ex99-3.htm

EXHIBIT 99.3

PEOPLES SERVICE COMPANY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

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June 30, 2014 and 2013

	2014		2013
ASSETS

Cash and cash equivalents, including
interest-bearing accounts of $792,998 in 2014
and $8,658,160 in 2013	$	5,602,552	$	13,166,816
Interest-bearing time deposits		20,813,000		20,108,146
Securities available-for-sale		31,871,781		32,135,901
Federal Home Loan Bank stock, at cost		927,300		993,900
Loans, net of allowance for loan losses of
$3,332,836 in 2014 and $3,668,740 in 2013		193,096,615		191,072,995
Accrued interest receivable		611,352		873,413
Foreclosed and repossessed assets		1,478,535		2,358,226
Property and equipment, net		10,848,172		10,950,438
Deferred income taxes, net		431,373		768,593
Other assets		154,428		220,825

Total assets	$	265,835,108	$	272,649,253

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Customer deposits	$	220,176,791	$	226,752,640
Borrowings		17,920,963		18,745,141
Subordinated debentures issued to Capital Trust		6,495,000		6,495,000
Income taxes payable		61,480		352,873
Other liabilities		557,420		767,778
Total liabilities		245,211,654		253,113,432

Equity:
Peoples Service Company's stockholder's equity:
Common stock, $.01 par value; 3,000,000 shares
authorized; 808,790 shares issued and outstanding		8,088		8,088
Additional paid-in-capital		600,384		600,384
Retained earnings		15,218,362		14,525,411
Accumulated other comprehensive income		66,009		(187,355	)
Total Peoples Service Company's stockholder's equity		15,892,843		14,946,528
Noncontrolling interest		4,730,611		4,589,293
Total equity		20,623,454		19,535,821
Total liabilities and stockholders' equity	$	265,835,108	$	272,649,253

PEOPLES SERVICE COMPANY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

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Six Months Ended June 30, 2014 and 2013

	2014			2013
Interest income:
Loans	$	4,931,849		$	5,545,733
Securities		283,188			152,567
Other		92,572			62,763
Total interest income		5,307,609			5,761,063

Interest expense:
Customer deposits		525,593			748,151
Subordinated debentures issued to Capital Trust		66,521			68,277
Federal funds purchased		10			20
Borrowings		342,016			353,116
Total interest expense		934,140			1,169,564

Net interest income		4,373,469			4,591,499

Provision for loan losses		-			-
Net interest income after provision for loan losses		4,373,469			4,591,499

Noninterest income:
Service charges on deposit accounts		220,123			231,932
Other service charges and fees		405,602			435,874
Other income		14,750			4,070
Total noninterest income		640,475			671,876

Noninterest expense:
Compensation and employee benefits		2,470,368			2,485,986
Occupancy and equipment		729,946			725,061
Telephone		85,968			95,714
Deposit insurance premiums		97,466			105,251
Foreclosure expenses		33,620			52,615
Data processing		121,215			108,386
Professional Fees (including $420,885 of Transaction Expenses in 2014)		490,030			57,260
Advertising		54,412			80,857
Loss on available-for-sale securities		162,995			-
(Gain) loss on property, equipment and foreclosed assets		(86,692	)		114,509
Other		276,287			284,704
Total noninterest expense		4,435,615			4,110,343

Income (loss) before taxes		578,329			1,153,032
Income tax (benefit) expense		212,051			423,755

Net income (loss)		366,278			729,277
Less: Net income (loss) attributable to the noncontrolling interest		82,558			155,301

Net income (loss) attibutable to Peoples Service Company	$	283,720		$	573,976

PEOPLES SERVICE COMPANY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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Six Months Ended June 30, 2014

	Peoples Service Company Stockholders' Equity
												Total
									Accumulated			Peoples Service
					Additional				Other			Company
	Common Stock				Paid-in		Retained		Comprehensive			Stockholders'			Noncontrolling			Total
	Shares		Amount		Capital		Earnings		Income (Loss)			Equity			Interest			Equity
Balances at December 31, 2012		808,790	$	8,088	$	600,384	$	13,951,434	$	96,192		$	14,656,098		$	4,593,466		$	19,249,564

Net loss		-		-		-		983,208		-			983,208			269,940			1,253,148
Change in net unrealized gain (loss) on
securities available-for-sale, net
of taxes of $229,616		-		-		-		-		(314,257	)		(314,257	)		(76,712	)		(390,969	)

Dividends paid		-		-		-		-		-			-			(184,440	)		(184,440	)

Balances at December 31, 2013		808,790		8,088		600,384		14,934,642		(218,065	)		15,325,049			4,602,254			19,927,303

Net Income		-		-		-		283,720		-			283,720			82,558			366,278
Change in net unrealized gain (loss) on
securities available-for-sale, net
of taxes of $(207,563)		-		-		-		-		284,074			284,074			69,345			353,419

Dividends paid		-		-		-		-		-			-			(23,546	)		(23,546	)

Balances at June 30, 2014		808,790	$	8,088	$	600,384	$	15,218,362	$	66,009		$	15,892,843		$	4,730,611		$	20,623,454

PEOPLES SERVICE COMPANY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

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Six Months Ended June 30, 2014 and 2013

	2014			2013
Cash flows from operating activities:
Net income including income attributable
to noncontrolling interest	$	366,278		$	729,277
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation		257,710			272,662
Premiums and discounts on securities		371,507			403,367
Loss on foreclosed and repossessed assets		(92,891	)		104,913
Loss on available-for-sale securities		162,995			-
Net change in operating accounts:
Accrued interest receivable		215,021			(39,873	)
Other assets		153,780			1,234,258
Other liabilities		147,876			218,816
Deferred income taxes		-			-
Income taxes payable		(393,694	)		253,207
Net cash from operating activities		1,188,582			3,176,627

Cash flows from investing activities:
Purchases of securities available-for-sale		(32,234,120	)		(16,842,100	)
Proceeds from maturities and sales of securities available-for-sale		33,389,927			315,000
Proceeds from maturities and sales of securities held-to-maturity		-			-
Redemption of Federal Home Loan Bank stock		(900	)		15,400
Net change in loans		(4,234,714	)		15,091,510
Purchases of property and equipment		(155,358	)		(96,762	)
Proceeds from sale of property and equipment		-			-
Proceeds from sale of foreclosed and repossessed assets		1,292,891			1,193,224
Net cash from investing activities	$	(1,942,274	)	$	(323,728	)

PEOPLES SERVICE COMPANY AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

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Six Months Ended June 30, 2014 and 2013

	2014			2013
Cash flows from financing activities:
Net change in demand deposits, savings
accounts, and certificates of deposit	$	(7,656,616	)	$	(586,590	)
Proceeds from borrowed funds		17,250,000			491,000
Repayments of borrowed funds		(17,250,000	)		(300,412	)
Cash dividends paid		(23,545	)		(90,259	)
Net cash used in financing activities		(7,680,161	)		(486,261	)

Net increase in cash and cash equivalents		(8,433,853	)		2,366,638

Cash and cash equivalents - beginning of year		34,849,405			30,908,324

Cash and cash equivalents - end of year	$	26,415,552		$	33,274,962


Supplemental disclosures of cash flow information:

Cash paid during the year for:
Interest	$	1,047,827		$	1,308,744
Income taxes		605,745			170,548

Non-cash Investing and Financing Items:

Loans charged-off to reserve		322,756			389,454
Loans transferred to foreclosed and repossessed assets		176,000			93,247