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.) |
||
1101
S. Boone Street
Aberdeen,
Washington 98520-5244
(360)
533-8870
(Address,
including zip code, and telephone number,
including
area code, of Registrant's principal executive offices)
|
PART
I
|
FINANCIAL
INFORMATION
|
3
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
3
|
CONDENSED
CONSOLIDATED BALANCE SHEETS JUNE
30, 2008 AND DECEMBER 31, 2007
|
3
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME THREE
AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
|
4
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS SIX
MONTHS ENDED JUNE 30, 2008 AND 2007
|
5
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2008 AND 2007
|
6
|
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
7
|
|
ITEM
2.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
|
14
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
23
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
23
|
PART
II
|
OTHER
INFORMATION
|
24
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
24
|
ITEM
1A.
|
RISK
FACTORS
|
24
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
|
24
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
24
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
24
|
ITEM
5.
|
OTHER
INFORMATION
|
24
|
ITEM
6.
|
EXHIBITS
|
24
|
SIGNATURES
|
25
|
PART
I - FINANCIAL INFORMATION
|
||||||
ITEM
1 - FINANCIAL STATEMENTS
|
PACIFIC
FINANCIAL CORPORATION
Condensed
Consolidated Balance Sheets
June
30, 2008 and December 31, 2007
(Dollars
in thousands) (Unaudited)
|
|||||||
June
30,
2008
|
December
31,
2007
|
||||||
Assets
|
|||||||
Cash
and due from banks
|
$
|
14,893
|
$
|
15,044
|
|||
Interest
bearing balances with banks
|
466
|
253
|
|||||
Investment
securities available-for-sale
|
44,719
|
42,912
|
|||||
Investment
securities held-to-maturity
|
4,619
|
4,329
|
|||||
Federal
Home Loan Bank stock, at cost
|
2,286
|
1,858
|
|||||
Loans
held for sale
|
15,374
|
17,162
|
|||||
Loans
|
455,789
|
438,911
|
|||||
Allowance
for credit losses
|
6,654
|
5,007
|
|||||
Loans,
net
|
449,135
|
433,904
|
|||||
Premises
and equipment
|
16,842
|
15,427
|
|||||
Foreclosed
real estate
|
280
|
—
|
|||||
Accrued
interest receivable
|
2,580
|
3,165
|
|||||
Cash
surrender value of life insurance
|
15,415
|
15,111
|
|||||
Goodwill
|
11,282
|
11,282
|
|||||
Other
intangible assets
|
1,658
|
1,728
|
|||||
Other
assets
|
3,518
|
3,412
|
|||||
Total
assets
|
$
|
583,067
|
$
|
565,587
|
|||
Liabilities
and Shareholders' Equity
|
|||||||
Deposits:
|
|||||||
Non-interest
bearing
|
$
|
87,946
|
$
|
86,883
|
|||
Interest-bearing
|
380,345
|
380,453
|
|||||
Total
deposits
|
468,291
|
467,336
|
|||||
Accrued
interest payable
|
1,006
|
1,399
|
|||||
Secured
borrowings
|
1,388
|
1,418
|
|||||
Short-term
borrowings
|
34,030
|
10,125
|
|||||
Long-term
borrowings
|
11,500
|
12,500
|
|||||
Junior
subordinated debentures
|
13,403
|
13,403
|
|||||
Other
liabilities
|
2,220
|
8,707
|
|||||
Total
liabilities
|
531,838
|
514,888
|
|||||
Commitments
and Contingencies (Note 6)
|
|||||||
Shareholders'
Equity
|
|||||||
Common
Stock (par value $1); 25,000,000 shares authorized; 6,652,573 shares
issued and outstanding at June 30, 2008 and 6,606,545 at December 31,
2007
|
6,653
|
6,607
|
|||||
Additional
paid-in capital
|
27,759
|
27,163
|
|||||
Retained
earnings
|
18,182
|
17,807
|
|||||
Accumulated
other comprehensive loss
|
(1,365
|
)
|
(878
|
)
|
|||
Total
shareholders' equity
|
51,229
|
50,699
|
|||||
Total
liabilities and shareholders' equity
|
$
|
583,067
|
$
|
565,587
|
PACIFIC
FINANCIAL CORPORATION
Condensed
Consolidated Statements of Income
Three
and six months ended June 30, 2008 and 2007
(Dollars
in thousands, except per share data)
(Unaudited)
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Interest
and dividend income
|
|||||||||||||
Loans
|
$
|
7,681
|
$
|
9,813
|
$
|
16,033
|
$
|
19,087
|
|||||
Investment
securities and FHLB dividends
|
593
|
504
|
1,169
|
971
|
|||||||||
Deposits
with banks and federal funds sold
|
5
|
29
|
14
|
99
|
|||||||||
Total
interest and dividend income
|
8,279
|
10,346
|
17,216
|
20,157
|
|||||||||
Interest
Expense
|
|||||||||||||
Deposits
|
2,214
|
3,364
|
5,208
|
6,645
|
|||||||||
Other
borrowings
|
563
|
669
|
1,061
|
1,194
|
|||||||||
Total
interest expense
|
2,777
|
4,033
|
6,269
|
7,839
|
|||||||||
Net
Interest Income
|
5,502
|
6,313
|
10,947
|
12,318
|
|||||||||
Provision
for credit losses
|
2,228
|
105
|
2,354
|
362
|
|||||||||
Net
interest income after provision for
credit
losses
|
3,274
|
6,208
|
8,593
|
11,956
|
|||||||||
Non-interest
Income
|
|||||||||||||
Service
charges on deposits
|
401
|
373
|
775
|
732
|
|||||||||
Gain
on sales of loans
|
444
|
530
|
893
|
955
|
|||||||||
Loss
on sale of investments available-for-sale
|
—
|
—
|
—
|
(20
|
)
|
||||||||
Loss
on sale of premises and equipment
|
—
|
(13
|
)
|
—
|
(18
|
)
|
|||||||
Other
operating income
|
447
|
259
|
834
|
446
|
|||||||||
Total
non-interest income
|
1,292
|
1,149
|
2,502
|
2,095
|
|||||||||
Non-interest
Expense
|
|||||||||||||
Salaries
and employee benefits
|
3,269
|
2,959
|
6,411
|
5,918
|
|||||||||
Occupancy
and equipment
|
693
|
633
|
1,387
|
1,214
|
|||||||||
Other
|
1,543
|
1,592
|
2,864
|
2,872
|
|||||||||
Total
non-interest expense
|
5,505
|
5,184
|
10,662
|
10,004
|
|||||||||
Income
(Loss) before income taxes
|
(939
|
)
|
2,173
|
433
|
4,047
|
||||||||
Provision
(benefit) for income taxes
|
(266
|
)
|
607
|
58
|
|
947
|
|||||||
Net
Income (Loss)
|
$
|
(673
|
)
|
$
|
1,566
|
$
|
375
|
$
|
3,100
|
||||
Earnings
(Loss) per common share:
|
|||||||||||||
Basic
|
$
|
(0.10
|
)
|
$
|
0.24
|
$
|
0.06
|
$
|
0.47
|
||||
Diluted
|
(0.10
|
)
|
0.23
|
0.06
|
0.46
|
||||||||
Weighted
Average shares outstanding:
|
|||||||||||||
Basic
|
6,647,322
|
6,576,276
|
6,641,202
|
6,567,493
|
|||||||||
Diluted
|
6,677,104
|
6,677,144
|
6,669,002
|
6,674,309
|
|||||||||
See
notes to condensed consolidated financial statements.
|
PACIFIC
FINANCIAL CORPORATION
Condensed
Consolidated Statements of Cash Flows
Six
months ended June 30, 2008 and 2007
(Dollars
in thousands)
(Unaudited)
|
|||||||
2008
|
2007
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
income
|
$
|
375
|
$
|
3,100
|
|||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
|||||||
Provision
for credit losses
|
2,354
|
362
|
|||||
Depreciation
and amortization
|
785
|
690
|
|||||
Origination
of loans held for sale
|
(50,735
|
)
|
(69,888
|
)
|
|||
Proceeds
of loans held for sale
|
53,416
|
66,142
|
|||||
Gain
on sales of loans
|
(893
|
)
|
(955
|
)
|
|||
Loss
on sale of investments available for sale
|
—
|
20
|
|||||
Loss
on sale of premises and equipment
|
—
|
18
|
|||||
(Increase)
decrease in accrued interest receivable
|
585
|
(373
|
)
|
||||
Decrease
in accrued interest payable
|
(393
|
)
|
(142
|
)
|
|||
Writedown
of foreclosed real estate
|
61
|
—
|
|||||
Other,
net
|
(1,538
|
)
|
443
|
||||
Net
cash provided by (used in) operating activities
|
4,017
|
(583
|
)
|
||||
INVESTING
ACTIVITIES
|
|||||||
Net
decrease in federal funds sold
|
—
|
8,980
|
|||||
Net
(increase) decrease in interest bearing balances with
banks
|
(213
|
)
|
5,110
|
||||
Purchase
of securities held-to-maturity
|
(369
|
)
|
—
|
||||
Purchase
of securities available-for-sale
|
(6,533
|
)
|
(3,420
|
)
|
|||
Proceeds
from maturities of investments held-to-maturity
|
77
|
159
|
|||||
Proceeds
from sales of securities available-for-sale
|
—
|
805
|
|||||
Proceeds
from maturities of securities available-for-sale
|
3,473
|
2,925
|
|||||
Proceeds
from sales of SBA loan pools
|
—
|
301
|
|||||
Net
increase in loans
|
(18,123
|
)
|
(14,881
|
)
|
|||
Additions
to premises and equipment
|
(1,953
|
)
|
(3,030
|
)
|
|||
Proceeds
from sales of premises and equipment
|
—
|
190
|
|||||
Net
cash used in investing activities
|
(23,641
|
)
|
(2,861
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Net
increase in deposits
|
955
|
2,101
|
|||||
Net
increase in short-term borrowings
|
21,405
|
7,500
|
|||||
Net
decrease in secured borrowings
|
(30
|
)
|
(460
|
)
|
|||
Proceeds
from issuance of long-term borrowings
|
6,500
|
—
|
|||||
Repayments
of long-term borrowings
|
(5,000
|
)
|
—
|
||||
Issuance
of common stock
|
624
|
794
|
|||||
Repurchase
and retirement of common stock
|
(26
|
)
|
—
|
||||
Payment
of cash dividends
|
(4,955
|
)
|
(4,893
|
)
|
|||
Net
cash provided by financing activities
|
19,473
|
5,042
|
|||||
Net
increase (decrease) in cash and due from banks
|
(151
|
)
|
1,598
|
Cash
and due from Banks
|
|||||||
Beginning
of period
|
15,044
|
14,964
|
|||||
End
of period
|
$
|
14,893
|
$
|
16,562
|
|||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|||||||
Cash
payments for:
|
|||||||
Interest
|
$
|
6,662
|
$
|
7,981
|
|||
Income
taxes
|
1,073
|
885
|
|||||
SUPPLEMENTAL
SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
|
|||||||
Foreclosed
real estate acquired in settlement of loans
|
$
|
(341
|
)
|
$
|
—
|
||
Change
in fair value of securities available-for-sale, net of tax
|
(522
|
)
|
(281
|
)
|
|||
Transfer
of securities held-to-maturity to available-for-sale
|
—
|
825
|
|||||
Renewal
of short-term borrowings to long-term borrowings
|
2,500
|
—
|
PACIFIC
FINANCIAL CORPORATION
Condensed
Consolidated Statements of Shareholders' Equity
Six
months ended June 30, 2008 and 2007
(Dollars
in thousands)
(Unaudited)
|
Shares
of Common Stock
|
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
||||||||||||||
Balance
January 1, 2007
|
6,524,407
|
$
|
6,524
|
$
|
26,047
|
$
|
16,731
|
($318
|
)
|
$
|
48,984
|
||||||||
Other
comprehensive income:
|
|||||||||||||||||||
Net
income
|
3,100
|
3,100
|
|||||||||||||||||
Change
in fair value of securities available-for-sale,
net
|
(281
|
)
|
(281
|
)
|
|||||||||||||||
Comprehensive
income
|
2,819
|
||||||||||||||||||
Issuance
of common stock
|
25,012
|
25
|
395
|
420
|
|||||||||||||||
Stock
options exercised
|
32,026
|
32
|
342
|
374
|
|||||||||||||||
Stock
compensation expense
|
43
|
43
|
|||||||||||||||||
Tax
benefit from exercise of stock options
|
48
|
48
|
|||||||||||||||||
|
|||||||||||||||||||
Balance
June 30, 2007
|
6,581,445
|
$
|
6,581
|
$
|
26,875
|
$
|
19,831
|
($599
|
)
|
$
|
52,688
|
||||||||
Balance
January 1, 2008
|
6,606,545
|
$
|
6,607
|
$
|
27,163
|
$
|
17,807
|
($878
|
)
|
$
|
50,699
|
||||||||
Other
comprehensive income:
|
|||||||||||||||||||
Net
income
|
375
|
375
|
|||||||||||||||||
Change
in fair value of securities available-for-sale,
net
|
(522
|
)
|
(522
|
)
|
|||||||||||||||
Amortization
of unrecognized prior service
costs and net gains/losses
|
35
|
35
|
|||||||||||||||||
Comprehensive
income
|
(112
|
)
|
|||||||||||||||||
Issuance
of common stock
|
41,672
|
42
|
524
|
566
|
|||||||||||||||
Stock
options exercised
|
6,656
|
6
|
52
|
58
|
|||||||||||||||
Common
stock repurchased and
retired
|
(2,300
|
)
|
(2
|
)
|
(24
|
)
|
(26
|
)
|
|||||||||||
Stock
compensation expense
|
43
|
43
|
|||||||||||||||||
Tax
benefit from exercise of stock options
|
1
|
1
|
|||||||||||||||||
Balance
June 30, 2008
|
6,652,573
|
$
|
6,653
|
$
|
27,759
|
$
|
18,182
|
($1,365
|
)
|
$
|
51,229
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Basic:
|
|
||||||||||||
Net
income (loss)
|
$
|
(673
|
)
|
$
|
1,566
|
$
|
375
|
$
|
3,100
|
||||
Weighted
average shares
outstanding
|
6,647,322
|
6,576,276
|
6,641,202
|
6,567,493
|
|||||||||
Basic
earnings (loss) per share
|
$
|
(0.10
|
)
|
$
|
0.24
|
$
|
0.06
|
$
|
0.47
|
||||
Diluted:
|
|||||||||||||
Net
income (loss)
|
$
|
(673
|
)
|
$
|
1,566
|
$
|
375
|
$
|
3,100
|
||||
Weighted
average shares
Outstanding
|
6,647,322
|
6,576,276
|
6,641,202
|
6,567,493
|
|||||||||
Effect
of dilutive stock options
|
29,782
|
100,868
|
27,800
|
106,816
|
|||||||||
Weighted
average shares
outstanding
assuming dilution
|
6,677,104
|
6,677,144
|
6,669,002
|
6,674,309
|
|||||||||
Diluted
earnings (loss) per share
|
$
|
(0.10
|
)
|
$
|
0.23
|
$
|
0.06
|
$
|
0.46
|
Securities
Held-to-Maturity
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
|||||||||
June
30, 2008
|
|||||||||||||
Mortgage-backed
securities
|
$
|
688
|
$
|
—
|
$
|
8
|
$
|
680
|
|||||
State
and municipal securities
|
3,931
|
58
|
—
|
3,989
|
|||||||||
Total
|
$
|
4,619
|
$
|
58
|
$
|
8
|
$
|
4,669
|
December
31, 2007
|
|||||||||||||
Mortgage-backed
securities
|
$
|
767
|
$
|
—
|
$
|
4
|
$
|
763
|
|||||
State
and municipal securities
|
3,562
|
48
|
5
|
3,605
|
|||||||||
Total
|
$
|
4,329
|
$
|
48
|
$
|
9
|
$
|
4,368
|
Securities
Available-for-Sale
|
|||||||||||||
June
30, 2008
|
|||||||||||||
U.S.
Government securities
|
$
|
1,746
|
$
|
20
|
$
|
—
|
$
|
1,766
|
|||||
State
and municipal securities
|
17,219
|
151
|
245
|
17,125
|
|||||||||
Mortgage-backed
securities
|
22,393
|
12
|
979
|
21,426
|
|||||||||
Corporate
securities
|
1,523
|
6
|
11
|
1,518
|
|||||||||
Mutual
funds
|
3,041
|
—
|
157
|
2,884
|
|||||||||
Total
|
$
|
45,922
|
$
|
189
|
$
|
1,392
|
$
|
44,719
|
|||||
December
31, 2007
|
|||||||||||||
U.S.
Government securities
|
$
|
3,796
|
$
|
22
|
$
|
—
|
$
|
3,818
|
|||||
State
and municipal securities
|
16,248
|
83
|
195
|
16,136
|
|||||||||
Mortgage-backed
securities
|
18,706
|
23
|
189
|
18,540
|
|||||||||
Corporate
securities
|
1,532
|
—
|
20
|
1,512
|
|||||||||
Mutual
funds
|
3,041
|
—
|
135
|
2,906
|
|||||||||
Total
|
$
|
43,323
|
$
|
128
|
$
|
539
|
$
|
42,912
|
Three
Months
Ended
June
30,
|
Six
Months
Ended
June
30,
|
Twelve
Months
Ended
December
31,
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
2007
|
||||||||||||
Balance
at beginning of period
|
$
|
5,120
|
$
|
4,284
|
$
|
5,007
|
$
|
4,033
|
$
|
4,033
|
||||||
Provision
for credit losses
|
2,228
|
105
|
2,354
|
362
|
482
|
|||||||||||
Charge-offs
|
(708
|
)
|
(35
|
)
|
(727
|
)
|
(48
|
)
|
(151
|
)
|
||||||
Recoveries
|
14
|
121
|
20
|
128
|
643
|
|||||||||||
Net
(charge-offs) recoveries
|
(694
|
)
|
86
|
(707
|
)
|
80
|
492
|
|||||||||
Balance
at end of period
|
$
|
6,654
|
$
|
4,475
|
$
|
6,654
|
$
|
4,475
|
$
|
5,007
|
Grant
period ended
|
Expected
Life
|
Risk
Free
Interest
Rate
|
Expected
Volatility
|
Dividend
Yield
|
Average
Fair
Value
|
|||||||||||
June
30, 2007
|
6.5
years
|
5.02
|
%
|
15.64
|
%
|
4.64
|
%
|
$
|
2.01
|
Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Term ( Years)
|
Aggregate
Intrinsic Value
|
||||||||||
June
30, 2008
|
|||||||||||||
Outstanding
beginning of period
|
627,153
|
$
|
13.80
|
||||||||||
Granted
|
—
|
—
|
|||||||||||
Exercised
|
(6,656
|
)
|
8.72
|
||||||||||
Forfeited
|
(1,500
|
)
|
16.33
|
||||||||||
Expired
|
—
|
—
|
|||||||||||
Outstanding
end of period
|
618,997
|
$
|
13.85
|
5.2
|
$
|
—
|
|||||||
Exercisable
end of period
|
499,397
|
$
|
13.52
|
4.4
|
$
|
—
|
|||||||
June
30, 2007
|
|||||||||||||
Outstanding
beginning of period
|
699,729
|
$
|
13.70
|
||||||||||
Granted
|
44,750
|
16.17
|
|||||||||||
Exercised
|
(32,026
|
)
|
11.69
|
||||||||||
Forfeited
|
(21,000
|
)
|
17.16
|
||||||||||
Expired
|
(1,700
|
)
|
5.88
|
||||||||||
Outstanding
end of period
|
689,753
|
$
|
13.87
|
5.3
|
$
|
1,610
|
|||||||
Exercisable
end of period
|
550,195
|
$
|
13.65
|
4.7
|
$
|
1,404
|
2008
|
2007
|
||||||||||||
Shares
|
Weighted
Average Fair Value
|
Shares
|
Weighted
Average Fair Value
|
||||||||||
Non-vested
beginning of period
|
176,258
|
$
|
1.98
|
129,206
|
$
|
2.37
|
|||||||
Granted
|
—
|
—
|
44,750
|
2.01
|
|||||||||
Vested
|
(55,558
|
)
|
2.38
|
(31,098
|
)
|
2.60
|
|||||||
Forfeited
|
(1,100
|
)
|
2.03
|
(3,300
|
)
|
2.53
|
|||||||
Non-vested
end of period
|
119,600
|
$
|
1.79
|
139,558
|
$
|
2.19
|
Net
periodic pension cost
|
Three
Months Ended
June
30, 2008
|
Six
Months Ended
June
30, 2008
|
|||||
Service
cost
|
$
|
23
|
$
|
46
|
|||
Interest
cost
|
12
|
24
|
|||||
Amortization
of prior service cost
|
18
|
35
|
|||||
Net
periodic pension cost
|
$
|
53
|
$
|
105
|
Readily
Available Market Prices
Level
1
|
Observable
Market Prices
Level
2
|
Significant
Unobservable
Inputs
Level
3
|
Total
|
||||||||||
Available
for sale securities
|
$
|
4,401
|
$
|
40,318
|
$
|
—
|
$
|
44,719
|
2008
|
2007
|
||||||||||||||||||
|
|
Interest
|
|
|
|
|
Interest
|
|
|
|
|||||||||
|
Average
|
|
Income
|
|
Avg
|
|
Average
|
|
Income
|
|
Avg
|
|
|||||||
(dollars
in thousands)
|
|
Balance
|
|
(Expense)
|
|
Rate
|
|
Balance
|
|
(Expense)
|
|
Rate
|
|||||||
Interest
Earning Assets
|
|||||||||||||||||||
Loans
(1)
|
$
|
461,672
|
$
|
16,121*
|
6.98
|
%
|
$
|
457,373
|
$
|
19,172*
|
8.38
|
%
|
|||||||
Taxable
securities
|
31,126
|
790
|
5.08
|
25,643
|
624
|
4.87
|
|||||||||||||
Tax-exempt
securities
|
18,278
|
557*
|
6.09
|
17,377
|
526*
|
6.05
|
|||||||||||||
Federal
Home Loan Bank Stock
|
1,956
|
11
|
1.12
|
1,858
|
—
|
—
|
|||||||||||||
Interest
earning balances with banks
|
1,074
|
14
|
2.61
|
3,910
|
99
|
5.06
|
|||||||||||||
Total
interest earning assets
|
$
|
514,106
|
$
|
17,493
|
6.81
|
%
|
$
|
506,161
|
$
|
20,421
|
8.07
|
%
|
|||||||
Cash
and due from banks
|
11,545
|
11,959
|
|||||||||||||||||
Bank
premises and equipment (net)
|
16,101
|
12,439
|
|||||||||||||||||
Other
assets
|
33,930
|
28,692
|
|||||||||||||||||
Allowance
for credit losses
|
(5,108
|
)
|
(4,278
|
)
|
|||||||||||||||
Total
assets
|
$
|
570,574
|
$
|
554,973
|
|||||||||||||||
Interest
Bearing Liabilities
|
|||||||||||||||||||
Savings
and interest bearing demand
|
$
|
202,979
|
$
|
(1,558
|
)
|
1.54
|
%
|
$
|
189,673
|
$
|
(2,465
|
)
|
2.60
|
%
|
|||||
Time
deposits
|
174,389
|
(3,650
|
)
|
4.19
|
176,914
|
(4,180
|
)
|
4.73
|
|||||||||||
Total
deposits
|
377,368
|
(5,208
|
)
|
2.76
|
366,587
|
(6,645
|
)
|
3.63
|
|||||||||||
Short-term
borrowings
|
17,316
|
(239
|
)
|
2.76
|
9,868
|
(273
|
)
|
5.53
|
|||||||||||
Long-term
borrowings
|
20,533
|
(397
|
)
|
3.87
|
21,500
|
(410
|
)
|
3.81
|
|||||||||||
Secured
borrowings
|
1,403
|
(49
|
)
|
6.99
|
1,633
|
(58
|
)
|
7.10
|
|||||||||||
Junior
subordinated debentures
|
13,403
|
(376
|
)
|
5.61
|
13,403
|
(453
|
)
|
6.76
|
|||||||||||
Total
borrowings
|
52,655
|
(1,061
|
)
|
4.03
|
46,404
|
(1,194
|
)
|
5.15
|
|||||||||||
Total
interest-bearing liabilities
|
430,023
|
$
|
(6,269
|
)
|
2.92
|
%
|
$
|
412,991
|
$
|
(7,839
|
)
|
3.80
|
%
|
||||||
Demand
deposits
|
82,964
|
86,084
|
|||||||||||||||||
Other
liabilities
|
5,433
|
5,032
|
|||||||||||||||||
Shareholders’
equity
|
52,154
|
50,866
|
|||||||||||||||||
Total
liabilities and shareholders’ equity
|
$
|
570,574
|
$
|
554,973
|
|||||||||||||||
Net
interest income
|
$
|
11,224*
|
$
|
12,582*
|
|||||||||||||||
Net
interest spread
|
4.37
|
%
|
4.97
|
%
|
|||||||||||||||
Net
interest margin
|
4.26
|
%
|
4.87
|
%
|
|||||||||||||||
$
|
277
|
$
|
264
|
ANALYSIS
OF NON-PERFORMING ASSETS
|
||||||||||
June
30,
2008
|
|
December
31,
2007
|
|
June
30,
2007
|
||||||
(in
thousands)
|
||||||||||
Accruing
loans past due 90 days or more
|
$
|
—
|
$
|
2,932
|
$
|
—
|
||||
Non-accrual
loans
|
8,485
|
3,479
|
802
|
|||||||
Foreclosed
real estate
|
280
|
—
|
—
|
|||||||
TOTAL
|
$
|
8,765
|
$
|
6,411
|
$
|
802
|
June
30,
2008
|
December
31,
2007
|
||||||
Commercial
and industrial
|
$
|
107,949
|
$
|
110,499
|
|||
Agricultural
|
17,975
|
17,646
|
|||||
Real
estate mortgage
|
91,318
|
87,094
|
|||||
Real
estate construction
|
94,229
|
93,249
|
|||||
Real
estate commercial
|
150,823
|
137,620
|
|||||
Installment
|
6,628
|
8,140
|
|||||
Credit
cards and other
|
3,039
|
2,506
|
|||||
Less
unearned income
|
(798
|
)
|
(681
|
)
|
|||
Total
Loans
|
471,163
|
456,073
|
|||||
Allowance
for credit losses
|
(6,654
|
)
|
(5,007
|
)
|
|||
Net
Loans
|
$
|
464,509
|
$
|
451,066
|
June
30,
2008
|
December
31,
2007
|
||||||
Non-interest
bearing demand
|
$
|
87,946
|
$
|
86,883
|
|||
Interest
bearing demand
|
55,643
|
44,305
|
|||||
Money
market deposits
|
95,024
|
105,260
|
|||||
Savings
deposits
|
49,069
|
55,210
|
|||||
Time
deposits
|
180,609
|
175,678
|
|||||
Total
deposits
|
$
|
468,291
|
$
|
467,336
|
PACIFIC FINANCIAL CORPORATION | ||
|
|
|
DATED: August
14, 2008
|
By: | /s/ Dennis A. Long |
Dennis A. Long |
||
Chief Executive Officer |
|
|
|
By: | /s/ Denise Portmann | |
Denise Portmann |
||
Chief Financial Officer |
EXHIBIT
NO.
|
EXHIBIT
|
|
10.1
|
SOX
Officer Incentive Plan
|
|
31.1
|
Certification
of CEO under Rule 13a - 14(a) of the Exchange Act.
|
|
31.2
|
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.
|