Maryland
|
52-1652138
|
|
(State
of other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
3035 Leonardtown Road, Waldorf,
Maryland
|
20601
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large Accelerated Filer ¨
|
Accelerated Filer o
|
|
Non-accelerated Filer ¨
|
Smaller Reporting Company x
|
|
(Do not check if a smaller reporting company)
|
Page
|
|
PART
I - FINANCIAL INFORMATION
|
|
Item
1 – Financial Statements (Unaudited)
|
|
Consolidated
Balance Sheets – September 30, 2009
and December 31, 2008 |
3
|
Consolidated
Statements of Income and Comprehensive Income -
Three and Nine Months Ended September 30, 2009 and 2008 |
4-5
|
Consolidated
Statements of Cash Flows - Nine Months
Ended September 30, 2009 and 2008 |
6-7
|
Notes
to Consolidated Financial Statements
|
8-17
|
Item
2 – Management’s Discussion and Analysis of Financial Condition
and Results of Operations |
18-28
|
Item
3 – Quantitative and Qualitative Disclosures about Market
Risk
|
28
|
Item
4 – Controls and Procedures
|
28
|
PART
II - OTHER INFORMATION
|
|
Item
1 – Legal Proceedings
|
29
|
Item
1A – Risk Factors
|
29
|
Item
2 – Unregistered Sales of Equity Securities and Use of
Proceeds
|
29
|
Item
3 – Defaults Upon Senior Securities
|
29
|
Item
4T – Submission of Matters to a Vote of Security
Holders
|
29
|
Item
5 – Other Information
|
29
|
Item
6 – Exhibits
|
29
|
SIGNATURES
|
30
|
September 30, 2009
|
December 31, 2008
|
|||||||
Assets
|
||||||||
Cash
and due from banks
|
$ | 20,116,141 | $ | 5,071,614 | ||||
Federal
Funds sold
|
7,610,000 | 989,754 | ||||||
Interest-bearing
deposits with banks
|
946,009 | 8,413,164 | ||||||
Securities
available for sale, at fair value
|
47,507,201 | 14,221,674 | ||||||
Securities
held to maturity, at amortized cost
|
95,516,261 | 108,712,281 | ||||||
Federal
Home Loan Bank and Federal Reserve Bank stock - at cost
|
6,935,500 | 6,453,000 | ||||||
Loans
held for sale
|
772,877 | - | ||||||
Loans
receivable - net of allowance for loan losses of $6,791,908 and
$5,145,673, respectively
|
586,487,319 | 542,977,138 | ||||||
Premises
and equipment, net
|
12,189,059 | 12,235,999 | ||||||
Foreclosed
real estate
|
922,934 | - | ||||||
Accrued
interest receivable
|
2,958,759 | 2,965,813 | ||||||
Investment
in bank owned life insurance
|
10,823,864 | 10,526,286 | ||||||
Other
assets
|
5,128,468 | 4,118,187 | ||||||
Total
Assets
|
$ | 797,914,392 | $ | 716,684,910 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Deposits
|
||||||||
Non-interest-bearing
deposits
|
$ | 57,793,984 | $ | 50,642,273 | ||||
Interest-bearing
deposits
|
569,201,810 | 474,525,293 | ||||||
Total
deposits
|
626,995,794 | 525,167,566 | ||||||
Short-term
borrowings
|
193,749 | 1,522,367 | ||||||
Long-term
debt
|
85,680,745 | 104,963,428 | ||||||
Guaranteed
preferred beneficial interest in junior subordinated
debentures
|
12,000,000 | 12,000,000 | ||||||
Accrued
expenses and other liabilities
|
5,557,022 | 5,917,130 | ||||||
Total
Liabilities
|
730,427,310 | 649,570,491 | ||||||
Stockholders'
Equity
|
||||||||
Fixed
Rate Cumulative Perpetual Preferred Stock, Series A - par value $1,000;
authorized 15,540; issued 15,540
|
15,540,000 | 15,540,000 | ||||||
Fixed
Rate Cumulative Perpetual Preferred Stock, Series B - par value $1,000;
authorized 777; issued 777
|
777,000 | 777,000 | ||||||
Common
stock - par value $.01; authorized - 15,000,000 shares; issued 2,967,680
and 2,947,759 shares, respectively
|
29,677 | 29,478 | ||||||
Additional
paid in capital
|
16,694,565 | 16,517,649 | ||||||
Retained
earnings
|
34,698,229 | 34,280,719 | ||||||
Accumulated
other comprehensive gain
|
52,094 | 229,848 | ||||||
Unearned
ESOP shares
|
(304,483 | ) | (260,275 | ) | ||||
Total
Stockholders' Equity
|
67,487,082 | 67,114,419 | ||||||
Total
Liabilities and Stockholders' Equity
|
$ | 797,914,392 | $ | 716,684,910 |
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
INTEREST
INCOME:
|
||||||||||||||||
Interest
and fees on loans
|
$ | 8,324,971 | $ | 7,990,645 | $ | 24,243,433 | $ | 23,894,892 | ||||||||
Taxable
interest and dividends on investment securities
|
1,286,507 | 1,318,151 | 3,914,458 | 4,080,686 | ||||||||||||
Interest
on deposits with banks
|
9,017 | 13,291 | 16,045 | 73,563 | ||||||||||||
Total
interest income
|
9,620,495 | 9,322,087 | 28,173,936 | 28,049,141 | ||||||||||||
INTEREST
EXPENSE:
|
||||||||||||||||
Interest
on deposits
|
3,076,512 | 3,233,917 | 9,375,353 | 9,759,618 | ||||||||||||
Interest
on short-term borrowings
|
- | 19,917 | 29,800 | 134,344 | ||||||||||||
Interest
on long-term borrowings
|
1,001,507 | 1,239,381 | 3,112,968 | 3,651,628 | ||||||||||||
Total
interest expenses
|
4,078,019 | 4,493,215 | 12,518,121 | 13,545,590 | ||||||||||||
NET
INTEREST INCOME
|
5,542,476 | 4,828,872 | 15,655,815 | 14,503,551 | ||||||||||||
PROVISION
FOR LOAN LOSSES
|
515,555 | 462,622 | 1,977,928 | 617,367 | ||||||||||||
NET
INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES
|
$ | 5,026,921 | $ | 4,366,250 | $ | 13,677,887 | $ | 13,886,184 |
Three Months Ended September&
#160;30,
|
Nine Months Ended September&#
160;30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
NONINTEREST
INCOME:
|
||||||||||||||||
Recognition
of other than temporary decline in value of investment
securities
|
$ | (458,530 | ) | $ | - | $ | (577,274 | ) | $ | - | ||||||
Less:
portion recorded as comprehensive income
|
410,530 | - | 410,530 | - | ||||||||||||
Impairment
loss on investment securities, net
|
48,000 | - | (166,744 | ) | - | |||||||||||
Loan
appraisal, credit, and miscellaneous charges
|
104,219 | 129,107 | 465,111 |
363,658
|
||||||||||||
Gain
on sale of loans held for sale
|
72,862 | - | 241,236 | - | ||||||||||||
Gain
on asset sale
|
- | - | - | 2,041 | ||||||||||||
Income
from bank owned life insurance
|
96,105 | 101,994 | 297,578 | 388,483 | ||||||||||||
Loss
on sale of investment securities
|
- | - | (12,863 | ) | - | |||||||||||
Service
charges
|
443,161 | 401,204 | 1,212,257 | 1,224,162 | ||||||||||||
Total
noninterest income
|
668,347 | 632,305 | 2,036,575 | 1,978,344 | ||||||||||||
NONINTEREST
EXPENSE:
|
||||||||||||||||
Salary
and employee benefits
|
2,284,641 | 2,052,810 | 6,536,475 | 6,174,825 | ||||||||||||
Occupancy
|
399,648 | 416,723 | 1,270,396 | 1,214,352 | ||||||||||||
Advertising
|
144,854 | 160,281 | 374,816 | 431,653 | ||||||||||||
Data
processing
|
245,974 | 216,283 | 682,594 | 477,274 | ||||||||||||
Legal
and professional fees
|
166,110 | 98,978 | 526,018 | 437,454 | ||||||||||||
Depreciation
of furniture, fixtures,
and equipment
|
154,777 | 141,859 | 453,882 | 413,139 | ||||||||||||
Telephone
communications
|
33,698 | 16,898 | 101,871 | 59,375 | ||||||||||||
Office
supplies
|
37,076 | 32,140 | 124,461 | 106,615 | ||||||||||||
FDIC
Insurance
|
242,332 | 71,692 | 875,943 | 195,946 | ||||||||||||
Other
|
557,942 | 416,486 | 1,413,431 | 1,259,280 | ||||||||||||
Total
noninterest expenses
|
4,267,052 | 3,624,150 | 12,359,887 | 10,769,913 | ||||||||||||
INCOME
BEFORE INCOME TAXES
|
1,428,216 | 1,374,405 | 3,354,575 | 5,094,615 | ||||||||||||
Income
tax expense
|
560,640 | 490,236 | 1,194,945 | 1,767,761 | ||||||||||||
NET
INCOME
|
867,576 | 884,169 | 2,159,630 | 3,326,854 | ||||||||||||
OTHER
COMPREHENSIVE INCOME NET OF TAX
|
||||||||||||||||
Net
unrealized holding gains arising during period
|
100,808 | 109,500 | 93,196 | 35,912 | ||||||||||||
Other-than-temporary
impairment on securities held-to-maturity
|
(270,950 | ) | - | (270,950 | ) | - | ||||||||||
COMPREHENSIVE
INCOME
|
$ | 697,434 | $ | 993,669 | $ | 1,981,876 | $ | 3,362,766 | ||||||||
EARNINGS
PER COMMON SHARE
|
||||||||||||||||
Basic
|
$ | 0.22 | $ | 0.30 | $ | 0.52 | $ | 1.13 | ||||||||
Diluted
|
0.22 | 0.29 | 0.51 | 1.09 | ||||||||||||
Dividends
paid per common share
|
- | - | 0.40 | 0.40 |
Nine Months Ended September 30,
|
||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income
|
$ | 2,159,630 | $ | 3,326,944 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Provision
for loan losses
|
1,977,928 | 617,367 | ||||||
Gain
on sale of asset
|
- | (2,041 | ) | |||||
Loss
on sales of investment securities
|
12,863 | - | ||||||
Other
than temporary decline in market value of investment
securities
|
166,744 | - | ||||||
Depreciation
and amortization
|
875,337 | 789,628 | ||||||
Net
amortization of premium/discount on investment securities
|
(134,621 | ) | (41,014 | ) | ||||
Increase
in cash surrender of bank owned life insurance
|
(297,578 | ) | (299,345 | ) | ||||
Deferred
income tax benefit
|
(1,266,083 | ) | (627,033 | ) | ||||
Decrease
in accrued interest receivable
|
7,054 | 56,203 | ||||||
Decrease
(increase) in deferred loan fees
|
349 | (78,784 | ) | |||||
(Increase)
decrease in accounts payable, accrued expenses, other
liabilities
|
(360,108 | ) | 677,897 | |||||
Decrease
in other assets
|
347,374 | 77,865 | ||||||
Loans
originated for resale
|
(19,238,916 | ) | - | |||||
Proceeds
from sale of loans held for sale
|
18,412,708 | - | ||||||
Gain
on sales of loans held for sale
|
(241,236 | ) | - | |||||
Net
cash provided by operating activities
|
2,421,445 | 4,497,687 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase
of investment securities available for sale
|
(35,245,124 | ) | (4,973,823 | ) | ||||
Proceeds
from sale, redemption or principal payments of investment securities
available for sale
|
2,117,244 | 253,765 | ||||||
Purchase
of investment securities held to maturity
|
(8,377,442 | ) | (5,644,733 | ) | ||||
Proceeds
from maturities or principal payments of investment securities held to
maturity
|
21,101,505 | 7,323,180 | ||||||
Net
increase in FHLB and Federal Reserve stock
|
(482,500 | ) | (893,800 | ) | ||||
Loans
originated or acquired
|
(190,835,961 | ) | (174,963,324 | ) | ||||
Principal
collected on loans
|
144,719,136 | 114,083,214 | ||||||
Proceeds
from disposal of premises and equipment
|
- | 2,041 | ||||||
Purchase
of premises and equipment
|
(828,397 | ) | (3,516,067 | ) | ||||
|
||||||||
Net
cash used in investing activities
|
(67,831,539 | ) | (68,329,547 | ) |
Nine Months Ended September 30,
|
||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net
increase in deposits
|
$ | 101,828,228 | $ | 57,768,858 | ||||
Proceeds
from long-term borrowings
|
750,000 | 24,000,000 | ||||||
Payments
of long-term borrowings
|
(20,032,683 | ) | (5,031,401 | ) | ||||
Net
decrease in short-term borrowings
|
(1,328,618 | ) | (739,082 | ) | ||||
Exercise
of stock options
|
162,143 | 868,684 | ||||||
Excess
tax benefits on stock-based compensation
|
14,947 | 51,880 | ||||||
Net
change in unearned ESOP shares
|
(44,183 | ) | 156,373 | |||||
Dividends
Paid
|
(1,742,122 | ) | (1,184,324 | ) | ||||
Redemption
of common stock
|
- | (889,650 | ) | |||||
Net
cash provided by financing activities
|
79,607,712 | 75,001,338 | ||||||
INCREASE IN
CASH AND CASH EQUIVALENTS
|
14,197,618 | 11,169,478 | ||||||
CASH
AND CASH EQUIVALENTS - JANUARY 1
|
14,474,532 | 11,426,637 | ||||||
CASH
AND CASH EQUIVALENTS - SEPTEMBER 30
|
$ | 28,672,150 | $ | 22,596,115 | ||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid during the six months for:
|
||||||||
Interest
|
$ | 13,566,054 | $ | 13,069,941 | ||||
Income
taxes
|
$ | 1,776,676 | $ | 2,223,625 | ||||
SUPPLEMENTAL
SCHEDULE OF NON-CASH OPERATING ACTIVITIES:
|
||||||||
Issuance
of common stock for payment of compensation
|
$ | 99,980 | $ | 140,088 | ||||
Transfer
of loans to OREO
|
$ | 922,934 | $ | - |
|
1.
|
BASIS
OF PRESENTATION
|
|
2.
|
NATURE
OF BUSINESS
|
|
3.
|
FAIR
VALUE MEASUREMENTS
|
Fair Value Measurements
|
||||||||||||||||
At September 30, 2009
|
||||||||||||||||
Using:
|
||||||||||||||||
Fair Value
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Description
of Asset
|
||||||||||||||||
Available-for-Sale
Securities
|
$ | 47,507,201 | $ | - | $ | 47,507,201 | $ | - | ||||||||
Loans
Held for Sale
|
$ | 772,877 | $ | - | $ | 772,877 | $ | - |
Fair Value
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Description
of Asset
|
||||||||||||||||
Impaired
loans
|
$ | 4,408,815 | $ | - | $ | 4,408,815 | $ | - | ||||||||
Held-to-Maturity
Security
|
$ | 744,610 | $ | - | $ | 744,610 | $ | - |
|
4.
|
INCOME
TAXES
|
|
5.
|
EARNINGS
PER SHARE
|
|
Basic
earnings per common share are computed by dividing net income less
dividends on preferred shares, by the weighted average number of common
shares outstanding during the period. Diluted net income available to
common shareholders is divided by the weighted average number of common
shares outstanding during the period, including any potential dilutive
common shares outstanding, such as options and warrants. As of September
30, 2009 and 2008, there were 216,804 and 102,524 shares,
respectively, excluded from the diluted net income per share
computation because inclusion of these options would be
anti-dilutive. Basic and diluted earnings per share, have been
computed based on weighted-average common and common equivalent shares
outstanding as follows:
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
Income
|
$ | 867,576 | $ | 884,169 | $ | 2,159,630 | $ | 3,326,854 | ||||||||
Less:
Dividends payable on preferred stock
|
(211,733 | ) | - | (635,198 | ) | - | ||||||||||
Net
income available to common shareholders
|
$ | 655,843 | $ | 884,169 | $ | 1,524,432 | $ | 3,326,854 | ||||||||
Average
number of common shares outstanding
|
2,965,332 | 2,948,727 | 2,958,336 | 2,942,129 | ||||||||||||
Effect
of dilutive options
|
27,802 | 112,496 | 31,708 | 123,905 | ||||||||||||
Average
number of shares used to calculate earnings per share
outstanding
|
2,993,134 | 3,061,223 | 2,990,044 | 3,066,034 |
6.
|
STOCK-BASED
COMPENSATION
|
Weighted
|
Weighted-Average
|
|||||||||||||
Average
|
Aggregate
|
Contractual Life
|
||||||||||||
Exercise
|
Intrinsic
|
Remaining In
|
||||||||||||
Shares
|
Price
|
Value
|
Years
|
|||||||||||
Outstanding
at December 31, 2008
|
353,217 | $ | 15.49 | |||||||||||
Granted
at fair value
|
- | - | ||||||||||||
Exercised
|
(12,186 | ) | 7.88 | $ | 43,579 | |||||||||
Expired
|
- | - | ||||||||||||
Forfeited
|
(1 | ) | 7.88 | |||||||||||
Outstanding
at September 30, 2009
|
341,030 | $ | 15.77 | $ | 288,169 |
1.7
|
||||||||
Exercisable
at September 30, 2009
|
341,030 | $ | 15.77 | $ | 288,169 |
1.7
|
Number
|
Weighted Average
Grant
|
|||||||
of Shares
|
Date Fair value
|
|||||||
Nonvested
at January 1, 2009
|
- | $ | - | |||||
Granted
|
8,000 | 11.90 | ||||||
Vested
|
(2,640 | ) | 11.90 | |||||
Cancelled
|
- | - | ||||||
Nonvested
at September 30, 2009
|
5,360 | $ | 11.90 |
|
7.
|
GUARANTEED PREFERRED BENEFICIAL
INTEREST IN JUNIOR SUBORDINATED
DEBENTURES
|
|
8.
|
PREFERRED
STOCK
|
|
9.
|
SECURITIES
|
September 30, 2009
|
||||||||||||||||
Amortized
|
Gross
Unrealized
|
Gross
Unrealized
|
Estimated
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||||||||
Securities
available for sale
|
||||||||||||||||
Asset-backed
securities issued by GSEs
|
$ | 43,446,294 | $ | 520,033 | $ | 169,222 | $ | 43,797,105 | ||||||||
Corporate
equity securities
|
37,310 | 1,824 | 130 | 39,004 | ||||||||||||
Bond
mutual funds
|
3,534,135 | 136,957 | - | 3,671,092 | ||||||||||||
Total
securities available for sale
|
$ | 47,017,739 | $ | 658,814 | $ | 169,352 | $ | 47,507,201 | ||||||||
Securities
held-to-maturity
|
||||||||||||||||
Asset-backed
securities issued by:
|
||||||||||||||||
GSEs
|
$ | 75,494,712 | $ | 1,771,070 | $ | 139,940 | $ | 77,125,842 | ||||||||
Other
|
20,011,521 | 8,912 | 4,152,522 | 15,867,911 | ||||||||||||
Total
debt securities held-to-maturity
|
95,506,233 | 1,779,982 | 4,292,462 | 92,993,753 | ||||||||||||
U.S.
Government obligations
|
- | - | - | - | ||||||||||||
Other
investments
|
10,028 | - | - | 10,028 | ||||||||||||
Total
securities held-to-maturity
|
$ | 95,516,261 | $ | 1,779,982 | $ | 4,292,462 | $ | 93,003,781 |
December 31, 2008
|
||||||||||||||||
Amortized
|
Gross
Unrealized
|
Gross
Unrealized
|
Estimated
|
|||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||||||||
Securities
available for sale
|
||||||||||||||||
Asset-backed
securities issued by GSEs
|
$ | 10,214,278 | $ | 298,224 | $ | 7,544 | $ | 10,504,958 | ||||||||
Corporate
equity securities
|
156,054 | 912 | 237 | 156,729 | ||||||||||||
Bond
mutual funds
|
3,503,086 | 56,901 | - | 3,559,987 | ||||||||||||
Total
securities available for sale
|
$ | 13,873,418 | $ | 356,037 | $ | 7,781 | $ | 14,221,674 | ||||||||
Securities
held-to-maturity
|
||||||||||||||||
Asset-backed
securities issued by:
|
||||||||||||||||
GSEs
|
$ | 82,544,538 | $ | 337,224 | $ | 931,832 | $ | 81,949,930 | ||||||||
Other
|
25,150,396 | - | 5,137,129 | 20,013,266 | ||||||||||||
Total
debt securities held-to-maturity
|
107,694,934 | 337,224 | 6,068,961 | 101,963,196 | ||||||||||||
U.S.
Government obligations
|
999,908 | 92 | - | 1,000,000 | ||||||||||||
Other
investments
|
17,439 | - | - | 17,439 | ||||||||||||
Total
securities held-to-maturity
|
$ | 108,712,281 | $ | 337,316 | $ | 6,068,961 | $ | 102,980,635 |
Continuous unrealized losses existing for
|
||||||||||||||||
Less Than 12
|
More Than 12
|
Total unrealized
|
||||||||||||||
Fair Value
|
Months
|
Months
|
Losses
|
|||||||||||||
Asset-backed
securities issued by GSE's:
|
$ | 26,597,102 | $ | 169,222 | $ | - | $ | 169,222 | ||||||||
Corporate
Equity Securities
|
180 | 130 | - | 130 | ||||||||||||
$ | 26,597,282 | $ | 169,352 | $ | - | $ | 169,352 |
Continuous unrealized losses existing for
|
||||||||||||||||
Less Than 12
|
More Than 12
|
Total unrealized
|
||||||||||||||
Fair Value
|
Months
|
Months
|
Losses
|
|||||||||||||
Asset-backed
securities issued by GSE's:
|
$ | 18,643,898 | $ | 87,411 | $ | 52,529 | $ | 139,940 | ||||||||
Asset-backed
securities issued by other
|
15,056,973 | - | 4,563,052 | 4,563,052 | ||||||||||||
$ | 33,700,871 | $ | 87,411 | $ | 4,615,580 | $ | 4,702,992 |
10.
|
NEW
ACCOUNTING STANDARDS
|
11.
|
FAIR
VALUE OF FINANCIAL INSTRUMENTS
|
September 30, 2009
|
December 31, 2008
|
|||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
Amount
|
Fair Value
|
Amount
|
Fair Value
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 28,672,150 | $ | 28,672,150 | $ | 14,474,532 | $ | 14,474,532 | ||||||||
Investment
securities and stock in FHLB and FRB
|
150,369,492 | 147,445,483 | 129,038,699 | 123,655,310 | ||||||||||||
Loans
receivable, net
|
587,260,196 | 597,762,000 | 542,977,138 | 585,899,804 | ||||||||||||
Liabilities:
|
||||||||||||||||
Non-interest
bearing demand, Savings, NOW, and money market accounts
|
249,758,528 | 249,758,528 | 205,126,970 | 205,483,312 | ||||||||||||
Time
certificates
|
377,237,266 | 381,667,000 | 320,040,596 | 324,199,698 | ||||||||||||
Short
and Long-term debt and other borrowed funds
|
85,874,494 | 83,219,000 | 106,485,795 | 107,628,766 | ||||||||||||
Guaranteed
preferred beneficial interest in junior subordinated
securities
|
12,000,000 | 3,083,307 | 12,000,000 | 11,520,000 |
SELECTED FINANCIAL DATA
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Condensed
Income Statement
|
||||||||||||||||
Interest
Income
|
$ | 9,620,495 | $ | 9,322,087 | $ | 28,173,936 | $ | 28,049,141 | ||||||||
Interest
Expense
|
4,078,019 | 4,493,215 | 12,518,121 | 13,545,590 | ||||||||||||
Net
Interest Income
|
5,542,476 | 4,828,872 | 15,655,815 | 14,503,551 | ||||||||||||
Provision
for Loan Loss
|
515,555 | 462,622 | 1,977,928 | 617,367 | ||||||||||||
Noninterest
Income
|
668,347 | 632,305 | 2,036,575 | 1,978,344 | ||||||||||||
Noninterest
Expense
|
4,267,052 | 3,624,150 | 12,359,887 | 10,769,913 | ||||||||||||
Income
Before Income Taxes
|
1,428,216 | 1,374,405 | 3,354,575 | 5,094,615 | ||||||||||||
Income
Taxes
|
560,640 | 490,236 | 1,194,945 | 1,767,761 | ||||||||||||
Net
Income
|
867,576 | 884,169 | 2,159,630 | 3,326,944 | ||||||||||||
Per
Common Share
|
||||||||||||||||
Basic
Earnings
|
$ | 0.22 | $ | 0.30 | $ | 0.52 | $ | 1.13 | ||||||||
Diluted
Earnings
|
$ | 0.22 | $ | 0.29 | $ | 0.51 | $ | 1.09 | ||||||||
Book
Value
|
$ | 17.24 | $ | 17.26 | $ | 17.24 | $ | 17.26 |
Nine Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2009
|
2008
|
$ Change
|
%Change
|
|||||||||||||
Interest
income
|
$ | 28,173,936 | $ | 28,049,141 | $ | 124,795 | 0.44 | % | ||||||||
Interest
expense
|
12,518,121 | 13,545,590 | (1,027,469 | ) | (7.59 | )% | ||||||||||
Net
interest income
|
15,655,815 | 14,503,551 | 1,152,264 | 7.94 | % | |||||||||||
Provision
for loan losses
|
1,977,928 | 617,367 | 1,360,561 | 220.38 | % |
|
Nine Months Ended September 30,
|
|||||||||||||||
NONINTEREST INCOME:
|
2009
|
2008
|
$ Change
|
% Change
|
||||||||||||
Recognition
of other than temporary decline in
|
||||||||||||||||
in
value of investment securities
|
$ | (577,274 | ) | $ | - | $ | (577,274 | ) | - | |||||||
Less:
Portion recorded as comprehensive income
|
410,530 | - | 410,530 | - | ||||||||||||
Impairment
loss on investment securities, net
|
(166,744 | ) | - | (166,744 | ) | - | ||||||||||
Loan
appraisal, credit, and miscellaneous charges
|
465,111 | 363,658 | 101,453 | 27.90 | % | |||||||||||
Gain
on sale of loans held for sale
|
241,236 | - | 241,236 | - | ||||||||||||
Gain
on asset sale
|
- | 2,041 | (2,041 | ) | - | |||||||||||
Income
from bank owned life insurance
|
297,578 | 388,483 | (90,905 | ) | (23.40 | )% | ||||||||||
Loss
on sale of investment securities
|
(12,863 | ) | - | (12,863 | ) | - | ||||||||||
Service
charges
|
1,212,257 | 1,224,162 | (11,905 | ) | (0.97 | )% | ||||||||||
Total
noninterest income
|
$ | 2,036,575 | $ | 1,978,344 | $ | 58,231 | 2.94 | % |
Nine Months Ended September 30,
|
||||||||||||||||
NONINTEREST EXPENSE:
|
2009
|
2008
|
$ Change
|
% Change
|
||||||||||||
Salary
and employee benefits
|
$ | 6,536,475 | $ | 6,174,825 | $ | 361,650 | 5.86 | % | ||||||||
Occupancy
|
1,270,396 | 1,214,352 | 56,044 | 4.62 | % | |||||||||||
Advertising
|
374,816 | 431,653 | (56,837 | ) | (13.17 | )% | ||||||||||
Data
processing
|
682,594 | 477,274 | 205,320 | 43.02 | % | |||||||||||
Legal
and professional fees
|
526,018 | 437,454 | 88,564 | 20.25 | % | |||||||||||
Depreciation
of furniture, fixtures, and equipment
|
453,882 | 413,139 | 40,743 | 9.86 | % | |||||||||||
Telephone
communications
|
101,871 | 59,375 | 42,496 | 71.57 | % | |||||||||||
Office
supplies
|
124,461 | 106,615 | 17,846 | 16.74 | % | |||||||||||
FDIC
Insurance
|
875,943 | 195,946 | 679,997 | 347.03 | % | |||||||||||
Other
|
1,413,431 | 1,259,280 | 154,151 | 12.24 | % | |||||||||||
Total
noninterest expenses
|
$ | 12,359,887 | $ | 10,769,913 | $ | 1,589,974 | 14.76 | % |
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2009
|
2008
|
$ Change
|
% Change
|
|||||||||||||
Interest
income
|
$ | 9,620,495 | $ | 9,322,087 | $ | 298,408 | 3.20 | % | ||||||||
Interest
expense
|
4,078,019 | 4,493,215 | (415,196 | ) | (9.24 | )% | ||||||||||
Net
interest income
|
5,542,476 | 4,828,872 | 713,604 | 14.78 | % | |||||||||||
Provision
for loan losses
|
515,555 | 462,622 | 52,933 | 11.44 | % |
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2009
|
2008
|
$ Change
|
% Change
|
|||||||||||||
NONINTEREST
INCOME:
|
||||||||||||||||
Recognition
of other than temporary decline in
|
||||||||||||||||
value
of investment securities
|
$ | (458,530 | ) | $ | - | $ | (458,530 | ) | - | |||||||
Less:
Portion recorded as comprehensive income
|
410,530 | - | 410,530 | - | ||||||||||||
Impairment
loss on investment securities, net
|
(48,000 | ) | (48,000 | ) | - | |||||||||||
Loan
appraisal, credit, and
|
||||||||||||||||
miscellaneous
charges
|
104,219 | 129,107 | (24,888 | ) | (19.28 | )% | ||||||||||
Gain
on sale of loans held for sale
|
72,862 | - | 72,862 | - | ||||||||||||
Income
from bank owned
|
||||||||||||||||
life
insurance
|
96,105 | 101,994 | (5,889 | ) | (5.77 | )% | ||||||||||
Service
charges
|
443,161 | 401,204 | 41,957 | 10.46 | % | |||||||||||
Total
noninterest income
|
$ | 668,347 | $ | 632,305 | $ | 36,042 | 5.70 | % |
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2009
|
2008
|
$ Change
|
% Change
|
|||||||||||||
NONINTEREST
EXPENSE:
|
||||||||||||||||
Salary
and employee benefits
|
$ | 2,284,641 | $ | 2,052,810 | $ | 231,831 | 11.29 | % | ||||||||
Occupancy
|
399,648 | 416,723 | (17,075 | ) | (4.10 | )% | ||||||||||
Advertising
|
144,854 | 160,281 | (15,427 | ) | (9.62 | )% | ||||||||||
Data
processing
|
245,974 | 216,283 | 29,691 | 13.73 | % | |||||||||||
Legal
and professional fees
|
166,110 | 98,978 | 67,132 | 67.83 | % | |||||||||||
Depreciation
of furniture, fixtures, and equipment
|
154,777 | 141,859 | 12,918 | 9.11 | % | |||||||||||
Telephone
communications
|
33,698 | 16,898 | 16,800 | 99.42 | % | |||||||||||
Office
supplies
|
37,076 | 32,140 | 4,936 | 15.36 | % | |||||||||||
FDIC
Insurance
|
242,332 | 71,692 | 170,640 | 238.02 | % | |||||||||||
Other
|
557,942 | 416,486 | 141,456 | 33.96 | % | |||||||||||
Total
noninterest expenses
|
$ | 4,267,052 | $ | 3,624,150 | $ | 642,902 | 17.74 | % |
September 30, 2009
|
December 31, 2008
|
$ Change
|
% Change
|
|||||||||||||
Assets
|
||||||||||||||||
Cash
and due from banks
|
$ | 20,116,141 | $ | 5,071,614 | $ | 15,044,527 | 296.64 | % | ||||||||
Federal
Funds sold
|
7,610,000 | 989,754 | 6,620,246 | 668.88 | % | |||||||||||
Interest-bearing
deposits with banks
|
946,009 | 8,413,164 | (7,467,155 | ) | (88.76 | )% | ||||||||||
Securities
available for sale, at fair value
|
47,507,201 | 14,221,674 | 33,285,527 | 234.05 | % | |||||||||||
Securities
held to maturity, at amortized cost
|
95,516,261 | 108,712,281 | (13,196,020 | ) | (12.14 | )% | ||||||||||
Federal
Home Loan Bank and Federal Reserve Bank stock - at
cost
|
6,935,500 | 6,453,000 | 482,500 | 7.48 | % | |||||||||||
Loans
held for sale
|
772,877 | - | 772,877 | |||||||||||||
Loans
receivable - net of allowance for loan losses of $6,791,908
and $5,145,673, respectively
|
586,487,319 | 542,977,138 | 43,510,181 | 8.01 | % | |||||||||||
Premises
and equipment, net
|
12,189,059 | 12,235,999 | (46,940 | ) | (0.38 | )% | ||||||||||
Foreclosed
real estate
|
922,934 | - | 922,934 | |||||||||||||
Accrued
interest receivable
|
2,958,759 | 2,965,813 | (7,054 | ) | (0.24 | )% | ||||||||||
Investment
in bank owned life insurance
|
10,823,864 | 10,526,286 | 297,578 | 2.83 | % | |||||||||||
Other
assets
|
5,128,468 | 4,118,187 | 1,010,281 | 24.53 | % | |||||||||||
Total
Assets
|
$ | 797,914,392 | $ | 716,684,910 | $ | 81,229,482 | 11.33 | % |
September 30, 2009
|
December 31, 2008
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Real
Estate Loans
|
||||||||||||||||
Commercial
|
$ | 273,587,035 | 46.09 | % | $ | 236,409,990 | 43.11 | % | ||||||||
Residential
first mortgages
|
113,454,307 | 19.11 | % | 104,607,136 | 19.07 | % | ||||||||||
Residential
construction
|
61,830,595 | 10.42 | % | 57,564,710 | 10.50 | % | ||||||||||
Second
mortgage loans
|
25,116,769 | 4.23 | % | 25,412,415 | 4.63 | % | ||||||||||
Commercial
lines of credit
|
98,422,905 | 16.58 | % | 101,935,520 | 18.59 | % | ||||||||||
Consumer
loans
|
1,569,321 | 0.26 | % | 2,045,838 | 0.37 | % | ||||||||||
Commercial
equipment
|
19,609,534 | 3.30 | % | 20,458,092 | 3.73 | % | ||||||||||
593,590,466 | 100.00 | % | 548,433,701 | 100.00 | % | |||||||||||
Less:
|
||||||||||||||||
Deferred
loan fees
|
311,239 | 0.05 | % | 310,890 | 0.06 | % | ||||||||||
Allowance
for loan loss
|
6,791,908 | 1.14 | % | 5,145,673 | 0.94 | % | ||||||||||
7,103,147 | 5,456,563 | |||||||||||||||
$ | 586,487,319 | $ | 542,977,138 |
Nine Months
Ended
|
Nine Months
Ended
|
|||||||
September 30, 2009
|
September 30, 2008
|
|||||||
Beginning
Balance
|
$ | 5,145,673 | $ | 4,482,483 | ||||
Charge
Offs
|
331,793 | 57,368 | ||||||
Recoveries
|
100 | 1,467 | ||||||
Net
Charge Offs
|
331,693 | 55,901 | ||||||
Additions
Charged to Operations
|
1,977,928 | 617,367 | ||||||
Balance
at the end of the Period
|
$ | 6,791,908 | $ | 5,043,949 |
Balances as of
|
Balances as of
|
|||||||
September 30, 2009
|
December 31, 2008
|
|||||||
Restructured
Loans
|
$ | 1,917,156 | $ | - | ||||
Accruing
loans which are contractually past due 90 days or
more:
|
$ | - | $ | - | ||||
Loans
accounted for on a nonaccrual basis
|
$ | 21,752,754 | $ | 4,936,000 | ||||
Total
non- performing loans
|
$ | 23,669,910 | $ | 4,936,000 | ||||
Non-performing
loans to total loans
|
3.99 | % | 0.90 | % | ||||
Allowance
for loan losses to non performing
loans
|
28.69 | % | 104.25 | % |
Non-accrual loans by loan type:
|
||||||||||||||||
September 30, 2009
|
December 31, 2008
|
|||||||||||||||
Dollars
|
Number of
Loans
|
Dollars
|
Number of Loans
|
|||||||||||||
Real
Estate Loans
|
||||||||||||||||
Commercial
|
$ | 7,548,166 | 8 | $ | 1,850,972 | 3 | ||||||||||
Residential
first mortgages
|
338,806 | 1 | 339,521 | 1 | ||||||||||||
Residential
construction
|
9,692,614 | 5 | 1,500,607 | 3 | ||||||||||||
Second
mortgage loans
|
21,654 | 1 | 97,806 | 1 | ||||||||||||
Commercial
lines of credit
|
3,184,702 | 10 | 902,713 | 5 | ||||||||||||
Consumer
loans
|
2,878 | 3 | 50,460 | 14 | ||||||||||||
Commercial
equipment
|
963,934 | 3 | 193,921 | 2 | ||||||||||||
$ | 21,752,754 | 31 | $ | 4,936,000 | 29 |
Liabilities
|
September 30, 2009
|
December 31, 2008
|
$ Change
|
% Change
|
||||||||||||
Deposits
|
||||||||||||||||
Non-interest-bearing
deposits
|
$ | 57,793,984 | $ | 50,642,273 | $ | 7,151,711 | 14.12 | % | ||||||||
Interest-bearing
deposits
|
569,201,810 | 474,525,293 | 94,676,517 | 19.95 | % | |||||||||||
Total
deposits
|
626,995,794 | 525,167,566 | 101,828,228 | 19.39 | % | |||||||||||
Short-term
borrowings
|
193,749 | 1,522,367 | (1,328,618 | ) | (87.27 | )% | ||||||||||
Long-term
debt
|
85,680,745 | 104,963,428 | (19,282,683 | ) | (18.37 | )% | ||||||||||
Trust
preferred securities
|
12,000,000 | 12,000,000 | - | |||||||||||||
Accrued
expenses and other liabilities
|
5,557,022 | 5,917,130 | (360,108 | ) | (6.09 | )% | ||||||||||
Total
Liabilities
|
$ | 730,427,310 | $ | 649,570,491 | $ | 80,856,819 | 12.45 | % |
Stockholders’ Equity
|
September 30, 2009
|
December 31, 2008
|
$ Change
|
% Change
|
||||||||||||
Perpetual
Preferred Stock Series A
|
$ | 15,540,000 | $ | 15,540,000 | $ | - | 0.00 | % | ||||||||
Perpetual
Preferred Stock, Series B
|
777,000 | 777,000 | - | 0.00 | % | |||||||||||
Common
stock - par value
|
29,677 | 29,478 | 199 | 0.68 | % | |||||||||||
Additional
paid in capital
|
16,694,565 | 16,517,649 | 176,916 | 1.07 | % | |||||||||||
Retained
earnings
|
34,698,229 | 34,280,719 | 417,510 | 1.22 | % | |||||||||||
Accumulated
other comprehensive gain
|
52,094 | 229,848 | (177,754 | ) | 77.34 | % | ||||||||||
Unearned
ESOP shares
|
(304,483 | ) | (260,275 | ) | (44,208 | ) | 16.99 | % | ||||||||
Total
Stockholders’ Equity
|
$ | 67,758,032 | $ | 67,114,419 | $ | 372,663 | 0.56 | % |
|
(a)
|
Not
applicable
|
|
(b)
|
Not
applicable
|
|
(c)
|
The
Company did not repurchase any shares of common stock in the quarter ended
September 30, 2009. On September 25, 2008, Tri-County Financial
Corporation announced a repurchase program under which it would repurchase
up to 5% of its outstanding common stock or approximately 147,435
shares. However, as part of the Company’s participation in the
Capital Repurchase Program of the U.S. Department of Treasury’s Troubled
Asset Repurchase Program, prior to the earlier of
(a) December 19, 2018 or (b) the date on which the
Series A preferred stock and the Series B preferred stock has
been redeemed in full or the Treasury has transferred all of the
Series A preferred stock and the Series B preferred stock to
non-affiliates, the Company, without the consent of the Treasury, cannot
repurchase any shares of its common stock or other capital stock or equity
securities or trust preferred securities. These repurchase restrictions do
not apply in certain limited circumstances, including the repurchase of
common stock in connection with the administration of any employee benefit
plan in the ordinary course of business and consistent with past practice.
In addition, during the period beginning on December 19, 2018 and
ending on the date on which the Series A preferred stock and the
Series B preferred stock have been redeemed in full or the Treasury
has transferred all of the Series A preferred stock and the
Series B preferred stock to non-affiliates, the Company cannot
repurchase any shares of its common stock or other capital stock or equity
securities or trust preferred securities without the consent of the
Treasury.
|
TRI-COUNTY FINANCIAL CORPORATION | ||
Date: November 12, 2009
|
By:
|
/s/ Michael L. Middleton |
Michael
L. Middleton, President, Chief
|
||
Executive Officer
and Chairman of the Board
|
Date:
November 12, 2009
|
By:
|
/s/ William J. Pasenelli |
William
J. Pasenelli, Executive Vice
|
||
President
and Chief Financial
Officer
|