans with a well defined weakness and where information
about possible credit problems of borrowers has caused management to have serious doubts about the
borrowers ability to comply with present repayment terms. This definition is believed to be
substantially consistent with the standards established by the FDIC, the Companys primary federal
regulator, for loans classified as special mention, substandard, or doubtful, excluding the impact
of nonperforming loans.
Note 3. Debt and Equity Securities
Debt and equity securities have been classified in the consolidated balance sheet according to
managements intent. Debt and equity securities at June 30, 2010 and December 31, 2009 are
summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 |
|
|
|
Securities Available-For-Sale |
|
|
|
In Thousands |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Market |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
U.S. Government and Federal
agencies |
|
$ |
2,007 |
|
|
$ |
7 |
|
|
$ |
|
|
|
$ |
2,014 |
|
U.S. Government-sponsored
enterprises (GSEs)* |
|
|
240,855 |
|
|
|
464 |
|
|
|
660 |
|
|
|
240,659 |
|
Mortgage-backed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSE residential |
|
|
59,106 |
|
|
|
147 |
|
|
|
152 |
|
|
|
59,101 |
|
Obligations of states and political
subdivisions |
|
|
1,522 |
|
|
|
54 |
|
|
|
|
|
|
$ |
1,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
303,490 |
|
|
$ |
672 |
|
|
$ |
812 |
|
|
$ |
303,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 |
|
|
|
Securities Held-To-Maturity |
|
|
|
In Thousands |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Market |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Mortgage-backed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSE residential |
|
$ |
1,651 |
|
|
$ |
35 |
|
|
$ |
|
|
|
$ |
1,686 |
|
Obligations of states and political
subdivisions |
|
|
11,986 |
|
|
|
411 |
|
|
|
8 |
|
|
|
12,389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
13,637 |
|
|
$ |
446 |
|
|
$ |
8 |
|
|
$ |
14,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation,
Federal Home Loan Banks, Federal Farm Credit Banks, and Government National Mortgage
Association. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
|
Securities Available-For-Sale |
|
|
|
In Thousands |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Market |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
U.S. Government and Federal
Agencies |
|
$ |
1,000 |
|
|
$ |
5 |
|
|
$ |
|
|
|
$ |
1,005 |
|
U.S. Government-sponsored
enterprises (GSEs)* |
|
|
246,541 |
|
|
|
636 |
|
|
|
1,485 |
|
|
|
245,692 |
|
Mortgage-backed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSE residential |
|
|
1,349 |
|
|
|
37 |
|
|
|
|
|
|
|
1,386 |
|
Obligations of states and political
subdivisions |
|
|
1,522 |
|
|
|
42 |
|
|
|
|
|
|
|
1.564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
250,412 |
|
|
$ |
720 |
|
|
$ |
1,485 |
|
|
$ |
249,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
|
Securities Held-To-Maturity |
|
|
|
In Thousands |
|
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Market |
|
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
Mortgage-backed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSE residential |
|
$ |
14 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
14 |
|
Obligations of states and political
subdivisions |
|
|
12,156 |
|
|
|
458 |
|
|
|
20 |
|
|
|
12,594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
12,170 |
|
|
$ |
458 |
|
|
$ |
20 |
|
|
$ |
12,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation,
Federal Home Loan Banks, Federal Farm Credit Banks, and Government National Mortgage
Association. |
The amortized cost and estimated market value of debt securities at June 30, 2010, by
contractual maturity, are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Thousands |
|
|
|
|
|
|
|
Estimated |
|
|
|
|
|
|
Estimated |
|
|
|
Amortized |
|
|
Market |
|
|
Amortized |
|
|
Market |
|
|
|
Cost |
|
|
Value |
|
|
Cost |
|
|
Value |
|
|
|
Held-to-Maturity |
|
|
Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less |
|
$ |
1,839 |
|
|
$ |
1,869 |
|
|
$ |
|
|
|
$ |
|
|
Due after one year
through five years |
|
|
4,906 |
|
|
|
5,132 |
|
|
|
142,660 |
|
|
|
142,486 |
|
Due after five years
through ten years |
|
|
3,297 |
|
|
|
3,431 |
|
|
|
119,847 |
|
|
|
119,834 |
|
Due after ten years |
|
|
3,595 |
|
|
|
3,643 |
|
|
|
40,983 |
|
|
|
41,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
13,637 |
|
|
$ |
14,075 |
|
|
$ |
303,490 |
|
|
$ |
303,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the gross unrealized losses and fair value of the Companys
investments with unrealized losses that are not deemed to be other-than-temporarily impaired,
aggregated by investment category and length of time that individual securities have been in a
continuous unrealized loss position at June 30, 2010 and December 31, 2009.
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Thousands, Except Number of Securities |
|
|
|
Less than 12 Months |
|
|
12 Months or More |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
|
|
|
|
|
|
|
|
|
|
of |
|
|
|
|
|
|
|
|
|
Fair |
|
|
Unrealized |
|
|
Securities |
|
|
Fair |
|
|
Unrealized |
|
|
Securities |
|
|
Fair |
|
|
Unrealized |
|
June 30, 2010 |
|
Value |
|
|
Losses |
|
|
Included |
|
|
Value |
|
|
Losses |
|
|
Included |
|
|
Value |
|
|
Losses |
|
Held to Maturity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSE residential |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
10 |
|
|
$ |
|
|
|
|
2 |
|
|
$ |
10 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and
political subdivisions |
|
|
946 |
|
|
|
8 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
946 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
946 |
|
|
$ |
8 |
|
|
|
3 |
|
|
$ |
10 |
|
|
$ |
|
|
|
|
2 |
|
|
$ |
956 |
|
|
$ |
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-Sale
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and
Federal agencies |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSEs |
|
|
136,697 |
|
|
|
640 |
|
|
|
43 |
|
|
|
5,980 |
|
|
|
20 |
|
|
|
2 |
|
|
|
142,677 |
|
|
|
660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSE residential |
|
|
36,119 |
|
|
|
152 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,119 |
|
|
|
152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and
political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
172,816 |
|
|
$ |
792 |
|
|
|
55 |
|
|
$ |
5,980 |
|
|
$ |
20 |
|
|
|
2 |
|
|
$ |
178,796 |
|
|
$ |
812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Thousands, Except Number of Securities |
|
|
|
Less than 12 Months |
|
|
12 Months or More |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
|
|
|
|
|
|
|
|
|
|
of |
|
|
|
|
|
|
|
|
|
Fair |
|
|
Unrealized |
|
|
Securities |
|
|
Fair |
|
|
Unrealized |
|
|
Securities |
|
|
Fair |
|
|
Unrealized |
|
December 31, 2009 |
|
Value |
|
|
Losses |
|
|
Included |
|
|
Value |
|
|
Losses |
|
|
Included |
|
|
Value |
|
|
Losses |
|
Held to Maturity Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSE residential |
|
$ |
2 |
|
|
$ |
|
|
|
|
1 |
|
|
$ |
9 |
|
|
$ |
|
|
|
|
1 |
|
|
$ |
11 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and
political subdivisions |
|
|
599 |
|
|
|
9 |
|
|
|
2 |
|
|
|
1,040 |
|
|
|
11 |
|
|
|
4 |
|
|
|
1,639 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
601 |
|
|
$ |
9 |
|
|
|
3 |
|
|
$ |
1,049 |
|
|
$ |
11 |
|
|
|
5 |
|
|
$ |
1,650 |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-Sale
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and
Federal agencies |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSEs |
|
|
149,048 |
|
|
|
1,401 |
|
|
|
35 |
|
|
|
2,906 |
|
|
|
84 |
|
|
|
1 |
|
|
|
151,954 |
|
|
|
1,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSE residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
2 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and
political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
149,048 |
|
|
$ |
1,401 |
|
|
|
35 |
|
|
$ |
2,910 |
|
|
$ |
84 |
|
|
|
3 |
|
|
$ |
151,958 |
|
|
$ |
1,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Because the Company does not intend to sell these securities and it is not more likely
than not that the Company will be required to sell the securities before recovery of their
amortized cost bases, which may be maturity, the Company does not consider these securities to be
other-than-temporarily impaired at June 30, 2010.
The carrying values of the Companys investment securities could decline in the future if the
financial condition of issuers deteriorate and management determines it is probable that the
Company will not recover the entire amortized cost bases of the securities. As a result, there is a
risk that other-than-temporary impairment charges may occur in the future given the current
economic environment.
13
Note 4. Earnings Per Share
The computation of basic earnings per share is based on the weighted average number of common
shares outstanding during the period. The computation of diluted earnings per share for the
Company begins with the basic earnings per share plus the effect of common shares contingently
issuable from stock options.
The following is a summary of components comprising basic and diluted earnings per share (EPS)
for the three months and six months ended June 30, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
(Dollars in Thousands |
|
|
(Dollars in Thousands |
|
|
|
Except Per Share Amounts) |
|
|
Except Per Share Amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS Computation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator Earnings available to common
Stockholders |
|
$ |
1,655 |
|
|
$ |
3,273 |
|
|
$ |
4,240 |
|
|
$ |
6,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator Weighted average number
of common shares outstanding |
|
|
7,185,208 |
|
|
|
7,077,562 |
|
|
|
7,178,453 |
|
|
|
7,073,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
|
$ |
.23 |
|
|
$ |
.46 |
|
|
$ |
.59 |
|
|
$ |
.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Computation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator Earnings available to
common Stockholders |
|
$ |
1,655 |
|
|
$ |
3,273 |
|
|
$ |
4,240 |
|
|
$ |
6,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator Weighted average number
of common shares outstanding |
|
|
7,185,208 |
|
|
|
7,077,562 |
|
|
|
7,178,453 |
|
|
|
7,073,691 |
|
Dilutive effect of stock options |
|
|
7,991 |
|
|
|
23,321 |
|
|
|
7,029 |
|
|
|
22,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,193,199 |
|
|
|
7,100,883 |
|
|
|
7,185,482 |
|
|
|
7,096,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
.23 |
|
|
$ |
.46 |
|
|
$ |
.59 |
|
|
$ |
.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 5. Fair Value Measurements
In September 2006, the FASB issued ASC 820, Fair Value Measurements and Disclosures. FASB
ASC 820, which defines fair value, establishes a framework for measuring fair value in U.S.
generally accepted accounting principles and expands disclosures about fair value measurements.
FASB ASC 820 applies only to fair-value measurements that are already required or permitted by
other accounting standards and is expected to increase the consistency of those measurements. The
definition
of fair value focuses on the exit price, i.e., the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the
measurement date, not the entry price, i.e., the price that would be paid to acquire the asset or
received to assume the liability at the measurement date. The statement emphasizes that fair value
is a market-based measurement, not an entity-specific measurement. Therefore, the fair value
measurement should be determined based on the
assumptions that market participants would use in pricing the asset or liability.
14
Valuation Hierarchy
FASB ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value
measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of
an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical
assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
A financial instruments categorization within the valuation hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. Following is a description
of the valuation methodologies used for assets and liabilities measured at fair value, as well as
the general classification of such assets and liabilities pursuant to the valuation hierarchy.
Assets
Securities available for sale Where quoted prices are available in an active market,
securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include
highly liquid government securities and certain other products. If quoted market prices are not
available, then fair values are estimated by using pricing models, quoted prices of securities with
similar characteristics, or discounted cash flows and are classified within Level 2 of the
valuation hierarchy. In certain cases where there is limited activity or less transparency around
inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy.
Impaired loans A loan is considered to be impaired when it is probable the Company will be
unable to collect all principal and interest payments due in accordance with the contractual terms
of the loan agreement. Impaired loans are measured based on the present value of expected payments
using the loans original effective rate as the discount rate, the loans observable market price,
or the fair value of the collateral if the loan is collateral dependent. If the recorded investment
in the impaired loan exceeds the measure of fair value, a valuation allowance may be established as
a component of the allowance for loan losses or the expense is recognized as a charge-off. Impaired
loans are classified within Level 3 of the hierarchy.
Other real estate Other real estate, consisting of properties obtained through foreclosure
or in satisfaction of loans, is initially recorded at fair value, determined on the basis of
current appraisals, comparable sales, and other estimates of value obtained principally from
independent sources, adjusted for estimated selling costs. At the time of foreclosure, any excess
of the loan balance over the fair value of the real estate held as collateral is treated as a
charge against the allowance for loan losses. Gains or losses on sale and any subsequent
adjustments to the fair value are recorded as a component of foreclosed real estate expense. Other
real estate is included in Level 3 of the valuation hierarchy.
Other assets Included in other assets are certain assets carried at fair value, including
the cash surrender value of bank owned life insurance policies. The carrying amount of the cash
surrender value of bank owned life insurance is based on information received from the insurance
carriers indicating the financial performance of the policies and the amount the Company would
receive should the policies be surrendered. The Company reflects these assets within Level 3 of the
valuation hierarchy.
15
The following tables present the financial instruments carried at fair value as of June 30,
2010, by caption on the consolidated balance sheets and by FASB ASC 820 valuation hierarchy (as
described above) (dollars in thousands)
Assets and liabilities measured at fair value on a recurring basis are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2010 |
|
|
|
Carrying |
|
|
Quoted Prices in |
|
|
|
|
|
|
|
|
|
Value at |
|
|
Active Markets |
|
|
Significant Other |
|
|
Significant |
|
|
|
June 30, |
|
|
for Identical |
|
|
Observable |
|
|
Unobservable |
|
(in Thousands) |
|
2010 |
|
|
Assets (Level 1) |
|
|
Inputs (Level 2) |
|
|
Inputs (Level 3) |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
securities |
|
$ |
303,350 |
|
|
$ |
2,014 |
|
|
$ |
301,336 |
|
|
$ |
|
|
Cash surrender
value of life
insurance |
|
|
1,539 |
|
|
|
|
|
|
|
|
|
|
|
1,539 |
|
Assets and liabilities measured at fair value on a non-recurring basis are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2010 |
|
|
|
Carrying |
|
|
Quoted Prices in |
|
|
|
|
|
|
|
|
|
Value at |
|
|
Active Markets |
|
|
Significant Other |
|
|
Significant |
|
|
|
June 30, |
|
|
for Identical |
|
|
Observable |
|
|
Unobservable |
|
(in Thousands) |
|
2010 |
|
|
Assets (Level 1) |
|
|
Inputs (Level 2) |
|
|
Inputs (Level 3) |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans |
|
$ |
53,397 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
53,397 |
|
Other real estate |
|
|
11,290 |
|
|
|
|
|
|
|
|
|
|
|
11,290 |
|
Repossesed assets |
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
27 |
|
Changes in level 3 fair value measurements
The table below includes a roll forward of the balance sheet amounts for the six months ended
June 30, 2010 (including the change in fair value) for financial instruments classified by the
Company within Level 3 of the valuation hierarchy for assets and liabilities measured at fair value
on a recurring basis. When a determination is made to classify a financial instrument within Level
3 of the valuation hierarchy, the determination is based upon the significance of the unobservable
factors to the overall fair value measurements. However, since Level 3 financial instruments
typically include, in addition to the unobservable or Level 3 components, observable components
(that is, components that are actively quoted and can be validated to external sources), the gains
and losses in the table below include changes in fair value due in part to observable factors that
are part of the valuation methodology.
Six months ended, June 30, 2010 (in thousands)
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
Liabilities |
|
Fair Value, January 1, 2010 |
|
$ |
1,497 |
|
|
$ |
|
|
Total realized gains included in income |
|
|
42 |
|
|
|
|
|
Purchases, issuances and settlements, net |
|
|
|
|
|
|
|
|
Transfers in and/or (out) of Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value, June 30, 2010 |
|
$ |
1,539 |
|
|
$ |
|
|
|
|
|
|
|
|
|
Total realized gains (losses) included in income related
to financial assets and liabilities still on the
consolidated balance sheet at June 30, 2010 |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
16
The following methods and assumptions were used by the Company in estimating its fair value
disclosures for financial instruments that are not measured at fair value. In cases where quoted
market prices are not available, fair values are based on estimates using discounted cash flow
models. Those models are significantly affected by the assumptions used, including the discount
rates and estimates of future cash flows. In that regard, the derived fair value estimates cannot
be substantiated by comparison to independent markets and, in many cases, could not be realized in
immediate settlement of the instrument. The use of different methodologies may have a material
effect on the estimated fair value amounts. The fair value estimates presented herein are based on
pertinent information available to management as of June 30, 2010 and December 31, 2009. Such
amounts have not been revalued for purposes of these consolidated financial statements since those
dates and, therefore, current estimates of fair value may differ significantly from the amounts
presented herein.
Cash, Due From Banks and Federal Funds Sold The carrying amounts of cash, due from banks, and
federal funds sold approximate their fair value.
Securities held to maturity Estimated fair values for securities held to maturity are based
on quoted market prices where available. If quoted market prices are not available, estimated fair
values are based on quoted market prices of comparable instruments.
Loans For variable-rate loans that reprice frequently and have no significant change in
credit risk, fair values approximate carrying values. For other loans, fair values are estimated
using discounted cash flow models, using current market interest rates offered for loans with
similar terms to borrowers of similar credit quality. Fair values for impaired loans are estimated
using discounted cash flow models or based on the fair value of the underlying collateral.
Mortgage loans held-for-sale Mortgage loans held-for-sale are carried at the lower of cost or
fair value and are classified within Level 2 of the valuation hierarchy. The inputs for valuation
of these assets are based on the anticipated sales price of these loans as the loans are usually
sold within a few weeks of their origination.
Deposits, Securities Sold Under Agreements to Repurchase, Federal Home Loan Bank Advances The
carrying amounts of demand deposits, savings deposits, securities sold under agreements to
repurchase, floating rate advances from the Federal Home Loan Bank and floating rate subordinated
debt approximate their fair values. Fair values for certificates of deposit and fixed rate advances
from the Federal Home Loan Bank are estimated using discounted cash flow models, using current
market interest rates offered on certificates, advances and other borrowings with similar remaining
maturities.
17
The carrying value and estimated fair values of the Companys financial instruments at
June 30,
2010 and December 31, 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Thousands |
|
|
|
June 30, 2010 |
|
|
December 31, 2009 |
|
|
|
Carrying |
|
|
|
|
|
|
Carrying |
|
|
|
|
|
|
Amount |
|
|
Fair Value |
|
|
Amount |
|
|
Fair Value |
|
|
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and short-term
investments |
|
$ |
47,608 |
|
|
|
47,608 |
|
|
$ |
31,512 |
|
|
|
31,512 |
|
Securities available-for-sale |
|
|
303,350 |
|
|
|
303,350 |
|
|
|
249,647 |
|
|
|
249,647 |
|
Securities, held to maturity |
|
|
13,637 |
|
|
|
14,075 |
|
|
|
12,170 |
|
|
|
12,608 |
|
Loans, net of unearned
interest |
|
|
1,098,599 |
|
|
|
|
|
|
|
1,115,261 |
|
|
|
|
|
Less: allowance for loan
losses |
|
|
21,487 |
|
|
|
|
|
|
|
16,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of allowance |
|
|
1,077,112 |
|
|
|
1,078,804 |
|
|
|
1,098,614 |
|
|
|
1,100,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale |
|
|
9,072 |
|
|
|
9,072 |
|
|
|
5,027 |
|
|
|
5,027 |
|
Restricted equity securities |
|
|
3,012 |
|
|
|
3,012 |
|
|
|
3,012 |
|
|
|
3,012 |
|
Accrued interest receivable |
|
|
6,489 |
|
|
|
6,489 |
|
|
|
7,563 |
|
|
|
7,563 |
|
Cash surrender value of life |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
1,539 |
|
|
|
1,539 |
|
|
|
1,497 |
|
|
|
1,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
1,368,771 |
|
|
|
1,378,304 |
|
|
|
1,310,706 |
|
|
|
1,316,097 |
|
Securities sold
under repurchase
agreements |
|
|
5,629 |
|
|
|
5,629 |
|
|
|
6,499 |
|
|
|
6,499 |
|
Advances from Federal Home
Loan Bank |
|
|
2 |
|
|
|
2 |
|
|
|
13 |
|
|
|
13 |
|
Accrued interest payable |
|
|
4,155 |
|
|
|
4,155 |
|
|
|
4,923 |
|
|
|
4,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized financial
instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments to extend
credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standby letters of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 6. Stock Options
In April 1999, the shareholders of the Company approved the Wilson Bank Holding Company 1999
Stock Option Plan (the 1999 Stock Option Plan) which expired April 13, 2009. The 1999 Stock
Option Plan provided for the granting of stock options, and authorized the issuance of common stock
upon the exercise of such options to officers and other key employees of the Company and its
subsidiaries. As of June 30, 2010, the Company has granted key employees options to purchase a
total of 36,494 shares of common stock pursuant to the 1999 Stock Option Plan. At June 30, 2010,
options to purchase 11,917 shares were exercisable.
On April 14, 2009, the Companys shareholders approved the Wilson Bank Holding
Company
2009 Stock Option Plan (the 2009 Stock Option Plan). The 2009 Stock Option Plan is effective as
of April 14, 2009 and replaces the 1999 Stock Option Plan which expired on April 13, 2009.
Under the 2009 Stock Option Plan, awards may be in the form of options to acquire common stock
of the Company. Subject to adjustment as provided by the terms of the 2009 Stock Option Plan,
the maximum number of shares of common stock with respect to which awards may be granted under
the 2009 Stock Option Plan is 75,000 shares. As of June 30, 2010, the Company has granted key
employees options to purchase a total of 19,250 shares of common stock pursuant to the 2009
Stock Option Plan, none of which were exercisable as of June 30, 2010.
18
A summary of the stock option activity for the six months ending June 30, 2010 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
Exercise |
|
|
|
Shares |
|
|
Price |
|
Outstanding at
January 1, 2010 |
|
|
41,370 |
|
|
$ |
24.73 |
|
Granted |
|
|
19,250 |
|
|
|
37.75 |
|
Exercised |
|
|
(3,207 |
) |
|
|
20.86 |
|
Forfeited or expired |
|
|
(1,669 |
) |
|
|
24.90 |
|
|
|
|
|
|
|
|
Outstanding at end
of year |
|
|
55,744 |
|
|
$ |
29.45 |
|
|
|
|
|
|
|
|
Options exercisable
June 30, 2010 |
|
|
11,917 |
|
|
$ |
22.03 |
|
|
|
|
|
|
|
|
The following table summarizes information about fixed stock options outstanding at
June 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Weighted |
|
|
Average |
|
|
|
|
|
|
Weighted |
|
|
Average |
|
Range of |
|
Number |
|
|
Average |
|
|
Remaining |
|
|
Number |
|
|
Average |
|
|
Remaining |
|
Exercise |
|
Outstanding |
|
|
Exercise |
|
|
Contractual |
|
|
Exercisable |
|
|
Remaining |
|
|
Contractual |
|
Prices |
|
at 6/30/10 |
|
|
Price |
|
|
Term |
|
|
at 6/30/10 |
|
|
Price |
|
|
Term |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$11.46 $17.19 |
|
|
9,093 |
|
|
$ |
15.99 |
|
|
2.1 years |
|
|
5,022 |
|
|
$ |
16.05 |
|
|
2.1 years |
$17.20 $25.79 |
|
|
10,289 |
|
|
$ |
22.53 |
|
|
4.2 years |
|
|
3,547 |
|
|
$ |
23.09 |
|
|
4.3 years |
$25.80 $35.75 |
|
|
17,112 |
|
|
$ |
31.41 |
|
|
7.0 years |
|
|
3,348 |
|
|
$ |
29.87 |
|
|
6.2 years |
$35.76 $37.75 |
|
|
19,250 |
|
|
$ |
37.75 |
|
|
9.5 years |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,744 |
|
|
|
|
|
|
|
|
|
|
|
11,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
intrinsic value
(in thousands) |
|
$ |
491 |
|
|
|
|
|
|
|
|
|
|
$ |
193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average fair value at the grant date of options granted during the first
six
months of 2010 was $6.01. The total intrinsic value of options exercised during 2010 was $56,000.
As of June 30, 2010, there was $168,000 of total unrecognized cost related to
non-vested
share-based compensation arrangements grant under the Companys stock option plans. The cost is
expected to be recognized over a weighted-average period of 4.5 years.
19
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The purpose of this discussion is to provide insight into the financial condition and results
of operations of the Company and its bank subsidiary. This discussion should be read in
conjunction with the consolidated financial statements. Reference should also be made to the
Companys Annual Report on Form 10-K for the year ended December 31, 2009 for a more complete
discussion of factors that impact liquidity, capital and the results of operations.
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements regarding, among other things, the
anticipated financial and operating results of the Company. Investors are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to publicly release any modifications or revisions to these
forward-looking statements to reflect events or circumstances occurring after the date hereof or to
reflect the occurrence of unanticipated events.
In connection with the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995, the Company cautions investors that future financial and operating results may differ
materially from those projected in forward-looking statements made by, or on behalf of, the
Company. The words expect, intend, should, may, could, believe, suspect,
anticipate, seek, plan, estimate and similar expressions are intended to identify such
forward-looking statements, but other statements not based on historical fact may also be
considered forward-looking. Such forward-looking statements involve known and unknown risks and
uncertainties, including, but not limited to those described in the Companys Annual Report on Form
10-K and also includes, without limitation, (i) deterioration in the financial condition of
borrowers resulting in significant increases in loan losses and provisions for these losses, (ii)
greater than anticipated deterioration in the real estate market conditions in the Companys market
areas, (iii) increased competition with other financial institutions, (iv) the continued
deterioration of the economy in the Companys market area, (v) continuation of the extremely low
short-term interest rate environment or rapid fluctuations in short-term interest rates, (vi)
significant downturns in the business of one or more large customers, (vii) changes in state or
Federal regulations, policies, or legislation applicable to banks and other financial service
providers, including regulatory or legislative developments arising out of current unsettled
conditions in the economy, including implementation of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, (viii) changes in capital levels and loan underwriting, credit review or
loss reserve policies associated with economic conditions, examination conclusions, or regulatory
developments, (ix) inadequate allowance for loan losses, (x) results of regulatory examinations,
and (xi) loss of key personnel These risks and uncertainties may cause the actual results or
performance of the Company to be materially different from any future results or performance
expressed or implied by such forward-looking statements. The Companys future operating results
depend on a number of factors which were derived utilizing numerous assumptions that could cause
actual results to differ materially from those projected in forward-looking statements.
Critical Accounting Estimates
The accounting principles we follow and our methods of applying these principles conform with
U.S. generally accepted accounting principles and with general practices within the banking
industry. In connection with the application of those principles, we have made judgments and
estimates which, in the case of the determination of our allowance for loan losses and the
assessment of impairment of the intangibles resulting from our mergers with Dekalb Community Bank
and Community Bank of Smith County in 2005 have been critical to the determination of our financial
position and results of operations.
Allowance for Loan Losses (allowance). Our management assesses the adequacy of the allowance
prior to the end of each calendar quarter. This assessment includes procedures to estimate the
allowance and test the adequacy and appropriateness of the resulting balance. The level of the
allowance is based upon managements evaluation of the loan portfolio, past loan loss experience,
current asset quality trends, known and inherent risks in the portfolio, adverse situations that
may affect the borrowers ability to repay (including the timing of future payment), the estimated
value of any underlying collateral, composition of the loan portfolio, economic conditions,
industry and peer bank loan quality indications and other pertinent factors, including regulatory
recommendations. This evaluation is inherently subjective as it requires material estimates
including the amounts and timing of future cash flows expected to be received on impaired loans
that may be susceptible to significant change. Loan losses are charged off when management believes
that the full collectability of the loan is unlikely. A loan may be partially charged-off after a
confirming event has occurred which serves to validate that full repayment pursuant to the terms
of the loan is unlikely. Allocation of the allowance may be made for specific loans, but the entire
allowance is available for any loan that, in managements judgment, is deemed to be uncollectible.
20
A loan is impaired when, based on current information and events, it is probable that we will
be unable to collect all amounts due according to the contractual terms of the loan agreement.
Collection of all amounts due according to the contractual terms means that both the interest and
principal payments of a loan will be collected as scheduled in the loan agreement.
An impairment allowance is recognized if the fair value of the loan is less than the recorded
investment in the loan (recorded investment in the loan is the principal balance plus any accrued
interest, net of deferred loan fees or costs and unamortized premium or discount). The impairment
is recognized through the allowance. Loans that are impaired are recorded at the present value of
expected future cash flows discounted at the loans effective interest rate, or if the loan is
collateral dependent, impairment measurement is based on the fair value of the collateral, less
estimated disposal costs. If the measure of the impaired loan is less than the recorded investment
in the loan, the Company recognizes an impairment by creating a valuation allowance with a
corresponding charge to the provision for loan losses or by adjusting an existing valuation
allowance for the impaired loan with a corresponding charge or credit to the provision for loan
losses. Management believes it follows appropriate accounting and regulatory guidance in
determining impairment and accrual status of impaired loans.
The level of allowance maintained is believed by management to be adequate to absorb probable
losses inherent in the portfolio at the balance sheet date. The allowance is increased by
provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously
charged-off.
In assessing the adequacy of the allowance, we also consider the results of our ongoing
independent loan review process. We undertake this process both to ascertain whether there are
loans in the portfolio whose credit quality has weakened over time and to assist in our overall
evaluation of the risk characteristics of the entire loan portfolio. Our loan review process
includes the judgment of management, the input from our independent loan reviewers, and reviews
that may have been conducted by bank regulatory agencies as part of their usual examination
process. We incorporate loan review results in the determination of whether or not it is probable
that we will be able to collect all amounts due according to the contractual terms of a loan.
As part of managements quarterly assessment of the allowance, management divides the loan
portfolio into twelve segments based on bank call reporting requirements. Each segment is then
analyzed such that an allocation of the allowance is estimated for each loan segment.
The allowance allocation begins with a process of estimating the probable losses inherent for
these types of loans. The estimates for these loans are established by loan category and are based
on our historical loss data for that category.
The estimated loan loss allocation for all twelve loan portfolio segments is then adjusted for
several environmental factors. The allocation for environmental factors is particularly
subjective and does not lend itself to exact mathematical calculation. This amount represents
estimated probable inherent credit losses which exist, but have not yet been identified, as of the
balance sheet date, and are based upon quarterly trend assessments in delinquent and nonaccrual
loans, unanticipated charge-offs, credit concentration changes, prevailing economic conditions,
changes in lending personnel experience, changes in lending policies or procedures and other
influencing factors. These environmental factors are considered for each of the twelve loan
segments and the allowance allocation, as determined by the processes noted above for each
component, is increased or decreased based on the incremental assessment of these various
environmental factors.
The assessment also includes an unallocated component. We believe that the unallocated amount
is warranted for inherent factors that cannot be practically assigned to individual loan
categories. An example is the imprecision in the overall measurement process, in particular the
volatility of the national and local economy.
21
We then test the resulting allowance by comparing the balance in the allowance to industry and
peer information. Our management then evaluates the result of the procedures performed, including
the result of our testing, and concludes on the appropriateness of the balance of the allowance in
its entirety. The board of directors reviews and approves the assessment prior to the filing of
quarterly and annual financial information.
Impairment of Intangible Assets. Long-lived assets, including purchased intangible assets
subject to amortization, such as our core deposit intangible asset, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. Assets to be disposed of would be separately presented in the balance
sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no
longer depreciated.
Goodwill and intangible assets that have indefinite useful lives are evaluated for impairment
annually and are evaluated for impairment more frequently if events and circumstances indicate that
the asset might be impaired. That annual assessment date is December 31. An impairment loss is
recognized to the extent that the carrying amount exceeds the assets fair value. The goodwill
impairment analysis is a two-step test. The first step, used to identify potential impairment,
involves comparing each reporting units estimated fair value to its carrying value, including
goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is
considered not to be impaired. If the carrying value exceeds estimated fair value, there is an
indication of potential impairment and the second step is performed to measure the amount of
impairment.
If required, the second step involves calculating an implied fair value of goodwill for each
reporting unit for which the first step indicated potential impairment. The implied fair value of
goodwill is determined in a manner similar to the amount of goodwill calculated in a business
combination, by measuring the excess of the estimated fair value of the reporting unit, as
determined in the first step, over the aggregate estimated fair values of the individual assets,
liabilities and identifiable intangibles as if the reporting unit was being acquired in a business
combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned
to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a
reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for
the excess. An impairment loss cannot exceed the carrying value of goodwill assigned to a reporting
unit, and the loss establishes a new basis in the goodwill.
Results of Operations
Net earnings decreased 34.7% to $4,240,000 for the six months ended June 30, 2010 from
$6,498,000 in the first six months of 2009. Net earnings were $1,655,000 for the quarter ended
June 30, 2010, a decrease of $1,618,000, or 49.4%, from $3,273,000 for the three months ended June
30, 2009 and a decrease of $930,000, or 36.0%, over the quarter ended March 31, 2010. The decrease
in net earnings during the six months ended June 30, 2010 as compared to the prior year period was
primarily due to a 11.7% decrease in non-interest income and a 4.4% decrease in non-interest
expense, offset in part by a 4.5% increase in net interest income. Net earnings for the six months
ended June 30, 2010 compared to June 30, 2009 were negatively impacted by the $4,818,000, or
143.4%, increase in provision for loan losses over the prior years comparable period. See
Provision for Loan Losses for further explanation. Net interest margin for the six months ended
June 30, 2010 was 3.6% as compared to 3.7% for the first six months of 2009 and the net interest
margin was 3.7% for the quarter ended June 30, 2010 compared to 3.6% for the quarter ended June 30,
2009. The decrease in net interest margin for the six months ended June 30, 2010, is primarily
reflected by the increased level of non accrual loans.
22
Net Interest Income
Net interest income represents the amount by which interest earned on various earning assets
exceeds interest paid on deposits and other interest-bearing liabilities and is the most
significant component of the Companys earnings. The Companys total interest income, excluding
tax equivalent adjustments relating to tax exempt securities, decreased $1,911,000, or 4.7%, during
the six months ended June 30, 2010 as compared to the same period in 2009. The decrease in total
interest income was $726,000, or 3.6%, for the quarter ended June 30, 2010 as compared
to the quarter ended June 30, 2009. Interest income for the second quarter of 2010 increased
$453,000, or 2.4%, over the first three months of 2010. The decrease in the first six months of
2010 was primarily attributable to the continuing impact of low interest rate policies initiated by
the Federal Reserve Board and the negative impact of higher non-accrual loan balances offset in
part by the increases in earning assets. The ratio of average earning assets to total average
assets was 94.9% and 95.5% for the six months ended June 30, 2010 and June 30, 2009, respectively.
Interest expense decreased $3,035,000, or 18.9%, for the six months ended June 30, 2010 as
compared to the same period in 2009. The decrease was $1,744,000, or 21.7%, for the three months
ended June 30, 2010 as compared to the same period in 2009. Interest expense decreased $436,000,
or 6.5%, for the quarter ended June 30, 2010 over the first three months of 2010. The decrease for
the quarter ended June 30, 2010 and for the six months ended June 30, 2009 as compared to the prior
years comparable periods was primarily due to a decrease in the rates paid on deposits,
particularly time deposits, reflecting the rate cuts by the Federal Reserve Open Market Committee.
The foregoing resulted in an increase in net interest income, before the provision for loan
losses, of $1,124,000, or 4.5%, for the first six months of 2010 as compared to the same period in
2009. The increase was $1,018,000, or 8.2%, for the quarter ended June 30, 2010 compared to the
quarter ended June 30, 2009. When compared to the first quarter of 2010, the Company experienced
an increase of $889,000, or 7.1% in net interest income.
Provision for Loan Losses
The provision for loan losses was $8,179,000 and $3,361,000 for the first six months of 2010
and 2009, respectively. The provision for loan losses during the three month periods ended June
30, 2010 and 2009 was $6,073,000 and $1,297,000, respectively. The increase in the provision in
the second quarter of 2010 and first six months of 2010 was primarily related to the Companys
decision to continue to increase the allowance for loan losses during the 2010 period due to the
continued weakening of economic conditions in the Companys market areas, generally, and in the
residential real estate construction and development area, specifically. Borrowers that are home
builders and developers and
sub dividers of land began experiencing stress in 2008 and have continued to experience stress in
the first six months of 2010 as a result of declining residential real estate demand and resulting
price and collateral value declines in the Companys market areas. As a result, the Company
increased its allowance for loan losses. The increase in the provision for loan losses for the
second quarter of 2010 as compared to the first quarter was due to Managements quarterly
evaluation of the current economic conditions in the local and national economy. As a result of
Managements evaluation, the level of the allowance was raised due to the continued weakening of
the local and national economy. The allowance for loan losses is based on past loan experience and
other factors which, in managements judgment, deserve current recognition in estimating possible
loan losses. Such factors include growth and composition of the loan portfolio, review of specific
problem loans, review of updated appraisals and borrower financial information, the recommendations
of the Companys regulators, and current economic conditions that may affect the borrowers ability
to repay. Management has in place a system designed for monitoring its loan portfolio and
identifying potential problem loans The provision for loan losses raised the allowance for loan
losses (net of charge-offs and recoveries) to $21,487,000, an increase of 29.1% from $16,647,000 at
December 31, 2009 and an increase of $4,076,000, or 23.4% from March 31, 2010. The allowance for
loan losses was 1.96%, 1.57%, and 1.49% of total loans at June 30, 2010, March 31, 2010, and
December 31, 2009, respectively.
23
Management believes the allowance for loan losses at June 30, 2010 to be adequate, but if
economic conditions continue to deteriorate beyond managements current expectations and additional
charge-offs are incurred, the allowance for loan losses may require an increase through additional
provision for loan losses which would negatively impact earnings.
Non-Interest Income
The components of the Companys non-interest income include service charges on deposit
accounts, other fees and commissions and gain on sale of loans. Total non-interest income for the
six months ended June 30, 2010 decreased 11.7% to $6,583,000 from $7,453,000 for the same period in
2009. The decrease was $144,000, or 3.9%, during the quarter ended June 30, 2010 compared to the
second quarter in 2009 and there was an increase of $515,000, or 17.0%, over the first three months
of 2010. The decrease for the first six months of 2010 related primarily to a reduction in gain on
sale of loans reflecting the decrease in mortgage originations and refinancing occurring during the
first six months of 2010. Gain on sale of loans decreased $1,002,000, or 58.2%, during the six
months ended June 30, 2010 compared to the same period in 2009. Gain on sale of loans decreased
$546,000, or 57.6%, during the quarter ended June 30, 2010 compared to the same quarter in 2009.
The Companys non-interest income in 2010 also benefited from a $261,000 gain on the sale of
investments as a result of the Company restructuring its bond portfolio. Service charges on deposit
accounts decreased $109,000, or 3.9%, during the six months ended June 30, 2010 compared to the
same period in 2009 and decreased $63,000, or 4.4%, during the quarter ended June 30, 2010 compared
to the second quarter of 2009 as a result of consumers slowing their spending due to the current
economic environment. Other fees and commissions increased $481,000, or 19.6%, during the six
months ended June 30, 2010 compared to the same period in 2009. The increase was $250,000, or
19.0%, during the quarter ended June 30, 2010 compared to the second quarter of 2009 and there was
an increase of $189,000, or 13.8%, over the first three months of 2010. Other fees and commissions
include income on brokerage accounts, insurance policies sold and various other fees.
Non-Interest Expenses
Non-interest expenses consist primarily of employee costs, occupancy expenses, furniture and
equipment expenses, data processing expenses, directors fees, loss on sale of other assets, loss
on sale of real estate and other operating expenses. Total non-interest expense decreased
$803,000, or 4.4%, during the first six months of 2010 compared to the same period in 2009. The
decrease for the quarter ended June 30, 2010 was $1,216,000, or 12.9%, as compared to the
comparable quarter in 2009. The Company experienced a decrease of $1,023,000, or 11.1%, in
non-interest expenses in the second quarter
of 2010 as compared to the first three months of 2010. The decrease in non-interest expenses is
attributable primarily to a decrease in employee salaries and benefits. Due to the current
economic conditions, the Company is uncertain as to the amount of bonus and profit sharing which
may be paid to its employees as a result of performance, if any, at the end of 2010. Because of
this uncertainty, the Company has chosen not to accrue for a bonus and profit sharing benefit
during the first six months of 2010. Substantially all of the reduction in salaries and employee
benefits results from this decision as the total number of full time equivalent employees is
roughly equally for the 2010 and 2009 periods. Other operating expenses for the six months ended
June 30, 2010 increased to $5,347,000 from $4,844,000 for the comparable period in 2009. Other
operating expenses increased $74,000, or 2.7%, during the quarter ended June 30, 2010 as compared
to the same period in 2009. The increase in other operating expenses for the six months ended June
30, 2009 is primarily attributable to increased FDIC insurance premiums and, to a more limited
extent, to an increase in costs associated with the disposal and maintenance of other real estate.
24
Income Taxes
The Companys income tax expense was $2,666,000 for the six months ended June 30, 2010 a
decrease of $1,503,000 over the comparable period in 2009. Income tax expense was $1,028,000 for
the quarter ended June 30, 2010, a decrease of $1,068,000 over the same period in 2009. The
percentage of income tax expense to net income before taxes was 38.6% for the six months ended June
30, 2010 and 39.1% for the six months ended June 30 2009, respectively, and 38.3% and 39.0% for the
quarters ended June 30, 2010 and 2009, respectively. The percentage of income tax expense to net
income before taxes was 38.8% for the first three months of 2010.
Financial Condition
Balance Sheet Summary
The Companys total assets increased 4.1% to $1,524,706,000 during the six months ended June
30, 2010 from $1,464,008,000 at December 31, 2009. Total assets decreased $2,271,000 during the
three-month period ended June 30, 2010 after increasing $62,969,000, or 4.3%, during the
three-month period ended March 31, 2010. Loans, net of allowance for loan losses, totaled
$1,077,112,000 at June 30, 2010, a 2.0% decrease compared to $1,098,614,000 at December 31, 2009.
Loans decreased $13,154,000, or 1.2%, during the three months ended June 30, 2010. Securities
increased $55,170,000, or 21.1%, to $316,987,000 at June 30, 2010 from $261,817,000 at December 31,
2009. Securities increased $13,440,000, or 4.4%, during the three months ended June 30, 2010.
Federal funds sold increased to $21,201,000 at June 30, 2010 from $5,450,000 at December 31, 2009,
resulting from a growth in deposits that exceeded loan growth.
Total liabilities increased by 4.3% to $1,381,287,000 at June 30, 2010 compared to
$1,324,451,000 at December 31, 2009. For the quarter ended June 30, 2010 total liabilities
decreased $4,045,000, or 0.3%. The increase in total liabilities for the six months ended June 30,
2010, was comprised primarily of a $58,065,000, or 4.4%, increase in total deposits, offset by a
decrease of $870,000, or 13.4%, in securities sold under repurchase agreements during the six
months ended June 30, 2010. Federal Home Loan Bank advances decreased $11,000 during the six
months ended June 30, 2010.
Non Performing Assets
The following schedule details selected information as to loans past due 90 days but still
accruing interest and non-accrual loans of the Company at June 30, 2010 and December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 |
|
|
December 31, 2009 |
|
|
|
Past Due |
|
|
|
|
|
|
Past Due |
|
|
|
|
|
|
90 Days |
|
|
Non-Accrual |
|
|
90 Days |
|
|
Non-Accrual |
|
|
|
(In Thousands) |
|
|
(In Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, and
agriculture |
|
$ |
96 |
|
|
|
545 |
|
|
$ |
1,291 |
|
|
|
100 |
|
Real estate-construction |
|
|
5 |
|
|
|
9,805 |
|
|
|
29 |
|
|
|
5,636 |
|
Real estate-mortgage |
|
|
3,811 |
|
|
|
14,130 |
|
|
|
2,435 |
|
|
|
19,750 |
|
Consumer |
|
|
105 |
|
|
|
|
|
|
|
314 |
|
|
|
28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,017 |
|
|
|
24,480 |
|
|
$ |
4,069 |
|
|
|
25,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
Generally, at the time a loan is placed on nonaccrual status, all interest accrued on the loan
in the current fiscal year is reversed from income, and all interest accrued and uncollected from
the prior year is charged off against the allowance for loan losses. Thereafter, interest on
nonaccrual loans is recognized as interest income only to the extent that cash is received and
future collection of principal is not in doubt. A nonaccrual loan may be restored to accruing
status when principal and interest are no longer past due and unpaid and future collection of
principal and interest on a timely basis is not in doubt. At June 30, 2010, the Company had
nonaccrual loans totaling $24,480,000 as compared to $25,514,000 at December 31, 2009. Non
accrual loans at March 31, 2010 were $29,640,000.
Non-performing loans, which included non-accrual loans and loans 90 days past due but still
accruing interest, at June 30, 2010 totaled $28,497,000, a decrease from $29,583,000 at December
31, 2009. The decrease in non-performing loans during the six months ended June 30, 2010 of
$1,086,000 is due primarily to an increase in non-performing real estate construction loans of
$4,145,000, offset by a decrease in non-performing real estate mortgage loans of $4,244,000, a
decrease in non-performing commercial loans of $750,000, and a decrease in non-performing consumer
loans of $237,000. The slight decrease in non-performing loans relates primarily to the foreclosure
on non-performing loans and the increase in other real estate. Management believes that it is
probable that it will incur losses on these loans but believes that these losses should not exceed
the amount in the allowance for loan losses already allocated to loan losses, unless there is
further deterioration of local real estate values.
Impaired loans and related allowance for loan loss amounts at June 30, 2010 and December 31,
2009 were as follows:
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
June 30,2010 |
|
|
December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
Impaired loans without a valuation
allowance |
|
$ |
14,696 |
|
|
|
23,982 |
|
Impaired loans with a valuation
allowance |
|
|
47,820 |
|
|
|
21,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans |
|
$ |
62,516 |
|
|
|
45,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation allowances related to
impaired loans |
|
$ |
9,119 |
|
|
|
5,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-accrual loans |
|
$ |
24,480 |
|
|
|
25,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans past due ninety days
or more and still accruing |
|
$ |
4,017 |
|
|
|
4,069 |
|
|
|
|
|
|
|
|
26
Other loans may be classified as impaired when the current net worth and financial capacity of
the borrower or of the collateral pledged, if any, is viewed as inadequate. Such loans generally
have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt, and if such
deficiencies are not corrected, there is a probability that the Company will sustain some loss. In
such cases, interest income continues to accrue as long as the loan does not meet the Companys
criteria for nonaccrual status.
The increase in impaired loans in the six months ended June 30, 2010 was primarily related to
the continued weakened residential and commercial real estate market in the Companys market areas.
Within this segment of the portfolio, the Company makes loans to, among other borrowers, home
builders and developers of land. These borrowers have continued to experience stress during the
current weak economic environment due to a combination of declining demand for residential real
estate and the resulting price and collateral value declines. In addition, housing starts in the
Companys market areas continue to slow. An extended recessionary period will likely cause the
Companys real estate mortgage loans, which include construction and land development loans, to
continue to underperform and may result in increased levels of impaired loans which may negatively
impact the Companys results of operations. The allowance for loan loss related to impaired loans
was measured based upon the estimated fair value of related collateral.
Loans are charged-off in the month when they are considered uncollectible. Net charge-offs
for the six months ended June 30, 2010 were $3,339,000 as compared to $1,543,000 for the six months
ended June 30, 2009, an increase of 116.4%. Net charge-offs for the quarter ended June 30, 2010
were $1,997,000. The increase in net charge-offs from the first quarter of 2010 to the second
quarter was the result of the Company charging off five loans totaling approximately $1.5 million.
The following table presents potential problem loans (including impaired loans) as of June 30,
2010 and December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
|
|
|
|
|
|
|
|
Total |
|
|
Mention |
|
|
Substandard |
|
|
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and
agricultural |
|
$ |
1,350 |
|
|
|
75 |
|
|
|
1,275 |
|
|
|
|
|
Real estate mortgage |
|
|
63,012 |
|
|
|
19,106 |
|
|
|
43,906 |
|
|
|
|
|
Real estate construction |
|
|
191 |
|
|
|
175 |
|
|
|
16 |
|
|
|
|
|
Consumer |
|
|
693 |
|
|
|
230 |
|
|
|
463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
65,246 |
|
|
|
19,586 |
|
|
|
45,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
|
|
|
|
|
|
|
|
Total |
|
|
Mention |
|
|
Substandard |
|
|
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and
agricultural |
|
$ |
3,622 |
|
|
|
2,821 |
|
|
|
801 |
|
|
|
|
|
Real estate mortgage |
|
|
57,901 |
|
|
|
10,998 |
|
|
|
46,903 |
|
|
|
|
|
Real estate construction |
|
|
273 |
|
|
|
273 |
|
|
|
|
|
|
|
|
|
Consumer |
|
|
904 |
|
|
|
266 |
|
|
|
638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
62,700 |
|
|
|
14,358 |
|
|
|
48,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The collateral values securing potential problem loans, including impaired loans, based on
estimates received by management, total approximately $82,899,000 ($80,318,000 related to real
property, $1,728,000 related to commercial loans, and $853,000 related to personal and other
loans). The internally classified loans have increased $2,546,000, or 4.1%, from $62,700,000 at
December, 31, 2009. Loans are listed as classified when information obtained about possible credit
problems of the borrower has prompted management to question the ability of the borrower to comply
with the repayment terms of the loan agreement. The loan classifications do not represent or
result from trends or uncertainties which management expects will materially impact future
operating results, liquidity or capital resources.
The largest category of internally graded loans at June 30, 2010 was real estate mortgage
loans. Included within this category are residential real estate construction and development
loans, including loans to home builders and developers of land, as well as one to four family
mortgage loans, and commercial real estate loans. Residential real estate and construction loans
that are internally classified totaling $62,203,000 and $58,174,000 at June 30, 2010 and December
31, 2009, respectively, consist of 229 and 217 individual loans, respectively, that have been
graded accordingly due to bankruptcies, inadequate cash flows and delinquencies. Borrowers within
this segment have continued to experience stress during the current weak economic environment due
to a combination of declining demand for residential real estate and the resulting price and
collateral declines. In addition, housing starts in the Companys market areas continue to slow.
An extended recessionary period will likely cause the Companys real estate mortgage loans to
continue to underperform and may result in increased levels of internally graded loans which, if
they continue to deteriorate, may negatively impact the Companys results of operation. Management
does not anticipate losses on these loans to exceed the amount already allocated to loan losses,
unless there is further deterioration of local real estate values.
The following detail provides a breakdown of the allocation of the allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 |
|
|
December 31, 2009 |
|
|
|
|
|
|
|
Percent of |
|
|
|
|
|
|
Percent of |
|
|
|
|
|
|
|
Loans In |
|
|
|
|
|
|
Loans In |
|
|
|
In |
|
|
Each Category |
|
|
In |
|
|
Each Category |
|
|
|
Thousands |
|
|
To Total Loans |
|
|
Thousands |
|
|
To Total Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and
agricultural |
|
$ |
1,182 |
|
|
|
5.6 |
% |
|
$ |
1,593 |
|
|
|
7.4 |
% |
Real estate construction |
|
|
4,429 |
|
|
|
16.6 |
|
|
|
3,412 |
|
|
|
17.8 |
|
Real estate mortgage |
|
|
14,629 |
|
|
|
71.9 |
|
|
|
10,252 |
|
|
|
69.1 |
|
Installment |
|
|
1,247 |
|
|
|
5.9 |
|
|
|
1,390 |
|
|
|
5.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
21,487 |
|
|
|
100.0 |
% |
|
$ |
16,647 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity and Asset Management
The Companys management seeks to maximize net interest income by managing the Companys
assets and liabilities within appropriate constraints on capital, liquidity and interest rate risk.
Liquidity is the ability to maintain sufficient cash levels necessary to fund operations, meet the
requirements of depositors and borrowers and fund attractive investment opportunities. Higher
levels of liquidity bear corresponding costs, measured in terms of lower yields on short-term, more
liquid earning assets and higher interest expense involved in extending liability maturities.
28
Liquid assets include cash and cash equivalents and securities and money market instruments
that will mature within one year. At June 30, 2010, the Companys liquid assets totaled
$170,541,000. The Company maintains a formal asset and liability management process to quantify,
monitor and control interest rate risk and to assist management in maintaining stability in the net
interest margin under varying interest rate environments. The Company accomplishes this process
through the development and implementation of lending, funding and pricing strategies designed to
maximize net interest income under varying interest rate environments subject to specific liquidity
and interest rate risk guidelines.
Analysis of rate sensitivity and rate gap analysis are the primary tools used to assess the
direction and magnitude of changes in net interest income resulting from changes in interest rates.
Included in the analysis are cash flows and maturities of financial instruments held for purposes
other than trading, changes in market conditions, loan volumes and pricing and deposit volume and
mix. These assumptions are inherently uncertain, and, as a result, net interest income can not be
precisely estimated nor can the impact of higher or lower interest rates on net interest income be
precisely predicted. Actual results will differ due to timing, magnitude and frequency of interest
rate changes and changes in market conditions and managements strategies, among other factors.
The Companys primary source of liquidity is a stable core deposit base. In addition loan
payments, investment security maturities and short-term borrowings provide a secondary source.
Interest rate risk (sensitivity) focuses on the earnings risk associated with changing
interest rates. Management seeks to maintain profitability in both immediate and long-term
earnings through funds management/interest rate risk management. The Companys rate sensitivity
position has an important impact on earnings. Senior management of the Company meets monthly to
analyze the rate sensitivity position of the Companys bank subsidiary. These meetings focus on
the spread between the Companys cost of funds and interest yields generated primarily through
loans and investments.
The Companys securities portfolio consists of earning assets that provide interest income.
For those securities classified as held-to-maturity, the Company has the ability and intent to hold
these securities to maturity or on a long-term basis. Securities classified as available-for-sale
include securities intended to be used as part of the Companys asset/liability strategy and/or
securities that may be sold in response to changes in interest rate, prepayment risk, the need or
desire to increase capital and similar
economic factors. Securities totaling approximately $1.8 million mature or will be subject to rate
adjustments within the next twelve months.
A secondary source of liquidity is the Companys loan portfolio. At June 30, 2010, loans
totaling approximately $298 million either will become due or will be subject to rate adjustments
within twelve months from the respective date. Continued emphasis will be placed on structuring
adjustable rate loans.
As for liabilities, certificates of deposit of $100,000 or greater totaling approximately $239
million will become due or reprice during the next twelve months. Historically, there has been no
significant reduction in immediately withdrawable accounts such as negotiable order of withdrawal
accounts, money market demand accounts, demand deposit accounts and regular savings accounts.
Management anticipates that there will be no significant withdrawals from these accounts in the
future.
Management believes that with present maturities, the anticipated growth in deposit base, and
the efforts of management in its asset/liability management program, liquidity will not pose a
problem in the near term future. At the present time there are no known trends or any known
commitments, demands, events or uncertainties that will result in or that are reasonably likely to
result in the Companys liquidity changing in a materially adverse way.
29
Off Balance Sheet Arrangements
At June 30, 2010, the Company had unfunded loan commitments outstanding of $173.1 million and
outstanding standby letters of credit of $17.6 million. Because these commitments generally have
fixed expiration dates and many will expire without being drawn upon, the total commitment level
does not necessarily represent future cash requirements. If needed to fund these outstanding
commitments, the Companys bank subsidiary has the ability to liquidate Federal funds sold or
securities available-for-sale or on a short-term basis to borrow and purchase Federal funds from
other financial institutions. Additionally, the Companys bank subsidiary could sell participations
in these or other loans to correspondent banks. As mentioned above, the Companys bank subsidiary
has been able to fund its ongoing liquidity needs through its stable core deposit base, loan
payments, its investment security maturities and short-term borrowings.
Capital Position and Dividends
At June 30, 2010, total stockholders equity was $143,419,000, or 9.4% of total assets, which
compares with $139,557,000, or 9.5% of total assets, at December 31, 2009. The dollar increase in
stockholders equity during the six months ended June 30, 2010 results from the Companys net
income of $4,240,000, proceeds from the issuance of common stock related to exercise of stock
options of $67,000, the net effect of a $625,000 unrealized gain on investment securities net of
applicable income taxes of $240,000, cash dividends declared of $2,144,000 of which $1,529,000 was
reinvested under the Companys dividend reinvestment plan, $225,000 relating to the repurchase of
5,969 shares of common stock by the Company, and $10,000 related to stock option compensation.
The Company and the Bank are subject to regulatory capital requirements administered by the
Federal Deposit Insurance Corporation, the Federal Reserve and the Tennessee Department of
Financial Institutions. Failure to meet minimum capital requirements can initiate certain
mandatory and possibly additional discretionary actions by regulators that, if undertaken, could
have a direct material effect on the Companys and Banks financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the
Bank must meet specific capital guidelines that involve quantitative measures of their assets,
liabilities and certain off-balance sheet items as calculated under regulatory accounting
practices. The capital amounts and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors. Prompt corrective action
provisions are not applicable to bank holding companies.
Quantitative measures established by regulation to ensure capital adequacy require the Company
and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and
Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1
capital (as defined) to average assets (as defined).
As of June 30, 2010 and December 31, 2009, the Company and the Bank are considered to be well
capitalized under regulatory definitions. To be categorized as well capitalized, an institution
must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth
in the following tables.
30
The Companys and the Banks actual capital amounts and ratios as of June 30, 2010 and
December 31, 2009, are also presented in the tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum To Be Well |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized Under |
|
|
|
|
|
|
|
|
|
|
|
Minimum Capital |
|
|
Prompt Corrective |
|
|
|
Actual |
|
|
Requirement |
|
|
Action Provision |
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
|
(dollars in thousands) |
|
|
June 30, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk
weighted assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
151,685 |
|
|
|
13.5 |
% |
|
$ |
89,887 |
|
|
|
8.0 |
% |
|
|
N/A |
|
|
|
N/A |
|
Wilson Bank |
|
|
147,891 |
|
|
|
13.1 |
|
|
|
90,315 |
|
|
|
8.0 |
|
|
$ |
112,894 |
|
|
|
10.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital to risk
weighted assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
137,995 |
|
|
|
12.3 |
|
|
|
44,876 |
|
|
|
4.0 |
|
|
|
N/A |
|
|
|
N/A |
|
Wilson Bank |
|
|
134,056 |
|
|
|
11.9 |
|
|
|
45,061 |
|
|
|
4.0 |
|
|
|
67,591 |
|
|
|
6.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital to
average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
137,995 |
|
|
|
9.1 |
|
|
|
60,657 |
|
|
|
4.0 |
|
|
|
N/A |
|
|
|
N/A |
|
Wilson Bank |
|
|
134,056 |
|
|
|
8.9 |
|
|
|
60,249 |
|
|
|
4.0 |
|
|
|
75,312 |
|
|
|
5.0 |
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum To Be Well |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized Under |
|
|
|
|
|
|
|
|
|
|
|
Minimum Capital |
|
|
Prompt Corrective |
|
|
|
Actual |
|
|
Requirement |
|
|
Action Provision |
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk
weighted assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
148,856 |
|
|
|
12.8 |
% |
|
$ |
93,035 |
|
|
|
8.0 |
% |
|
|
N/A |
|
|
|
N/A |
|
Wilson Bank |
|
|
148,518 |
|
|
|
12.8 |
|
|
|
92,824 |
|
|
|
8.0 |
|
|
$ |
116,030 |
|
|
|
10.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital to risk
weighted assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
134,320 |
|
|
|
11.6 |
|
|
|
46,317 |
|
|
|
4.0 |
|
|
|
N/A |
|
|
|
N/A |
|
Wilson Bank |
|
|
133,982 |
|
|
|
11.5 |
|
|
|
46,602 |
|
|
|
4.0 |
|
|
|
69,904 |
|
|
|
6.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital to
average assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
134,320 |
|
|
|
9.3 |
|
|
|
57,772 |
|
|
|
4.0 |
|
|
|
N/A |
|
|
|
N/A |
|
Wilson Bank |
|
|
133,982 |
|
|
|
9.3 |
|
|
|
57,627 |
|
|
|
4.0 |
|
|
|
72,033 |
|
|
|
5.0 |
|
Impact of Inflation
Although interest rates are significantly affected by inflation, the inflation rate is
immaterial when reviewing the Companys results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Companys primary component of market risk is interest rate volatility. Fluctuations in
interest rates will ultimately impact both the level of income and expense recorded on a large
portion of the Companys assets and liabilities, and the market value of all interest-earning
assets and interest-bearing liabilities, other than those which possess a short term to maturity.
Based upon the nature of the Companys operations, the Company is not subject to foreign currency
exchange or commodity price risk.
Interest rate risk (sensitivity) management focuses on the earnings risk associated with
changing interest rates. Management seeks to maintain profitability in both immediate and
long-term earnings through funds management/interest rate risk management. The Companys rate
sensitivity position has an important impact on earnings. Senior management of the Company meets
monthly to analyze the rate sensitivity position. These meetings focus on the spread between the
cost of funds and interest yields generated primarily through loans and investments.
There have been no material changes in reported market risks during the six months ended June
30, 2010.
32
Item 4. Controls and Procedures
The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934 (the Exchange Act), that are designated to
ensure that information required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and forms and that such
information is accumulated and communicated to the Companys management, including its Chief
Executive Officer and its Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. The Company carried out an evaluation, under the supervision and
with the participation of its management, including its Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of its disclosure controls and procedures
as of the end of the period covered by this report. Based on the evaluation of these disclosure
controls and procedures, its Chief Executive Officer and its Chief Financial Officer concluded that
the Companys disclosure controls and procedures were effective.
There were no changes in the Companys internal control over financial reporting during the
Companys fiscal quarter ended June 30, 2010 that have materially affected, or are reasonably
likely to materially affect, the Companys internal control over financial reporting.
33
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 1A. RISK FACTORS
Except as set forth below, there were no material changes to the Companys risk factors
as previously disclosed in Part I, Item 1A, of the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2009:
The impact on our future results of operations and financial condition of the recently enacted
Dodd-Frank Wall Street Reform and Consumer Protection Act is not yet known.
On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Reform Act) into law. The Reform Act significantly reforms the structure of
federal financial regulation and enacts new substantive requirements and regulations that apply to
a broad range of financial market participants, affecting every segment of the financial services
industry, which will alter the way we conduct certain aspects of our business and may restrict our
ability to compete, increase costs and reduce revenues. The Reform Act, among other things,
strengthens oversight and regulation of banks and nonbank financial institutions, enhances
regulation of over-the-counter derivatives and asset-backed securities, and establishes new rules
for credit rating agencies. The Reform Act may have a significant and negative impact on our
earnings through fee reductions, higher costs (from both a regulatory and an implementation
perspective) and new restrictions on our operations. The ultimate impact of the Reform Act on our
operations will be dependent on regulatory interpretation and rulemaking, as well as the success of
our actions to mitigate the negative impact of such rules and regulations. The full scope and
effect of the Reform Act on the Company and the Bank may not be known for several years.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) None
(b) Not applicable
(c) None
Item 3. DEFAULTS UPON SENIOR SECURITIES
(a) None
(b) Not applicable
Item 4. (REMOVED AND RESERVED)
Item 5. OTHER INFORMATION
None
34
Item 6. EXHIBITS
|
|
|
|
|
Exhibits
|
|
|
|
|
31.1 |
|
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
31.2 |
|
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
32.1 |
|
|
Certification of the Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
32.2 |
|
|
Certification of the Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
WILSON BANK HOLDING COMPANY
(Registrant)
|
|
|
|
|
|
|
|
DATE: August 9, 2010
|
|
/s/ Randall Clemons |
|
|
|
|
|
|
|
|
|
Randall Clemons |
|
|
|
|
President and Chief Executive Officer |
|
|
|
|
|
|
|
DATE: August 9, 2010
|
|
/s/ Lisa Pominski |
|
|
|
|
|
|
|
|
|
Lisa Pominski |
|
|
|
|
Senior Vice President & Chief Financial Officer |
|
|
36