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
|
|
o
|
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
For the transition period from ______________ to ______________
|
Michigan
(State or Other Jurisdiction of
Incorporation or Organization)
|
38-2659066
(I.R.S. Employer Identification No.)
|
|
109 East Division
Sparta, Michigan
(Address of Principal Executive Offices)
|
49345
(Zip Code)
|
|
(616) 887-7366
(Registrant’s Telephone Number, including Area Code)
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company x
|
(Dollars in thousands)
|
September 30,
2012
|
December 31
2011
|
||||||
(Unaudited)
|
(Audited)
|
|||||||
Assets
|
||||||||
Cash and due from banks
|
$ | 26,966 | $ | 17,125 | ||||
Federal funds sold
|
0 | 0 | ||||||
Cash and cash equivalents
|
26,966 | 17,125 | ||||||
Securities available for sale
|
138,208 | 114,276 | ||||||
Federal Home Loan Bank stock
|
2,478 | 2,478 | ||||||
Federal Reserve Bank stock
|
1,272 | 1,271 | ||||||
Loans held for sale
|
887 | 1,262 | ||||||
Loans
|
302,483 | 320,127 | ||||||
Allowance for loan losses
|
(5,773 | ) | (5,213 | ) | ||||
Loans, net
|
296,710 | 314,914 | ||||||
Premises and equipment, net
|
11,736 | 12,080 | ||||||
Other real estate owned, net
|
1,761 | 1,934 | ||||||
Cash value of life insurance policies
|
9,891 | 9,834 | ||||||
Intangible assets, net
|
1,836 | 2,172 | ||||||
Goodwill
|
13,728 | 13,728 | ||||||
Other assets
|
4,838 | 4,840 | ||||||
Total assets
|
$ | 510,311 | $ | 495,914 | ||||
Liabilities
|
||||||||
Deposits – noninterest-bearing
|
$ | 82,092 | $ | 78,263 | ||||
Deposits – interest-bearing
|
337,948 | 325,102 | ||||||
Total deposits
|
420,040 | 403,365 | ||||||
Repurchase agreements
|
20,263 | 21,869 | ||||||
Advances from Federal Home Loan Bank
|
5,427 | 8,447 | ||||||
Other liabilities
|
4,245 | 4,329 | ||||||
Total liabilities
|
449,975 | 438,010 | ||||||
Shareholders’ Equity
|
||||||||
Preferred stock; shares authorized: 100,000; shares outstanding: none
|
— | — | ||||||
Common stock and paid in capital, no par value; shares authorized: 7,000,000; shares outstanding: 3,300,970 at September 30, 2012 and 3,293,269 at December 31, 2011
|
46,707 | 46,602 | ||||||
Retained earnings
|
10,825 | 8,887 | ||||||
Accumulated other comprehensive income, net
|
2,804 | 2,415 | ||||||
Total shareholders’ equity
|
60,336 | 57,904 | ||||||
Total liabilities and shareholders’ equity
|
$ | 510,311 | $ | 495,914 |
(Dollars in thousands, except per share data)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Interest income
|
||||||||||||||||
Loans, including fees
|
$ | 4,272 | $ | 4,635 | $ | 12,783 | $ | 13,777 | ||||||||
Securities:
|
||||||||||||||||
Taxable
|
474 | 449 | 1,009 | 1,313 | ||||||||||||
Tax exempt
|
349 | 312 | 1,471 | 961 | ||||||||||||
Other
|
8 | 3 | 19 | 16 | ||||||||||||
Total interest income
|
5,103 | 5,399 | 15,282 | 16,067 | ||||||||||||
Interest expense
|
||||||||||||||||
Deposits
|
499 | 728 | 1,643 | 2,280 | ||||||||||||
Advances from Federal Home Loan Bank
|
59 | 78 | 247 | 230 | ||||||||||||
Other
|
33 | 70 | 171 | 217 | ||||||||||||
Total interest expense
|
591 | 876 | 2,061 | 2,727 | ||||||||||||
Net interest income
|
4,512 | 4,523 | 13,221 | 13,340 | ||||||||||||
Provision for loan losses
|
500 | 950 | 1,975 | 2,800 | ||||||||||||
Net interest income after provision for loan losses
|
4,012 | 3,573 | 11,246 | 10,540 | ||||||||||||
Noninterest income
|
||||||||||||||||
Customer service charges
|
875 | 898 | 2,461 | 2,613 | ||||||||||||
Insurance and investment commissions
|
164 | 163 | 546 | 533 | ||||||||||||
Gains on sales of loans
|
446 | 125 | 1,206 | 396 | ||||||||||||
Gains on sales of securities
|
21 | 5 | 307 | 67 | ||||||||||||
Gains/(losses) on sales of other real estate and other assets
|
(81 | ) | 27 | (320 | ) | 69 | ||||||||||
Earnings on life insurance policies
|
78 | 90 | 368 | 267 | ||||||||||||
Other
|
145 | 198 | 486 | 585 | ||||||||||||
Total noninterest income
|
1,648 | 1,506 | 5,054 | 4,530 | ||||||||||||
Noninterest expense
|
||||||||||||||||
Salaries and benefits
|
1,981 | 1,842 | 5,799 | 5,518 | ||||||||||||
Occupancy and equipment
|
574 | 592 | 1,711 | 1,724 | ||||||||||||
Data processing
|
503 | 436 | 1,379 | 1,302 | ||||||||||||
Professional fees
|
251 | 199 | 650 | 582 | ||||||||||||
Supplies and postage
|
118 | 115 | 369 | 394 | ||||||||||||
Advertising and promotional
|
47 | 26 | 128 | 112 | ||||||||||||
Intangible amortization
|
112 | 112 | 336 | 336 | ||||||||||||
Loan and collection expense
|
163 | 146 | 405 | 397 | ||||||||||||
FDIC insurance
|
80 | 108 | 290 | 405 | ||||||||||||
Other
|
338 | 342 | 1,126 | 1,082 | ||||||||||||
Total noninterest expense
|
4,167 | 3,918 | 12,193 | 11,852 | ||||||||||||
Income before income tax
|
1,493 | 1,161 | 4,107 | 3,218 | ||||||||||||
Income tax expense
|
371 | 275 | 949 | 724 | ||||||||||||
Net income
|
$ | 1,122 | $ | 886 | $ | 3,158 | $ | 2,494 | ||||||||
Basic earnings per share
|
$ | 0.34 | $ | 0.27 | $ | 0.96 | $ | 0.76 | ||||||||
Diluted earnings per share
|
$ | 0.34 | $ | 0.27 | $ | 0.96 | $ | 0.76 | ||||||||
Dividends declared per share
|
$ | 0.13 | $ | 0.12 | $ | 0.37 | $ | 0.36 |
(Dollars in thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net income
|
$ | 1,122 | $ | 886 | $ | 3,158 | $ | 2,494 | ||||||||
Other comprehensive income, net of tax:
|
||||||||||||||||
Unrealized holding gains on available for sale securities
|
243 | 756 | 591 | 1,781 | ||||||||||||
Less: Reclassification adjustment for gain recognized in earnings, net of tax
|
13 | 3 | 202 | 44 | ||||||||||||
Other comprehensive income, net of tax
|
230 | 753 | 389 | 1,737 | ||||||||||||
Comprehensive income
|
$ | 1,352 | $ | 1,639 | $ | 3,547 | $ | 4,231 |
(Dollars in thousands)
|
Number of
Shares
|
Common
Stock and
Paid in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income,
Net
|
Total
|
|||||||||||||||
Balance, January 1, 2011
|
3,280,515 | $ | 46,461 | $ | 6,952 | $ | 900 | $ | 54,313 | |||||||||||
Net income
|
2,494 | 2,494 | ||||||||||||||||||
Other comprehensive income | 1,737 | 1,737 | ||||||||||||||||||
Shares issued
|
9,923 | 104 | 104 | |||||||||||||||||
Exercise of stock options
|
477 | |||||||||||||||||||
Change in ESOP repurchase obligation
|
(2 | ) | (2 | ) | ||||||||||||||||
Effect of stock options granted
|
4 | 4 | ||||||||||||||||||
Effect of employee stock purchases
|
11 | 11 | ||||||||||||||||||
Cash dividends declared ($0.36 per share)
|
(1,182 | ) | (1,182 | ) | ||||||||||||||||
Balance, September 30, 2011
|
3,290,915 | $ | 46,578 | $ | 8,264 | $ | 2,637 | $ | 57,479 | |||||||||||
Balance, January 1, 2012
|
3,293,269 | $ | 46,602 | $ | 8,887 | $ | 2,415 | $ | 57,904 | |||||||||||
Net income
|
3,158 | 3,158 | ||||||||||||||||||
Other comprehensive income
|
389 | 389 | ||||||||||||||||||
Shares issued
|
7,701 | 97 | 97 | |||||||||||||||||
Effect of employee stock purchases
|
8 | 8 | ||||||||||||||||||
Cash dividends declared ($0.37 per share)
|
(1,220 | ) | (1,220 | ) | ||||||||||||||||
Balance, September 30, 2012
|
3,300,970 | $ | 46,707 | $ | 10,825 | $ | 2,804 | $ | 60,336 |
(Dollars in thousands)
|
Nine Months Ended
September 30,
|
|||||||
2012
|
2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 3,158 | $ | 2,494 | ||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||
Provision for loan losses
|
1,975 | 2,800 | ||||||
Depreciation
|
679 | 711 | ||||||
Amortization
|
1,150 | 949 | ||||||
Compensation expense on stock options and employee stock purchases
|
8 | 15 | ||||||
Gains on sales of securities
|
(307 | ) | (67 | ) | ||||
Gains on sales of loans
|
(1,206 | ) | (396 | ) | ||||
Loans originated for sale
|
(33,649 | ) | (17,357 | ) | ||||
Proceeds from loan sales
|
35,004 | 17,872 | ||||||
Earnings on bank-owned life insurance
|
(368 | ) | (267 | ) | ||||
Proceeds from life insurance
|
311 | — | ||||||
Gains on sales of other real estate owned
|
(18 | ) | (230 | ) | ||||
Write-downs of other real estate owned
|
346 | 164 | ||||||
Proceeds from sales of other real estate owned
|
763 | 2,866 | ||||||
Deferred
federal income tax benefit
|
(105 | ) | (138 | ) | ||||
Net changes in other assets
|
395 | 2,300 | ||||||
Net changes in other liabilities
|
(178 | ) | (2,171 | ) | ||||
Net cash from operating activities
|
7,958 | 9,545 | ||||||
Cash flows from investing activities:
|
||||||||
Securities available for sale:
|
||||||||
Sales
|
6,799 | 3,031 | ||||||
Maturities, prepayments and calls
|
27,592 | 15,047 | ||||||
Purchases
|
(58,409 | ) | (35,522 | ) | ||||
Sale of Federal Home Loan Bank stock
|
— | 411 | ||||||
Purchase of Federal Reserve Bank stock
|
(1 | ) | (1 | ) | ||||
Loan originations and payments, net
|
15,291 | (9,785 | ) | |||||
Additions to premises and equipment
|
(315 | ) | (413 | ) | ||||
Net cash from investing activities
|
(9,043 | ) | (27,232 | ) | ||||
Cash flows from financing activities:
|
||||||||
Net change in deposits
|
16,675 | 7,509 | ||||||
Net change in repurchase agreements
|
(1,606 | ) | (5,131 | ) | ||||
Net change in federal funds purchased
|
— | 2,400 | ||||||
Proceeds from Federal Home Loan Bank advances
|
— | 250 | ||||||
Payments on Federal Home Loan Bank advances
|
(3,020 | ) | (269 | ) | ||||
Issuance of common stock
|
97 | 104 | ||||||
Cash dividends
|
(1,220 | ) | (1,182 | ) | ||||
Net cash from financing activities
|
10,926 | 3,681 | ||||||
Net change in cash and cash equivalents
|
9,841 | (14,006 | ) | |||||
Beginning cash and cash equivalents
|
17,125 | 24,074 | ||||||
Ending cash and cash equivalents
|
$ | 26,966 | $ | 10,068 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for interest
|
$ | 2,136 | $ | 2,776 | ||||
Cash paid for income taxes
|
$ | 1,225 | $ | 415 | ||||
Loans transferred to other real estate owned
|
$ | 938 | $ | 2,274 | ||||
Securities transferred to other assets
|
$ | 330 | $ | — | ||||
Other real estate owned transferred to premises and equipment
|
$ | 20 | $ | — |
September 30, 2012
|
||||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
||||||||||||
U.S. Treasury
|
$ | 5,177 | $ | 53 | $ | — | $ | 5,230 | ||||||||
U.S. Government and federal agency
|
41,946 | 513 | — | 42,459 | ||||||||||||
State and municipal
|
62,947 | 3,091 | (152 | ) | 65,886 | |||||||||||
Mortgage-backed
|
13,592 | 358 | — | 13,950 | ||||||||||||
Corporate
|
6,903 | 131 | — | 7,034 | ||||||||||||
FDIC-guaranteed financial institution debt
|
2,002 | 8 | — | 2,010 | ||||||||||||
Equity securities
|
1,650 | — | (11 | ) | 1,639 | |||||||||||
Total
|
$ | 134,217 | $ | 4,154 | $ | (163 | ) | $ | 138,208 |
December 31, 2011
|
||||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
||||||||||||
U.S. Government and federal agency
|
$ | 39,829 | $ | 584 | $ | — | $ | 40,413 | ||||||||
State and municipal
|
51,859 | 2,729 | (89 | ) | 54,499 | |||||||||||
Mortgage-backed
|
9,511 | 276 | (7 | ) | 9,780 | |||||||||||
Corporate
|
5,914 | 100 | (3 | ) | 6,011 | |||||||||||
FDIC-guaranteed financial institution debt
|
2,010 | 28 | — | 2,038 | ||||||||||||
Equity securities
|
1,751 | 16 | (232 | ) | 1,535 | |||||||||||
Total
|
$ | 110,874 | $ | 3,733 | $ | (331 | ) | $ | 114,276 |
Agricultural
|
Commercial
and
Industrial
|
Consumer
|
Commercial
Real Estate
|
Construction
Real Estate
|
Residential
Real Estate
|
Unallocated
|
Total
|
|||||||||||||||||||||||||
Allowance for Loan Losses
|
||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2012
|
||||||||||||||||||||||||||||||||
Beginning balance
|
$ | 121 | $ | 690 | $ | 236 | $ | 2,611 | $ | 15 | $ | 1,674 | $ | 262 | $ | 5,609 | ||||||||||||||||
Charge-offs
|
— | (347 | ) | (128 | ) | (84 | ) | — | (44 | ) | — | (603 | ) | |||||||||||||||||||
Recoveries
|
1 | 15 | 52 | 192 | — | 7 | — | 267 | ||||||||||||||||||||||||
Provision
|
18 | 313 | 70 | (378 | ) | (3 | ) | 215 | 265 | 500 | ||||||||||||||||||||||
Ending balance
|
$ | 140 | $ | 671 | $ | 230 | $ | 2,341 | $ | 12 | $ | 1,852 | $ | 527 | $ | 5,773 | ||||||||||||||||
Nine Months Ended September 30, 2012
|
||||||||||||||||||||||||||||||||
Beginning balance
|
$ | 55 | $ | 609 | $ | 197 | $ | 2,300 | $ | 34 | $ | 1,846 | $ | 172 | $ | 5,213 | ||||||||||||||||
Charge-offs
|
— | (377 | ) | (261 | ) | (518 | ) | — | (784 | ) | — | (1,940 | ) | |||||||||||||||||||
Recoveries
|
4 | 45 | 177 | 213 | — | 86 | — | 525 | ||||||||||||||||||||||||
Provision
|
81 | 394 | 117 | 346 | (22 | ) | 704 | 355 | 1,975 | |||||||||||||||||||||||
Ending balance
|
$ | 140 | $ | 671 | $ | 230 | $ | 2,341 | $ | 12 | $ | 1,852 | $ | 527 | $ | 5,773 | ||||||||||||||||
Individually evaluated for impairment
|
$ | — | $ | 159 | $ | — | $ | 101 | $ | — | $ | — | $ | — | $ | 260 | ||||||||||||||||
Collectively evaluated for impairment
|
$ | 140 | $ | 512 | $ | 230 | $ | 2,240 | $ | 12 | $ | 1,852 | $ | 527 | $ | 5,513 | ||||||||||||||||
Three Months Ended September 30, 2011
|
||||||||||||||||||||||||||||||||
Beginning balance
|
$ | 171 | $ | 606 | $ | 209 | $ | 1,691 | $ | 2 | $ | 1,456 | $ | 667 | $ | 4,802 | ||||||||||||||||
Charge-offs
|
— | (159 | ) | (93 | ) | (287 | ) | — | (453 | ) | — | (992 | ) | |||||||||||||||||||
Recoveries
|
3 | 3 | 46 | 7 | — | 15 | — | 74 | ||||||||||||||||||||||||
Provision
|
50 | 324 | 55 | 242 | 1 | 930 | (652 | ) | 950 | |||||||||||||||||||||||
Ending balance
|
$ | 224 | $ | 774 | $ | 217 | $ | 1,653 | $ | 3 | $ | 1,948 | $ | 15 | $ | 4,834 | ||||||||||||||||
Nine Months Ended September 30, 2011
|
||||||||||||||||||||||||||||||||
Beginning balance
|
$ | 181 | $ | 641 | $ | 243 | $ | 1,729 | $ | 2 | $ | 1,554 | $ | 379 | $ | 4,729 | ||||||||||||||||
Charge-offs
|
— | (159 | ) | (262 | ) | (1,092 | ) | — | (1,502 | ) | — | (3,015 | ) | |||||||||||||||||||
Recoveries
|
6 | 9 | 177 | 51 | — | 77 | — | 320 | ||||||||||||||||||||||||
Provision
|
37 | 283 | 59 | 965 | 1 | 1,819 | (364 | ) | 2,800 | |||||||||||||||||||||||
Ending balance
|
$ | 224 | $ | 774 | $ | 217 | $ | 1,653 | $ | 3 | $ | 1,948 | $ | 15 | $ | 4,834 | ||||||||||||||||
Individually evaluated for impairment
|
$ | — | $ | 84 | $ | — | $ | 369 | $ | — | $ | — | $ | — | $ | 453 | ||||||||||||||||
Collectively evaluated for impairment
|
$ | 224 | $ | 690 | $ | 217 | $ | 1,284 | $ | 3 | $ | 1,948 | $ | 15 | $ | 4,381 | ||||||||||||||||
Loans
|
||||||||||||||||||||||||||||||||
September 30, 2012
|
||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | — | $ | 332 | $ | — | $ | 2,780 | $ | — | $ | 1,829 | $ | 4,941 | ||||||||||||||||||
Collectively evaluated for impairment
|
27,542 | 58,891 | 19,132 | 97,015 | 649 | 94,313 | 297,542 | |||||||||||||||||||||||||
Ending balance
|
$ | 27,542 | $ | 59,223 | $ | 19,132 | $ | 99,795 | $ | 649 | $ | 96,142 | $ | 302,483 | ||||||||||||||||||
December 31, 2011
|
||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$ | — | $ | 163 | $ | — | $ | 2,758 | $ | — | $ | 1,580 | $ | 4,501 | ||||||||||||||||||
Collectively evaluated for impairment
|
38,929 | 58,522 | 18,657 | 103,492 | 1,169 | 94,857 | 315,626 | |||||||||||||||||||||||||
Ending balance
|
$ | 38,929 | $ | 58,685 | $ | 18,657 | $ | 106,250 | $ | 1,169 | $ | 96,437 | $ | 320,127 |
Agricultural
|
Commercial and Industrial
|
Commercial Real Estate
|
||||||||||||||||||||||
September 30,
|
December 31,
|
September 30,
|
December 31,
|
September 30,
|
December 31,
|
|||||||||||||||||||
2012
|
2011
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||||||||
Risk ratings 1 and 2
|
$ | 4,530 | $ | 6,486 | $ | 4,371 | $ | 4,149 | $ | 6,972 | $ | 6,403 | ||||||||||||
Risk rating 3
|
14,249 | 20,211 | 39,040 | 30,109 | 46,586 | 45,034 | ||||||||||||||||||
Risk rating 4
|
6,187 | 9,499 | 14,428 | 21,993 | 28,724 | 33,462 | ||||||||||||||||||
Risk rating 5
|
1,337 | 2,672 | 518 | 1,669 | 11,059 | 14,313 | ||||||||||||||||||
Risk rating 6
|
1,236 | 57 | 658 | 680 | 4,387 | 5,009 | ||||||||||||||||||
Risk rating 7
|
3 | 4 | 208 | 85 | 2,067 | 2,029 | ||||||||||||||||||
$ | 27,542 | $ | 38,929 | $ | 59,223 | $ | 58,685 | $ | 99,795 | $ | 106,250 |
Consumer
|
Construction Real Estate
|
Residential Real Estate
|
||||||||||||||||||||||
September 30,
|
December 31,
|
September 30,
|
December 31,
|
September 30,
|
December 31,
|
|||||||||||||||||||
2012
|
2011
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||||||||
Performing
|
$ | 19,116 | $ | 18,634 | $ | 649 | $ | 1,169 | $ | 95,142 | $ | 95,732 | ||||||||||||
Nonperforming
|
16 | 23 | — | — | 1,000 | 705 | ||||||||||||||||||
$ | 19,132 | $ | 18,657 | $ | 649 | $ | 1,169 | $ | 96,142 | $ | 96,437 |
Nine Months Ended September 30, 2012 | ||||||||||||
(Dollars in thousands)
|
Number of
Loans
|
Pre-
Modification
Outstanding
Recorded
Investment
|
Post-
Modification
Outstanding
Recorded
Investment
|
|||||||||
Agricultural
|
1 | $ | 73 | $ | 73 | |||||||
Commercial and industrial
|
2 | 158 | 149 | |||||||||
Consumer
|
1 | 33 | 33 | |||||||||
Commercial real estate
|
2 | 145 | 145 | |||||||||
Residential real estate
|
3 | 355 | 355 | |||||||||
9 | $ | 764 | $ | 755 |
Nine Months Ended September 30, 2011
|
||||||||||||||
(Dollars in thousands)
|
Number of
Loans
|
Pre-
Modification
Outstanding
Recorded
Investment
|
Post-
Modification
Outstanding
Recorded
Investment
|
|||||||||||
Residential real estate
|
5 | $ | 554 | $ | 554 |
Three Months Ended September 30, 2012 |
Nine Months Ended September 30, 2012 |
|||||||||||||||
(Dollars in thousands)
|
Number
of Loans
|
Recorded
Investment
|
Number
of Loans
|
Recorded
Investment
|
||||||||||||
Commercial and industrial
|
3 | $ | 198 | 3 | $ | 198 | ||||||||||
Commercial real estate
|
5 | 1,341 | 5 | 1,341 | ||||||||||||
Consumer
|
1 | 32 | 1 | 32 | ||||||||||||
Residential real estate
|
7 | 1,029 | 8 | 1,176 | ||||||||||||
16 | $ | 2,600 | 17 | $ | 2,747 |
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
||||||||||||||||
September 30, 2012
|
||||||||||||||||||||
With no related allowance recorded
|
||||||||||||||||||||
Agricultural
|
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Commercial and industrial
|
172 | 183 | — | 267 | 6 | |||||||||||||||
Commercial real estate
|
2,027 | 2,529 | — | 1,839 | — | |||||||||||||||
Residential real estate
|
1,830 | 1,762 | — | 1,707 | 48 | |||||||||||||||
Subtotal
|
4,029 | 4,474 | — | 3,813 | 54 | |||||||||||||||
With an allowance recorded
|
||||||||||||||||||||
Agricultural
|
— | — | — | — | — | |||||||||||||||
Commercial and industrial
|
160 | 507 | 160 | 102 | (3 | ) | ||||||||||||||
Commercial real estate
|
753 | 753 | 100 | 1,184 | (2 | ) | ||||||||||||||
Residential real estate
|
— | — | — | — | — | |||||||||||||||
Subtotal
|
913 | 1,260 | 260 | 1,286 | (5 | ) | ||||||||||||||
Total
|
||||||||||||||||||||
Agricultural
|
— | — | — | — | — | |||||||||||||||
Commercial and industrial
|
332 | 690 | 160 | 369 | 3 | |||||||||||||||
Commercial real estate
|
2,780 | 3,282 | 100 | 3,023 | (2 | ) | ||||||||||||||
Residential real estate
|
1,830 | 1,762 | — | 1,707 | 48 | |||||||||||||||
Total
|
$ | 4,942 | $ | 5,734 | $ | 260 | $ | 5,099 | $ | 49 | ||||||||||
December 31, 2011
|
||||||||||||||||||||
With no related allowance recorded
|
||||||||||||||||||||
Agricultural
|
$ | — | $ | — | $ | — | $ | 45 | $ | — | ||||||||||
Commercial and industrial
|
102 | 105 | — | 167 | — | |||||||||||||||
Commercial real estate
|
1,122 | 1,538 | — | 2,369 | 15 | |||||||||||||||
Residential real estate
|
1,580 | 1,580 | — | 1,620 | 50 | |||||||||||||||
Subtotal
|
2,804 | 3,223 | — | 4,201 | 65 | |||||||||||||||
With an allowance recorded
|
||||||||||||||||||||
Agricultural
|
— | — | — | — | — | |||||||||||||||
Commercial and industrial
|
61 | 63 | 7 | 85 | — | |||||||||||||||
Commercial real estate
|
1,636 | 2,120 | 424 | 1,490 | 6 | |||||||||||||||
Residential real estate
|
— | — | — | — | — | |||||||||||||||
Subtotal
|
1,697 | 2,183 | 431 | 1,575 | 6 | |||||||||||||||
Total
|
||||||||||||||||||||
Agricultural
|
— | — | — | 45 | — | |||||||||||||||
Commercial and industrial
|
163 | 168 | 7 | 252 | — | |||||||||||||||
Commercial real estate
|
2,758 | 3,658 | 424 | 3,859 | 21 | |||||||||||||||
Residential real estate
|
1,580 | 1,580 | — | 1,620 | 50 | |||||||||||||||
Total
|
$ | 4,501 | $ | 5,406 | $ | 431 | $ | 5,776 | $ | 71 |
Past
Due
30 to 59 Days
|
Past
Due
60 to 89 Days
|
Past Due
Greater
Than 90
Days (1)
|
Past Due
Total
|
Loans Not
Past Due
|
Total Loans
|
90 Days Past
Due and
Accruing
|
||||||||||||||||||||||
September 30, 2012
|
||||||||||||||||||||||||||||
Agricultural
|
$ | 850 | $ | — | $ | — | $ | 850 | $ | 26,692 | $ | 27,542 | $ | — | ||||||||||||||
Commercial and industrial
|
11 | 45 | 114 | 170 | 59,053 | 59,223 | — | |||||||||||||||||||||
Consumer
|
92 | 7 | 16 | 115 | 19,017 | 19,132 | 12 | |||||||||||||||||||||
Commercial real estate
|
471 | 276 | 1,909 | 2,656 | 97,139 | 99,795 | — | |||||||||||||||||||||
Construction real estate
|
— | — | — | — | 649 | 649 | — | |||||||||||||||||||||
Residential real estate
|
827 | 303 | 1,000 | 2,130 | 94,012 | 96,142 | 345 | |||||||||||||||||||||
$ | 2,251 | $ | 631 | $ | 3,039 | $ | 5,921 | $ | 296,562 | $ | 302,483 | $ | 357 | |||||||||||||||
December 31, 2011
|
||||||||||||||||||||||||||||
Agricultural
|
$ | 151 | $ | — | $ | 22 | $ | 173 | $ | 38,756 | $ | 38,929 | $ | — | ||||||||||||||
Commercial and industrial
|
541 | 143 | 97 | 781 | 57,904 | 58,685 | — | |||||||||||||||||||||
Consumer
|
104 | 52 | 23 | 179 | 18,478 | 18,657 | 2 | |||||||||||||||||||||
Commercial real estate
|
1,752 | 713 | 1,816 | 4,281 | 101,969 | 106,250 | — | |||||||||||||||||||||
Construction real estate
|
— | — | — | — | 1,169 | 1,169 | — | |||||||||||||||||||||
Residential real estate
|
1,320 | 1,015 | 705 | 3,040 | 93,397 | 96,437 | 68 | |||||||||||||||||||||
$ | 3,868 | $ | 1,923 | $ | 2,663 | $ | 8,454 | $ | 311,673 | $ | 320,127 | $ | 70 |
(1)
|
Includes nonaccrual loans.
|
September 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
Agricultural
|
$ | — | $ | 26 | ||||
Commercial and industrial
|
319 | 143 | ||||||
Consumer
|
4 | 22 | ||||||
Commercial real estate
|
3,018 | 2,790 | ||||||
Construction real estate
|
— | — | ||||||
Residential real estate
|
805 | 1,174 | ||||||
$ | 4,146 | $ | 4,155 |
(Dollars in thousands, except per share data)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Basic Earnings Per Share
|
||||||||||||||||
Net income available to common
|
||||||||||||||||
Shareholders
|
$ | 1,122 | $ | 886 | $ | 3,158 | $ | 2,494 | ||||||||
Weighted average common shares outstanding
|
3,299,424 | 3,289,203 | 3,296,462 | 3,285,377 | ||||||||||||
Basic earnings per share
|
$ | 0.34 | $ | 0.27 | $ | 0.96 | $ | 0.76 | ||||||||
Diluted Earnings Per Share
|
||||||||||||||||
Net income available to common Shareholders
|
$ | 1,122 | $ | 886 | $ | 3,158 | $ | 2,494 | ||||||||
Weighted average common shares outstanding
|
3,299,424 | 3,289,203 | 3,296,462 | 3,285,377 | ||||||||||||
Plus dilutive stock options
|
1,100 | — | 436 | — | ||||||||||||
Weighted average common shares outstanding and potentially dilutive shares
|
3,300,524 | 3,289,203 | 3,296,898 | 3,285,377 | ||||||||||||
|
||||||||||||||||
Diluted earnings per share
|
$ | 0.34 | $ | 0.27 | $ | 0.96 | $ | 0.76 |
Carrying
Amount
|
Estimated
Fair Value
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||||
September 30, 2012
|
||||||||||||||||||||
Assets:
|
||||||||||||||||||||
Cash and due from banks
|
$ | 26,966 | $ | 26,966 | $ | 26,966 | $ | — | $ | — | ||||||||||
Securities available for sale
|
138,208 | 138,208 | — | 135,132 | 3,076 | |||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock
|
3,750 | 3,750 | — | 3,750 | — | |||||||||||||||
Loans held for sale
|
887 | 919 | — | 919 | — | |||||||||||||||
Loans, net
|
296,710 | 302,398 | — | — | 302,398 | |||||||||||||||
Liabilities:
|
||||||||||||||||||||
Noninterest-bearing deposits
|
82,092 | 82,092 | 82,092 | — | — | |||||||||||||||
Interest-bearing deposits
|
337,948 | 339,230 | — | 339,230 | — | |||||||||||||||
Repurchase agreements
|
20,263 | 19,487 | — | 19,487 | — | |||||||||||||||
Federal Home Loan Bank advances
|
5,427 | 5,524 | — | 5,524 | — |
Carrying
Amount
|
Estimated
Fair Value
|
|||||||
December 31, 2011
|
||||||||
Assets:
|
||||||||
Cash and due from banks
|
$ | 17,125 | $ | 17,125 | ||||
Securities available for sale
|
114,276 | 114,276 | ||||||
Federal Home Loan Bank and Federal Reserve Bank stock
|
3,749 | 3,749 | ||||||
Loans held for sale
|
1,262 | 1,262 | ||||||
Loans, net
|
314,914 | 319,017 | ||||||
Liabilities:
|
||||||||
Noninterest-bearing deposits
|
78,263 | 78,263 | ||||||
Interest-bearing deposits
|
325,102 | 326,123 | ||||||
Repurchase agreements
|
21,869 | 21,083 | ||||||
Federal Home Loan Bank advances
|
8,447 | 8,664 |
Quoted Prices
in Active
Markets for Identical
Assets (Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Balance at
Date Indicated
|
|||||||||||||
Investment Securities, Available for Sale – September 30, 2012
|
||||||||||||||||
U.S. Treasury
|
$ | — | $ | 5,230 | $ | — | $ | 5,230 | ||||||||
U.S. Government and federal agency
|
— | 42,459 | — | 42,459 | ||||||||||||
State and municipal
|
— | 63,310 | 2,576 | 65,886 | ||||||||||||
Mortgage-backed
|
— | 13,950 | — | 13,950 | ||||||||||||
Corporate
|
— | 7,034 | — | 7,034 | ||||||||||||
FDIC-guaranteed financial institution debt
|
— | 2,010 | — | 2,010 | ||||||||||||
Equity securities
|
— | 1,139 | 500 | 1,639 | ||||||||||||
Total
|
$ | — | $ | 135,132 | $ | 3,076 | $ | 138,208 | ||||||||
Investment Securities, Available for Sale - December 31, 2011
|
||||||||||||||||
U.S. Government and federal agency
|
$ | — | $ | 40,413 | $ | — | $ | 40,413 | ||||||||
State and municipal
|
— | 52,228 | 2,271 | 54,499 | ||||||||||||
Mortgage-backed
|
— | 9,780 | — | 9,780 | ||||||||||||
Corporate
|
— | 6,011 | — | 6,011 | ||||||||||||
FDIC-guaranteed financial institution debt
|
— | 2,038 | — | 2,038 | ||||||||||||
Equity securities
|
— | 1,035 | 500 | 1,535 | ||||||||||||
Total
|
$ | — | $ | 111,505 | $ | 2,771 | $ | 114,276 |
2012
|
2011
|
|||||||
Investment Securities, Available for Sale
|
||||||||
Balance, January 1
|
$ | 2,771 | $ | 2,839 | ||||
Total realized and unrealized gains included in income
|
— | — | ||||||
Total unrealized gains included in other comprehensive income
|
6 | 185 | ||||||
Purchases of securities
|
563 | — | ||||||
Calls, maturities, and payments
|
(244) | (280 | ) | |||||
Transfers into Level 3
|
291 | 67 | ||||||
Transfers out of Level 3
|
(311) | — | ||||||
Balance, September 30
|
$ | 3,076 | $ | 2,811 |
Balance at
Dates Indicated
|
Quoted Prices
in Active
Markets for Identical
Assets
(Level 1) |
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Impaired Loans
|
||||||||||||||||
September 30, 2012
|
$ | 4,942 | $ | — | $ | — | $ | 4,942 | ||||||||
December 31, 2011
|
$ | 4,501 | $ | — | $ | — | $ | 4,501 | ||||||||
Other Real Estate
|
||||||||||||||||
September 30, 2012
|
$ | 1,761 | $ | — | $ | — | $ | 1,761 | ||||||||
December 31, 2011
|
$ | 1,934 | $ | — | $ | — | $ | 1,934 |
(Dollars in thousands)
|
Nine Months Ended September 30,
|
|||||||||||||||||||||||
2012
|
2011
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Rate
|
Average
Balance
|
Interest
|
Rate
|
|||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Loans (1)
|
$ | 308,141 | $ | 12,795 | 5.54 | % | $ | 315,767 | $ | 13,792 | 5.82 | % | ||||||||||||
Taxable securities (2) (3)
|
89,213 | 1,471 | 2.20 | 69,586 | 1,312 | 2.51 | ||||||||||||||||||
Nontaxable securities (1) (2)
|
37,569 | 1,523 | 5.41 | 33,556 | 1,452 | 5.77 | ||||||||||||||||||
Other
|
12,076 | 19 | 0.21 | 8,870 | 16 | 0.24 | ||||||||||||||||||
Interest-earning assets
|
446,999 | 15,808 | 4.72 | 427,779 | 16,572 | 5.17 | ||||||||||||||||||
Noninterest-earning assets
|
54,117 | 56,895 | ||||||||||||||||||||||
Total assets
|
$ | 501,116 | $ | 484,674 | ||||||||||||||||||||
Liabilities and Shareholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing demand deposits
|
$ | 138,216 | 300 | 0.29 | % | $ | 125,356 | 416 | 0.44 | % | ||||||||||||||
Savings deposits
|
49,166 | 27 | 0.07 | 45,413 | 42 | 0.12 | ||||||||||||||||||
Certificates of deposit
|
139,843 | 1,316 | 1.25 | 154,525 | 1,822 | 1.57 | ||||||||||||||||||
Advances from Federal Home Loan Bank
|
7,408 | 247 | 4.45 | 8,464 | 230 | 3.62 | ||||||||||||||||||
Other
|
22,287 | 171 | 1.02 | 20,650 | 217 | 1.40 | ||||||||||||||||||
Interest-bearing liabilities
|
356,920 | 2,061 | 0.77 | 354,408 | 2,727 | 1.03 | ||||||||||||||||||
Noninterest-bearing demand deposits
|
81,350 | 71,147 | ||||||||||||||||||||||
Other noninterest-bearing liabilities
|
3,749 | 3,456 | ||||||||||||||||||||||
Total liabilities
|
442,019 | 429,011 | ||||||||||||||||||||||
Shareholders’ equity
|
59,097 | 55,663 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$ | 501,116 | $ | 484,674 | ||||||||||||||||||||
Net interest income (tax-equivalent basis) – interest spread
|
13,747 | 3.95 | % | 13,845 | 4.14 | % | ||||||||||||||||||
Tax-equivalent adjustment (1)
|
(526 | ) | (504 | ) | ||||||||||||||||||||
Net interest income
|
$ | 13,221 | $ | 13,341 | ||||||||||||||||||||
Net interest income as a percentage of earning assets (tax-equivalent basis)
|
4.10 | % | 4.32 | % |
(1)
|
Adjusted to a fully tax-equivalent basis to facilitate comparison to the taxable interest-earning assets. The adjustment uses an incremental tax rate of 34% for the periods presented.
|
|
(2)
|
Includes the effect of unrealized gains or losses on securities.
|
|
(3)
|
Taxable securities include dividend income from Federal Home Loan Bank and Federal Reserve Bank stock.
|
(Dollars in thousands)
|
Nine Months Ended September 30,
2012 Over 2011
|
|||||||||||
Total
|
Volume
|
Rate
|
||||||||||
Increase (decrease) in interest income (1)
|
||||||||||||
Loans (2)
|
$ | (997 | ) | $ | (328 | ) | $ | (669 | ) | |||
Taxable securities
|
159 | 414 | (255 | ) | ||||||||
Nontaxable securities (2)
|
71 | 207 | (136 | ) | ||||||||
Other
|
3 | 6 | (3 | ) | ||||||||
Net change in tax-equivalent income
|
(764 | ) | 299 | (1,063 | ) | |||||||
Increase (decrease) in interest expense (1)
|
||||||||||||
Interest-bearing demand deposits
|
(116 | ) | 61 | (177 | ) | |||||||
Savings deposits
|
(15 | ) | 5 | (20 | ) | |||||||
Certificates of deposit
|
(506 | ) | (162 | ) | (344 | ) | ||||||
Advances from Federal Home Loan Bank
|
17 | (43 | ) | 60 | ||||||||
Other
|
(46 | ) | 25 | (71 | ) | |||||||
Net change in interest expense
|
(666 | ) | (114 | ) | (552 | ) | ||||||
Net change in tax-equivalent net interest income
|
$ | (98 | ) | $ | 413 | $ | (511 | ) |
(1)
|
The volume variance is computed as the change in volume (average balance) multiplied by the previous year’s interest rate. The rate variance is computed as the change in interest rate multiplied by the previous year’s volume (average balance). The change in interest due to both volume and rate has been allocated to the volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.
|
|
(2)
|
Interest on nontaxable investment securities and loans has been adjusted to a fully tax-equivalent basis using an incremental tax rate of 34% for the periods presented.
|
(Dollars in thousands)
|
2012
|
2011
|
||||||||||||||
Charge-offs
|
Recoveries
|
Charge-offs
|
Recoveries
|
|||||||||||||
Agricultural
|
$ | — | $ | 4 | $ | — | $ | 6 | ||||||||
Commercial and industrial
|
377 | 45 | 159 | 9 | ||||||||||||
Consumer
|
261 | 177 | 262 | 177 | ||||||||||||
Real estate, commercial
|
518 | 213 | 1,092 | 51 | ||||||||||||
Real estate, residential
|
784 | 86 | 1,502 | 77 | ||||||||||||
$ | 1,940 | $ | 525 | $ | 3,015 | $ | 320 |
(Dollars in thousands)
|
||||||||
September 30,
2012
|
December 31,
2011
|
|||||||
Loans accounted for on a nonaccrual basis
|
$ | 4,146 | $ | 4,155 | ||||
Accruing loans contractually past due 90 days or more as to principal or interest payments
|
357 | 70 | ||||||
Loans considered troubled debt restructurings, which are not included above
|
3,025 | 2,448 | ||||||
Total
|
$ | 7,528 | $ | 6,673 |
Total
|
||||||||||||
Risk-
|
||||||||||||
(Dollars in thousands)
|
Leverage
|
Tier 1
|
Based
|
|||||||||
Capital |
Capital
|
Capital
|
||||||||||
Capital balances at September 30, 2012
|
$ | 41,240 | $ | 41,240 | $ | 45,261 | ||||||
Required regulatory capital to be considered “well capitalized”
|
24,435 | 20,239 | 33,732 | |||||||||
Capital in excess of “well capitalized” minimum
|
16,805 | 21,001 | 11,529 | |||||||||
Capital ratios at September 30, 2012
|
8.44 | % | 12.23 | % | 13.42 | % | ||||||
Regulatory capital ratios – minimum requirement to be considered “well capitalized”
|
5.00 | % | 6.00 | % | 10.00 | % |
Exhibit
Number
|
Document
|
||
3.1
|
Amended and Restated Articles of Incorporation of the Registrant. Previously filed as an exhibit to the Registrant’s Form 10-Q Quarterly Report for the quarter ended June 30, 2008. Here incorporated by reference.
|
||
3.2
|
Bylaws of the Registrant as currently in effect and any amendments thereto. Previously filed as an exhibit to the Registrant’s Form 10-K Annual Report for the year ended December 31, 2008. Here incorporated by reference.
|
||
10.1
|
ChoiceOne Financial Services, Inc. Stock Incentive Plan of 2012. Previous filed as an appendix to the Registrant’s Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on March 30, 2012. Here incorporated by reference.
|
||
31.1
|
Certification of President and Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
31.2
|
Certification of Treasurer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32.1
|
Certification pursuant to 18 U.S.C. § 1350.
|
||
101.1*
|
Interactive Data File.
*As provided in Rule 406T of Regulation S-T, this information shall not be deemed filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Exchange Act or otherwise subject to liability under those sections.
|
CHOICEONE FINANCIAL SERVICES, INC.
|
||
Date: November 14, 2012
|
/s/ James A. Bosserd
|
|
James A. Bosserd
President and Chief Executive Officer
(Principal Executive Officer)
|
||
Date: November 14, 2012
|
/s/ Thomas L. Lampen
|
|
Thomas L. Lampen
Treasurer
(Principal Financial and Accounting Officer)
|
Exhibit
Number
|
Document
|
||
3.1
|
Amended and Restated Articles of Incorporation of the Registrant. Previously filed as an exhibit to the Registrant’s Form 10-Q Quarterly Report for the quarter ended June 30, 2008. Here incorporated by reference.
|
||
3.2
|
Bylaws of the Registrant as currently in effect and any amendments thereto. Previously filed as an exhibit to the Registrant’s Form 10-K Annual Report for the year ended December 31, 2008. Here incorporated by reference.
|
||
10.1
|
ChoiceOne Financial Services, Inc. Stock Incentive Plan of 2012. Previous filed as an appendix to the Registrant’s Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on March 30, 2012. Here incorporated by reference.
|
||
101.1*
|
Interactive Data File.
*As provided in Rule 406T of Regulation S-T, this information shall not be deemed filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Exchange Act or otherwise subject to liability under those sections.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ChoiceOne Financial Services, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
Date: November 14, 2012
/s/ James A. Bosserd
|
|
James A. Bosserd
President and Chief Executive Officer
ChoiceOne Financial Services, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ChoiceOne Financial Services, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
Date: November 14, 2012
/s/ Thomas L. Lampen
|
|
Thomas L. Lampen
Treasurer
ChoiceOne Financial Services, Inc.
|
Date: November 14, 2012
|
/s/ James A. Bosserd
|
James A. Bosserd
President and Chief Executive Officer
|
|
Date: November 14, 2012
|
/s/ Thomas L. Lampen
|
Thomas L. Lampen
Treasurer
|
EARNINGS PER SHARE (Details Narrative)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Earnings Per Share Details | ||||
Stock options considered to be anti-dilutive to earnings per share | 28,625 | 46,656 | 28,625 | 46,656 |
FAIR VALUE MEASUREMENTS (Details 2) (Fair Value measured on a Non-Recurring Basis, USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Estimated Fair Value
|
||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired Loans | $ 4,942 | $ 4,501 |
Other Real Estate | 1,761 | 1,934 |
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired Loans | ||
Other Real Estate | ||
Significant Other Observable Inputs (Level 2)
|
||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired Loans | ||
Other Real Estate | ||
Significant Unobservable Inputs (Level 3)
|
||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired Loans | 4,942 | 4,501 |
Other Real Estate | $ 1,761 | $ 1,934 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Summary Of Significant Accounting Policies | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include ChoiceOne Financial Services, Inc. (“ChoiceOne” or the “Registrant”) and its wholly-owned subsidiary, ChoiceOne Bank (the “Bank”), and the Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc. Intercompany transactions and balances have been eliminated in consolidation.
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, prevailing practices within the banking industry and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
The accompanying consolidated financial statements reflect all adjustments ordinary in nature which are, in the opinion of management, necessary for a fair presentation of the Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, the Consolidated Statements of Income for the three- and nine-month periods ended September 30, 2012 and September 30, 2011, the Consolidated Statements of Comprehensive Income for the three- and nine-month periods ended September 30, 2012 and September 30, 2011, the Consolidated Statements of Changes in Shareholders’ Equity for the nine-month periods ended September 30, 2012 and September 30, 2011, and the Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2012 and September 30, 2011. Operating results for the nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.
The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2011.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level believed adequate by management to absorb probable incurred losses inherent in the consolidated loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, assessments of the impact of current economic conditions on the portfolio and historical loss experience of seasoned loan portfolios. See Note 3 to the interim consolidated financial statements for additional information.
Management believes the accounting estimate related to the allowance for loan losses is a “critical accounting estimate” because (1) the estimate is highly susceptible to change from period to period because of assumptions concerning the changes in the types and volumes of the portfolios and economic conditions and (2) the impact of recognizing an impairment or loan loss could have a material effect on ChoiceOne’s assets reported on the balance sheet as well as its net income.
Stock Transactions
A total of 3,603 shares of common stock were issued to the Registrant’s Board of Directors for a cash price of $50,000 under the terms of the Directors’ Stock Purchase Plan in the first nine months of 2012. A total of 4,036 shares were issued to employees for a cash price of $47,000 under the Employee Stock Purchase Plan in the first three quarters of 2012. A total of 62 shares were issued upon the exercise of stock options in the first three quarters of 2012.
Reclassifications
Certain amounts presented in prior periods have been reclassified to conform to the current presentation.
New Accounting Pronouncements
In July 2012, the Financial Accounting Standards Board issued ASU No. 2012-02, Intangibles – Goodwill and Other: Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”) to reduce the cost and complexity of testing indefinite-lived intangible assets for impairment. ASU 2012-02 gives an entity the option of first assessing qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Subtopic 350-30. An entity also has the option to bypass the qualitative assessment for any indefinite-lived asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. ASU 2012-02 is effective for fiscal years beginning after September 15, 2012 and early adoption is permitted. The adoption of ASU 2012-02 is not expected to have a material impact on ChoiceOne’s consolidated financial condition or results of operations.
|