EFSI-2013.03.31-10Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

(Do not check if a smaller reporting company.)

Smaller reporting company

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨




PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements:
	Consolidated Balance Sheets at March 31, 2013 and December 31, 2012	1
	Consolidated Statements of Income for the Three Months Ended March 31, 2013 and 2012	2
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2013 and 2012	3
	Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2013 and 2012	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	39

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	40



	March 31, 2013			December 31, 2012
	(Unaudited)
Assets
Cash and due from banks	$	8,583		$	9,782
Interest-bearing deposits with other institutions	13,246			38,908
Total cash and cash equivalents	21,829			48,690
Securities available for sale, at fair value	112,359			102,754
Restricted investments	2,642			2,777
Loans	423,850			418,097
Allowance for loan losses	(6,960		)	(6,577		)
Net Loans	416,890			411,520
Bank premises and equipment, net	16,834			16,545
Other real estate owned, net of allowance	2,928			2,928
Other assets	7,364			8,062
Total assets	$	580,846		$	593,276
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest bearing demand deposits	$	135,650		$	134,871
Savings and interest bearing demand deposits	227,876			231,249
Time deposits	109,554			110,981
Total deposits	$	473,080		$	477,101
Federal funds purchased and securities sold under agreements to repurchase	—			10,000
Federal Home Loan Bank advances	32,250			32,250
Trust preferred capital notes	7,217			7,217
Other liabilities	3,429			3,002
Total liabilities	$	515,976		$	529,570
Shareholders’ Equity
Preferred stock, $10 par value; 500,000 shares authorized and unissued	$	—		$	—
Common stock, $2.50 par value; authorized 10,000,000 shares; issued 2013, 3,350,379; issued 2012, 3,336,022	8,376			8,340
Surplus	10,636			10,424
Retained earnings	42,657			41,494
Accumulated other comprehensive income	3,201			3,448
Total shareholders’ equity	$	64,870		$	63,706
Total liabilities and shareholders’ equity	$	580,846		$	593,276



	Three Months Ended
	March 31,
	2013		2012
Interest and Dividend Income
Interest and fees on loans	$	5,331	$	5,675
Interest and dividends on securities available for sale:
Taxable interest income	547		598
Interest income exempt from federal income taxes	324		360
Dividends	67		103
Interest on deposits in banks	9		3
Total interest and dividend income	$	6,278	$	6,739
Interest Expense
Interest on deposits	326		444
Interest on federal funds purchased and securities sold under agreements to repurchase	28		91
Interest on Federal Home Loan Bank advances	270		298
Interest on trust preferred capital notes	34		38
Interest on interest rate swap	45		41
Total interest expense	$	703	$	912
Net interest income	$	5,575	$	5,827
Provision For Loan Losses	383		300
Net interest income after provision for loan losses	$	5,192	$	5,527
Noninterest Income
Income from fiduciary activities	$	360	$	240
Service charges on deposit accounts	343		352
Other service charges and fees	800		810
Gain on sale of securities	390		—
Other operating income	39		68
Total noninterest income	$	1,932	$	1,470
Noninterest Expenses
Salaries and employee benefits	$	2,641	$	2,613
Occupancy expenses	281		292
Equipment expenses	155		164
Advertising and marketing expenses	127		115
Stationery and supplies	78		71
ATM network fees	157		122
Other real estate owned expense	8		21
(Gain) loss on the sale of other real estate owned	—		(11		)
FDIC assessment	97		183
Computer software expense	155		157
Bank franchise tax	101		101
Professional fees	241		261
Other operating expenses	542		513
Total noninterest expenses	$	4,583	$	4,602
Income before income taxes	$	2,541	$	2,395
Income Tax Expense	738		681
Net income	$	1,803	$	1,714
Earnings Per Share
Net income per common share, basic	$	0.54	$	0.52
Net income per common share, diluted	$	0.53	$	0.52



	Three Months Ended
	March 31,
	2013			2012
Net income	$	1,803		$	1,714
Other comprehensive (loss) income:
Unrealized (loss) gain on available for sale securities, net of deferred income taxes (benefit) of ($143) in 2013 and $87 in 2012	(278		)	170
Change in fair value of interest rate swap, net of deferred income taxes of $17 in 2013 and $7 in 2012	31			12
Total other comprehensive (loss) income	(247		)	182
Total comprehensive income	$	1,556		$	1,896



	Common Stock		Surplus			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, December 31, 2011	$	8,217	$	9,568		$	37,374		$	2,931		$	58,090
Net income						1,714						1,714
Other comprehensive income									182			182
Restricted stock awards, stock incentive plan (5,150 shares)	13		(13		)							—
Income tax benefit on vesting of restricted stock			1									1
Stock-based compensation expense			45									45
Issuance of common stock, dividend investment plan (9,008 shares)	23		132									155
Dividends declared ($0.18 per share)						(596		)				(596		)
Balance, March 31, 2012	$	8,253	$	9,733		$	38,492		$	3,113		$	59,591
Balance, December 31, 2012	$	8,340	$	10,424		$	41,494		$	3,448		63,706
Net income						1,803						1,803
Other comprehensive (loss)									(247		)	(247		)
Restricted stock awards, stock incentive plan (5,700 shares)	14		(14		)							—
Income tax benefit on vesting of restricted stock			11									11
Stock-based compensation expense			56									56
Issuance of common stock, dividend investment plan (7,646 shares)	19		145									164
Issuance of common stock, employee benefit plan (1,011 shares)	3		14									17
Dividends declared ($0.19 per share)						(640		)				(640		)
Balance, March 31, 2013	$	8,376	$	10,636		$	42,657		$	3,201		$	64,870



	Three Months Ended
	March 31,
	2013			2012
Cash Flows from Operating Activities
Net income	$	1,803		$	1,714
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	190			212
Amortization of intangible and other assets	40			22
Provision for loan losses	383			300
(Gain) on the sale of other real estate owned	—			(11		)
Loss on the sale of repossessed assets	—			2
(Gain) on the sale of securities	(390		)	—
Accrual of restricted stock awards	56			44
Premium amortization on securities, net	23			48
Deferred tax benefit	876			—
Changes in assets and liabilities:
(Increase) decrease in other assets	(87		)	396
Increase in other liabilities	475			978
Net cash provided by operating activities	$	3,369		$	3,705
Cash Flows from Investing Activities
Proceeds from maturities and principal payments of securities available for sale	$	5,803		$	6,344
Proceeds from the sale of securities available for sale	2,485			—
Purchases of securities available for sale	(17,946		)	(2,157		)
Proceeds from the sale of restricted securities	136			—
Purchases of bank premises and equipment	(479		)	(1,328		)
Proceeds from the sale of other real estate owned	—			191
Proceeds from the sale of repossessed assets	9			9
Net (increase) in loans	(5,758		)	(6,738		)
Net cash (used in) investing activities	$	(15,750	)	$	(3,679	)
Cash Flows from Financing Activities
Net (decrease) increase in demand deposits, money market and savings accounts	$	(2,594	)	$	6,833
Net (decrease) in certificates of deposit	(1,427		)	(7,140		)
Net (decrease) in federal funds purchased and securities sold under agreements to repurchase	(10,000		)	—
Net (decrease) in Federal Home Loan Bank advances	—			(10,000		)
Issuance of common stock, employee benefit plan	17			—
Cash dividends paid	(476		)	(442		)
Net cash (used in) financing activities	$	(14,480	)	$	(10,749	)



	Three Months Ended
	March 31,
	2013			2012
(Decrease) in cash and cash equivalents	$	(26,861	)	$	(10,723	)
Cash and Cash Equivalents
Beginning	48,690			21,941
Ending	$	21,829		$	11,218
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest	$	775		$	951
Income taxes	$	—		$	—
Supplemental Schedule of Noncash Investing and Financing Activities:
Unrealized (loss) gain on securities available for sale	$	(421	)	$	257
Change in fair value of interest rate swap	$	48		$	19
Other real estate acquired in settlement of loans	$	—		$	579
Issuance of common stock, dividend investment plan	$	164		$	155

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America.

In the opinion of management, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position at March 31, 2013 and December 31, 2012, the results of operations for the three months ended March 31, 2013 and 2012, and cash flows for the three months ended March 31, 2013 and 2012. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”).

The Company owns 100% of Bank of Clarke County (the “Bank”) and Eagle Financial Statutory Trust II. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions between the Company and the Bank have been eliminated. The subordinated debt of Eagle Financial Statutory Trust II is reflected as a liability of the Company.

During 2003, the Company’s shareholders approved a stock incentive plan which allows key employees and directors to increase their personal financial interest in the Company. This plan permits the issuance of incentive stock options and non-qualified stock options and the award of stock appreciation rights, common stock, restricted stock, and phantom stock. The plan authorizes the issuance of up to 300,000 shares of common stock.

The Company periodically grants Restricted Stock to its directors and executive officers. Restricted Stock provides grantees with rights to shares of common stock upon completion of a service period or achievement of Company performance measures. During the restriction period, all shares are considered outstanding and dividends are paid to the grantee. In general, outside directors are periodically granted restricted shares which vest over a period of less than nine months. Beginning during 2006, executive officers were granted restricted shares which vest over a three year service period and restricted shares which vest based on meeting annual performance measures. The Company recognizes compensation expense over the restricted period.

Basic earnings per share represents income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. The number of potential common shares is determined using the treasury method and relates to outstanding stock options and unvested restricted stock grants.



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	March 31, 2013
	(in thousands)
Obligations of U.S. government corporations and agencies	$	34,512	$	863	$	(10	)	$	35,365
Mortgage-backed securities	19,599		1,047		(19		)	20,627
Obligations of states and political subdivisions	41,857		2,136		(38		)	43,955
Corporate securities	8,965		1,232		—			10,197
Equity securities	2,054		161		—			2,215
	$	106,987	$	5,439	$	(67	)	$	112,359
	December 31, 2012
	(in thousands)
Obligations of U.S. government corporations and agencies	$	22,781	$	911	$	—		$	23,692
Mortgage-backed securities	20,978		1,229		—			22,207
Obligations of states and political subdivisions	41,185		2,327		(11		)	43,501
Corporate securities	9,963		1,193		—			11,156
Equity securities	2,054		144		—			2,198
	$	96,961	$	5,804	$	(11	)	$	102,754



	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	March 31, 2013
	(in thousands)
Obligations of U.S. government corporations and agencies	$	7,937	$	10	$	—	$	—	$	7,937	$	10
Mortgage-backed securities	2,010		19		—		—		2,010		19
Obligations of states and political subdivisions	2,377		33		259		5		2,636		38
Corporate securities	—		—		—		—		—		—
Equity securities	—		—		—		—		—		—
	$	12,324	$	62	$	259	$	5	$	12,583	$	67
	December 31, 2012
	(in thousands)
Obligations of U.S. government corporations and agencies	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—		—		—
Obligations of states and political subdivisions	495		6		274		5		769		11
Corporate securities	—		—		—		—		—		—
Equity securities	—		—		—		—		—		—
	$	495	$	6	$	274	$	5	$	769	$	11

Gross unrealized losses on available for sale securities included fifteen (15) and two (2) debt securities at March 31, 2013 and December 31, 2012, respectively. The Company evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company’s mortgage-backed securities are issued by U.S. government agencies, which guarantee payments to investors regardless of the status of the underlying mortgages. Consideration is given to the length of time and the amount of an unrealized loss, the financial condition of the issuer, and the intent and ability of the Company to retain its investment in the issuer long enough to allow for an anticipated recovery in fair value. The fair value of a security reflects its liquidity as compared to similar instruments, current market rates on similar instruments, and the creditworthiness of the issuer. Absent any change in the liquidity of a security or the creditworthiness of the issuer, prices will decline as market rates rise and vice-versa. The primary cause of the unrealized losses at March 31, 2013 and December 31, 2012 was changes in market interest rates. Since the losses can be primarily attributed to changes in market interest rates and not expected cash flows or an issuer’s financial condition, the unrealized losses are deemed to be temporary. The current economic crisis involving housing, liquidity and credit were also a contributing factor to the unrealized losses on these securities at March 31, 2013 and December 31, 2012. The Company monitors the financial condition of these issuers continuously and will record other-than-temporary impairment if the recovery of value is unlikely.

The Company’s securities are exposed to various risks, such as interest rate, market, currency and credit risks. Due to the level of risk associated with certain securities and the level of uncertainty related to changes in the value of securities, it is at least reasonably possible that changes in risks in the near term would materially affect securities reported in the financial statements. In addition, recent economic uncertainty and market events have led to unprecedented volatility in currency, commodity, credit and equity markets culminating in failures of some banking and financial services firms and government intervention to solidify others. These events underscore the level of investment risk associated with the current economic environment, and accordingly the level of risk in the Company’s securities.



	March 31, 2013
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Days Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	35	$	—	$	549	$	584	$	20,813	$	21,397	$	319	$	230
Commercial Real Estate:
Owner Occupied	1,009		252		—		1,261		90,451		91,712		—		85
Non-owner occupied	1,166		576		—		1,742		42,381		44,123		—		203
Construction and Farmland:
Residential	99		—		—		99		4,617		4,716		—		—
Commercial	92		—		—		92		26,643		26,735		—		125
Consumer:
Installment	144		17		3		164		12,999		13,163		3		—
Residential:
Equity Lines	825		40		65		930		30,496		31,426		65		278
Single family	4,230		1,402		375		6,007		178,228		184,235		244		1,796
Multifamily	—		—		—		—		2,812		2,812		—		—
All Other Loans	—		—		—		—		3,531		3,531		—		—
Total	$	7,600	$	2,287	$	992	$	10,879	$	412,971	$	423,850	$	631	$	2,717



	December 31, 2012
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	822	$	225	$	—	$	1,047	$	20,593	$	21,640	$	—	$	230
Commercial Real Estate:
Owner Occupied	610		374		90		1,074		84,090		85,164		—		90
Non-owner occupied	234		582		—		816		38,402		39,218		—		209
Construction and Farmland:
Residential	—		—		—		—		9,706		9,706		—		—
Commercial	93		44		—		137		28,033		28,170		—		131
Consumer:
Installment	116		10		9		135		13,172		13,307		9		—
Residential:
Equity Lines	109		—		—		109		31,593		31,702		—		287
Single family	4,059		733		524		5,316		177,601		182,917		199		1,467
Multifamily	—		—		—		—		2,808		2,808		—		—
All Other Loans	—		—		—		—		3,465		3,465		—		—
Total	$	6,043	$	1,968	$	623	$	8,634	$	409,463	$	418,097	$	208	$	2,414



	As of and for the Three Months Ended
	March 31, 2013
	(in thousands)
	Construction and Farmland			Residential Real Estate			Commercial Real Estate		Commercial			Consumer			All Other Loans			Unallocated		Total
Allowance for credit losses:
Beginning Balance	$	1,280		$	2,820		$	1,182	$	880		$	107		$	122		$	186	$	6,577
Charge-Offs	—			—			—		(14		)	(23		)	(5		)	—		(42		)
Recoveries	1			3			1		16			17			4			—		42
Provision	(428		)	(26		)	62		(111		)	(12		)	13			885		383
Ending balance	$	853		$	2,797		$	1,245	$	771		$	89		$	134		$	1,071	$	6,960
Ending balance: Individually evaluated for impairment	$	139		$	1,179		$	298	$	630		$	—		$	—		$	—	$	2,246
Ending balance: collectively evaluated for impairment	$	714		$	1,618		$	947	$	141		$	89		$	134		$	1,071	$	4,714
Financing receivables:
Ending balance	$	31,451		$	218,473		$	135,835	$	21,397		$	13,163		$	3,531		$	—	$	423,850
Ending balance individually evaluated for impairment	$	1,308		$	7,777		$	5,064	$	868		$	—		$	—		$	—	$	15,017
Ending balance collectively evaluated for impairment	$	30,143		$	210,696		$	130,771	$	20,529		$	13,163		$	3,531		$	—	$	408,833



	As of and for the Twelve Months Ended
	December 31, 2012
	(in thousands)
	Construction and Farmland			Residential Real Estate			Commercial Real Estate			Commercial			Consumer			All Other Loans			Unallocated			Total
Allowance for credit losses:
Beginning Balance	$	2,618		$	3,544		$	1,057		$	1,077		$	131		$	123		$	193		$	8,743
Charge-Offs	(1,313		)	(1,381		)	(1,118		)	(207		)	(116		)	(28		)	—			(4,163		)
Recoveries	4			67			146			36			73			11			—			337
Provision	(29		)	590			1,097			(26		)	19			16			(7		)	1,660
Ending balance	$	1,280		$	2,820		$	1,182		$	880		$	107		$	122		$	186		$	6,577
Ending balance: Individually evaluated for impairment	$	141		$	1,176		$	305		$	737		$	—		$	—		$	—		$	2,359
Ending balance: collectively evaluated for impairment	$	1,139		$	1,644		$	877		$	143		$	107		$	122		$	186		$	4,218
Financing receivables:
Ending balance	$	37,876		$	217,427		$	124,382		$	21,640		$	13,307		$	3,465		$	—		$	418,097
Ending balance individually evaluated for impairment	$	1,326		$	7,695		$	5,246		$	985		$	—		$	—		$	—		$	15,252
Ending balance collectively evaluated for impairment	$	36,550		$	209,732		$	119,136		$	20,655		$	13,307		$	3,465		$	—		$	402,845



	As of
	March 31, 2013
	(in thousands)
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial - Non Real Estate:
Commercial & Industrial	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate:
Owner Occupied	1,475		1,478		—		1,691		19
Non-owner occupied	2,274		2,278		—		2,347		30
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	1,085		1,087		—		1,111		9
Residential:
Equity lines	463		463		—		648		1
Single family	3,911		3,920		—		5,079		27
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	9,208	$	9,226	$	—	$	10,876	$	86
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	868	$	877	$	630	$	963	$	11
Commercial Real Estate:
Owner Occupied	—		—		—		—		—
Non-owner occupied	1,315		1,318		298		1,322		18
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	223		224		139		225		2
Residential:
Equity lines	218		219		218		216		1
Single family	3,185		3,195		961		3,202		37
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	5,809	$	5,833	$	2,246	$	5,928	$	69
Total:
Commercial	$	868	$	877	$	630	$	963	$	11
Commercial Real Estate	5,064		5,074		298		5,360		67
Construction and Farmland	1,308		1,311		139		1,336		11
Residential	7,777		7,797		1,179		9,145		66
Other	—		—		—		—		—
Total	$	15,017	$	15,059	$	2,246	$	16,804	$	155



	As of
	December 31, 2012
	(in thousands)
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial - Non Real Estate:
Commercial & Industrial	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate:
Owner Occupied	1,632		1,636		—		2,323		130
Non-owner occupied	2,290		2,296		—		2,378		147
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	1,102		1,103		—		1,159		18
Residential:
Equity lines	287		287		—		469		1
Single family	4,406		4,417		—		5,683		210
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	9,717	$	9,739	$	—	$	12,012	$	506
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	985	$	994	$	737	$	1,062	$	53
Commercial Real Estate:
Owner Occupied	—		—		—		—		—
Non-owner occupied	1,324		1,327		305		1,337		38
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	224		225		141		227		9
Residential:
Equity lines	358		359		252		366		12
Single family	2,644		2,652		924		2,674		125
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	5,535



Virginia		54-1601306
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2 East Main Street P.O. Box 391 Berryville, Virginia		22,611
(Address of principal executive offices)		(Zip Code)



	Three Months Ended
	March 31,
	2013				2012
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested, beginning of period	16,500		$	16.53	13,700		$	16.11
Granted	10,900		21.80		10,900		16.75
Vested	(5,700	)	16.28		(5,150	)	16.04
Forfeited	—		—		—		—
Nonvested, end of period	21,700		$	19.24	19,450		$	16.49



	Three Months Ended
	March 31,
	2013	2012
Average number of common shares outstanding	3,367,689	3,316,005
Effect of dilutive common stock	10,680	8,751
Average number of common shares outstanding used to calculate diluted earnings per share	3,378,369	3,324,756



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



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



	Three Months Ended			Year Ended			Three Months Ended
	March 31,			December 31,			March 31,
	2013			2012			2012
				(in thousands)
Balance, beginning	$	6,577		$	8,743		$	8,743
Provision charged to operating expense	383			1,660			300
Recoveries added to the allowance	42			337			81
Loan losses charged to the allowance	(42		)	(4,163		)	(237		)
Balance, ending	$	6,960		$	6,577		$	8,887