x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Washington
(State
or other jurisdiction of
incorporation
or organization)
|
91-1815009
(IRS
Employer Identification No.)
|
FINANCIAL
INFORMATION
|
3
|
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
3
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
SEPTEMBER
30, 2007 AND DECEMBER 31, 2006
|
3
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
|
4
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE
MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
|
5
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
NINE
MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
|
6
|
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
7
|
|
ITEM
2.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
13
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
21
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
21
|
PART
II
|
OTHER
INFORMATION
|
21
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
22
|
ITEM
1A.
|
RISK
FACTORS
|
22
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
22
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
22
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
22
|
ITEM
5.
|
OTHER
INFORMATION
|
22
|
ITEM
6.
|
EXHIBITS
|
22
|
SIGNATURES
|
22
|
September 30, 2007
|
December 31, 2006
|
||||||
Assets
|
|||||||
Cash
and due from banks
|
$
|
16,611
|
$
|
14,964
|
|||
Interest
bearing balances with banks
|
2,881
|
5,479
|
|||||
Federal
funds sold
|
7,920
|
20,345
|
|||||
Investment
securities available for sale
|
42,388
|
36,608
|
|||||
Investment
securities held-to-maturity
|
5,073
|
6,104
|
|||||
Federal
Home Loan Bank stock, at cost
|
1,858
|
1,858
|
|||||
Loans
held for sale
|
17,927
|
14,368
|
|||||
Loans
|
435,857
|
424,801
|
|||||
Allowance
for credit losses
|
4,959
|
4,033
|
|||||
Loans,
net
|
430,898
|
420,768
|
|||||
Premises
and equipment
|
13,550
|
11,537
|
|||||
Accrued
interest receivable
|
3,365
|
3,006
|
|||||
Cash
surrender value of life insurance
|
9,963
|
9,714
|
|||||
Goodwill
|
11,282
|
11,282
|
|||||
Other
intangible assets
|
1,764
|
1,871
|
|||||
Other
assets
|
2,998
|
4,480
|
|||||
Total
assets
|
$
|
568,478
|
$
|
562,384
|
|||
Liabilities
and Shareholders' Equity
|
|||||||
Deposits:
|
|||||||
Non-interest
bearing
|
$
|
93,956
|
$
|
91,657
|
|||
Interest-bearing
|
378,539
|
375,184
|
|||||
Total
deposits
|
472,495
|
466,841
|
|||||
Accrued
interest payable
|
1,310
|
1,415
|
|||||
Secured
borrowings
|
1,548
|
1,906
|
|||||
Long-term
borrowings
|
21,500
|
21,500
|
|||||
Junior
subordinated debentures
|
13,403
|
13,403
|
|||||
Other
liabilities
|
3,607
|
8,335
|
|||||
Total
liabilities
|
513,863
|
513,400
|
|||||
Commitments
and Contingencies (Note 6)
|
|||||||
Shareholders'
Equity
|
|||||||
Common
Stock (par value $1); 25,000,000 shares authorized; 6,581,445 shares
issued and outstanding at September 30, 2007 and 6,524,407 at
December 31, 2006
|
6,581
|
6,524
|
|||||
Additional
paid-in capital
|
26,898
|
26,047
|
|||||
Retained
earnings
|
21,462
|
16,731
|
|||||
Accumulated
other comprehensive loss
|
(326
|
)
|
(318
|
)
|
|||
Total
shareholders' equity
|
54,615
|
48,984
|
|||||
Total
liabilities and shareholders' equity
|
$
|
568,478
|
$
|
562,384
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Interest
and dividend income
|
|||||||||||||
Loans
|
$
|
9,574
|
$
|
8,905
|
$
|
28,661
|
$
|
24,883
|
|||||
Investment
securities and FHLB dividends
|
507
|
432
|
1,478
|
1,169
|
|||||||||
Deposits
with banks and federal funds sold
|
250
|
428
|
349
|
602
|
|||||||||
Total
interest and dividend income
|
10,331
|
9,765
|
30,488
|
26,654
|
|||||||||
Interest
Expense
|
|||||||||||||
Deposits
|
3,566
|
3,042
|
10,127
|
7,630
|
|||||||||
Other
borrowings
|
434
|
468
|
1,712
|
1,237
|
|||||||||
Total
interest expense
|
4,000
|
3,510
|
11,839
|
8,867
|
|||||||||
Net
Interest Income
|
6,331
|
6,255
|
18,649
|
17,787
|
|||||||||
Provision
for credit losses
|
60
|
550
|
422
|
550
|
|||||||||
Net
interest income after provision for credit
losses
|
6,271
|
5,705
|
18,227
|
17,237
|
|||||||||
Non-interest
Income
|
|||||||||||||
Service
charges on deposits
|
374
|
347
|
1,106
|
1,103
|
|||||||||
Gain
on sales of loans
|
422
|
535
|
1,377
|
1,421
|
|||||||||
Loss
on sale of investments available for sale
|
—
|
—
|
(20
|
)
|
—
|
||||||||
Gain
on sale of foreclosed real estate
|
—
|
—
|
—
|
5
|
|||||||||
Loss
on sale of premises and equipment
|
—
|
(5
|
)
|
(18
|
)
|
(3
|
)
|
||||||
Other
operating income
|
267
|
214
|
713
|
600
|
|||||||||
Total
non-interest income
|
1,063
|
1,091
|
3,158
|
3,126
|
|||||||||
Non-interest
Expense
|
|||||||||||||
Salaries
and employee benefits
|
3,065
|
2,758
|
8,983
|
7,908
|
|||||||||
Occupancy
and equipment
|
644
|
610
|
1,858
|
1,763
|
|||||||||
Other
|
1,308
|
1,268
|
4,180
|
3,745
|
|||||||||
Total
non-interest expense
|
5,017
|
4,636
|
15,021
|
13,416
|
|||||||||
Income
before income taxes
|
2,317
|
2,160
|
6,364
|
6,947
|
|||||||||
Provision
for income taxes
|
686
|
617
|
1,633
|
2,069
|
|||||||||
Net
Income
|
$
|
1,631
|
$
|
1,543
|
$
|
4,731
|
$
|
4,878
|
|||||
Comprehensive
Income
|
$
|
1,904
|
$
|
1,673
|
$
|
4,723
|
$
|
4,778
|
|||||
Earnings
per common share:
|
|||||||||||||
Basic
|
$
|
0.25
|
$
|
0.24
|
$
|
0.72
|
$
|
0.
75
|
|||||
Diluted
|
0.24
|
0.23
|
0.71
|
0.74
|
|||||||||
Weighted
Average shares outstanding:
|
|||||||||||||
Basic
|
6,581,445
|
6,480,362
|
6,572,195
|
6,479,645
|
|||||||||
Diluted
|
6,667,559
|
6,589,900
|
6,672,034
|
6,580,766
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
income
|
$
|
4,731
|
$
|
4,878
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Provision
for credit losses
|
422
|
550
|
|||||
Depreciation
and amortization
|
1,060
|
928
|
|||||
Origination
of loans held for sale
|
(98,848
|
)
|
(73,506
|
)
|
|||
Proceeds
of loans held for sale
|
96,651
|
77,028
|
|||||
Gain
on sales of loans
|
(1,362
|
)
|
(1,421
|
)
|
|||
Loss
on sale of investments available for sale
|
20
|
—
|
|||||
Gain
on sale of foreclosed real estate
|
—
|
(5
|
)
|
||||
Loss
on sale of premises and equipment
|
18
|
3
|
|||||
Increase
in accrued interest receivable
|
(359
|
)
|
(440
|
)
|
|||
Increase
(decrease) in accrued interest payable
|
(105
|
)
|
625
|
||||
Other,
net
|
1,455
|
(1,483
|
)
|
||||
Net
cash provided by operating activities
|
3,683
|
7,157
|
|||||
INVESTING
ACTIVITIES
|
|||||||
Net
(increase) decrease in federal funds sold
|
12,425
|
(31,485
|
)
|
||||
Net
(increase) decrease in interest bearing balances with
banks
|
2,598
|
(5,119
|
)
|
||||
Purchase
of securities available for sale
|
(12,752
|
)
|
(7,261
|
)
|
|||
Proceeds
from maturities of investments held to maturity
|
201
|
253
|
|||||
Proceeds
from sales of securities available for sale
|
805
|
—
|
|||||
Proceeds
from maturities of securities available for sale
|
6,922
|
1,608
|
|||||
Proceeds
from sales of government guaranteed loans
|
301
|
—
|
|||||
Net
increase in loans
|
(10,862
|
)
|
(7,410
|
)
|
|||
Proceeds
from sales of foreclosed real estate
|
—
|
42
|
|||||
Additions
to premises and equipment
|
(3,061
|
)
|
(2,040
|
)
|
|||
Proceeds
from sales of premises and equipment
|
190
|
4
|
|||||
Deposit
assumption and transfer
|
—
|
(1,268
|
)
|
||||
Net
cash used in investing activities
|
(3,233
|
)
|
(52,676
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Net
increase in deposits
|
5,654
|
53,109
|
|||||
Net
decrease in short-term borrowings
|
—
|
(3,985
|
)
|
||||
Net
decrease in secured borrowings
|
(358
|
)
|
(229
|
)
|
|||
Proceeds
from issuance of long-term borrowings
|
—
|
2,000
|
|||||
Repayments
of long-term borrowings
|
—
|
(5,000
|
)
|
||||
Proceeds
from junior subordinated debentures
|
—
|
8,248
|
|||||
Issuance
of common stock
|
794
|
243
|
|||||
Payment
of cash dividends
|
(4,893
|
)
|
(4,719
|
)
|
|||
Net
cash provided by financing activities
|
1,197
|
49,667
|
|||||
Net
increase in cash and due from banks
|
1,647
|
4,148
|
|||||
Cash
and due from Banks
|
|||||||
Beginning
of period
|
14,964
|
11,223
|
|||||
End
of period
|
$
|
16,611
|
$
|
15,371
|
|||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|||||||
Cash
payments for:
|
|||||||
Interest
|
$
|
11,944
|
$
|
8,242
|
|||
Income
taxes
|
1,525
|
1,667
|
|||||
SUPPLEMENTAL
SCHEDULE OF NONCASH INVESTING ACTIVITIES
|
|||||||
Change
in fair value of securities available for sale, net of tax
|
$
|
(8
|
)
|
$
|
(100
|
)
|
|
Transfer
of securities held to maturity to available for sale
|
825
|
—
|
|||||
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
||||||||||||
Balance
January 1, 2006
|
$
|
6,464
|
$
|
25,386
|
$
|
15,073
|
($323
|
)
|
$
|
46,600
|
||||||
Other
comprehensive income:
|
||||||||||||||||
Net
income
|
4,878
|
4,878
|
||||||||||||||
Change
in fair value of securities available for sale, net
|
(100
|
)
|
(100
|
)
|
||||||||||||
Comprehensive
income
|
4,778
|
|||||||||||||||
Issuance
of common stock
|
16
|
227
|
243
|
|||||||||||||
Stock
compensation expense
|
23
|
23
|
||||||||||||||
|
|
|
|
|
||||||||||||
Balance
September 30, 2006
|
$
|
6,480
|
$
|
25,636
|
$
|
19,951
|
($423
|
)
|
$
|
51,644
|
||||||
Balance
January 1, 2007
|
$
|
6,524
|
$
|
26,047
|
$
|
16,731
|
($318
|
)
|
$
|
48,984
|
||||||
Other
comprehensive income:
|
||||||||||||||||
Net
income
|
4,731
|
4,731
|
||||||||||||||
Change
in fair value of securities available
for sale, net
|
(8
|
)
|
(8
|
)
|
||||||||||||
Comprehensive
income
|
4,723
|
|||||||||||||||
Issuance
of common stock
|
25
|
395
|
420
|
|||||||||||||
Stock
options exercised
|
32
|
342
|
374
|
|||||||||||||
Stock
compensation expense
|
66
|
66
|
||||||||||||||
Tax
benefit from exercise of stock options
|
48
|
48
|
||||||||||||||
|
|
|
|
|
||||||||||||
Balance
September 30, 2007
|
$
|
6,581
|
$
|
26,898
|
$
|
21,462
|
($326
|
)
|
$
|
54,615
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Basic:
|
|||||||||||||
Net
income
|
$
|
1,631,000
|
$
|
1,543,000
|
$
|
4,731,000
|
$
|
4,878,000
|
|||||
Weighted
average shares outstanding
|
6,581,445
|
6,480,362
|
6,572,195
|
6,479,645
|
|||||||||
Basic
earnings per share
|
$
|
0.25
|
$
|
0.24
|
$
|
0.72
|
$
|
0.75
|
|||||
Diluted:
|
|||||||||||||
Net
income
|
$
|
1,631,000
|
$
|
1,543,000
|
$
|
4,731,000
|
$
|
4,878,000
|
|||||
Weighted
average shares outstanding
|
6,581,445
|
6,480,362
|
6,572,195
|
6,479,645
|
|||||||||
Effect
of dilutive stock options
|
86,114
|
109,538
|
99,839
|
101,120
|
|||||||||
Weighted
average shares outstanding assuming dilution
|
6,667,559
|
6,589,900
|
6,672,034
|
6,580,766
|
|||||||||
Diluted
earnings per share
|
$
|
0.24
|
$
|
0.23
|
$
|
0.71
|
$
|
0.74
|
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
|||||||||
Securities
Held to Maturity
|
|||||||||||||
September
30, 2007
|
|||||||||||||
Mortgage-backed
securities
|
$
|
805
|
$
|
—
|
$
|
7
|
$
|
798
|
|||||
State
and municipal securities
|
4,268
|
36
|
13
|
4,291
|
|||||||||
Total
|
$
|
5,073
|
$
|
36
|
$
|
20
|
$
|
5,089
|
December
31, 2006
|
|||||||||||||
Mortgage-backed
securities
|
$
|
949
|
$
|
—
|
$
|
6
|
$
|
943
|
|||||
State
and municipal securities
|
5,155
|
38
|
35
|
5,158
|
|||||||||
Total
|
$
|
6,104
|
$
|
38
|
$
|
41
|
$
|
6,101
|
Securities Available for Sale | |||||||||||||
September
30, 2007
|
|||||||||||||
U.S.
Government securities
|
$
|
4,842
|
$
|
32
|
$
|
12
|
$
|
4,862
|
|||||
State
and municipal securities
|
15,593
|
67
|
173
|
15,487
|
|||||||||
Mortgage-backed
securities
|
17,870
|
18
|
261
|
17,627
|
|||||||||
Corporate
securities
|
1,536
|
--
|
27
|
1,509
|
|||||||||
Mutual
funds
|
3,041
|
--
|
138
|
2,903
|
|||||||||
Total
|
$
|
42,882
|
$
|
117
|
$
|
611
|
$
|
42,388
|
December
31, 2006
|
|||||||||||||
U.S.
Government securities
|
$
|
8,346
|
$
|
22
|
$
|
57
|
$
|
8,311
|
|||||
State
and municipal securities
|
13,719
|
69
|
169
|
13,619
|
|||||||||
Mortgage-backed
securities
|
10,434
|
27
|
229
|
10,232
|
|||||||||
Corporate
securities
|
1,550
|
—
|
38
|
1,512
|
|||||||||
Mutual
funds
|
3,041
|
—
|
107
|
2,934
|
|||||||||
Total
|
$
|
37,090
|
$
|
118
|
$
|
600
|
$
|
36,608
|
Three
Months
Ended
September 30,
|
Nine
Months
Ended
September 30,
|
Twelve
Months
Ended
Ended December 31,
|
||||||||||||||
2007
|
2006
|
2007
|
2006
|
2006
|
||||||||||||
Balance
at beginning of period
|
$
|
4,475
|
$
|
5,233
|
$
|
4,033
|
$
|
5,296
|
$
|
5,296
|
||||||
Provision
for credit losses
|
60
|
550
|
422
|
550
|
625
|
|||||||||||
Charge-offs
|
(26
|
)
|
(1,838
|
)
|
(74
|
)
|
(1,942
|
)
|
(1,945
|
)
|
||||||
Recoveries
|
450
|
9
|
578
|
50
|
57
|
|||||||||||
Net
(charge-offs) recoveries
|
424
|
(1,829
|
)
|
504
|
(1,892
|
)
|
(1,888
|
)
|
||||||||
Balance
at end of period
|
$
|
4,959
|
$
|
3,954
|
$
|
4,959
|
$
|
3,954
|
$
|
4,033
|
Grant
period ended
|
Expected
Life
|
Risk
Free
Interest Rate
|
Expected
Volatility
|
Dividend
Yield
|
Average
Fair Value
|
|||||||||||
September
30, 2007
|
6.5
years
|
4.83
|
%
|
15.65
|
%
|
4.75
|
%
|
$
|
1.86
|
|||||||
September
30, 2006
|
6.5
years
|
4.97
|
%
|
16.53
|
%
|
4.83
|
%
|
$
|
1.88
|
Shares
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual
Term ( Years)
|
Aggregate
Intrinsic
Value
|
||||||||||
September 30,
2007
|
|||||||||||||
Outstanding
beginning of period
|
699,729
|
$
|
13.70
|
||||||||||
Granted
|
77,250
|
15.79
|
|||||||||||
Exercised
|
(32,026
|
)
|
11.69
|
||||||||||
Forfeited
|
(94,100
|
)
|
16.60
|
||||||||||
Expired
|
(1,700
|
)
|
5.88
|
||||||||||
Outstanding
end of period
|
649,153
|
$
|
13.65
|
5.7
|
$
|
1,038
|
|||||||
Exercisable
end of period
|
492,895
|
$
|
13.28
|
5.2
|
$
|
971
|
|||||||
September
30, 2006
|
|||||||||||||
Outstanding
beginning of period
|
687,674
|
$
|
13.28
|
||||||||||
Granted
|
57,000
|
15.13
|
|||||||||||
Exercised
|
(900
|
)
|
11.11
|
||||||||||
Forfeited
|
—
|
—
|
|||||||||||
Outstanding
end of period
|
743,774
|
$
|
13.43
|
6.2
|
$
|
3,253
|
|||||||
Exercisable
end of period
|
615,968
|
$
|
13.34
|
5.9
|
$
|
2,750
|
2007
|
2006
|
||||||||||||
|
Shares
|
Weighted
Average Fair
Value
|
Shares
|
Weighted
Average Fair
Value
|
|||||||||
Non-vested
beginning of period
|
129,206
|
$
|
2.37
|
144,006
|
$
|
2.00
|
|||||||
Granted
|
77,250
|
1.86
|
57,000
|
1.82
|
|||||||||
Vested
|
(32,898
|
)
|
2.61
|
(73,200
|
)
|
1.27
|
|||||||
Forfeited
|
(17,300
|
)
|
2.02
|
—
|
—
|
||||||||
Non-vested
end of period
|
156,258
|
$
|
2.10
|
127,806
|
$
|
2.36
|
|
2007
|
|
|
2006
|
|
||||||||||||||
|
|
Interest
|
|
|
Interest
|
|
|||||||||||||
(dollars
in thousands)
|
Average
|
Income
|
Avg
|
Average
|
Income
|
Avg
|
|||||||||||||
|
Balance
|
(Expense)
|
Rate
|
Balance
|
(Expense)
|
Rate
|
|||||||||||||
Interest
Earning Assets
|
|||||||||||||||||||
Loans
(1)
|
$
|
455,395
|
$
|
28,784*
|
8.43
|
%
|
$
|
411,084
|
$
|
24,961*
|
8.10
|
%
|
|||||||
Taxable
securities
|
25,165
|
948
|
5.02
|
21,505
|
686
|
4.25
|
|||||||||||||
Tax-exempt
securities
|
17,550
|
798*
|
6.06
|
16,113
|
732*
|
6.06
|
|||||||||||||
Federal
Home Loan Bank Stock
|
1,858
|
3
|
.22
|
1,858
|
—
|
—
|
|||||||||||||
Interest
earning balances with banks
|
9,086
|
349
|
5.12
|
15,766
|
602
|
5.09
|
|||||||||||||
Total
interest earning assets
|
$
|
509,054
|
$
|
30,882
|
8.09
|
%
|
$
|
466,326
|
$
|
26,981
|
7.71
|
%
|
|||||||
Cash
and due from banks
|
12,229
|
12,095
|
|||||||||||||||||
Bank
premises and equipment (net)
|
12,900
|
10,981
|
|||||||||||||||||
Other
assets
|
28,542
|
25,947
|
|||||||||||||||||
Allowance
for credit losses
|
(4,489
|
)
|
(5,252
|
)
|
|||||||||||||||
Total
assets
|
$
|
558,236
|
$
|
510,097
|
|||||||||||||||
Interest
Bearing Liabilities
|
|||||||||||||||||||
Savings
and interest bearing demand
|
$
|
192,146
|
$
|
(3,756
|
)
|
2.61
|
%
|
$
|
196,078
|
$
|
(3,348
|
)
|
2.28
|
%
|
|||||
Time
deposits
|
177,604
|
(6,371
|
)
|
4.78
|
141,494
|
(4,282
|
)
|
4.04
|
|||||||||||
Total
deposits
|
369,750
|
(10,127
|
)
|
3.65
|
337,572
|
(7,630
|
)
|
3.01
|
|||||||||||
Short-term
borrowings
|
7,834
|
(324
|
)
|
5.51
|
1,843
|
(74
|
)
|
5.35
|
|||||||||||
Long-term
borrowings
|
21,500
|
(619
|
)
|
3.84
|
23,629
|
(660
|
)
|
3.72
|
|||||||||||
Secured
borrowings
|
1,548
|
(84
|
)
|
7.24
|
2,035
|
(106
|
)
|
6.95
|
|||||||||||
Junior
subordinated debentures
|
13,403
|
(685
|
)
|
6.81
|
8,237
|
(397
|
)
|
6.43
|
|||||||||||
Total
borrowings
|
44,285
|
(1,712
|
)
|
5.15
|
35,744
|
(1,237
|
)
|
4.61
|
|||||||||||
Total
interest-bearing liabilities
|
$
|
414,035
|
$
|
(11,839
|
)
|
3.81
|
%
|
$
|
373,316
|
$
|
(8,867
|
)
|
3.17
|
%
|
|||||
Demand
deposits
|
87,483
|
83,998
|
|||||||||||||||||
Other
liabilities
|
5,025
|
3,828
|
|||||||||||||||||
Shareholders’
equity
|
51,693
|
48,955
|
|||||||||||||||||
Total
liabilities and shareholders’ equity
|
$
|
558,236
|
$
|
510,097
|
|||||||||||||||
Net
interest income
|
$
|
19,043*
|
$
|
18,114*
|
|||||||||||||||
Net
interest spread
|
4.99
|
%
|
5.18
|
%
|
|||||||||||||||
Net
interest margin
|
4.88
|
%
|
5.09
|
%
|
|||||||||||||||
Tax
equivalent adjustment
|
$
|
394*
|
$
|
327*
|
ANALYSIS
OF NON-PERFORMING ASSETS
|
||||||||||
September 30
2007
|
December 31,
2006
|
September 30,
2006
|
||||||||
(in
thousands)
|
||||||||||
Accruing
loans past due 90 days or more
|
$
|
2,581
|
$
|
376
|
$
|
—
|
||||
Non-accrual
loans
|
621
|
7,335
|
6,698
|
|||||||
Foreclosed
real estate
|
—
|
—
|
—
|
|||||||
TOTAL
|
$
|
3,202
|
$
|
7,711
|
$
|
6,698
|
September 30,
2007
|
December 31,
2006
|
||||||
Commercial
and industrial
|
$
|
110,179
|
$
|
108,614
|
|||
Agricultural
|
15,340
|
24,229
|
|||||
Real
estate mortgage
|
93,624
|
91,598
|
|||||
Real
estate construction
|
87,988
|
87,063
|
|||||
Real
estate commercial
|
137,587
|
117,608
|
|||||
Installment
|
7,100
|
8,150
|
|||||
Credit
cards and other
|
2,575
|
2,508
|
|||||
Less
unearned income
|
(609
|
)
|
(601
|
)
|
|||
Total
Loans
|
453,784
|
439,169
|
|||||
Allowance
for credit losses
|
(4,959
|
)
|
(4,033
|
)
|
|||
Net
Loans
|
$
|
448,825
|
$
|
435,136
|
PACIFIC
FINANCIAL CORPORATION
|
|||
DATED:
November 9, 2007
|
By:
|
/s/
Dennis
A. Long
|
|
Dennis
A. Long
|
|||
Chief
Executive Officer
|
|||
By:
|
/s/
Denise
Portmann
|
||
Denise
Portmann
|
|||
Chief
Financial Officer
|
EXHIBIT
|
||
10.1
|
Executive
Supplemental Compensation Agreement effective as of January 1, 2007,
between the Bank of the Pacific and Dennis A. Long.
|
|
10.2
|
Executive
Supplemental Compensation Agreement effective as of January 1, 2007,
between the Bank of the Pacific and John G. Van Dijk.
|
|
10.3
|
Executive
Supplemental Compensation Agreement effective as of January 1, 2007,
between the Bank of the Pacific and Bruce D.
MacNaughton.
|
|
10.4
|
Executive
Supplemental Compensation Agreement effective as of January 1, 2007,
between the Bank of the Pacific and Denise J. Portmann.
|
|
31.1
|
Certification
of CEO under Rule 13a - 14(a) of the Exchange Act.
|
|
Certification
of CFO under Rule 13a - 14(a) of the Exchange Act.
|
||
32
|
Certification
of CEO and CFO under 18 U.S.C. Section
1350.
|