10-Q 1 a12-20153_110q.htm 10-Q

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

for the quarterly period ended September 30, 2012

 

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 000-50820

 

FIRST CLOVER LEAF FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

 

Maryland

 

20-4797391

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

 

 

 

6814 Goshen Road, Edwardsville, IL

 

62025

(Address of principal executive office)

 

(Zip Code)

 

Registrant’s telephone number, including area code (618) 656-6122

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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   x.  No   o.

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes   x.  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 the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  o

 

Accelerated filer  o

 

 

 

Non-accelerated filer  o

 

Smaller reporting company x

(do not check if 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 x.

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding October 31, 2012

Common Stock, par value $.10 per share

 

7,514,926

 

 

 



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

FORM 10-Q

 

FOR THE QUARTER ENDED SEPTEMBER 30, 2012

 

INDEX

 

 

PAGE NO.

 

 

PART I - Financial Information

 

 

 

Item 1. Financial Statements(Unaudited)

 

 

 

Consolidated Balance Sheets

3

 

 

Consolidated Statements of Net Income and Comprehensive Income

4

 

 

Consolidated Statements of Cash Flows

5

 

 

Notes to Consolidated Financial Statements

7

 

 

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

 

 

Item 3.Quantitative and Qualitative Disclosures about Market Risk

47

 

 

Item 4.Controls and Procedures

48

 

 

PART II - Other Information

 

 

 

Item 1. Legal Proceedings

49

 

 

Item 1A. Risk Factors

49

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

49

 

 

Item 3. Defaults Upon Senior Securities

49

 

 

Item 4. Mine Safety Disclosures

49

 

 

Item 5. Other Information

49

 

 

Item 6. Exhibits

50

 

 

Signatures

51

 



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Consolidated Balance Sheets

 

 

 

September 30,

 

December 31,

 

 

 

2012

 

2011

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

13,892,266

 

$

10,336,923

 

Interest-earning deposits

 

10,427,388

 

7,083,526

 

Federal funds sold

 

14,445,286

 

21,940,960

 

Total cash and cash equivalents

 

38,764,940

 

39,361,409

 

 

 

 

 

 

 

Interest-earning time deposits

 

1,745,769

 

1,738,498

 

Securities available for sale

 

78,948,242

 

85,575,351

 

Federal Home Loan Bank stock

 

3,077,201

 

6,306,273

 

Loans, net of allowance for loan losses of $5,669,422 and $7,789,262 at September 30, 2012 and December 31, 2011, respectively

 

387,605,718

 

387,634,646

 

Loans held for sale

 

1,468,000

 

1,661,750

 

Property and equipment, net

 

10,257,193

 

10,088,154

 

Goodwill

 

11,385,323

 

11,385,323

 

Bank-owned life insurance

 

5,199,304

 

5,067,935

 

Core deposit intangible

 

605,249

 

816,000

 

Foreclosed assets

 

6,471,334

 

5,822,864

 

Mortgage servicing rights

 

779,101

 

651,409

 

Accrued interest receivable

 

1,728,355

 

1,726,319

 

Prepaid FDIC insurance premiums

 

1,109,237

 

1,439,197

 

Other assets

 

3,053,488

 

3,449,851

 

Total assets

 

$

552,198,454

 

$

562,724,979

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Deposits:

 

 

 

 

 

Noninterest bearing

 

$

49,509,033

 

$

39,256,851

 

Interest bearing

 

370,806,479

 

375,501,432

 

Total deposits

 

420,315,512

 

414,758,283

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

26,963,000

 

26,944,000

 

Securities sold under agreements to repurchase

 

19,562,647

 

36,874,298

 

Subordinated debentures

 

4,000,000

 

4,000,000

 

Accrued interest payable

 

316,685

 

417,828

 

Other liabilities

 

2,230,914

 

2,016,445

 

Total liabilities

 

473,388,758

 

485,010,854

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

Preferred stock, $.10 par value, 10,000,000 shares authorized, no shares issued

 

 

 

Common stock, $.10 par value, 20,000,000 shares authorized, 7,605,546 and 7,727,756 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively

 

760,555

 

772,776

 

Additional paid-in capital

 

60,481,777

 

61,230,512

 

Retained earnings

 

16,062,834

 

14,418,656

 

Accumulated other comprehensive income

 

1,504,530

 

1,292,181

 

Total stockholders’ equity

 

78,809,696

 

77,714,125

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

552,198,454

 

$

562,724,979

 

 

See Notes to Consolidated Financial Statements.

 

3



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Consolidated Statements of Net Income and Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

4,890,979

 

$

5,246,210

 

$

14,849,606

 

$

15,970,496

 

Securities:

 

 

 

 

 

 

 

 

 

Taxable interest income

 

260,845

 

425,661

 

911,035

 

1,324,939

 

Nontaxable interest income

 

207,385

 

182,834

 

611,625

 

516,550

 

Federal Home Loan Bank dividends

 

2,941

 

1,572

 

6,213

 

4,717

 

Interest-earning deposits, federal funds sold, and other

 

13,700

 

26,380

 

44,532

 

79,663

 

Total interest and dividend income

 

5,375,850

 

5,882,657

 

16,423,011

 

17,896,365

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

927,908

 

1,420,324

 

2,960,395

 

4,535,474

 

Federal Home Loan Bank advances

 

133,662

 

129,393

 

394,426

 

382,671

 

Securities sold under agreements to repurchase

 

5,468

 

1,492

 

12,851

 

9,385

 

Subordinated debentures

 

24,939

 

21,886

 

74,591

 

92,615

 

Total interest expense

 

1,091,977

 

1,573,095

 

3,442,263

 

5,020,145

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

4,283,873

 

4,309,562

 

12,980,748

 

12,876,220

 

 

 

 

 

 

 

 

 

 

 

Provision for loan losses

 

400,000

 

891,000

 

1,200,000

 

1,666,000

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

3,883,873

 

3,418,562

 

11,780,748

 

11,210,220

 

 

 

 

 

 

 

 

 

 

 

Other income:

 

 

 

 

 

 

 

 

 

Service fees on deposit accounts

 

91,596

 

104,399

 

277,593

 

296,141

 

Other service charges and fees

 

93,652

 

83,267

 

276,420

 

255,464

 

Loan servicing fees

 

57,697

 

46,742

 

156,528

 

134,507

 

Gain on sale of securities

 

167,978

 

348,776

 

167,978

 

454,920

 

Gain on sale of loans

 

610,215

 

153,660

 

1,131,293

 

355,121

 

Other

 

177,472

 

75,582

 

187,079

 

63,839

 

 

 

1,198,610

 

812,426

 

2,196,891

 

1,559,992

 

 

 

 

 

 

 

 

 

 

 

Other expenses:

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

1,413,234

 

1,206,764

 

4,403,489

 

3,669,271

 

Occupancy expense

 

313,669

 

322,811

 

935,050

 

950,846

 

Data processing services

 

178,640

 

157,972

 

530,372

 

481,787

 

Director fees

 

34,850

 

38,000

 

115,850

 

109,000

 

Professional fees

 

119,510

 

135,707

 

410,320

 

396,110

 

FDIC insurance premiums

 

120,585

 

181,532

 

365,593

 

544,112

 

Foreclosed asset related expenses

 

138,469

 

277,260

 

583,066

 

603,284

 

Amortization of core deposit intangible

 

70,249

 

77,320

 

210,751

 

232,000

 

Amortization of mortgage servicing rights

 

88,416

 

51,348

 

193,811

 

114,304

 

Other

 

581,765

 

469,028

 

1,667,910

 

1,361,513

 

 

 

3,059,387

 

2,917,742

 

9,416,212

 

8,462,227

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

2,023,096

 

1,313,246

 

4,561,427

 

4,307,985

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

708,656

 

459,072

 

1,535,946

 

1,534,670

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

1,314,440

 

$

854,174

 

$

3,025,481

 

$

2,773,315

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

1,314,440

 

$

854,174

 

$

3,025,481

 

$

2,773,315

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Change in unrealized gains on securities available for sale, net of reclassifications and taxes

 

96,017

 

119,554

 

212,349

 

663,985

 

Comprehensive income

 

$

1,410,457

 

$

973,728

 

$

3,237,830

 

$

3,437,300

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share (see Note 5)

 

$

0.17

 

$

0.11

 

$

0.39

 

$

0.36

 

Dividends per share

 

$

0.06

 

$

0.06

 

$

0.18

 

$

0.18

 

 

See Notes to Consolidated Financial Statements.

 

4



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2012

 

2011

 

Cash flows from operating activities

 

 

 

 

 

Net income

 

$

3,025,481

 

$

2,773,315

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

Amortization (accretion) of:

 

 

 

 

 

Deferred loan origination (fees) costs, net

 

(68,656

)

3,082

 

Premiums and discounts on securities

 

(430,839

)

(344,969

)

Core deposit intangible

 

210,751

 

232,000

 

Mortgage servicing rights

 

193,811

 

114,304

 

Amortization of fair value adjustments

 

(41,030

)

(57,224

)

Provision for loan losses

 

1,200,000

 

1,666,000

 

Depreciation

 

414,336

 

426,802

 

ESOP expense

 

 

44,186

 

Gain on sale of securities available for sale

 

(167,978

)

(454,920

)

Gain on sale of loans

 

(1,131,293

)

(355,121

)

Gain on sale of property and equipment

 

 

(78,832

)

(Gain) loss on sale of foreclosed assets

 

(26,018

)

62,951

 

Write-down on foreclosed assets

 

369,500

 

169,734

 

Earnings on bank-owned life insurance

 

(131,369

)

(18,576

)

Increase in mortgage servicing rights

 

(321,503

)

(140,070

)

Proceeds from sales of loans held for sale

 

40,199,478

 

16,272,188

 

Originations of loans held for sale

 

(38,874,435

)

(16,877,667

)

Change in assets and liabilities:

 

 

 

 

 

Accrued interest receivable and other assets

 

724,287

 

741,746

 

Accrued interest payable

 

(101,143

)

(138,723

)

Other liabilities

 

89,757

 

(103,141

)

Net cash provided by operating activities

 

5,133,137

 

3,937,065

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of interest-earning time deposits

 

(7,271

)

(10,880

)

Available for sale securities:

 

 

 

 

 

Purchases

 

(34,569,689

)

(76,032,719

)

Proceeds from calls, maturities, and paydowns

 

37,873,293

 

58,843,176

 

Proceeds from sales

 

4,307,679

 

8,271,072

 

Redemption of FHLB stock

 

3,229,072

 

 

Increase in loans

 

(3,372,339

)

(2,642

)

Purchase of property and equipment

 

(595,429

)

(153,479

)

Proceeds from sale of property and equipment

 

 

146,655

 

Proceeds from the sale of foreclosed assets

 

1,298,759

 

2,306,842

 

Purchase of bank-owned life insurance

 

 

(5,000,000

)

Net cash provided by (used in) investing activities

 

8,164,075

 

(11,631,975

)

 

(Continued)

 

5



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2012

 

2011

 

Cash flows from financing activities

 

 

 

 

 

Net increase (decrease) in deposit accounts

 

$

5,560,229

 

$

(12,194,343

)

Net (decrease) increase in securities sold under agreements to repurchase

 

(17,311,651

)

3,825,192

 

Proceeds from Federal Home Loan Bank advances

 

10,000,000

 

5,000,000

 

Repayments of Federal Home Loan Bank advances

 

(10,000,000

)

 

Repurchase of common stock

 

(760,956

)

(348,638

)

Cash dividends paid

 

(1,381,303

)

(1,397,011

)

Net cash used in financing activities

 

(13,893,681

)

(5,114,800

)

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(596,469

)

(12,809,710

)

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

Beginning

 

39,361,409

 

66,253,047

 

 

 

 

 

 

 

Ending

 

$

38,764,940

 

$

53,443,337

 

 

 

 

 

 

 

Supplemental schedule of noncash investing activities

 

 

 

 

 

Assets acquired in settlement of loans

 

$

2,471,211

 

$

4,192,582

 

Loans made to finance sales of foreclosed assets

 

180,500

 

415,000

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information Cash paid during the period for:

 

 

 

 

 

Interest

 

$

3,527,406

 

$

5,140,140

 

Income taxes, net of refunds

 

840,000

 

1,091,728

 

 

See Notes to Consolidated Financial Statements.

 

6



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Notes to Consolidated Financial Statements

September 30, 2012 and December 31, 2011

 

Note 1.                                 Summary of Significant Accounting Policies

 

The information contained in the accompanying consolidated financial statements is unaudited.  In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations for the interim periods. All such adjustments are of a normal recurring nature.  Any differences appearing between the numbers presented in the financial statements and management’s discussion and analysis are due to rounding.  The results of operations for the interim periods are not necessarily indicative of the results which may be expected for the entire year.  These consolidated financial statements should be read in conjunction with the consolidated financial statements of First Clover Leaf Financial Corp. (the “Company” or “First Clover Leaf”) for the year ended December 31, 2011 contained in the 2011 Annual Report to Stockholders that is filed as Exhibit 13 to the Company’s Annual Report on Form 10-K.  Accordingly, footnote disclosures which would substantially duplicate the disclosures in the audited consolidated financial statements have been omitted.

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods.  Actual results could differ from those estimates.

 

The Company is a Maryland corporation that was incorporated in March 2006 as the successor corporation to First Federal Financial Services, Inc., in connection with the July 2006 “second-step” conversion of First Federal Financial Services, MHC and the simultaneous acquisition of Clover Leaf Financial Corp. and its wholly owned savings bank subsidiary, Clover Leaf Bank.  The accompanying interim consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, First Clover Leaf Bank (the “Bank”) and its wholly owned subsidiary, Clover Leaf Financial Services.  First Clover Leaf’s common stock is traded on the NASDAQ Capital Market under the symbol “FCLF.”

 

Recent accounting pronouncements:  There were no accounting standards recently issued relating to the financial services industry.

 

Reclassifications:  Certain reclassifications have been made to the balances, with no effect on net income or total stockholders’ equity, for the three and nine months ended September 30, 2011, to be consistent with the classifications adopted for the three and nine months ended September 30, 2012.

 

7



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Notes to Consolidated Financial Statements

September 30, 2012 and December 31, 2011

 

Note 2.                                 Securities

 

The amortized cost and fair values of securities available for sale, with gross unrealized gains and losses, are summarized as follows:

 

 

 

September 30, 2012

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

(Losses)

 

Value

 

U.S. government agency obligations

 

$

19,688,497

 

$

296,741

 

$

 

$

19,985,238

 

State and municipal securities

 

28,959,046

 

1,576,952

 

(3,849

)

30,532,149

 

Other securities

 

3,501

 

 

 

3,501

 

Mortgage-backed: residential

 

27,908,945

 

547,864

 

(29,455

)

28,427,354

 

 

 

 

 

 

 

 

 

 

 

 

 

$

76,559,989

 

$

2,421,557

 

$

(33,304

)

$

78,948,242

 

 

 

 

December 31, 2011

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

(Losses)

 

Value

 

U.S. government agency obligations

 

$

31,226,753

 

$

517,236

 

$

 

$

31,743,989

 

Corporate bonds

 

1,949,836

 

12,444

 

(123,956

)

1,838,324

 

State and municipal securities

 

25,063,842

 

1,329,567

 

(17,291

)

26,376,118

 

Other securities

 

3,501

 

 

 

3,501

 

Mortgage-backed: residential

 

25,280,227

 

425,272

 

(92,080

)

25,613,419

 

 

 

 

 

 

 

 

 

 

 

 

 

$

83,524,159

 

$

2,284,519

 

$

(233,327

)

$

85,575,351

 

 

8



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Notes to Consolidated Financial Statements

September 30, 2012 and December 31, 2011

 

Note 2.                                 Securities (Continued)

 

Unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2012 and December 31, 2011, are summarized as follows:

 

 

 

September 30, 2012

 

 

 

Less than 12 Months

 

12 Months or More

 

Total

 

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

 

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

 

State and municipal securities

 

1,165,961

 

(3,849

)

 

 

1,165,961

 

(3,849

)

Mortgage-backed: residential

 

2,829,771

 

(29,455

)

 

 

2,829,771

 

(29,455

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

3,995,732

 

$

(33,304

)

$

 

$

 

$

3,995,732

 

$

(33,304

)

 

 

 

December 31, 2011

 

 

 

Less than 12 Months

 

12 Months or More

 

Total

 

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

 

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

 

Corporate bonds

 

$

 

$

 

$

576,044

 

$

(123,956

)

$

576,044

 

$

(123,956

)

State and municipal securities

 

1,448,738

 

(17,291

)

 

 

1,448,738

 

(17,291

)

Mortgage-backed: residential

 

9,805,765

 

(92,080

)

 

 

9,805,765

 

(92,080

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

11,254,503

 

$

(109,371

)

$

576,044

 

$

(123,956

)

$

11,830,547

 

$

(233,327

)

 

Management evaluates the investment portfolio on at least a quarterly basis to determine if investments have suffered an other-than-temporary decline in value. In addition, management monitors market trends, investment grades, bond defaults and other circumstances to identify trends and circumstances that might impact the carrying value of equity securities.

 

At September 30, 2012, the Company had seven securities in an unrealized loss position which included: four state and municipal securities and three mortgage-backed securities.  The unrealized losses resulted from changes in market interest rates and liquidity, not from changes in the probability of contractual cash flows.  The Company does not intend to sell the securities, and it is not more-likely-than-not that the Company will be required to sell the securities prior to recovery of amortized cost.  Full collection of the amounts due according to the contractual terms of the securities is expected; therefore, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2012.  The Company had in previous filings reported a corporate security that had been in an unrealized loss position for more than 12 months.  The bond was called at par during the third quarter of 2012 and is no longer owned by the Company.

 

9



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Notes to Consolidated Financial Statements

September 30, 2012 and December 31, 2011

 

Note 2.                                 Securities (Continued)

 

The amortized cost and fair value at September 30, 2012, by contractual maturity, is shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties. Other securities have no stated maturity.  Therefore, stated maturities are not disclosed for these two categories.

 

 

 

Available for Sale

 

 

 

Amortized

 

Fair

 

 

 

Cost

 

Value

 

Due in one year or less

 

$

11,285,318

 

$

11,411,850

 

Due after one year through five years

 

12,497,377

 

12,894,983

 

Due after five years through ten years

 

8,624,282

 

9,181,316

 

Due after ten years

 

16,240,566

 

17,029,238

 

Mortgage-backed: residential

 

27,908,945

 

28,427,354

 

Other securities

 

3,501

 

3,501

 

 

 

 

 

 

 

 

 

$

76,559,989

 

$

78,948,242

 

 

Securities with a carrying amount of approximately $69,630,000 and $76,501,000 were pledged to secure deposits as required or permitted by law at September 30, 2012 and December 31, 2011, respectively.

 

Note 3.                                 Loans

 

The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated:

 

 

 

At September 30,

 

At December 31,

 

 

 

2012

 

2011

 

 

 

Amount

 

Percent

 

Amount

 

Percent

 

Real estate loans:

 

 

 

 

 

 

 

 

 

One-to-four family

 

$

110,992,194

 

27.9

%

$

115,540,320

 

29.1

%

Multi-family

 

35,106,027

 

8.8

 

39,481,726

 

9.9

 

Commercial

 

135,025,633

 

34.0

 

128,656,804

 

32.4

 

Construction and land

 

35,945,619

 

9.1

 

44,192,020

 

11.1

 

 

 

317,069,473

 

79.8

 

327,870,870

 

82.5

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

66,228,492

 

16.7

 

48,676,963

 

12.3

 

 

 

 

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

 

 

 

 

Home equity

 

12,630,466

 

3.2

 

19,139,850

 

4.8

 

Automobile and other

 

1,356,448

 

0.3

 

1,414,711

 

0.4

 

 

 

13,986,914

 

3.5

 

20,554,561

 

5.2

 

 

 

 

 

 

 

 

 

 

 

Total gross loans

 

397,284,879

 

100.0

%

397,102,394

 

100.0

%

Undisbursed portion of construction loans

 

(3,987,904

)

 

 

(1,725,311

)

 

 

Deferred loan origination costs (fees), net

 

(21,835

)

 

 

46,825

 

 

 

Allowance for loan losses

 

(5,669,422

)

 

 

(7,789,262

)

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net

 

$

387,605,718

 

 

 

$

387,634,646

 

 

 

 

10



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Notes to Consolidated Financial Statements

September 30, 2012 and December 31, 2011

 

Note 3.                                 Loans (Continued)

 

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk.  Management reviews and presents these policies to the Board at least annually.  A reporting system supplements the review process by providing management with reports related to loan production, loan quality, loan delinquencies and non-performing and potential problem loans.

 

Additional information regarding our accounting policies for the individual loan categories is contained in our 2011 Annual Report to Stockholders that is filed as an exhibit to the Company’s Annual Report on Form 10-K.

 

The loan portfolio includes a concentration of loans in commercial real estate amounting to approximately $135,026,000 and $128,657,000 as of September 30, 2012 and December 31, 2011, respectively.  The loans are expected to be repaid from cash flows or from proceeds from the sale of selected assets of the borrowers.  The concentration of credit within commercial real estate is taken into consideration by management in determining the allowance for loan losses.  The Company’s opinion as to the ultimate collectibility of these loans is subject to estimates regarding future cash flows from operations and the value of the property, real and personal, pledged as collateral.  These estimates are affected by changing economic conditions and the economic prospects of borrowers.

 

On occasion, the Company originates loans secured by single-family dwellings with loan to value ratios exceeding 90%.  The Company does not consider the level of such loans to be a significant concentration of credit as of September 30, 2012 or December 31, 2011.

 

The recorded investment in loans does not include accrued interest or loan origination fees due to immateriality.

 

The following tables present our past-due loans, segregated by class, as of September 30, 2012 and December 31, 2011.

 

 

 

September 30, 2012

 

 

 

Loans
30-59 Days Past
Due

 

Loans
60-89 Days Past
Due

 

Loans
90 or More Days
Past Due

 

Total
Past Due Loans

 

Current 
Loans

 

Total

 

Accruing Loans 
90 or More Days
Past Due

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-to-four family

 

$

415,745

 

$

1,145,227

 

$

932,855

 

$

2,493,827

 

$

108,498,367

 

$

110,992,194

 

$

 

Multi-family

 

220,535

 

 

 

220,535

 

34,885,492

 

35,106,027

 

 

Commercial

 

62,246

 

 

537,904

 

600,150

 

134,425,483

 

135,025,633

 

 

Construction and land

 

 

 

374,668

 

374,668

 

35,570,951

 

35,945,619

 

 

 

 

698,526

 

1,145,227

 

1,845,427

 

3,689,180

 

313,380,293

 

317,069,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

2,664

 

96,185

 

386,064

 

484,913

 

65,743,579

 

66,228,492

 

26,817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

65,407

 

 

178,150

 

243,557

 

12,386,909

 

12,630,466

 

 

Automobile and other

 

3,779

 

4,054

 

8,868

 

16,701

 

1,339,747

 

1,356,448

 

 

 

 

69,186

 

4,054

 

187,018

 

260,258

 

13,726,656

 

13,986,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

770,376

 

$

1,245,466

 

$

2,418,509

 

$

4,434,351

 

$

392,850,528

 

$

397,284,879

 

$

26,817

 

 

11



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Notes to Consolidated Financial Statements

September 30, 2012 and December 31, 2011

 

Note 3.                                 Loans (Continued)

 

 

 

December 31, 2011

 

 

 

Loans
30-59 Days Past
Due

 

Loans
60-89 Days Past
Due

 

Loans
90 or More Days 
PastDue

 

Total
Past Due Loans

 

Current
Loans

 

Total

 

Accruing Loans
90 or More Days 
Past Due

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-to-four family

 

$

679,214

 

$

49,977

 

$

946,915

 

$

1,676,106

 

$

113,864,214

 

$

115,540,320

 

$

404,984

 

Multi-family

 

 

 

235,837

 

235,837

 

39,245,889

 

39,481,726

 

 

Commercial

 

 

1,745,863

 

762,168

 

2,508,031

 

126,148,773

 

128,656,804

 

 

Construction and land

 

155,125

 

229,500

 

7,130,658

 

7,515,283

 

36,676,737

 

44,192,020

 

 

 

 

834,339

 

2,025,340

 

9,075,578

 

11,935,257

 

315,935,613

 

327,870,870

 

404,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

202,874

 

126,674

 

193,697

 

523,245

 

48,153,718

 

48,676,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

109,795

 

123,527

 

141,777

 

375,099

 

18,764,751

 

19,139,850

 

 

Automobile and other

 

 

 

 

 

1,414,711

 

1,414,711

 

 

 

 

109,795

 

123,527

 

141,777

 

375,099

 

20,179,462

 

20,554,561

 

 

 

 

$

1,147,008

 

$

2,275,541

 

$

9,411,052

 

$

12,833,601

 

$

384,268,793

 

$

397,102,394

 

$

404,984

 

 

All loans are reviewed on a regular basis and are placed on non-accrual status when, in the opinion of management, there is reasonable probability of loss of principal or collection of additional interest is deemed insufficient to warrant further accrual.  Generally, we place all loans 90 days or more past due on non-accrual status.  However, exceptions may occur when a loan is in process of renewal, but it has not yet been completed.  In addition, we may place any loan on non-accrual status if any part of it is classified as loss or if any part has been charged-off.  When a loan is placed on non-accrual status, total interest accrued and unpaid to date is reversed.  Subsequent payments are either applied to the outstanding principal balance or recorded as interest income, depending on the assessment of the ultimate collectability of the loan.

 

Non-accrual loans, segregated by class, are as follows:

 

 

 

September 30,

 

December 31,

 

 

 

2012

 

2011

 

Real estate loans:

 

 

 

 

 

One-to-four family

 

$

1,301,273

 

$

1,203,351

 

Multi-family

 

3,029,933

 

1,119,696

 

Commercial

 

3,522,232

 

762,168

 

Construction and land

 

2,554,531

 

7,690,156

 

 

 

10,407,969

 

10,775,371

 

 

 

 

 

 

 

Commercial business

 

359,248

 

249,695

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

Home equity

 

192,556

 

141,777

 

Automobile and other

 

8,868

 

 

 

 

201,424

 

141,777

 

 

 

 

 

 

 

Total non-accrual loans

 

$

10,968,641

 

$

11,166,843

 

 

12



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Notes to Consolidated Financial Statements

September 30, 2012 and December 31, 2011

 

Note 3.           Loans (Continued)

 

The following tables present the activity in the allowance for loan losses for the three and nine months ended September 30, 2012 and 2011.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

 

 

 

Three months ended September 30, 2012

 

 

 

Beginning
Balance

 

Charge-offs

 

Recoveries

 

Provision

 

Ending Balance

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

One-to-four family

 

$

629,183

 

$

(54,664

)

$

504

 

$

84,682

 

$

659,705

 

Multi-family

 

690,986

 

 

 

(131,373

)

559,613

 

Commercial

 

1,117,029

 

(178,781

)

4,946

 

61,992

 

1,005,186

 

Construction and land

 

2,254,932

 

 

6,169

 

(180,527

)

2,080,574

 

 

 

4,692,130

 

(233,445

)

11,619

 

(165,226

)

4,305,078

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

968,829

 

(383,575

)

9,801

 

595,069

 

1,190,124

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

189,091

 

 

 

(20,671

)

168,420

 

Automobile and other

 

14,972

 

 

 

(9,172

)

5,800

 

 

 

204,063

 

 

 

(29,843

)

174,220

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

5,865,022

 

$

(617,020

)

$

21,420

 

$

400,000

 

$

5,669,422

 

 

 

 

Three months ended September 30, 2011

 

 

 

Beginning
Balance

 

Charge-offs

 

Recoveries

 

Provision

 

Ending Balance

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

One-to-four family

 

$

619,443

 

$

(171,660

)

$

4,791

 

$

(67,523

)

$

385,051

 

Multi-family

 

560,523

 

 

 

(202,091

)

358,432

 

Commercial

 

959,582

 

 

2,509

 

363,962

 

1,326,053

 

Construction and land

 

1,904,460

 

(662,788

)

13,345

 

58,734

 

1,313,751

 

 

 

4,044,008

 

(834,448

)

20,645

 

153,082

 

3,383,287

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

687,908

 

 

 

492,007

 

1,179,915

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

66,008

 

 

 

243,045

 

309,053

 

Automobile and other

 

21,948

 

 

 

2,866

 

24,814

 

 

 

87,956

 

 

 

245,911

 

333,867

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

4,819,872

 

$

(834,448

)

$

20,645

 

$

891,000

 

$

4,897,069

 

 

13



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Notes to Consolidated Financial Statements

September 30, 2012 and December 31, 2011

 

Note 3.           Loans (Continued)

 

 

 

Nine months ended September 30, 2012

 

 

 

Beginning
Balance

 

Charge-offs

 

Recoveries

 

Provision

 

Ending Balance

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

One-to-four family

 

$

777,470

 

$

(263,026

)

$

1,172

 

$

144,089

 

$

659,705

 

Multi-family

 

779,680

 

 

34,312

 

(254,379

)

559,613

 

Commercial

 

1,157,114

 

(576,046

)

221,287

 

202,831

 

1,005,186

 

Construction and land

 

3,934,573

 

(2,123,047

)

15,316

 

253,732

 

2,080,574

 

 

 

6,648,837

 

(2,962,119

)

272,087

 

346,273

 

4,305,078

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

969,669

 

(549,749

)

11,997

 

758,207

 

1,190,124

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

133,234

 

(92,056

)

 

127,242

 

168,420

 

Automobile and other

 

37,522

 

 

 

(31,722

)

5,800

 

 

 

170,756

 

(92,056

)

 

95,520

 

174,220

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

7,789,262

 

$

(3,603,924

)

$

284,084

 

$

1,200,000

 

$

5,669,422

 

 

 

 

Nine months ended September 30, 2011

 

 

 

Beginning
Balance

 

Charge-offs

 

Recoveries

 

Provision

 

Ending Balance

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

One-to-four family

 

$

1,161,865

 

$

(411,864

)

$

27,728

 

(392,678

)

$

385,051

 

Multi-family

 

299,964

 

(171,878

)

 

230,346

 

358,432

 

Commercial

 

1,043,023

 

(275,405

)

6,939

 

551,496

 

1,326,053

 

Construction and land

 

2,151,810

 

(1,753,982

)

70,589

 

845,334

 

1,313,751

 

 

 

4,656,662

 

(2,613,129

)

105,256

 

1,234,498

 

3,383,287

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

868,572

 

 

10,547

 

300,796

 

1,179,915

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

193,756

 

 

 

115,297

 

309,053

 

Automobile and other

 

9,405

 

 

 

15,409

 

24,814

 

 

 

203,161

 

 

 

130,706

 

333,867

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

5,728,395

 

$

(2,613,129

)

$

115,803

 

$

1,666,000

 

$

4,897,069

 

 

14



Table of Contents

 

FIRST CLOVER LEAF FINANCIAL CORP.

 

Notes to Consolidated Financial Statements

September 30, 2012 and December 31, 2011

 

Note 3.           Loans (Continued)

 

The following tables separate the allocation of the allowance for loan losses and the loan balances between loans evaluated both individually and collectively as of September 30, 2012, and December 31, 2011.

 

 

 

September 30, 2012

 

 

 

Period-end allowance allocated to loans:

 

Loans evaluated for impairment:

 

 

 

Individually
evaluated for
impairment

 

Collectively
evaluated for
impairment

 

Ending
Balance

 

Individually

 

Collectively

 

Ending Balance

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

One-to-four family

 

$

35,363

 

$

624,342

 

$

659,705

 

$

1,301,273

 

$

109,690,921

 

$

110,992,194

 

Multi-family

 

405,026

 

154,587

 

559,613

 

3,029,933

 

32,076,094

 

35,106,027

 

Commercial

 

128,048

 

877,138

 

1,005,186

 

3,288,577

 

131,737,056

 

135,025,633

 

Construction and land

 

 

2,080,574

 

2,080,574

 

2,554,531

 

33,391,088

 

35,945,619

 

 

 

568,437

 

3,736,641

 

4,305,078

 

10,174,314

 

306,895,159

 

317,069,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

141,291

 

1,048,833

 

1,190,124

 

467,019

 

65,761,473

 

66,228,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer: