SECURITIES AND EXCHANGE COMMISSION
Exchange Act of 1934 (Amendment No. __)
þ | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
o | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
þ | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) | Proposed maximum aggregate value of transaction: | ||
(5) | Total fee paid: | ||
o | Fee paid previously with preliminary materials. | |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: | ||
(2 ) Form, Schedule or Registration Statement No.: | |||
(3) | Filing Party: | ||
(4) | Date Filed: | ||
• | purchase for $217,019,000 in cash, 119,900,000 shares of Common Stock, at a purchase price of $1.81 per share; and | ||
• | permit the Company to distribute to each Company shareholder as of a certain date fixed prior to the closing of the transactions contemplated by the Investment Agreement (the “Closing”), immediately prior to Closing, one contingent value right (“CVR”) per share that would entitle the holder to receive up to $0.75 in cash per CVR at the end of a five-year period based on the credit performance of GreenBank’s existing loan portfolio. |
(1) | the original issuance and certain subsequent issuances of shares of the Company’s Common Stock to NAFH under the terms of the Investment Agreement; | ||
(2) | an amendment to the Company’s Amended and Restated Charter (the “Charter”) to increase the number of authorized shares of the Company’s Common Stock from twenty million (20,000,000) to three hundred million (300,000,000); | ||
(3) | an amendment to the Company’s Charter to decrease the par value of the Company’s Common Stock from $2.00 per share to $0.01 per share; | ||
(4) | an amendment to the Company’s Charter to expressly exempt NAFH and its affiliates and associates from the provisions of Section 9 of the Company’s Charter; |
(5) | an amendment to the Company’s Charter to remove Section 8(j) of the Charter so that the Tennessee Control Share Acquisition Act will not apply to the Company and its shareholders; | ||
(6) | the merger of GreenBank with and into a subsidiary of NAFH; | ||
(7) | on an advisory and non-binding basis, the compensation to be received by the Company’s named executive officers in connection with the issuance of the shares of Common Stock to NAFH under the terms of the Investment Agreement; and | ||
(8) | the grant to the proxy holder of discretionary authority to vote to adjourn the Special Meeting, if necessary, in order to solicit additional proxies in the event there are not sufficient affirmative votes present at the Special Meeting to approve the proposals that may be considered and voted on, at the Special Meeting. |
Chairman of the Board and
Chief Executive Officer
your shares, please call our proxy solicitor:
Shareholder may call toll-free at 1 (888) 750-5834
Banks and Brokers may call collect at 1 (212) 750-5833
To Be Held on July __, 2011
(1) | to approve the original issuance and certain subsequent issuances of shares of the Company’s Common Stock to North American Financial Holdings, Inc. under the terms of the Investment Agreement, dated May 5, 2011, among Green Bankshares, Inc., GreenBank and North American Financial Holdings, Inc. (the “Investment Agreement”); | ||
(2) | to vote on an amendment to the Company’s Amended and Restated Charter (the “Charter”) to increase the number of authorized shares of the Company’s Common Stock from twenty million (20,000,000) to three hundred million (300,000,000); | ||
(3) | to vote on an amendment to the Company’s Charter to decrease the par value of the Company’s Common Stock from $2.00 per share to $0.01 per share; | ||
(4) | to vote on an amendment to the Company’s Charter to expressly exempt North American Financial Holdings, Inc. and its affiliates and associates from the provisions of Section 9 of the Company’s Charter; | ||
(5) | to vote on an amendment to the Company’s Charter to remove Section 8(j) of the Charter so that the Tennessee Control Share Acquisition Act will not apply to the Company and its shareholders; | ||
(6) | to approve the merger of GreenBank with and into a subsidiary of North American Financial Holdings, Inc.; | ||
(7) | to approve, on an advisory and non-binding basis, the compensation to be received by the Company’s named executive officers in connection with the issuance of the shares of the Company’s Common Stock to North American Financial Holdings, Inc. under the terms of the Investment Agreement; and | ||
(8) | to grant the proxy holder discretionary authority to vote to adjourn the Special Meeting, if necessary, in order to solicit additional proxies in the event there are not sufficient affirmative votes present at the Special Meeting to approve the proposals that may be considered and voted on, at the Special Meeting. |
June __, 2011
Special Meeting of Shareholders to be Held on July __, 2011
100 North Main Street
P.O. Box 1120
Greeneville, Tennessee 37743
(423) 639-5111
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• | the absence of any law, order, injunction or decree by a governmental body prohibiting (or any lawsuit or formal proceeding by a governmental body seeking to prohibit) the Initial Investment or NAFH’s owning or voting the shares it intends to purchase in the Initial Investment; | ||
• | receipt of all required regulatory approvals; | ||
• | the approval of Proposals 1, 2, 3, 5 and 6 described in this Proxy Statement; | ||
• | the accuracy of the other party’s representations and warranties (subject to the materiality standard described in the Investment Agreement) and the performance by the other party in all material respects of its obligations under the Investment Agreement; and | ||
• | the entry by NAFH and the United States Department of the Treasury (“Treasury”) into a binding agreement, on terms previously disclosed to the Company by NAFH, regarding the NAFH’s repurchase of $72.3 million of shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A and warrant to purchase shares of Common Stock issued to the Treasury in connection with the Company’s participation in the Capital Purchase Program (the “CPP”) of the Treasury’s Troubled Asset Relief Program (the “TARP”) (the “Repurchase”). |
• | either (i) Proposal 4 described in this Proxy Statement is approved by the Company’s shareholders or (ii) the Bank Merger (as defined in Proposal 4) shall have received all required board and governmental approvals and is reasonably capable of being consummated within three business days following the Closing; | ||
• | the absence, since December 31, 2010, of any “material adverse effect” (as defined in the Investment Agreement) on the Company or its subsidiaries; | ||
• | the appointment of individuals designated by NAFH to the board of directors of the Company and GreenBank such that the NAFH designees constitute a majority of the board of directors of the Company and GreenBank; | ||
• | the resignation of certain directors of the Company and GreenBank; | ||
• | the waiver of rights to receive certain change in control and other payments from certain senior officers; | ||
• | the absence of any requirement imposed by any required regulatory approvals that materially reduces the economic benefit of the transactions contemplated by the Investment Agreement for NAFH (a “Burdensome Condition”), as determined by NAFH in its good faith judgment; | ||
• | certain limitations on reductions in deposit levels and the amount of charge-offs at GreenBank between the date of the Investment Agreement and Closing; | ||
• | the declaration of the CVR distribution; and | ||
• | other terms and conditions typical of similar transactions and described in the Investment Agreement. |
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• | completion of the Initial Investment; | ||
• | termination of the Investment Agreement in accordance with its terms, before certain third party acquisitions or acquisition proposals, except a termination of the Investment Agreement by NAFH based on a breach by the Company of a representation, warranty, covenant or other agreement contained in the Investment Agreement (unless the breach is non-volitional) or a termination based on the Company breaching its obligations under the non-solicitation/exclusivity provisions of the Investment Agreement or based on the Board of Directors having withdrawn its recommendation that the Company’s shareholders approve the transactions or recommended a competing transaction; or | ||
• | the passage of 18 months, subject to certain limited extensions described in the Option Agreement, after termination of the Investment Agreement, if the termination follows the occurrence of certain third party acquisitions or acquisition proposals or is a termination of the Investment Agreement by NAFH based on a breach by the Company of a representation, warranty, covenant or other agreement contained in the Investment Agreement (unless the breach is non-volitional) or a termination based on the Company breaching its obligations under the non-solicitation/exclusivity provisions of the Investment Agreement or based on the Board of Directors having withdrawn its recommendation that the Company’s shareholders approve the transactions or recommended a competing transaction. |
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• | approve the original issuance and certain subsequent issuances of shares of Common Stock to NAFH under the terms of the Investment Agreement; | ||
• | vote on an amendment to the Company’s Charter to increase the number of authorized shares of Common Stock from twenty million (20,000,000) to three hundred million (300,000,000); | ||
• | vote on an amendment to the Charter to decrease the par value of the Common Stock from $2.00 per share to $0.01 per share; | ||
• | vote on an amendment to the Charter to expressly exempt NAFH and its affiliates and associates from the provisions of Section 9 of the Charter; | ||
• | vote on an amendment to the Charter to remove Section 8(j) of the Charter so that the Tennessee Control Share Acquisition Act will not apply to the Company and its shareholders; | ||
• | approve the merger of GreenBank with and into a subsidiary of NAFH; | ||
• | approve, on an advisory and non-binding basis, the compensation to be received by the Company’s named executive officers in connection with the issuance of the shares of Common Stock to NAFH under the terms of the Investment Agreement; and | ||
• | grant the proxy holder discretionary authority to vote to adjourn the Special Meeting, if necessary, in order to solicit additional proxies in the event there are not sufficient affirmative votes present at the Special Meeting to approve the proposals that may be considered and voted on, at the Special Meeting. |
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• | submitting a written revocation prior to the meeting to Michael J. Fowler, Corporate Secretary, Green Bankshares, Inc., 100 North Main Street, Greeneville, Tennessee 37743-4992; | ||
• | submitting another proxy by mail, Internet or telephone on a later date than the original proxy; or | ||
• | attending the Special Meeting and voting in person. |
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INVESTMENT AGREEMENT
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• | That would result in a monopoly or that would further a combination or conspiracy to monopolize banking in the United States; or | ||
• | That could substantially lessen competition in any in any banking market, that would tend to create a monopoly in any banking market, or that would be in restraint of trade, unless the Federal Reserve finds that the public interest in meeting the convenience and needs of the communities served outweighs the anti-competitive effects of the proposed transaction. |
AUTHORIZED SHARES OF COMMON STOCK
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Upon Effectiveness of | ||||||||
As of May 31, 2011 | Amendment | |||||||
Shares of Common Stock Authorized | 20,000,000 | 300,000,000 | ||||||
Shares of Common Stock Outstanding | 13,240,201 | 13,240,201 | ||||||
Shares of Common Stock Reserved for Issuance* | 1,052,152 | 1,052,152 | ||||||
Shares of Common Stock Available for Future Issuance | 5,707,647 | 285,707,647 | ||||||
Shares of Common Stock to be Issued in Connection with Investment Agreement | 119,900,000 | 119,900,000 | ||||||
* | The number of shares of Common Stock reserved for issuance includes 979,874 shares of Common Stock subject to outstanding options at May 31, 2011 and 72,278 shares of Common Stock subject to the Treasury Warrant. |
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OF COMMON STOCK
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FINANCIAL HOLDINGS, INC. AND ITS AFFILIATES AND ASSOCIATES FROM THE PROVISIONS
OF SECTION 9
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THAT THE TENNESSEE CONTROL SHARE ACQUISITION ACT WILL NOT APPLY TO THE
COMPANY AND ITS SHAREHOLDERS
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OF NORTH AMERICAN FINANCIAL HOLDINGS, INC.
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• | On July 16, 2010, NAFH commenced banking operations when it purchased the assets and assumed the liabilities of three failed banks from the FDIC: First National Bank of the South of Spartanburg, South Carolina, Metro Bank of Dade County of Miami, Florida and Turnberry Bank of Aventura, Florida (collectively, the “Failed Banks”). The transactions included 13 branches located in South Carolina and 10 branches located in Florida. NAFH purchased assets of approximately $1.4 billion and assumed deposits of approximately $1.2 billion from the Failed Banks. In connection with the acquisition, NAFH entered into a loss-sharing arrangement with the FDIC covering approximately $1 billion of loans and real estate owned acquired from the Failed Banks. | ||
• | On September 30, 2010, NAFH invested approximately $175 million in TIB Financial, a bank holding company headquartered in Naples, Florida with approximately $1.7 billion in assets and 28 branches in southwest Florida, and acquired approximately 94% of that company’s common stock after giving effect to a subsequent rights offering to legacy TIB Financial Corp. shareholders. On April 27, 2011, NAFH combined TIB Financial Corp.’s banking subsidiary, TIB Bank, with the Bank in an all stock transaction. | ||
• | On January 28, 2011, NAFH invested approximately $181 million in Capital Bank Corporation, a bank holding company headquartered in Raleigh, North Carolina with approximately $1.6 billion in assets and 33 branches in central and western North Carolina, and acquired approximately 83% of that company’s common stock after giving effect to a subsequent rights offering to legacy Capital Bank Corporation shareholders. |
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• | The Bank Merger is expected to create significant operating efficiencies by consolidating the loan operations, deposit operations, ALCO and risk management, budgeting, marketing, financial reporting and compliance functions of the two banks; | ||
• | The Bank Merger will result in a bank with increased size and scale; | ||
• | The Bank Merger will expand NAFH Bank’s and GreenBank’s overall geographic coverage; | ||
• | The Bank Merger is expected to be a tax free transaction; and | ||
• | The Bank Merger is expected to mitigate the regulatory burden of operating two stand alone banks regulated by two different federal regulators. |
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NAFH | ||||||||||||||||
Company | NAFH | Combined | Equivalent | |||||||||||||
Common | Common | Pro Forma | Pro Forma | |||||||||||||
Stock | Stock | Data | Data | |||||||||||||
Three months ended March 31, 2011 | ||||||||||||||||
Net income (loss) per share, basic | $ | (0.88 | ) | $ | 0.01 | $ | 0.04 | $ | 0.11 | |||||||
Net income (loss) per share, diluted | (0.88 | ) | 0.01 | 0.04 | 0.11 | |||||||||||
Dividends | — | — | — | — | ||||||||||||
Common book value per share | $ | 4.88 | $ | 19.56 | $ | 1.90 | $ | 19.53 | ||||||||
Year ended December 31, 2010 | ||||||||||||||||
Net income (loss) per share, basic | (6.54 | ) | 0.32 | 0.13 | 0.72 | |||||||||||
Net income (loss) per share, diluted | (6.54 | ) | 0.32 | 0.13 | 0.72 | |||||||||||
Dividends | — | — | — | — | ||||||||||||
Common book value per share | 5.75 | 19.49 | 1.98 | 19.45 |
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• | That would result in a monopoly or that would further a combination or conspiracy to monopolize banking in the United States; or | ||
• | That could substantially lessen competition in any banking market, that would tend to create a monopoly in any banking market, or that would be in restraint of trade, unless the Office of the Comptroller of the Currency finds that the public interest in meeting the convenience and needs of the communities served outweighs the anti-competitive effects of the proposed transaction. |
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• | The closing price per share at the time of consummation of the Investment is $2.58, which is equal to average closing market price of the Company’s common stock over the first five business days following the first public announcement of the Investment (or May 5, 2011); | ||
• | The Investment closed on June __, 2011, the last practicable date prior to the filing of this Proxy Statement; | ||
• | The named executive officers of the Company were terminated without cause immediately following a change in control on June __, 2011, which is the last practicable date prior to the filing of this Proxy Statement; and | ||
• | Messrs. Vaught and Droke waived their rights to receive any change in control payments based on or otherwise related to the Investment. |
Cash | Equity | Pension/ | ||||||||||||||
Name | ($)(5) | ($)(1) | NQDC ($) | Total ($) | ||||||||||||
Stephen M. Rownd | — | 109,745 | — | 109,745 | ||||||||||||
Michael J. Fowler | — | 79,632 | — | 79,632 | ||||||||||||
Kenneth R. Vaught | (2 | ) | 2,655 | (3 | ) | 2,655 | ||||||||||
James E. Adams(4) | — | — | — | — | ||||||||||||
Steve L. Droke | (2 | ) | 2,559 | — | 2,559 | |||||||||||
William C. Adams, Jr. | 321,266 | 1,604 | — | 322,870 | ||||||||||||
R. Stan Puckett (4) | — | — | — | — |
(1) | Pursuant to EESA, the accelerated vesting of equity awards upon a change in control is prohibited. However, it is anticipated that following consummation of the Repurchase the unvested equity awards of the NEOs will be accelerated. None of the stock options held by the NEOs have exercise prices that are less than $2.58. Accordingly, no value is ascribed to these stock options and the value reported is related solely to unvested shares of restricted stock. | |
(2) | If the Company fails to obtain waivers with respect to payments based on or otherwise related to the Investment from Messrs. Vaught and Droke and NAFH waives such condition to the Closing, Mr. Vaught and Droke may be entitled to additional payments in the amounts of approximately $798,000 and $406,917, respectively. | |
(3) | Under the Non-Competition Agreement and in connection with his termination (without regard for any change in control enhancement), Mr. Vaught would be entitled to receive payments of $84,924 per year for a period of ten years. Mr. Vaught would not be entitled to receive payments until he reaches age 50. | |
(4) | Messrs. J. Adams and Puckett retired on May 16, 2011 and March 31, 2010, respectively, and neither is entitled to any payments solely as a result of consummation of the Investment. |
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Name and Address of | Amount and Nature of | Percent of Common | ||||||
Beneficial Owner | Beneficial Ownership (a) | Stock Outstanding | ||||||
Scott M. Niswonger | 827,711 | (b) | 6.25 | % | ||||
P.O. Box 938 Greeneville, TN 37744 | ||||||||
Columbia Wagner Assets Management, L.P. | 1,183,912 | (c) | 8.94 | % | ||||
227 West Monroe Street, Suite 3000 Chicago, IL 60606 | ||||||||
Phil M. Bachman | 893,280 | (d) | 6.75 | % | ||||
Martha Bachman 100 N. Main Street, P.O. Box 1120 Greeneville, Tennessee 37743 | ||||||||
Dimensional Fund Advisors LP | 780,663 | (e) | 5.90 | % | ||||
6300 Bee Cave Road, Building One Austin, TX 78746 | ||||||||
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(a) | For purposes of this table, an individual or entity is considered to “beneficially own” any share of Common Stock which he, she or it directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares: (1) voting power, which includes the power to vote, or to direct the voting of, such security; and/or (2) investment power, which includes the power to dispose, or to direct the disposition of, such security. In addition, an individual or entity is deemed to be the beneficial owner of any share of Common Stock of which he, she or it has the right to acquire voting or investment power within 60 days of the Record Date. | |
(b) | Based upon information set forth in a Schedule 13D/A, filed with the SEC on October 22, 2010 by Mr. Niswonger, who has sole voting and dispositive power with respect to 827,711 shares. | |
(c) | Based solely on the information contained in a Schedule 13G filed by Columbia Wagner Asset Management, L.P. with the SEC on February 10, 2011, as of December 31, 2010. | |
(d) | Martha Bachman is a director and the wife of retired director Phil Bachman. Includes 201,417 shares of common stock held directly or indirectly by Martha Bachman, 673,697 shares owned by Phil Bachman individually and 18,166 shares owned by Mr. and Mrs. Bachman jointly. | |
(e) | Based solely on the information contained in a Schedule 13G filed by Dimensional Fund Advisors, L.P. with the SEC on February 11, 2011, as of December 31, 2010. |
The following table sets forth, as of the Record Date, certain information known to the Company as to Common Stock beneficially owned by each director and named executive officer of the Company and by all directors and executive officers of the Company as a group. The address for each of our directors and executive officers listed below is c/o Green Bankshares, Inc., 100 North Main Street, P.O. Box 1120, Greeneville, Tennessee 37743. As of the Record Date, there were ______ shares of the Company’s stock outstanding. |
Number of Shares Beneficially Owned | ||||||||||||||||
Common | ||||||||||||||||
Shares | Shares | Percent of | ||||||||||||||
Beneficially | Acquirable in | Common Stock | ||||||||||||||
Name and Position | Owned(a)(b) | 60 Days (c) | Total | Outstanding | ||||||||||||
Stephen M. Rownd, Chairman of the Board and Chief Executive Officer | 47,114 | — | 47,114 | * | ||||||||||||
Martha Bachman, Director | 893,280 | (d)(e) | — | 893,280 | 6.75 | % | ||||||||||
Bruce Campbell, Director | 10,189 | — | 10,189 | * | ||||||||||||
W.T. Daniels, Director | 14,215 | — | 14,215 | * | ||||||||||||
Robert K. Leonard, Director | 94,153 | (f)(e) | — | 94,153 | * | |||||||||||
Samuel Lynch, Director | 3,850 | — | 3,850 | * | ||||||||||||
Bill Mooningham, Director | 2,396 | — | 2,396 | * | ||||||||||||
John Tolsma, Director | 11,985 | — | 11,985 | * | ||||||||||||
Charles H. Whitfield, Jr., Director | 14,817 | — | 14,817 | * | ||||||||||||
Kenneth R. Vaught, Director, President and Chief Operating Officer | 38,834 | 26,800 | 65,634 | * | ||||||||||||
William C. Adams, Senior Vice President and Chief Information Officer | 25,870 | (e) | 16,391 | 42,261 | * | |||||||||||
Steve L. Droke, Senior Vice President and Chief Credit Officer | 18,802 | 7,219 | 26,021 | * | ||||||||||||
R. Stan Puckett, Retired Chairman of the Board and Chief Executive Officer | 45,772 | 44,640 | (g) | 90,412 | * | |||||||||||
James E. Adams, Retired Executive Vice President, Former Chief Financial Officer and Secretary | 25,823 | 4,200 | 30,023 | * | ||||||||||||
Michael J. Fowler, Senior Vice President and Chief Financial Officer | 30,865 | — | 30,865 | * |
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Number of Shares Beneficially Owned | ||||||||||||||||
Common | ||||||||||||||||
Shares | Shares | Percent of | ||||||||||||||
Beneficially | Acquirable in | Common Stock | ||||||||||||||
Name and Position | Owned(a)(b) | 60 Days (c) | Total | Outstanding | ||||||||||||
All directors and executive officers as a group (16 persons)(h) | 1,299,825 | 119,737 | 1,419,562 | 10.63 | % |
* | Less than 1% of the outstanding Common Stock. | |
(a) | For the definition of “beneficially owned,” see Note (a) to the preceding table. | |
(b) | Includes shares owned directly by directors and executive officers of the Company as well as shares held by their spouses and children, trust of which certain directors are trustees and corporations in which certain directors own a controlling interest. | |
(c) | Represents options to purchase Common Stock which are exercisable within 60 days of the Record Date. | |
(d) | Martha Bachman is a director and the wife of retired director Phil Bachman. Includes 201,417 shares of common stock held directly or indirectly by Martha Bachman, 673,697 shares owned by Phil Bachman individually and 18,166 shares owned by Mr. and Mrs. Bachman jointly. | |
(e) | As of May 23, 2011, the following individuals have pledged the following amounts of their common shares beneficially owned to secure lines of credits or other indebtedness: Martha Bachman and retired director Phil Bachman — 312,899 shares; Robert Leonard — 15,000 shares held in a limited liability partnership; and William C. Adams — 5,000 shares. | |
(f) | Includes 41,197 shares of common stock in a limited partnership of which Mr. Leonard is a limited partner. Mr. Leonard disclaims beneficial ownership of 32,216 of these shares. Also includes 504 shares of common stock in a limited liability company in which Mr. Leonard has an interest. Mr. Leonard disclaims beneficial ownership of 363 of these shares. | |
(g) | Includes options to acquire 36,000 shares of Common Stock currently exercisable (or exercisable within 60 days of the Record Date) by Mr. Puckett at an exercise price equal to 150% of the book value of the Common Stock at the date of grant (a weighted average price of approximately $16.27 per share) and options to acquire 19,800 shares of Common Stock currently exercisable (or exercisable within 60 days of the Record Date) by Mr. Puckett at an exercise price equal to the fair market value at the date of grant (a weighted average price of approximately $29.03 per share). | |
(h) | Includes shares held by Mr. Puckett, who served as the Company’s Chairman and Chief Executive Officer until March 31, 2010, and shares held by Mr. J. Adams, who served as the Company’s Executive Vice President, Chief Financial Officer and Secretary until May 16, 2011. |
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Secretary
June __, 2011
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ARTICLE I PURCHASE; CLOSING | ||
1.1 Purchase | A-1 | |
1.2 Closing | A-1 | |
ARTICLE II REPRESENTATIONS AND WARRANTIES | ||
2.1 Disclosure | A-5 | |
2.2 Representations and Warranties of the Company and the Bank | A-6 | |
2.3 Representations and Warranties of Purchaser | A-23 | |
ARTICLE III COVENANTS | ||
3.1 Filings; Other Actions | A-26 | |
3.2 Access, Information and Confidentiality | A-27 | |
3.3 Conduct of the Business | A-28 | |
3.4 Acquisition Proposals | A-31 | |
3.5 Repurchase | A-33 | |
3.6 D&O Indemnification | A-34 | |
3.7 Notice of Developments | A-34 | |
ARTICLE IV ADDITIONAL AGREEMENTS | ||
4.1 Governance Matters | A-34 | |
4.2 Legend | A-35 | |
4.3 Exchange Listing | A-35 | |
4.4 Registration Rights | A-35 | |
4.5 Employees | A-35 | |
4.6 Reservation for Issuance | A-35 | |
4.7 Additional Investment | A-35 | |
ARTICLE V TERMINATION | ||
5.1 Termination | A-36 | |
5.2 Effects of Termination | A-37 | |
5.3 Fees | A-37 | |
ARTICLE VI MISCELLANEOUS | ||
6.1 No Survival | A-38 | |
6.2 Expenses | A-38 | |
A-ii |
6.3 Amendment; Waiver | A-38 | |
6.4 Counterparts and Facsimile | A-38 | |
6.5 Governing Law | A-38 | |
6.6 Notices | A-38 | |
6.7 Entire Agreement, Assignment | A-39 | |
6.8 Interpretation; Other Definitions | A-39 | |
6.9 Captions | A-40 | |
6.10 Severability | A-40 | |
6.11 No Third Party Beneficiaries | A-40 | |
6.12 Time of Essence | A-40 | |
6.13 Certain Adjustments | A-41 | |
6.14 Public Announcements | A-41 | |
6.15 Specific Performance; Limitation on Damages | A-41 | |
A-iii |
Term | Location of Definition | |
409A Plan | 2.2(s)(8) | |
Acquisition Agreement | 3.4(b) | |
Acquisition Proposal | 3.4(c) | |
Adverse Recommendation Change | 3.4(b) | |
Affiliate | 6.8(a) | |
Agency | 2.2(w)(5)(D) | |
Agreement | Preamble | |
Authorizations | 2.2(a)(1) | |
Bank | Preamble | |
Bank Charter | 2.2(a)(2) | |
beneficial owner | 6.8(g) | |
beneficially own | 6.8(g) | |
Benefit Plan | 2.2(s)(1) | |
Burdensome Condition | 1.2(c)(2)(F) | |
business day | 6.8(e) | |
Capitalization Date | 2.2(b) | |
CERCLA | 2.2(v) | |
Charge-Offs | 1.2(c)(2)(L) | |
Charter | 2.2(a)(1) | |
Closing | 1.2(a) | |
Closing Date | 1.2(a) | |
Closing Expense Reimbursement | 6.2 | |
Code | 2.2(j) | |
Common Stock | Recitals | |
Company | Preamble | |
Company 10-K | 2.1(c)(2)(A) | |
Company Insurance Policies | 2.2(x) | |
Company Preferred Stock | 2.2(b) | |
Company Recommendation | 3.1(b) | |
Company Reports | 2.2(h)(1) | |
Company Representatives | 3.2(a) | |
Company Significant Agreement | 2.2(m)(i) | |
Company’s knowledge | 2.1(d) | |
Confidentiality Agreement | 3.2(b) | |
control | 6.8(a) | |
controlled by | 6.8(a) | |
CVRs | Recitals | |
Disclosure Schedule | 2.1(a) | |
EESA | 2.2(s)(10) | |
ERISA | 2.2(s)(1) | |
ERISA Affiliate | 2.2(s)(1) | |
Exchange Act | 2.2(h)(1) | |
Existing D&O Policies | 1.2(c)(2)(H)(i) | |
Expense Reimbursement | 5.3(c) | |
FDIC | 2.2(a)(2) | |
Federal Reserve | 1.2(c)(1)(B) | |
GAAP | 2.2(g) | |
Governmental Entity | 1.2(c)(1)(A) | |
herein | 6.8(d) | |
hereof | 6.8(d) | |
hereunder | 6.8(d) | |
include | 6.8(c) | |
A-iv |
Term | Location of Definition | |
included | 6.8(c) | |
includes | 6.8(c) | |
including | 6.8(c) | |
knowledge of the Company | 2.1(d) | |
Laws | 2.1(b) | |
Liens | 1.2(b)(1) | |
Loan Portfolio Committee | 4.1(c) | |
Loans | 2.2(w)(1) | |
Loan Tape | 2.2(w)(9) | |
Material Adverse Effect | 2.1(b) | |
NASDAQ | 1.2(c)(2)(I) | |
Nominees | 4.1(b) | |
Notice of Recommendation Change | 3.4(b) | |
or | 6.8(b) | |
Option | Recitals | |
Organizational Common Stock | 2.2(b) | |
Permits | 2.2(q) | |
Permitted Liens | 2.2(i) | |
Per Share Purchase Price | 1.2(b)(2) | |
person | 6.8(f) | |
Pool | 2.2(w)(8) | |
Previously Disclosed | 2.1(c) | |
Proprietary Rights | 2.2(y) | |
Purchased Shares | 1.1 | |
Purchaser | Preamble | |
Purchaser Designees | 1.2(c)(2)(G) | |
Registration Rights Agreement | 4.4 | |
Regulatory Agreement | 2.2(u) | |
Resigning Directors | 1.2(c)(2)(G) | |
Representatives | 3.4(a) | |
Repurchase | Recitals | |
Required Approvals | 2.2(f) | |
Sarbanes-Oxley Act | 2.2(h)(2) | |
SEC | 2.1(c)(2)(A) | |
Securities Act | 2.2(h)(1) | |
Series A Preferred | Recitals | |
Shareholder Meeting | 3.1(b) | |
Shareholder Proposal | 3.1(b) | |
SRO | 2.2(h)(1) | |
Subsidiaries | 2.2(a)(1) | |
Subsidiary | 2.2(a)(1) | |
Superior Proposal | 3.4(c) | |
Tax Return | 2.2(j) | |
Taxes | 2.2(j) | |
Tennessee DFI | 1.2(c)(1)(B) | |
Termination Fee | 5.3(c) | |
Treasury | Recitals | |
Treasury Warrants | Recitals | |
Trust Preferred Securities | 2.2(d)(2) | |
under common control with | 6.8(a) | |
VA | 2.2(w)(5) | |
Voting Debt | 2.2(b) | |
A-v |
Schedule A | List of Subsidiaries | |
Exhibit A | Terms of Contingent Value Rights | |
Exhibit B | Terms of Repurchase | |
Exhibit C | Form of Registration Rights Agreement |
A-1
A-2
A-3
A-4
A-5
A-6
A-7
A-8
A-9
A-10
A-11
A-12
A-13
A-14
A-15
A-16
A-17
A-18
A-19
A-20
A-21
A-22
A-23
A-24
A-25
COVENANTS
A-26
A-27
A-28
A-29
A-30
A-31
A-32
A-33
A-34
A-35
A-36
A-37
A-38
(a) | If to Purchaser: | ||
North American Financial Holdings, Inc. 4725 Piedmont Row Drive Charlotte, North Carolina 28210 Attention: Christopher G. Marshall Telephone: (704) 554-5901 Fax: (704) 964-2442 | |||
with a copy to (which copy alone shall not constitute notice): | |||
Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: David E. Shapiro Telephone: (212) 403-1000 Fax: (212) 403-2000 | |||
(b) | If to the Company or the Bank: | ||
Green Bankshares, Inc. 100 North Main Street Greeneville, Tennessee 37743 Attention: Stephen M. Rownd Telephone: (423) 278-3323 Fax: (866) 550-2336 | |||
with a copy to (which copy alone shall not constitute notice): | |||
Bass, Berry & Sims PLC 150 Third Avenue South, Suite 2800 Nashville, Tennessee 37201 Attention: D. Scott Holley Telephone: (615) 742-7721 Fax: (615) 742-2813 |
A-39
A-40
A-41
GREEN BANKSHARES, INC. | ||||
By: | /s/ Stephen M. Rownd | |||
Name: | Stephen M. Rownd | |||
Title: | Chairman and CEO | |||
GREENBANK | ||||
By: | /s/ Stephen M. Rownd | |||
Name: | Stephen M. Rownd | |||
Title: | Chairman and CEO | |||
A-42
NORTH AMERICAN FINANCIAL HOLDINGS, INC. | ||||
By: | /s/ Christopher G. Marshall | |||
Name: | Christopher G. Marshall | |||
Title: | EVP, CFO | |||
A-43
State or Other Jurisdiction of | ||
Name of Subsidiary | Incorporation/Organization | |
Company Subsidiaries | ||
Greene County Capital Trust I | Delaware | |
Greene County Capital Trust II | Delaware | |
GreenBank Capital Trust I | Delaware | |
Civitas Statutory Trust I | Delaware | |
Cumberland Capital Statutory Trust II | Connecticut | |
Bank Subsidiaries | ||
Superior Financial Services, Inc. | Tennessee | |
GCB Acceptance Corporation | Tennessee | |
Fairway Title Company | Tennessee | |
GB Holdings, LLC | Tennessee |
Term Sheet for Contingent Value Rights
Recipients | Immediately prior to the Closing, existing shareholders of the Company as of a predetermined record date mutually agreeable to the Purchaser and the Company will be issued one right (a “CVR”) for each share of Common Stock owned by such shareholder. Each CVR would entitle the holder to a cash payment based on the amount of Credit Losses (as defined below) prior to the Maturity Date up to a maximum of $0.75 per CVR in the aggregate. | |
Maturity Date | 5 years from the Closing Date | |
Settlement Obligation at Maturity | If the amount of Credit Losses is less than the Stipulated Amount, the Issuer will pay to holders of the CVRs, within 60 days of the Maturity Date, an amount equal to: | |
(A) If the difference between the Stipulated Amount and the amount of Credit Losses expressed on a per CVR basis (such difference, the “Loss Shortfall”) is less than or equal to $0.50, then 100% of the Loss Shortfall; and | ||
(B) If the Loss Shortfall is greater than $0.50, then $0.50 plus 50% of the excess of the Loss Shortfall over $0.50 with a maximum of $0.75 per CVR. | ||
If the amount of Credit Losses equals or exceeds the Stipulated Amount (as defined below), the CVRs will expire and the Company shall not be required to make any payment with respect to them. | ||
Credit Losses | “Credit Losses” means the Charge-Offs for any loans existing as of the date hereof for the period commencing on the date hereof and ending on the Maturity Date less any recoveries in respect of such Charge-Offs. | |
Stipulated Amount | $178,000,000. | |
Determinations | All determinations with respect to Credit Losses calculations for purposes of the CVRs and amounts payable in respect of the CVRs shall be made by the Loan Portfolio Committee of the Company’s Board of Directors in its sole discretion. | |
Early Redemption | The Company may redeem the CVRs at any time at a price of $0.75 per CVR. | |
Voting rights | Any modifications of the terms of the CVRs that are adverse to the holders will require the consent of the holders of a majority of the CVRs. Otherwise, no voting rights attach to the CVRs. | |
Dividend rights | None. | |
Merger, Acquisition or Change in Control | In the event that the Company experiences a Change in Control, all rights under the CVRs shall be redeemed upon closing at $0.75 per CVR. |
Exhibit A-1
Change in Control | A “Change in Control” shall mean any transaction resulting in the holders of the equity interests of the Parent immediately prior to such transaction owning, directly or indirectly, less than 50% of the equity interests of the Parent immediately following such transaction. For purposes of the preceding sentence, the “Parent” shall mean the ultimate holder that directly or indirectly owns or controls, by share ownership, contract or otherwise, a majority of the equity interests of the Company. | |
Transferability; Attachment; Death | The rights of a holder of a CVR may not be assigned or transferred except by will or the laws of descent or distribution. The CVR shall not be subject, in whole or in part, to attachment, execution, or levy of any kind, and any attempt to sell, pledge, assign, hypothecate, transfer or otherwise dispose of the CVR shall be void. If a holder of a CVR should die, the designee, legal representative, or legatee, the successor trustee of such holder’s inter vivos trust or the person who acquired the right to the CVR by reason of the death of such holder (individually, a “Successor”) shall succeed to such holder’s rights with respect to the CVR. |
Exhibit A-2
TO THE CHARTER
OF
GREEN BANKSHARES, INC.
GREEN BANKSHARES, INC. | ||||
By: | ||||
Name: | Stephen M. Rownd | |||
Title: | Chief Executive Officer |
B-1
TO THE CHARTER
OF
GREEN BANKSHARES, INC.
GREEN BANKSHARES, INC. | ||||
By: | ||||
Name: | Stephen M. Rownd | |||
Title: | Chief Executive Officer |
C-1
TO THE CHARTER
OF
GREEN BANKSHARES, INC.
GREEN BANKSHARES, INC. | ||||
By: | ||||
Name: | Stephen M. Rownd | |||
Title: | Chief Executive Officer |
D-1
GREENBANK
WITH AND INTO
NAFH NATIONAL BANK
E-1
E-2
ATTEST: | NAFH NATIONAL BANK | |
Name: | Name: | |
Title: | Title: | |
ATTEST: | GREENBANK | |
Name: | Name: | |
Title: | Title: |
E-3
F-1
F-2
F-3
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Commercial real estate | $ | 1,080,805 | $ | 1,306,398 | $ | 1,430,225 | $ | 1,549,457 | $ | 921,190 | ||||||||||
Residential real estate | 378,783 | 392,365 | 397,922 | 398,779 | 281,629 | |||||||||||||||
Commercial | 222,927 | 274,346 | 315,099 | 320,264 | 258,998 | |||||||||||||||
Consumer | 75,498 | 83,382 | 89,733 | 97,635 | 87,111 | |||||||||||||||
Other | 1,913 | 2,117 | 4,656 | 3,871 | 2,203 | |||||||||||||||
Unearned interest | (14,548 | ) | (14,801 | ) | (14,245 | ) | (13,630 | ) | (11,502 | ) | ||||||||||
Loans, net of unearned interest | $ | 1,745,378 | $ | 2,043,807 | $ | 2,223,390 | $ | 2,356,376 | $ | 1,539,629 | ||||||||||
Allowance for loan losses | $ | (66,830 | ) | $ | (50,161 | ) | $ | (48,811 | ) | $ | (34,111 | ) | $ | (22,302 | ) | |||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Speculative 1-4 family residential real estate | ||||||||||||||||||||
Acquisition and development | $ | 131,669 | $ | 185,087 | $ | 242,343 | $ | 285,592 | $ | 159,760 | ||||||||||
Lot warehouse | 42,796 | 66,104 | 79,555 | 104,201 | 64,429 | |||||||||||||||
Commercial 1-4 family residential | 31,511 | 70,434 | 160,786 | 279,680 | 134,390 | |||||||||||||||
Sub-total | 205,976 | 321,625 | 482,684 | 669,473 | 358,579 | |||||||||||||||
Construction | ||||||||||||||||||||
Commercial vacant land | 77,081 | 101,679 | 103,160 | 69,298 | 37,461 | |||||||||||||||
Commercial construction — non-owner occupied | 63,881 | 164,887 | 144,344 | 157,374 | 80,032 | |||||||||||||||
Commercial construction — owner occupied | 5,407 | 28,213 | 55,305 | 58,814 | 37,515 |
F-4
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Consumer residential construction | 14,161 | 19,073 | 27,632 | 38,231 | 25,279 | |||||||||||||||
Sub-total | 160,530 | 313,852 | 330,441 | 323,717 | 180,287 | |||||||||||||||
Total speculative and construction | $ | 366,506 | $ | 635,477 | $ | 813,125 | $ | 993,190 | $ | 538,866 | ||||||||||
Due in One | Due After One Year | Due After | ||||||||||||||
Year or Less | Through Five Years | Five Years | Total | |||||||||||||
Commercial real estate | $ | 437,374 | $ | 613,259 | $ | 30,172 | $ | 1,080,805 | ||||||||
Residential real estate(1) | 42,826 | 93,735 | 235,732 | 372,293 | ||||||||||||
Commercial | 148,500 | 68,752 | 5,675 | 222,927 | ||||||||||||
Consumer(1) | 19,110 | 45,815 | 2,515 | 67,440 | ||||||||||||
Other | 1,629 | 236 | 48 | 1,913 | ||||||||||||
Total | $ | 649,439 | $ | 821,797 | $ | 274,142 | $ | 1,745,378 | ||||||||
(1) | Net of unearned interest |
Fixed Rate | Variable Rate | Total | ||||||||||
Commercial real estate | $ | 432,141 | $ | 211,290 | $ | 643,431 | ||||||
Residential real estate | 111,198 | 218,269 | 329,467 | |||||||||
Commercial | 46,740 | 27,687 | 74,427 | |||||||||
Consumer | 47,696 | 634 | 48,330 | |||||||||
Other | 236 | 48 | 284 | |||||||||
Total | $ | 638,011 | $ | 457,928 | $ | 1,095,939 | ||||||
F-5
F-6
At December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Loans accounted for on a non-accrual basis | $ | 143,707 | $ | 75,411 | $ | 30,926 | $ | 32,060 | $ | 3,479 | ||||||||||
Accruing loans which are contractually past due 90 days or more as to interest or principal payments | 2,112 | 147 | 509 | 18 | 28 | |||||||||||||||
Total non-performing loans | 145,819 | 75,558 | 31,435 | 32,078 | 3,507 | |||||||||||||||
Real estate owned: | ||||||||||||||||||||
Foreclosures | 59,965 | 56,952 | 44,964 | 4,401 | 1,445 | |||||||||||||||
Other real estate held and repossessed assets | 130 | 216 | 407 | 458 | 243 | |||||||||||||||
Total non-performing assets | $ | 205,914 | $ | 132,726 | $ | 76,806 | $ | 36,937 | $ | 5,195 | ||||||||||
Restructured loans not included above | $ | 39,940 | $ | 11,632 | $ | — | $ | — | $ | — | ||||||||||
F-7
Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Balance at beginning of year | $ | 50,161 | $ | 48,811 | $ | 34,111 | $ | 22,302 | $ | 19,739 | ||||||||||
Reserve acquired in acquisition | — | — | — | 9,022 | — | |||||||||||||||
Subtotal | 50,161 | 48,811 | 34,111 | 31,324 | 19,739 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Commercial real estate | (48,617 | ) | (40,893 | ) | (28,759 | ) | (7,516 | ) | (494 | ) | ||||||||||
Commercial | (3,210 | ) | (6,941 | ) | (6,177 | ) | (2,065 | ) | (879 | ) | ||||||||||
Subtotal | (51,827 | ) | (47,834 | ) | (34,936 | ) | (9,581 | ) | (1,373 | ) | ||||||||||
Residential real estate | (3,102 | ) | (3,176 | ) | (2,275 | ) | (840 | ) | (947 | ) | ||||||||||
Consumer | (2,889 | ) | (3,880 | ) | (4,058 | ) | (3,050 | ) | (2,009 | ) | ||||||||||
Other | — | — | — | — | (28 | ) | ||||||||||||||
Total charge-offs | (57,818 | ) | (54,890 | ) | (41,269 | ) | (13,471 | ) | (4,357 | ) | ||||||||||
Recoveries: | ||||||||||||||||||||
Commercial real estate | 1,301 | 3,066 | 1,691 | 289 | 17 | |||||||||||||||
Commercial | 909 | 1,669 | 221 | 227 | 171 | |||||||||||||||
Subtotal | 2,210 | 4,735 | 1,912 | 516 | 188 | |||||||||||||||
Residential real estate | 287 | 402 | 138 | 213 | 284 | |||||||||||||||
Consumer | 882 | 853 | 1,106 | 1,038 | 936 | |||||||||||||||
Other | 1 | 4 | 3 | 8 | 5 | |||||||||||||||
Total recoveries | 3,380 | 5,994 | 3,159 | 1,775 | 1,413 | |||||||||||||||
Net charge-offs | (54,438 | ) | (48,896 | ) | (38,110 | ) | (11,696 | ) | (2,944 | ) | ||||||||||
Provision for loan losses | 71,107 | 50,246 | 52,810 | 14,483 | 5,507 | |||||||||||||||
Balance at end of year | $ | 66,830 | $ | 50,161 | $ | 48,811 | $ | 34,111 | $ | 22,302 | ||||||||||
Ratio of net charge-offs to average loans outstanding, net of unearned discount, during the period | 2.84 | % | 2.25 | % | 1.63 | % | .57 | % | .20 | % | ||||||||||
Ratio of allowance for loan losses to non-performing loans | 45.83 | % | 66.39 | % | 155.28 | % | 106.34 | % | 635.93 | % | ||||||||||
Ratio of allowance for loan losses to total loans, net of unearned income | 3.83 | % | 2.45 | % | 2.20 | % | 1.45 | % | 1.45 | % | ||||||||||
F-8
At December 31, | ||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||
Percent | Percent of | Percent of | Percent | Percent | ||||||||||||||||||||||||||||||||||||
of loans | loans in | loans in | of loans | of loans | ||||||||||||||||||||||||||||||||||||
in each | each | each | in each | in each | ||||||||||||||||||||||||||||||||||||
category | category | category | category | category | ||||||||||||||||||||||||||||||||||||
Balance at end of period | to total | to total | to total | to total | to total | |||||||||||||||||||||||||||||||||||
applicable to: | Amount | loans | Amount | loans | Amount | loans | Amount | loans | Amount | loans | ||||||||||||||||||||||||||||||
Commercial real estate | $ | 54,203 | 61.93 | % | $ | 36,527 | 63.93 | % | $ | 35,714 | 64.33 | % | $ | 20,489 | 65.38 | % | $ | 10,619 | 59.38 | % | ||||||||||||||||||||
Residential real estate | 4,431 | 21.33 | % | 4,350 | 18.88 | % | 3,669 | 17.63 | % | 2,395 | 16.83 | % | 1,639 | 18.16 | % | |||||||||||||||||||||||||
Commercial | 5,080 | 12.78 | % | 5,840 | 13.42 | % | 6,479 | 14.17 | % | 7,575 | 13.51 | % | 6,645 | 16.70 | % | |||||||||||||||||||||||||
Consumer | 3,108 | 3.86 | % | 3,437 | 3.67 | % | 2,927 | 3.66 | % | 3,635 | 4.12 | % | 3,384 | 5.62 | % | |||||||||||||||||||||||||
Other | 8 | 0.11 | % | 7 | 0.10 | % | 22 | 0.21 | % | 17 | 0.16 | % | 15 | 0.14 | % | |||||||||||||||||||||||||
Totals | $ | 66,830 | 100.00 | % | $ | 50,161 | 100.00 | % | $ | 48,811 | 100.00 | % | $ | 34,111 | 100.00 | % | $ | 22,302 | 100.00 | % | ||||||||||||||||||||
At December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Securities Held to Maturity: | ||||||||||||
State and political subdivisions | $ | 215 | $ | 251 | $ | 404 | ||||||
Other securities | 250 | 375 | 253 | |||||||||
Total | $ | 465 | $ | 626 | $ | 657 | ||||||
Securities Available for Sale: | ||||||||||||
U.S. government agencies | $ | 83,299 | $ | 52,048 | $ | 98,806 | ||||||
State and political subdivisions | 31,501 | 32,192 | 31,804 | |||||||||
Collateralized mortgage obligations | 67,575 | 44,677 | 68,373 | |||||||||
Mortgage-backed securities | 17,964 | 16,892 | 2,086 | |||||||||
Trust preferred securities | 1,663 | 1,915 | 2,493 | |||||||||
Total | $ | 202,002 | $ | 147,724 | $ | 203,562 | ||||||
F-9
Due After One | ||||||||||||||||||||
Due in One | Year through | Due After Five Years | Due | |||||||||||||||||
Year or Less | Five Years | through 10 Years | After 10 Years | Total | ||||||||||||||||
Securities Held to Maturity: | ||||||||||||||||||||
State and political subdivisions | $ | 215 | $ | — | $ | — | $ | — | $ | 215 | ||||||||||
Other securities | 250 | — | — | — | 250 | |||||||||||||||
Securities Available for Sale: | ||||||||||||||||||||
U.S. government agencies | — | — | 39,004 | 45,102 | 84,106 | |||||||||||||||
State and political subdivisions | 1,005 | 4,067 | 21,986 | 4,133 | 31,191 | |||||||||||||||
Collateralized mortgage obligations | — | 651 | 1,584 | 63,809 | 66,044 | |||||||||||||||
Mortgage-backed securities | — | 5,989 | 4,012 | 7,167 | 17,168 | |||||||||||||||
Trust preferred securities | — | — | — | 1,850 | 1,850 | |||||||||||||||
Subtotal | $ | 1,470 | $ | 10,707 | $ | 66,586 | $ | 122,061 | $ | 200,824 | ||||||||||
Market value adjustment on available for sale securities | 3 | 535 | 554 | 553 | 1,645 | |||||||||||||||
Total | $ | 1,473 | $ | 11,242 | $ | 67,140 | $ | 122,614 | $ | 202,469 | ||||||||||
Weighted average yield (a) | 7.08 | % | 4.83 | % | 3.94 | % | 3.44 | % | 3.75 | % | ||||||||||
(a) | Weighted average yields on tax-exempt obligations have been computed on a fully taxable-equivalent basis using a tax rate of 35%. |
Year Ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||
Balance | Rate Paid | Balance | Rate Paid | Balance | Rate Paid | |||||||||||||||||||
Types of deposits (all in domestic offices): | ||||||||||||||||||||||||
Noninterest bearing demand deposits | $ | 166,814 | — | $ | 162,765 | — | $ | 187,058 | — | |||||||||||||||
Interest-bearing demand deposits | 881,978 | 1.01 | % | 700,586 | 1.30 | % | 577,024 | 1.57 | % | |||||||||||||||
Savings deposits | 98,900 | 1.02 | % | 83,549 | 1.13 | % | 68,612 | .77 | % | |||||||||||||||
Time deposits | 841,458 | 2.20 | % | 1,166,640 | 3.06 | % | 1,317,362 | 3.68 | % | |||||||||||||||
Total deposits | $ | 1,989,150 | $ | 2,113,540 | $ | 2,150,056 | ||||||||||||||||||
F-10
Maturity Period | Certificates of Deposits | |||
Three months or less | $ | 41,190 | ||
Over three through six months | 43,741 | |||
Over six through twelve months | 112,097 | |||
Over twelve months | 112,673 | |||
Total | $ | 309,701 | ||
County | Deposit Share | |||
Greene, TN | 28.72 | % | ||
Hawkins, TN | 19.36 | % | ||
Lawrence, TN | 17.53 | % | ||
Smith, TN | 10.58 | % | ||
Sumner, TN | 10.12 | % | ||
Hamblen, TN | 8.78 | % | ||
Blount, TN | 8.15 | % | ||
Cocke, TN | 8.15 | % | ||
Macon, TN | 7.10 | % | ||
Madison, NC | 6.66 | % | ||
Montgomery, TN | 6.36 | % | ||
Loudon, TN | 6.00 | % | ||
Washington, TN | 5.91 | % | ||
McMinn, TN | 5.63 | % | ||
Bristol, VA1 | 4.39 | % | ||
Sullivan, TN | 2.82 | % | ||
Williamson, TN | 2.80 | % | ||
Rutherford, TN | 2.62 | % | ||
Monroe, TN | 1.49 | % | ||
Knox, TN | 0.82 | % | ||
Davidson, TN | 0.79 | % |
1 | Bristol, VA is deemed a city. |
F-11
• | Changing the assessment base for federal deposit insurance from the amount of insured deposits to consolidated assets less tangible capital, eliminating the ceiling and increasing the size of the floor of the DIF, and offsetting the impact of the increase in the minimum floor on institutions with less than $10 billion in assets; | ||
• | Making permanent the $250,000 limit for federal deposit insurance, increasing the cash limit of Securities Investor Protection Corporation protection to $250,000 and providing unlimited federal deposit insurance until December 31, 2012 for non-interest bearing demand transaction accounts at all insured depository institutions; | ||
• | Repealing the federal prohibition on payment of interest on demand deposits, thereby permitting depositing institutions to pay interest on business transaction and other accounts; | ||
• | Centralizing responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, responsible for implementing federal consumer protection laws, although banks below $10 billion in assets will continue to be examined and supervised for compliance with these laws by their federal banking regulator; | ||
• | Restricting the preemption of state law by federal law and disallowing national bank subsidiaries from availing themselves of such preemption; | ||
• | Imposing new requirements for mortgage lending, including new minimum underwriting standards, prohibitions on certain yield-spread compensation to mortgage originators, special consumer protections for mortgage loans that do not meet certain provision qualifications, prohibitions and limitations on certain mortgage terms and various new mandated disclosures to mortgage borrowers; | ||
• | Applying the same leverage and risk based capital requirements that apply to insured depository institutions to holding companies, although the Company’s currently outstanding subordinated debentures (but not new issuances) will continue to qualify as Tier 1 capital, subject to existing limitations on the amount that may so qualify; |
F-12
• | Permitting national and state banks to establish de novo interstate branches at any location where a bank based in that state could establish a branch, and requiring that bank holding companies and banks be well capitalized and well managed in order to acquire banks located outside their home state; | ||
• | Imposing new limits on affiliated transactions and causing derivative transactions to be subject to lending limits; and | ||
• | Implementing corporate governance revisions, including with regard to executive compensation and proxy access to shareholders, that apply to all public companies not just financial institutions. |
• | The bank holding company has registered securities under Section 12 of the Securities Exchange Act of 1934; or | ||
• | No other person owns a greater percentage of that class of voting securities immediately after the transaction. |
F-13
F-14
F-15
• | Ensure that the incentive compensation programs for its senior executive officers do not encourage unnecessary and excessive risks that threaten the value of the Company; |
F-16
• | Implement a required clawback of any bonus or incentive compensation paid to the Company’s senior executive officers and the next twenty most highly compensated employees based on materially inaccurate financial statements or any other materially inaccurate performance metric; | ||
• | Not make any bonus, incentive or retention payment to any of the Company’s five most highly compensated employees, except as permitted under the IFR; | ||
• | Not make any “golden parachute payment” (as defined in the IFR) to any of the Company’s senior executive officers or next five most highly compensated employees; and | ||
• | Agree not to deduct for tax purposes executive compensation in excess of $500,000 in any one fiscal year for each of the Company’s senior executive officers. |
F-17
F-18
F-19
F-20
High/Low Sales Price | Closing | Dividends Paid | ||||||||||
During Quarter | Price | Per Share | ||||||||||
2010: | ||||||||||||
First quarter | $ | 9.48 / 3.52 | $ | 8.16 | $ | — | ||||||
Second quarter | 15.04 / 7.96 | 12.77 | — | |||||||||
Third quarter | 13.11 / 6.58 | 6.79 | — | |||||||||
Fourth quarter | 7.73 / 2.39 | 3.20 | — | |||||||||
$ | — | |||||||||||
2009: | ||||||||||||
First quarter | $ | 14.71 / 4.51 | $ | 8.80 | $ | 0.13 | ||||||
Second quarter | 9.73 / 4.14 | 4.48 | — | |||||||||
Third quarter | 6.83 / 3.25 | 5.00 | — | |||||||||
Fourth quarter | 5.48 / 3.51 | 3.55 | — | |||||||||
$ | 0.13 | |||||||||||
F-21
2010 | 2009 | 2008 | 2007(1) | 2006 | ||||||||||||||||
(in thousands, except per share data, ratios and percentages) | ||||||||||||||||||||
Total interest income | $ | 120,864 | $ | 138,456 | $ | 170,516 | $ | 176,626 | $ | 117,357 | ||||||||||
Total interest expense | 37,271 | 57,931 | 75,491 | 81,973 | 45,400 | |||||||||||||||
Net interest income | 83,593 | 80,525 | 95,025 | 94,653 | 71,957 | |||||||||||||||
Provision for loan losses | (71,107 | ) | (50,246 | ) | (52,810 | ) | (14,483 | ) | (5,507 | ) | ||||||||||
Net interest income after provision for loan losses | 12,486 | 30,279 | 42,215 | 80,170 | 66,450 | |||||||||||||||
Noninterest income | 32,544 | 31,578 | 33,614 | 27,602 | 20,710 | |||||||||||||||
Noninterest expense | (110,815 | ) | (229,587 | ) | (85,837 | ) | (69,252 | ) | (52,708 | ) | ||||||||||
Income (loss) before income taxes | (65,785 | ) | (167,730 | ) | (10,008 | ) | 38,520 | 34,452 | ||||||||||||
Income tax (expense) benefit | (14,910 | ) | 17,036 | 4,648 | (14,146 | ) | (13,190 | ) | ||||||||||||
Net income (loss) | (80,695 | ) | (150,694 | ) | (5,360 | ) | 24,374 | 21,262 | ||||||||||||
Preferred stock dividend and accretion of discount on warrants | (5,001 | ) | (4,982 | ) | (92 | ) | — | — | ||||||||||||
Net income (loss) available to common shareholders | $ | (85,696 | ) | $ | (155,676 | ) | $ | (5,452 | ) | $ | 24,374 | $ | 21,262 | |||||||
Per Share Data: | ||||||||||||||||||||
Net income (loss) available to common shareholders, basic | $ | (6.54 | ) | $ | (11.91 | ) | $ | (0.42 | ) | $ | 2.07 | $ | 2.17 | |||||||
Net income (loss) available to common shareholders, assuming dilution | $ | (6.54 | ) | $ | (11.91 | ) | $ | (0.42 | ) | $ | 2.07 | $ | 2.14 | |||||||
Net income (loss) available to common shareholders, assuming dilution adjusted for goodwill impairment charge(7) | $ | (6.54 | ) | $ | (1.40 | ) | $ | (0.42 | ) | $ | 2.07 | $ | 2.14 | |||||||
Dividends declared | $ | 0.00 | $ | 0.13 | $ | 0.52 | $ | 0.68 | $ | 0.64 | ||||||||||
Common book value(2)(7) | $ | 5.75 | $ | 12.15 | $ | 24.09 | $ | 24.94 | $ | 18.80 | ||||||||||
Tangible common book value(3)(7) | $ | 5.23 | $ | 11.44 | $ | 12.23 | $ | 12.73 | $ | 14.87 | ||||||||||
Financial Condition Data: | ||||||||||||||||||||
Assets | $ | 2,406,040 | $ | 2,619,139 | $ | 2,944,671 | $ | 2,947,741 | $ | 1,772,654 | ||||||||||
Loans, net of unearned interest | $ | 1,745,378 | $ | 2,043,807 | $ | 2,223,390 | $ | 2,356,376 | $ | 1,539,629 | ||||||||||
Cash and investments | $ | 504,559 | $ | 378,785 | $ | 410,344 | $ | 314,615 | $ | 91,997 | ||||||||||
Federal funds sold | $ | 4,856 | $ | 3,793 | $ | 5,263 | $ | — | $ | 25,983 | ||||||||||
Deposits | $ | 1,976,854 | $ | 2,084,096 | $ | 2,184,147 | $ | 1,986,793 | $ | 1,332,505 | ||||||||||
FHLB advances and notes payable | $ | 158,653 | $ | 171,999 | $ | 229,349 | $ | 318,690 | $ | 177,571 | ||||||||||
Subordinated debentures | $ | 88,662 | $ | 88,662 | $ | 88,662 | $ | 88,662 | $ | 13,403 | ||||||||||
Federal funds purchased and repurchase agreements | $ | 19,413 | $ | 24,449 | $ | 35,302 | $ | 194,525 | $ | 42,165 | ||||||||||
Shareholders’ equity | $ | 143,897 | $ | 226,769 | $ | 381,231 | $ | 322,477 | $ | 184,471 | ||||||||||
Common shareholders’ equity(2)(7) | $ | 75,776 | $ | 160,034 | $ | 315,885 | $ | 322,477 | $ | 184,471 | ||||||||||
Tangible common shareholders’ equity(3)(7) | $ | 69,025 | $ | 150,699 | $ | 160,411 | $ | 164,650 | $ | 145,931 | ||||||||||
Tangible shareholders’ equity(4)(7) | $ | 137,146 | $ | 217,434 | $ | 225,757 | $ | 164,650 | $ | 145,931 | ||||||||||
Selected Ratios: | ||||||||||||||||||||
Interest rate spread | 3.79 | % | 3.19 | % | 3.48 | % | 3.83 | % | 4.32 | % | ||||||||||
Net interest margin(6) | 3.86 | % | 3.34 | % | 3.70 | % | 4.25 | % | 4.77 | % | ||||||||||
Total tangible equity to tangible assets(4)(5)(7) | 5.72 | % | 8.33 | % | 8.09 | % | 5.90 | % | 8.42 | % | ||||||||||
Tangible common equity to tangible assets(3)(5)(7) | 2.88 | % | 5.77 | % | 5.75 | % | 5.90 | % | 8.42 | % | ||||||||||
Return on average assets | (3.41 | )% | (5.59 | )% | (0.18 | )% | 0.98 | % | 1.28 | % | ||||||||||
Return on average equity | (38.56 | )% | (50.44 | )% | (1.64 | )% | 8.96 | % | 11.91 | % | ||||||||||
Return on average common equity(2)(7) | (55.35 | )% | (64.25 | )% | (1.65 | )% | 8.96 | % | 11.91 | % | ||||||||||
Return on average common tangible equity(3)(7) | (58.32 | )% | (96.77 | )% | (3.14 | )% | 15.41 | % | 15.25 | % | ||||||||||
Average equity to average assets | 8.85 | % | 11.09 | % | 11.24 | % | 10.91 | % | 10.78 | % | ||||||||||
Dividend payout ratio | N/M | N/M | N/M | 32.85 | % | 29.49 | % | |||||||||||||
Ratio of nonperforming assets to total assets assets | 8.56 | % | 5.07 | % | 2.61 | % | 1.25 | % | 0.29 | % | ||||||||||
Ratio of allowance for loan losses to nonperforming loans | 45.83 | % | 66.39 | % | 155.28 | % | 106.34 | % | 635.93 | % | ||||||||||
Ratio of allowance for loan losses to total loans, net of unearned income loans | 3.83 | % | 2.45 | % | 2.20 | % | 1.45 | % | 1.45 | % |
1 | Information for the 2007 fiscal year includes the operations of CVBG, with which the Company merged on May 18, 2007. |
F-22
2 | Common shareholders’ equity is shareholders’ equity less preferred stock. | |
3 | Tangible common shareholders’ equity is shareholders’ equity less goodwill, other intangible assets and preferred stock. | |
4 | Tangible shareholders’ equity is shareholders’ equity less goodwill and other intangible assets. | |
5 | Tangible assets is total assets less goodwill and other intangible assets. | |
6 | Net interest margin is the net yield on interest earning assets and is the difference between the Fully Taxable Equivalent yield earned on interest-earning assets less the effective cost of supporting liabilities. | |
7 | Please refer to the “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” section following “Selected Financial Data” for more information, including a reconciliation of this non-GAAP financial measure. |
• | “Net income (loss) per share available to common shareholders assuming dilution adjusted for goodwill impairment charge” is defined as net income (loss) per share available to common shareholders reduced by goodwill impairment charge, net of tax. | |
• | “Common shareholders’ equity” is shareholders’ equity less preferred stock. | |
• | “Tangible assets” are total assets less goodwill and other intangible assets. | |
• | “Tangible shareholders’ equity” is shareholders’ equity less goodwill and other intangible assets. | |
• | “Tangible common book value per share” is defined as total equity reduced by recorded goodwill, other intangible assets and preferred stock divided by total common shares outstanding. This measure discloses changes from period-to-period in book value per share exclusive of changes in intangible assets and preferred stock. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing total book value while not increasing the tangible assets of a company. Companies utilizing purchase accounting in a business combination, as required by GAAP, must record goodwill related to such transactions. | |
• | “Tangible common shareholders’ equity” is shareholders’ equity less goodwill, other intangible assets and preferred stock. | |
• | “Return on average common equity” is defined as net income (loss) available to common shareholders’ for the period divided by average equity reduced by average preferred stock. | |
• | “Return on average common tangible equity” is defined as net income (loss) available to common shareholders’ for the period divided by average equity reduced by average goodwill, other intangible assets and preferred stock. |
At and for the Fiscal Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Total shareholders’ equity | $ | 143,897 | $ | 226,769 | $ | 381,231 | $ | 322,477 | $ | 184,471 | ||||||||||
Less: Preferred stock | (68,121 | ) | (66,735 | ) | (65,346 | ) | — | — | ||||||||||||
Common shareholders’ equity | $ | 75,776 | $ | 160,034 | $ | 315,855 | $ | 322,477 | $ | 184,471 | ||||||||||
Total shareholders’ equity | $ | 143,897 | $ | 226,769 | $ | 381,231 | $ | 322,477 | $ | 184,471 | ||||||||||
Less: | ||||||||||||||||||||
Goodwill | — | — | (143,389 | ) | (143,140 | ) | (31,327 | ) | ||||||||||||
Core Deposit and other intangibles | (6,751 | ) | (9,335 | ) | (12,085 | ) | (14,687 | ) | (7,213 | ) | ||||||||||
Preferred stock | (68,121 | ) | (66,735 | ) | (65,346 | ) | — | — | ||||||||||||
Tangible common shareholders’ equity | $ | 69,025 | $ | 150,699 | $ | 160,411 | $ | 1 64,650 | $ | 145,931 | ||||||||||
F-23
At and for the Fiscal Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Total shareholders’ equity | $ | 143,897 | $ | 226,769 | $ | 381,231 | $ | 322,477 | $ | 184,471 | ||||||||||
Less: | ||||||||||||||||||||
Goodwill | — | — | (143,389 | ) | (143,140 | ) | (31,327 | ) | ||||||||||||
Core Deposit and other intangibles | (6,751 | ) | (9,335 | ) | (12,085 | ) | (14,687 | ) | (7,213 | ) | ||||||||||
Tangible shareholders’ equity | $ | 137,146 | $ | 217,434 | $ | 225,757 | $ | 164,650 | $ | 145,931 | ||||||||||
Total assets | $ | 2,406,040 | $ | 2,619,139 | $ | 2,944,671 | $ | 2,947,741 | $ | 1,772,654 | ||||||||||
Less: | ||||||||||||||||||||
Goodwill | — | — | (143,389 | ) | (143,140 | ) | (31,327 | ) | ||||||||||||
Core Deposit and other intangibles | (6,751 | ) | (9,335 | ) | (12,085 | ) | (14,687 | ) | (7,213 | ) | ||||||||||
Tangible assets | $ | 2,399,289 | $ | 2,609,804 | $ | 2,789,197 | $ | 2,789,914 | $ | 1,734,114 | ||||||||||
Common book value per share | $ | 5.75 | $ | 12.15 | $ | 24.09 | $ | 24.94 | $ | 18.80 | ||||||||||
Effect of intangible assets | $ | (0.52 | ) | $ | (0.71 | ) | $ | (11.86 | ) | $ | (12.21 | ) | $ | (3.93 | ) | |||||
Tangible common book value per share | $ | 5.23 | $ | 11.44 | $ | 12.23 | $ | 12.73 | $ | 14.87 | ||||||||||
Return on average common equity | (55.35 | )% | (64.25 | )% | (1.65 | )% | 8.96 | % | 11.91 | % | ||||||||||
Effect of intangible assets | (2.97 | )% | (32.52 | )% | (1.49 | )% | 6.45 | % | 3.34 | % | ||||||||||
Return on average common tangible equity | (58.32 | )% | (96.77 | )% | (3.14 | )% | 15.41 | % | 15.25 | % |
For the Fiscal Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Total non-interest expense | $ | 110,815 | $ | 229,587 | $ | 85,837 | $ | 69,252 | $ | 52,708 | ||||||||||
Goodwill impairment charge | — | (143,389 | ) | — | — | — | ||||||||||||||
Operating expenses | $ | 110,815 | $ | 86,198 | $ | 85,837 | $ | 69,252 | $ | 52,708 | ||||||||||
Net income (loss) available to common shareholders | $ | (85,696 | ) | $ | (155,676 | ) | $ | (5,452 | ) | $ | 24,374 | $ | 21,262 | |||||||
Goodwill impairment charge, net of tax of $5,975 | — | 137,414 | — | — | — | |||||||||||||||
Net operating income (loss) available to common shareholders | $ | (85,696 | ) | $ | (18,262 | ) | $ | (5,452 | ) | $ | 24,374 | $ | 21,262 | |||||||
Per Diluted Share: | ||||||||||||||||||||
Net income (loss) available to common shareholders | $ | (6.54 | ) | $ | (11.91 | ) | $ | (0.42 | ) | $ | 2.07 | $ | 2.14 |
F-24
For the Fiscal Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Goodwill impairment charge, net of tax of $5,975 | — | 10.51 | — | — | — | |||||||||||||||
Net operating income (loss) | $ | (6.54 | ) | $ | (1.40 | ) | $ | (0.42 | ) | $ | 2.07 | $ | 2.14 | |||||||
F-25
F-26
F-27
F-28
2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
Loans(1)(4) | ||||||||||||||||||||||||||||||||||||
Real estate loans | $ | 1,517,937 | $ | 86,904 | 5.73 | % | $ | 1,719,026 | $ | 99,796 | 5.81 | % | $ | 1,890,209 | $ | 121,168 | 6.41 | % | ||||||||||||||||||
Commercial loans | 250,126 | 14,358 | 5.74 | % | 295,913 | 16,284 | 5.50 | % | 319,131 | 20,020 | 6.27 | % | ||||||||||||||||||||||||
Consumer and other loans-net(2) | 65,802 | 8,963 | 13.62 | % | 81,242 | 9,660 | 11.89 | % | 89,565 | 10,516 | 11.74 | % | ||||||||||||||||||||||||
Fees on loans | — | 3,563 | — | 3,532 | — | 3,979 | ||||||||||||||||||||||||||||||
Total loans (including fees) | $ | 1,833,865 | $ | 113,788 | 6.20 | % | $ | 2,096,181 | $ | 129,272 | 6.17 | % | $ | 2,298,905 | $ | 155,683 | 6.77 | % | ||||||||||||||||||
Investment securities(3) | ||||||||||||||||||||||||||||||||||||
Taxable | $ | 137,148 | $ | 4,937 | 3.60 | % | $ | 144,881 | $ | 7,035 | 4.86 | % | $ | 227,710 | $ | 12,770 | 5.61 | % | ||||||||||||||||||
Tax-exempt(4) | 30,799 | 1,909 | 6.20 | % | 31,660 | 1,938 | 6.12 | % | 32,743 | 1,995 | 6.09 | % | ||||||||||||||||||||||||
FHLB and other stock | 12,734 | 530 | 4.16 | % | 12,836 | 573 | 4.46 | % | 12,890 | 647 | 5.02 | % | ||||||||||||||||||||||||
Total investment securities | $ | 180,681 | $ | 7,376 | 4.08 | % | $ | 189,377 | $ | 9,546 | 5.04 | % | $ | 273,343 | $ | 15,412 | 5.64 | % | ||||||||||||||||||
Other short-term investments | 170,952 | 435 | 0.25 | % | 147,918 | 376 | 0.25 | % | 17,941 | 175 | 0.98 | % | ||||||||||||||||||||||||
Total interest- earning assets | $ | 2,185,498 | $ | 121,599 | 5.56 | % | $ | 2,433,476 | $ | 139,194 | 5.72 | % | $ | 2,590,189 | $ | 171,270 | 6.61 | % | ||||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||||||||||||||
Cash and due from banks | $ | 42,743 | $ | 45,870 | $ | 51,181 | ||||||||||||||||||||||||||||||
Premises and equipment | 80,556 | 83,478 | 83,411 | |||||||||||||||||||||||||||||||||
Other, less allowance for loan losses | 202,649 | 219,831 | 231,499 | |||||||||||||||||||||||||||||||||
Total noninterest- earning assets | $ | 325,948 | $ | 349,179 | $ | 366,091 | ||||||||||||||||||||||||||||||
Total assets | $ | 2,511,446 | $ | 2,782,655 | $ | 2,956,280 | ||||||||||||||||||||||||||||||
1 | Average loan balances exclude nonaccrual loans. | |
2 | Installment loans are stated net of unearned income. | |
3 | The average balance of and the related yield associated with securities available for sale is based on the cost of such securities. | |
4 | Fully Taxable Equivalent (“FTE”) at the rate of 35%. The FTE basis adjusts for the tax benefits of income on certain tax-exempt loans and investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. |
F-29
2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Deposits Savings, interest checking, and money market accounts | $ | 980,878 | $ | 9,924 | 1.01 | % | $ | 784,135 | $ | 10,078 | 1.29 | % | $ | 645,636 | $ | 9,588 | 1.49 | % | ||||||||||||||||||
Time deposits | 841,458 | 18,510 | 2.20 | % | 1,166,640 | 35,690 | 3.06 | % | 1,317,362 | 48,502 | 3.68 | % | ||||||||||||||||||||||||
Total deposits | $ | 1,822,336 | $ | 28,434 | 1.56 | % | $ | 1,950,775 | $ | 45,768 | 2.35 | % | $ | 1,962,998 | $ | 58,090 | 2.96 | % | ||||||||||||||||||
Securities sold under repurchase agreements and short-term borrowings | 22,338 | 22 | 0.10 | % | 28,049 | 29 | 0.10 | % | 106,309 | 2,111 | 1.99 | % | ||||||||||||||||||||||||
Subordinated debentures | 88,662 | 1,980 | 2.23 | % | 88,662 | 2,577 | 2.91 | % | 88,662 | 4,555 | 5.14 | % | ||||||||||||||||||||||||
FHLB advances and notes payable | 171,229 | 6,835 | 3.99 | % | 221,282 | 9,557 | 4.32 | % | 254,154 | 10,735 | 4.22 | % | ||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 2,104,565 | $ | 37,271 | 1.77 | % | $ | 2,288,768 | $ | 57,931 | 2.53 | % | $ | 2,412,123 | $ | 75,491 | 3.13 | % | ||||||||||||||||||
Noninterest bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Demand deposits | $ | 166,814 | $ | 162,765 | $ | 187,058 | ||||||||||||||||||||||||||||||
Other liabilities | 17,854 | 22,477 | 24,832 | |||||||||||||||||||||||||||||||||
Total non-interest- bearing liabilities | $ | 184,668 | $ | 185,242 | $ | 211,890 | ||||||||||||||||||||||||||||||
Shareholders’ equity | 222,213 | 308,645 | 332,267 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,511,446 | $ | 2,782,655 | $ | 2,956,280 | ||||||||||||||||||||||||||||||
Net interest income | $ | 84,328 | $ | 81,263 | $ | 95,799 | ||||||||||||||||||||||||||||||
Margin analysis: | ||||||||||||||||||||||||||||||||||||
Interest rate spread | 3.79 | % | 3.19 | % | 3.48 | % | ||||||||||||||||||||||||||||||
Net yield on interest- earning assets (net interest margin) | 3.86 | % | 3.34 | % | 3.70 | % | ||||||||||||||||||||||||||||||
F-30
2010 vs. 2009 | 2009 vs. 2008 | |||||||||||||||||||||||||||||||
Rate/ | Total | Rate/ | Total | |||||||||||||||||||||||||||||
Volume | Rate | Volume | Change | Volume | Rate | Volume | Change | |||||||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||||||||
Loans, net of unearned income | $ | (16,177 | ) | $ | 792 | $ | (99 | ) | $ | (15,484 | ) | $ | (13,729 | ) | $ | (13,909 | ) | $ | 1,227 | $ | (26,411 | ) | ||||||||||
Investment securities: | ||||||||||||||||||||||||||||||||
Taxable | (376 | ) | (1,826 | ) | 104 | (2,098 | ) | (4,645 | ) | (1,713 | ) | 623 | (5,735 | ) | ||||||||||||||||||
Tax-exempt | (53 | ) | 25 | 1 | (27 | ) | (66 | ) | 9 | — | (57 | ) | ||||||||||||||||||||
FHLB and other stock, at cost | (5 | ) | (38 | ) | — | (43 | ) | 13 | (88 | ) | 1 | (74 | ) | |||||||||||||||||||
Other short-term investments | 59 | — | — | 59 | 1,272 | (127 | ) | (944 | ) | 201 | ||||||||||||||||||||||
Total interest income | (16,552 | ) | (1,047 | ) | 6 | (17,593 | ) | (17,155 | ) | (15,828 | ) | 907 | (32,076 | ) | ||||||||||||||||||
Interest Expense: | ||||||||||||||||||||||||||||||||
Savings, interest checking, and money market accounts | 2,529 | (2,145 | ) | (539 | ) | (155 | ) | 2,128 | (1,347 | ) | (291 | ) | 490 | |||||||||||||||||||
Time deposits | (9,948 | ) | (10,027 | ) | 2,795 | (17,180 | ) | (5,549 | ) | (8,201 | ) | 938 | (12,812 | ) | ||||||||||||||||||
Short-term borrowings | (6 | ) | (1 | ) | — | (7 | ) | (1,671 | ) | (1,379 | ) | 968 | (2,082 | ) | ||||||||||||||||||
Subordinated debentures | — | (597 | ) | — | (597 | ) | — | (1,978 | ) | — | (1,978 | ) | ||||||||||||||||||||
Notes payable | (2,162 | ) | (724 | ) | 164 | (2,722 | ) | (1,389 | ) | 242 | (31 | ) | (1,178 | ) | ||||||||||||||||||
Total interest expense | (9,587 | ) | (13,494 | ) | 2,420 | (20,661 | ) | (6,481 | ) | (12,663 | ) | 1,584 | (17,560 | ) | ||||||||||||||||||
Net interest income | $ | (6,965 | ) | $ | 12,447 | $ | (2,414 | ) | $ | 3,068 | $ | (10,674 | ) | $ | (3,165 | ) | $ | (677 | ) | $ | (14,516 | ) | ||||||||||
F-31
F-32
F-33
F-34
F-35
• | On December 28, 2005, CVBG issued $13,403 of subordinated debentures, as part of a privately placed pool of trust preferred securities. The securities, due in 2036, bear interest at a floating rate of 1.54% above the three-month LIBOR rate, reset quarterly, and are callable five years from the date of issuance without penalty. | ||
• | On July 31, 2001, CVBG issued $4,124 of subordinated debentures, as part of a privately placed pool of trust preferred securities. The securities, due in 2031, bear interest at a floating rate of 3.58% above the three-month LIBOR rate, reset quarterly, and are currently callable without penalty. |
F-36
Minimum Amounts | ||||||||||||||||||||||||
to be Well | ||||||||||||||||||||||||
Minimum Required | Capitalized Under | |||||||||||||||||||||||
for Capital | Prompt Corrective | |||||||||||||||||||||||
Actual | Adequacy Purposes | Action Provisions | ||||||||||||||||||||||
Actual | Ratio (%) | Actual | Ratio (%) | Actual | Ratio (%) | |||||||||||||||||||
2010 | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | $ | 239.7 | 13.2 | $ | 145.2 | 8.0 | $ | 181.6 | 10.0 | |||||||||||||||
Bank | 239.6 | 13.2 | 145.0 | 8.0 | 181.3 | 10.0 | ||||||||||||||||||
Tier 1 Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | $ | 216.5 | 11.9 | $ | 72.6 | 4.0 | $ | 108.9 | 6.0 | |||||||||||||||
Bank | 216.4 | 11.9 | 72.5 | 4.0 | 108.8 | 6.0 | ||||||||||||||||||
Tier 1 Capital (to Average Assets) | ||||||||||||||||||||||||
Consolidated | $ | 216.5 | 8.9 | $ | 97.6 | 4.0 | $ | 122.0 | 5.0 | |||||||||||||||
Bank | 216.4 | 8.9 | 97.5 | 4.0 | 121.8 | 5.0 | ||||||||||||||||||
2009 | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | $ | 318.5 | 14.9 | $ | 171.0 | 8.0 | $ | 213.8 | 10.0 | |||||||||||||||
Bank | 317.4 | 14.9 | 170.7 | 8.0 | 213.4 | 10.0 |
F-37
Minimum Amounts | ||||||||||||||||||||||||
to be Well | ||||||||||||||||||||||||
Minimum Required | Capitalized Under | |||||||||||||||||||||||
for Capital | Prompt Corrective | |||||||||||||||||||||||
Actual | Adequacy Purposes | Action Provisions | ||||||||||||||||||||||
Actual | Ratio (%) | Actual | Ratio (%) | Actual | Ratio (%) | |||||||||||||||||||
Tier 1 Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | $ | 291.5 | 13.6 | $ | 85.5 | 4.0 | $ | 128.3 | 6.0 | |||||||||||||||
Bank | 290.4 | 13.6 | 85.4 | 4.0 | 128.0 | 6.0 | ||||||||||||||||||
Tier 1 Capital (to Average Assets) | ||||||||||||||||||||||||
Consolidated | $ | 291.5 | 10.7 | $ | 108.6 | 4.0 | $ | 135.8 | 5.0 | |||||||||||||||
Bank | 290.4 | 10.7 | 108.6 | 4.0 | 135.7 | 5.0 |
Less than 1 | More than 5 | |||||||||||||||||||
Year | 1-3 Years | 3-5 Years | Years | Total | ||||||||||||||||
Commitments to make loans — fixed | $ | 3,827 | $ | — | $ | — | $ | — | $ | 3,827 | ||||||||||
Commitments to make loans — variable | 2,464 | — | — | — | 2,464 | |||||||||||||||
Unused lines of credit | 101,145 | 14,460 | 13,457 | 72,911 | 201,973 | |||||||||||||||
Letters of credit | 17,632 | 8,042 | — | — | 25,674 | |||||||||||||||
Total | $ | 125,068 | $ | 22,502 | $ | 13,457 | $ | 72,911 | $ | 233,938 | ||||||||||
F-38
Less than 1 | More than 5 | |||||||||||||||||||
Year | 1-3 Years | 3-5 Years | Years | Total | ||||||||||||||||
Certificate of deposits | $ | 531,829 | $ | 192,743 | $ | 55,068 | $ | 3,446 | $ | 783,086 | ||||||||||
Repurchase agreements | 19,413 | — | — | — | 19,413 | |||||||||||||||
FHLB advances and notes payable | 15,288 | 65,566 | 30,605 | 47,194 | 158,653 | |||||||||||||||
Subordinated debentures | — | — | — | 88,662 | 88,662 | |||||||||||||||
Operating lease obligations | 1,243 | 2,294 | 1,226 | 734 | 5,497 | |||||||||||||||
Deferred compensation | 1,543 | — | 256 | 475 | 2,274 | |||||||||||||||
Purchase obligations | 1,611 | — | — | — | 1,611 | |||||||||||||||
Total | $ | 570,927 | $ | 260,603 | $ | 87,155 | $ | 140,511 | $ | 1,059,196 | ||||||||||
F-39
F-40
GREEN BANKSHARES, INC.
F-41
March 15, 2011
F-42
GREEN BANKSHARES, INC.
March 15, 2011
F-43
CONSOLIDATED BALANCE SHEETS
December 31, 2010 and 2009
(Amounts in thousands, except share and per share data)
2010 | 2009 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 289,358 | $ | 206,701 | ||||
Federal funds sold | 4,856 | 3,793 | ||||||
Cash and cash equivalents | 294,214 | 210,494 | ||||||
Interest earning deposits in other banks | — | 11,000 | ||||||
Securities available for sale | 202,002 | 147,724 | ||||||
Securities held to maturity (with a market value of $467 and $638) | 465 | 626 | ||||||
Loans held for sale | 1,299 | 1,533 | ||||||
Loans, net of unearned interest | 1,745,378 | 2,043,807 | ||||||
Allowance for loan losses | (66,830 | ) | (50,161 | ) | ||||
Other real estate owned and repossessed assets | 60,095 | 57,168 | ||||||
Premises and equipment, net | 78,794 | 81,818 | ||||||
FHLB and other stock, at cost | 12,734 | 12,734 | ||||||
Cash surrender value of life insurance | 31,479 | 30,277 | ||||||
Core deposit and other intangibles | 6,751 | 9,335 | ||||||
Deferred tax asset (net of valuation allowance of $43,455 and $0) | 2,177 | 13,600 | ||||||
Other assets | 37,482 | 49,184 | ||||||
Total assets | $ | 2,406,040 | $ | 2,619,139 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Non interest-bearing deposits | $ | 152,752 | $ | 177,602 | ||||
Interest-bearing deposits | 1,822,703 | 1,899,910 | ||||||
Brokered deposits | 1,399 | 6,584 | ||||||
Total deposits | 1,976,854 | 2,084,096 | ||||||
Repurchase agreements | 19,413 | 24,449 | ||||||
FHLB advances and notes payable | 158,653 | 171,999 | ||||||
Subordinated debentures | 88,662 | 88,662 | ||||||
Accrued interest payable and other liabilities | 18,561 | 23,164 | ||||||
Total liabilities | $ | 2,262,143 | $ | 2,392,370 | ||||
�� | ||||||||
Shareholders’ equity | ||||||||
Preferred stock: no par, 1,000,000 shares authorized, 72,278 shares outstanding | $ | 68,121 | $ | 66,735 | ||||
Common stock: $2 par, 20,000,000 shares authorized, 13,188,896 and 13,171,474 shares outstanding | 26,378 | 26,343 | ||||||
Common stock warrants | 6,934 | 6,934 | ||||||
Additional paid-in capital | 188,901 | 188,310 | ||||||
Retained earnings (deficit) | (147,436 | ) | (61,742 | ) | ||||
Accumulated other comprehensive income (loss) | 999 | 189 | ||||||
Total shareholders’ equity | 143,897 | 226,769 | ||||||
Total liabilities and shareholders’ equity | $ | 2,406,040 | $ | 2,619,139 | ||||
F-44
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2010, 2009 and 2008
(Amounts in thousands, except share and per share data)
2010 | 2009 | 2008 | ||||||||||
Interest income | ||||||||||||
Interest and fees on loans | $ | 113,721 | $ | 129,212 | $ | 155,627 | ||||||
Taxable securities | 4,938 | 7,035 | 12,770 | |||||||||
Nontaxable securities | 1,241 | 1,260 | 1,297 | |||||||||
FHLB and other stock | 530 | 573 | 647 | |||||||||
Federal funds sold and other | 434 | 376 | 175 | |||||||||
Total interest income | 120,864 | 138,456 | 170,516 | |||||||||
Interest expense | ||||||||||||
Deposits | 28,434 | 45,768 | 58,090 | |||||||||
Federal funds purchased and repurchase agreements | 22 | 29 | 2,111 | |||||||||
FHLB advances and notes payable | 6,835 | 9,557 | 10,735 | |||||||||
Subordinated debentures | 1,980 | 2,577 | 4,555 | |||||||||
Total interest expense | 37,271 | 57,931 | 75,491 | |||||||||
Net interest income | 83,593 | 80,525 | 95,025 | |||||||||
Provision for loan losses | 71,107 | 50,246 | 52,810 | |||||||||
Net interest income after provision for loan losses | 12,486 | 30,279 | 42,215 | |||||||||
Non-interest income | ||||||||||||
Service charges on deposit accounts | 24,179 | 23,738 | 23,176 | |||||||||
Other charges and fees | 1,791 | 1,999 | 2,192 | |||||||||
Trust and investment services income | 2,842 | 1,977 | 1,878 | |||||||||
Mortgage banking income | 703 | 383 | 804 | |||||||||
Other income | 3,122 | 3,042 | 2,903 | |||||||||
Securities gains (losses), net | ||||||||||||
Realized gains | — | 1,415 | 2,661 | |||||||||
Other-than-temporary impairment | (553 | ) | (1,678 | ) | — | |||||||
Less non-credit portion recognized in other comprehensive income | 460 | 702 | — | |||||||||
Total securities gains (loss), net | (93 | ) | 439 | 2,661 | ||||||||
Total non-interest income | 32,544 | 31,578 | 33,614 | |||||||||
Non-interest expense | ||||||||||||
Employee compensation | 31,990 | 30,611 | 33,615 | |||||||||
Employee benefits | 3,378 | 3,835 | 4,788 | |||||||||
Occupancy expense | 6,908 | 6,956 | 6,900 | |||||||||
Equipment expense | 2,846 | 3,092 | 3,555 | |||||||||
Computer hardware/software expense | 3,523 | 2,816 | 2,752 | |||||||||
Professional services | 2,777 | 2,108 | 2,069 | |||||||||
Advertising | 2,388 | 1,894 | 3,538 | |||||||||
OREO maintenance expense | 2,324 | 1,222 | 825 | |||||||||
Collection and repossession expense | 3,228 | 3,131 | 1,109 | |||||||||
Loss on OREO and repossessed assets | 29,895 | 8,156 | 7,028 | |||||||||
FDIC insurance | 4,155 | 4,960 | 1,631 | |||||||||
Core deposit and other intangibles amortization | 2,584 | 2,750 | 2,602 | |||||||||
Goodwill impairment | — | 143,389 | — | |||||||||
Other expenses | 14,819 | 14,667 | 15,425 | |||||||||
Total non-interest expense | 110,815 | 229,587 | 85,837 | |||||||||
Income (loss) before income taxes | (65,785 | ) | (167,730 | ) | (10,008 | ) | ||||||
Provision (benefit) for income taxes | 14,910 | (17,036 | ) | (4,648 | ) | |||||||
Net income (loss) | (80,695 | ) | (150,694 | ) | (5,360 | ) | ||||||
Preferred stock dividends and accretion of discount | 5,001 | 4,982 | 92 | |||||||||
Net income (loss) available to common shareholders | $ | (85,696 | ) | $ | (155,676 | ) | $ | (5,452 | ) | |||
Earnings (loss) per common share: | ||||||||||||
Basic | $ | (6.54 | ) | $ | (11.91 | ) | $ | (0.42 | ) | |||
Diluted | (6.54 | ) | (11.91 | ) | (0.42 | ) |
F-45
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Years ended December 31, 2010, 2009 and 2008
(Amounts in thousands, except share and per share data)
Warrants | Accumulated | |||||||||||||||||||||||||||||||
For | Additional | Retained | Other | Total | ||||||||||||||||||||||||||||
Preferred | Common Stock | Common | Paid-in | Earnings | Comprehensive | Shareholders’ | ||||||||||||||||||||||||||
Stock | Shares | Amount | Stock | Capital | (Deficit) | Income (Loss) | Equity | |||||||||||||||||||||||||
Balance, January 1, 2008 | — | 12,931,015 | 25,862 | — | 185,170 | 109,938 | 1,507 | 322,477 | ||||||||||||||||||||||||
Preferred stock transactions: | ||||||||||||||||||||||||||||||||
Issuance of 72,278 shares of preferred stock | 72,278 | — | — | — | — | — | — | 72,278 | ||||||||||||||||||||||||
Discount associated with 635,504 common stock warrants issued with preferred stock | (6,934 | ) | — | — | 6,934 | — | — | — | — | |||||||||||||||||||||||
Accretion of preferred stock discount | 2 | — | — | — | — | (2 | ) | — | — | |||||||||||||||||||||||
Preferred stock dividends accrued | — | — | — | — | — | (90 | ) | — | (90 | ) | ||||||||||||||||||||||
Common stock transactions: | ||||||||||||||||||||||||||||||||
Exercise of shares under stock option plan | — | 9,759 | 19 | — | 201 | — | — | 220 | ||||||||||||||||||||||||
Common stock exchanged for exercised stock options | — | (7,991 | ) | (16 | ) | — | (93 | ) | — | — | (109 | ) | ||||||||||||||||||||
Issuance of restricted common shares | 60,907 | 122 | (122 | ) | — | — | — | |||||||||||||||||||||||||
Stock dividend | — | 118,997 | 238 | — | 1,822 | (2,060) - | — | — | ||||||||||||||||||||||||
Compensation expense: | ||||||||||||||||||||||||||||||||
Stock options | — | — | — | — | 456 | — | 456 | |||||||||||||||||||||||||
Restricted stock | — | — | — | — | 303 | — | 303 | |||||||||||||||||||||||||
Stock option tax benefit | — | — | — | — | 5 | — | — | 5 | ||||||||||||||||||||||||
Dividends paid ($.52 per share) | — | — | — | — | — | (6,779 | ) | — | (6,779 | ) | ||||||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (5,360 | ) | — | (5,360 | ) | ||||||||||||||||||||||
Change in unrealized losses, net of reclassification and taxes | — | — | — | — | — | — | (2,170 | ) | (2,170 | ) | ||||||||||||||||||||||
Total comprehensive loss | (7,530 | ) | ||||||||||||||||||||||||||||||
Balance, December 31, 2008 | 65,346 | 13,112,687 | 26,225 | 6,934 | 187,742 | 95,647 | (663 | ) | 381,231 | |||||||||||||||||||||||
Preferred stock transactions: | ||||||||||||||||||||||||||||||||
Accretion of preferred stock discount | 1,389 | — | — | — | — | (1,389 | ) | — | — | |||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | (3,593 | ) | — | (3,593 | ) | ||||||||||||||||||||||
Common stock transactions: | ||||||||||||||||||||||||||||||||
Issuance of restricted common shares | — | 58,787 | 118 | — | (118 | ) | — | — | — | |||||||||||||||||||||||
Compensation expense: | ||||||||||||||||||||||||||||||||
Stock options | — | — | — | — | 387 | — | — | 387 | ||||||||||||||||||||||||
Restricted stock | — | — | — | — | 299 | — | — | 299 | ||||||||||||||||||||||||
Dividends paid ($.13 per share) | — | — | — | — | — | (1,713 | ) | — | (1,713 | ) | ||||||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (150,694 | ) | — | (150,694 | ) | ||||||||||||||||||||||
Change in unrealized gains, net of reclassification and taxes | — | — | — | — | — | — | 852 | 852 | ||||||||||||||||||||||||
Total comprehensive loss | (149,842 | ) | ||||||||||||||||||||||||||||||
Balance, December 31, 2009 | $ | 66,735 | 13,171,474 | $ | 26,343 | $ | 6,934 | $ | 188,310 | $ | (61,742 | ) | $ | 189 | $ | 226,769 | ||||||||||||||||
Preferred stock transactions: | ||||||||||||||||||||||||||||||||
Accretion of preferred stock discount | 1,386 | — | — | — | — | (1,386 | ) | — | — | |||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | (3,613 | ) | — | (3,613 | ) | ||||||||||||||||||||||
Common stock transactions: | ||||||||||||||||||||||||||||||||
Issuance of restricted common shares | — | 17,422 | 35 | — | (35 | ) | — | — | — | |||||||||||||||||||||||
Compensation expense: | ||||||||||||||||||||||||||||||||
Stock options | — | — | — | — | 295 | — | — | 295 | ||||||||||||||||||||||||
Restricted stock | — | — | — | — | 331 | — | — | 331 | ||||||||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (80,695 | ) | — | (80,695 | ) | ||||||||||||||||||||||
Change in unrealized gains, net of reclassification and taxes | — | — | — | — | — | — | 810 | 810 | ||||||||||||||||||||||||
Total comprehensive loss | (79,885 | ) | ||||||||||||||||||||||||||||||
Balance, December 31, 2010 | $ | 68,121 | 13,188,896 | $ | 26,378 | $ | 6,934 | $ | 188,901 | $ | (147,436 | ) | $ | 999 | $ | 143,897 | ||||||||||||||||
F-46
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2010, 2009 and 2008
(Amounts in thousands)
2010 | 2009 | 2008 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net loss | $ | (80,695 | ) | $ | (150,694 | ) | $ | (5,360 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||||||
Provision for loan losses | 71,107 | 50,246 | 52,810 | |||||||||
Impairment of goodwill | — | 143,389 | — | |||||||||
Depreciation and amortization | 7,152 | 7,117 | 7,030 | |||||||||
Security amortization and accretion, net | 538 | 73 | (983 | ) | ||||||||
Write down of investments and other securities for impairment | 93 | 1,272 | 174 | |||||||||
(Gain) loss on sale of securities | — | (1,415 | ) | (2,661 | ) | |||||||
FHLB stock dividends | — | — | (464 | ) | ||||||||
Net gain on sale of mortgage loans | (653 | ) | (264 | ) | (573 | ) | ||||||
Originations of mortgage loans held for sale | (46,994 | ) | (43,879 | ) | (49,501 | ) | ||||||
Proceeds from sales of mortgage loans | 47,881 | 43,050 | 51,962 | |||||||||
Increase in cash surrender value of life insurance | (1,202 | ) | (1,125 | ) | (1,073 | ) | ||||||
Gain from settlement of life insurance | — | (305 | ) | — | ||||||||
Net (gains) losses from sales of fixed assets | (1 | ) | (85 | ) | 665 | |||||||
Stock-based compensation expense | 626 | 686 | 759 | |||||||||
Net loss on OREO and repossessed assets | 29,895 | 8,156 | 7,028 | |||||||||
Deferred tax (benefit) | 26,739 | (1,654 | ) | (4,374 | ) | |||||||
Net changes: | ||||||||||||
Other assets | (4,139 | ) | (21,375 | ) | 78 | |||||||
Accrued interest payable and other liabilities | (5,505 | ) | (3,177 | ) | (10,875 | ) | ||||||
Net cash provided by operating activities | 44,842 | 30,016 | 44,642 | |||||||||
Cash flows from investing activities | ||||||||||||
Net change in interest-earning deposits with banks | 11,000 | (11,000 | ) | — | ||||||||
Purchase of securities available for sale | (171,820 | ) | (92,100 | ) | (180,626 | ) | ||||||
Proceeds from sale of securities available for sale | — | 36,266 | 123,701 | |||||||||
Proceeds from maturities of securities available for sale | 118,246 | 113,440 | 88,711 | |||||||||
Proceeds from maturities of securities held to maturity | 160 | 30 | 645 | |||||||||
Purchase of FHLB stock | — | — | (417 | ) | ||||||||
Net change in loans | 195,847 | 99,111 | 27,754 | |||||||||
Proceeds from settlement of life insurance | — | 691 | — | |||||||||
Proceeds from sale of other real estate | 16,136 | 11,930 | 20,654 | |||||||||
Improvements to other real estate | (813 | ) | (307 | ) | (1,071 | ) | ||||||
Proceeds from sale of fixed assets | 8 | 800 | 58 | |||||||||
Premises and equipment expenditures | (1,551 | ) | (3,542 | ) | (5,814 | ) | ||||||
Net cash provided by investing activities | 167,213 | 155,319 | 73,595 | |||||||||
Cash flows from financing activities | ||||||||||||
Net change in core deposits | (102,057 | ) | 270,162 | 48,589 | ||||||||
Net change in brokered deposits | (5,185 | ) | (370,213 | ) | 148,765 | |||||||
Net change in federal funds purchased and repurchase agreements | (5,036 | ) | (10,853 | ) | (159,223 | ) | ||||||
Tax benefit resulting from stock options | — | — | 5 | |||||||||
Proceeds from FHLB advances and notes payable | — | — | 20,916 | |||||||||
Repayment of FHLB advances and notes payable | (13,346 | ) | (57,350 | ) | (110,258 | ) | ||||||
Preferred stock dividends paid | (2,711 | ) | (3,232 | ) | — | |||||||
Common stock dividends paid | — | (1,713 | ) | (6,779 | ) | |||||||
Proceeds from issuance of preferred stock and common stock warrants | — | — | 72,278 | |||||||||
Proceeds from issuance of common stock | — | — | 111 | |||||||||
Net cash provided by (used in) financing activities | (128,335 | ) | (173,199 | ) | 14,404 | |||||||
Net change in cash and cash equivalents | 83,720 | 12,136 | 132,641 | |||||||||
Cash and cash equivalents, beginning of year | 210,494 | 198,358 | 65,717 | |||||||||
Cash and cash equivalents, end of year | $ | 294,214 | $ | 210,494 | $ | 198,358 | ||||||
Supplemental disclosures — cash and noncash | ||||||||||||
Interest paid | $ | 41,875 | $ | 62,198 | $ | 77,761 | ||||||
Income taxes paid net of refunds | (148 | ) | 1,675 | 5,674 | ||||||||
Loans converted to other real estate | 54,613 | 75,545 | 37,991 | |||||||||
Unrealized gain (loss) on available for sale securities, net of tax | 810 | 852 | (2,170 | ) |
F-47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Available for Sale | ||||||||||||||||
2010 | ||||||||||||||||
U.S. government agencies | $ | 84,106 | $ | 115 | $ | (922 | ) | $ | 83,299 | |||||||
States and political subdivisions | 31,192 | 705 | (396 | ) | 31,501 | |||||||||||
Collateralized mortgage obligations | 66,043 | 1,901 | (369 | ) | 67,575 | |||||||||||
Mortgage-backed securities | 17,168 | 815 | (19 | ) | 17,964 | |||||||||||
Trust preferred securities | 1,850 | — | (187 | ) | 1,663 | |||||||||||
$ | 200,359 | $ | 3,536 | $ | (1,893 | ) | $ | 202,002 | ||||||||
2009 | ||||||||||||||||
U.S. government agencies | $ | 52,937 | $ | 99 | $ | (988 | ) | $ | 52,048 | |||||||
States and political subdivisions | 31,764 | 877 | (449 | ) | 32,192 | |||||||||||
Collateralized mortgage obligations | 44,018 | 1,281 | (622 | ) | 44,677 | |||||||||||
Mortgage-backed securities | 16,607 | 291 | (6 | ) | 16,892 | |||||||||||
Trust preferred securities | 2,088 | — | (173 | ) | 1,915 | |||||||||||
$ | 147,414 | $ | 2,548 | $ | (2,238 | ) | $ | 147,724 | ||||||||
Held to Maturity | ||||||||||||||||
2010 | ||||||||||||||||
States and political subdivisions | $ | 215 | $ | 1 | $ | — | $ | 216 | ||||||||
Other securities | 250 | 1 | — | 251 | ||||||||||||
$ | 465 | $ | 2 | $ | — | $ | 467 | |||||||||
2009 | ||||||||||||||||
States and political subdivisions | $ | 251 | $ | 4 | $ | — | $ | 255 | ||||||||
Other securities | 375 | 8 | — | 383 | ||||||||||||
$ | 626 | $ | 12 | $ | — | $ | 638 | |||||||||
F-53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Available for Sale | Held to Maturity | |||||||||||
Fair | Carrying | Fair | ||||||||||
Value | Amount | Value | ||||||||||
Due in one year or less | $ | 979 | $ | 465 | $ | 467 | ||||||
Due after one year through five years | 4,226 | — | — | |||||||||
Due after five years through ten years | 61,208 | — | — | |||||||||
Due after ten years | 50,050 | — | — | |||||||||
Collateralized mortgage obligations | 67,575 | — | — | |||||||||
Mortgage-backed securities | 17,964 | — | — | |||||||||
Total maturities | $ | 202,002 | $ | 465 | $ | 467 | ||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
2010 | ||||||||||||||||||||||||
U. S. government agencies | $ | 65,178 | $ | (922 | ) | $ | — | $ | — | $ | 65,178 | $ | (922 | ) | ||||||||||
States and political subdivisions | 2,488 | (114 | ) | 1,659 | (282 | ) | 4,147 | (396 | ) | |||||||||||||||
Collateralized mortgage obligations | 14,666 | (266 | ) | 2,699 | (104 | ) | 17,365 | (370 | ) | |||||||||||||||
Mortgage-backed securities | 2,821 | (17 | ) | 8 | (2 | ) | 2,829 | (19 | ) | |||||||||||||||
Trust preferred securities | — | — | 1,663 | (186 | ) | 1,663 | (186 | ) | ||||||||||||||||
Total temporarily impaired | $ | 85,153 | $ | (1,319 | ) | $ | 6,029 | $ | (574 | ) | $ | 91,182 | $ | (1,893 | ) | |||||||||
2009 | ||||||||||||||||||||||||
U. S. government agencies | $ | 40,959 | $ | (988 | ) | $ | — | $ | — | $ | 40,959 | $ | (988 | ) | ||||||||||
States and political subdivisions | 2,463 | (24 | ) | 3,075 | (425 | ) | 5,538 | (449 | ) | |||||||||||||||
Collateralized mortgage obligations | 4,997 | (32 | ) | 3,222 | (590 | ) | 8,219 | (622 | ) | |||||||||||||||
Mortgage-backed securities | 2,028 | (5 | ) | 11 | (1 | ) | 2,039 | (6 | ) | |||||||||||||||
Trust preferred securities | 1,783 | (122 | ) | 132 | (51 | ) | 1,915 | (173 | ) | |||||||||||||||
Total temporarily impaired | $ | 52,230 | $ | (1,171 | ) | $ | 6,440 | $ | (1,067 | ) | $ | 58,670 | $ | (2,238 | ) | |||||||||
F-54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Present | ||||||||||||||||||||||||
Current | Value | |||||||||||||||||||||||
Credit | Book | Fair | Unrealized | Discounted | ||||||||||||||||||||
Description | Cusip# | Rating | Value | Value | Loss | Cash Flow | ||||||||||||||||||
Collateralized mortgage obligations | ||||||||||||||||||||||||
Wells Fargo — 2007 - 4 A21 | 94985RAW2 | Caa2 | $ | 2,802 | $ | 2,699 | (103 | ) | $ | 2,887 | ||||||||||||||
Trust preferred securities | ||||||||||||||||||||||||
West Tennessee Bancshares, Inc. | 956192AA6 | N/A | 675 | 638 | (37 | ) | 675 |
December 31, 2010 | December 31, 2009 | |||||||
Beginning balance of credit losses at January 1, 2010 and 2009 | $ | 976 | $ | — | ||||
Other-than-temporary impairment credit losses | 93 | 976 | ||||||
Ending balance of cumulative credit losses recognized in earnings | $ | 1,069 | $ | 976 | ||||
2010 | 2009 | 2008 | ||||||||||
Commercial real estate | $ | 1,080,805 | $ | 1,306,398 | $ | 1,430,225 | ||||||
Residential real estate | 378,783 | 392,365 | 397,922 | |||||||||
Commercial | 222,927 | 274,346 | 315,099 | |||||||||
Consumer | 75,498 | 83,382 | 89,733 | |||||||||
Other | 1,913 | 2,117 | 4,656 | |||||||||
Unearned interest | (14,548 | ) | (14,801 | ) | (14,245 | ) | ||||||
Loans, net of unearned interest | $ | 1,745,378 | $ | 2,043,807 | $ | 2,223,390 | ||||||
Allowance for loan losses | $ | (66,830 | ) | $ | (50,161 | ) | $ | (48,811 | ) | |||
F-56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | 2008 | ||||||||||
Beginning balance | $ | 50,161 | $ | 48,811 | $ | 34,111 | ||||||
Add (deduct): | ||||||||||||
Provision for loan losses | 71,107 | 50,246 | 52,810 | |||||||||
Loans charged off | (57,818 | ) | (54,890 | ) | (41,269 | ) | ||||||
Recoveries of loans charged off | 3,380 | 5,994 | 3,159 | |||||||||
Balance, end of year | $ | 66,830 | $ | 50,161 | $ | 48,811 | ||||||
Commercial | Residential | |||||||||||||||||||||||
Real Estate | Real Estate | Commercial | Consumer | Other | Total | |||||||||||||||||||
2010 | ||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||
Beginning balance | $ | 36,527 | $ | 4,350 | $ | 5,840 | $ | 3,437 | $ | 7 | $ | 50,161 | ||||||||||||
Add (deduct): | ||||||||||||||||||||||||
Charge-offs | (48,617 | ) | (3,102 | ) | (3,210 | ) | (2,889 | ) | — | (57,818 | ) | |||||||||||||
Recoveries | 1,301 | 287 | 909 | 882 | 1 | 3,380 | ||||||||||||||||||
Provision | 64,992 | 2,896 | 1,541 | 1,678 | — | 71,107 | ||||||||||||||||||
Ending balance | $ | 54,203 | $ | 4,431 | $ | 5,080 | $ | 3,108 | $ | 8 | $ | 66,830 | ||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||
Allocation for loans individually evaluated for impairment | $ | 22,939 | $ | 1,027 | $ | 722 | $ | 146 | $ | — | $ | 24,834 | ||||||||||||
Allocation for loans collectively evaluated for impairment | 31,264 | 3,404 | 4,358 | 2,962 | 8 | 41,996 | ||||||||||||||||||
Ending Balance | $ | 54,203 | $ | 4,431 | $ | 5,080 | $ | 3,108 | $ | 8 | $ | 66,830 | ||||||||||||
Loans: | ||||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||
individually evaluated for impairment | 170,175 | 8,697 | 6,149 | 970 | — | 185,991 | ||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||
collectively evaluated for impairment | 910,630 | 363,506 | 216,778 | 66,470 | 1,913 | 1,559,387 | ||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||
Loans with no allowance allocated | $ | 81,981 | $ | 89,292 | $ | 29,602 | ||||||
Loans with allowance allocated | $ | 104,010 | $ | 25,946 | $ | 17,613 | ||||||
Amount of allowance allocated | 24,834 | 5,737 | 2,651 | |||||||||
Average impaired loan balance during the year | 212,167 | 125,280 | 48,347 | |||||||||
Interest income not recognized during impairment | 1,105 | 558 | 619 |
F-57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Unpaid | Average | Interest | ||||||||||||||||||
Recorded | Principal | Related | Recorded | Income | ||||||||||||||||
Investment | Balance | Allowance | Investment | Recognized | ||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||
Speculative 1-4 Family | $ | 72,138 | $ | 98,141 | $ | 11,830 | $ | 85,487 | $ | 2,292 | ||||||||||
Construction | 56,758 | 69,355 | 8,366 | 63,710 | 2,565 | |||||||||||||||
Owner Occupied | 13,590 | 14,513 | 851 | 14,119 | 644 | |||||||||||||||
Non-owner Occupied | 25,824 | 27,561 | 1,823 | 28,786 | 1,375 | |||||||||||||||
Other | 1,865 | 2,090 | 69 | 2,278 | 66 | |||||||||||||||
Residential Real Estate: | ||||||||||||||||||||
HELOC | 2,807 | 2,894 | 346 | 2,603 | 88 | |||||||||||||||
Mortgage-Prime | 4,539 | 4,722 | 590 | 4,661 | 209 | |||||||||||||||
Mortgage-Subprime | 370 | 370 | 57 | 370 | — | |||||||||||||||
Other | 981 | 1,285 | 34 | 2,419 | 47 | |||||||||||||||
Commercial | 6,149 | 7,510 | 722 | 6,729 | 171 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Prime | 217 | 228 | 32 | 252 | 13 | |||||||||||||||
Subprime | 228 | 228 | 35 | 228 | — | |||||||||||||||
Auto-Subprime | 525 | 525 | 79 | 525 | — | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Total | $ | 185,991 | $ | 229,422 | $ | 24,834 | $ | 212,167 | $ | 7,470 | ||||||||||
F-58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Speculative 1-4 | Owner | Non-Owner | ||||||||||||||||||
Family | Construction | Occupied | Occupied | Other | ||||||||||||||||
Commercial Real Estate Credit Exposure | ||||||||||||||||||||
Prime | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Desirable | — | 1,573 | 968 | 177 | — | |||||||||||||||
Satisfactory tier I | 2,836 | 978 | 38,623 | 56,221 | 4,246 | |||||||||||||||
Satisfactory tier II | 14,010 | 34,239 | 102,383 | 130,850 | 17,999 | |||||||||||||||
Acceptable with care | 69,902 | 47,093 | 62,198 | 159,216 | 45,597 | |||||||||||||||
Management Watch | 27,383 | 15,259 | 5,298 | 26,415 | 2,965 | |||||||||||||||
Substandard | 91,845 | 61,388 | 16,289 | 38,037 | 6,817 | |||||||||||||||
Loss | — | — | — | — | — | |||||||||||||||
Total | 205,976 | 160,530 | 225,759 | 410,916 | 77,624 | |||||||||||||||
Commercial | ||||
Commercial Credit Exposure | ||||
Prime | $ | 1,236 | ||
Desirable | 7,951 | |||
Satisfactory tier I | 33,859 | |||
Satisfactory tier II | 91,505 | |||
Acceptable with care | 72,286 | |||
Management Watch | 8,511 | |||
Substandard | 7,579 | |||
Loss | — | |||
Total | 222,927 | |||
Mortgage – | ||||||||||||||||
HELOC | Mortgage | Subprime | Other | |||||||||||||
Consumer Real Estate Credit Exposure | ||||||||||||||||
Pass | $ | 188,086 | $ | 131,845 | $ | 11,692 | $ | 29,833 | ||||||||
Management Watch | 1,017 | 317 | — | — | ||||||||||||
Substandard | 2,807 | 5,117 | 50 | 1,529 | ||||||||||||
Total | 191,910 | 137,279 | 11,742 | 31,362 | ||||||||||||
F-60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Consumer – | Consumer Auto | |||||||||||
Consumer – Prime | Subprime | – Subprime | ||||||||||
Consumer Credit Exposure | ||||||||||||
Pass | $ | 35,029 | $ | 13,093 | $ | 18,588 | ||||||
Management Watch | — | — | — | |||||||||
Substandard | 217 | 39 | 474 | |||||||||
Total | 35,246 | 13,132 | 19,062 | |||||||||
60-89 | ||||||||||||||||||||||||||||
30-59 | Days | Greater | Recorded | |||||||||||||||||||||||||
Days | Past | Than | Total | Total | Investment > 90 | |||||||||||||||||||||||
Past Due | Due | 90 Days | Past Due | Current | Loans | Days and Accruing | ||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||
Speculative 1-4 Family | $ | 22,267 | $ | 1,777 | $ | 30,802 | $ | 54,846 | $ | 151,130 | $ | 205,976 | $ | 1,758 | ||||||||||||||
Construction | 14,541 | — | 26,915 | 41,456 | 119,074 | 160,530 | — | |||||||||||||||||||||
Owner Occupied | 8,114 | 1,633 | 4,137 | 13,884 | 211,875 | 225,759 | — | |||||||||||||||||||||
Non-owner Occupied | 4,014 | 5,961 | 8,814 | 18,789 | 392,127 | 410,916 | 170 | |||||||||||||||||||||
Other | 116 | 865 | 1,491 | 2,472 | 75,152 | 77,624 | 18 | |||||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||||
HELOC | 747 | 358 | 644 | 1,749 | 190,161 | 191,910 | — | |||||||||||||||||||||
Mortgage-Prime | 1,359 | 915 | 1,779 | 4,053 | 133,226 | 137,279 | 8 | |||||||||||||||||||||
Mortgage-Subprime | 100 | 51 | 98 | 249 | 11,493 | 11,742 | — | |||||||||||||||||||||
Other | 403 | 176 | 566 | 1,145 | 30,217 | 31,362 | 19 | |||||||||||||||||||||
Commercial | 2,422 | 593 | 3,922 | 6,937 | 215,990 | 222,927 | 92 |
F-61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
60-89 | ||||||||||||||||||||||||||||
30-59 | Days | Greater | �� | Recorded | ||||||||||||||||||||||||
Days | Past | Than | Total | Total | Investment > 90 | |||||||||||||||||||||||
Past Due | Due | 90 Days | Past Due | Current | Loans | Days and Accruing | ||||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||
Prime | 315 | 86 | 108 | 509 | 34,737 | 35,246 | 29 | |||||||||||||||||||||
Subprime | 155 | 64 | 6 | 225 | 12,907 | 13,132 | — | |||||||||||||||||||||
Auto-Subprime | 476 | 166 | 101 | 743 | 18,319 | 19,062 | 18 | |||||||||||||||||||||
Other | 73 | — | — | 73 | 1,840 | 1,913 | — | |||||||||||||||||||||
Total | 55,102 | 12,645 | 79,383 | 147,130 | 1,598,248 | 1,745,378 | 2,112 | |||||||||||||||||||||
F-62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Commercial real estate: | ||||
Speculative 1-4 Family | $ | 63,298 | ||
Construction | 41,789 | |||
Owner Occupied | 5,511 | |||
Non-owner Occupied | 18,772 | |||
Other | 1,865 | |||
Residential real estate: | ||||
HELOC | 1,668 | |||
Mortgage-Prime | 3,350 | |||
Mortgage-Subprime | 254 | |||
Other | 957 | |||
Commercial | 5,813 | |||
Consumer: | ||||
Prime | 130 | |||
Subprime | 107 | |||
Auto-Subprime | 193 | |||
Other | — | |||
Total | 143,707 | |||
2010 | 2009 | |||||||
Loans past due 90 days still on accrual | $ | 2,112 | $ | 147 | ||||
Nonaccrual loans | 143,707 | 75,411 | ||||||
Total | $ | 145,819 | $ | 75,558 | ||||
F-63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Total | ||||||||||||||||||||
Fair Value | Carrying | Assets/Liabilities | ||||||||||||||||||
Measurement Using | Amount in | Measured | ||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Balance Sheet | at Fair Value | |||||||||||||||
2010 | ||||||||||||||||||||
Securities available for sale | ||||||||||||||||||||
U.S. government agencies | $ | — | $ | 83,299 | $ | — | $ | 83,299 | $ | 83,299 | ||||||||||
States and political subdivisions | — | 31,501 | — | 31,501 | 31,501 | |||||||||||||||
Collateralized mortgage obligations | — | 67,575 | — | 67,575 | 67,575 | |||||||||||||||
Mortgage-backed securities | — | 17,964 | — | 17,964 | 17,964 | |||||||||||||||
Trust preferred securities | — | 1,025 | 638 | 1,663 | 1,663 | |||||||||||||||
2009 | ||||||||||||||||||||
Securities available for sale | ||||||||||||||||||||
U.S. government agencies | $ | — | $ | 52,048 | $ | — | $ | 52,048 | $ | 52,048 | ||||||||||
States and political subdivisions | — | 32,192 | — | 32,192 | 32,192 | |||||||||||||||
Collateralized mortgage obligations | — | 44,677 | — | 44,677 | 44,677 | |||||||||||||||
Mortgage-backed securities | — | 16,892 | — | 16,892 | 16,892 | |||||||||||||||
Trust preferred securities | — | 1,277 | 638 | 1,915 | 1,915 |
F-66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | |||||||
Beginning balance | $ | 638 | $ | — | ||||
Total gains or (loss) (realized/unrealized) | ||||||||
Included in earnings | (75 | ) | (778 | ) | ||||
Included in other comprehensive income | 75 | (112 | ) | |||||
Paydowns and maturities | — | — | ||||||
Transfers into Level 3 | — | 1,528 | ||||||
Ending balance | $ | 638 | $ | 638 | ||||
Total Carrying | Assets/Liabilities | |||||||||||||||||||
Fair Value Measurement Using | Amount in | Measured at Fair | ||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Balance Sheet | Value | |||||||||||||||
2010 | ||||||||||||||||||||
Other real estate | $ | — | $ | — | $ | 38,086 | $ | 38,086 | $ | 38,086 | ||||||||||
Impaired loans | — | — | 129,088 | 129,088 | 129,088 | |||||||||||||||
Total assets at fair value | $ | — | $ | — | $ | 167,174 | $ | 167,174 | $ | 167,174 | ||||||||||
2009 | ||||||||||||||||||||
Other real estate | $ | — | $ | — | $ | 23,508 | $ | 23,508 | $ | 23,508 | ||||||||||
Impaired loans | — | — | 57,914 | 57,914 | 57,914 | |||||||||||||||
Total assets at fair value | $ | — | $ | — | $ | 81,422 | $ | 81,422 | $ | 81,422 | ||||||||||
F-67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
Financial assets: | ||||||||||||||||
Cash and cash equivalents | $ | 294,214 | $ | 294,214 | $ | 221,494 | $ | 221,494 | ||||||||
Securities available for sale | 202,002 | 202,002 | 147,724 | 147,724 | ||||||||||||
Securities held to maturity | 465 | 467 | 626 | 638 | ||||||||||||
Loans held for sale | 1,299 | 1,317 | 1,533 | 1,552 | ||||||||||||
Loans, net | 1,678,548 | 1,664,126 | 1,993,646 | 1,950,684 | ||||||||||||
FHLB and other stock | 12,734 | 12,734 | 12,734 | 12,734 | ||||||||||||
Cash surrender value of life insurance | 31,479 | 31,479 | 30,277 | 30,277 | ||||||||||||
Accrued interest receivable | 7,845 | 7,845 | 9,130 | 9,130 | ||||||||||||
Financial liabilities: | ||||||||||||||||
Deposit accounts | $ | 1,976,854 | $ | 1,987,105 | $ | 2,084,096 | $ | 2,095,611 | ||||||||
Federal funds purchased and repurchase agreements | 19,413 | 19,413 | 24,449 | 24,449 | ||||||||||||
FHLB Advances and notes payable | 158,653 | 166,762 | 171,999 | 176,602 | ||||||||||||
Subordinated debentures | 88,662 | 64,817 | 88,662 | 70,527 | ||||||||||||
Accrued interest payable | 2,140 | 2,140 | 2,561 | 2,561 |
F-68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | |||||||
Land | $ | 18,372 | $ | 18,372 | ||||
Premises | 62,474 | 61,809 | ||||||
Leasehold improvements | 3,092 | 3,061 | ||||||
Furniture, fixtures and equipment | 28,057 | 25,222 | ||||||
Automobiles | 103 | 112 | ||||||
Construction in progress | 138 | 2,162 | ||||||
112,236 | 110,738 | |||||||
Accumulated depreciation | (33,442 | ) | (28,920 | ) | ||||
$ | 78,794 | $ | 81,818 | |||||
2011 | $ | 1,243 | ||
2012 | 1,251 | |||
2013 | 1,043 | |||
2014 | 793 | |||
2015 | 433 | |||
Thereafter | 734 | |||
Total | $ | 5,497 | ||
F-69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | |||||||
Beginning of year | $ | — | $ | 143,389 | ||||
Impairment | — | (143,389 | ) | |||||
End of year | $ | — | $ | — | ||||
Core deposit intangibles | 2010 | 2009 | ||||||
Gross carrying amount | $ | 19,796 | $ | 19,796 | ||||
Accumulated amortization, beginning of year | (10,803 | ) | (8,304 | ) | ||||
Amortization | (2,495 | ) | (2,499 | ) | ||||
Accumulated amortization, end of year | (13,298 | ) | (10,803 | ) | ||||
End of year | $ | 6,498 | $ | 8,993 | ||||
Other intangibles | 2010 | 2009 | ||||||
Gross carrying amount | $ | 745 | $ | 745 | ||||
Accumulated amortization, beginning of year | (403 | ) | (152 | ) | ||||
Amortization | (89 | ) | (251 | ) | ||||
Accumulated amortization, end of year | (492 | ) | (403 | ) | ||||
End of year | $ | 253 | $ | 342 | ||||
2011 | $ | 2,531 | ||
2012 | 2,401 | |||
2013 | 1,701 | |||
2014 | 118 | |||
2015 | — | |||
Total | $ | 6,751 | ||
F-70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | |||||||
Noninterest-bearing demand deposits | $ | 152,752 | $ | 177,602 | ||||
Interest-bearing demand deposits | 939,091 | 837,268 | ||||||
Savings deposits | 101,925 | 86,166 | ||||||
Brokered deposits | 1,399 | 6,584 | ||||||
Time deposits | 781,687 | 976,476 | ||||||
Total deposits | $ | 1,976,854 | $ | 2,084,096 | ||||
2011 | $ | 531,829 | ||
2012 | 139,812 | |||
2013 | 52,931 | |||
2014 | 14,822 | |||
2015 | 40,246 | |||
Thereafter | 3,446 |
F-71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | 2008 | ||||||||||
Average balance during the year | $ | 22,342 | $ | 28,008 | $ | 74,881 | ||||||
Average interest rate during the year | 0.10 | % | 0.10 | % | 1.57 | % | ||||||
Maximum month-end balance during the year | $ | 26,161 | $ | 35,935 | $ | 98,925 | ||||||
Weighted average interest rate at year-end | 0.10 | % | 0.10 | % | 0.10 | % |
2010 | 2009 | |||||||
Short-term borrowings | ||||||||
Fixed rate FHLB advance, 4.44% | ||||||||
Matures December 2011 | $ | 15,000 | $ | — | ||||
Variable rate FHLB advances at 5.00% to 5.31% | ||||||||
Matured December 2010 | — | 12,000 | ||||||
Total short-term borrowings | 15,000 | 12,000 | ||||||
Long-term borrowings | ||||||||
Fixed rate FHLB advances, from 1.50% to 3.36%, | ||||||||
Various maturities through June 2023 | 51,327 | 50,766 | ||||||
Fixed rate FHLB advances from 4.18% to 6.35%, | ||||||||
Various maturities through 2020 | 92,326 | 109,233 | ||||||
Total long term borrowings | 143,653 | 159,999 | ||||||
Total borrowings | $ | 158,653 | $ | 171,999 | ||||
F-72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Total | ||||
2011 | $ | 15,288 | ||
2012 | 65,278 | |||
2013 | 288 | |||
2014 | 10,296 | |||
2015 | 20,309 | |||
Thereafter | 47,194 | |||
$ | 158,653 | |||
F-73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | 2008 | ||||||||||
Current — federal | $ | (10,054 | ) | $ | (12,906 | ) | $ | (221 | ) | |||
Current — state | (1,775 | ) | (2,476 | ) | (53 | ) | ||||||
Deferred — federal | (13,870 | ) | (1,397 | ) | (3,649 | ) | ||||||
Deferred — state | (2,846 | ) | (257 | ) | (725 | ) | ||||||
Deferred tax asset — valuation allowance | 43,455 | — | — | |||||||||
$ | 14,910 | $ | (17,036 | ) | $ | (4,648 | ) | |||||
2010 | 2009 | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
Allowance for loan losses | $ | 26,214 | $ | — | $ | 19,675 | $ | — | ||||||||
Deferred compensation | 2,129 | — | 1,973 | — | ||||||||||||
REO basis | 12,175 | — | — | — | ||||||||||||
Purchase accounting adjustments | — | (1,424 | ) | 672 | — | |||||||||||
Depreciation | — | (1,998 | ) | — | (2,129 | ) | ||||||||||
FHLB dividends | — | (1,658 | ) | — | (1,658 | ) | ||||||||||
Core deposit intangible | 2,189 | — | — | (4,860 | ) | |||||||||||
Unrealized (gain) loss on securities | — | (645 | ) | — | (122 | ) | ||||||||||
NOL carry forward | 10,192 | — | — | (122 | ) | |||||||||||
Other | (1,542 | ) | 49 | — | ||||||||||||
Deferred tax asset — valuation allowance | (43,455 | ) | — | — | ||||||||||||
Total deferred income taxes | $ | 52,899 | $ | (50,722 | ) | $ | 22,369 | $ | (8,769 | ) | ||||||
F-76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | 2008 | ||||||||||
Statutory federal tax rate | (35.0 | %) | (35.0 | %) | (35.0 | %) | ||||||
State income tax, net of federal benefit | (4.6 | ) | (1.1 | ) | (5.2 | ) | ||||||
Tax exempt income | (2.0 | ) | (0.5 | ) | (8.0 | ) | ||||||
Goodwill impairment | — | 26.4 | — | |||||||||
Deferred tax asset — valuation allowance | 66.1 | — | — | |||||||||
Other | (1.8 | ) | (0.5 | ) | — | |||||||
(22.7 | %) | (10.2 | %) | (46.4 | %) | |||||||
2010 | 2009 | |||||||
Commitments to make loans — fixed | $ | 3,827 | $ | 1,202 | ||||
Commitments to make loans — variable | 2,464 | 4,718 | ||||||
Unused lines of credit | 201,973 | 239,374 | ||||||
Letters of credit | 25,674 | 30,107 |
F-77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Minimum Amounts | ||||||||||||||||||||||||
to be Well | ||||||||||||||||||||||||
Minimum Required | Capitalized Under | |||||||||||||||||||||||
for Capital | Prompt Corrective | |||||||||||||||||||||||
Actual | Adequacy Purposes | Action Provisions | ||||||||||||||||||||||
Actual | Ratio (%) | Actual | Ratio (%) | Actual | Ratio (%) | |||||||||||||||||||
2010 | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | $ | 239.7 | 13.2 | $ | 145.2 | 8.0 | $ | 181.6 | 10.0 | |||||||||||||||
Bank | 239.6 | 13.2 | 145.0 | 8.0 | 181.3 | 10.0 | ||||||||||||||||||
Tier 1 Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | $ | 216.5 | 11.9 | $ | 72.6 | 4.0 | $ | 108.9 | 6.0 | |||||||||||||||
Bank | 216.4 | 11.9 | 72.5 | 4.0 | 108.8 | 6.0 | ||||||||||||||||||
Tier 1 Capital (to Average Assets) | ||||||||||||||||||||||||
Consolidated | $ | 216.5 | 8.9 | $ | 97.6 | 4.0 | $ | 122.0 | 5.0 | |||||||||||||||
Bank | 216.4 | 8.9 | 97.5 | 4.0 | 121.8 | 5.0 | ||||||||||||||||||
2009 | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | $ | 318.5 | 14.9 | $ | 171.0 | 8.0 | $ | 213.8 | 10.0 | |||||||||||||||
Bank | 317.4 | 14.9 | 170.7 | 8.0 | 213.4 | 10.0 | ||||||||||||||||||
Tier 1 Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | $ | 291.5 | 13.6 | $ | 85.5 | 4.0 | $ | 128.3 | 6.0 | |||||||||||||||
Bank | 290.4 | 13.6 | 85.4 | 4.0 | 128.0 | 6.0 | ||||||||||||||||||
Tier 1 Capital (to Average Assets) | ||||||||||||||||||||||||
Consolidated | $ | 291.5 | 10.7 | $ | 108.6 | 4.0 | $ | 135.8 | 5.0 | |||||||||||||||
Bank | 290.4 | 10.7 | 108.6 | 4.0 | 135.7 | 5.0 |
F-79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
F-80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Stock | Exercise | Contractual | Intrinsic | |||||||||||||
Options | Price | Term | Value | |||||||||||||
Outstanding at January 1, 2008 | 452,077 | $ | 25.72 | |||||||||||||
Exercised | (9,759 | ) | 12.63 | |||||||||||||
Forfeited | (1,565 | ) | 30.65 | |||||||||||||
Expired | (16,310 | ) | 23.00 | |||||||||||||
Outstanding at December 31, 2008 | 424,443 | $ | 26.10 | |||||||||||||
Forfeited | (1,374 | ) | 32.05 | |||||||||||||
Expired | (34,875 | ) | 25.58 | |||||||||||||
Outstanding at December 31, 2009 | 388,194 | $ | 26.14 | |||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited | (6,484 | ) | 33.12 | |||||||||||||
Expired | — | — | ||||||||||||||
Outstanding at December 31, 2010 | 381,710 | $ | 25.96 | 3.6 years | $ | — | ||||||||||
Options exercisable at December 31, 2010 | 344,029 | $ | 25.17 | 3.4 years | $ | — | ||||||||||
F-81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Outstanding | Exercisable | |||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||||
Range of | Number | Remaining | Exercise | Number | Remaining | Exercise | ||||||||||||||||||
Exercise Prices | Outstanding | Contractual Life | Price | Outstanding | Contractual Life | Price | ||||||||||||||||||
$12.41 - $15.00 | 24,142 | 1.8 | $ | 12.95 | 24,142 | 1.8 | $ | 12.95 | ||||||||||||||||
$15.01 - $20.00 | 77,698 | 1.8 | $ | 17.63 | 77,698 | 1.8 | $ | 17.63 | ||||||||||||||||
$20.01 - $25.00 | 50,635 | 3.1 | $ | 23.36 | 50,635 | 3.1 | $ | 23.36 | ||||||||||||||||
$25.01 - $30.00 | 135,476 | 4.7 | $ | 28.00 | 122,137 | 4.6 | $ | 27.91 | ||||||||||||||||
$30.01 - $36.32 | 93,759 | 4.4 | $ | 34.80 | 69,417 | 3.8 | $ | 34.37 | ||||||||||||||||
Total | 381,710 | 344,029 | ||||||||||||||||||||||
F-82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Weighted | ||||||||
Average | ||||||||
Price Per | ||||||||
Shares | Share | |||||||
Balance at January 1, 2008 | — | $ | — | |||||
Granted: | ||||||||
Non-employee Directors | 7,852 | 16.56 | ||||||
Executive officers & management | 62,015 | 19.20 | ||||||
Cancelled: | ||||||||
Non-employee Directors | — | — | ||||||
Executive officers & management | (8,960 | ) | 19.44 | |||||
Balance at December 31, 2008 | 60,907 | 18.83 | ||||||
Granted: | ||||||||
Non-employee Directors | 7,060 | 7.08 | ||||||
Non-executive officers & management | 56,934 | 7.08 | ||||||
Vested: | ||||||||
Non-employee Directors | (7,852 | ) | 16.56 | |||||
Executive officers, non-executive officers & management | (10,584 | ) | 19.16 | |||||
Cancelled: | ||||||||
Non-employee Directors | — | — | ||||||
Non-executive officers & management | (5,207 | ) | 14.98 | |||||
Balance at December 31, 2009 | 101,258 | $ | 11.74 | |||||
Granted: | ||||||||
Non-employee Directors | 6,548 | 6.11 | ||||||
Executive officers | 18,382 | 8.16 | ||||||
Vested: | ||||||||
Non-employee Directors | (7,060 | ) | 7.08 | |||||
Executive officers, non-executive officers & management | (20,335 | ) | 12.77 | |||||
Cancelled: | ||||||||
Executive officers | (1,543 | ) | 16.56 | |||||
Non-executive officers & management | (5,968 | ) | 11.82 | |||||
Balance at December 31, 2010 | 91,282 | $ | 10.67 | |||||
Weighted-average fair value of nonvested stock awards granted during the year ended December 31, | ||||||||
2010 | $ | 7.62 | ||||||
2009 | $ | 7.08 | ||||||
2008 | $ | 18.90 | ||||||
F-83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Weighted | ||||||||
Average | ||||||||
Price Per | ||||||||
SAR’s | Share | |||||||
Balance at January 1, 2008 | 19,000 | 34.63 | ||||||
Granted: | ||||||||
Non-employee Directors | 7,852 | 16.56 | ||||||
Executive officers & management | 62,015 | 19.20 | ||||||
Cancelled/Expired: | ||||||||
Non-employee Directors | — | — | ||||||
Executive officers & management | (8,960 | ) | 19.44 | |||||
Balance at December 31, 2008 | 79,907 | $ | 22.58 | |||||
Granted: | ||||||||
Non-employee Directors | 7,060 | 7.08 | ||||||
Non-executive officers & management | 56,934 | 7.08 | ||||||
Cancelled/Expired: | ||||||||
Non-employee Directors | (7,852 | ) | 16.56 | |||||
Non-executive officers & management | (15,817 | ) | 17.78 | |||||
Balance at December 31, 2009 | 120,232 | $ | 15.36 | |||||
Granted: | ||||||||
Non-employee Directors | 6,548 | 6.11 | ||||||
Non-executive officers & management | — | — | ||||||
Cancelled/Expired: | ||||||||
Non-employee Directors | (7,060 | ) | 7.08 | |||||
Non-executive officers & management | (27,777 | ) | 12.75 | |||||
Balance at December 31, 2010 | 91,943 | $ | 16.12 | |||||
F-84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Weighted | ||||||||
Average | ||||||||
Price Per | ||||||||
SAR’s | Share | |||||||
Weighted-average fair value of cash-settled SAR’s granted during the year ended December 31, | ||||||||
2010 | $ | 6.11 | ||||||
2009 | $ | 7.08 | ||||||
2008 | $ | 18.93 | ||||||
2010 | 2009 | 2008 | ||||||||||
Risk-free interest rate | 0.307 | % | 0.67% – 1.89 | % | 3.81% – 3.85 | % | ||||||
Volatility | 57.06 | % | 40.18 | % | 29.46% – 32.81 | % | ||||||
Expected life | 1 year | 1 – 5 years | 1 – 5 years | |||||||||
Dividend yield | 0.00 | % | 7.34 | % | 3.54 | % |
F-85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
2010 | 2009 | 2008 | ||||||||||
Basic Earnings (Loss) Per Share | ||||||||||||
Net income (loss) | $ | (80,695 | ) | $ | (150,694 | ) | $ | (5,360 | ) | |||
Less: preferred stock dividends and accretion of discount on warrants | 5,001 | 4,982 | 92 | |||||||||
Net income (loss) available to common shareholders | $ | (85,696 | ) | $ | (155,676 | ) | $ | (5,452 | ) | |||
Weighted average common shares outstanding | 13,093,847 | 13,068,407 | 12,932,576 | |||||||||
Basic earnings (loss) per share | $ | (6.54 | ) | $ | (11.91 | ) | $ | (0.42 | ) | |||
Diluted Earnings (Loss) Per Share | ||||||||||||
Net income (loss) | $ | (80,695 | ) | $ | (150,694 | ) | $ | (5,360 | ) | |||
Less: preferred stock dividends and accretion of discount on warrants | 5,001 | 4,982 | 92 | |||||||||
Net income (loss) available to common shareholders | $ | (85,696 | ) | $ | (155,676 | ) | $ | (5,452 | ) | |||
Weighted average common shares outstanding | 13,093,847 | 13,068,407 | 12,932,576 | |||||||||
Add: Dilutive effects of assumed conversions of restricted stock and exercises of stock options and warrants | — | — | 58,214 | |||||||||
Weighted average common and dilutive potential common shares outstanding(1) (2) | 13,093,847 | 13,068,407 | 12,990,790 | |||||||||
Diluted earnings (loss) per common share(1) (2) | $ | (6.54 | ) | $ | (11.91 | ) | $ | (0.42 | ) | |||
1 | Diluted weighted average shares outstanding for 2010 and 2009 excludes 92,979 and 96,971 shares of unvested restricted stock because they are anti-dilutive and is equal to weighted average common shares outstanding. | |
2 | Stock options and warrants of 1,017,645, 1,058,992 and 387,121 were excluded from the 2010, 2009 and 2008 diluted earnings per share because their impact was anti-dilutive. |
F-86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Years ended December 31, 2010 and 2009
2010 | 2009 | |||||||
Assets | ||||||||
Cash and due from financial institutions | $ | 1,707 | $ | 3,081 | ||||
Investment in subsidiary | 228,590 | 308,831 | ||||||
Other | 4,795 | 4,692 | ||||||
Total assets | $ | 235,092 | $ | 316,604 | ||||
LIABILITIES | ||||||||
Subordinated debentures | $ | 88,662 | $ | 88,662 | ||||
Other liabilities | 2,533 | 1,173 | ||||||
Total liabilities | 91,195 | 89,835 | ||||||
Shareholders’ equity | 143,897 | 226,769 | ||||||
Total liabilities and shareholders’ equity | $ | 235,092 | $ | 316,604 | ||||
Years ended December 31, 2010, 2009, and 2008
2010 | 2009 | 2008 | ||||||||||
Dividends from subsidiary | $ | 2,500 | $ | 3,000 | $ | 13,600 | ||||||
Other income | 96 | 180 | 241 | |||||||||
Interest expense | (1,980 | ) | (2,577 | ) | (4,555 | ) | ||||||
Other expense | (2,002 | ) | (1,718 | ) | (2,022 | ) | ||||||
Income (loss) before income taxes | (1,386 | ) | (1,115 | ) | 7,264 | |||||||
Income tax benefit | (743 | ) | (1,488 | ) | (2,330 | ) | ||||||
Equity in undistributed net income (loss) of subsidiary | (80,052 | ) | (151,067 | ) | (14,954 | ) | ||||||
Net income (loss) | (80,695 | ) | (150,694 | ) | (5,360 | ) | ||||||
Preferred stock dividends and accretion of discount on warrants | 5,001 | 4,982 | 92 | |||||||||
Net income (loss) available to common shareholders | $ | (85,696 | ) | $ | (155,676 | ) | $ | (5,452 | ) | |||
F-87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Years ended December 31, 2010, 2009, and 2008
2010 | 2009 | 2008 | ||||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | (80,695 | ) | $ | (150,694 | ) | $ | (5,360 | ) | |||
Adjustments to reconcile net income to net cash provided (used) by operating activities: | ||||||||||||
Undistributed (net income) loss of subsidiaries | 80,052 | 151,067 | 14,954 | |||||||||
Stock compensation expense | 626 | 686 | 759 | |||||||||
Change in other assets | 104 | 1,868 | (1,413 | ) | ||||||||
Change in liabilities | 1,250 | (412 | ) | (14 | ) | |||||||
Net cash provided (used) by operating activities | 1,337 | 2,515 | 8,926 | |||||||||
Investing activities | ||||||||||||
Capital investment in bank subsidiary | — | — | (77,278 | ) | ||||||||
Net cash used in investing activities | — | — | (77,278 | ) | ||||||||
Financing activities | ||||||||||||
Preferred stock dividends paid | (2,711 | ) | (3,232 | ) | — | |||||||
Common stock dividends paid | — | (1,713 | ) | (6,779 | ) | |||||||
Proceeds from issuance of preferred stock | — | — | 72,278 | |||||||||
Proceeds from issuance of common stock | — | — | 111 | |||||||||
Tax benefit resulting from stock options | — | — | 5 | |||||||||
Net cash provided (used in) financing activities | (2,711 | ) | (4,945 | ) | 65,615 | |||||||
Net change in cash and cash equivalents | (1,374 | ) | (2,430 | ) | (2,737 | ) | ||||||
Cash and cash equivalents, beginning of year | 3,081 | 5,511 | 8,248 | |||||||||
Cash and cash equivalents, end of year | $ | 1,707 | $ | 3,081 | $ | 5,511 | ||||||
2010 | 2009 | 2008 | ||||||||||
Unrealized holding gains and (losses) on securities available for sale, net of tax of $523, $1,105 and ($357), respectively | $ | 810 | $ | 1,712 | $ | (553 | ) | |||||
Reclassification adjustment for losses (gains) realized in net income, net of tax of $0, ($555) and ($1,044), respectively | — | (860 | ) | (1,617 | ) | |||||||
Other comprehensive income (loss) | $ | 810 | $ | 852 | $ | (2,170 | ) | |||||
F-88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
Other | Holding | Total | ||||||||||||||||||
2010 | Banking | Segments | Company | Eliminations | Segments | |||||||||||||||
Net interest income | $ | 77,246 | $ | 8,327 | $ | (1,980 | ) | $ | — | $ | 83,593 | |||||||||
Provision for loan losses | 69,568 | 1,539 | — | — | 71,107 | |||||||||||||||
Noninterest income | 31,467 | 1,899 | 96 | (918 | ) | 32,544 | ||||||||||||||
Noninterest expense | 105,088 | 4,643 | 2,002 | (918 | ) | 110,815 | ||||||||||||||
Income tax expense (benefit) | 14,068 | 1,585 | (743 | ) | — | 14,910 | ||||||||||||||
Segment profit (loss) | $ | (80,011 | ) | $ | 2,459 | $ | (3,143 | ) | $ | — | $ | (80,695 | ) | |||||||
Segment assets | $ | 2,356,543 | $ | 42,995 | $ | 6,502 | $ | — | $ | 2,406,040 | ||||||||||
Other | Holding | Total | ||||||||||||||||||
2009 | Banking | Segments | Company | Eliminations | Segments | |||||||||||||||
Net interest income | $ | 74,628 | $ | 8,474 | $ | (2,577 | ) | $ | — | $ | 80,525 | |||||||||
Provision for loan losses | 47,483 | 2,763 | — | — | 50,246 | |||||||||||||||
Noninterest income | 30,258 | 2,127 | 180 | (987 | ) | 31,578 | ||||||||||||||
Noninterest expense | 223,989 | 4,868 | 1,717 | (987 | ) | 229,587 | ||||||||||||||
Income tax expense (benefit) | (16,712 | ) | 1,164 | (1,488 | ) | — | (17,036 | ) | ||||||||||||
Segment profit (loss) | $ | (149,874 | ) | $ | 1,806 | $ | (2,626 | ) | $ | — | $ | (150,694 | ) | |||||||
Segment assets | $ | 2,568,926 | $ | 42,251 | $ | 7,962 | $ | — | $ | 2,619,139 | ||||||||||
Other | Holding | Total | ||||||||||||||||||
2008 | Banking | Segments | Company | Eliminations | Segments | |||||||||||||||
Net interest income | $ | 91,900 | $ | 7,680 | $ | (4,555 | ) | $ | — | $ | 95,025 | |||||||||
Provision for loan losses | 50,074 | 2,736 | — | — | 52,810 | |||||||||||||||
Noninterest income | 32,012 | 2,231 | 241 | (870 | ) | 33,614 | ||||||||||||||
Noninterest expense | 79,548 | 5,137 | 2,022 | (870 | ) | 85,837 | ||||||||||||||
Income tax expense (benefit) | (3,118 | ) | 800 | (2,330 | ) | — | (4,648 | ) | ||||||||||||
Segment profit (loss) | $ | (2,592 | ) | $ | 1,238 | $ | (4,006 | ) | $ | — | $ | (5,360 | ) | |||||||
Segment assets | $ | 2,895,163 | $ | 39,846 | $ | 9,662 | $ | — | $ | 2,944,671 | ||||||||||
F-89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
As of and for the period ended December 31, 2010 | Bank | Other | Total | |||||||||
Nonperforming loans as percentage of total loans, net of unearned income | 8.40 | % | 1.30 | % | 8.35 | % | ||||||
Nonperforming assets as a percentage of total assets | 8.52 | % | 1.34 | % | 8.56 | % | ||||||
Allowance for loan losses as a percentage of total loans, net of unearned income | 3.68 | % | 7.33 | % | 3.83 | % | ||||||
Allowance for loan losses as a percentage of nonperforming loans | 43.80 | % | 562.24 | % | 45.83 | % | ||||||
Net charge-offs to average total loans, net of unearned income | 2.76 | % | 4.20 | % | 2.84 | % |
As of and for the period ended December 31, 2009 | Bank | Other | Total | |||||||||
Nonperforming loans as percentage of total loans, net of unearned income | 3.69 | % | 1.50 | % | 3.70 | % | ||||||
Nonperforming assets as a percentage of total assets | 5.04 | % | 2.02 | % | 5.07 | % | ||||||
Allowance for loan losses as a percentage of total loans, net of unearned income | 2.30 | % | 8.05 | % | 2.45 | % | ||||||
Allowance for loan losses as a percentage of nonperforming loans | 62.29 | % | 538.31 | % | 66.39 | % | ||||||
Net charge-offs to average total loans, net of unearned income | 2.15 | % | 5.88 | % | 2.25 | % |
F-90
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2010, 2009 and 2008
For the three months ended | ||||||||||||||||
Summary of Operations | 3/31/10 | 6/30/10 | 9/30/10 | 12/31/10 | ||||||||||||
Net interest income | $ | 21,659 | $ | 21,473 | $ | 20,747 | $ | 19,714 | ||||||||
Provision for loan losses | 3,889 | 4,749 | 36,823 | 25,646 | ||||||||||||
Noninterest income | 7,686 | 8,771 | 9,029 | 7,058 | ||||||||||||
Noninterest expense | 20,546 | 21,274 | 27,009 | 41,986 | ||||||||||||
Income tax expense (benefit) | 1,714 | 1,410 | 1,098 | 10,688 | ||||||||||||
Net income (loss) | $ | 3,196 | $ | 2,811 | $ | (35,154 | ) | $ | (51,548 | ) | ||||||
Net income (loss) available to common shareholders | $ | 1,946 | $ | 1,561 | $ | (36,405 | ) | $ | (52,798 | ) | ||||||
Comprehensive income | $ | 4,166 | $ | 3,705 | $ | (34,583 | ) | $ | (53,173 | ) | ||||||
Basic earnings (loss) per common share | $ | 0.15 | $ | 0.12 | $ | (2.78 | ) | $ | (4.03 | ) | ||||||
Diluted earnings (loss) per common share | $ | 0.15 | $ | 0.12 | $ | (2.78 | ) | $ | (4.03 | ) | ||||||
Dividends per common share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
Average common shares outstanding | 13,082,347 | 13,097,611 | 13,097,611 | 13,097,611 | ||||||||||||
Average common shares outstanding — diluted | 13,172,727 | 13,192,648 | 13,097,611 | 13,097,611 |
For the three months ended | ||||||||||||||||
Summary of Operations | 3/31/09 | 6/30/09 | 9/30/09 | 12/31/09 | ||||||||||||
Net interest income | $ | 19,429 | $ | 20,180 | $ | 20,338 | $ | 20,578 | ||||||||
Provision for loan losses | 985 | 24,384 | 18,475 | 6,402 | ||||||||||||
Noninterest income | 6,943 | 7,541 | 9,189 | 8,134 | ||||||||||||
Noninterest expense | 17,831 | 169,143 | 22,365 | 20,477 | ||||||||||||
Income tax expense (benefit) | 2,776 | (15,656 | ) | (4,815 | ) | 659 | ||||||||||
Net income (loss) | $ | 4,780 | $ | (150,150 | ) | $ | (6,498 | ) | $ | 1,174 | ||||||
Net income (loss) available to common shareholders | $ | 3,548 | $ | (151,400 | ) | $ | (7,748 | ) | $ | (76 | ) | |||||
Comprehensive income | $ | 5,668 | $ | (150,557 | ) | $ | (5,073 | ) | $ | 120 | ||||||
Basic earnings (loss) per common share | $ | 0.27 | $ | (11.58 | ) | $ | (0.59 | ) | $ | (0.01 | ) | |||||
Diluted earnings (loss) per share | $ | 0.27 | $ | (11.58 | ) | $ | (0.59 | ) | $ | (0.01 | ) | |||||
Dividends per common share | $ | 0.13 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
Average common shares outstanding | 13,062,881 | 13,070,216 | 13,070,216 | 13,070,216 | ||||||||||||
Average common shares outstanding — diluted | 13,141,840 | 13,070,216 | 13,070,216 | 13,070,216 |
F-91
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2011 and December 31, 2010
(Amounts in thousands, except share and per share data)
(Unaudited) | ||||||||
March 31, | December 31, | |||||||
2011 | 2010* | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 323,485 | $ | 289,358 | ||||
Federal funds sold | 7,931 | 4,856 | ||||||
Cash and cash equivalents | 331,416 | 294,214 | ||||||
Interest earning deposits in other banks | — | — | ||||||
Securities available for sale | 226,732 | 202,002 | ||||||
Securities held to maturity (with a market value of $115 and $467) | 115 | 465 | ||||||
Loans held for sale | 960 | 1,299 | ||||||
Loans, net of unearned interest | 1,680,249 | 1,745,378 | ||||||
Allowance for loan losses | (65,109 | ) | (66,830 | ) | ||||
Other real estate owned and repossessed assets | 60,033 | 60,095 | ||||||
Premises and equipment, net | 77,814 | 78,794 | ||||||
FHLB and other stock, at cost | 12,734 | 12,734 | ||||||
Cash surrender value of life insurance | 31,758 | 31,479 | ||||||
Core deposit and other intangibles | 6,125 | 6,751 | ||||||
Deferred tax asset ( net of valuation allowance of $47,563 and $43,455) | 6,339 | 2,177 | ||||||
Other assets | 23,528 | 37,482 | ||||||
Total assets | $ | 2,392,694 | $ | 2,406,040 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Non-interest bearing deposits | $ | 165,927 | $ | 152,752 | ||||
Interest bearing deposits | 1,808,309 | 1,822,703 | ||||||
Brokered deposits | 1,399 | 1,399 | ||||||
Total deposits | 1,975,635 | 1,976,854 | ||||||
Repurchase agreements | 18,712 | 19,413 | ||||||
FHLB advances and notes payable | 158,588 | 158,653 | ||||||
Subordinated debentures | 88,662 | 88,662 | ||||||
Accrued interest payable and other liabilities | 18,267 | 18,561 | ||||||
Total liabilities | $ | 2,259,864 | $ | 2,262,143 | ||||
Shareholders’ equity | ||||||||
Preferred stock: no par, 1,000,000 shares authorized, 72,278 shares outstanding | $ | 68,468 | $ | 68,121 | ||||
Common stock: $2 par, 20,000,000 shares authorized, 13,182,797 and 13,188,896 shares outstanding | 26,366 | 26,378 | ||||||
Common stock warrants | 6,934 | 6,934 | ||||||
Additional paid-in capital | 189,022 | 188,901 | ||||||
Accumulated Deficit | (158,997 | ) | (147,436 | ) | ||||
Accumulated other comprehensive income | 1,037 | 999 | ||||||
Total shareholders’ equity | 132,830 | 143,897 | ||||||
Total liabilities and shareholders’ equity | $ | 2,392,694 | $ | 2,406,040 | ||||
* | Derived from the audited consolidated balance sheet, as filed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010. |
F-92
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 2011 and 2010
(Amounts in thousands, except share and per share data)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Interest income | ||||||||
Interest and fees on loans | $ | 24,600 | $ | 30,060 | ||||
Taxable securities | 1,401 | 1,288 | ||||||
Nontaxable securities | 305 | 312 | ||||||
FHLB and other stock | 138 | 138 | ||||||
Federal funds sold and other | 181 | 94 | ||||||
Total interest income | 26,625 | 31,892 | ||||||
Interest expense | ||||||||
Deposits | 5,330 | 8,061 | ||||||
Federal funds purchased and repurchase agreements | 4 | 6 | ||||||
FHLB advances and notes payable | 1,543 | 1,694 | ||||||
Subordinated debentures | 481 | 472 | ||||||
Total interest expense | 7,358 | 10,233 | ||||||
Net interest income | 19,267 | 21,659 | ||||||
Provision for loan losses | 13,897 | 3,889 | ||||||
Net interest income after provision for loan losses | 5,370 | 17,770 | ||||||
Non-interest income | ||||||||
Service charges on deposit accounts | 5,830 | 5,940 | ||||||
Other charges and fees | 430 | 356 | ||||||
Trust and investment services income | 515 | 582 | ||||||
Mortgage banking income | 87 | 118 | ||||||
Other income | 765 | 690 | ||||||
Total non-interest income | 7,627 | 7,686 | ||||||
Non-interest expense | ||||||||
Employee compensation | 8,131 | 7,665 | ||||||
Employee benefits | 977 | 977 | ||||||
Occupancy expense | 1,794 | 1,699 | ||||||
Equipment expense | 877 | 708 | ||||||
Computer hardware/software expense | 919 | 824 | ||||||
Professional services | 788 | 607 | ||||||
Advertising | 719 | 598 | ||||||
OREO maintenance expense | 1,155 | 445 | ||||||
Collection and repossession expense | 547 | 1,287 | ||||||
Loss on OREO and repossessed assets | 2,101 | 509 | ||||||
FDIC Insurance | 1,086 | 851 | ||||||
Core deposit and other intangibles amortization | 626 | 651 | ||||||
Other expenses | 3,307 | 3,725 | ||||||
Total non-interest expenses | 23,027 | 20,546 | ||||||
Income (loss) before income taxes | (10,030 | ) | 4,910 | |||||
Provision for income/(loss) taxes | 281 | 1,714 | ||||||
Net income/(loss) | $ | (10,311 | ) | $ | 3,196 | |||
Preferred stock dividends and accretion of discount | 1,250 | 1,250 | ||||||
Net income/(loss) available to common shareholders | $ | (11,561 | ) | $ | 1,946 | |||
Per share of common stock: | ||||||||
Basic earnings | $ | (0.88 | ) | $ | 0.15 | |||
Diluted earnings | (0.88 | ) | 0.15 | |||||
Dividends | — | — | ||||||
Weighted average shares outstanding: | ||||||||
Basic | 13,108,598 | 13,082,347 | ||||||
Diluted | 13,108,598 | 13,172,727 | ||||||
F-93
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Three Months Ended March 31, 2011
(Unaudited)
(Amounts in thousands, except share and per share data)
Warrants | Accumulated | |||||||||||||||||||||||||||||||
For | Additional | Other | Total | |||||||||||||||||||||||||||||
Preferred | Common Stock | Common | Paid-in | Accumulated | Comprehensive | Shareholders’ | ||||||||||||||||||||||||||
Stock | Shares | Amount | Stock | Capital | (Deficit) | Income | Equity | |||||||||||||||||||||||||
Balance, December 31, 2010 | $ | 68,121 | 13,188,896 | $ | 26,378 | $ | 6,934 | $ | 188,901 | $ | (147,436 | ) | $ | 999 | $ | 143,897 | ||||||||||||||||
Preferred stock transactions: | ||||||||||||||||||||||||||||||||
Accretion of preferred stock discount | 347 | — | — | — | — | (347 | ) | — | — | |||||||||||||||||||||||
Preferred stock dividends accrued | — | — | — | — | — | (903 | ) | — | (903 | ) | ||||||||||||||||||||||
Common stock transactions: | ||||||||||||||||||||||||||||||||
Forfeiture of restricted common shares | — | (6,099 | ) | (12 | ) | — | (52 | ) | — | — | (64 | ) | ||||||||||||||||||||
Compensation expense: | ||||||||||||||||||||||||||||||||
Stock options | — | — | — | — | 50 | — | — | 50 | ||||||||||||||||||||||||
Restricted stock | — | — | — | — | 123 | — | — | 123 | ||||||||||||||||||||||||
Comprehensive income/(loss): | ||||||||||||||||||||||||||||||||
Net (loss) | — | — | — | — | — | (10,311 | ) | — | (10,311 | ) | ||||||||||||||||||||||
Change in unrealized gains, net of reclassification and taxes | — | — | — | — | — | — | 38 | 38 | ||||||||||||||||||||||||
Total comprehensive income/(loss) | (10,273 | ) | ||||||||||||||||||||||||||||||
Balance, March 31, 2011 | $ | 68,468 | 13,182,797 | $ | 26,366 | $ | 6,934 | $ | 189,022 | $ | (158,997 | ) | $ | 1,037 | $ | 132,830 | ||||||||||||||||
F-94
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2011 and 2010
(Amounts in thousands, except share and per share data)
March 31, | March 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Cash flows from operating activities | ||||||||
Net income (loss) | $ | (10,311 | ) | $ | 3,196 | |||
Adjustments to reconcile net income / (loss) to net cash provided by operating activities | ||||||||
Provision for loan losses | 13,897 | 3,889 | ||||||
Depreciation and amortization | 1,736 | 1,828 | ||||||
Security amortization and accretion, net | 129 | 59 | ||||||
Net gain on sale of mortgage loans | (78 | ) | (110 | ) | ||||
Originations of mortgage loans held for sale | (7,421 | ) | (8,741 | ) | ||||
Proceeds from sales of mortgage loans | 7,838 | 9,794 | ||||||
Increase in cash surrender value of life insurance | (279 | ) | (265 | ) | ||||
Net losses from sales of fixed assets | 203 | 3 | ||||||
Stock-based compensation expense | 109 | 156 | ||||||
Net loss on other real estate and repossessed assets | 2,099 | 509 | ||||||
Deferred tax benefit | — | (303 | ) | |||||
Net changes: | ||||||||
Other assets | 9,769 | 4,970 | ||||||
Accrued interest payable and other liabilities | (1,196 | ) | (5,895 | ) | ||||
Net cash provided by operating activities | 16,495 | 9,090 | ||||||
Cash flows from investing activities | ||||||||
Purchase of securities available for sale | (35,782 | ) | (51,525 | ) | ||||
Proceeds from maturities of securities available for sale | 10,985 | 27,072 | ||||||
Proceeds from maturities of securities held to maturity | 350 | 10 | ||||||
Net change in loans | 43,266 | 28,763 | ||||||
Proceeds from sale of other real estate | 4,322 | 2,368 | ||||||
Improvements to other real estate | (113 | ) | (332 | ) | ||||
Proceeds from sale of fixed assets | 7 | — | ||||||
Premises and equipment expenditures | (342 | ) | (566 | ) | ||||
Net cash provided by investing activities | 22,693 | 5,790 | ||||||
Cash flows from financing activities | ||||||||
Net change in core deposits | (1,219 | ) | (41,046 | ) | ||||
Net change in brokered deposits | — | (5,185 | ) | |||||
Net change in repurchase agreements | (702 | ) | (619 | ) | ||||
Repayments of FHLB advances and notes payable | (65 | ) | (80 | ) | ||||
Preferred stock dividends paid | — | (903 | ) | |||||
Common stock dividends paid | — | — | ||||||
Net cash (used) in financing activities | (1,986 | ) | (47,833 | ) | ||||
Net change in cash and cash equivalents | 37,202 | (32,953 | ) | |||||
Cash and cash equivalents, beginning of period | 294,214 | 210,494 | ||||||
Cash and cash equivalents, end of period | $ | 331,416 | $ | 177,541 | ||||
Supplemental disclosures — cash and noncash | ||||||||
Interest paid | $ | 7,044 | $ | 10,523 | ||||
Loans converted to other real estate | 6,616 | 18,540 | ||||||
Unrealized gain on available for sale securities, net of tax | 38 | 970 | ||||||
Loans Originated to finance / sell other real estate | 1,020 | 1,417 |
F-95
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Available for Sale | ||||||||||||||||
March 31, 2011 | ||||||||||||||||
U.S. government agencies | $ | 93,966 | $ | 138 | $ | (1,031 | ) | $ | 93,073 | |||||||
States and political subdivisions | 30,225 | 845 | (271 | ) | 30,799 | |||||||||||
Collateralized mortgage obligations | 78,300 | 1,861 | (395 | ) | 79,766 | |||||||||||
Mortgage-backed securities | 20,685 | 749 | (30 | ) | 21,404 | |||||||||||
Trust preferred securities | 1,850 | — | (160 | ) | 1,690 | |||||||||||
$ | 225,026 | $ | 3,593 | $ | (1,887 | ) | $ | 226,732 | ||||||||
December 31, 2010 | ||||||||||||||||
U.S. government agencies | $ | 84,106 | $ | 115 | $ | (922 | ) | $ | 83,299 | |||||||
States and political subdivisions | 31,192 | 705 | (396 | ) | 31,501 | |||||||||||
Collateralized mortgage obligations | 66,043 | 1,901 | (369 | ) | 67,575 | |||||||||||
Mortgage-backed securities | 17,168 | 815 | (19 | ) | 17,964 | |||||||||||
Trust preferred securities | 1,850 | — | (187 | ) | 1,663 | |||||||||||
$ | 200,359 | $ | 3,536 | $ | (1,893 | ) | $ | 202,002 | ||||||||
Held to Maturity | ||||||||||||||||
March 31, 2011 | ||||||||||||||||
States and political subdivisions | $ | 115 | $ | — | $ | — | $ | 115 | ||||||||
$ | 115 | $ | — | $ | — | $ | 115 | |||||||||
December 31, 2010 | ||||||||||||||||
States and political subdivisions | $ | 215 | $ | 1 | $ | — | $ | 216 | ||||||||
Other securities | 250 | 1 | — | 251 | ||||||||||||
$ | 465 | $ | 2 | $ | — | $ | 467 | |||||||||
F-96
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Available for Sale | Held to Maturity | |||||||||||
Fair | Carrying | Fair | ||||||||||
Value | Amount | Value | ||||||||||
Due in one year or less | $ | 989 | $ | 115 | $ | 115 | ||||||
Due after one year through five years | 4,723 | — | — | |||||||||
Due after five years through ten years | 64,980 | — | — | |||||||||
Due after ten years | 54,870 | — | — | |||||||||
Collateralized mortgage obligations | 79,766 | — | — | |||||||||
Mortgage-backed securities | 21,404 | — | — | |||||||||
Total maturities | $ | 226,732 | $ | 115 | $ | 115 | ||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
March 31, 2011 | ||||||||||||||||||||||||
U. S. government agencies | $ | 66,950 | $ | (1,031 | ) | $ | — | $ | — | $ | 66,950 | $ | (1,031 | ) | ||||||||||
States and political subdivisions | 3,798 | (58 | ) | 1,749 | (213 | ) | 5,547 | (271 | ) | |||||||||||||||
Collateralized mortgage obligations | 19,893 | (383 | ) | 2,790 | (12 | ) | 22,683 | (395 | ) | |||||||||||||||
Mortgage-backed securities | 2,986 | (27 | ) | 6 | (3 | ) | 2,992 | (30 | ) | |||||||||||||||
Trust preferred securities | — | — | 1,690 | (160 | ) | 1,690 | (160 | ) | ||||||||||||||||
Total temporarily impaired | $ | 93,627 | $ | (1,499 | ) | $ | 6,235 | $ | (388 | ) | $ | 99,862 | $ | (1,887 | ) | |||||||||
December 31, 2010 | ||||||||||||||||||||||||
U. S. government agencies | $ | 65,178 | $ | (922 | ) | $ | — | $ | — | $ | 65,178 | $ | (922 | ) | ||||||||||
States and political subdivisions | 2,488 | (114 | ) | 1,659 | (282 | ) | 4,147 | (396 | ) | |||||||||||||||
Collateralized mortgage obligations | 14,666 | (266 | ) | 2,699 | (104 | ) | 17,365 | (370 | ) | |||||||||||||||
Mortgage-backed securities | 2,821 | (17 | ) | 8 | (2 | ) | 2,829 | (19 | ) | |||||||||||||||
Trust preferred securities | — | — | 1,663 | (186 | ) | 1,663 | (186 | ) | ||||||||||||||||
Total temporarily impaired | $ | 85,153 | $ | (1,319 | ) | $ | 6,029 | $ | (574 | ) | $ | 91,182 | $ | (1,893 | ) | |||||||||
F-97
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
F-98
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Current | ||||||||||||||||
Credit | Book | Fair | Unrealized | |||||||||||||
Description | Cusip# | Rating | Value | Value | Loss | |||||||||||
Collateralized mortgage obligations | ||||||||||||||||
Wells Fargo — 2007 - 4 A21 | 94985RAW2 | Caa2 | $ | 2,802 | $ | 2,790 | $ | (12 | ) | |||||||
Trust preferred securities | ||||||||||||||||
West Tennessee Bancshares, Inc. | 956192AA6 | N/A | 675 | 638 | (37 | ) |
First Quarter | First Quarter | |||||||
2011 | 2010 | |||||||
Beginning balance of credit losses at January 1, 2011 and 2010 | $ | 1,069 | $ | 976 | ||||
Other-than-temporary impairment credit losses | — | — | ||||||
Ending balance of cumulative credit losses recognized in earnings | $ | 1,069 | $ | 976 | ||||
F-99
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Commercial real estate | $ | 1,028,903 | $ | 1,080,805 | ||||
Residential real estate | 379,616 | 378,783 | ||||||
Commercial | 208,496 | 222,927 | ||||||
Consumer | 75,379 | 75,498 | ||||||
Other | 3,139 | 1,913 | ||||||
Unearned income | (15,284 | ) | (14,548 | ) | ||||
Loans, net of unearned income | $ | 1,680,249 | $ | 1,745,378 | ||||
Allowance for loan losses | $ | (65,109 | ) | $ | (66,830 | ) | ||
March 31, | March 31, | |||||||
2011 | 2010 | |||||||
Beginning balance | $ | 66,830 | $ | 50,161 | ||||
Add (deduct): | ||||||||
Provision for loan losses | 13,897 | 3,889 | ||||||
Loans charged off | (16,404 | ) | (4,733 | ) | ||||
Recoveries of loans charged off | 786 | 850 | ||||||
Balance, end of period | $ | 65,109 | $ | 50,167 | ||||
F-100
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Commercial Real | Residential Real | |||||||||||||||||||||||
Estate | Estate | Commercial | Consumer | Other | Total | |||||||||||||||||||
2011 | ||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||
Beginning balance | $ | 54,203 | $ | 4,431 | $ | 5,080 | $ | 3,108 | $ | 8 | $ | 66,830 | ||||||||||||
Add (deduct): | ||||||||||||||||||||||||
Charge-offs | (14,919 | ) | (312 | ) | (728 | ) | (445 | ) | — | (16,404 | ) | |||||||||||||
Recoveries | 196 | 29 | 378 | 183 | — | 786 | ||||||||||||||||||
Provision | 13,886 | 234 | 915 | (1,138 | ) | — | 13,897 | |||||||||||||||||
Ending balance | $ | 53,366 | $ | 4,382 | $ | 5,645 | $ | 1,708 | $ | 8 | $ | 65,109 | ||||||||||||
As of December 31, 2010 | ||||||||||||||||||||||||
Allowance for loan losses | ||||||||||||||||||||||||
Allocation for loans individually evaluated for impairment | $ | 22,939 | $ | 1,027 | $ | 722 | $ | 146 | $ | — | $ | 24,834 | ||||||||||||
Allocation for loans collectively evaluated for impairment | 31,264 | 3,404 | 4,358 | 2,962 | 8 | 41,996 | ||||||||||||||||||
Ending Balance | $ | 54,203 | $ | 4,431 | $ | 5,080 | $ | 3,108 | $ | 8 | $ | 66,830 | ||||||||||||
As of March 31, 2011 | ||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||
Allocation for loans individually evaluated for impairment | $ | 19,662 | $ | 1,120 | $ | 1,732 | $ | 154 | $ | — | $ | 22,668 | ||||||||||||
Allocation for loans collectively evaluated for impairment | 33,704 | 3,262 | 3,913 | 1,554 | 8 | 42,441 | ||||||||||||||||||
Ending Balance | $ | 53,366 | $ | 4,382 | $ | 5,645 | $ | 1,708 | $ | 8 | $ | 65,109 | ||||||||||||
As of December 31, 2010 Loans: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 170,175 | $ | 8,697 | $ | 6,149 | $ | 970 | $ | — | $ | 185,991 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 910,630 | $ | 363,506 | $ | 216,778 | $ | 66,470 | $ | 1,913 | $ | 1,559,387 | ||||||||||||
As of March 31, 2011 Loans: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 181,082 | $ | 9,657 | $ | 7,512 | $ | 1,286 | $ | — | $ | 199,537 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 847,821 | $ | 363,266 | $ | 200,984 | $ | 66,458 | $ | 3,139 | $ | 1,481,668 | ||||||||||||
F-101
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Loans with no allowance allocated | $ | 95,432 | $ | 81,981 | ||||
Loans with allowance allocated | $ | 104,105 | $ | 104,010 | ||||
Amount of allowance allocated | 22,668 | 24,834 | ||||||
Average impaired loan balance during the year | 207,166 | 212,167 | ||||||
Interest income not recognized during impairment | 500 | 1,105 |
Unpaid | Average | Interest | ||||||||||||||||||
Recorded | Principal | Related | Recorded | Income | ||||||||||||||||
Investment | Balance | Allowance | Investment | Recognized | ||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||
Speculative 1-4 Family | $ | 75,482 | $ | 111,392 | $ | 11,085 | $ | 79,742 | $ | 231 | ||||||||||
Construction | 46,456 | 65,525 | 4,379 | 49,747 | 71 | |||||||||||||||
Owner Occupied | 14,782 | 15,365 | 543 | 15,143 | 18 | |||||||||||||||
Non-owner Occupied | 43,663 | 46,035 | 3,655 | 44,177 | 182 | |||||||||||||||
Other | 699 | 738 | — | 706 | — | |||||||||||||||
Residential Real Estate: | ||||||||||||||||||||
HELOC | 3,199 | 3,295 | — | 3,206 | 15 | |||||||||||||||
Mortgage-Prime | 6,260 | 6,801 | 1,069 | 6,373 | 41 | |||||||||||||||
Mortgage-Subprime | 650 | 649 | 51 | 650 | — | |||||||||||||||
Other | 102 | 122 | — | 103 | — | |||||||||||||||
Commercial | 7,512 | 8,702 | 1,732 | 7,825 | 17 | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Consumer: | ||||||||||||||||||||
Prime | 222 | 234 | — | 235 | 3 | |||||||||||||||
Subprime | 86 | 86 | 90 | 86 | — | |||||||||||||||
Auto-Subprime | 424 | 424 | 64 | 424 | — | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Total | $ | 199,537 | 259,368 | 22,668 | 208,417 | 578 | ||||||||||||||
F-102
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Unpaid | Average | Interest | ||||||||||||||||||
Recorded | Principal | Related | Recorded | Income | ||||||||||||||||
Investment | Balance | Allowance | Investment | Recognized | ||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||
Speculative 1-4 Family | $ | 72,138 | $ | 98,141 | $ | 11,830 | $ | 85,487 | $ | 2,292 | ||||||||||
Construction | 56,758 | 69,355 | 8,366 | 63,710 | 2,565 | |||||||||||||||
Owner Occupied | 13,590 | 14,513 | 851 | 14,119 | 644 | |||||||||||||||
Non-owner Occupied | 25,824 | 27,561 | 1,823 | 28,786 | 1,375 | |||||||||||||||
Other | 1,865 | 2,090 | 69 | 2,278 | 66 | |||||||||||||||
Residential Real Estate: | ||||||||||||||||||||
HELOC | 2,807 | 2,894 | 346 | 2,603 | 88 | |||||||||||||||
Mortgage-Prime | 4,539 | 4,722 | 590 | 4,661 | 209 | |||||||||||||||
Mortgage-Subprime | 370 | 370 | 57 | 370 | — | |||||||||||||||
Other | 981 | 1,285 | 34 | 2,419 | 47 | |||||||||||||||
Commercial | 6,149 | 7,510 | 722 | 6,729 | 171 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Prime | 217 | 228 | 32 | 252 | 13 | |||||||||||||||
Subprime | 228 | 228 | 35 | 228 | — | |||||||||||||||
Auto-Subprime | 525 | 525 | 79 | 525 | — | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Total | 185,991 | 229,422 | 24,834 | 212,167 | 7,470 | |||||||||||||||
F-103
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
F-104
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Speculative 1-4 | Owner | Non-Owner | ||||||||||||||||||
Family | Construction | Occupied | Occupied | Other | ||||||||||||||||
Commercial Real Estate Credit Exposure | ||||||||||||||||||||
Prime | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Desirable | 1,585 | 971 | 173 | |||||||||||||||||
Satisfactory tier I | 2,773 | 899 | 29,677 | 35,754 | 919 | |||||||||||||||
Satisfactory tier II | 13,816 | 18,949 | 111,367 | 155,082 | 6,664 | |||||||||||||||
Acceptable with care | 60,611 | 43,092 | 58,729 | 185,416 | 6,850 | |||||||||||||||
Management Watch | 25,855 | 15,592 | 8,985 | 34,028 | 2,036 | |||||||||||||||
Substandard | 78,764 | 55,190 | 19,051 | 52,929 | 3,146 | |||||||||||||||
Loss | — | — | — | — | — | |||||||||||||||
Total | 181,819 | 135,307 | 228,780 | 463,382 | 19,615 | |||||||||||||||
Speculative 1-4 | Owner | Non-Owner | ||||||||||||||||||
Family | Construction | Occupied | Occupied | Other | ||||||||||||||||
Commercial Real Estate Credit Exposure | ||||||||||||||||||||
Prime | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Desirable | — | 1,573 | 968 | 177 | — | |||||||||||||||
Satisfactory tier I | 2,836 | 978 | 38,623 | 56,221 | 4,246 | |||||||||||||||
Satisfactory tier II | 14,010 | 34,239 | 102,383 | 130,850 | 17,999 | |||||||||||||||
Acceptable with care | 69,902 | 47,093 | 62,198 | 159,216 | 45,597 | |||||||||||||||
Management Watch | 27,383 | 15,259 | 5,298 | 26,415 | 2,965 | |||||||||||||||
Substandard | 91,845 | 61,388 | 16,289 | 38,037 | 6,817 | |||||||||||||||
Loss | — | — | — | — | — | |||||||||||||||
Total | 205,976 | 160,530 | 225,759 | 410,916 | 77,624 | |||||||||||||||
F-105
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Commercial | Commercial | |||||||
Commercial Credit Exposure | ||||||||
Prime | $ | 1,418 | $ | 1,236 | ||||
Desirable | 6,098 | 7,951 | ||||||
Satisfactory tier I | 31,276 | 33,859 | ||||||
Satisfactory tier II | 85,849 | 91,505 | ||||||
Acceptable with care | 63,295 | 72,286 | ||||||
Management Watch | 8,826 | 8,511 | ||||||
Substandard | 11,734 | 7,579 | ||||||
Loss | — | — | ||||||
Total | 208,496 | 222,927 | ||||||
Mortgage – | ||||||||||||||||
HELOC | Mortgage | Subprime | Other | |||||||||||||
Consumer Real Estate Credit Exposure | ||||||||||||||||
Pass | $ | 192,083 | $ | 151,975 | $ | 11,668 | $ | 3,932 | ||||||||
Management Watch | 1,017 | 2,042 | — | |||||||||||||
Substandard | 3,695 | 6,359 | 50 | 102 | ||||||||||||
Total | 196,795 | 160,376 | 11,718 | 4,034 | ||||||||||||
Mortgage – | ||||||||||||||||
HELOC | Mortgage | Subprime | Other | |||||||||||||
Consumer Real Estate Credit Exposure | ||||||||||||||||
Pass | $ | 188,086 | $ | 131,845 | $ | 11,692 | $ | 29,833 | ||||||||
Management Watch | 1,017 | 317 | — | — | ||||||||||||
Substandard | 2,807 | 5,117 | 50 | 1,529 | ||||||||||||
Total | 191,910 | 137,279 | 11,742 | 31,362 | ||||||||||||
F-106
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Consumer – | Consumer Auto | |||||||||||
As of March 31, 2011 | Consumer – Prime | Subprime | – Subprime | |||||||||
Consumer Credit Exposure | ||||||||||||
Pass | $ | 33,964 | $ | 12,963 | $ | 19,468 | ||||||
Management Watch | — | — | ||||||||||
Substandard | 221 | 76 | 96 | |||||||||
Total | 34,185 | 13,039 | 19,564 | |||||||||
Consumer – | Consumer Auto | |||||||||||
As of December 31, 2010 | Consumer – Prime | Subprime | – Subprime | |||||||||
Consumer Credit Exposure | ||||||||||||
Pass | $ | 35,029 | $ | 13,093 | $ | 18,588 | ||||||
Management Watch | — | — | — | |||||||||
Substandard | 217 | 39 | 474 | |||||||||
Total | 35,246 | 13,132 | 19,062 | |||||||||
F-107
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Recorded | ||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||
Greater | > 90 Days | |||||||||||||||||||||||||||
30-59 Days | 60-89 Days | Than 90 | Total Past | and | ||||||||||||||||||||||||
Past Due | Past Due | Days | Due | Current | Total Loans | Accruing | ||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||
Speculative 1-4 | $ | 9,179 | $ | 3,222 | $ | 41,377 | $ | 53,778 | $ | 128,041 | $ | 181,819 | $ | 5,518 | ||||||||||||||
Family | ||||||||||||||||||||||||||||
Construction | 248 | 18,622 | 18,870 | 116,437 | 135,307 | — | ||||||||||||||||||||||
Owner | 4,499 | 126 | 11,610 | 16,235 | 212,545 | 228,780 | — | |||||||||||||||||||||
Occupied | ||||||||||||||||||||||||||||
Non-owner | 6,170 | 3,848 | 17,675 | 27,693 | 435,689 | 463,382 | — | |||||||||||||||||||||
Occupied | ||||||||||||||||||||||||||||
Other | 835 | 619 | 192 | 1,646 | 17,969 | 19,615 | — | |||||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||||
HELOC | 1,077 | 155 | 1,024 | 2,256 | 194,539 | 196,795 | — | |||||||||||||||||||||
Mortgage-Prime | 6,196 | 1,381 | 2,711 | 10,288 | 150,088 | 160,376 | — | |||||||||||||||||||||
Mortgage-Subprime | 51 | 6 | 72 | 129 | 11,589 | 11,718 | — | |||||||||||||||||||||
Other | 85 | 3 | 81 | 169 | 3,865 | 4,034 | — | |||||||||||||||||||||
Commercial | 608 | 267 | 5,795 | 6,670 | 201,826 | 208,496 | 72 | |||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||
Prime | 201 | 58 | 51 | 310 | 33,875 | 34,185 | 2 | |||||||||||||||||||||
Subprime | 140 | 104 | 53 | 297 | 12,742 | 13,039 | — | |||||||||||||||||||||
Auto-Subprime | 565 | 110 | 125 | 800 | 18,764 | 19,564 | — | |||||||||||||||||||||
Other | — | — | — | — | 3,139 | 3,139 | — | |||||||||||||||||||||
Total | 29,606 | 10,147 | 99,388 | 139,141 | 1,541,108 | 1,680,249 | 5,592 | |||||||||||||||||||||
F-108
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
(Amounts in thousands, except share and per share data)
Recorded | ||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||
Greater | > 90 Days | |||||||||||||||||||||||||||
30-59 Days | 60-89 Days | Than 90 | Total Past | and | ||||||||||||||||||||||||
Past Due | Past Due | Days | Due | Current | Total Loans | Accruing | ||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||
Speculative 1-4 | $ | 22,267 | $ | 1,777 | $ | 30,802 | $ | 54,846 | $ | 151,130 | $ | 205,976 | $ | 1,758 | ||||||||||||||
Family | ||||||||||||||||||||||||||||
Construction | 14,541 | — | 26,915 | 41,456 | 119,074 | 160,530 | — | |||||||||||||||||||||
Owner | 8,114 | 1,633 | 4,137 | 13,884 | 211,875 | 225,759 | — | |||||||||||||||||||||
Occupied | ||||||||||||||||||||||||||||
Non-owner | 4,014 | 5,961 | 8,814 | 18,789 | 392,127 | 410,916 | 170 | |||||||||||||||||||||
Occupied | ||||||||||||||||||||||||||||
Other | 116 | 865 | 1,491 | 2,472 | 75,152 | 77,624 | 18 | |||||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||||
HELOC | 747 | 358 | 644 | 1,749 | 190,161 | 191,910 | — | |||||||||||||||||||||
Mortgage-Prime | 1,359 | 915 | 1,779 | 4,053 | 133,226 | 137,279 | 8 | |||||||||||||||||||||
Mortgage-Subprime | 100 | 51 | 98 | 249 | 11,493 | 11,742 | — | |||||||||||||||||||||
Other | 403 | 176 | 566 | 1,145 | 30,217 | 31,362 | 19 | |||||||||||||||||||||
Commercial | 2,422 | 593 | 3,922 | 6,937 | 215,990 | 222,927 | 92 | |||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||
Prime | 315 | 86 | 108 | 509 | 34,737 | 35,246 | 29 | |||||||||||||||||||||
Subprime | 155 | 64 | 6 | 225 | 12,907 | 13,132 | — | |||||||||||||||||||||
Auto-Subprime | 476 | 166 | 101 | 743 | 18,319 | 19,062 | 18 | |||||||||||||||||||||
Other | 73 | — | — | 73 | 1,840 | 1,913 | — | |||||||||||||||||||||
Total | 55,102 | 12,645 | 79,383 | 147,130 | 1,598,248 | 1,745,378 | 2,112 | |||||||||||||||||||||
F-109
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
March 31, | December | |||||||
2011 | 31, 2010 | |||||||
Commercial real estate: | ||||||||
Speculative 1-4 Family | $ | 60,024 | $ | 63,298 | ||||
Construction | 38,629 | 41,789 | ||||||
Owner Occupied | 14,458 | 5,511 | ||||||
Non-owner Occupied | 30,720 | 18,772 | ||||||
Other | 192 | 1,865 | ||||||
Residential real estate: | ||||||||
HELOC | 2,025 | 1,668 | ||||||
Mortgage-Prime | 4,758 | 3,350 | ||||||
Mortgage-Subprime | 351 | 254 | ||||||
Other | 102 | 957 | ||||||
Commercial | 7,034 | 5,813 | ||||||
Consumer: | ||||||||
Prime | 143 | 130 | ||||||
Subprime | 163 | 107 | ||||||
Auto-Subprime | 217 | 193 | ||||||
Other | — | — | ||||||
Total | 158,816 | 143,707 | ||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Loans past due 90 days still on accrual | $ | 5,592 | $ | 2,112 | ||||
Nonaccrual loans | 158,816 | 143,707 | ||||||
Total | $ | 164,408 | $ | 145,819 | ||||
F-110
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
F-111
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Basic Earnings Per Share | ||||||||
Net income (loss) | $ | (10,311 | ) | $ | 3,196 | |||
Less: preferred stock dividends and accretion of discount on warrants | 1,250 | 1,250 | ||||||
Net income (loss) available to common shareholders | $ | (11,561 | ) | $ | 1,946 | |||
Weighted average common shares outstanding | 13,108,598 | 13,082,347 | ||||||
Basic earnings (loss) per share available to common shareholders | $ | (0.88 | ) | $ | 0.15 | |||
Diluted Earnings Per Share | ||||||||
Net income (loss) | $ | (10,311 | ) | $ | 3,196 | |||
Less: preferred stock dividends and accretion of discount on warrants | 1,250 | 1,250 | ||||||
Net income (loss) available to common shareholders | $ | (11,561 | ) | $ | 1,946 | |||
Weighted average common shares outstanding | 13,108,598 | 13,082,347 | ||||||
Add: Dilutive effects of assumed conversions of restricted stock and exercises of stock options and warrants | — | 90,380 | ||||||
Weighted average common and dilutive potential common shares outstanding | 13,108,598 | 13,172,727 | ||||||
Diluted earnings (loss) per share available to common shareholders | $ | (0.88 | ) | $ | 0.15 | |||
NOTE: | Dividends of $3,255 on preferred stock have been accrued as the Company intends to pay. |
F-112
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Other | Holding | |||||||||||||||||||
Three months ended March 31, 2011 | Bank | Segments | Company | Eliminations | Totals | |||||||||||||||
Net interest income (expense) | $ | 17,611 | $ | 2,148 | $ | (492 | ) | $ | — | $ | 19,267 | |||||||||
Provision for loan losses | 13,627 | 270 | — | — | 13,897 | |||||||||||||||
Noninterest income | 7,379 | 476 | 14 | (242 | ) | 7,627 | ||||||||||||||
Noninterest expense | 22,115 | 1,243 | (89 | ) | (242 | ) | 23,027 | |||||||||||||
Income tax expense (benefit) | (46 | ) | 436 | (109 | ) | — | 281 | |||||||||||||
Segment profit (loss) | (10,706 | ) | $ | 675 | $ | (280 | ) | $ | — | $ | (10,311 | ) | ||||||||
Segment assets at March 31, 2011 | $ | 2,342,891 | $ | 43,322 | $ | 6,481 | $ | — | $ | 2,392,694 | ||||||||||
Other | Holding | |||||||||||||||||||
Three months ended March 31, 2010 | Bank | Segments | Company | Eliminations | Totals | |||||||||||||||
Net interest income (expense) | $ | 20,068 | $ | 2,063 | $ | (472 | ) | $ | — | $ | 21,659 | |||||||||
Provision for loan losses | 3,356 | 533 | — | — | 3,889 | |||||||||||||||
Noninterest income | 7,528 | 371 | 14 | (227 | ) | 7,686 | ||||||||||||||
Noninterest expense | 19,469 | 1,115 | 189 | (227 | ) | 20,546 | ||||||||||||||
Income tax expense (benefit) | 1,628 | 309 | (223 | ) | — | 1,714 | ||||||||||||||
Segment profit (loss) | 3,143 | $ | 477 | $ | (424 | ) | $ | — | $ | 3,196 | ||||||||||
Segment assets at March 31, 2010 | $ | 2,520,503 | $ | 41,663 | $ | 7,566 | $ | — | $ | 2,569,732 | ||||||||||
F-113
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
As of and for the period ended March 31, 2011 | Bank | Other | Total | |||||||||
Nonperforming loans as percentage of total loans, net of unearned income | 9.84 | % | 1.65 | % | 9.78 | % | ||||||
Nonperforming assets as a percentage of total assets | 9.34 | % | 2.07 | % | 9.38 | % | ||||||
Allowance for loan losses as a percentage of total loans, net of unearned income | 3.72 | % | 7.25 | % | 3.87 | % | ||||||
Allowance for loan losses as a percentage of nonperforming loans | 37.81 | % | 439.21 | % | 39.60 | % | ||||||
YTD net charge-offs to average total loans, net of unearned income | 0.90 | % | 0.61 | % | 0.91 | % |
As of and for the period ended March 31, 2010 | Bank | Other | Total | |||||||||
Nonperforming loans as percentage of total loans, net of unearned income | 3.19 | % | 1.23 | % | 3.19 | % | ||||||
Nonperforming assets as a percentage of total assets | 5.25 | % | 1.37 | % | 5.27 | % | ||||||
Allowance for loan losses as a percentage of total loans, net of unearned income | 2.36 | % | 8.13 | % | 2.52 | % | ||||||
Allowance for loan losses as a percentage of nonperforming loans | 73.98 | % | 661.74 | % | 78.85 | % | ||||||
YTD net charge-offs to average total loans, net of unearned income | 0.17 | % | 1.25 | % | 0.19 | % |
As of and for the year ended December 31, 2010 | Bank | Other | Total | |||||||||
Nonperforming loans as percentage of total loans, net of unearned income | 8.40 | % | 1.30 | % | 8.35 | % | ||||||
Nonperforming assets as a percentage of total assets | 8.52 | % | 1.34 | % | 8.56 | % | ||||||
Allowance for loan losses as a percentage of total loans, net of unearned income | 3.68 | % | 7.33 | % | 3.83 | % | ||||||
Allowance for loan losses as a percentage of nonperforming loans | 43.80 | % | 562.24 | % | 45.83 | % | ||||||
Net charge-offs to average total loans, net of unearned income | 2.76 | % | 4.20 | % | 2.84 | % |
Net charge-offs | Bank | Other | Total | |||||||||
For the three month period ended March 31, 2011 | $ | 15,347 | $ | 270 | $ | 15,617 | ||||||
For the three month period ended March 31, 2010 | $ | 3,345 | $ | 537 | $ | 3,882 | ||||||
For the year ended December 31, 2010 | $ | 52,615 | $ | 1,823 | $ | 54,438 |
F-114
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
F-115
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
F-116
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
Total Carrying | Assets/Liabilities | |||||||||||||||||||
Fair Value Measurement Using | Amount in | Measured at Fair | ||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Balance Sheet | Value | |||||||||||||||
March 31, 2011 | ||||||||||||||||||||
Securities available for sale | ||||||||||||||||||||
U.S. government agencies | $ | — | $ | 93,073 | $ | — | $ | 93,073 | $ | 93,073 | ||||||||||
States and political subdivisions | — | 30,799 | — | 30,799 | 30,799 | |||||||||||||||
Collateralized mortgage obligations | — | 79,766 | — | 79,766 | 79,766 | |||||||||||||||
Mortgage-backed securities | — | 21,404 | — | 21,404 | 21,404 | |||||||||||||||
Trust preferred securities | — | 1,052 | 638 | 1,690 | 1,690 | |||||||||||||||
December 31, 2010 | ||||||||||||||||||||
Securities available for sale | ||||||||||||||||||||
U.S. government agencies | $ | — | $ | 83,299 | $ | — | $ | 83,299 | $ | 83,299 | ||||||||||
States and political subdivisions | — | 31,501 | — | 31,501 | 31,501 | |||||||||||||||
Collateralized mortgage obligations | — | 67,575 | — | 67,575 | 67,575 | |||||||||||||||
Mortgage-backed securities | — | 17,964 | — | 17,964 | 17,964 | |||||||||||||||
Trust preferred securities | — | 1,025 | 638 | 1,663 | 1,663 |
F-117
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
March 31, | March 31, | |||||||
2011 | 2010 | |||||||
Beginning balance, January 1 | $ | 638 | $ | 638 | ||||
Total gains or (loss) (realized/unrealized) | ||||||||
Included in earnings | — | — | ||||||
Included in other comprehensive income | — | — | ||||||
Paydowns and maturities | — | — | ||||||
Transfers into Level 3 | — | — | ||||||
Ending balance, March 31 | $ | 638 | $ | 638 | ||||
Total Carrying | Assets/Liabilities | |||||||||||||||||||
Fair Value Measurement Using | Amount in | Measured at Fair | ||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Balance Sheet | Value | |||||||||||||||
March 31, 2011 | ||||||||||||||||||||
Other real estate | $ | — | $ | — | $ | 6,008 | $ | 6,008 | $ | 6,008 | ||||||||||
Impaired loans | — | — | 125,361 | 125,361 | 125,361 | |||||||||||||||
Total assets at fair value | $ | — | $ | — | $ | 131,369 | $ | 131,369 | $ | 131,369 | ||||||||||
December 31, 2010 | ||||||||||||||||||||
Other real estate | $ | — | $ | — | $ | 38,806 | $ | 38,806 | $ | 38,806 | ||||||||||
Impaired loans | — | — | 129,088 | 129,088 | 129,088 | |||||||||||||||
Total assets at fair value | $ | — | $ | — | $ | 167,174 | $ | 167,174 | $ | 167,174 | ||||||||||
F-118
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
March 31, | December 31, | |||||||||||||||
2011 | 2010 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
Financial assets: | ||||||||||||||||
Cash and cash equivalents | $ | 331,416 | $ | 331,416 | $ | 294,214 | $ | 294,214 | ||||||||
Securities available for sale | 226,732 | 226,732 | 202,002 | 202,002 | ||||||||||||
Securities held to maturity | 115 | 115 | 465 | 467 | ||||||||||||
Loans held for sale | 960 | 970 | 1,299 | 1,317 | ||||||||||||
Loans, net | 1,615,140 | 1,600,794 | 1,678,548 | 1,664,126 | ||||||||||||
FHLB and other stock | 12,734 | 12,734 | 12,734 | 12,734 | ||||||||||||
Cash surrender value of life insurance | 31,758 | 31,758 | 31,479 | 31,479 | ||||||||||||
Accrued interest receivable | 7,332 | 7,332 | 7,845 | 7,845 | ||||||||||||
Financial liabilities: | ||||||||||||||||
Deposit accounts | $ | 1,975,635 | $ | 1,988,676 | $ | 1,976,854 | $ | 1,987,105 | ||||||||
Federal funds purchased and repurchase agreements | 18,712 | 18,712 | 19,413 | 19,413 | ||||||||||||
FHLB advances and notes payable | 158,588 | 166,703 | 158,653 | 166,762 | ||||||||||||
Subordinated debentures | 88,662 | 62,985 | 88,662 | 64,817 | ||||||||||||
Accrued interest payable | 2,454 | 2,454 | 2,140 | 2,140 |
F-119
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
F-120
F-121
F-122
F-123
F-124
F-125
Three Months Ended | ||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans(1) (2) | $ | 1,567,761 | $ | 24,614 | 6.37 | % | $ | 1,954,136 | $ | 30,080 | 6.24 | % | ||||||||||||
Investment securities(2) | 227,762 | 2,007 | 3.57 | % | 169,020 | 1,906 | 4.57 | % | ||||||||||||||||
Other short-term investments | 294,905 | 181 | 0.25 | % | 148,394 | 94 | 0.26 | % | ||||||||||||||||
Total interest-earning assets | $ | 2,090,428 | $ | 26,802 | 5.20 | % | $ | 2,271,550 | $ | 32,080 | 5.73 | % | ||||||||||||
Non-interest earning assets | 340,868 | 306,586 | ||||||||||||||||||||||
Total assets | $ | 2,431,296 | $ | 2,578,136 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Interest checking, savings and money market | $ | 1,079,824 | $ | 1,811 | 0.68 | % | $ | 941,888 | $ | 2,398 | 1.03 | % | ||||||||||||
Time deposits | 763,967 | 3,519 | 1.87 | % | 940,388 | 5,663 | 2.44 | % | ||||||||||||||||
Total interest-bearing deposits | $ | 1,843,791 | $ | 5,330 | 1.17 | % | $ | 1,882,276 | $ | 8,061 | 1.74 | % | ||||||||||||
Securities sold under repurchase agreements and short-term borrowings | 16,994 | 4 | 0.10 | % | 23,615 | 6 | 0.10 | % | ||||||||||||||||
Notes payable | 158,628 | 1,543 | 3.94 | % | 171,946 | 1,694 | 4.00 | % | ||||||||||||||||
Subordinated debentures | 88,662 | 481 | 2.20 | % | 88,662 | 472 | 2.16 | % | ||||||||||||||||
Total interest-bearing liabilities | $ | 2,108,075 | $ | 7,358 | 1.42 | % | $ | 2,166,499 | $ | 10,233 | 1.92 | % | ||||||||||||
Non-interest bearing liabilities: | ||||||||||||||||||||||||
Demand deposits | 161,702 | 163,173 | ||||||||||||||||||||||
Other liabilities | 17,731 | 18,098 | ||||||||||||||||||||||
Total non-interest bearing liabilities | 179,433 | 181,271 | ||||||||||||||||||||||
Total liabilities | 2,287,508 | 2,347,770 | ||||||||||||||||||||||
Shareholders’ equity | 143,788 | 230,366 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,431,296 | $ | 2,578,136 | ||||||||||||||||||||
Net interest income | $ | 19,444 | $ | 21,847 | ||||||||||||||||||||
Interest rate spread | 3.77 | % | 3.81 | % | ||||||||||||||||||||
Net yield on interest-earning assets | 3.77 | % | 3.90 | % | ||||||||||||||||||||
1 | Average loan balances excluded nonaccrual loans for the periods presented. | |
2 | Fully Taxable Equivalent (“FTE”) at the rate of 35%. The FTE basis adjusts for the tax benefits of income on certain tax-exempt loans and investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. |
F-126
F-127
F-128
F-129
F-130
Required | Required | |||||||||||||||
Minimum | to be | |||||||||||||||
Ratio | Well Capitalized | Bank | Company | |||||||||||||
Tier 1 risk-based | 4.00 | % | 6.00 | % | 11.83 | % | 9.36 | % | ||||||||
capital | ||||||||||||||||
Total risk-based capital | 8.00 | % | 10.00 | % | 13.11 | % | 13.03 | % | ||||||||
Leverage Ratio | 4.00 | % | 5.00 | % | 8.55 | % | 6.78 | % |
Less than 1_ | More than 5_ | |||||||||||||||||||
Year | 1-3 Years | 3-5 Years | Years | Total | ||||||||||||||||
Commitments to make loans — fixed | $ | 272 | $ | 862 | $ | 744 | $ | 152 | $ | 2,030 | ||||||||||
Commitments to make loans — variable | 606 | 225 | — | 698 | 1,529 | |||||||||||||||
Unused lines of credit | 126,883 | 22,888 | 14,379 | 72,492 | 236,642 | |||||||||||||||
Letters of credit | 17,532 | 7,762 | — | — | 25,294 | |||||||||||||||
Total | $ | 145,293 | $ | 31,737 | $ | 15,123 | $ | 73,342 | $ | 265,495 | ||||||||||
Less than 1_ | More than 5_ | |||||||||||||||||||
Year | 1-3 Years | 3-5 Years | Years | Total | ||||||||||||||||
Certificates of deposits | $ | 527,774 | $ | 142,656 | $ | 56,445 | $ | 3,448 | $ | 730,323 | ||||||||||
FHLB advances and notes payable | 15,291 | 75,570 | 20,611 | 47,115 | 158,587 | |||||||||||||||
Subordinated debentures | — | — | — | 88,662 | 88,662 | |||||||||||||||
Operating lease obligations | 1,292 | 2,284 | 1,093 | 648 | 5,317 | |||||||||||||||
Deferred compensation | 1,515 | — | 264 | 2,131 | 3,910 | |||||||||||||||
Purchase obligations | — | — | — | — | — | |||||||||||||||
Total | $ | 545,872 | $ | 220,510 | $ | 78,413 | $ | 142,004 | $ | 986,799 | ||||||||||
F-131
F-132
Consolidated Financial Statements
As of December 31, 2010 and 2009 and for the Year Ended
December 31, 2010 and for the Period From November 30, 2009
(Inception) Through December 31, 2009
G-i
Page | ||
G-1 | ||
Consolidated Financial Statements | ||
G-2 | ||
G-3 | ||
G-4 | ||
G-5 |
North American Financial Holdings, Inc.
G-1
December | ||||||||
2010 | 2009 | |||||||
(dollars and shares in thousands, except | ||||||||
per share data) | ||||||||
Assets | ||||||||
Cash and due from banks | $ | 886,925 | $ | 526,711 | ||||
Investment securities held to maturity (estimated fair value $250) | 250 | — | ||||||
Investment securities available for sale (amortized cost $483,929) | 479,466 | — | ||||||
Loans, net of deferred loan costs and fees | 1,742,747 | — | ||||||
Less: Allowance for loan losses | 753 | — | ||||||
Loans, net | 1,741,994 | — | ||||||
Other real estate owned | 70,817 | — | ||||||
Receivable from FDIC | 46,585 | — | ||||||
Indemnification asset | 91,467 | — | ||||||
Premises and equipment, net | 44,078 | — | ||||||
Goodwill | 36,616 | — | ||||||
Intangible assets, net | 15,154 | — | ||||||
Accrued interest receivable and other assets | 83,639 | 50 | ||||||
Total assets | $ | 3,496,991 | $ | 526,761 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Liabilities | ||||||||
Deposits | ||||||||
Noninterest-bearing demand | $ | 295,713 | $ | — | ||||
Interest-bearing | 1,964,384 | — | ||||||
Total deposits | 2,260,097 | — | ||||||
Federal Home Loan Bank (FHLB) advances | 243,067 | — | ||||||
Short-term borrowings | 61,969 | — | ||||||
Long-term borrowings | 22,887 | — | ||||||
Accrued interest payable and other liabilities | 27,735 | 441 | ||||||
Total liabilities | 2,615,755 | 441 | ||||||
Shareholders’ Equity | ||||||||
Preferred stock $0.01 par value: 50,000 shares authorized, 0 shares issued | — | — | ||||||
Common stock-Class A $0.01 par value: 400,000 shares authorized, 21,184 and 19,181 shares issued and outstanding | 212 | 192 | ||||||
Common stock-Class B $0.01 par value: 400,000 shares authorized, 23,736 and 8,726 shares issued and outstanding | 237 | 87 | ||||||
Additional paid in capital | 865,675 | 526,133 | ||||||
Retained earnings (accumulated deficit) | 11,938 | (92 | ) | |||||
Accumulated other comprehensive loss | (2,759 | ) | — | |||||
Noncontrolling interest | 5,933 | — | ||||||
Total shareholders’ equity | 881,236 | 526,320 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 3,496,991 | $ | 526,761 | ||||
G-2
2010 | 2009 | |||||||
(dollars in thousands) | ||||||||
Interest and dividend income | ||||||||
Loans, including fees | $ | 36,429 | $ | — | ||||
Investment securities | 2,713 | — | ||||||
Interest-bearing deposits in other banks | 3,462 | 72 | ||||||
Federal Home Loan Bank stock | 141 | — | ||||||
Total interest and dividend income | 42,745 | 72 | ||||||
Interest expense | ||||||||
Deposits | 4,656 | — | ||||||
Long-term debt-subordinated debentures | 458 | — | ||||||
Federal Home Loan Bank advances | 931 | — | ||||||
Borrowings | 189 | — | ||||||
Total interest expense | 6,234 | — | ||||||
Net interest income | 36,511 | 72 | ||||||
Provision for loan losses | 753 | — | ||||||
Net interest income after provision for loan losses | 35,758 | 72 | ||||||
Noninterest income | ||||||||
Service charges on deposit accounts | 1,992 | — | ||||||
Fees on mortgage loans originated and sold | 449 | — | ||||||
Investment advisory and trust fees | 354 | — | ||||||
Gain on acquisition of banks | 15,175 | — | ||||||
Other income | 1,689 | — | ||||||
Total noninterest income | 19,659 | — | ||||||
Noninterest expense | ||||||||
Salaries and employee benefits | 17,229 | 40 | ||||||
Net occupancy and equipment expense | 4,673 | — | ||||||
Professional fees | 11,721 | — | ||||||
Other expense | 10,798 | 174 | ||||||
Total noninterest expense | 44,421 | 214 | ||||||
Income (loss) before income taxes | 10,996 | (142 | ) | |||||
Income tax benefit | 1,041 | 50 | ||||||
Net income before attribution of noncontrolling interests | 12,037 | (92 | ) | |||||
Net income attributable to noncontrolling interests | 7 | — | ||||||
Net income attributable to North American Financial Holdings, Inc. | $ | 12,030 | $ | (92 | ) | |||
G-3
Shares | Shares | Retained | Accumulated | |||||||||||||||||||||||||||||||||
Common | Common | Additional | Earnings | Other | ||||||||||||||||||||||||||||||||
Stock | Class A | Stock | Class B | Paid in | (Accumulated | Comprehensive | Noncontrolling | Total | ||||||||||||||||||||||||||||
Class A | Stock | Class B | Stock | Capital | Deficit) | Loss | Interest | Equity | ||||||||||||||||||||||||||||
(dollars and shares in thousands) | ||||||||||||||||||||||||||||||||||||
Balance, November 30, 2009 (Inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Issuance of common stock | 19,181 | 192 | 8,726 | 87 | 526,133 | — | — | — | 526,412 | |||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (92 | ) | — | — | (92 | ) | |||||||||||||||||||||||||
Balance, December 31, 2009 | 19,181 | 192 | 8,726 | 87 | 526,133 | (92 | ) | — | — | 526,320 | ||||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 12,030 | — | 7 | 12,037 | |||||||||||||||||||||||||||
Other comprehensive loss | ||||||||||||||||||||||||||||||||||||
Net market valuation adjustment on securities available for sale, net of tax | ||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (2,759 | ) | (29 | ) | (2,788 | ) | ||||||||||||||||||||||||
Comprehensive income | — | — | — | — | — | — | — | — | 9,249 | |||||||||||||||||||||||||||
Issuance of common stock | 2,003 | 20 | 15,010 | 150 | 339,542 | — | — | — | 339,712 | |||||||||||||||||||||||||||
Origination of noncontrolling interest | — | — | — | — | — | — | — | 5,955 | 5,955 | |||||||||||||||||||||||||||
Balance, December 31, 2010 | 21,184 | $ | 212 | 23,736 | $ | 237 | $ | 865,675 | $ | 11,938 | $ | (2,759 | ) | $ | 5,933 | $ | 881,236 | |||||||||||||||||||
G-4
2010 | 2009 | |||||||
(dollars in thousands) | ||||||||
Cash flows from operating activities | ||||||||
Net income (loss) | $ | 12,037 | $ | (92 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | ||||||||
Accretion of acquired loans | (30,480 | ) | — | |||||
Depreciation and amortization | (980 | ) | — | |||||
Provision for loan losses | 752 | — | ||||||
Deferred income tax benefit (loss) | (159 | ) | — | |||||
Net amortization of investment premium/discount | 1,931 | — | ||||||
Net deferred loan costs | (216 | ) | — | |||||
Gain on acquisition of banks | (15,175 | ) | — | |||||
Mortgage loans originated for sale | (22,194 | ) | — | |||||
Proceeds from sales of mortgage loans held for sale, net of fees | 18,493 | — | ||||||
Change in accrued interest receivable and other asset | 1,336 | (50 | ) | |||||
Change in accrued interest payable and other liabilities | (7,090 | ) | 301 | |||||
Net cash (used in) provided by operating activities | (41,745 | ) | 159 | |||||
Cash flows from investing activities | ||||||||
Purchases of investment securities available for sale | (211,775 | ) | — | |||||
Sales of investment securities available for sale | 22,204 | — | ||||||
Repayments of principal and maturities of investment securities available for sale | 87,173 | — | ||||||
Cash received on TIB Financial Corp. acquisition | 54,665 | — | ||||||
Cash paid on FNB acquisition, net of cash acquired | (29,751 | ) | — | |||||
Cash received on Metro bank acquisition, net of cash paid | 75,076 | — | ||||||
Cash received on Turnberry acquisition | 57,279 | — | ||||||
Net purchase of FHLB and Federal Reserve stock | (2,849 | ) | — | |||||
Principal repayments on loans, net of loans originated or acquired | 54,338 | — | ||||||
Purchases of premises and equipment | (1,277 | ) | — | |||||
Proceeds from sales of OREO | 12,253 | — | ||||||
Net cash provided by investing activities | 117,336 | — | ||||||
Cash flows from financing activities | ||||||||
Net increase in demand, money market and savings accounts | 31,062 | — | ||||||
Net decrease in time deposits | (58,427 | ) | — | |||||
Net decrease in brokered time deposits | (314 | ) | — | |||||
Net increase in federal funds purchased and securities sold under agreements to repurchase | 4,430 | — | ||||||
Net decrease in long term repurchase agreements | (10,000 | ) | — | |||||
Net repayment of long term FHLB advances | (21,840 | ) | — | |||||
Net proceeds from issuance of common shares | 339,712 | 526,552 | ||||||
Net cash provided by financing activities | 284,623 | 526,552 | ||||||
Net increase in cash and cash equivalents | 360,214 | 526,711 | ||||||
Cash and cash equivalents | ||||||||
Beginning of period | 526,711 | — | ||||||
End of period | $ | 886,925 | $ | 526,711 | ||||
Supplemental disclosures of cash paid | ||||||||
Interest paid | $ | 7,387 | $ | — | ||||
Supplemental disclosures of noncash transactions | ||||||||
Other real estate acquired from borrowers | $ | 20,009 | $ | — |
G-5
G-6
G-7
G-8
G-9
G-10
G-11
Loss | 80% of Loss | Value of | ||||||||||
Threshold | Threshold | Indemnification Asset | ||||||||||
(dollars in thousands) | ||||||||||||
FNB | $ | 123,000 | $ | 98,400 | $ | 71,386 | ||||||
Metro | 81,000 | 64,800 | 44,191 | |||||||||
Turnberry | 28,000 | 22,400 | 21,739 | |||||||||
$ | 232,000 | $ | 185,600 | $ | 137,316 | |||||||
FNB | Metro | Turnberry | Total | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash | $ | 64,728 | $ | 79,267 | $ | 40,353 | $ | 184,348 | ||||||||
Investment securities | 40,564 | 30,333 | 3,495 | 74,392 | ||||||||||||
Loans | 389,603 | 226,826 | 152,125 | 768,554 | ||||||||||||
Other real estate owned | 20,832 | 7,547 | 5,439 | 33,818 | ||||||||||||
Core deposit and other intangible assets | 2,214 | 1,400 | 600 | 4,214 | ||||||||||||
Goodwill | 6,616 | — | — | 6,616 | ||||||||||||
Indemnification asset | 71,386 | 44,191 | 21,739 | 137,316 | ||||||||||||
Other assets | 6,315 | 3,921 | 4,392 | 14,628 | ||||||||||||
Total assets | 602,258 | 393,485 | 228,143 | 1,223,886 | ||||||||||||
G-12
FNB | Metro | Turnberry | Total | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Liabilities | ||||||||||||||||
Interest-bearing deposits | 409,614 | 263,110 | 161,209 | 833,933 | ||||||||||||
Noninterest-bearing deposits | 38,718 | 73,271 | 14,192 | 126,181 | ||||||||||||
Borrowings | 57,579 | 31,981 | 59,024 | 148,584 | ||||||||||||
Other liabilities | 1,868 | 10,312 | 6,089 | 18,269 | ||||||||||||
Total liabilities | 507,779 | 378,674 | 240,514 | 1,126,967 | ||||||||||||
Net assets acquired | 94,479 | 14,811 | (12,371 | ) | 96,919 | |||||||||||
Consideration paid (received) | 94,479 | 4,191 | (16,926 | ) | 81,744 | |||||||||||
Gains on acquisitions of banks | $ | — | $ | 10,620 | $ | 4,555 | $ | 15,175 | ||||||||
(dollars in thousands) | ||||
Fair value of assets acquired | ||||
Cash and cash equivalents | $ | 229,665 | ||
Securities available for sale | 309,320 | |||
Loans | 1,017,842 | |||
Goodwill and intangible assets, net | 41,769 | |||
Other real estate owned | 29,531 | |||
Bank officer life insurance — cash surrender value | 10,842 | |||
Premises and equipment | 43,632 | |||
Other assets | 54,582 | |||
Total assets acquired | 1,737,183 | |||
Fair value of liabilities assumed | ||||
Deposits | 1,327,663 | |||
Long-term debt and other borrowings | 208,783 | |||
Other liabilities | 22,239 | |||
Total liabilities assumed | 1,558,685 | |||
Net assets | 178,498 | |||
Less: Noncontrolling interest at fair value | 5,955 | |||
172,543 | ||||
Underwriting, due diligence and legal costs | 2,457 | |||
Purchase consideration | $ | 175,000 | ||
G-13
Amortized | Unrealized | Unrealized | Estimated | |||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Held to Maturity | ||||||||||||||||
Foreign government | $ | 250 | $ | — | $ | — | $ | 250 | ||||||||
$ | 250 | $ | — | $ | — | $ | 250 | |||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||
Available for Sale | ||||||||||||||||
U.S. Government agencies and corporations | $ | 49,497 | $ | 18 | $ | 382 | $ | 49,133 | ||||||||
States and political subdivisions — tax exempt | 5,918 | 2 | 128 | 5,792 | ||||||||||||
States and political subdivisions — taxable | 9,540 | 41 | 227 | 9,354 | ||||||||||||
Mortgage-backed securities — residential | 415,961 | 948 | 4,696 | 412,213 | ||||||||||||
Marketable equity securities | 102 | — | 28 | 74 | ||||||||||||
Corporate bonds | 2,104 | 1 | — | 2,105 | ||||||||||||
Collateralized debt obligations | 807 | — | 12 | 795 | ||||||||||||
$ | 483,929 | $ | 1,010 | $ | 5,473 | $ | 479,466 | |||||||||
Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
Estimated | Unrealized | Estimated | Unrealized | Estimated | Unrealized | |||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Available for Sale | ||||||||||||||||||||||||
U.S. Government agencies and corporations | $ | 20,725 | $ | 382 | $ | — | $ | — | $ | 20,725 | $ | 382 | ||||||||||||
States and political subdivisions — tax exempt | 5,191 | 128 | — | — | 5,191 | 128 | ||||||||||||||||||
States and political subdivisions — taxable | 8,198 | 227 | — | — | 8,198 | 227 | ||||||||||||||||||
Mortgage-backed securities — Residential | 255,676 | 4,696 | — | — | 255,676 | 4,696 | ||||||||||||||||||
Marketable equity securities | 74 | 28 | — | — | 74 | 28 | ||||||||||||||||||
Corporate bonds | — | — | — | — | — | — |
G-14
Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
Estimated | Unrealized | Estimated | Unrealized | Estimated | Unrealized | |||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Collateralized debt obligations | 795 | 12 | — | — | 795 | 12 | ||||||||||||||||||
$ | 290,659 | $ | 5,473 | $ | — | $ | — | $ | 290,659 | $ | 5,473 | |||||||||||||
Held to | Available | |||||||
Maturity | for Sale | |||||||
(dollars in thousands) | ||||||||
Due in one year or less | $ | 250 | $ | 2,290 | ||||
Due after one year through five years | — | 18,409 | ||||||
Due after five years through ten years | — | 26,104 | ||||||
Due after ten years | — | 20,376 | ||||||
Marketable equity securities | — | 74 | ||||||
Mortgage-backed securities | — | 412,213 | ||||||
$ | 250 | $ | 479,466 | |||||
(dollars in thousands) | ||||
Real estate mortgage loans | ||||
Commercial | $ | 1,020,921 | ||
Residential | 318,977 | |||
Farmland | 21,290 | |||
Construction and vacant land | 130,019 | |||
Commercial and agricultural loans | 103,524 | |||
Indirect auto loans | 28,038 | |||
Home equity loans | 104,955 | |||
Other consumer loans | 14,807 | |||
Total loans | 1,742,531 |
G-15
(dollars in thousands) | ||||
Net deferred loan costs | 216 | |||
Loans, net of deferred loan costs | $ | 1,742,747 | ||
• | Whether the loan was performing according to contractual terms at the time of acquisition; | ||
• | The loan type based on regulatory reporting guidelines, namely whether the loan was a mortgage, consumer or commercial loan; and | ||
• | The nature of collateral. |
NAFH NB | TIBB | Total | ||||||||||
(dollars in thousands) | ||||||||||||
Cash flows expected to be collected at acquisition | $ | 737,605 | $ | 1,250,636 | $ | 1,988,241 | ||||||
Accretable yield | (46,570 | ) | (276,715 | ) | (323,285 | ) | ||||||
Fair value of acquired loans at acquisition | $ | 691,035 | $ | 973,921 | $ | 1,664,956 | ||||||
(dollars in thousands) | ||||
Balance, December 31, 2009 | $ | — | ||
New loans purchased | 323,285 | |||
Accretion of income | (30,480 | ) | ||
Reclassifications from nonaccretable difference | — | |||
Disposals | — | |||
Balance, December 31, 2010 | $ | 292,805 | ||
G-16
• | The estimate of the remaining life of PCI loans which may change the amount of future interest income, and possibly principal, expected to be collected; | ||
• | The estimate of the amount of contractually required principal and interest payments over the estimated life that will not be collected (the nonaccretable difference); and | ||
• | Indices for PCI loans with variable rates of interest. |
Non PCI | Total Noncovered | |||||||||||
PCI Loans | Loans | Loans | ||||||||||
(dollars in thousands) | ||||||||||||
Real estate mortgage loans | ||||||||||||
Commercial | $ | 599,820 | $ | 18,043 | $ | 617,863 | ||||||
Residential | 213,982 | 15,918 | 229,900 | |||||||||
Farmland | 12,083 | — | 12,083 | |||||||||
Construction and vacant land | 38,956 | 1,864 | 40,820 | |||||||||
Commercial and agricultural loans | 55,741 | 15,633 | 71,374 | |||||||||
Indirect auto loans | 21,743 | 6,295 | 28,038 | |||||||||
Home equity loans | 4,353 | 27,010 | 31,363 | |||||||||
Other consumer loans | 8,805 | 6,001 | 14,806 | |||||||||
Total loans | 955,483 | 90,764 | 1,046,247 | |||||||||
Net deferred loan costs | — | 216 | 216 | |||||||||
Loans, net of deferred loan costs | $ | 955,483 | $ | 90,980 | $ | 1,046,463 | ||||||
G-17
Non PCI | Total Covered | |||||||||||
PCI Loans | Loans | Loans | ||||||||||
(dollars in thousands) | ||||||||||||
Real estate mortgage loans | ||||||||||||
Commercial | $ | 403,059 | $ | — | $ | 403,059 | ||||||
Residential | 89,077 | — | 89,077 | |||||||||
Farmland | 9,207 | — | 9,207 | |||||||||
Construction and vacant land | 89,199 | — | 89,199 | |||||||||
Commercial and agricultural loans | 29,592 | 2,558 | 32,150 | |||||||||
Home equity loans | — | 73,592 | 73,592 | |||||||||
Total loans | $ | 620,134 | $ | 76,150 | $ | 696,284 | ||||||
(dollars in thousands) | ||||
Balance, December 31, 2009 | $ | — | ||
Increase due to acquisitions | 137,316 | |||
Accretion | 736 | |||
Reimbursable losses claimed | (46,585 | ) | ||
Balance, December 31, 2010 | $ | 91,467 | ||
(dollars in thousands) | ||||
Balance, December 31, 2009 | $ | — | ||
Provision for loan losses charged to expense | 753 | |||
Loans charged off | — | |||
Recoveries of loans previously charged off | — | |||
Balance, December 31, 2010 | $ | 753 | ||
(dollars in thousands) | ||||
Balance as of December 31, 2010 | ||||
Land | $ | 13,891 | ||
Buildings and leasehold improvements | 25,133 | |||
Furniture, fixtures and equipment | 5,595 | |||
Construction in progress | 259 | |||
44,878 | ||||
Less: Accumulated depreciation | (800 | ) | ||
Premises and equipment, net | $ | 44,078 | ||
G-18
(dollars in thousands) | ||||
Years Ending December 31, | ||||
2011 | $ | 3,062 | ||
2012 | 1,996 | |||
2013 | 1,689 | |||
2014 | 1,655 | |||
2015 | 1,244 | |||
Thereafter | 15,145 | |||
$ | 24,791 | |||
Gross | ||||||||||||
Carrying | Accumulated | Net Book | ||||||||||
Amount | Amortization | Value | ||||||||||
(dollars in thousands) | ||||||||||||
Balance, December 31, 2009 | $ | — | $ | — | $ | — | ||||||
Core deposit intangible due to acquisition of NAFH NB | 4,100 | 454 | 3,646 | |||||||||
Mortgage servicing right due to acquisition of NAFH NB | 114 | 12 | 102 | |||||||||
Core deposit intangible due to acquisition of TIBB | 7,500 | 188 | 7,312 | |||||||||
Customer relationship intangible due to acquisition of TIBB | 3,500 | 87 | 3,413 | |||||||||
Trade names due to acquisition of TIBB | 770 | 89 | 681 | |||||||||
Balance, December 31, 2010 | $ | 15,984 | $ | 830 | $ | 15,154 | ||||||
(dollars in thousands) | ||||
Years ending December 31, | ||||
2011 | $ | 2,509 | ||
2012 | 2,420 | |||
2013 | 2,154 | |||
2014 | 1,686 | |||
2015 | 1,100 | |||
$ | 9,869 | |||
G-19
(dollars in thousands) | ||||
Balance, December 31, 2009 | $ | — | ||
OREO acquired through acquisitions | 63,349 | |||
Real estate acquired from borrowers | 19,721 | |||
Property sold | (12,253 | ) | ||
Balance, December 31, 2010 | $ | 70,817 | ||
(dollars in thousands) | ||||
Years Ending December 31, | ||||
2011 | $ | 1,004,708 | ||
2012 | 248,638 | |||
2013 | 70,882 | |||
2014 | 5,234 | |||
2015 | 24,048 | |||
$ | 1,353,510 | |||
G-20
Carrying | Contractual | Repricing | Rate at | |||||||||||||
Amount | Outstanding Amount | Maturity Date | Frequency | December 31, 2010 | ||||||||||||
NAFH Bank | ||||||||||||||||
$ | 5,001 | $ | 5,000 | February 2011 | Fixed | 0.51 | % | |||||||||
3,011 | 3,000 | March 2011 | Fixed | 2.12 | % | |||||||||||
3,013 | 3,000 | May 2011 | Fixed | 1.65 | % | |||||||||||
5,102 | 5,000 | June 2011 (a) | Fixed | 4.95 | % | |||||||||||
5,106 | 5,000 | June 2011 (a) | Fixed | 5.04 | % | |||||||||||
5,058 | 5,000 | July 2011 (a) | Fixed | 2.81 | % | |||||||||||
1,547 | 1,250 | September 2011 | Fixed | 2.99 | % | |||||||||||
1,077 | 1,250 | September 2011 | Fixed | 3.58 | % | |||||||||||
465 | 357 | October 2011 | Fixed | 3.91 | % | |||||||||||
5,203 | 5,000 | January 2012 (a) | Fixed | 4.56 | % | |||||||||||
571 | 476 | April 2012 | Fixed | 4.70 | % | |||||||||||
5,265 | 5,000 | May 2012 (a) | Fixed | 4.59 | % | |||||||||||
7,695 | 7,500 | March 2013 | Fixed | 2.29 | % | |||||||||||
4,308 | 4,000 | March 2013 | Fixed | 4.58 | % | |||||||||||
5,155 | 5,000 | June 2013 (a) | Fixed | 2.27 | % | |||||||||||
5,528 | 5,000 | May 2014 (a) | Fixed | 4.60 | % | |||||||||||
5,552 | 5,000 | June 2014 (a) | Fixed | 4.66 | % | |||||||||||
5,215 | 5,000 | February 2015 | Fixed | 2.83 | % | |||||||||||
5,391 | 5,000 | June 2015 | Fixed | 3.71 | % | |||||||||||
5,426 | 5,000 | July 2015 (a) | Fixed | 3.57 | % | |||||||||||
5,734 | 5,000 | June 2017 (a) | Fixed | 4.58 | % | |||||||||||
5,523 | 5,000 | November 2017 (b) | Fixed | 3.93 | % | |||||||||||
5,613 | 5,000 | July 2018 (a) | Fixed | 3.94 | % | |||||||||||
5,198 | 5,000 | July 2018 (a) | Fixed | 2.14 | % | |||||||||||
5,194 | 5,000 | July 2018 (a) | Fixed | 2.12 | % | |||||||||||
TIB Bank | ||||||||||||||||
53,502 | 50,000 | April 2013 (a) | Fixed | 3.80 | % | |||||||||||
51,790 | 50,000 | December 2011 (a) | Fixed | 4.18 | % | |||||||||||
10,586 | 10,000 | September 2012 (a) | Fixed | 4.05 | % | |||||||||||
10,009 | 10,000 | March 2011 | Fixed | 0.61 | % | |||||||||||
5,229 | 5,000 | March 2012 (a) | Fixed | 4.29 | % | |||||||||||
$ | 243,067 | $ | 230,833 | |||||||||||||
(a) | These advances have quarterly conversion dates. If the FHLB chooses to convert the advance, the Bank has the option of prepaying the entire balance without penalty. Otherwise, the advance will convert to an adjustable rate, repricing on a quarterly basis. If the FHLB does not convert the advance, it will remain at the contracted fixed rate until the maturity date. | |
(b) | This advance has a one-time conversion option in November 2012. |
G-21
Face | Carrying | |||||||||||||
Date of Offering | Amount | Amount | Interest Rate | Call Date | Maturity Date | |||||||||
September 7, 2000 | $ | 8,000 | $ | 8,865 | 10.6% Fixed | September 7, 2010 | September 7, 2030 | |||||||
July 31, 2001 | 5,000 | 3,674 | 3.87% (3 Month | July 31, 2006 | July 31, 2031 | |||||||||
LIBOR plus 358 | ||||||||||||||
basis points) | ||||||||||||||
June 23, 2006 | 20,000 | 10,348 | 1.84% (3 Month | June 23, 2011 | June 23, 2036 | |||||||||
LIBOR plus 155 | ||||||||||||||
basis points) |
Fixed Rate | Floating Rate | Total | ||||||||||
(dollars in thousands) | ||||||||||||
Due in 2011 | $ | — | $ | — | $ | — | ||||||
Due in 2012 | — | — | — | |||||||||
Due in 2013 | — | — | — | |||||||||
Due in 2014 | — | — | — | |||||||||
Thereafter | 8,865 | 14,022 | 22,887 | |||||||||
Total long-term debt | $ | 8,865 | $ | 14,022 | $ | 22,887 | ||||||
2010 | 2009 | |||||||
(dollars in thousands) | ||||||||
Current income tax provision | ||||||||
Federal | $ | 4,491 | $ | — | ||||
State | 550 | — | ||||||
5,041 | — | |||||||
G-22
2010 | 2009 | |||||||
(dollars in thousands) | ||||||||
Deferred tax benefit | ||||||||
Federal | (4,949 | ) | (41 | ) | ||||
State | (1,133 | ) | (9 | ) | ||||
(6,082 | ) | (50 | ) | |||||
$ | (1,041 | ) | $ | (50 | ) | |||
G-23
Well Capitalized | Adequately Capitalized | |||||||||||||||||||||||
Requirement | Requirement | Actual | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Tier 1 Capital (to Average Assets) | ||||||||||||||||||||||||
Consolidated | N/A | N/A | ³$ | 137,767 | ³ | 4.0 | % | $ | 838,475 | 24.3 | % | |||||||||||||
TIBB | N/A | N/A | ³ | 67,763 | ³ | 4.0 | % | 139,596 | 8.2 | % | ||||||||||||||
TIB Bank | ³$ | 84,285 | ³ | 5.0 | % | ³ | 67,428 | ³ | 4.0 | % | 136,764 | 8.1 | % | |||||||||||
NAFH NB | ³ | 60,119 | ³ | 5.0 | % | ³ | 48,095 | ³ | 4.0 | % | 145,632 | 12.1 | % | |||||||||||
Tier 1 Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | N/A | N/A | $ | 80,201 | ³ | 4.0 | % | $ | 838,475 | 41.8 | % | |||||||||||||
TIBB | N/A | N/A | 41,750 | ³ | 4.0 | % | 139,596 | 13.4 | % | |||||||||||||||
TIB Bank | ³$ | 62,616 | ³ | 6.0 | % | 41,744 | ³ | 4.0 | % | 136,764 | 13.1 | % | ||||||||||||
NAFH NB | ³ | 51,167 | ³ | 6.0 | % | 34,112 | ³ | 4.0 | % | 145,632 | 17.1 | % | ||||||||||||
Total Capital (to Risk Weighted Assets) | ||||||||||||||||||||||||
Consolidated | N/A | N/A | ³$ | 160,402 | ³ | 8.0 | % | $ | 839,280 | 41.9 | % | |||||||||||||
TIBB | N/A | N/A | ³ | 83,501 | ³ | 8.0 | % | 140,027 | 13.4 | % | ||||||||||||||
TIB Bank | ³$ | 104,360 | ³ | 10.0 | % | ³ | 83,488 | ³ | 8.0 | % | 137,195 | 13.1 | % | |||||||||||
NAFH NB | ³ | 85,279 | ³ | 10.0 | % | ³ | 68,223 | ³ | 8.0 | % | 146,006 | 17.1 | % |
G-24
Fixed Rate | Variable Rate | |||||||
(dollars in thousands) | ||||||||
Commitments to make loans | $ | 42,236 | $ | 16,627 | ||||
Unfunded commitments under lines of credit | 21,179 | 99,850 |
G-25
Level 1 | Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. | ||
Level 2 | Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | ||
Level 3 | Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. |
Fair Value Measurements Using | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | ||||||||||||||||
Markets for | Significant Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Assets | Inputs | Inputs | ||||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||||||
(dollars in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
U.S. Government agencies and corporations | $ | 49,133 | $ | — | $ | 49,133 | $ | — | ||||||||
States and political subdivisions — tax exempt | 5,792 | — | 5,792 | — | ||||||||||||
States and political subdivisions — taxable | 9,353 | — | 9,353 | — | ||||||||||||
Mortgage-backed securities — residential | 412,213 | — | 412,213 | — | ||||||||||||
Marketable equity securities | 74 | — | 74 | — | ||||||||||||
Corporate bonds | 2,105 | — | 2,105 | — |
G-26
Fair Value Measurements Using | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | ||||||||||||||||
Markets for | Significant Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Assets | Inputs | Inputs | ||||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||||||
(dollars in thousands) | ||||||||||||||||
Collateralized debt obligations | 796 | — | — | 796 | ||||||||||||
Available for sale securities | $ | 479,466 | $ | — | $ | 478,670 | $ | 796 | ||||||||
Fair Value Measurements Using | ||||||||||||
Quoted Prices in | ||||||||||||
Active Markets for | Significant Other | Significant | ||||||||||
Identical Assets | Observable Inputs | Unobservable | ||||||||||
(Level 1) | (Level 2) | Inputs (Level 3) | ||||||||||
(dollars in thousands) | ||||||||||||
Assets | ||||||||||||
Other real estate owned | $ | — | $ | — | $ | 70,817 | ||||||
Other repossessed assets | — | 137 | — |
2010 | 2009 | |||||||||||||||
Carrying | Estimated Fair | Carrying | Estimated Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Financial Assets | ||||||||||||||||
Cash and cash equivalents | $ | 886,925 | $ | 886,925 | $ | 526,711 | $ | 526,711 | ||||||||
Investment securities available for sale | 479,466 | 479,466 | — | — | ||||||||||||
Investment securities held to maturity | 250 | 250 | — | — | ||||||||||||
Loans, net | 1,741,994 | 1,781,181 | — | — | ||||||||||||
FDIC indemnification asset | 91,467 | 91,467 | — | — | ||||||||||||
Federal reserve, federal home loan bank | — | — | ||||||||||||||
and independent bankers’ bank stock | 23,465 | 23,465 | — | — | ||||||||||||
Accrued interest receivable | 8,286 | 8,286 | — | — | ||||||||||||
Financial Liabilities | ||||||||||||||||
Noncontractual deposits | $ | 906,742 | $ | 906,742 | $ | — | $ | — | ||||||||
Contractual deposits | 1,353,510 | 1,355,099 | — | — | ||||||||||||
Federal home loan bank advances | 243,067 | 242,522 | — | — | ||||||||||||
Short-term borrowings | 61,969 | 61,969 | — | — | ||||||||||||
Subordinated debentures | 22,887 | 25,267 | — | — | ||||||||||||
Accrued interest payable | 9,334 | 9,334 | — | — |
G-27
G-28
EASY WAYS TO VOTE
OF SHAREHOLDERS
July __, 2011
common stock for the upcoming Special Meeting of Shareholders.
1. | Vote by Telephone —Call toll-free from the U.S. or Canada at[xxx-xxx-xxx], on a touch-tone telephone. Please follow the simple instructions provided. |
2. | Vote by Internet —Please access[https://xxxxxxxx], and follow the simple instructions provided. Please note you must type an “s” after http. |
CONTROL NUMBER: | |||||
Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner
as if you had executed a proxy card.
3. | Vote by Mail —If you do not have access to a touch-tone telephone or to the Internet, please sign, date and return the proxy card in the envelope provided, or mail to: Green Bankshares, Inc. c/o Innisfree M&A Incorporated, FDR Station, P.O. Box 5154, New York, NY 10150-5154. |
1. | Approval of the original issuance and certain subsequent issuances of shares of the Company’s Common Stock under the terms of the Investment Agreement, dated May 5, 2011, among Green Bankshares, Inc., GreenBank and North American Financial Holdings, Inc. |
2. | Approval of the amendment to the Company’s Charter to increase the number of authorized shares of the Company’s Common Stock from twenty million (20,000,000) to three hundred million (300,000,000). |
2
3. | Approval of the amendment to the Company’s Charter to decrease the par value of the Company’s Common Stock from $2.00 per share to $0.01 per share. |
4. | Approval of the amendment to the Company’s Charter to exempt North American Financial Holdings, Inc. and its affiliates and associates from Section 9 of the Charter. |
5. | Approval of the amendment to the Company’s Charter to remove Section 8(j) of the Charter so that the Tennessee Control Share Acquisition Act will not apply to the Company and its shareholders. |
6. | Approval of the merger of GreenBank with and into a subsidiary of North American Financial Holdings, Inc. |
7. | Approval, on an advisory and non-binding basis, of the compensation to be received by the Company’s named executive officers in connection with the issuance of shares of Common Stock to North American Financial Holdings, Inc. under the terms of the Investment Agreement. |
8. | Approval of grant of discretionary authority to vote to adjourn the Special Meeting, if necessary, in order to solicit additional proxies in the event that there are not sufficient affirmative votes present at the Special Meeting to approve the proposals that may be considered and acted upon at the Special Meeting. |
Date: | |||
Signature: | |||
Signature: | |||
Title(s): | |||
3