10-Q 1 mbc_10q-093012.htm FORM 10-Q mbc_10q-093012.htm
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.   20552
 
FORM 10 - Q
 
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2012
 
 
Commission File Number 000-32561
Middlefield Banc Corp.

(Exact name of registrant as specified in its charter)
 
Ohio   34 - 1585111
(State or other jurisdiction of incorporation or organization)
  (IRS Employer Identification No.)
 
15985 East High Street, Middlefield, Ohio  44062-9263
(Address of principal executive offices)
 
(440) 632-1666
(Registrant's telephone number, including area code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   YES []  NO [ ]
 
 
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 (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   [√]  NO [ ]
 
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 definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer  [ ]    Accelerated filer  [ ]    Non-accelerated filer [  ]   Small reporting company []
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES [ ]   NO []
 
 
State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date:
 
 
 
Class:  Common Stock, without par value
Outstanding at November 5, 2012:  1,983,491
 
 
1

 
 
MIDDLEFIELD BANC CORP.
 
INDEX
 
       
Page
Number
         
PART I - FINANCIAL INFORMATION
   
         
 
Item 1. Financial Statements
   
         
 
Consolidated Balance Sheet (Unaudited) as of September 30, 2012 and December 31, 2011
  3
         
 
Consolidated Statement of Income (Unaudited) for the Three and Nine Months ended September 30, 2012 and 2011
  4
         
 
Consolidated Statement of Comprehensive Income (Unaudited) for the Three and Nine Months ended September 30, 2012
  5
         
 
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) for the Nine Months ended September 30, 2012
  6
         
 
Consolidated Statement of Cash Flows (Unaudited) for the Nine Months ended September 30, 2012 and 2011
  7
         
 
Notes to Unaudited Consolidated Financial Statements
  8
         
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
  31
         
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
  44
         
 
Item 4. Controls and Procedures
  46
         
PART II - OTHER INFORMATION
   
         
 
Item 1. Legal Proceedings
  47
         
 
Item 1A. Risk Factors
  47
         
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  47
         
 
Item 3. Default Upon Senior Securities
  47
         
 
Item 4. Mine Safety Disclosures
  47
         
 
Item 5. Other Information
  47
         
 
Item 6. Exhibits and Reports on Form 8 - K
  47
         
SIGNATURES
  55
         
Exhibit 31.1
   
Exhibit 31.2
   
Exhibit 32
   
 
 
2

 
 
MIDDLEFIELD BANC CORP.
CONSOLIDATED BALANCE SHEET
(Dollar amounts in thousands)
(Unaudited)
 
   
September 30,
2012
   
December 31,
2011
 
             
ASSETS
           
Cash and due from banks
  $ 32,735     $ 15,730  
Federal funds sold
    19,871       18,660  
Cash and cash equivalents
    52,606       34,390  
Investment securities available for sale
    179,140       193,977  
Loans
    409,175       401,880  
Less allowance for loan losses
    7,173       6,819  
Net loans
    402,002       395,061  
Premises and equipment
    8,701       8,264  
Goodwill
    4,559       4,559  
Bank-owned life insurance
    8,465       8,257  
Accrued interest and other assets
    8,708       10,043  
                 
TOTAL ASSETS
  $ 664,181     $ 654,551  
                 
LIABILITIES
               
Deposits:
               
Noninterest-bearing demand
  $ 70,505     $ 63,348  
Interest-bearing demand
    65,164       55,853  
Money market
    72,831       75,621  
Savings
    174,273       167,207  
Time
    201,965       218,933  
Total deposits
    584,738       580,962  
Short-term borrowings
    6,518       7,392  
Other borrowings
    15,836       16,831  
Accrued interest and other liabilities
    2,003       2,113  
TOTAL LIABILITIES
    609,095       607,298  
                 
STOCKHOLDERS' EQUITY
               
Common stock, no par value; 10,000,000 shares authorized, 2,172,934 and 1,951,868 shares issued
    34,082       31,240  
Retained earnings
    21,736       18,206  
Accumulated other comprehensive income
    6,002       4,541  
Treasury stock, at cost; 189,530 shares
    (6,734 )     (6,734 )
TOTAL STOCKHOLDERS' EQUITY
    55,086       47,253  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 664,181     $ 654,551  
 
See accompanying notes to the unaudited consolidated financial statements.
 
 
3

 
 
MIDDLEFIELD BANC CORP.
CONSOLIDATED STATEMENT OF INCOME
(Dollar amounts in thousands, except per share data)
(Unaudited)
 
   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2012
   
2011
   
2012
   
2011
 
INTEREST INCOME
                       
Interest and fees on loans
  $ 5,810     $ 5,555     $ 16,988     $ 16,255  
Interest-bearing deposits in other institutions
    7       4       19       8  
Federal funds sold
    6       -       13       13  
Investment securities:
                               
Taxable interest
    749       1,220       2,455       3,832  
Tax-exempt interest
    749       724       2,249       2,124  
Dividends on stock
    21       25       73       76  
Total interest income
    7,342       7,528       21,797       22,308  
                                 
INTEREST EXPENSE
                               
Deposits
    1,418       1,836       4,349       5,877  
Short term borrowings
    61       59       219       177  
Other borrowings
    78       100       244       313  
Trust preferred securities
    45       139       122       412  
Total interest expense
    1,602       2,134       4,934       6,779  
                                 
NET INTEREST INCOME
    5,740       5,394       16,863       15,529  
                                 
Provision for loan losses
    143       920       1,193       2,485  
                                 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    5,597       4,474       15,670       13,044  
                                 
NONINTEREST INCOME
                               
Service charges on deposit accounts
    481       455       1,383       1,299  
Investment securities gains (losses), net
    152       6       448       (16 )
Earnings on bank-owned life insurance
    71       70       208       209  
Other income
    164       155       640       487  
Total noninterest income
    868       686       2,679       1,979  
                                 
NONINTEREST EXPENSE
                               
Salaries and employee benefits
    1,705       1,754       5,255       5,388  
Occupancy expense
    233       242       703       737  
Equipment expense
    186       175       557       488  
Data processing costs
    184       162       574       515  
Ohio state franchise tax
    160       126       417       351  
Federal deposit insurance expense
    250       176       751       673  
Professional fees
    270       181       670       577  
Losses on other real estate owned
    188       195       238       498  
Other expense
    946       895       2,780       2,676  
Total noninterest expense
    4,122       3,906       11,945       11,903  
                                 
Income before income taxes
    2,343       1,254       6,404       3,120  
Income taxes
    494       175       1,392       319  
                                 
NET INCOME
  $ 1,849     $ 1,079     $ 5,012     $ 2,801  
                                 
EARNINGS PER SHARE
                               
Basic
  $ 0.93     $ 0.63     $ 2.66     $ 1.69  
Diluted
    0.93       0.63       2.65       1.69  
                                 
DIVIDENDS DECLARED PER SHARE
  $ 0.26     $ 0.26     $ 0.78     $ 0.78  
 
See accompanying notes to the unaudited consolidated financial statements.
 
 
4

 
 
MIDDLEFIELD BANC CORP.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Dollar amounts in thousands)
(Unaudited)
 
   
Three Months Ended
September 30
   
Nine Months Ended
September 30
 
   
2012
   
2011
   
2012
   
2011
 
                         
Net income
  $ 1,849     $ 1,079     $ 5,012     $ 2,801  
                                 
Other comprehensive income:
                               
Net unrealized holding gain on available for sale securities
    838       3,238       2,662       6,746  
Tax effect
    (285 )     (1,124 )     (905 )     (2,294 )
                                 
Reclassification adjustment for (gains) losses included in net income
    (152 )     (6 )     (448 )     16  
Tax effect
    52       2       152       (5 )
                                 
Total other comprehensive income
    453       2,110       1,461       4,463  
                                 
Comprehensive income
  $ 2,302     $ 3,189     $ 6,473     $ 7,264  
 
See accompanying notes to the unaudited consolidated financial statements.
 
 
5

 
 
MIDDLEFIELD BANC CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollar amounts in thousands, except dividend per share amount)
(Unaudited)
 
   
Common
Stock
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income
   
Treasury
Stock
   
Total
Stockholders'
Equity
 
                               
Balance, December 31, 2011
  $ 31,240     $ 18,206     $ 4,541     $ (6,734 )   $ 47,253  
                                         
Net income
            5,012                       5,012  
Comprehensive income
                    1,461               1,461  
Stock-based compensation expense (1,722 shares)
    32                               32  
Common stock issuance (196,635 shares), net of issuance costs of $816
    2,329                               2,329  
Dividend reinvestment and purchase plan (22,708 shares)
    481                               481  
Cash dividends ($0.78 per share)
            (1,482 )                     (1,482 )
                                         
Balance, September 30, 2012
  $ 34,082     $ 21,736     $ 6,002     $ (6,734 )   $ 55,086  
 
See accompanying notes to the unaudited consolidated financial statements.
 
 
6

 
 
MIDDLEFIELD BANC CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
 
   
Nine Months Ended
September 30,
 
   
2012
   
2011
 
OPERATING ACTIVITIES
           
Net income
  $ 5,012     $ 2,801  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Provision for loan losses
    1,193       2,485  
Investment securities (gains) losses, net
    (448 )     16  
Depreciation and amortization
    663       639  
Amortization of premium and discount on investment securities
    674       247  
Amortization of deferred loan fees, net
    (139 )     (120 )
Earnings on bank-owned life insurance
    (208 )     (209 )
Deferred income taxes
    220       (173 )
Stock-based compensation expense
    32       59  
Losses on other real estate owned
    238       498  
Increase in accrued interest receivable
    (364 )     (384 )
Decrease in accrued interest payable
    (88 )     (73 )
Decrease in prepaid federal deposit insurance
    633       642  
Other, net
    (95 )     (746 )
Net cash provided by operating activities
    7,323       5,682  
                 
INVESTING ACTIVITIES
               
Investment securities available for sale:
               
Proceeds from repayments and maturities
    40,227       56,940  
Proceeds from sale of securities
    27,426       24,305  
Purchases
    (50,828 )     (77,429 )
Increase in loans, net
    (8,826 )     (18,217 )
Proceeds from the sale of other real estate owned
    542       777  
Purchase of premises and equipment
    (883 )     (321 )
Net cash provided by (used for) investing activities
    7,658       (13,945 )
                 
FINANCING ACTIVITIES
               
Net increase in deposits
    3,776       21,987  
Decrease in short-term borrowings, net
    (874 )     (724 )
Repayment of other borrowings
    (995 )     (1,366 )
Common stock issuance
    2,329       2,210  
Proceeds from dividend reinvestment & purchase plan
    481       414  
Cash dividends
    (1,482 )     (1,306 )
Net cash provided by financing activities
    3,235       21,215  
                 
Increase in cash and cash equivalents
    18,216       12,952  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    34,390       30,635  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 52,606     $ 43,587  
                 
SUPPLEMENTAL INFORMATION
               
Cash paid during the year for:
               
Interest on deposits and borrowings
  $ 5,022     $ 6,852  
Income taxes
    1,250       515  
                 
Non-cash investing transactions:
               
Transfers from loans to other real estate owned
  $ 916     $ 1,146  
 
See accompanying notes to the unaudited consolidated financial statements.
 
 
7

 
 
MIDDLEFIELD BANC CORP.
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 

NOTE 1 - BASIS OF PRESENTATION
 
The consolidated financial statements of Middlefield Banc Corp. ("Company") include its two bank subsidiaries, The Middlefield Banking Company (“MB”) and Emerald Bank (“EB”), and a non-bank asset resolution subsidiary EMORECO, Inc. All significant inter-company items have been eliminated.

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles and the instructions for Form 10-Q and Article 10 of Regulation S-X.  In management’s opinion, the financial statements include all adjustments, consisting of normal recurring adjustments, that the Company considers necessary to fairly state the Company’s financial position and the results of operations and cash flows.  The consolidated balance sheet at December 31, 2011, has been derived from the audited financial statements at that date but does not include all of the necessary informational disclosures and footnotes as required by U. S. generally accepted accounting principles.  The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included with Middlefield’s Form 10-K for the year ended December 31, 2011 (File No. 000-32561). The results of Middlefield’s operations for any interim period are not necessarily indicative of the results of Middlefield’s operations for any other interim period or for a full fiscal year.

Recent Accounting Pronouncements
 
In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other Topics (Topic 350), Testing Goodwill for Impairment.  The objective of this Update is to simplify how entities, both public and nonpublic, test goodwill for impairment.  The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350.  The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent.  Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.  The amendments in this Update apply to all entities, both public and nonpublic, that have goodwill reported in their financial statements and are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.  This ASU did not have a significant impact on the Company’s financial statements.
 
In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210):  Disclosures about Offsetting Assets and Liabilities.  The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement.  The requirements amend the disclosure requirements on offsetting in Section 210-20-50.  This information will enable users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements on an entity's financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update.  An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.  An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented.  This ASU is not expected to have a significant impact on the Company’s financial statements.
 
 
8

 

NOTE 2 - STOCK-BASED COMPENSATION
 
The Company has no unvested stock options outstanding and no unrecognized stock-based compensation costs outstanding as of September 30, 2012.
 
Stock option activity during the nine months ended September 30, 2012 and 2011 is as follows:
 
   
2012
   
Weighted-
average
Exercise
Price
   
2011
   
Weighted-
average
Exercise
Price
 
                         
Outstanding, January 1
    88,774     $ 26.81       89,077     $ 27.87  
Granted
    -       -       9,000       17.55  
Exercised
    -       -       -       -  
Forfeited
    (420 )     36.86       (7,549 )     29.22  
                                 
Outstanding, September 30
    88,354     $ 26.76       90,528     $ 26.73  
                                 
Exercisable, September 30
    88,354     $ 26.76       81,528     $ 27.75  
 
 
9

 
 
NOTE 3 - EARNINGS PER SHARE
 
The Company provides dual presentation of Basic and Diluted earnings per share.  Basic earnings per share uses net income as reported as the numerator and the actual average shares outstanding as the denominator.  Diluted earnings per share includes any dilutive effects of options, warrants, and convertible securities.
 
There are no convertible securities that would affect the denominator in calculating basic and diluted earnings per share. The following tables set forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation.
 
   
For the Three
Months Ended
September 30,
   
For the Nine
Months Ended
September 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Weighted average common shares outstanding
    2,167,711       1,894,207       2,077,027       1,847,945  
                                 
Average treasury stock shares
    (189,530 )     (189,530 )     (189,530 )     (189,530 )
                                 
Weighted average common shares and common stock equivalents used to calculate basic earnings per share
    1,978,181       1,704,677       1,887,497       1,658,415  
                                 
Additional common stock equivalents (stock options) used to calculate diluted earnings per share
    5,682       -       4,236       -  
                                 
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share
    1,983,863       1,704,677       1,891,733       1,658,415  
 
The average share price for the quarter ended September 30, 2012 was $22.85 while the year-to-date average price was $21.08.  Options to purchase 88,354 shares of common stock, at prices ranging from $17.55 to $40.24, were outstanding at September 30, 2012.  Of those options, 9,000 were considered dilutive based on the average market price exceeding the strike price for the nine months ended September 30, 2012.  The three month period ended with 17,536 shares considered dilutive.  In accordance with the subscription agreement entered into by an institutional investor, there was also an additional 11,332 shares, at $16 per share, considered dilutive for the three and nine-months ended September 30, 2012.  The remaining options had no dilutive effect on the earnings per share.
 
The average share price for the quarter ended September 30, 2011 was $17.23 while the year-to-date average price was $17.36.  The options to purchase 90,528 shares of common stock at prices ranging from $17.55 to $40.24 were outstanding during the three and nine months ended September 30, 2011 but were not included in the computation of diluted earnings per share as they were anti-dilutive due to the strike price being greater than the average market price.
 
 
10

 

NOTE 4 - FAIR VALUE MEASUREMENTS
 
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. The three broad levels within the fair value hierarchy are as follows:
 
Level I:     Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
 
Level II:    Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date.  The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.
 
Level III:   Assets and liabilities that have little to no pricing observability as of the reported date.  These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
 
The following tables present the assets measured on a recurring basis on the Consolidated Balance Sheet at their fair value as of September 30, 2012 and December 31, 2011 by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
 
         
September 30, 2012
       
                         
(Dollar amounts in thousands)
 
Level I
   
Level II
   
Level III
   
Total
 
                         
Assets Measured on a Recurring Basis:
                       
U.S. government agency securities
  $ -     $ 17,268     $ -     $ 17,268  
Obligations of states and political subdivisions
    -       92,668       -       92,668  
Mortgage-backed securities in government-sponsored entities
            62,467               62,467  
Private-label mortgage-backed securities
    -       5,986       -       5,986  
Total debt securities
    -       178,389       -       178,389  
Equity securities in financial institutions
    5       746       -       751  
Total
  $ 5     $ 179,135     $ -     $ 179,140  
 
 
11

 

         
December 31, 2011
       
                         
   
Level I
   
Level II
   
Level III
   
Total
 
                         
Assets Measured on a Recurring Basis:
                       
U.S. government agency securities
  $ -     $ 31,933     $ -     $ 31,933  
Obligations of states and political subdivisions
    -       88,400       -       88,400  
Mortgage-backed securities in government-sponsored entities
            65,573               65,573  
Private-label mortgage-backed securities
    -       7,321       -       7,321  
Total debt securities
    -       193,227       -       193,227  
Equity securities in financial institutions
    5       745       -       750  
Total
  $ 5     $ 193,972     $ -     $ 193,977  
 
The Company obtains fair values from an independent pricing service which represent either quoted market prices for the identical securities (Level 1 inputs) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level 2).
 
Financial instruments are considered Level III when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.  In addition to these unobservable inputs, the valuation models for Level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly.  Level III financial instruments also include those for which the determination of fair value requires significant management judgment or estimation.  The Company has no securities considered to be Level III as of September 30, 2012 and December 31, 2011.
 
The Company uses prices compiled by third party vendors due to the recent stabilization in the markets along with improvements in third party pricing methodology that have narrowed the variances between third party vendor prices and actual market prices.
 
The following tables present the assets measured on a nonrecurring basis on the Consolidated Balance Sheet at their fair value as of September 30, 2012 and December 31, 2011, by level within the fair value hierarchy. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loan include: quoted market prices for identical assets classified as Level I inputs; observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.
 
 
12

 

         
September 30, 2012
       
                         
(Dollar amounts in thousands)
 
Level I
   
Level II
   
Level III
   
Total
 
                         
 Assets Measured on a non-recurring Basis:
                       
    Impaired loans
  $ -     $ -     $ 14,258     $ 14,258  
    Other real estate owned
    -       -       2,332       2,332  
 
           
December 31, 2011
         
                         
   
Level I
   
Level II
   
Level III
   
Total
 
                                 
 Assets Measured on a non-recurring Basis:
                               
    Impaired loans
  $ -     $ -     $ 16,535     $ 16,535  
    Other real estate owned
    -       -       2,196       2,196  

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company uses Level III inputs to determine fair value:
 
   
Quantitative Information about Level III Fair Value Measurements
(unaudited, in thousands)
 
Estimate
  Valuation Techniquest
Unobservable Input
Range (Weighted Average)
September 30, 2012
                 
Impaired loans
  $ 14,258  
Appraisal of collateral (1)
Appraisal adjustments (2)
0%
to -75.0% (-31.9%)
           
Liquidation expenses (2)
0%
to -45.8% (-1.5%)
                     
Other real estate owned
  $ 2,332  
Appraisal of collateral (1), (3)
       
 
(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.
(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.
(3) Includes qualitative adjustments by management and estimated liquidation expenses.
 
 
13

 

The estimated fair value of the Company’s financial instruments is as follows:
 
   
September 30, 2012
 
   
Carrying
Value
   
Level I
   
Level II
   
Level III
   
Total
Fair Value
 
   
(in thousands)
 
Financial assets:
                             
Cash and cash equivalents
  $ 52,606     $ 52,606     $ -     $ -     $ 52,606  
Investment securities
                                       
Available for sale
    179,140       5       179,135       -       179,140  
Net loans
    402,002       -       -       394,070       394,070  
Bank-owned life insurance
    8,465       8,465               -       8,465  
Federal Home Loan Bank stock
    1,887       1,887               -       1,887  
Accrued interest receivable
    2,598       2,598       -       -       2,598  
                                         
                                         
Financial liabilities:
                                       
Deposits
  $ 584,738     $ 382,773     $ -     $ 207,336     $ 590,109  
Short-term borrowings
    6,518       6,518       -       -       6,518  
Other borrowings
    15,836       -       -       16,240       16,240  
Accrued interest payable
    557       557       -       -       557  
 
   
September 30, 2012
   
December 31, 2011
 
   
Carrying
Value
   
Fair
Value
   
Carrying
Value
   
Fair
Value
 
   
(in thousands)
 
Financial assets:
                       
Cash and cash equivalents
  $ 52,606     $ 52,606     $ 34,390     $ 34,390  
Investment securities
                               
    Available for sale
    179,140       179,140       193,977       193,977  
Net loans
    402,002       394,070       395,061       382,542  
Bank-owned life insurance
    8,465       8,465       8,257       8,257  
Federal Home Loan Bank stock
    1,887       1,887       1,887       1,887  
Accrued interest receivable
    2,598       2,598       2,234       2,234  
                                 
                                 
Financial liabilities:
                               
Deposits
  $ 584,738     $ 590,109     $ 580,962     $ 587,178  
Short-term borrowings
    6,518       6,518       7,392       7,392  
Other borrowings
    15,836       16,240       16,831       17,327  
Accrued interest payable
    557       557       645       645  
 
Financial instruments are defined as cash, evidence of ownership interest in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.
 
Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties other than in a forced liquidation sale.  If a quoted market price is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument.
 
 
14

 
 
If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses, and other factors as determined through various option pricing formulas or simulation modeling.  Since many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument.  In addition, changes in assumptions on which the estimated fair values are based may have a significant impact on the resulting estimated fair values.
 
As certain assets such as deferred tax assets and premises and equipment are not considered financial instruments, the estimated fair value of financial instruments would not represent the full value of the Company.
 
The Company employed simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices were not available based upon the following assumptions:
 
Cash and Cash Equivalents, Federal Home Loan Bank Stock, Accrued Interest Receivable, Accrued Interest Payable, and Short-Term Borrowings
The fair value is equal to the current carrying value.

Bank-Owned Life Insurance
The fair value is equal to the cash surrender value of the life insurance policies.
 
Investment Securities Available-for-sale
The fair value of investment securities is equal to the available quoted market price.  If no quoted market price is available, fair value is estimated using the quoted market price for similar securities. 
 
Loans
The fair value is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality.  Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were used as estimates for fair value.
 
Deposits and Other Borrowings
The fair values of certificates of deposit and other borrowed funds are based on the discounted value of contractual cash flows.  The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.  Demand, savings, and money market deposits are valued at the amount payable on demand.
 
Commitments to Extend Credit
These financial instruments are generally not subject to sale, and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment or letter of credit, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure.
 
 
15

 

NOTE 5 - INVESTMENT SECURITIES AVAILABLE-FOR-SALE
 
The amortized cost and fair values of securities available-for-sale are as follows:
 
   
September 30, 2012
 
(Dollar amounts in thousands)
 
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Fair
Value
 
                         
U.S. government agency securities
  $ 16,733     $ 537     $ (2 )   $ 17,268  
Obligations of states and political subdivisions:
                               
Taxable
    8,198       864       -       9,062  
Tax-exempt
    78,808       4,827       (29 )     83,606  
Mortgage-backed securities in government-sponsored entities
    60,139       2,328       -       62,467  
Private-label mortgage-backed securities
    5,418       570       (2 )     5,986  
Total debt securities
    169,296       9,126       (33 )     178,389  
Equity securities in financial institutions
    750       1       -       751  
Total
  $ 170,046     $ 9,127     $ (33 )   $ 179,140  

   
December 31, 2011
 
   
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Fair
Value
 
                         
U.S. government agency securities
  $ 31,520     $ 427     $ (14 )   $ 31,933  
Obligations of states and political subdivisions:
                               
Taxable
    8,207       766       -       8,973  
Tax-exempt
    75,807       3,681       (61 )     79,427  
Mortgage-backed securities in government-sponsored entities
    63,808       1,819       (54 )     65,573  
Private-label mortgage-backed securities
    7,005       411       (95 )     7,321  
Total debt securities
    186,347       7,104       (224 )     193,227  
Equity securities in financial institutions
    750       -       -       750  
Total
  $ 187,097     $ 7,104     $ (224 )   $ 193,977  
 
 
16

 
 
The amortized cost and fair value of debt securities at September 30, 2012, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollar amounts in thousands)
 
Amortized
Cost
   
Fair
Value
 
             
Due in one year or less
  $ 3,003     $ 3,038  
Due after one year through five years
    4,834       5,093  
Due after five years through ten years
    14,682       15,545  
Due after ten years
    146,777       154,713  
                 
Total
  $ 169,296     $ 178,389  

Proceeds from the sales of securities available-for-sale and the gross realized gains and losses are as follows:

   
For the Three Months Ended
September 30,
   
For the Nine Months Ended
September 30,
 
   
2012
   
2011
   
2012
   
2011
 
Proceeds from sales
  $ 5,622     $ 14,233     $ 27,426     $ 24,305  
Gross realized gains
    154       6       462       21  
Gross realized losses
    (2 )     -       (14 )     (37 )
 
Gross realized losses for the nine months ended September 30, 2011 were the result of other-than-temporary impairment (“OTTI”) taken on equity securities.
 
Investment securities with an approximate carrying value of $55,600,000 and $55,800,000 at September 30, 2012 and 2011, respectively, were pledged to secure deposits and other purposes as required by law.
 
The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

   
September 30, 2012
 
   
Less than Twelve Months
   
Twelve Months or Greater
   
Total
 
(Dollar amounts in thousands)
 
Fair
Value
   
Gross
Unrealized
Losses
   
Fair
Value
   
Gross
Unrealized
Losses
   
Fair
Value
   
Gross
Unrealized
Losses
 
                                     
U.S. government agency securities
  $ 1,998     $ (2 )   $ -     $ -     $ 1,998     $ (2 )
Obligations of states and political subdivisions
    1,671       (29 )     -       -       1,671       (29 )
Private-label mortgage-backed securities
    -       -       370       (2 )     370       (2 )
Total
  $ 3,669     $ (31 )   $ 370     $ (2 )   $ 4,039     $ (33 )
 
 
17

 
 
   
December 31, 2011
 
   
Less than Twelve Months
   
Twelve Months or Greater
   
Total
 
   
Fair
Value
   
Gross
Unrealized
Losses
   
Fair
Value
   
Gross
Unrealized
Losses
   
Fair
Value
   
Gross
Unrealized
Losses
 
                                     
U.S. government agency securities
  $ 1,986     $ (14 )   $ -     $ -     $ 1,986     $ (14 )
Obligations of states and political subdivisions
    2,707       (40 )     919       (21 )     3,626       (61 )
Mortgage-backed securities in government sponsored entities
    8,992       (54 )     -       -       8,992       (54 )
Private-label mortgage-backed securities
    1,628       (42 )     398       (53 )     2,026       (95 )
Equity securities in financial institutions
    -       -                                  
Total
  $ 15,313     $ (150 )   $ 1,317     $ (74 )   $ 16,630     $ (224 )
 
There were 7 securities that were considered temporarily impaired at September 30, 2012.
 
On a quarterly basis, the Company performs an assessment to determine whether there have been any events or economic circumstances indicating that a security with an unrealized loss has suffered OTTI. A debt security is considered impaired if the fair value is less than its amortized cost basis at the reporting date. OTTI losses are recognized in earnings when the Company has the intent to sell the debt security or it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis. However, even if the Company does not expect to sell a debt security, it must evaluate expected cash flows to be received and determine if a credit loss has occurred.
 
An unrealized loss is generally deemed to be other than temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. As a result, the credit loss component of an OTTI is recorded as a component of investment securities gains (losses) in the accompanying Consolidated Statement of Income, while the remaining portion of the impairment loss is recognized in other comprehensive income, provided the Company does not intend to sell the underlying debt security and it is “more likely than not” that the Company will not have to sell the debt security prior to recovery.
 
Debt securities issued by U.S. government agencies, U.S. government-sponsored enterprises, and state and political subdivisions accounted for more than 96% of the total available-for-sale portfolio as of September 30, 2012 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government and the lack of significant unrealized loss positions within the obligations of state and political subdivisions’ security portfolio. The Company’s assessment was concentrated mainly on private-label collateralized mortgage obligations of approximately $5.4 million for which the Company evaluates credit losses on a quarterly basis. The gross unrealized gain position related to these private-label collateralized mortgage obligations amounted to $570,000 and the gross unrealized loss position was $2,000 on September 30, 2012. The Company considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:
 
 
 
The length of time and the extent to which the fair value has been less than the amortized cost basis.
       
 
 
Changes in the near term prospects of the underlying collateral of a security such as changes in default rates, loss severity given default and significant changes in prepayment assumptions;
       
 
 
The level of cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities; and
       
 
 
Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the overall financial condition of the issuer, credit ratings, recent legislation and government actions affecting the issuer’s industry and actions taken by the issuer to deal with the present economic climate.

 
18

 
 
For the three and nine months ended September 30, 2012, there were no available-for-sale debt securities with an unrealized loss that suffered OTTI.
 

NOTE 6 - LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES
 
Major classifications of loans are summarized as follows (in thousands):
 
   
September 30,
2012
   
December 31,
2011
 
             
Commercial and industrial
  $ 65,323     $ 59,185  
Real estate - construction
    21,322       21,545  
Real estate - mortgage:
               
Residential
    205,433       208,139  
Commercial
    112,867       108,502  
Consumer installment
    4,230       4,509  
      409,175       401,880  
Less allowance for loan losses
    (7,173 )     (6,819 )
                 
Net loans
  $ 402,002     $ 395,061  
 
The Company’s primary business activity is with customers located within its local trade area, eastern Geauga County, and contiguous counties to the north, east, and south.  The Company also serves the central Ohio market with offices in Dublin and Westerville, Ohio.  Commercial, residential, consumer, and agricultural loans are granted.  Although the Company has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the Company’s immediate trade area.
 
The following tables summarize the primary segments of the loan portfolio and allowance for loan losses (in thousands):
 
               
Real Estate- Mortgage
             
September 30, 2012
 
Commercial and industrial
   
Real estate- construction
   
Residential
   
Commercial
   
Consumer installment
   
Total
 
                                     
Individually evaluated for impairment
  $ 4,414     $ 4,383     $ 3,734     $ 7,021     $ -     $ 19,553  
Collectively evaluated for impairment
    60,909       16,939       201,699       105,846       4,230       389,622  
Total loans
  $ 65,323     $ 21,322     $ 205,433     $ 112,867     $ 4,230     $ 409,175  
 
 
19

 
 
               
Real estate- Mortgage
             
December 31, 2011
 
Commercial and industrial
   
Real estate- construction
   
Residential
   
Commercial
   
Consumer installment
   
Total
 
                                     
Individually evaluated for impairment
  $ 4,492     $ 867     $ 4,882     $ 6,491     $ -     $ 16,732  
Collectively evaluated for impairment
    54,693       20,678       203,257       102,011       4,509       385,148  
Total loans
  $ 59,185     $ 21,545     $ 208,139     $ 108,502     $ 4,509     $ 401,880  
 
               
Real Estate- Mortgage
             
September 30, 2012
 
Commercial and industrial
   
Real estate- construction
   
Residential
   
Commercial
   
Consumer installment
   
Total
 
Allowance for loan losses:
                                   
Ending allowance balance attributable to loans:
                                   
Individually evaluated for impairment
  $ 1,096     $ 442     $ 482     $ 955     $ -     $ 2,975  
Collectively evaluated for impairment
    608       3       2,471       1,100       16       4,198  
Total ending allowance balance
  $ 1,704     $ 445     $ 2,953     $ 2,055     $ 16     $ 7,173  
 
               
Real Estate- Mortgage
             
December 31, 2011
 
Commercial and industrial
   
Real estate- construction
   
Residential
   
Commercial
   
Consumer installment
   
Total
 
Allowance for loan losses:
                                   
Ending allowance balance attributable to loans:
                                   
Individually evaluated for impairment
  $ 595     $ 237     $ 685     $ 185     $ -     $ 1,702  
Collectively evaluated for impairment
    701       201       3,046       1,121       48       5,117  
Total ending allowance balance
  $ 1,296     $ 438     $ 3,731     $ 1,306     $ 48     $ 6,819  
 
The Company’s loan portfolio is segmented to a level that allows management to monitor risk and performance.  The portfolio is segmented into Commercial and Industrial (“C&I”), Real Estate Construction, Real Estate - Mortgage which is further segmented into Residential and Commercial real estate, and Consumer Installment Loans.  The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers.  The residential mortgage loan segment consists of loans made for the purpose of financing the purchase or equity line of residences.  The commercial mortgage loan segment consists of loans made for the purposed of financing the activities of commercial real estate owners and operators. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.
 
Management evaluates individual loans in all of the commercial segments for possible impairment if the loan is greater than $150,000 and if the loan either is in nonaccrual status, or is risk rated Special Mention or Substandard.  Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  The Company does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired.
 
Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of three methods:  (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs.  The method is selected on a loan-by loan basis, with management primarily utilizing the fair value of collateral method.  The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis.  The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.
 
 
20

 
 
The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):
 
September 30, 2012
 
Impaired Loans
 
   
Recorded
Investment
   
Unpaid Principal Balance
   
Related
Allowance
 
With no related allowance recorded:
             
Commercial and industrial
  $ 978     $ 978     $ -  
Real estate - construction
    203       203       -  
Real estate - mortgage:
                       
Residential
    1,859       1,863       -  
Commercial
    1,306       1,311       -  
Consumer installment
    30       30       -  
Total
  $ 4,376     $ 4,385     $ -  
                         
With an allowance recorded:
                       
Commercial and industrial
  $ 2,896     $ 2,899     $ 840  
Real estate - construction
    3,986       3,986       442  
Real estate - mortgage:
                       
Residential
    2,451       2,458       556  
Commercial
    3,524       3,533       1,137  
Total
  $ 12,857     $ 12,876     $ 2,975  
                         
Total:
                       
Commercial and industrial
  $ 3,874     $ 3,877     $ 840  
Real estate - construction
    4,189       4,189       442  
Real estate - mortgage:
                       
Residential
    4,310       4,321       556  
Commercial
    4,830       4,844       1,137  
Consumer installment
    30       30       -  
Total
  $ 17,233     $ 17,261     $ 2,975  

 
21

 
 
December 31, 2011
 
Impaired Loans
 
   
Recorded
Investment
   
Unpaid Principal Balance
   
Related
Allowance
 
With no related allowance recorded:
             
Commercial and industrial
  $ 1,172     $ 1,172     $ -  
Real estate - construction
    4,250       4,250       -  
Real estate - mortgage:
                       
Residential
    3,188       3,193       -  
Commercial
    2,528       2,536       -  
Consumer installment
    24       24       -  
Total
  $ 11,162     $ 11,175     $ -  
                         
With an allowance recorded:
                       
Commercial and industrial
  $ 658     $ 658     $ 203  
Real estate - construction
    271       271       125  
Real estate - mortgage:
                       
Residential
    1,813       1,817       547  
Commercial
    4,332       4,344       827  
Total
  $ 7,074     $ 7,090     $ 1,702  
                         
Total:
                       
Commercial and industrial
  $ 1,830     $ 1,831     $ 203  
Real estate - construction
    4,521       4,521       125  
Real estate - mortgage:
                       
Residential
    5,001       5,010       547  
Commercial
    6,861       6,880       827  
Consumer installment
    24       24       -  
Total
  $ 18,237     $ 18,266     $ 1,702  
 
The following tables present average recorded investment and related interest income recognized for impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):
 
 
22

 
 
   
For the Three Months Ended September 30, 2012
   
For the Three Months Ended September 30, 2011
 
                         
   
Average Recorded Investment
   
Interest Income Recognized
   
Average Recorded Investment
   
Interest Income Recognized
 
Total:
                       
Commercial and industrial
  $ 2,535     $ 139     $ 3,295     $ 11  
Real estate - construction
    2,305       -       630       15  
Real estate - mortgage:
                               
Residential
    3,622       85       997       23  
Commercial
    3,597       200       4,899       86  
Consumer installment
    13       1       25       -  
 
   
For the Nine Months Ended September 30, 2012
   
For the Nine Months Ended September 30, 2011
 
                         
   
Average Recorded Investment
   
Interest Income Recognized
   
Average Recorded Investment
   
Interest Income Recognized
 
Total:
                       
Commercial and industrial
  $ 2,170     $ 170     $ 3,266     $ 93  
Real estate - construction
    2,400       113       624       15  
Real estate - mortgage:
                               
Residential
    3,764       169       793       68  
Commercial
    3,985       324       4,081       188  
Consumer installment
    27       2       13       4  
 
 
Management uses a nine point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories used by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  All loans greater than 90 days past due are considered Substandard.  Loans in the doubtful category exhibit similar weaknesses found in the substandard loans, though the weaknesses are more pronounced. Such loans are static and collection in full is improbable. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.  Any portion of a loan that has been charged off is placed in the Loss category.
 
To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event.  The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis.  The Credit Department performs an annual review of all commercial relationships $200,000 or greater.  Confirmation of the appropriate risk grade is included in the review on an ongoing basis.  The Company has an experienced Loan Review Department that continually reviews and assesses loans within the portfolio.  The Company engages an external consultant to conduct loan reviews on a semi-annual basis. Generally, the external consultant reviews commercial relationships greater than $250,000 and/or criticized relationships greater than $125,000.  Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis.  Loans in the Special Mention and Substandard categories that are individually evaluated for impairment are given separate consideration in the determination of the allowance.
 
 
23

 
 
The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system (in thousands):
 
   
Pass
   
Special
Mention
   
Substandard
   
Doubtful
   
Total
Loans
 
September 30, 2012
                             
                               
Commercial and industrial
  $ 60,439     $ 407     $ 4,477     $ -     $ 65,323  
Real estate - construction
    16,913       -       4,409       -       21,322  
Real estate - mortgage:
                                       
Residential
    191,710       868       12,855       -       205,433  
Commercial
    104,030       2,176       6,661       -       112,867  
Consumer installment
    4,208       2       20       -       4,230  
Total
  $ 377,300     $ 3,453     $ 28,422     $ -     $ 409,175  
 
December 31, 2011
 
Pass
   
Special
Mention
   
Substandard
   
Doubtful
   
Loans
 
                               
Commercial and industrial
  $ 53,645     $ 1,104     $ 4,363     $ 73     $ 59,185  
Real estate - construction
    20,883       -       662       -       21,545  
Real estate - mortgage:
                                       
Residential
    192,534       1,100       14,505       -       208,139  
Commercial
    100,536       443       7,523       -       108,502  
Consumer installment